Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Paying user area
Try for free
Celgene Corp. pages available for free this week:
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Celgene Corp. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Celgene Corp., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2018 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT showed a generally positive trend over the period, starting at 1,826 million US dollars at the end of 2014. It experienced a slight decline in 2015, decreasing to 1,787 million, followed by a modest recovery to 1,954 million in 2016 and a slight dip to 1,913 million in 2017. A significant increase was observed in 2018, where NOPAT more than doubled to 4,676 million US dollars.
- Cost of Capital
- The cost of capital exhibited a steady downward trend during the reviewed period. It decreased from 17.96% at the end of 2014 to 15.28% by the end of 2018, indicating a gradual reduction in the required return rate or discount rate applied to the invested capital over time.
- Invested Capital
- Invested capital increased substantially throughout the period, rising from 9,844 million US dollars at the end of 2014 to 27,773 million by the end of 2018. There was a notable jump between 2014 and 2015, with a near doubling, and a continued gradual rise through 2018. This upward movement suggests significant capital deployment or asset growth during these years.
- Economic Profit
- Economic profit demonstrated a challenging trend initially, starting with a slight positive value of 58 million US dollars in 2014, followed by consistent negative results in 2015 (-1,203 million), 2016 (-1,174 million), and 2017 (-1,095 million). However, there was a marked recovery in 2018, yielding a positive economic profit of 432 million US dollars. This pattern indicates that despite increased invested capital and steady NOPAT, the company was not generating sufficient returns to cover its cost of capital until the final year of the period analyzed.
Net Operating Profit after Taxes (NOPAT)
Celgene Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2018 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2018 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income.
8 2018 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
- Net Income
- The net income demonstrates a fluctuating yet generally upward trend over the five-year period. Starting at $2,000 million in 2014, it experienced a notable decline to $1,602 million in 2015. This was followed by a recovery in 2016, reaching $1,999 million, subsequently increasing more substantially in 2017 to $2,940 million. The most significant growth occurred in 2018, with net income reaching $4,046 million, more than doubling the 2015 low point and exceeding the 2014 figure by a substantial margin. This trend suggests an overall improvement in profitability, with a particularly strong performance in the final year under review.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT shows a more consistent pattern over the period, with marginal fluctuations between 2014 and 2017. It started at $1,826 million in 2014, experienced a slight decrease to $1,787 million in 2015, then increased moderately to $1,954 million in 2016, before a small decrease to $1,913 million in 2017. A significant increase occurred in 2018, with NOPAT more than doubling to $4,676 million. This sharp rise contrasts with the relative stability of previous years and indicates a substantial improvement in operational efficiency or profitability in 2018. The disparity between net income and NOPAT values also suggests changes in tax impact or non-operating items affecting earnings.
- Overall Analysis
- Both net income and NOPAT reveal a period of relative stability or moderate variation from 2014 to 2017, followed by significant growth in 2018. The sharp increase in 2018 for both metrics represents a notable positive shift in financial performance. While net income shows some volatility, NOPAT is comparatively stable until the final year, indicating consistent operating profitability prior to the substantial improvement. The data suggests the company may have implemented effective strategies or benefited from market conditions that dramatically enhanced profitability and operational results in 2018.
Cash Operating Taxes
Celgene Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Provision for taxes on income
- The provision for taxes on income exhibited fluctuations over the observed period. Starting at $328 million in 2014, it increased to $422 million in 2015, then decreased to $373 million in 2016. A significant rise occurred in 2017, reaching $1,374 million, followed by a notable decline to $786 million in 2018. This pattern indicates volatility in the tax obligations estimated for income taxes, with a pronounced peak in 2017.
- Cash operating taxes
- Cash operating taxes showed a similar volatile pattern. Beginning at $654 million in 2014, the value fell to $555 million in 2015, then rose substantially to $884 million in 2016. A dramatic increase was observed in 2017, peaking at $2,853 million. The following year, 2018, saw a sharp decrease to $903 million. This trend suggests a significant variation in the actual cash tax payments, with the highest cash outflow recorded in 2017.
- Comparative insights
- Both provisions for income taxes and cash operating taxes demonstrate notable volatility with peaks in 2017. The magnitude of cash operating taxes consistently exceeds the provision for taxes, particularly evident in 2017 when cash taxes were more than double the provision amount. This discrepancy might indicate timing differences or adjustments between accrued tax expenses and actual cash payments during these periods.
- Overall trend
- The data reveals inconsistent patterns in both tax provisions and cash taxes over the five years, with a significant spike in 2017 followed by a decrease in 2018. The spikes may be linked to underlying changes in earnings, tax planning strategies, or external tax regulations affecting the company’s tax liabilities and payments.
Invested Capital
Celgene Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of debt securities available-for-sale and equity investments with readily determinable fair values.
- Total reported debt & leases
- The total reported debt and leases exhibited a significant upward trend over the five-year period. Starting at $7,068 million in 2014, the figure more than doubled by 2015 to $14,456 million. It then remained relatively stable in 2016 around $14,480 million before increasing consistently to reach $20,645 million by 2018. This indicates a growing reliance on debt and lease obligations to finance operations or investments during this timeframe.
- Stockholders’ equity
- Stockholders’ equity showed some fluctuations with no clear positive trend. The equity started at $6,525 million in 2014, decreased to $5,919 million in 2015, then increased gradually in 2016 and 2017 to reach $6,921 million. However, in 2018, equity declined again to $6,161 million. This pattern may suggest variability in retained earnings, issuance or repurchase of shares, or other equity-related activities affecting the net book value of shareholders' investment.
- Invested capital
- Invested capital expanded substantially over the period assessed. It nearly doubled from $9,844 million in 2014 to $18,136 million in 2015 and then continued to grow steadily to $18,672 million in 2016 and $18,857 million in 2017. A marked increase occurred in 2018, with invested capital soaring to $27,773 million. This substantial growth points to increased capital deployment into long-term assets or working capital, possibly reflecting strategic expansion or acquisition initiatives supported partially by rising debt levels.
Cost of Capital
Celgene Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2017-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2016-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2015-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2014-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Celgene Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2018 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit showed significant volatility over the analyzed periods. Beginning with a positive figure of $58 million at the end of 2014, it sharply declined to negative values in subsequent years, reaching its lowest point at -$1,203 million in 2015. The negative trend continued, with economic profit remaining substantially negative through 2016 and 2017, although there was a slight improvement from -$1,203 million to -$1,095 million over these years. In 2018, the company returned to a positive economic profit of $432 million, indicating a recovery from previous losses.
- Invested Capital
- Invested capital consistently increased throughout the period. Starting at $9,844 million in 2014, it nearly doubled by the end of 2015 to $18,136 million and showed further growth in the following years. This steady increase continued into 2018, where invested capital peaked at $27,773 million. This trend suggests significant expansion and investment activities over the five-year span.
- Economic Spread Ratio
- The economic spread ratio experienced notable fluctuations. It began at a positive 0.59% in 2014, then plunged into negative territory, reflecting inefficient capital use or higher costs of capital relative to returns. The ratio reached its lowest point at -6.63% in 2015 and remained negative in 2016 and 2017, slightly improving from -6.63% to -5.81%. By 2018, the economic spread ratio rebounded to a positive 1.55%, suggesting a restoration of value generation over the capital invested.
- Overall Trends and Insights
- Overall, the data indicates that the company underwent a challenging phase from 2015 through 2017, characterized by significant economic losses and negative capital efficiency despite increasing invested capital. The recovery signs in 2018, with positive economic profit and economic spread ratio, imply improved financial performance and better returns on capital invested. The expanding invested capital base across the years reflects sustained investment and growth efforts, which may have contributed to the eventual positive turnaround.
Economic Profit Margin
Celgene Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Net product sales | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted net product sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Economic profit. See details »
2 2018 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net product sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Adjusted Net Product Sales
- The adjusted net product sales demonstrated a consistent upward trend throughout the analyzed period. Starting from US$7,569 million in 2014, sales increased steadily each year, reaching US$15,302 million by the end of 2018. This reflects a strong growth trajectory in revenue generation over the five-year span.
- Economic Profit
- The economic profit exhibited significant volatility during the period. It began with a positive value of US$58 million in 2014, followed by a sharp decline to negative figures exceeding US$1 billion in losses for three consecutive years (2015: -US$1,203 million; 2016: -US$1,174 million; 2017: -US$1,095 million). By 2018, economic profit rebounded to a positive US$432 million. This suggests the company faced substantial economic challenges mid-period but managed to recover by the end of 2018.
- Economic Profit Margin
- The economic profit margin mirrored the pattern observed in economic profit. It started marginally positive at 0.77% in 2014, then declined dramatically into negative territory, hitting -13.08% in 2015. Although there was a slight improvement over the next two years (-10.51% in 2016 and -8.42% in 2017), the margin remained negative until 2018, when it shifted back to positive at 2.82%. This indicates that despite growing sales, profitability relative to sales struggled for much of the period before improving in the final year analyzed.