Biogen Inc. (NASDAQ:BIIB)

The financial data reveals distinct trends in key performance indicators over the five-year period. Notably, the net operating profit after taxes (NOPAT) experienced initial growth followed by a decline in the latter years. The NOPAT increased from approximately $2.9 billion in 2017 to a peak of around $6 billion in 2019, indicating improved profitability. However, after 2019, there was a sharp decline, with NOPAT dropping to about $4.4 billion in 2020 and further down to roughly $1.5 billion in 2021.

The cost of capital exhibited a gradual downward trend throughout the period. Starting at 8.37% in 2017, it slightly increased to 8.4% in 2018 but then consistently decreased each subsequent year, reaching 7.66% in 2021. This trend suggests a reduction in the company’s cost of funding, which can potentially have positive effects on investment decisions and valuation.

Invested capital showed a generally rising pattern with some fluctuations. It increased from approximately $12.5 billion in 2017 to the highest value of around $14.1 billion in 2019. A drop occurred in 2020, bringing invested capital down to about $12.6 billion, followed by a rise again to approximately $13.8 billion in 2021. These fluctuations might reflect changes in the company's capital expenditure, asset management, or divestitures.

Economic profit mirrored a pattern somewhat aligned with NOPAT but with more pronounced variability. Economic profit grew significantly from about $1.8 billion in 2017 to a peak nearing $4.8 billion in 2019, which indicates strong value creation over those years. However, it declined considerably in the following years—to approximately $3.4 billion in 2020 and further to around $442 million in 2021. This decline reflects diminishing returns over invested capital or escalated capital costs relative to profit generation.

Summary of trends

Profitability metrics (NOPAT and economic profit) displayed robust growth up to 2019 followed by marked declines, suggesting challenges in maintaining earlier profit levels.

Cost of capital steadily decreased after a brief rise in 2018, which could signal improved financing conditions or reduced risk perceptions.

Invested capital increased overall but showed a dip in 2020, possibly indicating asset base rationalization or changes in investment strategies.

The divergence between peaks in profit and invested capital highlights efficiency and value creation, though recent declines point to potential issues in sustaining these advantages.

Net Income Attributable to Biogen Inc.

The net income exhibited a rising trend from 2017 to 2019, increasing from approximately 2.54 billion to nearly 5.89 billion US dollars. However, a decline was observed starting in 2020, with net income falling to about 4.00 billion and further decreasing sharply to approximately 1.56 billion US dollars in 2021. This indicates a significant reduction in profitability during the latter years of the period.

Net Operating Profit After Taxes (NOPAT)

The NOPAT followed a similar trajectory to net income, showing an increase from about 2.89 billion US dollars in 2017 to a peak of approximately 6.02 billion US dollars in 2019. Subsequently, a decline occurred with NOPAT decreasing to roughly 4.37 billion in 2020 and then sharply dropping to around 1.50 billion US dollars in 2021. This pattern signifies a reduction in operating efficiency and effectiveness in generating profit after taxes over the last two years.

Overall Observations

Both net income and NOPAT demonstrated growth during the initial three years, suggesting improved financial performance and operational results. The peak in 2019 represents the highest point in profitability within the analyzed period. The subsequent decline in 2020 and more pronounced drop in 2021 highlight challenges or adverse developments affecting profitability and operational outcomes. The data suggests the company experienced a notable downturn in earning capacity and operating profit in the final years.

Income Tax Expense

The income tax expense demonstrates a consistent downward trend from 2017 to 2021. Starting at 2,458,700 thousand US dollars in 2017, the expense decreased significantly each year to reach 52,500 thousand US dollars in 2021. The reduction is particularly notable in 2021, where the expense dropped sharply compared to previous years.

Cash Operating Taxes

Cash operating taxes also show a general decline over the analyzed period. Beginning at 2,441,355 thousand US dollars in 2017, these taxes declined steadily year over year, falling to 533,599 thousand US dollars in 2021. The reduction is gradual until 2020, followed by a less steep but still notable decrease in 2021.

Comparative Analysis

Both income tax expense and cash operating taxes have followed a downward trajectory, reflecting a possible strategic or operational improvement affecting taxable income or tax planning. The income tax expense decreased more sharply between 2020 and 2021 compared to prior years, whereas cash operating taxes reduced more steadily across the entire timeframe.

Total Reported Debt & Leases

The total reported debt and leases remained relatively stable from 2017 to 2019, with a slight decrease each year from approximately 6.45 billion US dollars to around 6.44 billion US dollars. However, there was a significant increase in 2020, rising to approximately 7.91 billion US dollars. In 2021, the debt slightly decreased to about 7.69 billion US dollars, indicating a reduction after the peak the previous year.

Total Biogen Inc. Shareholders’ Equity

Shareholders' equity showed a consistent upward trend from 2017 to 2019, growing from approximately 12.61 billion US dollars to 13.34 billion US dollars. In 2020, there was a notable decline to about 10.70 billion US dollars. This followed by a modest recovery in 2021, with equity increasing to approximately 10.90 billion US dollars, yet still below the peak levels observed in 2019.

Invested Capital

Invested capital experienced steady growth from 2017 through 2019, rising from approximately 12.48 billion US dollars to 14.14 billion US dollars. In 2020, invested capital dropped to about 12.63 billion US dollars but rebounded in 2021 to 13.82 billion US dollars. This pattern suggests some disruptions or adjustments during 2020, followed by partial recovery the following year.

The financial analysis reveals several notable trends over the five-year period ending in 2021. The economic profit exhibited significant fluctuations, reaching a peak in 2019 before experiencing a pronounced decline in subsequent years.

Economic Profit

The economic profit increased substantially from 1,845,761 thousand US dollars in 2017 to a peak of 4,849,175 thousand US dollars in 2019. However, this positive trend did not sustain, as economic profit decreased to 3,382,342 thousand in 2020 and further declined sharply to 442,115 thousand in 2021. This significant drop in 2021 indicates challenges in maintaining profitability at previous levels.

Invested Capital

Invested capital showed a gradual upward trajectory, rising from 12,476,129 thousand US dollars in 2017 to 14,142,400 thousand in 2019. A decline was observed in 2020, with invested capital decreasing to 12,625,400 thousand, before rising again to 13,824,500 thousand in 2021. The fluctuations suggest some variations in the company's asset base or capital deployment strategies during these years.

Economic Spread Ratio

The economic spread ratio mirrored the economic profit trend, starting at 14.79% in 2017 and reaching a high of 34.29% in 2019. This ratio subsequently decreased to 26.79% in 2020 and plummeted to 3.2% in 2021. The steep decline in 2021 signifies a sharp reduction in the return spread over the cost of capital, which may reflect decreased operational efficiency or increased capital costs.

Overall, the data suggest that while the company achieved strong economic profitability and capital efficiency towards the end of the decade, it faced significant difficulties in sustaining these levels in the most recent year analyzed. The sharp reduction in economic profit and economic spread ratio in 2021 warrants attention for underlying causes, potentially indicating changing market conditions, increased competition, or internal operational challenges.

Economic Profit

The economic profit exhibited a significant upward trend from 2017 to 2019, increasing from approximately $1.85 billion to nearly $4.85 billion. However, this was followed by a decline in 2020 to roughly $3.38 billion and a more pronounced drop in 2021 to approximately $442 million. This pattern indicates a peak in economic profitability in 2019, followed by a deterioration over the subsequent two years.

Revenue

Revenue demonstrated a steady growth between 2017 and 2019, rising from about $12.27 billion to approximately $14.38 billion. In 2020, revenue decreased slightly to around $13.44 billion, and the downward trend accelerated in 2021, with revenue falling to approximately $10.98 billion. The data suggests a contraction in sales or pricing power beginning in 2020, culminating in a significant revenue decline by 2021.

Economic Profit Margin

The economic profit margin mirrored the trajectory of economic profit, increasing markedly from 15.04% in 2017 to a peak of 33.73% in 2019. A subsequent decrease occurred in 2020, where the margin declined to 25.16%, followed by a sharp reduction to just 4.03% in 2021. This trend indicates a reduction in the company's ability to generate economic profit per unit of revenue, with margins contracting significantly in the most recent year.

Overall Analysis

Over the observed period, the company experienced growth in both revenue and economic profit up until 2019, indicating a phase of strong financial performance and efficient capital utilization. From 2020 onwards, both revenue and economic profit saw considerable declines, with economic profit margin reflecting diminished profitability efficiency. The steep decrease in 2021 economic profit margin to a low single-digit percentage points to potential challenges such as increased costs, pricing pressure, or other factors adversely impacting financial performance. The overall pattern suggests the company faced significant headwinds starting in 2020, resulting in contraction in both revenue and profitability by 2021.