Bristol-Myers Squibb Co. (NYSE:BMY)

The income tax expense and related components exhibit notable fluctuations over the five-year period. Current income tax expense generally increased from 2021 to 2022, then decreased through 2024 before increasing again in 2025. Deferred tax expense consistently represents a benefit, offsetting a portion of the current tax expense, and shows a decreasing trend in benefit magnitude over the period.

Current Income Tax Expense

Current income tax expense increased significantly from US$2,477 million in 2021 to US$4,106 million in 2022. This was followed by a decrease to US$3,688 million in 2023 and a further reduction to US$2,643 million in 2024. A substantial increase is then observed in 2025, reaching US$3,237 million. This suggests a correlation with underlying profitability, though further investigation would be needed to confirm this relationship.

Deferred Income Tax Expense (Benefit)

Deferred tax expense consistently represents a benefit, reducing the overall income tax provision. The magnitude of this benefit decreased from US$1,393 million in 2021 to US$965 million in 2025. The benefit decreased each year from 2021 to 2023, then decreased at a slower rate from 2023 to 2025. This could indicate a reduction in temporary differences giving rise to deferred tax assets, or changes in applicable tax rates.

Income Tax Provision

The overall income tax provision reflects the combined effect of current and deferred tax expense. The provision increased from US$1,084 million in 2021 to US$1,368 million in 2022, then experienced a significant decline to US$400 million in 2023. It rose to US$554 million in 2024 before increasing substantially to US$2,272 million in 2025. The volatility in the income tax provision is largely driven by the fluctuations in current tax expense, with the deferred tax benefit providing a consistent, though decreasing, offset.

The significant changes in income tax provision from year to year warrant further investigation to understand the underlying drivers, including changes in pre-tax income, statutory tax rates, and the nature and amount of temporary differences.

The effective income tax rate exhibits considerable fluctuation over the five-year period. While the U.S. federal statutory tax rate remained constant at 21.00%, the effective tax rate demonstrates significant variance, suggesting influences beyond the standard corporate rate.

Effective Tax Rate Trend

In 2021, the effective tax rate was 13.40%, indicating the presence of factors reducing the tax burden below the statutory rate. This could include tax credits, deductions, or income earned in lower-tax jurisdictions. The rate increased to 17.70% in 2022, suggesting a lessening of these mitigating factors or a shift in the company’s income mix.

A substantial decrease is observed in 2023, with the effective tax rate falling to 4.70%. This significant reduction warrants further investigation, potentially stemming from one-time tax benefits, changes in deferred tax assets/liabilities, or a substantial increase in foreign-sourced income taxed at lower rates.

The year 2024 presents a particularly noteworthy anomaly, with a negative effective tax rate of -6.60%. This indicates that the company recorded more tax benefits than tax expense during the year. This could be due to the realization of significant tax loss carryforwards, a change in tax law, or other unusual items.

Finally, the effective tax rate rebounds sharply to 24.40% in 2025. This increase suggests the reversal of the factors contributing to the negative rate in 2024, or a change in the company’s operational or financial structure resulting in a higher tax liability.

The volatility in the effective tax rate highlights the importance of understanding the underlying drivers of tax expense. Further analysis of the company’s tax footnotes and related disclosures is recommended to determine the specific factors contributing to these fluctuations and assess their sustainability.

The composition of deferred tax assets and liabilities exhibits significant fluctuations over the five-year period. A notable trend is the increasing net deferred tax asset position, shifting from a net liability to a substantial net asset.

Deferred Tax Assets - Components

The largest component of deferred tax assets consistently remains ‘Other’, fluctuating between US$1,284 million and US$1,883 million. ‘Milestone payments and license fees’ also represent a significant portion, increasing from US$887 million in 2021 to US$1,330 million in 2025. A substantial increase is observed in ‘Capitalized research expenditures’, growing from initial recognition in 2022 at US$1,573 million to US$4,366 million in 2025. ‘Foreign net operating loss and other carryforwards’ experienced volatility, peaking at US$2,017 million in 2023 before decreasing to US$1,229 million in 2025. ‘U.S. Federal capital loss, net operating loss and tax credit’ also shows an increase, particularly in 2024, reaching US$695 million, before declining to US$557 million in 2025. ‘State net operating loss and credit carryforwards’ demonstrate a steady, albeit moderate, increase throughout the period.

The valuation allowance against deferred tax assets has decreased over time, but remains substantial. While declining from US$1,056 million in 2021 to US$960 million in 2025, it continues to offset a significant portion of the gross deferred tax assets.

Deferred Tax Liabilities - Components

‘Acquired intangible assets’ constitute the primary component of deferred tax liabilities, consistently representing the largest portion. These liabilities have decreased steadily from US$4,867 million in 2021 to US$3,069 million in 2025. ‘Goodwill and other’ also contribute to deferred tax liabilities, decreasing from US$891 million in 2021 to US$698 million in 2025. The overall trend in deferred tax liabilities is downward.

The net deferred tax position has undergone a dramatic transformation. Beginning as a net liability of US$3,062 million in 2021, it transitioned to a net asset of US$5,155 million by 2025. This shift is primarily driven by the growth in deferred tax assets, particularly capitalized research expenditures, coupled with the reduction in deferred tax liabilities.

Overall Trend

The increasing net deferred tax asset position suggests a potential future reduction in income tax payments, assuming the underlying temporary differences reverse and the valuation allowance remains at current levels. The significant increase in capitalized research expenditures contributing to deferred tax assets warrants further investigation into the nature and realizability of these expenditures.

Analysis of the deferred tax asset and liability positions reveals significant fluctuations over the five-year period. A notable trend is the increasing value of non-current deferred tax assets, contrasted by a substantial decrease in non-current deferred tax liabilities.

Deferred Tax Assets (Non-Current)

Non-current deferred tax assets demonstrate a consistent upward trajectory. Beginning at US$1,439 million in 2021, the value decreased to US$1,344 million in 2022. However, a significant increase is observed in subsequent years, reaching US$2,768 million in 2023, US$4,236 million in 2024, and culminating in US$5,378 million in 2025. This growth suggests a potential increase in future taxable income or the recognition of deductible temporary differences.

Deferred Tax Liabilities (Non-Current)

In contrast to the assets, non-current deferred tax liabilities exhibit a marked downward trend. Starting at US$4,501 million in 2021, the liabilities decreased substantially to US$2,166 million in 2022. This decline continues, with values of US$338 million, US$369 million, and US$222 million reported for 2023, 2024, and 2025 respectively. This reduction could indicate a decrease in taxable temporary differences or the realization of previously recognized taxable amounts.

The combined effect of these trends is a widening gap between deferred tax assets and deferred tax liabilities. The substantial increase in assets coupled with the significant decrease in liabilities suggests a potential shift in the company’s future tax obligations and a possible reduction in overall deferred tax expense in later periods, assuming these deferred tax assets are ultimately realized.

Net Deferred Tax Position

The net deferred tax position (assets less liabilities) has dramatically improved over the period. In 2021, net deferred tax liabilities were US$3,062 million (US$4,501 - US$1,439). By 2025, this has transformed into a net deferred tax asset of US$5,156 million (US$5,378 - US$222). This represents a swing of US$8,218 million, indicating a significant change in the company’s deferred tax profile.

The financial information reveals a consistent pattern of adjustments related to deferred tax assets and liabilities across the five-year period. These adjustments result in lower reported asset and liability values when deferred taxes are removed, and consequently impact reported shareholders’ equity and net earnings.

Total Assets

Reported total assets demonstrate a declining trend from US$109,314 million in 2021 to US$90,038 million in 2025. The adjusted total assets exhibit a similar downward trajectory, starting at US$107,875 million in 2021 and decreasing to US$84,660 million in 2025. The difference between reported and adjusted assets remains relatively stable, averaging approximately US$1,439 million annually, suggesting a consistent impact from the deferred tax adjustments.

Total Liabilities

Reported total liabilities decreased from US$73,308 million in 2021 to US$71,533 million in 2025, with a notable increase to US$76,215 million in 2024. Adjusted total liabilities follow a similar pattern, declining from US$68,807 million in 2021 to US$71,311 million in 2025, also peaking at US$75,846 million in 2024. The adjustment consistently reduces reported liabilities, with an average difference of approximately US$4,501 million over the period.

Shareholders’ Equity

Reported total shareholders’ equity experienced a significant decline from US$35,946 million in 2021 to US$18,473 million in 2025, including a substantial drop in 2024. Adjusted shareholders’ equity mirrors this trend, decreasing from US$39,008 million in 2021 to US$13,318 million in 2025. The removal of deferred tax effects consistently increases the adjusted equity compared to the reported equity, with an average difference of approximately US$3,065 million annually.

Net Earnings

Reported net earnings fluctuate over the period, beginning at US$6,994 million in 2021, reaching US$8,025 million in 2023, and then declining to a loss of US$8,948 million in 2024 before recovering to US$7,054 million in 2025. Adjusted net earnings show a similar pattern but with lower magnitudes. The adjustment consistently reduces reported net earnings, with an average reduction of approximately US$1,393 million annually. The impact is most pronounced in 2024, where the reported loss is exacerbated by the adjustment, resulting in a significantly larger adjusted loss of US$11,037 million.

In summary, the adjustments consistently reduce reported asset and liability values, increase shareholders’ equity, and decrease net earnings. The magnitude of these adjustments remains relatively stable over the period, indicating a consistent application of the deferred tax removal methodology. The largest impact is observed on net earnings, particularly in 2024, where the adjustment transforms a substantial reported loss into an even larger adjusted loss.

The financial performance metrics exhibit notable variations when analyzed with and without the impact of deferred taxes. Generally, the adjusted ratios present a more conservative view of profitability and returns. A significant divergence between reported and adjusted figures is particularly evident in the later years of the period.

Profitability

Reported net profit margin initially decreased from 15.08% in 2021 to 13.71% in 2022, before recovering to 17.83% in 2023. However, it experienced a substantial decline to -18.53% in 2024, followed by a partial recovery to 14.64% in 2025. The adjusted net profit margin mirrors this trend, but consistently reports lower values, decreasing from 12.08% to 7.78% between 2021 and 2022, increasing to 10.53% in 2023, then falling to -22.85% in 2024, and recovering to 12.63% in 2025. The magnitude of the negative impact in 2024 is considerably larger when deferred taxes are excluded from the calculation.

Asset Turnover

Reported total asset turnover shows a gradual increase from 0.42 in 2021 to 0.54 in 2025, indicating improving efficiency in asset utilization. The adjusted total asset turnover also demonstrates an increasing trend, moving from 0.43 to 0.57 over the same period, though the increases are less pronounced than those observed in the reported figures. The difference between reported and adjusted values remains relatively stable throughout the period.

Financial Leverage

Reported financial leverage increased steadily from 3.04 in 2021 to 3.23 in 2023, then experienced a significant jump to 5.67 in 2024, before decreasing slightly to 4.87 in 2025. The adjusted financial leverage follows a similar pattern, increasing from 2.77 to 3.42 between 2021 and 2023, rising sharply to 7.09 in 2024, and declining to 6.36 in 2025. The adjusted leverage ratios are consistently lower than the reported ratios, suggesting that deferred tax assets and liabilities influence the perception of financial risk.

Returns on Equity and Assets

Reported ROE initially increased from 19.46% in 2021 to 27.27% in 2023, but then plummeted to -54.78% in 2024, recovering to 38.19% in 2025. Adjusted ROE exhibits a similar trajectory, increasing from 14.36% to 17.54% before falling to -88.52% in 2024 and recovering to 45.72% in 2025. The negative values in 2024 are substantially more severe when deferred taxes are excluded. Reported ROA followed a similar pattern, increasing from 6.40% to 8.43% before declining to -9.66% and recovering to 7.83%. Adjusted ROA shows a more moderate trend, increasing from 5.19% to 5.13% and then declining to -12.49% before recovering to 7.19%. The impact of removing deferred taxes consistently reduces the reported returns on both equity and assets, particularly during periods of lower profitability.

In summary, the removal of deferred tax effects results in a more conservative assessment of the company’s financial performance. The adjusted ratios highlight a greater sensitivity to profitability fluctuations, particularly in 2024, and demonstrate a lower level of financial leverage and returns compared to the reported figures.

The period under review demonstrates significant fluctuations in both reported and adjusted net earnings, consequently impacting associated profit margins. A notable divergence emerges between the reported and adjusted figures, particularly in 2024, suggesting the presence of substantial non-recurring items affecting reported results.

Reported Net Profit Margin

The reported net profit margin exhibited volatility throughout the period. It began at 15.08% in 2021, decreased to 13.71% in 2022, and then increased to 17.83% in 2023. A substantial decline occurred in 2024, resulting in a negative margin of -18.53%, before recovering to 14.64% in 2025. This pattern mirrors the fluctuations in reported net earnings.

Adjusted Net Profit Margin

The adjusted net profit margin also showed considerable variation. Starting at 12.08% in 2021, it decreased to 7.78% in 2022, then rose to 10.53% in 2023. Similar to the reported margin, 2024 saw a significant drop, with the adjusted margin reaching -22.85%. A recovery was observed in 2025, with the adjusted margin increasing to 12.63%. The magnitude of the negative adjusted margin in 2024 is larger than the reported margin, indicating that the adjustments made to net earnings were not sufficient to offset the underlying losses.

The correlation between reported and adjusted net earnings and their respective margins is strong. The substantial negative results in 2024 for both metrics warrant further investigation to understand the nature and impact of the items causing these declines. The recovery observed in 2025 suggests a potential reversal of these negative influences, but continued monitoring is necessary to confirm a sustained positive trend.

Relationship between Reported and Adjusted Margins

The difference between the reported and adjusted net profit margins remained relatively consistent between 2021 and 2023, generally around 2-3 percentage points. However, this difference widened considerably in 2024 and 2025, indicating a greater impact from adjustments to net earnings in those years. This suggests that non-GAAP adjustments played a more significant role in reflecting the underlying economic performance of the company during these periods.

An examination of the provided financial information reveals trends in both total asset figures and associated turnover ratios over a five-year period. Reported total assets demonstrate a consistent decline annually, while adjusted total assets exhibit a similar, though slightly less pronounced, downward trajectory. Concurrently, both reported and adjusted total asset turnover ratios show an increasing trend throughout the period.

Reported Total Assets

Reported total assets decreased from US$109,314 million in 2021 to US$90,038 million in 2025. This represents a cumulative reduction of approximately 17.6% over the five-year span. The largest year-over-year decrease occurred between 2021 and 2022, with a reduction of US$12,494 million.

Adjusted Total Assets

Adjusted total assets followed a similar pattern, declining from US$107,875 million in 2021 to US$84,660 million in 2025, a decrease of roughly 21.5%. The rate of decline appears to accelerate in later years, with the most substantial decrease observed between 2023 and 2025 (US$7,731 million).

Reported Total Asset Turnover

The reported total asset turnover ratio increased steadily from 0.42 in 2021 to 0.54 in 2025. This indicates improving efficiency in generating revenue relative to the level of reported assets. The increase between 2024 and 2025 was the smallest, at 0.02.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio mirrored the trend of the reported ratio, rising from 0.43 in 2021 to 0.57 in 2025. This suggests that the efficiency gains observed are consistent even when considering adjustments to the total asset base. The adjusted ratio consistently exceeds the reported ratio, indicating a slightly higher efficiency when utilizing the adjusted asset value.

The concurrent decrease in asset values alongside the increase in asset turnover ratios suggests that the entity is becoming more effective at generating revenue with a shrinking asset base. This could be due to various factors, including improved operational efficiency, strategic asset disposals, or a shift in business model. Further investigation would be required to determine the underlying drivers of these trends.

An examination of the financial information reveals trends in both reported and adjusted asset and equity figures, subsequently impacting calculated financial leverage ratios. Total assets, both reported and adjusted, demonstrate a consistent decline over the five-year period. Shareholders’ equity, similarly, exhibits a decreasing trend when considering reported values, though adjusted equity shows some fluctuation with a slight increase in the final year.

Asset Trends

Reported total assets decreased from US$109,314 million in 2021 to US$90,038 million in 2025, representing a cumulative reduction of approximately 17.7%. Adjusted total assets followed a similar pattern, declining from US$107,875 million to US$84,660 million, a decrease of roughly 21.5% over the same timeframe. The rate of asset decline appears to accelerate in the later years of the period.

Shareholders’ Equity Trends

Reported total shareholders’ equity experienced a substantial decrease, falling from US$35,946 million in 2021 to US$18,473 million in 2025, a decline of approximately 48.6%. Adjusted shareholders’ equity also decreased, moving from US$39,008 million to US$13,318 million, representing a reduction of about 65.8%. While reported equity consistently declined, adjusted equity showed a modest recovery in 2025.

Reported Financial Leverage

Reported financial leverage increased significantly throughout the period. Starting at 3.04 in 2021, it rose to 5.67 in 2024 before decreasing slightly to 4.87 in 2025. This indicates a growing reliance on debt financing relative to reported equity.

Adjusted Financial Leverage

Adjusted financial leverage mirrored the trend observed in the reported ratio, though with different magnitudes. It increased from 2.77 in 2021 to 7.09 in 2024, then decreased to 6.36 in 2025. The adjusted leverage ratio consistently remained higher than the reported ratio, suggesting that adjustments to asset and equity values result in a more pronounced indication of financial risk. The substantial increases in both reported and adjusted financial leverage, particularly peaking in 2024, warrant further investigation into the underlying drivers of debt accumulation or equity reduction.

The consistent decline in assets and equity, coupled with the increasing financial leverage, suggests a potential shift in the company’s capital structure. The difference between reported and adjusted figures indicates that the adjustments applied have a material impact on the assessment of financial risk.

The period between 2021 and 2025 demonstrates significant fluctuations in both reported and adjusted net earnings, alongside corresponding changes in shareholders’ equity, impacting return on equity (ROE) calculations. Reported net earnings initially decreased from US$6,994 million in 2021 to US$6,327 million in 2022, before increasing to US$8,025 million in 2023. However, a substantial loss of US$8,948 million was recorded in 2024, followed by a recovery to a profit of US$7,054 million in 2025. Adjusted net earnings mirrored this trend, with a decrease from US$5,601 million in 2021 to US$3,589 million in 2022, an increase to US$4,737 million in 2023, a significant loss of US$11,037 million in 2024, and a recovery to US$6,089 million in 2025.

Shareholders’ Equity

Reported total shareholders’ equity experienced a decline from US$35,946 million in 2021 to US$29,430 million in 2023, then a more dramatic decrease to US$16,335 million in 2024, before a partial recovery to US$18,473 million in 2025. Adjusted total shareholders’ equity followed a similar pattern, decreasing from US$39,008 million in 2021 to US$27,000 million in 2023, then falling to US$12,468 million in 2024, with a subsequent increase to US$13,318 million in 2025. The larger decrease in reported equity in 2024 suggests potential impacts from unrealized gains or losses not reflected in adjusted equity.

Reported ROE

Reported ROE initially rose from 19.46% in 2021 to 20.37% in 2022, peaked at 27.27% in 2023, then plummeted to -54.78% in 2024 due to the substantial net loss. A significant recovery to 38.19% was observed in 2025, coinciding with the return to profitability. The volatility in reported ROE directly reflects the swings in reported net earnings.

Adjusted ROE

Adjusted ROE exhibited a similar trend, decreasing from 14.36% in 2021 to 11.26% in 2022, increasing to 17.54% in 2023, and then experiencing a substantial decline to -88.52% in 2024. A strong recovery to 45.72% occurred in 2025. The adjusted ROE figures, while following the same directional changes as the reported ROE, demonstrate a greater magnitude of fluctuation, particularly the significant negative value in 2024. This suggests that adjustments to net earnings have a considerable impact on the calculated ROE.

The substantial losses recorded in 2024 significantly impacted both reported and adjusted ROE, resulting in negative values. The subsequent recovery in 2025 indicates a return to profitability, but the ROE remains sensitive to earnings fluctuations. The divergence between reported and adjusted ROE highlights the importance of considering the impact of adjustments when evaluating financial performance.

The period between 2021 and 2025 demonstrates considerable fluctuation in reported and adjusted net earnings, impacting return on assets calculations. Reported net earnings began at US$6,994 million in 2021, decreased to US$6,327 million in 2022, increased to US$8,025 million in 2023, then experienced a substantial loss of US$8,948 million in 2024, before recovering to a profit of US$7,054 million in 2025. Adjusted net earnings followed a similar pattern, starting at US$5,601 million, declining to US$3,589 million, rising to US$4,737 million, falling to a loss of US$11,037 million, and finally reaching US$6,089 million.

Reported Return on Assets (ROA)

Reported ROA mirrored the earnings trend. It began at 6.40% in 2021, increased to 6.53% in 2022, peaked at 8.43% in 2023, then sharply declined to -9.66% in 2024, and partially recovered to 7.83% in 2025. The significant negative value in 2024 is directly attributable to the substantial reported net loss for that year.

Adjusted Return on Assets (ROA)

Adjusted ROA also exhibited volatility. Starting at 5.19% in 2021, it decreased to 3.76% in 2022, increased to 5.13% in 2023, plummeted to -12.49% in 2024, and recovered to 7.19% in 2025. The adjusted ROA’s lowest point in 2024 was more pronounced than the reported ROA, reflecting the larger adjusted net loss compared to the reported net loss.

Total assets, both reported and adjusted, generally decreased throughout the period. Reported total assets declined from US$109,314 million in 2021 to US$92,603 million in 2024, and further to US$90,038 million in 2025. Adjusted total assets followed a similar downward trajectory, decreasing from US$107,875 million in 2021 to US$88,367 million in 2024, and then to US$84,660 million in 2025. The consistent decrease in asset base, coupled with the earnings volatility, significantly influenced the ROA figures.

The discrepancy between reported and adjusted ROA suggests the presence of significant non-recurring or unusual items impacting reported earnings. The substantial difference in 2024, where the adjusted loss far exceeded the reported loss, warrants further investigation into the nature of these adjustments. The recovery in both reported and adjusted ROA in 2025 indicates a return to profitability, but continued monitoring is necessary to assess the sustainability of this improvement.