Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Biogen Inc., EBITDA calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The financial performance of Biogen Inc. between 2017 and 2021 is characterized by a period of growth peaking in 2019, followed by a significant contraction in profitability through 2021. This trend is consistently reflected across all primary earnings metrics, including EBITDA, EBIT, EBT, and Net Income.
- EBITDA Performance Trajectory
- Earnings before interest, tax, depreciation and amortization exhibited a positive growth trend from 2017 to 2019, rising from 6,460,600 thousand US$ to a peak of 7,698,600 thousand US$. However, a sharp reversal occurred after 2019. EBITDA declined to 5,732,500 thousand US$ in 2020 and experienced a further substantial drop to 2,521,400 thousand US$ by December 31, 2021, representing a total decrease of approximately 67% from the 2019 peak.
- Correlation Between Operating and Net Earnings
- A strong positive correlation is observed between EBITDA and Net Income. Both metrics reached their maximum values in 2019 and declined concurrently thereafter. The contraction in Net Income was more severe than that of EBITDA; while EBITDA fell to roughly one-third of its peak by 2021, Net Income decreased from 5,888,500 thousand US$ in 2019 to 1,556,100 thousand US$ in 2021, indicating an intensified impact on the bottom line relative to operational cash flow proxies.
- Analysis of Non-Cash Charges
- The variance between EBITDA and EBIT, which represents depreciation and amortization, showed a notable decrease from 2017 to 2019. In 2017, the difference was 1,081,000 thousand US$, which narrowed to 464,700 thousand US$ by 2019. From 2019 to 2021, these non-cash charges remained relatively stable, fluctuating between 457,200 thousand US$ and 487,700 thousand US$, suggesting that the precipitous decline in EBITDA was driven by operational factors or revenue losses rather than an increase in depreciation and amortization expenses.
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Enterprise Value to EBITDA Ratio, Current
Biogen Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 42,927,124) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 2,521,400) |
| Valuation Ratio | |
| EV/EBITDA | 17.03 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| AbbVie Inc. | 30.03 |
| Amgen Inc. | 15.96 |
| Bristol-Myers Squibb Co. | 10.69 |
| Danaher Corp. | 24.71 |
| Eli Lilly & Co. | 40.15 |
| Gilead Sciences Inc. | 15.05 |
| Johnson & Johnson | 16.60 |
| Merck & Co. Inc. | 14.22 |
| Pfizer Inc. | 12.81 |
| Regeneron Pharmaceuticals Inc. | 12.93 |
| Thermo Fisher Scientific Inc. | 24.32 |
| Vertex Pharmaceuticals Inc. | 26.07 |
| EV/EBITDA, Sector | |
| Pharmaceuticals, Biotechnology & Life Sciences | 22.08 |
| EV/EBITDA, Industry | |
| Health Care | 20.39 |
Based on: 10-K (reporting date: 2021-12-31).
1 Click competitor name to see calculations.
If the company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.
Otherwise, if the company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.
Enterprise Value to EBITDA Ratio, Historical
Biogen Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 35,890,898) | 44,904,281) | 60,176,147) | 67,941,735) | 75,435,189) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 2,521,400) | 5,732,500) | 7,698,600) | 6,750,700) | 6,460,600) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 14.23 | 7.83 | 7.82 | 10.06 | 11.68 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| AbbVie Inc. | 13.44 | — | — | — | — | |
| Amgen Inc. | 13.22 | — | — | — | — | |
| Bristol-Myers Squibb Co. | 8.65 | — | — | — | — | |
| Danaher Corp. | 21.05 | — | — | — | — | |
| Eli Lilly & Co. | 29.86 | — | — | — | — | |
| Gilead Sciences Inc. | 8.57 | — | — | — | — | |
| Johnson & Johnson | 14.47 | — | — | — | — | |
| Merck & Co. Inc. | 12.18 | — | — | — | — | |
| Pfizer Inc. | 8.64 | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 6.68 | — | — | — | — | |
| Thermo Fisher Scientific Inc. | 20.21 | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | 18.92 | — | — | — | — | |
| EV/EBITDA, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 13.16 | — | — | — | — | |
| EV/EBITDA, Industry | ||||||
| Health Care | 14.33 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
3 2021 Calculation
EV/EBITDA = EV ÷ EBITDA
= 35,890,898 ÷ 2,521,400 = 14.23
4 Click competitor name to see calculations.
Between 2017 and 2021, a consistent and significant decline in enterprise value was observed, falling from 75.4 billion US dollars to 35.9 billion US dollars. During the same period, operational profitability, as measured by EBITDA, exhibited a non-linear trend, peaking in 2019 at 7.7 billion US dollars before experiencing a sharp contraction to 2.5 billion US dollars by the end of 2021.
- EV/EBITDA Ratio Compression (2017–2020)
- The EV/EBITDA ratio trended downward from 11.68 in 2017 to a low of 7.82 in 2019. This compression was driven by a combination of decreasing enterprise value and increasing EBITDA, suggesting that the company's operational earnings were growing relative to its overall valuation. This stability persisted into 2020, with the ratio remaining nearly flat at 7.83.
- Valuation Expansion (2021)
- A sharp reversal occurred in 2021, with the ratio spiking to 14.23. While the enterprise value continued its downward trajectory, the decline in EBITDA was significantly more aggressive, falling by approximately 56% year-over-year. The resulting increase in the ratio indicates that the erosion of operational earnings outpaced the reduction in enterprise value.
- Overall Financial Trajectory
- The five-year period reveals a transition from a high-valuation environment with stable earnings to a lower-valuation environment characterized by diminished operational profitability. The peak ratio in 2021 reflects a deterioration in the fundamental relationship between the company's market value and its ability to generate cash flow from operations.
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