Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

Vertex Pharmaceuticals Inc., consolidated income statement

US$ in thousands

12 months ended:	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Product revenues, net	11,020,100)	9,869,200)	8,930,700)	7,573,400)	6,202,783)
Other revenues	—)	—)	—)	1,000)	2,900)
Revenues	11,020,100)	9,869,200)	8,930,700)	7,574,400)	6,205,683)
Cost of sales	(1,530,500)	(1,262,200)	(1,080,300)	(904,200)	(736,300)
Gross profit	9,489,600)	8,607,000)	7,850,400)	6,670,200)	5,469,383)
Research and development expenses	(3,630,300)	(3,162,900)	(2,540,300)	(1,937,800)	(1,644,937)
Acquired in-process research and development expenses	(4,628,400)	(527,100)	(115,500)	(1,113,300)	(184,600)
Selling, general and administrative expenses	(1,464,300)	(1,136,600)	(944,700)	(840,100)	(770,456)
Change in fair value of contingent consideration	500)	51,600)	57,500)	3,100)	(13,100)
Income (loss) from operations	(232,900)	3,832,000)	4,307,400)	2,782,100)	2,856,290)
Interest income	598,100)	614,700)	144,600)	4,900)	22,239)
Interest expense	(30,600)	(44,100)	(54,800)	(61,500)	(58,151)
Other income (expense), net	(86,100)	(22,800)	(164,800)	4,900)	296,420)
Income before provision for income taxes	248,500)	4,379,800)	4,232,400)	2,730,400)	3,116,798)
Provision for income taxes	(784,100)	(760,200)	(910,400)	(388,300)	(405,151)
Net income (loss)	(535,600)	3,619,600)	3,322,000)	2,342,100)	2,711,647)

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).

The financial data exhibits a consistent upward trend in net product revenues over the five-year period, increasing from approximately 6.2 billion USD in 2020 to over 11 billion USD in 2024. Overall revenues followed a similar trajectory, though "Other revenues" were minimal and irregular, disappearing after 2021.

Cost of sales has risen steadily, growing from around 736 million USD in 2020 to more than 1.5 billion USD in 2024, which reflects expansion alongside revenue growth. Consequently, gross profit increased substantially, nearly doubling from about 5.5 billion USD in 2020 to almost 9.5 billion USD in 2024, demonstrating effective management of costs relative to revenue gains.

Research and development expenses show a significant upward trend, climbing from roughly 1.6 billion USD in 2020 to over 3.6 billion USD in 2024. This reflects increasing investment in innovation and product development. Acquired in-process research and development expenses, however, exhibit volatility, spiking notably in 2021 and again in 2024, which suggests irregular acquisition-related costs impacting R&D spending in those years.

Selling, general, and administrative expenses rose steadily from about 770 million USD in 2020 to nearly 1.5 billion USD in 2024, aligning with business growth and potentially increased marketing and administrative efforts. The change in fair value of contingent consideration fluctuated over the years but remained relatively minor in magnitude compared to other expense items.

Income from operations displayed fluctuations: starting at approximately 2.9 billion USD in 2020, slightly decreasing in 2021, then significantly increasing in 2022 before declining sharply in 2023 and turning negative in 2024, resulting in an operating loss of about 233 million USD. This decline in the latest year indicates increased costs or impairments impacting operational profitability.

Interest income was relatively low initially but surged dramatically in 2023 and 2024, reaching over 600 million USD, which may reflect higher cash holdings or investments yielding substantial returns. Interest expenses steadily decreased during the period, from about 58 million USD to 31 million USD, indicating potential debt reduction or more favorable financing costs.

Other income/(expense), net, was positive in 2020, negligible in 2021, and negative thereafter, with losses increasing slightly in the last two years, which may have contributed to lower overall profitability. Income before income taxes mirrored the trend in operating income, peaking in 2023 but collapsing in 2024 to approximately 249 million USD, reflecting the overall drop in pre-tax profitability.

Provision for income taxes increased through 2022 but decreased slightly in subsequent years; tax expenses remained significant relative to pre-tax income. The net income followed a similar pattern to operating income and pre-tax income: increasing from 2.7 billion USD in 2020 to just over 3.6 billion USD in 2023, then experiencing a sharp decline to a net loss of approximately 536 million USD in 2024. The negative net income in 2024 highlights considerable challenges in maintaining profitability.

Summary of Key Financial Trends:: - Steady increase in product revenues and gross profit over the five years.; - Growing research and development expenditures, with notable volatility in acquisition-related R&D costs.; - Increasing selling, general, and administrative expenses consistent with growth.; - Significant deterioration in income from operations and net income in 2024, reversing positive profitability trends.; - Elevated interest income in 2023 and 2024, accompanied by declining interest expense.; - Fluctuating other income/expense contributing variably to overall earnings.

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Vertex Pharmaceuticals Inc. (NASDAQ:VRTX)

Income Statement