Biogen Inc. (NASDAQ:BIIB)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited a significant upward trend from 2017 through 2019, increasing from approximately 2.89 billion to over 6 billion USD. However, in 2020, there was a notable decline to around 4.37 billion USD, followed by a further and more substantial decrease to approximately 1.5 billion USD in 2021. This pattern indicates a strong profitability increase initially, with a sharp contraction in the final two years observed.

Invested Capital

The invested capital demonstrated a moderate increase over the period, rising from about 12.48 billion USD in 2017 to 14.34 billion USD by the end of 2021. The amount peaked in 2019 at approximately 14.14 billion USD, experienced a reduction in 2020 to around 12.63 billion USD, but then increased again in 2021 to the highest value in the examined timeframe. This suggests ongoing investments or asset base expansion despite fluctuations.

Return on Invested Capital (ROIC)

The ROIC showed a strong performance from 2017 to 2019, escalating from 23.16% to a peak of 42.59%. However, this was followed by a decline to 34.62% in 2020 and a more pronounced drop to 10.86% in 2021. The decline in ROIC parallels the decreases observed in NOPAT, implying diminished efficiency or profitability relative to the invested capital during the latter two years.

Overall Analysis

The data reveals a robust phase of profitability and capital efficiency between 2017 and 2019. Nevertheless, the subsequent years show declining net operating profits and ROIC despite a generally stable or slightly increased invested capital base. This may reflect operational challenges, market conditions, or other factors impacting profitability and returns on invested resources. The contrasting trends between increasing invested capital and declining returns indicate potential issues with asset utilization or cost management in the recent periods examined.

Operating Profit Margin (OPM)

The operating profit margin exhibited an upward trend from 43.44% in 2017 to a peak of 49.6% in 2019, indicating improving operational efficiency during this period. However, the margin declined sharply thereafter, falling to 39.1% in 2020 and further to 18.53% in 2021. This significant reduction suggests deteriorating profitability from core operations in the most recent years.

Turnover of Capital (TO)

The turnover of capital remained relatively stable between 0.98 and 1.06 from 2017 through 2020, reflecting consistent asset utilization efficiency. In 2021, this ratio declined noticeably to 0.79, suggesting a decrease in the effectiveness of capital employed to generate revenue during the latest period.

1 – Effective Cash Tax Rate (CTR)

The effective cash tax rate increased substantially over the first three years, rising from 54.21% in 2017 to a high of 84.47% in 2019. This elevated level of tax burden persisted through 2020, influenced by rates of 83.15%, before dropping to 73.78% in 2021. Although there was a slight decrease recently, the tax rate remained considerably higher than the initial level, indicating sustained tax expenses affecting cash flows.

Return on Invested Capital (ROIC)

Return on invested capital showed a pronounced increase from 23.16% in 2017 to a peak of 42.59% in 2019, reflecting highly effective use of capital to generate returns. This strong performance weakened notably in subsequent years, with ROIC decreasing to 34.62% in 2020 and dropping sharply to 10.86% in 2021. This downward trend highlights a significant decline in capital profitability in the most recent period.

The financial data reveals notable trends in profitability and revenue over the five-year period ending December 31, 2021. There is a general fluctuation in net operating profit before taxes (NOPBT), revenue, and operating profit margin (OPM) that merits detailed attention.

Net Operating Profit Before Taxes (NOPBT)

The NOPBT increased steadily from 2017 to 2019, rising from approximately $5.33 billion to $7.13 billion, indicating improving operational efficiency or favorable market conditions during this period. However, a decline is observed thereafter, dropping to around $5.26 billion in 2020 and sharply decreasing to roughly $2.04 billion in 2021. This significant downturn in 2021 suggests challenges impacting profitability.

Revenue

Revenue displayed an upward trend from 2017 to 2019, increasing from about $12.27 billion to $14.38 billion. Revenue then decreased slightly in 2020 to approximately $13.45 billion, followed by a more pronounced decline to roughly $10.98 billion in 2021. The revenue downturn in 2021 aligns with the sharp decline in profit metrics, indicating a potential reduction in sales volume, pricing pressures, or a shift in market demand.

Operating Profit Margin (OPM)

The operating profit margin shows a peak in 2019 at 49.6%, suggesting the highest efficiency or profitability relative to revenue during the period analyzed. The margin decreased to 39.1% in 2020 and continued to deteriorate significantly to 18.53% in 2021. This trend indicates reduced profitability per dollar of revenue, highlighting rising costs, decreased pricing power, or other inefficiencies emerging in the later years.

Overall, the period from 2017 to 2019 was marked by growth in revenue and improved profitability, culminating in peak operational performance in 2019. The subsequent years, particularly 2021, experienced marked declines in both revenue and profit metrics, with operating margin shrinking considerably. These changes may reflect external market pressures or internal operational challenges adversely affecting financial results.

Revenue Trends

The revenue exhibited a growth trend from 2017 to 2019, increasing from approximately 12.27 billion US dollars to 14.38 billion US dollars. However, the revenue declined in subsequent years, falling to roughly 13.45 billion US dollars in 2020 and further decreasing to 10.98 billion US dollars in 2021. This pattern suggests an initial period of growth followed by a notable contraction in revenue during the last two years under review.

Invested Capital Trends

Invested capital steadily increased over the period, starting at about 12.48 billion US dollars in 2017 and reaching approximately 13.82 billion US dollars by 2021. Although there was a slight decline in 2020 to around 12.63 billion US dollars, the overall trend remains upward. This consistent increase in invested capital reflects ongoing investment or asset growth activities.

Turnover of Capital (TO) Trends

The turnover of capital ratio was relatively stable and slightly improving from 0.98 in 2017 to 1.06 in 2020, indicating a gradual improvement in capital efficiency over these years. In 2021, however, the ratio dropped substantially to 0.79, signaling a decrease in the efficiency with which invested capital is being used to generate revenue.

Overall Insights

The data reveals a period of growth in revenue and capital efficiency until 2019-2020, after which both revenue and turnover of capital declined. Despite this, the invested capital continued to rise, suggesting that the company increased its investments even as revenue generation and capital turnover weakened. This divergence may warrant further examination of asset utilization and the effectiveness of recent capital expenditures.

Cash Operating Taxes

The cash operating taxes exhibit a consistent downward trend over the five-year period. Beginning at approximately 2.44 billion USD in 2017, the amount decreases each year, reaching about 0.53 billion USD by 2021. This represents a significant reduction exceeding 75% from the initial value, suggesting either improved tax efficiency, changes in taxable income, or other tax planning strategies affecting cash outflows for taxes.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes initially increases from roughly 5.33 billion USD in 2017 to a peak of approximately 7.13 billion USD in 2019. However, there is a marked decline in the subsequent years, falling to around 5.26 billion USD in 2020 and further sharply decreasing to approximately 2.04 billion USD by 2021. This pattern indicates a period of growth followed by a significant downturn in operational profitability before tax considerations, particularly pronounced in the last two years.

Effective Cash Tax Rate (CTR)

The effective cash tax rate shows notable variability and a general declining trend from 2017 through 2019. Starting at 45.79% in 2017, it decreases substantially to 15.53% by 2019. There is a slight increase in 2020 to 16.85%, followed by a more considerable rise to 26.22% in 2021. These fluctuations imply changes in tax policies, the composition of taxable income, or the application of tax credits or deductions impacting the rate at which taxes were paid on operating profits.

Combined Analysis

The simultaneous reduction in cash operating taxes and effective cash tax rate from 2017 to 2019 aligns with the period of increasing NOPBT, suggesting improved tax efficiency or benefits received in that timeframe. The decrease in NOPBT in 2020 and 2021 likely contributed to the reduction in cash operating taxes despite the rise in effective tax rate in 2021, indicating that lower operating profits drove the lower tax payments, albeit taxed at a higher rate comparatively. Overall, the data reflects a shift from strong growth and high profitability early on to a decline in profitability with varying tax impacts in recent years.