Enterprise Value to EBITDA (EV/EBITDA)
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- Statement of Comprehensive Income
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity 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: 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 financial performance, as indicated by earnings metrics, demonstrates a generally positive trajectory from 2021 through 2023, followed by a significant downturn in 2024, and a subsequent recovery in 2025. A consistent pattern exists across all reported earnings measures – Net Income, Earnings Before Tax (EBT), Earnings Before Interest and Tax (EBIT), and Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA).
- EBITDA Trend
- EBITDA increased steadily from US$2,917.5 million in 2021 to US$4,605.2 million in 2023, representing a compound annual growth rate of approximately 14.7%. This indicates improving operational profitability over this period. However, in 2024, EBITDA experienced a substantial decrease to US$486.3 million. This represents a significant contraction in earnings power. A recovery is then observed in 2025, with EBITDA rising to US$4,866.3 million, exceeding the 2023 level.
- Relationship between Earnings Measures
- The difference between EBITDA and EBIT remained relatively stable between 2021 and 2023, suggesting consistent depreciation and amortization expenses. The gap between EBIT and EBT also remained consistent, indicating stable interest expense. The most pronounced fluctuation occurs between EBT and Net Income, reflecting changes in the effective tax rate. The substantial decline in all earnings measures in 2024 is consistent across all levels, suggesting a broad-based impact on profitability.
- 2024 Anomaly
- The year 2024 stands out as an outlier. The dramatic reduction in EBITDA, EBIT, EBT, and Net Income suggests a significant negative event or series of events impacted the company’s financial results. Further investigation would be required to determine the underlying cause of this decline. The recovery in 2025 suggests the impact was potentially temporary or successfully mitigated.
- Overall Performance
- Despite the volatility observed in 2024, the overall trend from 2021 to 2025 demonstrates growth in earnings power. The return to profitability in 2025, exceeding prior peak levels, is a positive indicator. However, the substantial fluctuation highlights potential risks and the importance of understanding the factors driving the 2024 downturn.
Enterprise Value to EBITDA Ratio, Current
Vertex Pharmaceuticals Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ 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: 2025-12-31).
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, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 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).
3 2025 Calculation
EV/EBITDA = EV ÷ EBITDA
= ÷ =
4 Click competitor name to see calculations.
The Enterprise Value to EBITDA ratio exhibits considerable fluctuation over the observed period. Initially, the ratio decreased, followed by a significant increase and then a return towards earlier levels. Enterprise Value consistently increased year-over-year, while EBITDA experienced more volatility.
- Enterprise Value (EV)
- Enterprise Value demonstrated a consistent upward trend throughout the period, increasing from US$55.21 billion in 2021 to US$118.35 billion in 2025. This indicates a growing overall value of the company, considering both equity and debt.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
- EBITDA increased from US$2.92 billion in 2021 to US$4.44 billion in 2022, and then to US$4.61 billion in 2023. A substantial decrease was observed in 2024, falling to US$0.49 billion, before recovering to US$4.87 billion in 2025. This volatility suggests potential operational or accounting factors impacting profitability during the 2024 fiscal year.
- EV/EBITDA Ratio
- The EV/EBITDA ratio began at 18.92 in 2021, decreased to 14.91 in 2022, and then increased to 21.57 in 2023. A dramatic surge occurred in 2024, reaching 231.93, coinciding with the significant decline in EBITDA. The ratio then decreased to 24.32 in 2025, as EBITDA recovered. The 2024 spike suggests the market valued the enterprise at a very high multiple of its earnings before non-cash expenses, likely due to expectations of future growth or a temporary disruption in current earnings. The return to a level closer to prior years in 2025 indicates a re-evaluation as earnings improved.
The substantial change in the EV/EBITDA ratio in 2024 warrants further investigation to understand the underlying causes of the EBITDA decline and the market’s reaction. The overall trend suggests a company with increasing enterprise value, but with earnings that are subject to fluctuation.