Biogen Inc. (NASDAQ:BIIB)

Net Operating Profit After Taxes (NOPAT)

Over the analyzed period, NOPAT exhibited an overall upward trend from 2017 through 2019, increasing from approximately 2.89 billion USD to 6.02 billion USD. However, this growth was not sustained in subsequent years. There was a noticeable decline in 2020, with NOPAT falling to about 4.37 billion USD and a more pronounced decrease in 2021 to approximately 1.50 billion USD.

Cost of Capital

The cost of capital demonstrated a gradual decrease over the five-year period, moving from 8.37% in 2017 to 7.66% in 2021. This steady decline suggests a potentially lower risk environment or improved capital structure during the timeframe.

Invested Capital

Invested capital showed some fluctuation across the years. It increased from around 12.48 billion USD in 2017 to 14.14 billion USD in 2019. This was followed by a decrease in 2020 to 12.63 billion USD, and then a rise again in 2021 to approximately 13.82 billion USD. The fluctuations suggest varying levels of capital deployment or divestment activities through the periods.

Economic Profit

Economic profit mirrored similar trends as NOPAT, with a significant increase between 2017 and 2019, reaching nearly 4.85 billion USD. Subsequently, economic profit declined in 2020 to around 3.38 billion USD, followed by a sharp decrease in 2021 to roughly 443 million USD. This decline in economic profit despite the declining cost of capital indicates that the declines in profitability were more impactful than any benefits gained from reduced capital costs.

Overall Insights

The data reveals a strong positive trajectory of profitability and value creation up to 2019, followed by a pronounced downturn in the last two years analyzed. Despite a favorable trend in the cost of capital, the decreased NOPAT and economic profit suggest potential operational challenges or adverse market conditions in 2020 and 2021. Additionally, the fluctuations in invested capital reflect dynamic capital management strategies that may have been responses to changing business conditions.

Net Income Attributable to Biogen Inc.

The net income exhibited a rising trend from 2017 to 2019, increasing from approximately 2.54 billion to nearly 5.89 billion US dollars. However, a decline was observed starting in 2020, with net income falling to about 4.00 billion and further decreasing sharply to approximately 1.56 billion US dollars in 2021. This indicates a significant reduction in profitability during the latter years of the period.

Net Operating Profit After Taxes (NOPAT)

The NOPAT followed a similar trajectory to net income, showing an increase from about 2.89 billion US dollars in 2017 to a peak of approximately 6.02 billion US dollars in 2019. Subsequently, a decline occurred with NOPAT decreasing to roughly 4.37 billion in 2020 and then sharply dropping to around 1.50 billion US dollars in 2021. This pattern signifies a reduction in operating efficiency and effectiveness in generating profit after taxes over the last two years.

Overall Observations

Both net income and NOPAT demonstrated growth during the initial three years, suggesting improved financial performance and operational results. The peak in 2019 represents the highest point in profitability within the analyzed period. The subsequent decline in 2020 and more pronounced drop in 2021 highlight challenges or adverse developments affecting profitability and operational outcomes. The data suggests the company experienced a notable downturn in earning capacity and operating profit in the final years.

Income Tax Expense

The income tax expense demonstrates a consistent downward trend from 2017 to 2021. Starting at 2,458,700 thousand US dollars in 2017, the expense decreased significantly each year to reach 52,500 thousand US dollars in 2021. The reduction is particularly notable in 2021, where the expense dropped sharply compared to previous years.

Cash Operating Taxes

Cash operating taxes also show a general decline over the analyzed period. Beginning at 2,441,355 thousand US dollars in 2017, these taxes declined steadily year over year, falling to 533,599 thousand US dollars in 2021. The reduction is gradual until 2020, followed by a less steep but still notable decrease in 2021.

Comparative Analysis

Both income tax expense and cash operating taxes have followed a downward trajectory, reflecting a possible strategic or operational improvement affecting taxable income or tax planning. The income tax expense decreased more sharply between 2020 and 2021 compared to prior years, whereas cash operating taxes reduced more steadily across the entire timeframe.

Total Reported Debt & Leases

The total reported debt and leases remained relatively stable from 2017 to 2019, with a slight decrease each year from approximately 6.45 billion US dollars to around 6.44 billion US dollars. However, there was a significant increase in 2020, rising to approximately 7.91 billion US dollars. In 2021, the debt slightly decreased to about 7.69 billion US dollars, indicating a reduction after the peak the previous year.

Total Biogen Inc. Shareholders’ Equity

Shareholders' equity showed a consistent upward trend from 2017 to 2019, growing from approximately 12.61 billion US dollars to 13.34 billion US dollars. In 2020, there was a notable decline to about 10.70 billion US dollars. This followed by a modest recovery in 2021, with equity increasing to approximately 10.90 billion US dollars, yet still below the peak levels observed in 2019.

Invested Capital

Invested capital experienced steady growth from 2017 through 2019, rising from approximately 12.48 billion US dollars to 14.14 billion US dollars. In 2020, invested capital dropped to about 12.63 billion US dollars but rebounded in 2021 to 13.82 billion US dollars. This pattern suggests some disruptions or adjustments during 2020, followed by partial recovery the following year.

The financial data over the five-year period reveals several notable trends and changes in the company's economic performance and capital investment.

Economic Profit

The economic profit demonstrated significant fluctuations during the period under review. Starting at approximately 1.85 billion USD in 2017, it increased substantially to a peak of nearly 4.85 billion USD in 2019. Following this peak, there was a decline to around 3.38 billion USD in 2020, and a more pronounced drop to approximately 443 million USD in 2021. This pattern indicates a period of strong profitability growth followed by a marked contraction in economic profit in the latter years.

Invested Capital

Invested capital showed a generally increasing trend across the five years. The company began with around 12.48 billion USD in 2017, rising steadily to about 14.14 billion USD in 2019. Although there was a slight decline to 12.63 billion USD in 2020, invested capital rebounded to its highest level of roughly 13.82 billion USD in 2021. This suggests a strategic approach to managing capital, potentially adjusting the asset base in response to changing economic conditions.

Economic Spread Ratio

The economic spread ratio exhibited a pattern paralleling economic profit, indicating changes in profitability relative to invested capital. Starting at 14.8% in 2017, it increased sharply to its highest point of 34.29% in 2019. Subsequently, the ratio declined to 26.79% in 2020 and fell drastically to 3.2% in 2021. This sharp decrease in 2021 suggests a significant reduction in the company's return on invested capital, potentially signaling operational challenges or increased capital costs.

Overall, the data points to a period of strong economic profit growth and effective capital utilization up to 2019, followed by a decline in profitability and economic spread, despite an overall increase in invested capital by 2021. Attention to capital efficiency and profit drivers would be advisable given the 2021 performance downturn.

Revenue Trend

The revenue demonstrated a rising trend from 2017 to 2019, increasing from approximately $12.27 billion to nearly $14.38 billion. However, in 2020, there was a decline to about $13.45 billion, followed by a further decrease in 2021 to roughly $10.98 billion. This indicates a downturn in revenue generation over the last two years of the period analyzed.

Economic Profit Development

Economic profit increased significantly from 2017 to 2019, starting at around $1.85 billion and peaking near $4.85 billion in 2019. However, after 2019, economic profit showed a sharp decline, falling to approximately $3.38 billion in 2020 and plummeting to about $443 million in 2021. This represented a substantial reduction in economic profit after the 2019 peak.

Economic Profit Margin Analysis

The economic profit margin followed a similar trajectory to economic profit, rising from 15.04% in 2017 to a high of 33.73% in 2019. This was followed by a decline to 25.16% in 2020 and a drastic drop to just over 4% in 2021. The sharp contraction in the margin during the final year suggests diminished profitability relative to revenue.

Overall Summary

The financial data show strong growth in both revenue and profitability up to 2019, indicating a period of robust operational performance. However, the last two years saw marked decreases in revenue, economic profit, and profit margin, highlighting a challenging phase leading to weakened financial outcomes. The steep decline in 2021, in particular, signals significant pressures affecting the company’s economic value creation.