Regeneron Pharmaceuticals Inc. (NASDAQ:REGN)

The income tax expense exhibited considerable fluctuation over the five-year period. Current tax expense generally remained above US$1 million annually, while the deferred tax benefit consistently represented a negative value, offsetting a portion of the current tax expense. The resulting income tax expense demonstrates a significant decrease initially, followed by a period of increase.

Current Tax Expense

Current tax expense decreased from US$1,397.6 million in 2021 to US$1,083.5 million in 2023. A slight increase to US$1,124.6 million was observed in 2024, followed by a more substantial rise to US$1,511.2 million in 2025. This suggests a correlation with underlying profitability, though further investigation would be needed to confirm this relationship.

Deferred Tax Benefit

The deferred tax benefit became more substantial in absolute value from 2021 to 2023, moving from a benefit of US$147.1 million to US$837.8 million. This indicates an increasing recognition of future tax benefits, potentially related to net operating loss carryforwards or other temporary differences. The benefit moderated slightly in 2024 (US$757.3 million) and 2025 (US$785.4 million), but remained a significant offset to current tax expense.

Income Tax Expense (Net)

Income tax expense decreased substantially from US$1,250.5 million in 2021 to US$245.7 million in 2023. This decline was primarily driven by the increasing deferred tax benefit. A subsequent increase was noted in 2024, reaching US$367.3 million, and continued into 2025, with income tax expense rising to US$725.8 million. The 2024 and 2025 increases align with the increases observed in current tax expense, though the deferred tax benefit continued to partially mitigate the overall expense.

The interplay between current tax expense and the deferred tax benefit significantly impacted the overall income tax expense. The increasing deferred tax benefit in the earlier years reduced the net tax burden, while the subsequent increases in both current tax expense and a moderating deferred tax benefit led to a higher income tax expense in the later years of the period.

The effective income tax rate exhibited considerable fluctuation over the five-year period. While the U.S. federal statutory tax rate remained constant at 21.00%, the effective income tax rate demonstrated a decreasing trend from 2021 to 2023, followed by increases in subsequent years.

Overall Trend

The effective income tax rate began at 13.40% in 2021, decreased to a low of 5.90% in 2023, and then increased to 13.90% by 2025. This indicates significant variability in factors influencing the company’s tax burden.

2021-2023 Decline

A notable decline in the effective income tax rate occurred between 2021 and 2023, falling from 13.40% to 5.90%. This decrease suggests a potential shift in the company’s earnings mix, an increase in tax credits or deductions, or changes in the geographic distribution of profits. The magnitude of the decline warrants further investigation into the underlying causes.

2023-2025 Reversal

Following the low point in 2023, the effective income tax rate began to rise, reaching 7.70% in 2024 and 13.90% in 2025. This reversal could be attributed to a change in the profitability of different subsidiaries, the expiration of tax benefits, or alterations in tax legislation. The increase in 2025 brings the rate close to the initial value observed in 2021.

Discrepancy with Statutory Rate

Throughout the period, the effective income tax rate consistently differed from the U.S. federal statutory rate of 21.00%. This difference is expected due to various factors, including state taxes, foreign income, tax credits, and non-deductible expenses. The observed fluctuations in the effective rate suggest these factors are having a dynamic impact on the company’s overall tax liability.

The considerable changes in the effective income tax rate over the observed period suggest the company’s tax position is sensitive to various internal and external factors. Continued monitoring of this rate, along with the underlying drivers, is recommended.

The composition of deferred tax assets and liabilities demonstrates significant changes over the five-year period. A substantial increase is observed in deferred tax assets, driven primarily by capitalized research and development expenses and, to a lesser extent, by increases in other components. Deferred tax liabilities remain relatively stable and negative, representing a limited offset to the growing deferred tax asset position.

Capitalized Research and Development Expenses

Capitalized research and development expenses show a consistent and substantial upward trend, increasing from US$845.3 million in 2022 to US$3.146 billion in 2025. This growth is the most significant driver of the overall increase in deferred tax assets, as these expenses create future deductible amounts for tax purposes.

Deferred Compensation

Deferred compensation exhibits a modest increase over the period, rising from US$406.6 million in 2021 to US$452.0 million in 2025. While contributing to the deferred tax asset balance, its impact is considerably smaller than that of capitalized research and development.

Fixed Assets and Intangible Assets

The value associated with fixed assets and intangible assets generally declines from US$257.5 million in 2021 to US$145.1 million in 2023, before a partial recovery to US$192.6 million in 2025. This suggests potential changes in asset valuation or depreciation/amortization patterns.

Accrued Expenses

Accrued expenses demonstrate a consistent downward trend, decreasing from US$262.1 million in 2021 to US$158.8 million in 2025. This reduction contributes to a smaller deferred tax asset balance compared to prior years.

Tax Attribute Carryforwards

Tax attribute carryforwards increase significantly from US$6.1 million in 2021 to US$88.7 million in 2023, then stabilize around US$80-90 million for the remainder of the period. These carryforwards represent potential future tax benefits.

Other Deferred Tax Items

The “Other” category shows a steady increase, rising from US$10.8 million in 2021 to US$49.9 million in 2025. The specific nature of these items is not detailed, but their growth contributes to the overall increase in deferred tax assets.

Deferred Revenue

Deferred revenue is only present in the 2021 figures at US$57.3 million, and is absent in subsequent years. This suggests a change in revenue recognition practices or a decrease in unearned revenue.

Unrealized Gains on Investments

Unrealized gains on investments are consistently negative, representing deferred tax liabilities. The magnitude of these liabilities increases from US$123.5 million in 2021 to US$93.0 million in 2023, then decreases significantly to US$1.9 million in 2025. This fluctuation likely reflects changes in investment valuations.

Net Deferred Tax Assets (Liabilities)

The net deferred tax asset position increases substantially over the period, growing from US$876.9 million in 2021 to US$4.077 billion in 2025. This growth is primarily attributable to the increasing capitalization of research and development expenses. The relatively small and consistently negative deferred tax liabilities have a limited impact on offsetting the deferred tax asset balance.

The value associated with deferred tax assets demonstrates a consistent upward trend over the five-year period. This indicates an increasing expectation of future tax benefits stemming from temporary differences or carryforwards.

Trend Analysis

From December 31, 2021, to December 31, 2025, deferred tax assets increased from US$876,900 thousand to US$4,077,200 thousand. This represents a substantial overall increase.

Year-over-Year Changes

The largest absolute increase occurred between December 31, 2021, and December 31, 2022, with an increase of US$846,800 thousand. The increase from December 31, 2022, to December 31, 2023, was US$851,700 thousand. The increase from December 31, 2023, to December 31, 2024, was US$738,700 thousand. Finally, the increase from December 31, 2024, to December 31, 2025, was US$763,100 thousand. While the increases remain substantial each year, the rate of increase appears to be moderating slightly in the later periods.

Implications

The continued growth in deferred tax assets suggests the company is generating taxable temporary differences or has net operating loss carryforwards that it anticipates utilizing in future periods to reduce its tax obligations. Further investigation into the specific sources of these deferred tax assets would be necessary to assess the certainty of their realization.

The financial information reveals a consistent pattern of adjustments related to income taxes, resulting in reductions to both total assets and stockholders’ equity over the five-year period. These adjustments also impact reported net income, though to a lesser extent.

Asset Adjustments

Reported total assets increased steadily from $25.43 billion in 2021 to $40.56 billion in 2025. However, the adjusted total assets consistently fall below the reported figures, with a difference of approximately $876.9 million in 2021, growing to $4.077 billion by 2025. This indicates a systematic removal of asset values, likely attributable to deferred tax assets that are being written down or removed from the balance sheet. The magnitude of the adjustment increases each year, suggesting a growing impact from these tax-related items.

Equity Adjustments

A similar trend is observed in stockholders’ equity. Reported equity rose from $18.77 billion in 2021 to $31.26 billion in 2025. Adjusted equity is consistently lower, starting with a difference of $876.9 million in 2021 and increasing to $4.077 billion in 2025. This parallel to the asset adjustments reinforces the conclusion that deferred tax liabilities or other tax-related items are being removed, directly impacting the equity position.

Net Income Adjustments

Reported net income fluctuates over the period, peaking at $8.08 billion in 2021 and settling at $4.50 billion in 2025. The adjustments to net income are smaller in magnitude compared to the asset and equity adjustments, ranging from approximately $147.1 million to $838.3 million. The adjusted net income consistently understates the reported net income, indicating that the removal of deferred tax assets or liabilities results in a lower reported earnings figure. The difference between reported and adjusted net income appears to be growing in later years.

The consistent and increasing adjustments to assets, equity, and net income suggest a significant change in the company’s tax position or a reassessment of previously recognized deferred tax items. Further investigation into the specific nature of these adjustments is warranted to understand the underlying reasons and potential implications for future financial performance.

The financial performance metrics demonstrate a consistent pattern when adjusted for the removal of deferred tax impacts. Generally, the adjusted ratios are incrementally different from their reported counterparts, but the trends observed remain largely consistent. A notable trend across multiple ratios is a decline from 2021 to 2023, followed by a stabilization or slight recovery in 2024 and 2025.

Profitability

Reported net profit margin decreased from 50.25% in 2021 to 30.14% in 2023, then showed modest improvement to 31.41% by 2025. The adjusted net profit margin followed a similar trajectory, declining from 49.33% to 23.75% and recovering to 25.93%. The adjustment consistently lowers the reported margin, suggesting deferred taxes contribute positively to reported profitability. The magnitude of this difference appears relatively stable over the period.

Asset Efficiency

Reported total asset turnover decreased steadily from 0.63 in 2021 to 0.35 in 2025. The adjusted total asset turnover exhibited a similar downward trend, starting at 0.65 and ending at 0.39. The adjustment slightly increases the reported turnover ratio, indicating deferred taxes may be associated with assets that are less efficiently utilized. The difference between reported and adjusted values remains relatively small.

Financial Leverage

Reported financial leverage remained relatively stable between 1.29 and 1.36 throughout the period. The adjusted financial leverage showed a similar pattern, fluctuating between 1.30 and 1.37. The adjustment consistently increases the reported leverage ratio, suggesting deferred taxes reduce the reported level of financial obligations. The impact of this adjustment is minimal.

Return on Investment

Both reported and adjusted Return on Equity (ROE) and Return on Assets (ROA) exhibited declines from 2021 to 2023, followed by stabilization. Reported ROE decreased from 43.03% to 14.41%, while the adjusted ROE decreased from 44.31% to 13.68%. Similarly, reported ROA decreased from 31.75% to 11.11%, and adjusted ROA decreased from 32.28% to 10.20%. In each case, the adjustment increases the ratio, indicating deferred taxes reduce reported returns. The difference between reported and adjusted values is more pronounced for ROE and ROA than for other ratios.

In summary, the removal of deferred tax impacts results in lower reported profitability, asset efficiency, and returns on investment. The trends observed in the adjusted ratios largely mirror those of the reported ratios, suggesting that deferred taxes are not driving the overall performance changes but rather influencing the reported magnitude of these metrics. The adjustments consistently reduce the reported values, indicating a positive impact from deferred taxes on the reported financial position.

The reported and adjusted net profit margins exhibited distinct trends between 2021 and 2025. While both metrics experienced declines, the adjusted net profit margin demonstrated a more pronounced decrease initially, followed by a period of stabilization. A consistent pattern emerges where the adjusted net profit margin is lower than the reported net profit margin in each year presented.

Reported Net Profit Margin

The reported net profit margin decreased from 50.25% in 2021 to 31.41% in 2025. The most significant decline occurred between 2021 and 2022, falling by 14.61 percentage points. Subsequent decreases were more moderate, with fluctuations between 30.14% and 31.41% from 2023 to 2025, indicating a potential leveling off.

Adjusted Net Profit Margin

The adjusted net profit margin experienced a more substantial initial decline, decreasing from 49.33% in 2021 to 23.75% in 2023, representing a decrease of 25.58 percentage points. From 2023 to 2025, the adjusted net profit margin showed a modest recovery, increasing to 25.93% in 2025. This suggests that adjustments made to net income had a greater impact on profitability in the earlier years of the period.

Relationship Between Reported and Adjusted Margins

The difference between the reported and adjusted net profit margins remained relatively consistent throughout the period, generally ranging between 1.0% and 2.0%. This indicates that the adjustments made to arrive at the adjusted net income consistently reduced the reported profit margin by a similar proportion. The consistent difference suggests a recurring nature to the adjustments being made.

Overall Trend

Both net profit margins demonstrate a general downward trend over the five-year period. However, the adjusted net profit margin’s decline was more dramatic in the initial years, followed by a slight stabilization. The stabilization of both margins in the later years suggests a potential shift in underlying business conditions or accounting practices.

An examination of the provided financial information reveals trends in total asset values and associated turnover ratios over a five-year period. Both reported and adjusted total assets demonstrate a consistent year-over-year increase from 2021 to 2025. However, the asset turnover ratios, both reported and adjusted, exhibit a contrasting downward trend during the same period.

Total Asset Values

Reported total assets increased from US$25.43 billion in 2021 to US$40.56 billion in 2025, representing a cumulative growth of approximately 59.4%. Adjusted total assets followed a similar pattern, rising from US$24.56 billion in 2021 to US$36.48 billion in 2025, a growth of roughly 48.5%. The difference between reported and adjusted assets remains relatively consistent across the observed period.

Reported Total Asset Turnover

The reported total asset turnover ratio decreased steadily from 0.63 in 2021 to 0.35 in 2025. This indicates a diminishing ability to generate revenue for each dollar of reported assets held. The decline is approximately 44.4% over the five-year period.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio mirrors the trend of the reported ratio, declining from 0.65 in 2021 to 0.39 in 2025. This represents a decrease of approximately 40.0%. The adjusted ratio consistently remains slightly higher than the reported ratio throughout the period, suggesting that the adjustments made to total assets have a positive, albeit small, impact on the turnover calculation.

The consistent increase in total assets coupled with the simultaneous decline in both reported and adjusted asset turnover ratios suggests that the company is investing in assets that are not yet translating into proportional revenue growth. Further investigation would be required to determine the underlying causes of this trend, such as changes in operational efficiency, investment in long-term projects, or shifts in the company’s revenue generation strategies.

An examination of the financial information reveals trends in both reported and adjusted asset and equity figures, subsequently impacting calculated financial leverage ratios. Over the five-year period, both reported and adjusted total assets demonstrate a consistent upward trajectory. Reported total assets increased from US$25.43 billion in 2021 to US$40.56 billion in 2025, while adjusted total assets grew from US$24.56 billion to US$36.48 billion over the same timeframe.

Similar growth is observed in stockholders’ equity. Reported stockholders’ equity rose from US$18.77 billion in 2021 to US$31.26 billion in 2025, and adjusted stockholders’ equity increased from US$17.89 billion to US$27.18 billion during the same period. The difference between reported and adjusted values for both assets and equity remains relatively consistent across the years, suggesting a systematic adjustment is being applied.

Reported Financial Leverage

Reported financial leverage exhibited a slight decrease from 1.36 in 2021 to 1.27 in 2022, followed by a modest increase to 1.29 in 2023 and remaining stable at 1.29 in 2024 before increasing slightly to 1.30 in 2025. This indicates a relatively stable level of financial leverage when considering reported figures.

Adjusted Financial Leverage

Adjusted financial leverage began at 1.37 in 2021 and decreased to 1.31 in 2022, then remained relatively stable at 1.30 in 2023. A slight increase to 1.32 was observed in 2024, followed by a further increase to 1.34 in 2025. The adjusted leverage ratio consistently remains marginally higher than the reported leverage ratio throughout the period.

The consistent difference between reported and adjusted financial leverage suggests the adjustments to assets and equity have a predictable impact on the leverage calculation. While both reported and adjusted leverage ratios remain within a narrow range, the slight upward trend in adjusted financial leverage in the later years warrants monitoring. The growth in both assets and equity appears to be outpacing any increase in leverage, indicating a strengthening financial position when considered in relation to the asset base.

The period between 2021 and 2025 demonstrates fluctuating financial performance as reflected in both reported and adjusted return on equity (ROE) metrics. Reported net income decreased significantly from 2021 to 2022, followed by a period of relative stability and modest growth through 2025. Adjusted net income exhibits a similar pattern, though the magnitude of the initial decline is more pronounced. Stockholders’ equity, both reported and adjusted, consistently increased throughout the five-year period.

Reported ROE

Reported ROE experienced a substantial decline from 43.03% in 2021 to 19.14% in 2022. Subsequent years show a gradual decrease, reaching 14.41% in 2025. This suggests a diminishing ability to generate profit relative to shareholder investment when considering reported figures.

Adjusted ROE

Adjusted ROE mirrors the trend observed in reported ROE, decreasing from 44.31% in 2021 to 17.15% in 2022. While showing some recovery to 14.04% in 2024, it ultimately settles at 13.68% in 2025. The adjusted ROE consistently remains slightly higher than the reported ROE across all years, indicating that adjustments to net income and stockholders’ equity positively impact profitability metrics.

Relationship between Reported and Adjusted ROE

The difference between reported and adjusted ROE remains relatively stable throughout the period, generally ranging between 0.7% and 1.2%. This consistency suggests that the nature of the adjustments made to arrive at the adjusted figures is consistent year over year. The adjustments appear to consistently enhance the ROE calculation.

Stockholders’ Equity Trend

Both reported and adjusted stockholders’ equity demonstrate a consistent upward trend throughout the period. Reported stockholders’ equity increased from US$18,768,800 in 2021 to US$31,256,900 in 2025, representing a growth of approximately 66.7%. Adjusted stockholders’ equity followed a similar trajectory, growing from US$17,891,900 to US$27,179,700, a growth of approximately 51.8%. This growth in equity provides a larger base for generating returns, but the declining ROE suggests that the growth in net income has not kept pace with the growth in equity.

In summary, while stockholders’ equity has grown consistently, profitability, as measured by both reported and adjusted ROE, has declined over the five-year period. The adjustments made to net income and equity consistently result in a slightly higher ROE, but the overall trend remains downward.

The period between 2021 and 2025 demonstrates a consistent decline in reported and adjusted return on assets (ROA). While both metrics initially exhibit substantial values, they trend downward over the five-year period. A comparison of reported and adjusted ROA reveals a relatively small difference in each year, suggesting that adjustments to net income and total assets have a limited impact on the overall ROA calculation.

Reported ROA

Reported ROA begins at 31.75% in 2021 and experiences a significant decrease to 14.85% in 2022. This decline continues, albeit at a slower pace, reaching 11.95% in 2023, 11.69% in 2024, and finally settling at 11.11% in 2025. The most substantial reduction occurs between 2021 and 2022, indicating a potentially significant shift in profitability relative to asset base during that period.

Adjusted ROA

Adjusted ROA mirrors the trend observed in reported ROA. Starting at 32.28% in 2021, it decreases to 13.07% in 2022, then to 10.21% in 2023. A slight increase is noted in 2024, with adjusted ROA reaching 10.61%, before decreasing again to 10.20% in 2025. The pattern of decline is consistent, though the adjusted figures consistently remain slightly higher than their reported counterparts.

Asset Trends

Reported total assets consistently increase throughout the period, rising from US$25,434,800 in 2021 to US$40,558,700 in 2025. Adjusted total assets follow a similar upward trajectory, moving from US$24,557,900 to US$36,481,500 over the same timeframe. The increasing asset base, coupled with the declining ROA, suggests that the company is not effectively leveraging its growing assets to generate proportionate increases in net income.

Net Income Trends

Reported net income decreases from US$8,075,300 in 2021 to US$4,338,400 in 2022, and then to US$3,953,600 in 2023. It shows a slight recovery to US$4,412,600 in 2024 and US$4,504,900 in 2025. Adjusted net income follows a similar pattern, with a decrease from US$7,928,200 in 2021 to US$3,719,500 in 2025. The relatively stable net income in the later years, combined with the increasing asset base, contributes to the observed decline in ROA.

In summary, the observed trends indicate a decreasing ability to generate profit from its asset base. The consistent increase in total assets, alongside relatively stagnant or declining net income, is the primary driver of this reduction in ROA. The small difference between reported and adjusted ROA suggests that the adjustments made do not fundamentally alter the overall picture of profitability relative to assets.