Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Vertex Pharmaceuticals Inc. (NASDAQ:VRTX)

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Analysis of Income Taxes

Advanced level

Income Tax Expense (Benefit)

Vertex Pharmaceuticals Inc., income tax expense (benefit), continuing operations

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Federal
Foreign
State
Current taxes
Federal
Foreign
State
Deferred taxes
Provision for (benefit from) income taxes

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-16).

Item Description The company
Current taxes Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Vertex Pharmaceuticals Inc.’s current taxes increased from 2017 to 2018 and from 2018 to 2019.
Deferred taxes Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Vertex Pharmaceuticals Inc.’s deferred taxes decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.
Provision for (benefit from) income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Vertex Pharmaceuticals Inc.’s provision for (benefit from) income taxes decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Effective Income Tax Rate (EITR)

Vertex Pharmaceuticals Inc., effective income tax rate (EITR) reconciliation

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
U.S. federal statutory tax rate
Effective income tax rate

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-16).

Item Description The company
Effective income tax rate Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Vertex Pharmaceuticals Inc.’s effective income tax rate decreased from 2017 to 2018 and from 2018 to 2019.

Components of Deferred Tax Assets and Liabilities

Vertex Pharmaceuticals Inc., components of deferred tax assets and liabilities

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net operating loss
Tax credit carryforwards
Intangible assets
Deferred revenues
Stock-based compensation
Accrued expenses
Finance lease liabilities
Operating lease assets
Other
Gross deferred tax assets
Valuation allowance
Deferred tax assets
Property and equipment
Acquired intangibles
Deferred revenue
Unrealized gain
Operating lease liabilities
Deferred tax liabilities
Net deferred tax assets (liabilities)

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-16).

Item Description The company
Gross deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Vertex Pharmaceuticals Inc.’s gross deferred tax assets increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.
Deferred tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Vertex Pharmaceuticals Inc.’s deferred tax assets increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.
Net deferred tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Vertex Pharmaceuticals Inc.’s net deferred tax assets (liabilities) increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.

Deferred Tax Assets and Liabilities, Classification

Vertex Pharmaceuticals Inc., deferred tax assets and liabilities, classification

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Deferred tax assets
Deferred tax liabilities

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-16).

Item Description The company
Deferred tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Vertex Pharmaceuticals Inc.’s deferred tax assets increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.
Deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.

Adjustments to Financial Statements: Removal of Deferred Taxes

Vertex Pharmaceuticals Inc., adjustments to financial statements

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported)
Less: Noncurrent deferred tax assets, net
Total assets (adjusted)
Adjustment to Total Liabilities
Total liabilities (as reported)
Less: Noncurrent deferred tax liabilities, net
Total liabilities (adjusted)
Adjustment to Total Vertex Shareholders’ Equity
Total Vertex shareholders’ equity (as reported)
Less: Net deferred tax assets (liabilities)
Total Vertex shareholders’ equity (adjusted)
Adjustment to Net Income (loss) Attributable To Vertex
Net income (loss) attributable to Vertex (as reported)
Add: Deferred income tax expense (benefit)
Net income (loss) attributable to Vertex (adjusted)

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-16).

Vertex Pharmaceuticals Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Vertex Pharmaceuticals Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net Profit Margin
Reported net profit margin
Adjusted net profit margin
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE
Adjusted ROE
Return on Assets (ROA)
Reported ROA
Adjusted ROA

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-16).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Vertex Pharmaceuticals Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Vertex Pharmaceuticals Inc.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Vertex Pharmaceuticals Inc.’s adjusted financial leverage ratio decreased from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Vertex Pharmaceuticals Inc.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Vertex Pharmaceuticals Inc.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.

Vertex Pharmaceuticals Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to Vertex
Revenues
Profitability Ratio
Net profit margin1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss) attributable to Vertex
Revenues
Profitability Ratio
Adjusted net profit margin2

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-16).

2019 Calculations

1 Net profit margin = 100 × Net income (loss) attributable to Vertex ÷ Revenues
= 100 × ÷ =

2 Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to Vertex ÷ Revenues
= 100 × ÷ =

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Vertex Pharmaceuticals Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Revenues
Total assets
Activity Ratio
Total asset turnover1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Revenues
Adjusted total assets
Activity Ratio
Adjusted total asset turnover2

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-16).

2019 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= ÷ =

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Vertex Pharmaceuticals Inc.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 and from 2018 to 2019.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Total assets
Total Vertex shareholders’ equity
Solvency Ratio
Financial leverage1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets
Adjusted total Vertex shareholders’ equity
Solvency Ratio
Adjusted financial leverage2

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-16).

2019 Calculations

1 Financial leverage = Total assets ÷ Total Vertex shareholders’ equity
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Vertex shareholders’ equity
= ÷ =

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Vertex Pharmaceuticals Inc.’s adjusted financial leverage ratio decreased from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to Vertex
Total Vertex shareholders’ equity
Profitability Ratio
ROE1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss) attributable to Vertex
Adjusted total Vertex shareholders’ equity
Profitability Ratio
Adjusted ROE2

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-16).

2019 Calculations

1 ROE = 100 × Net income (loss) attributable to Vertex ÷ Total Vertex shareholders’ equity
= 100 × ÷ =

2 Adjusted ROE = 100 × Adjusted net income (loss) attributable to Vertex ÷ Adjusted total Vertex shareholders’ equity
= 100 × ÷ =

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Vertex Pharmaceuticals Inc.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to Vertex
Total assets
Profitability Ratio
ROA1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss) attributable to Vertex
Adjusted total assets
Profitability Ratio
Adjusted ROA2

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-16).

2019 Calculations

1 ROA = 100 × Net income (loss) attributable to Vertex ÷ Total assets
= 100 × ÷ =

2 Adjusted ROA = 100 × Adjusted net income (loss) attributable to Vertex ÷ Adjusted total assets
= 100 × ÷ =

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Vertex Pharmaceuticals Inc.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.