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Vertex Pharmaceuticals Inc. (NASDAQ:VRTX)

Enterprise Value to EBITDA (EV/EBITDA)

Intermediate level

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

Vertex Pharmaceuticals Inc., EBITDA calculation

US$ in thousands

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12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income (loss) attributable to Vertex 1,176,810  2,096,896  263,484  (112,052) (556,334)
Add: Net income attributable to noncontrolling interest —  (9,793) (171,849) 28,021  (31,847)
Add: Income tax expense 218,109  (1,486,862) (107,324) 16,665  30,381 
Earnings before tax (EBT) 1,394,919  600,241  (15,689) (67,366) (557,800)
Add: Interest expense 58,502  72,471  69,298  81,432  84,206 
Earnings before interest and tax (EBIT) 1,453,421  672,712  53,609  14,066  (473,594)
Add: Depreciation expense 106,941  72,420  61,397  61,398  62,343 
Earnings before interest, tax, depreciation and amortization (EBITDA) 1,560,362  745,132  115,006  75,464  (411,251)

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
EBITDA To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital. Vertex Pharmaceuticals Inc.’s EBITDA increased from 2017 to 2018 and from 2018 to 2019.

Enterprise Value to EBITDA Ratio, Current

Vertex Pharmaceuticals Inc., current EV/EBITDA calculation, comparison to benchmarks

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Selected Financial Data (US$ in thousands)
Enterprise value (EV) 62,951,847 
Earnings before interest, tax, depreciation and amortization (EBITDA) 1,560,362 
Valuation Ratio
EV/EBITDA 40.34
Benchmarks
EV/EBITDA, Competitors1
Abbott Laboratories 20.63
AbbVie Inc. 11.35
Allergan PLC 43.68
Amgen Inc. 11.54
Biogen Inc. 7.03
Bristol-Myers Squibb Co. 21.97
Eli Lilly & Co. 21.51
Gilead Sciences Inc. 13.04
Johnson & Johnson 15.28
Merck & Co. Inc. 13.72
Pfizer Inc. 9.28
Regeneron Pharmaceuticals Inc. 19.85
Zoetis Inc. 26.57
EV/EBITDA, Sector
Pharmaceuticals & Biotechnology 14.60
EV/EBITDA, Industry
Health Care 14.98

Based on: 10-K (filing date: 2020-02-13).

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

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in thousands)
Enterprise value (EV)1 59,008,371  44,779,018  39,370,339  20,866,988  20,956,661 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 1,560,362  745,132  115,006  75,464  (411,251)
Valuation Ratio
EV/EBITDA3 37.82 60.10 342.33 276.52 —
Benchmarks
EV/EBITDA, Competitors4
Abbott Laboratories 21.70 21.41 20.08 25.22 12.40
AbbVie Inc. 13.68 17.98 20.80 12.73 13.50
Allergan PLC 47.47 84.90 — 20.95 59.52
Amgen Inc. 12.26 9.49 9.37 9.60 9.91
Biogen Inc. 7.60 9.55 11.68 9.99 11.42
Bristol-Myers Squibb Co. 23.84 11.97 17.25 14.26 39.09
Eli Lilly & Co. 21.40 23.29 22.72 18.40 19.15
Gilead Sciences Inc. 11.77 7.83 7.11 5.57 5.56
Johnson & Johnson 16.28 14.42 15.04 13.07 11.54
Merck & Co. Inc. 13.66 16.05 13.74 17.75 12.35
Pfizer Inc. 9.17 13.48 11.92 14.86 13.02
Regeneron Pharmaceuticals Inc. 14.80 15.50 15.13 26.10 28.77
Zoetis Inc. 30.11 20.74 21.37 18.19 28.57
EV/EBITDA, Sector
Pharmaceuticals & Biotechnology 15.14 14.88 15.03 13.31 13.23
EV/EBITDA, Industry
Health Care 15.92 15.55 15.56 13.78 13.74

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).

1 See details »

2 See details »

3 2019 Calculation
EV/EBITDA = EV ÷ EBITDA
= 59,008,371 ÷ 1,560,362 = 37.82

4 Click competitor name to see calculations.

Valuation ratio Description The company
EV/EBITDA Enterprise value to earnings before interest, tax, depreciation and amortization is a valuation indicator for the overall company rather than common stock. Vertex Pharmaceuticals Inc.’s EV/EBITDA ratio decreased from 2017 to 2018 and from 2018 to 2019.