Common-Size Income Statement
Vertex Pharmaceuticals Inc., common-size consolidated income statement
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 common-size income statement reveals significant shifts in the company’s profitability and expense structure over the five-year period. Revenue concentration remains exceptionally high, stemming from product revenues, although a slight diversification is observed in the most recent year. Cost of sales as a percentage of revenue consistently increased, while gross profit experienced a corresponding decline. Notably, research and development expenses, alongside acquired in-process research and development expenses, represent a substantial and fluctuating portion of revenue, impacting overall operational income.
- Revenue Composition
- Product revenues consistently comprised nearly all revenue, ranging from 99.99% to 100% between 2021 and 2023. In 2025, product revenues decreased slightly to 99.74%, with other revenues increasing to 0.26% of total revenue, indicating a minor diversification of revenue streams.
- Profitability Margins
- Gross profit as a percentage of revenue decreased from 88.06% in 2021 to 86.11% in 2024, before a slight recovery to 86.24% in 2025. This decline coincides with a consistent increase in the cost of sales as a percentage of revenue, rising from -11.94% to -13.89% over the same period. Net income as a percentage of revenue also exhibited volatility, peaking at 37.20% in 2022 before experiencing a significant loss of -4.86% in 2024, and recovering to 32.94% in 2025.
- Research and Development
- Research and development expenses increased substantially as a percentage of revenue from 25.58% in 2021 to 32.05% in 2023, before leveling off slightly to 32.58% in 2025. Acquired in-process research and development expenses were also significant, particularly in 2024, reaching -42.00% of revenue, suggesting a large acquisition or write-down related to research projects. These expenses collectively represent a major investment in future growth.
- Operating Performance
- Income from operations as a percentage of revenue demonstrated considerable fluctuation. It rose from 36.73% in 2021 to a high of 48.23% in 2022, then decreased to 38.83% in 2023, and experienced a substantial loss of -2.11% in 2024, before recovering to 34.77% in 2025. This volatility is likely influenced by the combined effect of cost of sales, research and development, and selling, general and administrative expenses.
- Other Income and Expenses
- Interest income as a percentage of revenue increased significantly from 0.06% in 2021 to 6.23% in 2023, before decreasing to 4.09% in 2025. Interest expense remained relatively stable, decreasing from -0.81% to -0.11% over the period. An intangible asset impairment charge of -3.16% of revenue appeared in 2025, impacting overall profitability. Changes in the fair value of contingent consideration also fluctuated, with a negative impact in 2025.
- Tax Rate
- The provision for income taxes as a percentage of revenue varied considerably, ranging from -5.13% to -10.19%. This fluctuation likely reflects changes in taxable income and applicable tax rates.
Overall, the company experienced a period of fluctuating performance. While revenue remained heavily concentrated, increased costs, particularly in research and development and cost of sales, impacted profitability. The significant impairment charge and fluctuations in contingent consideration further contributed to the volatility observed in net income.
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