Gilead Sciences Inc. (NASDAQ:GILD)

The analysis of the financial data reveals several notable trends in the intangible asset categories over the five-year period.

Goodwill

The goodwill balance shows a relatively stable trend, with a slight increase from 8,108 million in 2020 to 8,332 million in 2021, followed by minor fluctuations stabilizing at 8,314 million from 2022 through 2024.

Specific Intangible Assets

Sofosbuvir remains constant at 10,720 million throughout the period, indicating no impairment or additional acquisitions related to this asset. Similarly, Axicabtagene ciloleucel increased from 6,200 million in 2020 to 7,110 million in 2021, maintaining that level afterward.

Trodelvy exhibits a significant upward revision in value, rising from 4,600 million in 2020 to 5,630 million in 2021 and then sharply increasing to 11,730 million in 2023 and 2024, which may reflect enhanced valuation or development progress.

Hepcludex appears on the balance sheet starting 2021 at 845 million and remains steady thereafter.

Other intangible assets show modest variability, increasing from 1,376 million in 2020 to a peak of 1,611 million in 2021, followed by a slight decline and stabilization near 1,475 million in 2024.

Finite-lived Assets

The gross carrying amount of finite-lived assets rose steadily from 22,896 million in 2020 to 31,880 million in 2024, suggesting increased investments or acquisitions in this asset class.

Accumulated amortization also increases consistently in magnitude (a larger negative value), from -6,660 million in 2020 to -14,822 million in 2024, reflecting ongoing amortization expenses consistent with the growing gross base.

As a result, the net carrying amount of finite-lived assets rose moderately between 2020 and 2021, then decreased notably in 2022, recovered to a higher peak in 2023, and dropped again in 2024, suggesting uneven amortization or asset retirements impacting net values.

IPR&D and Indefinite-lived Assets

Both IPR&D and indefinite-lived assets follow an identical downward trajectory, starting at 16,890 million in 2020, decreasing gradually each year to 2,890 million by 2024. This significant decline likely reflects impairments, reclassifications, or completion of research projects leading to capitalization changes.

Total Intangible Assets and Goodwill plus Intangibles

The aggregate intangible assets decrease from 33,126 million in 2020 to 19,948 million in 2024, mirroring the decline in IPR&D and indefinite-lived assets.

Combining goodwill and intangible assets shows a similar declining pattern, falling from 41,234 million in 2020 to 28,262 million in 2024, reinforcing the observation of asset write-downs or disposals over the period.

Overall, the data indicates a relatively stable goodwill base, steady or increasing values in certain product-related intangibles such as Trodelvy, and significant reductions in research-related intangible assets. The gradual increase in finite-lived asset gross values alongside rising accumulated amortization suggests active asset management with ongoing amortization charges impacting net carrying amounts. The pronounced reduction in IPR&D and indefinite-lived assets highlights a trend of impairments or reclassifications, leading to a notable overall contraction in intangible asset values by 2024.

Total Assets

The reported total assets demonstrate a declining trend over the five-year period, decreasing from US$ 68,407 million in 2020 to US$ 58,995 million in 2024. This represents a reduction of approximately 13.8%. The adjusted total assets, which exclude goodwill, also follow a similar downward trajectory, falling from US$ 60,299 million in 2020 to US$ 50,681 million in 2024, marking a decrease of about 15.9%. This consistent decline in both reported and adjusted total assets suggests a contraction in the asset base over this timeframe.

Stockholders’ Equity

The reported total stockholders’ equity shows variability with an overall increase from US$ 18,202 million in 2020 to a peak of US$ 22,833 million in 2023, before declining to US$ 19,330 million in 2024. This indicates moderate growth followed by a decrease in the final year. Conversely, the adjusted stockholders’ equity, which removes goodwill effects, exhibits a more fluctuating pattern. It rises significantly from US$ 10,094 million in 2020 to a high of US$ 14,519 million in 2023 and then decreases notably to US$ 11,016 million in 2024. The adjusted equity remains substantially lower than the reported equity throughout the period, emphasizing the material impact of goodwill on the company’s reported equity.

Comparative Insights

The presence of goodwill notably elevates the reported total assets and stockholders’ equity compared to the adjusted values that exclude goodwill. Both asset and equity bases show a declining trend in the latest year after periods of relative stability or growth, which may necessitate further examination into the factors contributing to these declines. The more pronounced reduction in adjusted figures suggests that intangible assets classified as goodwill have experienced less volatility or impairment compared to other asset components.

Total Asset Turnover

The reported total asset turnover displays a gradual increase from 0.36 in 2020 to 0.48 in 2024, with a more pronounced rise between 2023 and 2024. The adjusted total asset turnover, which excludes goodwill, consistently shows higher values each year compared to the reported figures. It increased steadily from 0.40 in 2020 to 0.56 in 2024, indicating an improving efficiency in asset utilization over the period, especially when adjusted for goodwill.

Financial Leverage

Reported financial leverage declined from 3.76 in 2020 to 2.72 in 2023, suggesting a reduction in reliance on debt or liabilities relative to equity during this timeframe. However, there is a rebound to 3.05 in 2024. The adjusted financial leverage shows a higher magnitude consistently, starting at 5.97 in 2020 and declining to 3.71 in 2023, then increasing to 4.60 in 2024. This pattern implies that when goodwill is excluded, the leverage was initially much higher but followed a similar downward trajectory with a modest uptick in the final year.

Return on Equity (ROE)

Reported ROE exhibits high volatility, starting at a very low 0.68% in 2020, surging dramatically to 29.55% in 2021, then declining to 2.48% by 2024. The adjusted ROE, which excludes goodwill effects, mirrors this trend but at significantly higher levels, peaking at 48.87% in 2021 and falling to 4.36% in 2024. This reflects considerable fluctuations in profitability attributable to equity holders, with overall diminishing returns after the peak in 2021.

Return on Assets (ROA)

Reported ROA starts minimal at 0.18% in 2020, rises substantially to 9.16% in 2021, and then shows a declining trend to 0.81% in 2024. The adjusted ROA follows a similar pattern but remains consistently higher, reaching a peak of 10.53% in 2023 before dropping to below 1% in 2024. This suggests that asset profitability was substantially stronger in the earlier years, with the adjusted figures indicating the presence of goodwill having a dampening effect on asset returns.

Summary Insights

The overall trends suggest that both asset efficiency and profitability metrics improved significantly after 2020, with peaks around 2021 and 2023 depending on the measure. Adjusted figures consistently show higher turnover and return ratios, indicating that goodwill has a material impact on reported results. Leverage decreased over most of the period, potentially reflecting deleveraging efforts or changes in capital structure, but increased again in 2024. The substantial volatility in ROE and ROA indicates fluctuating profitability which may warrant further investigation into underlying operational or market factors during these years.

Total Assets

The reported total assets exhibit a consistent downward trend over the five-year period, declining from US$68,407 million in 2020 to US$58,995 million in 2024. This represents a reduction of approximately 13.7%. Similarly, the adjusted total assets, which exclude goodwill, also decrease steadily each year, falling from US$60,299 million in 2020 to US$50,681 million in 2024. The adjusted figures consistently remain below the reported totals, reflecting the impact of goodwill on total asset values.

Total Asset Turnover

Both the reported and adjusted total asset turnover ratios display an improving trend, indicating enhanced efficiency in utilizing assets to generate revenue. The reported total asset turnover increases from 0.36 in 2020 to 0.48 in 2024, marking a 33.3% improvement. The adjusted total asset turnover follows a similar pattern, rising from 0.4 in 2020 to 0.56 in 2024, an increase of 40%. The adjusted turnover ratios are consistently higher than the reported ones, suggesting that when goodwill is excluded, the company's asset utilization appears more effective.

Overall Insights

The declining asset base alongside improving asset turnover ratios suggests that the company is generating more revenue per unit of asset over time despite holding fewer assets overall. This could indicate a focus on asset optimization or divestiture of lower-performing assets, leading to greater operational efficiency. The adjustment for goodwill reveals a clearer picture of asset productivity, highlighting the benefits of analyzing financial performance both with and without intangible asset considerations for a more nuanced understanding.

The financial data reveals distinct trends in asset valuation, equity levels, and leverage ratios over the five-year period under review.

Total Assets

There is a steady decline in both reported and adjusted total assets from 2020 through 2024. Reported total assets decreased from 68,407 million US dollars in 2020 to 58,995 million US dollars in 2024, marking an overall reduction of approximately 14%. Adjusted total assets, which exclude goodwill, declined more sharply, falling from 60,299 million US dollars to 50,681 million US dollars, a decrease of around 16%. This consistent downward trend suggests asset contraction or revaluation over the timeframe.

Stockholders’ Equity

Reported total stockholders’ equity initially increased from 18,202 million US dollars in 2020 to a peak of 22,833 million US dollars in 2023, followed by a noticeable decline to 19,330 million US dollars in 2024. Adjusted equity, which removes goodwill, follows a similar trend but on a lower scale: rising from 10,094 million US dollars in 2020 to 14,519 million US dollars in 2023 before dropping to 11,016 million US dollars in 2024. The pattern indicates growth in equity through 2023, subsequently reversing in 2024, which may reflect operational challenges or changes in retained earnings and reserves.

Financial Leverage

Financial leverage ratios, calculated as total assets divided by stockholders’ equity, show a general decline until 2023 followed by an increase in 2024. The reported financial leverage decreased from 3.76 in 2020 to 2.72 in 2023, indicating a reduction in reliance on debt relative to equity. However, in 2024, it increased again to 3.05. The adjusted financial leverage presents a higher level of leverage, starting at 5.97 in 2020 and decreasing to 3.71 in 2023 before rising to 4.6 in 2024. This pattern suggests a tendency towards deleveraging followed by a partial reversal, potentially pointing to strategic financing decisions or shifts in capital structure.

Total Gilead Stockholders’ Equity (Reported)

The reported total stockholders’ equity exhibits a generally positive trend from 2020 through 2023, increasing from $18,202 million to a peak of $22,833 million. However, a notable decline occurs in 2024, dropping to $19,330 million. This indicates some contraction in equity available to shareholders in the most recent year after a period of growth.

Total Gilead Stockholders’ Equity (Adjusted)

The adjusted total equity follows a similar increasing trajectory from $10,094 million in 2020 to $14,519 million in 2023. Subsequently, it also experiences a decrease in 2024, falling to $11,016 million. The adjusted figures consistently remain significantly lower than the reported equity, suggesting substantial goodwill or other adjustments affecting the equity base.

Return on Equity (ROE) - Reported

The reported ROE remains very low at 0.68% in 2020 but shows a sharp increase in 2021 to 29.55%, before dipping slightly to 21.62% in 2022. It then rebounds to 24.81% in 2023, followed by a steep decline to 2.48% in 2024. This pattern reflects volatile profitability relative to shareholders’ equity, with strong returns in the period 2021-2023 and a significant drop thereafter.

Return on Equity (ROE) - Adjusted

The adjusted ROE mirrors the reported ROE but at higher levels, starting at 1.22% in 2020 and surging dramatically to 48.87% in 2021. It then gradually decreases to 35.53% in 2022 and slightly increases to 39.02% in 2023, before declining sharply to 4.36% in 2024. The adjusted ROE suggests that when goodwill and other adjustments are excluded, the company’s true profitability relative to equity is substantially higher during the peak periods but still experiences a notable downturn in the latest year.

Overall Trends and Insights

The data reveals a period of considerable growth in both equity and return on equity from 2020 through 2023, indicating improved financial performance and shareholder value creation. The divergence between reported and adjusted equity highlights the impact of goodwill or intangible assets on the company’s equity base. The marked decline in both equity and ROE in 2024 signals a potential weakening in profitability and net asset value, warranting further investigation into the drivers of this recent deterioration.

Total Assets

The reported total assets display a consistent downward trend from 68,407 million US dollars at the end of 2020 to 58,995 million US dollars at the end of 2024. This suggests a reduction of approximately 13.8% over the five-year period. Similarly, the adjusted total assets, which exclude goodwill, also decline steadily from 60,299 million US dollars in 2020 to 50,681 million US dollars in 2024, representing a decrease of about 15.9%. Both metrics demonstrate a continuous contraction in asset base, indicating possible divestitures, asset sales, or asset impairments during this time frame.

Return on Assets (ROA)

The reported ROA shows significant variability across the years. Starting at a low 0.18% in 2020, it jumps sharply to 9.16% in 2021 and remains elevated in 2022 and 2023 with values of 7.27% and 9.12%, respectively, before dropping to 0.81% in 2024. The adjusted ROA, which likely offers a clearer profitability measure excluding goodwill, follows a similar pattern but with slightly higher values during the peak years: rising from 0.2% in 2020 to 10.44% in 2021, then moderating to 8.37% in 2022 and 10.53% in 2023, and finally falling to 0.95% in 2024.

Overall Analysis

Over the observed period, the company experiences a steady reduction in its asset base both on a reported and adjusted basis. Despite this, profitability as measured by ROA shows strong improvement after 2020, peaking during 2021-2023, suggesting increased efficiency or improved earnings from the asset base during those years. However, the sharp decline in ROA in 2024 to near 2020 levels indicates a significant decrease in profitability relative to assets in the latest year. This pattern may imply one-off factors or operational challenges affecting returns in 2024. The alignment between reported and adjusted figures suggests that goodwill adjustments have a relatively stable impact on the asset and profitability measures through the analyzed period.