Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Vertex Pharmaceuticals Inc., FCFF 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).
- Operating Activities Cash Flow
- Over the five-year period, the net cash provided by operating activities exhibited variable performance. It started at a high level of approximately $3,253 million in 2020 and declined to around $2,643 million in 2021, marking a notable decrease. Subsequently, it rebounded strongly in 2022 to approximately $4,130 million, indicating a significant improvement in cash generation. In 2023, cash inflows reduced again to about $3,537 million but remained above the level recorded in 2021. The most recent data point in 2024 reveals a substantial reversal, showing a negative cash flow of approximately -$493 million, which indicates operational cash outflows for that year.
- Free Cash Flow to the Firm (FCFF)
- The FCFF followed a pattern similar to that of operating cash flow, beginning at roughly $3,041 million in 2020 and declining to approximately $2,457 million in 2021. The figure improved significantly in 2022 to around $3,966 million, reflecting enhanced free cash generation. In 2023, the FCFF decreased somewhat to approximately $3,372 million but still remained strong relative to earlier years. However, the data for 2024 shows a negative free cash flow of about -$766 million, which signals a material deterioration in free cash flow availability.
- Overall Trends and Insights
- The data reveals a fluctuating cash flow profile with peaks in 2022 and declines in the years immediately preceding and following it. Notably, 2024 stands out with negative cash flows from both operations and free cash flow, suggesting either increased operational cash consumption or significant capital expenditures or other financial outflows that have impacted liquidity. The similarity in trends between operating cash flow and FCFF implies that changes in operating performance substantially affect free cash flow generation. The negative cash flow in 2024 warrants closer investigation into the underlying causes, as it represents a significant divergence from the generally positive cash flows in previous years.
Interest Paid, Net of Tax
Vertex Pharmaceuticals Inc., interest paid, net of tax calculation
US$ 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).
2 2024 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 30,500 × 21.00% = 6,405
- Effective Income Tax Rate (EITR)
- The effective income tax rate showed some fluctuations over the five-year period. Starting at 13% in 2020, it increased moderately to 14.2% in 2021, then saw a notable rise to 21.5% in 2022. Subsequently, it decreased to 17.4% in 2023 before rising again to 21% in 2024. Overall, the trend indicates variability in the tax burden, with rates in the last two years generally higher than those in the earlier years.
- Cash Paid for Interest, Net of Tax
- The cash paid for interest, net of tax, displayed a consistent downward trend throughout the five-year period. Beginning at $47,432 thousand in 2020, the value slightly increased to $48,305 thousand in 2021 but then declined steadily each year to $41,056 thousand in 2022, $35,601 thousand in 2023, and finally reaching $24,095 thousand in 2024. This pattern suggests a reduction in interest expense or improved interest cost management over time.
Enterprise Value to FCFF Ratio, Current
Vertex Pharmaceuticals Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 93,263,739) |
| Free cash flow to the firm (FCFF) | (766,205) |
| Valuation Ratio | |
| EV/FCFF | — |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| AbbVie Inc. | 22.53 |
| Amgen Inc. | 14.71 |
| Bristol-Myers Squibb Co. | 8.64 |
| Danaher Corp. | 27.06 |
| Eli Lilly & Co. | 176.72 |
| Gilead Sciences Inc. | 14.22 |
| Johnson & Johnson | 20.39 |
| Merck & Co. Inc. | 11.77 |
| Pfizer Inc. | 14.44 |
| Regeneron Pharmaceuticals Inc. | 14.93 |
| Thermo Fisher Scientific Inc. | 23.34 |
| EV/FCFF, Sector | |
| Pharmaceuticals, Biotechnology & Life Sciences | 22.49 |
| EV/FCFF, Industry | |
| Health Care | 22.27 |
Based on: 10-K (reporting date: 2024-12-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Vertex Pharmaceuticals Inc., historical EV/FCFF 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 | 112,787,958) | 99,322,439) | 66,152,095) | 55,209,611) | 48,644,172) | |
| Free cash flow to the firm (FCFF)2 | (766,205) | 3,372,501) | 3,966,256) | 2,456,805) | 3,041,139) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | — | 29.45 | 16.68 | 22.47 | 16.00 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| AbbVie Inc. | 20.05 | 14.89 | 12.15 | 13.18 | 13.95 | |
| Amgen Inc. | 15.35 | 22.22 | 16.01 | 15.82 | 14.51 | |
| Bristol-Myers Squibb Co. | 9.94 | 9.14 | 13.87 | 10.52 | 11.63 | |
| Danaher Corp. | 28.93 | 36.34 | 25.74 | 28.25 | 30.66 | |
| Eli Lilly & Co. | 200.93 | 655.33 | 59.14 | 38.37 | 39.01 | |
| Gilead Sciences Inc. | 14.50 | 13.41 | 13.58 | 8.42 | 13.60 | |
| Johnson & Johnson | 18.16 | 19.30 | 23.80 | 21.25 | 20.75 | |
| Merck & Co. Inc. | 13.24 | 37.84 | 19.09 | 23.27 | 34.12 | |
| Pfizer Inc. | 15.33 | 32.24 | 9.15 | 8.40 | 21.74 | |
| Regeneron Pharmaceuticals Inc. | 19.30 | 23.99 | 17.96 | 9.81 | 25.74 | |
| Thermo Fisher Scientific Inc. | 26.13 | 28.85 | 31.61 | 33.14 | 26.14 | |
| EV/FCFF, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 23.57 | 27.24 | 17.95 | 16.12 | 19.74 | |
| EV/FCFF, Industry | ||||||
| Health Care | 24.03 | 25.94 | 18.56 | 17.80 | 19.47 | |
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/FCFF = EV ÷ FCFF
= 112,787,958 ÷ -766,205 = —
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited a consistent upward trend over the five-year period. Starting from approximately 48.6 billion USD at the end of 2020, it increased steadily each year, reaching nearly 113 billion USD by the end of 2024. This reflects a significant growth in the overall market valuation or capital structure of the firm.
- Free Cash Flow to the Firm (FCFF)
- FCFF displayed fluctuating patterns over the years. Initially, it decreased from around 3.04 billion USD in 2020 to approximately 2.46 billion USD in 2021. Subsequently, FCFF saw a notable increase, peaking at nearly 4 billion USD in 2022. However, a decline occurred in 2023 to about 3.37 billion USD, followed by a sharp drop into negative territory, registering a deficit of approximately 766 million USD in 2024. This indicates potential operational or investment challenges during the most recent period.
- EV to FCFF Ratio (EV/FCFF)
- The EV/FCFF ratio reveals considerable volatility across the years, reflecting changing market valuations relative to free cash flow generation. In 2020, the ratio stood at 16, increased significantly to 22.47 in 2021, then declined to 16.68 in 2022, and surged again to 29.45 in 2023. The ratio for 2024 is unavailable, possibly due to the negative FCFF figure which makes the ratio non-computable or less meaningful. The elevated ratio in 2023 suggests increased market valuation relative to cash flow performance, potentially indicating heightened expectations or valuation pressures.