Enterprise Value to EBITDA (EV/EBITDA)
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- Income Statement
- Common-Size Balance Sheet: Assets
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
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Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Vertex Pharmaceuticals Inc., EBITDA calculation
US$ in thousands
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).
- Net income (loss)
- The net income shows a positive trend from 2020 to 2023, increasing from approximately 2.71 billion US dollars in 2020 to around 3.62 billion US dollars in 2023. However, in 2024 there is a significant decline, resulting in a net loss of about 535.6 million US dollars, indicating a drastic negative turnaround after several years of growth.
- Earnings before tax (EBT)
- EBT demonstrates an overall upward trajectory from 3.12 billion US dollars in 2020 to a peak of approximately 4.38 billion US dollars in 2023. Despite this growth pattern, the EBT sharply drops in 2024 to approximately 248.5 million US dollars, reflecting a substantial decrease in earnings before taxes in the last reported year.
- Earnings before interest and tax (EBIT)
- EBIT follows a similar upward trend from 3.17 billion US dollars in 2020 to 4.42 billion US dollars in 2023. In 2024, EBIT experiences a significant decline falling to approximately 279.1 million US dollars. This indicates a considerable reduction in operating profitability before accounting for interest and taxes.
- Earnings before interest, tax, depreciation and amortization (EBITDA)
- EBITDA shows steady growth from about 3.28 billion US dollars in 2020 to 4.61 billion US dollars in 2023, suggesting improving operational performance before non-cash and financing-related expenses. However, this upward trend reverses sharply in 2024, with EBITDA falling to approximately 486.3 million US dollars, representing a major contraction in earnings capacity.
- Overall Trends and Insights
- From 2020 through 2023, the financial data reveals consistent growth across all profitability metrics, indicating an expanding and profitable operational period. Each successive year up to 2023 shows increased net income, EBT, EBIT, and EBITDA, pointing to strong business performance and possibly successful operational management. Nonetheless, 2024 presents a pronounced and abrupt deterioration in financial results, with all key profit indicators plunging to substantially lower levels and net income turning negative. This sharp decline signals potential underlying challenges or extraordinary events impacting performance in the latest year and warrants further investigation to identify causative factors.
Enterprise Value to EBITDA Ratio, Current
Vertex Pharmaceuticals Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | |
| Valuation Ratio | |
| EV/EBITDA | |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| AbbVie Inc. | |
| Amgen Inc. | |
| Bristol-Myers Squibb Co. | |
| Danaher Corp. | |
| Eli Lilly & Co. | |
| Gilead Sciences Inc. | |
| Johnson & Johnson | |
| Merck & Co. Inc. | |
| Pfizer Inc. | |
| Regeneron Pharmaceuticals Inc. | |
| Thermo Fisher Scientific Inc. | |
| EV/EBITDA, Sector | |
| Pharmaceuticals, Biotechnology & Life Sciences | |
| EV/EBITDA, Industry | |
| Health Care | |
Based on: 10-K (reporting date: 2024-12-31).
1 Click competitor name to see calculations.
If the company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.
Otherwise, if the company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.
Enterprise Value to EBITDA Ratio, Historical
Vertex Pharmaceuticals Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | ||||||
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | ||||||
| Valuation Ratio | ||||||
| EV/EBITDA3 | ||||||
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| EV/EBITDA, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| EV/EBITDA, Industry | ||||||
| Health Care | ||||||
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).
3 2024 Calculation
EV/EBITDA = EV ÷ EBITDA
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV) Trend
- The enterprise value exhibited a continuous upward trend over the five-year period. Starting at approximately 48.6 billion US dollars at the end of 2020, it increased to nearly 55.2 billion at the end of 2021, followed by a rise to about 66.2 billion at the end of 2022. The growth accelerated substantially thereafter, with the value reaching over 99.3 billion by the end of 2023 and further increasing to nearly 113 billion by the end of 2024.
- EBITDA Performance
- Earnings before interest, tax, depreciation, and amortization showed variability across the years. In 2020, EBITDA was approximately 3.28 billion US dollars, which declined to around 2.92 billion in 2021. Subsequently, it experienced a strong recovery and growth to roughly 4.44 billion in 2022 and a slight increase to about 4.61 billion in 2023. However, there was a sharp decline in EBITDA in 2024, dropping dramatically to approximately 486 million US dollars.
- EV/EBITDA Ratio Analysis
- The EV/EBITDA ratio, which is a valuation multiple reflecting enterprise value relative to operating profitability, varied considerably. Initially, the ratio stood at 14.81 in 2020 and then increased to 18.92 in 2021, indicating a higher valuation relative to EBITDA at that point despite EBITDA declining. It decreased back near 2020 levels to 14.91 in 2022 as EBITDA rebounded. In 2023, the ratio jumped significantly to 21.57, showing a marked increase in valuation relative to EBITDA. Most notably, in 2024, this ratio surged dramatically to 231.93, which is largely attributable to the severe drop in EBITDA despite the continuing rise in enterprise value.
- Insights and Implications
- The data presents a scenario of steady growth in enterprise value accompanied by fluctuating EBITDA results. The sharp reduction in EBITDA in 2024 relative to previous years raises concerns regarding operational profitability or one-off adverse impacts during that year. The extraordinary increase in the EV/EBITDA ratio in 2024 highlights a disconnection between the company's valuation and its current earnings performance, which could imply elevated market expectations, valuation adjustments, or risk factors specific to that period. These dynamics suggest the need for further investigation into the drivers behind EBITDA decline and the factors sustaining or inflating enterprise value.