Allergan PLC (NYSE:AGN)

The financial data reveals several important trends concerning intangible assets and goodwill over the five-year period ending December 31, 2019.

Definite lived intangible assets

There is a consistent increase in the cost basis from approximately 65.2 billion US dollars in 2015 to 72.9 billion US dollars in 2019, indicating sustained investments or acquisitions related to these assets.

Accumulated amortization has increased significantly each year, from about 8.5 billion in 2015 to 39.6 billion in 2019, reflecting ongoing amortization expenses associated with these assets.

As a result, the net value of definite lived intangible assets has declined steadily from 56.7 billion in 2015 to 33.4 billion in 2019, showing the impact of amortization exceeding new capitalizations or acquisitions.

Product rights and other intangibles

The gross value increased from approximately 64.5 billion in 2015 to a peak of 73.9 billion in 2017 before declining slightly to 72.2 billion in 2019.

The net product rights and other intangibles also show a downward trend, falling from 67.9 billion in 2015 to 37.9 billion in 2019, indicating impairment, amortization, or disposals impacting their net carrying amount.

IPR&D and Indefinite lived intangible assets

Both categories demonstrate a steady decrease over the period. IPR&D declines from 11.1 billion in 2015 to 4.5 billion in 2019.

Similarly, indefinite lived intangible assets decline from 11.2 billion in 2015 to 4.5 billion in 2019. This suggests the company is either expensing R&D costs, impairing these assets, or reclassifying them during the period.

The separate trade name intangible asset remains constant at 690 million throughout the period, with an additional smaller trade name value of 76.2 million recorded in 2015 and absent thereafter.

Goodwill

Goodwill values remain relatively stable, with a peak of nearly 49.9 billion in 2017 followed by a decline to 42.2 billion in 2019.

The aggregated value of goodwill with product rights and other intangible assets shows a downward trend from 114.5 billion in 2015 to 80.1 billion in 2019, indicating possible write-downs or divestitures affecting the total intangible asset base.

Overall, the data suggests a strategic environment characterized by significant amortization charges, a declining intangible asset base net of amortization, and a reduction in goodwill, possibly due to impairments or disposals. Investments in intangible assets have not offset the amortization and impairments, resulting in decreasing net carrying amounts through the period analyzed.

Assets Trend

The reported total assets have exhibited a consistent decline over the observed period from US$135.8 billion at the end of 2015 to US$94.7 billion at the end of 2019. Similarly, the adjusted total assets have followed a downward trajectory, decreasing more sharply from US$89.3 billion in 2015 to US$52.5 billion in 2019. This trend indicates a systematic reduction in asset base, both on a reported and goodwill-adjusted basis, suggesting significant asset disposals, write-downs, or restructuring activities.

Equity Movement

Reported shareholders' equity has also declined steadily from approximately US$76.6 billion in 2015 to US$58.2 billion in 2019. The adjusted shareholders' equity shows a parallel pattern but significantly lower levels, falling from US$30.0 billion to US$15.9 billion across the same period. The consistent decrease in equity, particularly in the adjusted figures, points to weakening net asset values after accounting for goodwill adjustments, possibly reflecting impaired goodwill or losses absorbed.

Profitability Analysis

Reported net income attributable to shareholders has experienced considerable volatility. Starting with a positive income of approximately US$3.9 billion in 2015, it surged to US$14.9 billion in 2016 before turning negative from 2017 onwards, with losses ranging from approximately -US$4.1 billion in 2017 to -US$5.3 billion in 2019. Adjusted net income mirrors this volatility but shows a moderated level of losses post-2017: from -US$4.1 billion in 2017 to -US$1.7 billion in 2019. The adjustment appears to mitigate some of the reported net losses, which may indicate exclusion of certain non-operational or goodwill-related charges.

Overall Financial Performance

The company has experienced declining asset and equity levels consistently over the five-year period, alongside increasing net losses after 2016. The adjusted metrics, factoring out goodwill, show a more pronounced contraction in asset and equity bases but relatively lower net losses in recent years. This suggests underlying operational challenges and asset impairments which have negatively impacted the company’s financial health. The significant reduction in adjusted equity also implies that goodwill write-downs substantially affect the shareholder value.

Net profit margin trends

The reported net profit margin showed a strong value of 25.98% in 2015, followed by an exceptional peak at 102.76% in 2016. However, the company experienced a significant decline afterward, turning negative in 2017 at -25.88%, and remaining deeply negative through 2018 and 2019 at -32.28% and -32.76%, respectively. The adjusted net profit margin mirrored this pattern initially, but the negative margins in 2018 and 2019 were less severe at -14.29% and -10.68%, indicating that adjustments, possibly excluding goodwill impacts, mitigated some of the losses.

Total asset turnover trends

Reported total asset turnover increased steadily from 0.11 in 2015 and 2016 to 0.17 in 2019, indicating improving efficiency in asset utilization over the period. Adjusted total asset turnover was consistently higher than reported figures, rising from 0.17 in 2015 to 0.31 in 2019, suggesting that adjustments enhanced the perception of asset efficiency, potentially by removing intangible asset inflations.

Financial leverage trends

Reported financial leverage demonstrated a gradual decline from 1.77 in 2015 to a low of 1.56 in 2018, before a slight increase to 1.63 in 2019. Conversely, adjusted financial leverage was substantially higher across all years, although it also dipped between 2015 and 2016 before rising steadily to reach 3.29 in 2019. This divergence points to the adjusted figures capturing greater reliance on debt or equity amplification, possibly refined after goodwill adjustments.

Return on equity (ROE) trends

Reported ROE reflected positive performance in 2015 and 2016 at 5.11% and 19.65%, respectively, before turning negative from 2017 onwards, declining to -9.06% by 2019. Adjusted ROE was notably higher in 2015 (13.03%) and spiked to a remarkable 50.18% in 2016, then sharply reversed into negative territory, showing greater volatility and deeper downturns than reported figures, with -17.22% in 2017 and gradual improvement towards -10.79% in 2019. This suggests that goodwill adjustments significantly impacted equity profitability metrics, reflecting the company's operational and financial challenges in later years.

Return on assets (ROA) trends

Reported ROA improved from 2.88% in 2015 to 11.61% in 2016, but then reversed sharply to negative values from 2017, reaching -5.57% by 2019. Adjusted ROA followed a similar trajectory but remained consistently higher than reported figures until 2018, indicating milder negative returns, with -3.28% reported in 2019. This contrast highlights the effect of adjustments in smoothing asset profitability declines during the downturn period.

Summary of insights

Overall, the data depicts a company that experienced excellent profitability and returns in 2015 and especially 2016, followed by a severe and sustained downturn beginning in 2017 across key profitability and efficiency measures. The adjustments, likely related to goodwill, consistently presented more favorable asset utilization and profitability metrics, though still reflecting the deeper challenges faced by the company. Financial leverage according to adjustments indicates increasing reliance on capital structure strategies by 2019. The substantial decline in profitability margins and returns after 2016 suggests significant operational or market difficulties impacting the company's financial health.

The financial data reveals significant volatility in the company's profitability over the five-year period examined. The reported net income attributable to shareholders showed a large positive figure in 2015 and 2016, with a remarkable peak in 2016 at approximately 14.97 billion USD. However, this was followed by steep declines into negative territory from 2017 onwards, reaching losses exceeding 5 billion USD in both 2018 and 2019.

The adjusted net income figures, which presumably exclude goodwill and other exceptional items, mirror the reported net income in 2015 and 2016, suggesting no significant adjustments were necessary in those years. From 2017 forward, the adjusted net income remains negative but shows a less severe decline compared to the reported net income. Specifically, losses are reduced in 2018 and 2019 when using adjusted results, indicating that some impairments or one-time charges may have contributed to diminishing reported profits during these years.

Examining the profit margins provides further insight into profitability trends. The reported net profit margin was high and positive in 2015 and extraordinarily elevated in 2016, exceeding 100%, which signals a very strong profitability or possibly extraordinary income items affecting that year. However, this metric deteriorated sharply thereafter, with the company experiencing negative margins from 2017 through 2019, indicating an inability to generate profit relative to revenue.

The adjusted net profit margin follows a similar pattern but is notably less negative from 2018 onwards, with margins of approximately -14.29% in 2018 and -10.68% in 2019 versus reported margins around -32%. This suggests that adjustments for goodwill and other items improve the view of underlying profitability, though the company remained unprofitable during these later years.

In summary, the data depicts a company that was highly profitable up to 2016 but faced a sharp reversal in financial performance in subsequent years with sustained net losses and negative profit margins. Adjusted figures indicate that some of these negative results stem from non-recurring charges, which somewhat mitigate but do not eliminate the losses. The trend suggests challenges in maintaining profitability and potential issues related to asset impairments or restructuring activities in the post-2016 period.

Total Assets

The reported total assets demonstrate a consistent decline over the five-year period, decreasing from approximately 135.8 billion US dollars at the end of 2015 to about 94.7 billion US dollars by the end of 2019. Similarly, the adjusted total assets, which exclude goodwill, also show a downward trend, dropping from roughly 89.3 billion US dollars in 2015 to nearly 52.5 billion US dollars in 2019. This suggests significant asset reductions or disposals during this timeframe, with a proportionally larger decrease in adjusted assets compared to reported assets.

Total Asset Turnover

The reported total asset turnover ratio exhibits a gradual increase from 0.11 in 2015 to 0.17 in 2019, indicating a progressive improvement in the efficiency with which the company utilizes its reported assets to generate revenue. The adjusted total asset turnover ratio, excluding goodwill, also rises more markedly, from 0.17 in 2015 to 0.31 in 2019. This higher ratio compared to the reported figure highlights enhanced asset utilization efficiency when goodwill is removed from total assets, with a notably stronger improvement trend over the observed period.

Insights

The data suggests that while total asset bases—both reported and adjusted—have been contracting, the company has simultaneously improved its ability to generate revenue from those assets. The sharper increase in adjusted asset turnover relative to the reported counterpart implies that non-goodwill assets have become more productive over time. This could reflect strategic operational improvements or asset optimization initiatives. Overall, the trends point to efficient asset management amid a gradually shrinking asset base.

The analysis of the financial data over the five-year period reveals several significant trends in both reported and goodwill-adjusted metrics.

Total Assets

Reported total assets display a consistent downward trend, decreasing from approximately 135.8 billion US dollars at the end of 2015 to about 94.7 billion US dollars by the end of 2019. This represents a substantial reduction in asset size over the period. Similarly, adjusted total assets, which exclude goodwill, follow a comparable declining pattern, shrinking from about 89.3 billion to 52.5 billion US dollars. The adjusted figures exhibit a steeper decline relative to reported totals, indicating that goodwill constitutes a significant portion of the asset base and its exclusion results in a more pronounced contraction in asset size.

Shareholders’ Equity

Reported shareholders’ equity also declines gradually over the analyzed timeframe, falling from around 76.6 billion US dollars in 2015 to approximately 58.2 billion US dollars in 2019. This steady decrease suggests erosion in net book value or retained earnings. The goodwill-adjusted shareholders’ equity shows a sharper decline, from about 30.0 billion to 15.9 billion US dollars, reflecting the impact of removing goodwill from equity and signifying a more pronounced reduction in core equity value.

Financial Leverage

Reported financial leverage, defined as the ratio of total assets to shareholders’ equity, shows a decreasing trend from 1.77 in 2015 to a low of 1.56 in 2018, before slightly rising to 1.63 in 2019. This indicates a modest decrease in leverage levels over the period but later a slight increase. In contrast, adjusted financial leverage rises overall, starting at 2.97 in 2015, fluctuating slightly in the middle years, and peaking at 3.29 in 2019. The increasing trend in adjusted leverage implies greater reliance on liabilities when goodwill is excluded, suggesting higher financial risk based on core asset and equity values alone.

In summary, the data illustrates a consistent reduction in both total assets and shareholders’ equity under reported and adjusted bases, with goodwill adjustments highlighting more significant declines and increased financial leverage. This pattern suggests that the company experienced contraction in its asset base and equity, with increasing financial leverage when intangible assets such as goodwill are excluded, pointing to potential shifts in capital structure and risk profile over the period examined.

The financial data demonstrates a significant fluctuation in net income figures, equity values, and return on equity (ROE) metrics over the five-year period. Both reported and adjusted results reveal notable volatility and downward trends beginning in 2017.

Net Income attributable to Shareholders

The reported net income showed an initial increase from approximately $3.9 billion in 2015 to $14.97 billion in 2016, indicating a strong profitability surge. However, starting in 2017, the company experienced substantial losses, with net income turning negative at approximately -$4.13 billion. These losses deepened in 2018 and 2019, increasing in magnitude to about -$5.09 billion and -$5.27 billion respectively. When adjusting for goodwill, the pattern is similar though the losses from 2018 onward are somewhat reduced in size, from about -$2.26 billion in 2018 to approximately -$1.72 billion in 2019. This suggests that goodwill adjustments mitigate but do not negate the losses in recent years.

Shareholders’ Equity

The reported shareholders’ equity declined steadily after 2015, starting from roughly $76.6 billion and decreasing to about $58.2 billion by 2019. This represents a significant erosion in the equity base over this period. The adjusted shareholders’ equity, which accounts for goodwill, shows an even sharper decline, falling from approximately $30.0 billion in 2015 to roughly $15.9 billion in 2019. The adjusted figures being considerably lower than the reported figures imply a substantial goodwill component on the balance sheet, which when removed, indicates a reduced equity cushion.

Return on Equity (ROE)

Reported ROE exhibited high volatility. It peaked at 19.65% in 2016 following the profit spike but then declined sharply into negative territory, reaching -9.06% in 2019. This shift reflects deteriorating profitability relative to the equity base. Adjusted ROE follows a similar trajectory but with more extreme swings: a high of 50.18% in 2016, followed by increasingly negative returns down to -10.79% in 2019. The higher positive peak and deeper negative trough in adjusted ROE likely result from the reduced equity denominator after goodwill adjustment, amplifying percentage changes.

Overall, the data reveals a company that experienced a strong profit increase up to 2016 but then faced several years of significant operating losses. The declining shareholders’ equity and consistently negative ROE from 2017 onwards indicate sustained financial challenges. The disparity between reported and adjusted data highlights the influence of goodwill on the financial statements, underscoring the importance of considering adjusted figures for a clearer view of underlying financial health.

The analysis of financial data over the five-year period reveals significant fluctuations and downward trends in key profitability and asset metrics.

Net Income

Reported net income attributable to shareholders showed an initial increase from approximately 3.9 billion US dollars in 2015 to nearly 15 billion in 2016, indicating strong profitability during that period. However, this was followed by sharp declines in subsequent years, with reported net losses extending to over 5 billion US dollars by 2019. The adjusted net income, which likely excludes goodwill-related adjustments, follows a similar pattern but displays slightly lower losses in 2018 and 2019, suggesting some mitigating effects of the adjustments on the bottom line losses in these years.

Total Assets

Reported total assets declined steadily each year, from about 136 billion US dollars in 2015 to approximately 95 billion by 2019, reflecting a contraction of the asset base. Adjusted total assets, after excluding goodwill, exhibit a parallel but more pronounced decline, decreasing from around 89 billion in 2015 to roughly 52 billion in 2019. This sharper decrease suggests significant goodwill impairment or revaluation impacting the reported total assets and indicates a substantial reduction in asset quality or acquisitions over this timeframe.

Return on Assets (ROA)

Reported ROA peaked at 11.61% in 2016, showing strong asset profitability that year, but then turned negative from 2017 onwards, deteriorating from -3.49% to -5.57% by 2019. Adjusted ROA figures were consistently higher than reported ROA in 2015 and 2016, reaching 18.12% at their peak, but similarly became negative in later years. Notably, adjusted ROA exhibited less severe negative returns in the final years, moving from -6.02% in 2017 to -3.28% in 2019, which suggests the impact of adjustments mitigated the perceived decline in asset efficiency to some extent.

Overall, the data highlights a period of initial growth followed by significant financial challenges, including substantial net losses and asset base reductions. The adjustments for goodwill appear to present a somewhat less severe picture of profitability and asset returns. These trends signal potential issues related to asset impairment and operational performance deteriorations in the latter part of the period under review.