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:
- Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Economic Profit
Gilead Sciences Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The period under review demonstrates significant fluctuations in economic profit. Net operating profit after taxes (NOPAT) exhibited volatility, decreasing substantially in 2022 before partially recovering in 2023, experiencing a significant loss in 2024, and then rebounding strongly in 2025. This pattern directly influences the observed economic profit.
- Economic Profit Trend
- Economic profit began at US$3,406 million in 2021, declined sharply to US$69 million in 2022, increased to US$1,496 million in 2023, then plummeted to a loss of US$4,446 million in 2024. A substantial recovery occurred in 2025, with economic profit reaching US$5,596 million. This indicates a considerable sensitivity to changes in NOPAT and, to a lesser extent, the cost of capital.
- NOPAT and Cost of Capital Relationship
- The cost of capital increased steadily from 7.31% in 2021 to 8.44% in 2025. While the cost of capital increased consistently, the impact on economic profit was most pronounced in 2024 when NOPAT was negative. The negative NOPAT in 2024, combined with the rising cost of capital, resulted in the largest economic loss during the analyzed period.
- Invested Capital
- Invested capital showed a gradual decline over the five-year period, decreasing from US$47,782 million in 2021 to US$42,812 million in 2025. This decrease in invested capital occurred alongside the fluctuations in NOPAT and economic profit, but the impact of invested capital on economic profit is less direct than that of NOPAT and the cost of capital.
The substantial swing in economic profit highlights the importance of NOPAT generation. The company’s ability to generate positive economic profit is heavily reliant on maintaining sufficient NOPAT to offset the cost of capital. The 2024 results suggest a period of underperformance relative to the capital employed, while the 2025 results indicate a significant improvement in this regard.
Net Operating Profit after Taxes (NOPAT)
Gilead Sciences Inc., NOPAT calculation
US$ 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).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2025 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 2025 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 and Net Operating Profit After Taxes (NOPAT) exhibited considerable fluctuation between 2021 and 2025. While both metrics moved in similar directions, the magnitude of change differed, particularly in 2024.
- Overall Trend
- From 2021 to 2025, NOPAT demonstrated a volatile pattern. It decreased significantly in 2022, recovered partially in 2023, experienced a substantial loss in 2024, and then rebounded strongly in 2025, ultimately exceeding the 2021 level. Net income followed a similar, though less dramatic, trajectory.
- 2021-2022
- A notable decline is observed in both NOPAT and net income from 2021 to 2022. NOPAT decreased from US$6,897 million to US$3,687 million, representing a decrease of approximately 46.7%. Net income decreased from US$6,225 million to US$4,592 million, a decrease of approximately 26.2%. This suggests a weakening of operational profitability and overall earnings during this period.
- 2022-2023
- Both metrics showed improvement between 2022 and 2023, although the recovery was not complete. NOPAT increased to US$5,086 million, while net income rose to US$5,665 million. This indicates a partial recovery in profitability and earnings.
- 2023-2024
- A significant shift occurred from 2023 to 2024. NOPAT experienced a substantial loss, falling to negative US$796 million. Net income also plummeted to US$480 million. This represents a dramatic downturn in operational performance and overall profitability. The disparity between the decline in net income and the loss in NOPAT suggests potential impacts from non-operating items or changes in the tax structure.
- 2024-2025
- A strong recovery is evident from 2024 to 2025. NOPAT rebounded to US$9,207 million, surpassing the 2021 value. Net income also increased substantially to US$8,510 million. This indicates a significant improvement in operational profitability and overall earnings, potentially driven by new products, cost reductions, or favorable market conditions.
The fluctuations in NOPAT, particularly the substantial loss in 2024 followed by a strong recovery in 2025, warrant further investigation to understand the underlying drivers of these changes. The divergence between NOPAT and net income trends in 2024 also merits closer scrutiny.
Cash Operating Taxes
Gilead Sciences Inc., cash operating taxes calculation
US$ 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).
The relationship between income tax expense and cash operating taxes demonstrates fluctuating patterns over the five-year period. While both metrics represent tax-related financial obligations, their divergence suggests timing differences between reported accounting expense and actual cash outflows.
- Income Tax Expense
- Income tax expense decreased significantly from 2021 to 2022, followed by a minimal change in 2023. A substantial decline occurred in 2024, reaching a low of 211 US$ millions, before increasing again in 2025 to 1,286 US$ millions. This pattern indicates considerable volatility in the company’s reported tax liability.
- Cash Operating Taxes
- Cash operating taxes increased from 2021 to 2022, reaching 2,981 US$ millions. A subsequent decrease was observed in 2023, followed by a further reduction in 2024 to 2,205 US$ millions. The most significant decline occurred between 2024 and 2025, with cash operating taxes falling to 1,273 US$ millions. This suggests a reduction in actual cash paid for taxes in the most recent year.
- Relationship between Metrics
- In 2021 and 2022, cash operating taxes exceeded income tax expense, indicating potential deferred tax liabilities being realized or other timing differences. The gap narrowed in 2023 and 2024. By 2025, income tax expense surpassed cash operating taxes, potentially due to the creation of new deferred tax assets or changes in tax regulations impacting reported expense without immediate cash impact. The divergence between these two figures warrants further investigation to understand the underlying causes and their implications for future cash flows and financial reporting.
The observed trends suggest that the company’s effective tax rate and cash tax payments are subject to considerable variation, potentially influenced by factors such as tax credits, loss carryforwards, or changes in the tax code. Continued monitoring of these metrics is recommended to assess the sustainability of these trends and their impact on overall financial performance.
Invested Capital
Gilead Sciences Inc., invested capital calculation (financing approach)
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).
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.
The invested capital of the company demonstrates a generally decreasing trend over the five-year period. Total reported debt & leases and total stockholders’ equity are the components used to calculate invested capital, and their individual movements contribute to this overall pattern.
- Invested Capital Trend
- Invested capital began at US$47,782 million in 2021 and generally declined to US$42,812 million in 2025. A slight decrease was observed from 2021 to 2022, followed by relative stability between 2022 and 2023. A more pronounced decrease occurred between 2023 and 2024, and this downward trend continued into 2025.
- Debt & Leases
- Total reported debt & leases decreased from US$27,285 million in 2021 to US$25,808 million in 2022, representing a reduction in financial obligations. It remained relatively stable through 2023 at US$25,658 million before increasing to US$27,322 million in 2024. A subsequent decrease to US$25,541 million was noted in 2025.
- Stockholders’ Equity
- Total stockholders’ equity exhibited a modest increase from US$21,069 million in 2021 to US$21,240 million in 2022, and continued to rise to US$22,833 million in 2023. However, a significant decrease was observed in 2024, falling to US$19,330 million. Stockholders’ equity partially recovered in 2025, reaching US$22,703 million.
The fluctuations in stockholders’ equity appear to have a more substantial impact on the overall invested capital trend, particularly the decline observed in 2024. While debt & leases experienced some volatility, its impact was less pronounced than the changes in equity. The combined effect of these components resulted in the observed decrease in invested capital over the period.
Cost of Capital
Gilead Sciences Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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: 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 »
Economic Spread Ratio
Gilead Sciences Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The economic spread ratio exhibited significant fluctuations over the five-year period. Initially positive, the ratio declined substantially before recovering to levels exceeding the initial value. This movement correlates with changes in economic profit and invested capital.
- Economic Spread Ratio Trend
- In 2021, the economic spread ratio stood at 7.13%. A sharp decrease was observed in 2022, falling to 0.15%. The ratio experienced a moderate recovery in 2023, reaching 3.27%, but then declined dramatically in 2024 to -10.03%. A substantial increase occurred in 2025, with the ratio rising to 13.07%.
The economic spread ratio’s volatility suggests a dynamic relationship between returns generated from invested capital and the cost of that capital. The negative value in 2024 indicates that the cost of capital exceeded the returns generated, resulting in value destruction. The subsequent positive and higher value in 2025 suggests a reversal of this trend.
- Relationship to Economic Profit
- The economic spread ratio’s movements align with those of economic profit. The decline in the ratio from 2021 to 2022 and the negative value in 2024 correspond with decreasing and then negative economic profit, respectively. Conversely, the increase in the ratio in 2025 mirrors the substantial increase in economic profit during that year.
- Relationship to Invested Capital
- Invested capital decreased steadily over the period, from US$47,782 million in 2021 to US$42,812 million in 2025. While this decrease generally contributes to a higher economic spread ratio given a constant economic profit, the significant swings in economic profit appear to be the dominant driver of the observed ratio fluctuations. The reduction in invested capital appears to have a moderating effect on the negative spread in 2024, but is insufficient to offset the substantial decline in economic profit.
The substantial changes in the economic spread ratio warrant further investigation into the underlying factors driving economic profit, including revenue growth, operating margins, and the cost of capital. The recovery in 2025 is a positive sign, but sustained performance will require continued monitoring of these key drivers.
Economic Profit Margin
Gilead Sciences Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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: 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Product sales
= 100 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin exhibited significant fluctuation over the five-year period. Initial profitability declined substantially before recovering to levels exceeding the initial period.
- Economic Profit Margin Trend
- In 2021, the economic profit margin stood at 12.61%. This figure decreased dramatically in 2022 to 0.26%, indicating a substantial reduction in economic profit relative to product sales. A partial recovery was observed in 2023, with the margin increasing to 5.55%. However, 2024 witnessed a significant downturn, resulting in a negative economic profit margin of -15.54%. The final year analyzed, 2025, showed a strong rebound, with the economic profit margin reaching 19.35%, surpassing the 2021 level.
The economic profit margin’s movement closely mirrors the trend in economic profit. The substantial decline in economic profit in 2022 and 2024 directly translated into corresponding decreases in the economic profit margin. Conversely, the increases in economic profit in 2023 and 2025 were reflected in improved margin figures.
- Relationship to Product Sales
- Product sales remained relatively stable between 2021 and 2023, fluctuating within a narrow range around $27 billion. A moderate increase in product sales was observed in 2024 and 2025, reaching $28.61 billion and $28.915 billion, respectively. However, these sales increases did not consistently correlate with improvements in the economic profit margin, suggesting that factors beyond revenue generation significantly influenced profitability.
The negative economic profit margin in 2024 is a notable point, indicating that the cost of capital exceeded the economic profit generated during that year, despite an increase in product sales. The substantial positive margin in 2025 suggests a significant improvement in cost management or operational efficiency relative to the capital employed.