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.
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Gilead Sciences Inc. pages available for free this week:
- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
- Analysis of Debt
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Economic Profit
Gilead Sciences Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited significant fluctuations across the reported periods. Starting from a moderate level in 2020, there was a dramatic increase in 2021, reaching a peak. This was followed by a notable decline in 2022, a partial recovery in 2023, and a negative value in 2024, indicating a potential operational loss or impairment in that year.
- Cost of Capital
- The cost of capital showed a gradual upward trend over the period. It increased steadily from 5.37% in 2020 to 6.07% in 2024, suggesting a rising expense associated with financing or increased risk perceptions over time.
- Invested Capital
- Invested capital demonstrated a continuous decline throughout the years analyzed. From approximately 50.3 billion USD in 2020, it decreased gradually each year, ending at about 44.3 billion USD in 2024. This may indicate a reduction in the capital base or asset divestment.
- Economic Profit
- The economic profit pattern closely mirrors the fluctuations in NOPAT, starting with a negative economic profit in 2020, sharply improving to a positive high in 2021, then decreasing in 2022, recovering again in 2023, and finally dropping into a significant negative figure in 2024. This suggests volatile value creation performance, with the firm generating returns above its cost of capital in some years and falling short in others, particularly in 2024.
Net Operating Profit after Taxes (NOPAT)
Gilead Sciences Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances for credit losses.
3 Addition of increase (decrease) in equity equivalents to net income attributable to Gilead.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income attributable to Gilead.
7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
- Net income attributable to Gilead
- The net income experienced a significant increase from 123 million US dollars in 2020 to 6,225 million in 2021, marking a substantial positive shift. This was followed by a decrease to 4,592 million in 2022. In 2023, net income showed a recovery, increasing to 5,665 million, but then declined sharply to 480 million in 2024. Overall, the data indicates volatility with a peak in 2021, fluctuations thereafter, and a downward trend by the final year.
- Net operating profit after taxes (NOPAT)
- NOPAT followed a somewhat similar pattern initially, rising from 633 million US dollars in 2020 to a peak of 6,897 million in 2021. However, unlike net income, NOPAT declined more sharply to 3,687 million in 2022. It showed an improvement in 2023, rising to 5,086 million, before turning negative in 2024 with a value of -796 million. This negative figure in the last period signals a significant operational challenge or increased expenses resulting in operating losses after taxes.
Cash Operating Taxes
Gilead Sciences Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
- Income Tax Expense
- The income tax expense displayed a fluctuating pattern over the examined periods. Starting at 1,580 million US dollars in 2020, the expense increased significantly to 2,077 million US dollars in 2021. This was followed by a sharp decline to 1,248 million US dollars in 2022, remaining relatively stable into 2023 with a negligible decrease to 1,247 million US dollars. Notably, in 2024, there was a pronounced drop to 211 million US dollars, marking the lowest point in the time series.
- Cash Operating Taxes
- Cash operating taxes showed a generally increasing trend from 2020 to 2022. Beginning at 2,006 million US dollars in 2020, they rose to 2,403 million US dollars in 2021 and further to a peak of 2,981 million US dollars in 2022. The trend reversed afterward, with a decrease to 2,366 million US dollars in 2023, followed by a continued decline to 2,205 million US dollars in 2024. Despite this reversal, cash operating taxes remained higher in the last two years compared to 2020 levels.
- Comparative Insights
- The data suggests a divergence between income tax expense and cash operating taxes beginning from 2022 onwards. While cash operating taxes peaked in 2022 and then declined, income tax expense sharply decreased in 2024, indicating possible changes in tax planning, accounting practices, or tax regulations impacting reporting differently from cash outflows related to operating taxes. The significant reduction in income tax expense by 2024 suggests a substantial alteration in either taxable income or effective tax rates.
Invested Capital
Gilead Sciences Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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 equity equivalents to total Gilead stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of marketable debt securities.
- Total reported debt & leases
- The total reported debt and leases decreased significantly from 32,117 million US dollars in 2020 to 25,808 million US dollars in 2022. This trend indicates a reduction in debt obligations over this period. However, from 2022 to 2023, the debt level remained relatively stable, showing only a slight decrease to 25,658 million US dollars. In 2024, there was an uptick in total debt, increasing to 27,322 million US dollars, suggesting a reversal of the prior debt reduction trend.
- Total Gilead stockholders’ equity
- Stockholders’ equity saw a consistent increase from 18,202 million US dollars in 2020 to a peak of 22,833 million US dollars in 2023. This upward movement reflects a strengthening of the company's equity base during these years. However, in 2024, equity fell notably to 19,330 million US dollars, implying a decrease in net assets attributable to shareholders, which could be due to various factors such as losses, dividends, or share repurchases.
- Invested capital
- Invested capital showed a declining trend throughout the period from 50,285 million US dollars in 2020 to 44,333 million US dollars in 2024. This steady decrease suggests a contraction in the total capital employed in the business, possibly due to asset disposals, changes in financing structure, or operational adjustments.
- Summary
- Overall, the company experienced a reduction in debt from 2020 to 2022, but this trend reversed in 2024. Equity increased notably until 2023, followed by a significant decline in 2024. Invested capital consistently decreased over the five years. These patterns suggest a shifting financial structure, with potential impacts on leverage and capital deployment in the most recent year.
Cost of Capital
Gilead Sciences Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Gilead Sciences Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited notable fluctuations over the observed periods. Starting with a negative value of -2,069 million US dollars at the end of 2020, it rose significantly to a positive 4,274 million US dollars by the end of 2021. Subsequently, it decreased to 1,012 million in 2022 but rebounded to 2,414 million in 2023. However, by the end of 2024, it sharply declined again to a negative value of -3,488 million US dollars. This volatility indicates varying operational and financial performance impacting the company’s value generation across the years.
- Invested Capital
- Invested capital showed a general downward trend during the five-year period. It started at 50,285 million US dollars at the end of 2020 and decreased steadily to 44,333 million by the end of 2024. Slight declines occurred each year with minor fluctuations, indicating either divestment or depreciation exceeding new investments, reflecting a contraction or optimization in capital deployment.
- Economic Spread Ratio
- The economic spread ratio, which measures the return on invested capital relative to its cost, also experienced significant variability. It began at -4.12% at the end of 2020, rose sharply to 8.94% in 2021, then decreased substantially to 2.22% in 2022. The ratio improved moderately to 5.27% in 2023 before falling again to -7.87% in 2024. These swings indicate inconsistent profitability relative to capital costs, with positive spreads generally aligning with years of positive economic profit and negative spreads corresponding to economic losses.
- Overall Analysis
- The data reflects an inconsistent financial performance characterized by alternating periods of profitability and losses as measured by economic profit and economic spread ratio. The decline in invested capital suggests a strategic shift or response to market conditions. The relationship between economic profit and economic spread ratio supports a view that profitability is closely tied to efficient capital utilization. The substantial negative values in 2020 and 2024 may warrant further investigation to identify underlying causes and potential corrective actions.
Economic Profit Margin
Gilead Sciences Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| 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. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Product sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibits substantial volatility over the analyzed period. Starting with a negative value of -2,069 million US$ in 2020, it sharply improves to a positive 4,274 million US$ in 2021, indicating a significant turnaround. However, this peak is followed by a decline to 1,012 million US$ in 2022. The trend recovers somewhat in 2023 with an economic profit of 2,414 million US$, but falls back to a negative figure of -3,488 million US$ in 2024, reflecting considerable fluctuations in value generation.
- Product Sales
- Product sales show moderate growth over the period, starting at 24,355 million US$ in 2020 and increasing to 28,610 million US$ by 2024. The figures from 2021 to 2023 remain relatively stable, hovering near 27,000 million US$, with a slight dip in 2022 and 2023 compared to 2021. The increase in 2024 to 28,610 million US$ indicates a renewed upward trend in sales revenue.
- Economic Profit Margin
- The economic profit margin correlates with the economic profit trend, reflecting significant swings. It begins at a negative -8.5% in 2020, improves dramatically to a positive 15.83% in 2021, then declines to 3.75% in 2022. The margin rebounds to 8.96% in 2023, before dropping to -12.19% in 2024. This pattern suggests fluctuating profitability relative to economic profit, with 2024 showing a marked deterioration in economic efficiency despite higher product sales.
- Overall Insights
- The data indicates that while product sales have shown a generally positive growth trend, the company’s economic profit and related margin have experienced pronounced volatility. The periods of strong economic profit and margin in 2021 and 2023 are interspersed with significant downturns, particularly in 2020 and 2024. This suggests underlying challenges in cost management, operational efficiency, or capital allocation impacting the ability to consistently convert sales into economic value. The divergent trends of stable sales growth versus fluctuating economic profit margins highlight potential areas for strategic focus to stabilize and improve profitability.