Biogen Inc. (NASDAQ:BIIB)

The financial data reveals notable trends in the composition and valuation of intangible assets and goodwill over the five-year period.

Completed Technology

This asset category shows a modest decline from 2017 to 2018, decreasing from approximately $7.52 billion to $7.19 billion. It then experiences a slight recovery and stabilizes around $7.39 billion to $7.41 billion in subsequent years, indicating a relatively steady valuation with minor fluctuations.

In-process Research and Development

This category exhibits considerable volatility. Starting at $680.6 million in 2017, it drops significantly to $476 million in 2018, followed by a sharp increase to $965.5 million in 2019. Thereafter, it declines to $762.5 million in 2020 and further drops to $132.7 million in 2021, suggesting variability in ongoing R&D initiatives or changes in the reporting or valuation approach.

Trademarks and Trade Names

This asset remains constant at $64 million throughout the entire period, indicating no significant acquisition or impairment activity affecting this category.

Intangible Assets, Cost

The total cost of intangible assets follows a somewhat fluctuating but overall downward trend, initially decreasing from approximately $8.26 billion in 2017 to $7.73 billion in 2018, then rising to $8.41 billion in 2019 before declining again to $7.61 billion in 2021. This pattern reflects the underlying variations in the components like completed technology and in-process R&D.

Accumulated Amortization

Accumulated amortization steadily increases in magnitude (negatively recorded), growing from approximately $4.39 billion in 2017 to $5.39 billion in 2021. This consistent rise indicates ongoing amortization expenses being recognized annually against the intangible assets.

Intangible Assets, Net

The net intangible assets, after accounting for amortization, demonstrate a declining trend. The figure drops from about $3.88 billion in 2017 to $2.22 billion in 2021, showing a significant reduction of approximately 43%. This decline underscores the impact of amortization outweighing new additions or revaluations.

Goodwill

Goodwill shows a positive trend, increasing from $4.63 billion in 2017 to approximately $5.76 billion by 2019, and remaining relatively stable around this level through 2021. This stability suggests maintenance of goodwill balances without significant impairments or write-offs during the observed period.

Intangible Assets and Goodwill Combined

The sum of intangible assets and goodwill first rises from $8.51 billion in 2017 to a peak of approximately $9.28 billion in 2019, then declines to $7.98 billion in 2021. This trajectory indicates that while goodwill increased and stabilized, the decline in net intangible assets exerted downward pressure on the combined total in later years.

In summary, the data reflect a company managing a sizable portfolio of intangible assets and goodwill with some volatility in specific asset categories such as in-process research and development. The consistent increase in accumulated amortization leads to a notable decrease in net intangible assets, while goodwill remains relatively stable after initial growth. The combined intangible assets and goodwill peaked in 2019, followed by a decline, indicating potential challenges in sustaining asset growth or shifts in asset valuations post-2019.

Total Assets

The reported total assets show a gradual increase from 23,652,600 thousand US dollars in 2017 to a peak of 27,234,300 thousand US dollars in 2019. This is followed by a decline in 2020 and 2021, with the value falling to 23,877,300 thousand US dollars by the end of 2021. The adjusted total assets, which exclude goodwill, also follow a similar trend, increasing from 19,020,100 thousand US dollars in 2017 to 21,476,500 thousand US dollars in 2019, then decreasing to 18,116,200 thousand US dollars in 2021. The adjusted figures are consistently lower than the reported figures, indicating a significant portion of assets is attributed to goodwill. The decline in adjusted assets from 2019 onwards may suggest asset disposals, impairment, or revaluation.

Shareholders’ Equity

The reported total shareholders’ equity displays a modest increase from 12,612,800 thousand US dollars in 2017 to 13,343,200 thousand US dollars in 2019, followed by a notable decrease to 10,896,200 thousand US dollars by the end of 2021. The adjusted shareholders’ equity, excluding goodwill, decreases from 7,980,300 thousand US dollars in 2017 to 7,333,200 thousand US dollars in 2018, then slightly recovers to 7,585,400 thousand US dollars in 2019 before dropping significantly to 5,135,100 thousand US dollars by 2021. The adjusted equity consistently remains substantially lower than the reported equity, reflecting the impact of goodwill on the company’s net worth. The sharp decrease between 2019 and 2020 in adjusted equity may indicate impairment charges or other factors negatively affecting the net asset value excluding goodwill.

Overall Insights

Both reported and adjusted figures demonstrate growth in the earlier years up to 2019, followed by declines through 2020 and 2021. The difference between reported and adjusted values underscores the material presence of goodwill on the balance sheet. The trends suggest that while the company expanded its asset base until 2019, it faced challenges afterward that led to asset reduction and decreased equity, particularly evident when goodwill is excluded. This pattern may warrant further investigation into asset impairments, goodwill write-downs, or restructuring activities occurring after 2019.

Total Asset Turnover

The reported total asset turnover exhibited a relatively stable pattern from 2017 to 2020, maintaining a range between 0.52 to 0.55, before declining noticeably to 0.46 in 2021. In contrast, the adjusted total asset turnover, which accounts for goodwill adjustments, showed higher values throughout the period, starting at 0.65 in 2017 and reaching a peak of 0.71 in 2020, followed by a decrease to 0.61 in 2021. This suggests enhanced asset utilization when goodwill is excluded, although both measures indicate a decline in efficiency in the latest year.

Financial Leverage

Reported financial leverage increased steadily from 1.88 in 2017 to a maximum of 2.30 in 2020, with a slight decrease to 2.19 in 2021. The adjusted financial leverage, which is higher due to goodwill exclusion, followed a similar rising trend, climbing from 2.38 in 2017 to a peak of 3.82 in 2020, then tapering off to 3.53 in 2021. The upward trajectory indicates progressively greater use of debt or other leverage components, with a marked amplification in leverage levels once goodwill is adjusted out.

Return on Equity (ROE)

Reported ROE experienced substantial growth from 20.13% in 2017 to 44.13% in 2019, although it declined to 37.39% in 2020 and sharply dropped to 14.28% in 2021. The adjusted ROE figures, generally higher than the reported ones, displayed strong upward momentum from 31.82% in 2017 to an apex of 81.01% in 2020, but then significantly decreased to 30.3% in 2021. These trends reflect a period of improving profitability and returns to equity holders, peaking in 2020, followed by a notable downturn in 2021.

Return on Assets (ROA)

Reported ROA increased from 10.73% in 2017 to a peak of 21.62% in 2019 before declining sharply to 6.52% by 2021. The adjusted ROA values, consistently higher, rose from 13.35% in 2017 to 27.42% in 2019, then fell to 8.59% in 2021. This pattern demonstrates improvements in asset profitability until 2019, followed by a reduction in earnings efficiency relative to total assets through the subsequent years.

Overall Insights

The adjusted metrics, which take goodwill into account, generally present higher performance ratios across all categories compared to their reported counterparts, indicating that the goodwill component dilutes asset efficiency and profitability metrics. Key performance indicators such as asset turnover, leverage, ROE, and ROA improved consistently up to 2019 or 2020, suggesting effective operational and financial management during that period. However, 2021 shows a reversal of these positive trends with declines in turnover ratios, leverage, and profitability measures, signaling potential challenges affecting operational performance or market conditions. The pronounced decrease in both reported and adjusted ROE and ROA in 2021 highlights a significant reduction in profitability and returns, warranting further investigation into underlying causes.

Total Assets

The reported total assets exhibited a general upward trend from 23,652,600 thousand US dollars at the end of 2017 to a peak of 27,234,300 thousand US dollars in 2019. Following this peak, the total assets declined to 23,817,300 thousand US dollars by the end of 2021. In contrast, the adjusted total assets, which exclude goodwill, also increased from 19,020,100 thousand US dollars in 2017 to 21,476,500 thousand US dollars in 2019 before decreasing to 18,116,200 thousand US dollars in 2021. Both reported and adjusted asset values thus show a rise through 2019 followed by a subsequent decline over the next two years.

Total Asset Turnover Ratios

Reported total asset turnover ratios remained relatively stable between 0.52 and 0.55 from 2017 to 2020, reflecting consistent efficiency in utilizing reported assets to generate revenue during this period. However, there was a noticeable decline to 0.46 in 2021, indicating reduced effectiveness in asset use for generating sales. The adjusted total asset turnover ratios, which consider assets excluding goodwill, were consistently higher than the reported ratios, ranging between 0.61 and 0.71 over the years. Similar to the reported ratios, the adjusted turnover increased from 0.65 in 2017 to a high of 0.71 in 2020, before dropping to 0.61 in 2021. This pattern suggests that while asset utilization was robust until 2020, a downturn in operational efficiency occurred in the most recent year reported.

Overall Trends and Insights

There is a clear pattern of growth in both asset base and asset utilization efficiency up to 2019 and 2020 respectively, with subsequent declines into 2021. The divergence between reported and adjusted figures reflects the impact of goodwill on the asset base and corresponding turnover ratios. The adjusted turnover ratios being consistently higher suggests that goodwill may be inflating the asset base, potentially masking operational efficiency when looking only at reported figures. The decline in both the asset base and turnover ratios in 2021 could indicate challenges in asset management or changing business conditions affecting revenue generation relative to asset levels during that period.

Total Assets

The reported total assets demonstrate a generally upward trend from 23.65 billion US dollars in 2017 to a peak of 27.23 billion in 2019, followed by a decline to 23.88 billion in 2021. Adjusted total assets, which exclude goodwill, exhibit a similar pattern but with consistently lower values, declining from 19.02 billion in 2017 to 18.12 billion in 2021 after peaking at 21.48 billion in 2019. This suggests a reduction in asset base after 2019, particularly when adjusted for intangible goodwill.

Shareholders’ Equity

The reported shareholders' equity increased steadily from 12.61 billion in 2017 to 13.34 billion in 2019, then sharply decreased to 10.70 billion by 2020 and slightly improved to 10.90 billion in 2021. The adjusted equity shows a more pronounced decline, dropping from 7.98 billion in 2017 to 5.14 billion in 2021, with a notable reduction in 2020. The divergence between reported and adjusted equity indicates a considerable impact of goodwill on equity valuation and suggests that intangible assets decreased or were impaired during this period.

Financial Leverage

The reported financial leverage ratio rose steadily from 1.88 in 2017 to 2.3 in 2020 before a moderate decrease to 2.19 in 2021. In contrast, the adjusted financial leverage, which accounts for goodwill adjustments, shows a more significant increase from 2.38 in 2017 to 3.82 in 2020, followed by a decline to 3.53 in 2021. The higher adjusted leverage ratios throughout the period indicate increased reliance on debt or liabilities relative to equity when excluding goodwill, highlighting elevated financial risk under this adjusted view.

Overall Insights

The data reveal that while the company’s reported asset base and equity initially grew until 2019, both subsequently contracted, particularly after adjustment for goodwill. The increased financial leverage ratios, especially the adjusted ones, portray a trend of rising financial risk from 2017 to 2020, with some improvement in 2021. The divergence between reported and adjusted figures underscores the significant influence of intangible assets on the company’s financial structure and risk profile during the five-year period.

The analysis of the annual reported and goodwill adjusted financial data indicates several notable trends in both shareholders' equity and returns on equity over the five-year period.

Reported Shareholders' Equity

The reported total shareholders’ equity exhibits moderate growth from 12.61 billion USD in 2017 to 13.34 billion USD in 2019, followed by a significant decline to approximately 10.7 billion USD in 2020. In 2021, equity shows a slight recovery, reaching about 10.9 billion USD. This pattern suggests an initial period of equity accumulation, interrupted by a substantial reduction in 2020, potentially due to impairments, losses, or changes in accounting policies.

Adjusted Shareholders' Equity

The goodwill-adjusted shareholders' equity presents a contrasting trend. Starting at roughly 7.98 billion USD in 2017, it decreases to 7.33 billion USD in 2018, then modestly recovers to 7.59 billion USD in 2019. However, a pronounced decrease is observed in 2020, with equity falling to approximately 4.94 billion USD, followed by a marginal increase to 5.14 billion USD in 2021. The adjusted equity figures are substantially lower than the reported values throughout, highlighting the significant impact of goodwill adjustments on equity measurement.

Reported Return on Equity (ROE)

The reported ROE demonstrates strong and increasing profitability from 20.13% in 2017 to a peak of 44.13% in 2019. Despite remaining robust, it declines to 37.39% in 2020 and further drops markedly to 14.28% in 2021. This suggests that while operational efficiency or profitability was high through 2019, external factors or internal challenges may have adversely affected returns in the subsequent years.

Adjusted Return on Equity (ROE)

The adjusted ROE shows a more pronounced upward trend from 31.82% in 2017, rising sharply to 81.01% in 2020, before falling steeply to 30.3% in 2021. The substantially higher adjusted ROE figures compared to the reported ones imply that when excluding goodwill, the equity base is smaller, inflating return measures. The peak in 2020 coupled with the sharp decline in 2021 mirrors the fluctuations seen in adjusted equity, reflecting variability in profitability relative to the adjusted equity base.

In summary, the data reveals that while reported shareholders' equity and ROE initially improved, they have experienced significant volatility starting in 2020. Adjusted figures underscore the material impact of goodwill on equity and profitability measures, showing more dramatic declines and recoveries. The considerable reduction in equity and associated returns in 2020 and 2021 may warrant further investigation to understand the underlying causes, such as asset impairments or shifts in operational performance.

Over the observed five-year period, total assets reported showed a general increase from 23,652,600 thousand US dollars in 2017 to a peak of 27,234,300 thousand US dollars in 2019, followed by a decline to 23,877,300 thousand US dollars by the end of 2021. When adjusted for goodwill, the total assets also followed a similar pattern, rising from 19,020,100 thousand US dollars in 2017 to a peak of 21,476,500 thousand US dollars in 2019, then decreasing to 18,116,200 thousand US dollars in 2021. This indicates a contraction in the asset base after 2019 when goodwill adjustments are considered.

Return on assets (ROA), both reported and adjusted, exhibited an upward trend from 2017 through 2019, suggesting improving profitability relative to the asset base during this period. Reported ROA increased from 10.73% in 2017 to 21.62% in 2019, then decreased significantly to 6.52% by 2021. Adjusted ROA followed a similar trajectory, rising from 13.35% in 2017 to a high of 27.42% in 2019 before sharply declining to 8.59% in 2021. The sharper decline in adjusted ROA compared to reported ROA in the last two years suggests that goodwill adjustments have a material effect on profitability metrics, highlighting diminished efficiency in asset utilization when intangible assets are excluded or adjusted.

Asset Base Trends

Total assets peaked in 2019 and subsequently decreased, indicating a possible divestiture or asset write-downs post-2019.

Goodwill adjustments consistently reduced the reported total assets, signaling a significant presence of intangible assets in the balance sheet.

Profitability Trends

ROA increased markedly up to 2019, reflecting enhanced return generation from the assets.

The decline in both reported and adjusted ROA after 2019 implies deteriorating operational efficiency or profitability challenges emerging in the later years.

The greater volatility and higher values in adjusted ROA compared to reported ROA suggest that adjustments for goodwill provide a more sensitive measure of operational performance.