EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Cytokinetics Inc., economic profit calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net operating profit after taxes (NOPAT)¹	(460,021)	(193,076)	(31,573)	(119,531)	(105,906)
Cost of capital²	12.51%	13.16%	12.44%	13.25%	13.34%
Invested capital³	(117,411)	91,721)	(87,987)	(106,877)	(78,273)

Economic profit⁴	(445,337)	(205,145)	(20,627)	(105,369)	(95,468)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= -460,021 – 12.51% × -117,411 = -445,337

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Cytokinetics Inc. economic profit decreased from 2020 to 2021 and from 2021 to 2022.

Cytokinetics Inc., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net loss	(388,955)	(215,314)	(127,290)	(121,692)	(106,289)
Deferred income tax expense (benefit)¹	—)	—)	—)	—)	—)
Increase (decrease) in deferred revenue²	(87,000)	—)	87,000)	—)	—)
Increase (decrease) in equity equivalents³	(87,000)	—)	87,000)	—)	—)
Interest expense	19,414)	16,440)	15,963)	6,623)	3,797)
Interest expense, operating lease liability⁴	12,156)	12,709)	371)	613)	887)
Adjusted interest expense	31,570)	29,149)	16,334)	7,236)	4,684)
Tax benefit of interest expense⁵	(6,630)	(6,121)	(3,430)	(1,520)	(984)
Adjusted interest expense, after taxes⁶	24,940)	23,028)	12,904)	5,716)	3,701)
Interest income	(11,400)	(1,000)	(5,300)	(4,500)	(4,200)
Investment income, before taxes	(11,400)	(1,000)	(5,300)	(4,500)	(4,200)
Tax expense (benefit) of investment income⁷	2,394)	210)	1,113)	945)	882)
Investment income, after taxes⁸	(9,006)	(790)	(4,187)	(3,555)	(3,318)
Net operating profit after taxes (NOPAT)	(460,021)	(193,076)	(31,573)	(119,531)	(105,906)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in deferred revenue.

³ Addition of increase (decrease) in equity equivalents to net loss.

⁴ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 139,724 × 8.70% = 12,156

⁵ 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 31,570 × 21.00% = 6,630

⁶ Addition of after taxes interest expense to net loss.

⁷ 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 11,400 × 21.00% = 2,394

⁸ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Cytokinetics Inc. NOPAT decreased from 2020 to 2021 and from 2021 to 2022.

Cytokinetics Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Income tax provision	—)	—)	—)	—)	—)
Less: Deferred income tax expense (benefit)	—)	—)	—)	—)	—)
Add: Tax savings from interest expense	6,630)	6,121)	3,430)	1,520)	984)
Less: Tax imposed on investment income	2,394)	210)	1,113)	945)	882)
Cash operating taxes	4,236)	5,911)	2,317)	575)	102)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Cytokinetics Inc. cash operating taxes increased from 2020 to 2021 but then slightly decreased from 2021 to 2022.

Cytokinetics Inc., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Current portion of term loan	—)	—)	—)	—)	2,607)
Short-term finance lease liabilities	1,000)	500)	—)	—)	—)
Term loan, net, excluding current portion	63,810)	47,367)	46,209)	45,052)	39,806)
Convertible notes, net	545,808)	95,471)	89,504)	84,205)	—)
Long-term finance lease liabilities	1,001)	805)	—)	—)	—)
Operating lease liability¹	139,724)	127,092)	3,225)	6,811)	10,355)
Total reported debt & leases	751,343)	271,235)	138,938)	136,068)	52,768)
Stockholders’ equity (deficit)	(107,900)	243,863)	113,383)	(10,937)	25,934)
Net deferred tax (assets) liabilities²	—)	—)	—)	—)	—)
Deferred revenue³	—)	87,000)	87,000)	—)	—)
Equity equivalents⁴	—)	87,000)	87,000)	—)	—)
Accumulated other comprehensive (income) loss, net of tax⁵	3,590)	869)	(149)	(679)	(500)
Adjusted stockholders’ equity (deficit)	(104,310)	331,732)	200,234)	(11,616)	25,434)
Construction in progress⁶	(741)	(224)	(9,130)	—)	—)
Available-for-sale investments⁷	(763,703)	(511,022)	(418,029)	(231,329)	(156,475)
Invested capital	(117,411)	91,721)	(87,987)	(106,877)	(78,273)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of deferred revenue.

⁴ Addition of equity equivalents to stockholders’ equity (deficit).

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of construction in progress.

⁷ Subtraction of available-for-sale investments.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Cytokinetics Inc. invested capital increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.

Cytokinetics Inc., cost of capital calculations

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	4,102,408)	4,102,408)	÷	5,023,043)	=	0.82	0.82	×	14.39%	=	11.75%
Debt³	780,911)	780,911)	÷	5,023,043)	=	0.16	0.16	×	4.61% × (1 – 21.00%)	=	0.57%
Operating lease liability⁴	139,724)	139,724)	÷	5,023,043)	=	0.03	0.03	×	8.70% × (1 – 21.00%)	=	0.19%
Total:	5,023,043)					1.00					12.51%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	2,971,658)	2,971,658)	÷	3,766,355)	=	0.79	0.79	×	14.39%	=	11.35%
Debt³	667,605)	667,605)	÷	3,766,355)	=	0.18	0.18	×	11.01% × (1 – 21.00%)	=	1.54%
Operating lease liability⁴	127,092)	127,092)	÷	3,766,355)	=	0.03	0.03	×	10.00% × (1 – 21.00%)	=	0.27%
Total:	3,766,355)					1.00					13.16%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	1,331,901)	1,331,901)	÷	2,020,026)	=	0.66	0.66	×	14.39%	=	9.48%
Debt³	684,900)	684,900)	÷	2,020,026)	=	0.34	0.34	×	10.98% × (1 – 21.00%)	=	2.94%
Operating lease liability⁴	3,225)	3,225)	÷	2,020,026)	=	0.00	0.00	×	11.50% × (1 – 21.00%)	=	0.01%
Total:	2,020,026)					1.00					12.44%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	883,433)	883,433)	÷	1,105,896)	=	0.80	0.80	×	14.39%	=	11.49%
Debt³	215,652)	215,652)	÷	1,105,896)	=	0.20	0.20	×	11.13% × (1 – 21.00%)	=	1.71%
Operating lease liability⁴	6,811)	6,811)	÷	1,105,896)	=	0.01	0.01	×	9.00% × (1 – 21.00%)	=	0.04%
Total:	1,105,896)					1.00					13.25%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	329,879)	329,879)	÷	382,647)	=	0.86	0.86	×	14.39%	=	12.40%
Debt³	42,413)	42,413)	÷	382,647)	=	0.11	0.11	×	8.57% × (1 – 21.00%)	=	0.75%
Operating lease liability⁴	10,355)	10,355)	÷	382,647)	=	0.03	0.03	×	8.57% × (1 – 21.00%)	=	0.18%
Total:	382,647)					1.00					13.34%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Cytokinetics Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	(445,337)	(205,145)	(20,627)	(105,369)	(95,468)
Invested capital²	(117,411)	91,721)	(87,987)	(106,877)	(78,273)
Performance Ratio
Economic spread ratio³	—	-223.66%	—	—	—
Benchmarks
Economic Spread Ratio, Competitors⁴
AbbVie Inc.	4.80%	4.24%	-3.54%	—	—
Amgen Inc.	7.35%	7.33%	11.65%	—	—
Bristol-Myers Squibb Co.	-1.53%	0.79%	-14.73%	—	—
Danaher Corp.	-3.61%	-2.91%	-4.30%	—	—
Eli Lilly & Co.	9.37%	11.10%	17.78%	—	—
Gilead Sciences Inc.	2.43%	9.13%	-3.94%	—	—
Johnson & Johnson	4.94%	10.00%	4.80%	—	—
Merck & Co. Inc.	11.30%	11.47%	4.31%	—	—
Pfizer Inc.	17.88%	11.05%	-3.61%	—	—
Regeneron Pharmaceuticals Inc.	23.50%	67.19%	38.69%	—	—
Thermo Fisher Scientific Inc.	-3.33%	-1.45%	-0.50%	—	—
Vertex Pharmaceuticals Inc.	14.10%	15.31%	28.59%	—	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -445,337 ÷ -117,411 = —

⁴ Click competitor name to see calculations.

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Cytokinetics Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	(445,337)	(205,145)	(20,627)	(105,369)	(95,468)

Revenues	94,588)	70,428)	55,828)	26,868)	31,501)
Add: Increase (decrease) in deferred revenue	(87,000)	—)	87,000)	—)	—)
Adjusted revenues	7,588)	70,428)	142,828)	26,868)	31,501)
Performance Ratio
Economic profit margin²	-5,868.97%	-291.28%	-14.44%	-392.17%	-303.06%
Benchmarks
Economic Profit Margin, Competitors³
AbbVie Inc.	6.79%	7.23%	-8.02%	—	—
Amgen Inc.	11.77%	12.15%	18.64%	—	—
Bristol-Myers Squibb Co.	-2.38%	1.36%	-31.23%	—	—
Danaher Corp.	-8.96%	-7.28%	-12.59%	—	—
Eli Lilly & Co.	7.98%	10.25%	17.80%	—	—
Gilead Sciences Inc.	4.10%	16.15%	-8.13%	—	—
Johnson & Johnson	5.93%	10.46%	5.72%	—	—
Merck & Co. Inc.	14.10%	16.66%	5.13%	—	—
Pfizer Inc.	19.57%	11.80%	-8.79%	—	—
Regeneron Pharmaceuticals Inc.	23.66%	45.44%	37.70%	—	—
Thermo Fisher Scientific Inc.	-6.14%	-2.96%	-0.95%	—	—
Vertex Pharmaceuticals Inc.	20.81%	18.97%	37.51%	—	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -445,337 ÷ 7,588 = -5,868.97%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Cytokinetics Inc. economic profit margin deteriorated from 2020 to 2021 and from 2021 to 2022.

Cytokinetics Inc. (NASDAQ:CYTK)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin