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.
Economic Profit
Cytokinetics Inc., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= -460,021 – 14.53% × -117,411 = -442,963
The financial performance from 2018 to 2022 is characterized by consistent negative economic profit, indicating a sustained failure to generate returns that exceed the cost of capital. The trajectory shows a period of relative stability followed by a significant acceleration in value destruction during the final two years.
- Net Operating Profit After Taxes (NOPAT)
- Operational losses persisted throughout the entire analysis period. A notable temporary improvement occurred in 2020, where losses narrowed to -31,573 thousand US dollars. However, this trend reversed sharply in 2021 and 2022, with NOPAT declining to -460,021 thousand US dollars by the end of 2022, suggesting a substantial increase in operating expenses or a decrease in operating efficiency.
- Cost of Capital and Invested Capital
- The cost of capital remained remarkably stable, fluctuating minimally between a high of 15.47% in 2018 and a low of 14.07% in 2020. Invested capital demonstrated significant volatility and atypical movement, maintaining negative balances from 2018 to 2020, shifting to a positive 91,721 thousand US dollars in 2021, and returning to a negative -117,411 thousand US dollars in 2022.
- Economic Profit Analysis
- Economic profit remained negative for all five years, confirming that the entity did not create economic value. The most favorable position was reached in 2020 with an economic profit of -19,191 thousand US dollars. Subsequent years witnessed a rapid deterioration, culminating in a loss of -442,963 thousand US dollars in 2022. The close correlation between the widening NOPAT losses and the decline in economic profit indicates that operational performance was the primary driver of value erosion.
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Net Operating Profit after Taxes (NOPAT)
Cytokinetics Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net loss.
4 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 139,724 × 8.70% = 12,156
5 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 31,570 × 21.00% = 6,630
6 Addition of after taxes interest expense to net loss.
7 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 11,400 × 21.00% = 2,394
8 Elimination of after taxes investment income.
- Net Loss Trend
- The net loss demonstrates a consistent and significant increase over the five-year period. Beginning at approximately -106.3 million US dollars at the end of 2018, the net loss gradually worsened to -121.7 million in 2019 and further to -127.3 million in 2020. A sharper escalation is observed in 2021, with the net loss reaching approximately -215.3 million US dollars, followed by a substantial further decline to -389.0 million US dollars in 2022. This indicates increasing expenses, reduced revenues, or other factors contributing to growing financial challenges over time.
- Net Operating Profit After Taxes (NOPAT) Trend
- NOPAT follows a somewhat different trajectory from net loss but remains negative throughout the observed period. It starts at around -105.9 million US dollars in 2018 and deteriorates slightly to -119.5 million in 2019. In 2020, there is a notable improvement, with NOPAT improving substantially to approximately -31.6 million US dollars, indicating either a reduction in operating losses or improved operational efficiency during that year. However, this improvement is not sustained, as NOPAT declines sharply in 2021 to around -193.1 million, and further worsens to an estimated -460.0 million US dollars by the end of 2022. This sharp downturn in recent years suggests significant operational challenges impacting profitability after taxes.
- Overall Financial Performance Insights
- The increasing net losses alongside the fluctuating but largely negative NOPAT values suggest persistent financial difficulties with a notable deterioration in both net loss and operating profitability in the last two years of the data. The brief improvement in NOPAT in 2020 could reflect transient operational efficiencies or cost management, which were not maintained amid subsequent increases in losses. This pattern may warrant a deeper investigation into the underlying causes such as increased expenses, investments, or operational disruptions in the 2021 and 2022 periods.
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Cash Operating Taxes
Cytokinetics Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 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).
The data presents a clear upward trend in cash operating taxes for the company over the observed period from December 31, 2018, to December 31, 2022. Starting at 102 thousand US dollars in 2018, the cash operating taxes increased significantly each year, peaking at 5,911 thousand US dollars by the end of 2021. However, in 2022, there was a noticeable decline to 4,236 thousand US dollars, indicating a reduction of approximately 28% from the previous year.
The absence of values for the income tax provision across all periods indicates either that such data was not reported or that there were no income tax provisions recognized during these years.
Overall, the cash operating taxes show a consistent upward trajectory with the exception of the last year, where a decline suggests possible changes in tax policy, operational conditions, or other factors impacting the tax liability related to cash operations. The lack of income tax provision data limits the ability to analyze comprehensive tax expense trends.
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Invested Capital
Cytokinetics Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 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).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of deferred revenue.
4 Addition of equity equivalents to stockholders’ equity (deficit).
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of available-for-sale investments.
- Total reported debt & leases
- The total reported debt and leases show a consistent and significant upward trend over the five-year period. Beginning at $52.8 million in 2018, the figure rose sharply to $136.1 million in 2019 and remained relatively stable in 2020. From 2020 onwards, the debt level surged substantially, reaching $271.2 million in 2021 and further increasing to $751.3 million by the end of 2022. This dramatic rise in debt indicates a growing reliance on external financing or obligations over time.
- Stockholders’ equity (deficit)
- Stockholders’ equity exhibits considerable volatility throughout the period. Initially, it was positive at $25.9 million in 2018. However, it turned negative in 2019, reflecting a deficit of approximately $10.9 million. The position improved markedly in 2020 and 2021, reaching a peak value of $243.9 million in 2021, indicating a strong equity base during these years. Nevertheless, by the end of 2022, stockholders’ equity declined sharply into a deficit of $107.9 million, suggesting a deterioration in the company’s net asset position in the most recent year.
- Invested capital
- Invested capital remained negative for the majority of the analyzed period, starting at a deficit of $78.3 million in 2018 and worsening slightly to $106.9 million in 2019. There was a modest improvement in 2020, yet the figure remained negative. A notable positive shift occurred in 2021, with invested capital rising to a positive $91.7 million, implying effective investment and capital utilization during that year. This positive trend was reversed in 2022, with invested capital declining sharply back into negative territory at $117.4 million, reflecting a significant decrease in net capital invested in the company.
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Cost of Capital
Cytokinetics Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 4,102,408) | 4,102,408) | ÷ | 5,023,043) | = | 0.82 | 0.82 | × | 16.86% | = | 13.77% | ||
| Debt3 | 780,911) | 780,911) | ÷ | 5,023,043) | = | 0.16 | 0.16 | × | 4.61% × (1 – 21.00%) | = | 0.57% | ||
| Operating lease liability4 | 139,724) | 139,724) | ÷ | 5,023,043) | = | 0.03 | 0.03 | × | 8.70% × (1 – 21.00%) | = | 0.19% | ||
| Total: | 5,023,043) | 1.00 | 14.53% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 2,971,658) | 2,971,658) | ÷ | 3,766,355) | = | 0.79 | 0.79 | × | 16.86% | = | 13.30% | ||
| Debt3 | 667,605) | 667,605) | ÷ | 3,766,355) | = | 0.18 | 0.18 | × | 11.01% × (1 – 21.00%) | = | 1.54% | ||
| Operating lease liability4 | 127,092) | 127,092) | ÷ | 3,766,355) | = | 0.03 | 0.03 | × | 10.00% × (1 – 21.00%) | = | 0.27% | ||
| Total: | 3,766,355) | 1.00 | 15.11% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,331,901) | 1,331,901) | ÷ | 2,020,026) | = | 0.66 | 0.66 | × | 16.86% | = | 11.12% | ||
| Debt3 | 684,900) | 684,900) | ÷ | 2,020,026) | = | 0.34 | 0.34 | × | 10.98% × (1 – 21.00%) | = | 2.94% | ||
| Operating lease liability4 | 3,225) | 3,225) | ÷ | 2,020,026) | = | 0.00 | 0.00 | × | 11.50% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 2,020,026) | 1.00 | 14.07% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 883,433) | 883,433) | ÷ | 1,105,896) | = | 0.80 | 0.80 | × | 16.86% | = | 13.47% | ||
| Debt3 | 215,652) | 215,652) | ÷ | 1,105,896) | = | 0.20 | 0.20 | × | 11.13% × (1 – 21.00%) | = | 1.71% | ||
| Operating lease liability4 | 6,811) | 6,811) | ÷ | 1,105,896) | = | 0.01 | 0.01 | × | 9.00% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 1,105,896) | 1.00 | 15.23% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 329,879) | 329,879) | ÷ | 382,647) | = | 0.86 | 0.86 | × | 16.86% | = | 14.54% | ||
| Debt3 | 42,413) | 42,413) | ÷ | 382,647) | = | 0.11 | 0.11 | × | 8.57% × (1 – 21.00%) | = | 0.75% | ||
| Operating lease liability4 | 10,355) | 10,355) | ÷ | 382,647) | = | 0.03 | 0.03 | × | 8.57% × (1 – 21.00%) | = | 0.18% | ||
| Total: | 382,647) | 1.00 | 15.47% | ||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Cytokinetics Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | (442,963) | (206,937) | (19,191) | (103,255) | (93,797) | |
| Invested capital2 | (117,411) | 91,721) | (87,987) | (106,877) | (78,273) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | — | -225.62% | — | — | — | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 5.50% | 4.88% | — | — | — | |
| Amgen Inc. | 6.80% | 6.80% | — | — | — | |
| Bristol-Myers Squibb Co. | -1.19% | 1.10% | — | — | — | |
| Danaher Corp. | -6.68% | -5.85% | — | — | — | |
| Eli Lilly & Co. | 8.53% | 10.20% | — | — | — | |
| Gilead Sciences Inc. | -0.26% | 6.76% | — | — | — | |
| Johnson & Johnson | 5.30% | 10.36% | — | — | — | |
| Merck & Co. Inc. | 11.26% | 11.43% | — | — | — | |
| Pfizer Inc. | 17.97% | 11.14% | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 18.81% | 62.56% | — | — | — | |
| Thermo Fisher Scientific Inc. | -7.02% | -5.00% | — | — | — | |
| Vertex Pharmaceuticals Inc. | 13.86% | 15.07% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -442,963 ÷ -117,411 = —
4 Click competitor name to see calculations.
The financial trajectory from 2018 through 2022 is characterized by persistent economic losses and significant instability in the invested capital base, indicating a sustained inability to generate returns exceeding the cost of capital.
- Economic Profit Trends
- Economic profit remained negative throughout the analyzed period. A temporary improvement was noted in 2020, where losses narrowed to -19.19 million USD. However, this was followed by a sharp deterioration, with losses expanding to -206.94 million USD in 2021 and further accelerating to -442.96 million USD by the end of 2022. This downward trend indicates a widening gap between operating returns and the cost of financing.
- Invested Capital Volatility
- Invested capital exhibited high volatility and frequent negative values. From 2018 to 2020, the figure remained negative, fluctuating between -78.27 million USD and -106.88 million USD. A significant deviation occurred in 2021, when invested capital shifted to a positive 91.72 million USD, before returning to a negative position of -117.41 million USD in 2022. Such fluctuations suggest substantial changes in the balance sheet structure or capital deployment strategies.
- Economic Spread Ratio Analysis
- The economic spread ratio, reported only for 2021, was -225.62%. This deeply negative value confirms a substantial deficit between the return on invested capital and the cost of capital during that year, signifying significant value destruction relative to the capital employed.
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Economic Profit Margin
Cytokinetics Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | (442,963) | (206,937) | (19,191) | (103,255) | (93,797) | |
| Revenues | 94,588) | 70,428) | 55,828) | 26,868) | 31,501) | |
| Add: Increase (decrease) in deferred revenue | (87,000) | —) | 87,000) | —) | —) | |
| Adjusted revenues | 7,588) | 70,428) | 142,828) | 26,868) | 31,501) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -5,837.67% | -293.83% | -13.44% | -384.31% | -297.76% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | 7.78% | 8.32% | — | — | — | |
| Amgen Inc. | 10.89% | 11.26% | — | — | — | |
| Bristol-Myers Squibb Co. | -1.85% | 1.91% | — | — | — | |
| Danaher Corp. | -16.61% | -14.62% | — | — | — | |
| Eli Lilly & Co. | 7.26% | 9.40% | — | — | — | |
| Gilead Sciences Inc. | -0.45% | 11.96% | — | — | — | |
| Johnson & Johnson | 6.35% | 10.84% | — | — | — | |
| Merck & Co. Inc. | 14.04% | 16.59% | — | — | — | |
| Pfizer Inc. | 19.67% | 11.89% | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 18.94% | 42.30% | — | — | — | |
| Thermo Fisher Scientific Inc. | -12.94% | -10.17% | — | — | — | |
| Vertex Pharmaceuticals Inc. | 20.45% | 18.67% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -442,963 ÷ 7,588 = -5,837.67%
3 Click competitor name to see calculations.
The analysis of economic value added reveals a consistent failure to generate positive economic profit between 2018 and 2022, characterized by losses that consistently exceeded the returns on invested capital. The period is marked by extreme volatility in both revenue generation and the resulting economic margins.
- Economic Profit Trajectory
- Absolute economic profit remained negative throughout the five-year period. A temporary and significant improvement occurred in 2020, where losses narrowed to -19.19 million USD from -103.26 million USD in 2019. This recovery was short-lived, as losses expanded rapidly in subsequent years, reaching -206.94 million USD in 2021 and peaking at -442.96 million USD by the end of 2022.
- Adjusted Revenue Volatility
- Revenue streams exhibited substantial instability. Following a slight decline between 2018 and 2019, a sharp increase was observed in 2020, with revenues peaking at 142.83 million USD. This peak was followed by a precipitous decline over the next two years, resulting in a five-year low of 7.59 million USD by December 31, 2022.
- Economic Profit Margin Analysis
- The economic profit margin demonstrates a critical deterioration. While the margin reached its most favorable point in 2020 at -13.44%, the subsequent collapse in adjusted revenues coupled with increasing economic losses led to a severe margin expansion in the negative direction. By 2022, the economic profit margin reached -5,837.67%, indicating that economic losses were vastly disproportionate to the generated revenue.
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