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 – 14.48% × -117,411 = -443,022
The analysis of economic profit from 2018 to 2022 reveals a consistent failure to generate value above the cost of capital, characterized by a significant acceleration of losses in the final two years of the period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT remained negative throughout the observed five-year duration, indicating that the company did not achieve operational profitability. A temporary improvement was noted in 2020, where losses narrowed to -31.57 million USD. However, this was followed by a sharp downward trajectory, with losses expanding to -193.08 million USD in 2021 and further deteriorating to -460.02 million USD by December 31, 2022.
- Cost of Capital
- The cost of capital exhibited relative stability, fluctuating within a tight range between a high of 15.42% in 2018 and a low of 14.03% in 2020. The consistency of this percentage suggests that the decline in economic profit was driven by operational performance rather than changes in the risk profile or the cost of financing.
- Invested Capital
- Invested capital demonstrated significant volatility and was negative for the majority of the period. Values remained negative from 2018 through 2020, shifted to a positive 91.72 million USD in 2021, and returned to a negative 117.41 million USD in 2022. The prevalence of negative invested capital suggests that the entity's liabilities and working capital structures frequently exceeded its long-term asset investments.
- Economic Profit
- Economic profit remained negative across the entire timeframe, signifying continuous value destruction. While the loss was most contained in 2020 at -19.23 million USD, the trend shifted aggressively thereafter. The economic profit plummeted to -443.02 million USD by the end of 2022, reflecting a substantial gap between the operating returns and the required return on capital.
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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 $117.4 million, reflecting a significant decrease in net capital invested in the company.
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Cost of Capital
Cytokinetics Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 4,102,408) | 4,102,408) | ÷ | 5,023,043) | = | 0.82 | 0.82 | × | 16.80% | = | 13.72% | ||
| Debt3 | 780,911) | 780,911) | ÷ | 5,023,043) | = | 0.16 | 0.16 | × | 4.61% × (1 – 21.00%) | = | 0.57% | ||
| Operating lease liability4 | 139,724) | 139,724) | ÷ | 5,023,043) | = | 0.03 | 0.03 | × | 8.70% × (1 – 21.00%) | = | 0.19% | ||
| Total: | 5,023,043) | 1.00 | 14.48% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ 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 | × | 16.80% | = | 13.26% | ||
| 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 | 15.06% | ||||||||||
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 | × | 16.80% | = | 11.08% | ||
| 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 | 14.03% | ||||||||||
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 | × | 16.80% | = | 13.42% | ||
| 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 | 15.18% | ||||||||||
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 | × | 16.80% | = | 14.48% | ||
| 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 | 15.42% | ||||||||||
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 | (443,022) | (206,892) | (19,226) | (103,308) | (93,839) | |
| Invested capital2 | (117,411) | 91,721) | (87,987) | (106,877) | (78,273) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | — | -225.57% | — | — | — | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 5.54% | 4.92% | — | — | — | |
| Amgen Inc. | 6.84% | 6.84% | — | — | — | |
| Bristol-Myers Squibb Co. | -1.15% | 1.14% | — | — | — | |
| Danaher Corp. | -6.63% | -5.80% | — | — | — | |
| Eli Lilly & Co. | 8.58% | 10.25% | — | — | — | |
| Gilead Sciences Inc. | -0.22% | 6.80% | — | — | — | |
| Johnson & Johnson | 5.35% | 10.41% | — | — | — | |
| Merck & Co. Inc. | 11.31% | 11.47% | — | — | — | |
| Pfizer Inc. | 18.02% | 11.19% | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 18.86% | 62.61% | — | — | — | |
| Thermo Fisher Scientific Inc. | -6.97% | -4.95% | — | — | — | |
| Vertex Pharmaceuticals Inc. | 13.91% | 15.12% | — | — | — | |
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 × -443,022 ÷ -117,411 = —
4 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by persistent negative economic profit and significant volatility in invested capital, indicating a consistent failure to generate economic value above the cost of capital.
- Economic Profit Trends
- Economic profit remained negative throughout the entire five-year period. While a temporary improvement was observed in 2020, with losses narrowing to -19.23 million, a sharp downward trajectory followed. Losses expanded to -206.89 million in 2021 and further deteriorated to -443.02 million by the end of 2022, representing a substantial acceleration in value erosion.
- Invested Capital Volatility
- Invested capital exhibited an unstable pattern, fluctuating between negative and positive values. The metric remained negative from 2018 through 2020, shifted to a positive 91.72 million in 2021, and reverted to a negative -117.41 million in 2022. This volatility suggests an inconsistent capital base, which impacts the stability of economic value calculations.
- Economic Spread Ratio Interpretation
- The economic spread ratio was recorded only for the 2021 fiscal year at -225.57%. This deeply negative ratio confirms that the return on invested capital was significantly lower than the weighted average cost of capital, highlighting a critical deficit in the company's ability to create economic wealth during that period.
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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 | (443,022) | (206,892) | (19,226) | (103,308) | (93,839) | |
| 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 | -5,838.45% | -293.76% | -13.46% | -384.50% | -297.89% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | 7.84% | 8.39% | — | — | — | |
| Amgen Inc. | 10.96% | 11.33% | — | — | — | |
| Bristol-Myers Squibb Co. | -1.79% | 1.98% | — | — | — | |
| Danaher Corp. | -16.47% | -14.49% | — | — | — | |
| Eli Lilly & Co. | 7.30% | 9.45% | — | — | — | |
| Gilead Sciences Inc. | -0.37% | 12.03% | — | — | — | |
| Johnson & Johnson | 6.41% | 10.89% | — | — | — | |
| Merck & Co. Inc. | 14.10% | 16.66% | — | — | — | |
| Pfizer Inc. | 19.72% | 11.94% | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 18.99% | 42.34% | — | — | — | |
| Thermo Fisher Scientific Inc. | -12.85% | -10.06% | — | — | — | |
| Vertex Pharmaceuticals Inc. | 20.52% | 18.74% | — | — | — | |
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 × -443,022 ÷ 7,588 = -5,838.45%
3 Click competitor name to see calculations.
The analysis of economic value added indicates a period of significant financial instability and increasing economic losses between 2018 and 2022. A persistent inability to generate positive economic profit is evident, with a marked deterioration in the final two years of the period analyzed.
- Economic Profit Trends
- Economic profit remained negative throughout the entire duration. While there was a temporary improvement in 2020, where losses narrowed to US$ 19.2 million, the subsequent years saw a rapid acceleration in economic losses. By 2022, the economic profit reached its lowest point at negative US$ 443 million, representing a substantial increase in the cost of capital and operating deficits relative to returns.
- Adjusted Revenue Volatility
- Adjusted revenues exhibited extreme fluctuations, peaking in 2020 at US$ 142.8 million before declining sharply to US$ 7.6 million by 2022. This precipitous drop in revenue coincided with the widening economic losses, suggesting an inability to sustain revenue streams while capital requirements or operating costs continued to escalate.
- Economic Profit Margin Analysis
- The economic profit margin reflects a severe disconnect between revenue generation and economic value creation. The margin improved significantly in 2020 to -13.46% as a direct result of the revenue spike. However, the margin collapsed to -5,838.45% in 2022. This extreme negative percentage is the result of the simultaneous occurrence of the highest recorded economic loss and the lowest recorded adjusted revenue, indicating that the economic cost of operations now vastly exceeds the revenue-generating capacity.
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