Analysis of Investments
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- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Gilead Sciences Inc., adjustment to net income attributable to Gilead
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Reported net income attributable to Gilead exhibited volatility over the five-year period, while adjusted net income demonstrated a more stable pattern. A comparison of the two figures reveals a consistent, though generally small, adjustment to net income each year.
- Overall Trend
- Reported net income fluctuated significantly, decreasing from US$6,225 million in 2021 to US$4,592 million in 2022, then increasing to US$5,665 million in 2023, followed by a substantial decline to US$480 million in 2024, and a strong recovery to US$8,510 million in 2025. Adjusted net income showed less variation, moving from US$6,219 million in 2021 to US$4,563 million in 2022, US$5,693 million in 2023, US$485 million in 2024, and US$8,518 million in 2025.
- Adjustment Magnitude
- The difference between reported and adjusted net income remained relatively small throughout the period. The adjustment ranged from US$6 million in 2021 to US$5 million in 2025. This suggests that mark-to-market adjustments on available-for-sale securities have a limited impact on the overall reported earnings.
- Year-over-Year Changes
- In 2022, both reported and adjusted net income decreased, with the adjustment being US$31 million. In 2023, both figures increased, with an adjustment of US$30 million. The most significant changes occurred in 2024, where both reported and adjusted net income experienced a substantial decrease, with an adjustment of US$5 million. Finally, 2025 saw a considerable increase in both reported and adjusted net income, with an adjustment of US$8 million.
The consistent application of the adjustment to net income suggests a regular accounting practice related to available-for-sale securities. The small magnitude of the adjustment indicates that these securities do not represent a substantial portion of the company’s overall financial position, and their market value fluctuations have a minimal effect on reported earnings.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Gilead Sciences Inc., adjusted profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The profitability ratios demonstrate significant fluctuations over the five-year period. Reported and adjusted profitability metrics exhibit a similar pattern, suggesting that adjustments made do not materially alter the overall trend. A period of relative stability is followed by a substantial shift in performance, culminating in a strong recovery in the final year.
- Net Profit Margin
- Both reported and adjusted net profit margins decreased from 23.05% and 23.03% in 2021 to 17.02% and 16.91% in 2022, respectively. A modest recovery occurred in 2023, reaching 21.03% and 21.14%. However, a dramatic decline is observed in 2024, with margins falling to 1.68% and 1.70%. A substantial rebound then takes place in 2025, with both reported and adjusted margins increasing to 29.43% and 29.46%, respectively, exceeding the initial 2021 levels.
- Return on Equity (ROE)
- The trend in Return on Equity mirrors that of the net profit margin. ROE decreased from 29.55% and 29.52% in 2021 to 21.62% and 21.48% in 2022. A slight increase is seen in 2023, reaching 24.81% and 24.93%. A significant drop occurs in 2024, with ROE falling to 2.48% and 2.51%. The final year, 2025, shows a strong recovery, with ROE climbing to 37.48% and 37.52%, surpassing the 2021 figures.
- Return on Assets (ROA)
- Return on Assets follows a similar pattern to ROE and net profit margin. ROA decreased from 9.16% and 9.15% in 2021 to 7.27% and 7.22% in 2022. A slight recovery is observed in 2023, reaching 9.12% and 9.16%. A substantial decline is evident in 2024, with ROA falling to 0.81% and 0.82%. A significant increase occurs in 2025, with ROA rising to 14.42% and 14.43%, representing a substantial improvement but remaining below the initial 2021 levels.
The consistency between reported and adjusted ratios suggests that the adjustments applied are not significantly impacting the underlying profitability trends. The pronounced dip in 2024, followed by a strong recovery in 2025, warrants further investigation to understand the underlying drivers of these fluctuations. The recovery in 2025 is particularly noteworthy, as it results in profitability metrics exceeding those observed in 2021.
Gilead Sciences Inc., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 Net profit margin = 100 × Net income attributable to Gilead ÷ Product sales
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income attributable to Gilead ÷ Product sales
= 100 × ÷ =
The period under review demonstrates considerable fluctuation in profitability metrics. Reported and adjusted net income attributable to the company exhibit similar patterns, suggesting consistency in the adjustments made. However, significant volatility is apparent, particularly in the later years.
- Adjusted Net Profit Margin - Overall Trend
- The adjusted net profit margin experienced a decline from 23.03% in 2021 to 16.91% in 2022. A subsequent recovery occurred in 2023, reaching 21.14%. A dramatic decrease to 1.70% was observed in 2024, followed by a substantial increase to 29.46% in 2025. This indicates a highly variable profitability profile.
- 2022 Decline
- The decrease in the adjusted net profit margin in 2022 suggests a potential increase in costs or a reduction in revenue, or a combination of both, relative to net sales. Further investigation into the company’s cost structure and revenue streams during this period would be warranted.
- 2024 Dip and 2025 Rebound
- The exceptionally low adjusted net profit margin in 2024 is a significant outlier. This could be attributable to one-time expenses, substantial investments, or a temporary disruption in operations. The subsequent strong recovery in 2025 suggests that the factors impacting 2024 were largely resolved or non-recurring. The 2025 margin represents the highest value in the observed period.
- Relationship between Reported and Adjusted Margins
- The adjusted and reported net profit margins remain consistently close throughout the period, differing by only 0.02% to 0.03% each year. This indicates that the adjustments made to net income have a relatively minor impact on the overall profitability picture. The consistency suggests a systematic and predictable adjustment process.
In conclusion, while the adjusted net profit margin demonstrates an overall capacity for profitability, the substantial fluctuations observed necessitate a deeper understanding of the underlying drivers of these changes. The significant divergence in 2024 and subsequent recovery in 2025 warrant particular attention.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 ROE = 100 × Net income attributable to Gilead ÷ Total Gilead stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income attributable to Gilead ÷ Total Gilead stockholders’ equity
= 100 × ÷ =
The period under review demonstrates considerable fluctuation in reported and adjusted net income, which consequently impacts return on equity (ROE) metrics. While reported and adjusted net income figures remain closely aligned across the observed years, the ROE values exhibit more pronounced volatility.
- Reported ROE
- Reported ROE experienced a significant decline from 29.55% in 2021 to 21.62% in 2022. A partial recovery was noted in 2023, with the ROE reaching 24.81%. However, a substantial drop occurred in 2024, falling to 2.48%. A strong rebound is then observed in 2025, with reported ROE increasing to 37.48%.
- Adjusted ROE
- Adjusted ROE mirrors the trend observed in reported ROE. It decreased from 29.52% in 2021 to 21.48% in 2022, increased to 24.93% in 2023, plummeted to 2.51% in 2024, and then rose sharply to 37.52% in 2025. The adjusted ROE values consistently remain very close to the reported ROE values, suggesting that adjustments do not materially alter the overall return picture.
The most striking feature of this analysis is the dramatic decrease in both reported and adjusted ROE in 2024, followed by a substantial recovery in 2025. This suggests a significant event or series of events impacted profitability in 2024, which were then reversed in 2025. The consistency between reported and adjusted ROE indicates that the underlying cause of these fluctuations is reflected in the core net income figures, rather than being driven by accounting adjustments.
- Net Income Correlation
- The fluctuations in ROE directly correlate with changes in net income. The decrease in net income from 2021 to 2022 and again in 2024 corresponds with the declines in ROE. Conversely, the increases in net income in 2023 and 2025 align with the ROE improvements. This highlights the strong influence of profitability on the company’s returns to equity holders.
Further investigation into the factors driving the 2024 decline and 2025 recovery in net income is warranted to fully understand the observed ROE volatility.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 ROA = 100 × Net income attributable to Gilead ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income attributable to Gilead ÷ Total assets
= 100 × ÷ =
The period under review demonstrates considerable fluctuation in reported and adjusted net income, which directly impacts return on assets (ROA). While reported and adjusted net income figures are consistently close, the ROA metrics exhibit notable shifts over the five-year span.
- Reported ROA
- Reported ROA begins at 9.16% in 2021, declines to 7.27% in 2022, and recovers to 9.12% in 2023. A significant drop is then observed in 2024, falling to 0.81%. This is followed by a substantial increase in 2025, reaching 14.42%. The volatility suggests sensitivity to changes in net income and potentially asset base.
- Adjusted ROA
- Adjusted ROA mirrors the trend of reported ROA closely. It starts at 9.15% in 2021, decreases to 7.22% in 2022, rises to 9.16% in 2023, then falls sharply to 0.82% in 2024. A similar strong recovery is seen in 2025, with adjusted ROA reaching 14.43%. The minimal difference between reported and adjusted ROA indicates that adjustments to net income have a limited impact on the overall ROA calculation.
- Net Income Trends
- Both reported and adjusted net income show a decrease from 2021 to 2022, followed by a recovery in 2023. A dramatic decline in net income occurs in 2024, before a substantial increase in 2025. This pattern directly correlates with the observed fluctuations in ROA, indicating that net income is a primary driver of the ROA changes.
- Overall Observations
- The most striking feature of this analysis is the significant decline in ROA during 2024, followed by a strong rebound in 2025. This suggests a potentially disruptive event or strategic shift in 2024 that negatively impacted profitability, which was then reversed in 2025. Further investigation into the factors driving the net income changes in 2024 and 2025 is warranted to understand the underlying causes of these ROA fluctuations.