Economic Value Added (EVA)
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.
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Gilead Sciences Inc. pages available for free this week:
- Income Statement
- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Return on Equity (ROE) since 2005
- Price to Operating Profit (P/OP) since 2005
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Economic Profit
Gilead Sciences Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial performance from 2021 to 2025 is characterized by significant volatility in operating returns and a steady increase in the cost of capital, leading to inconsistent economic profit generation.
- Net Operating Profit After Taxes (NOPAT)
- Operating profitability exhibited extreme fluctuations over the five-year period. After a decline in 2022 and a moderate recovery in 2023, NOPAT plummeted to a negative value of 796 million US$ in 2024. This downturn was followed by a sharp rebound to a peak of 9,207 million US$ in 2025, indicating a highly unstable operating environment or the impact of significant non-recurring items.
- Cost of Capital
- The hurdle rate for investments demonstrated a consistent upward trajectory, rising from 7.66% in 2021 to 8.87% by 2025. This steady increase suggests a rising cost of financing or an increased risk premium required by investors over the period.
- Invested Capital
- A gradual contraction in the capital base is observed, with invested capital decreasing from 47,782 million US$ in 2021 to 42,812 million US$ in 2025. This downward trend indicates a systematic reduction in the total assets employed to generate operating returns.
- Economic Profit
- Economic profit followed a volatile pattern, alternating between value creation and value destruction. The company achieved its highest economic profit of 5,411 million US$ in 2025, which contrasts sharply with a substantial deficit of 4,630 million US$ in 2024 and a minor deficit in 2022. The instability underscores a period of difficulty in maintaining returns consistently above the cost of capital, though the 2025 results indicate a strong recovery in value creation.
Net Operating Profit after Taxes (NOPAT)
Gilead Sciences Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances for credit losses.
3 Addition of increase (decrease) in equity equivalents to net income attributable to Gilead.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income attributable to Gilead.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
Net income attributable to Gilead and Net Operating Profit After Taxes (NOPAT) exhibited considerable fluctuation between 2021 and 2025. While both metrics moved in similar directions, the magnitude of change differed, particularly in 2024.
- Overall Trend
- From 2021 to 2025, NOPAT demonstrated a volatile pattern. It decreased significantly in 2022, recovered partially in 2023, experienced a substantial loss in 2024, and then rebounded strongly in 2025, ultimately exceeding the 2021 level. Net income followed a similar, though less dramatic, trajectory.
- 2021-2022
- A notable decline is observed in both NOPAT and net income from 2021 to 2022. NOPAT decreased from US$6,897 million to US$3,687 million, representing a decrease of approximately 46.7%. Net income decreased from US$6,225 million to US$4,592 million, a decrease of approximately 26.2%. This suggests a weakening of operational profitability and overall earnings during this period.
- 2022-2023
- Both metrics showed improvement between 2022 and 2023, although the recovery was not complete. NOPAT increased to US$5,086 million, while net income rose to US$5,665 million. This indicates a partial recovery in profitability and earnings.
- 2023-2024
- A significant shift occurred from 2023 to 2024. NOPAT experienced a substantial loss, falling to negative US$796 million. Net income also plummeted to US$480 million. This represents a dramatic downturn in operational performance and overall profitability. The disparity between the decline in net income and the loss in NOPAT suggests potential impacts from non-operating items or changes in the tax structure.
- 2024-2025
- A strong recovery is evident from 2024 to 2025. NOPAT rebounded to US$9,207 million, surpassing the 2021 value. Net income also increased substantially to US$8,510 million. This indicates a significant improvement in operational profitability and overall earnings, potentially driven by new products, cost reductions, or favorable market conditions.
The fluctuations in NOPAT, particularly the substantial loss in 2024 followed by a strong recovery in 2025, warrant further investigation to understand the underlying drivers of these changes. The divergence between NOPAT and net income trends in 2024 also merits closer scrutiny.
Cash Operating Taxes
Gilead Sciences Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The relationship between income tax expense and cash operating taxes demonstrates fluctuating patterns over the five-year period. While both metrics represent tax-related financial obligations, their divergence suggests timing differences between reported accounting expense and actual cash outflows.
- Income Tax Expense
- Income tax expense decreased significantly from 2021 to 2022, followed by a minimal change in 2023. A substantial decline occurred in 2024, reaching a low of 211 US$ millions, before increasing again in 2025 to 1,286 US$ millions. This pattern indicates considerable volatility in the company’s reported tax liability.
- Cash Operating Taxes
- Cash operating taxes increased from 2021 to 2022, reaching 2,981 US$ millions. A subsequent decrease was observed in 2023, followed by a further reduction in 2024 to 2,205 US$ millions. The most significant decline occurred between 2024 and 2025, with cash operating taxes falling to 1,273 US$ millions. This suggests a reduction in actual cash paid for taxes in the most recent year.
- Relationship between Metrics
- In 2021 and 2022, cash operating taxes exceeded income tax expense, indicating potential deferred tax liabilities being realized or other timing differences. The gap narrowed in 2023 and 2024. By 2025, income tax expense surpassed cash operating taxes, potentially due to the creation of new deferred tax assets or changes in tax regulations impacting reported expense without immediate cash impact. The divergence between these two figures warrants further investigation to understand the underlying causes and their implications for future cash flows and financial reporting.
The observed trends suggest that the company’s effective tax rate and cash tax payments are subject to considerable variation, potentially influenced by factors such as tax credits, loss carryforwards, or changes in the tax code. Continued monitoring of these metrics is recommended to assess the sustainability of these trends and their impact on overall financial performance.
Invested Capital
Gilead Sciences Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of equity equivalents to total Gilead stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of marketable debt securities.
The invested capital of the company demonstrates a generally decreasing trend over the five-year period. Total reported debt & leases and total stockholders’ equity are the components used to calculate invested capital, and their individual movements contribute to this overall pattern.
- Invested Capital Trend
- Invested capital began at US$47,782 million in 2021 and generally declined to US$42,812 million in 2025. A slight decrease was observed from 2021 to 2022, followed by relative stability between 2022 and 2023. A more pronounced decrease occurred between 2023 and 2024, and this downward trend continued into 2025.
- Debt & Leases
- Total reported debt & leases decreased from US$27,285 million in 2021 to US$25,808 million in 2022, representing a reduction in financial obligations. It remained relatively stable through 2023 at US$25,658 million before increasing to US$27,322 million in 2024. A subsequent decrease to US$25,541 million was noted in 2025.
- Stockholders’ Equity
- Total stockholders’ equity exhibited a modest increase from US$21,069 million in 2021 to US$21,240 million in 2022, and continued to rise to US$22,833 million in 2023. However, a significant decrease was observed in 2024, falling to US$19,330 million. Stockholders’ equity partially recovered in 2025, reaching US$22,703 million.
The fluctuations in stockholders’ equity appear to have a more substantial impact on the overall invested capital trend, particularly the decline observed in 2024. While debt & leases experienced some volatility, its impact was less pronounced than the changes in equity. The combined effect of these components resulted in the observed decrease in invested capital over the period.
Cost of Capital
Gilead Sciences Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Gilead Sciences Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The period from 2021 to 2025 demonstrates a highly volatile cycle of economic value creation. The financial trajectory is characterized by alternating phases of value addition and value destruction, occurring against a backdrop of a gradual and consistent reduction in the overall invested capital base.
- Economic Profit Trends
- Economic profit exhibits extreme instability over the five-year period. A positive start of 3,239 million US$ in 2021 transitioned to a loss of 112 million US$ in 2022, followed by a recovery to 1,320 million US$ in 2023. A significant downturn occurred in 2024, with economic profit falling to negative 4,630 million US$, before reaching a peak of 5,411 million US$ in 2025. These fluctuations suggest significant variability in the ability to generate returns exceeding the cost of capital.
- Invested Capital Analysis
- A sustained downward trend is observed in the total invested capital. The capital base decreased from 47,782 million US$ in 2021 to 42,812 million US$ by 2025. This steady contraction indicates a reduction in the total assets employed to generate earnings, which may reflect divestments, depreciation, or a strategic shift toward a leaner capital structure.
- Economic Spread Ratio Interpretation
- The economic spread ratio closely mirrors the volatility of economic profit, indicating the margin by which the return on invested capital exceeds or falls short of the cost of capital. The ratio shifted from a positive 6.78% in 2021 to -0.25% in 2022, recovered to 2.88% in 2023, and experienced a sharp decline to -10.44% in 2024. The period concludes with a substantial increase to 12.64% in 2025. The negative spreads in 2022 and 2024 highlight intervals of value destruction where the cost of capital outweighed the operational returns.
Economic Profit Margin
Gilead Sciences Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Product sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Product sales
= 100 × ÷ =
3 Click competitor name to see calculations.
An analysis of the financial performance between 2021 and 2025 reveals significant volatility in economic profit and the corresponding economic profit margin, contrasting with a relatively stable trajectory in product sales.
- Product Sales Performance
- Product sales remained largely stagnant between 2021 and 2023, hovering around the 27 billion USD mark. A growth phase emerged in 2024 and 2025, with revenues increasing to 28.61 billion USD and 28.92 billion USD, respectively. This indicates a steady baseline of commercial activity despite fluctuations in value creation.
- Economic Profit Volatility
- Economic profit exhibited extreme variance over the five-year period. After a positive start of 3,239 million USD in 2021, the figure dropped to a deficit of 112 million USD in 2022. A recovery occurred in 2023 with a profit of 1,320 million USD, followed by a substantial decline to a deficit of 4,630 million USD in 2024. The period concluded with a significant rebound to 5,411 million USD in 2025, marking the highest economic profit within the analyzed timeframe.
- Economic Profit Margin Trends
- The economic profit margin reflected the underlying volatility of the economic profit figures. The margin shifted from 11.99% in 2021 to a negative 0.42% in 2022, before recovering to 4.90% in 2023. A sharp contraction was observed in 2024, where the margin fell to -16.18%, indicating a period of significant value destruction. This trend reversed sharply in 2025, reaching a peak margin of 18.71%, suggesting a substantial improvement in the efficiency of capital utilization relative to sales.
The divergence between stable product sales and highly fluctuating economic profit suggests that the volatility is driven by factors other than top-line revenue, such as significant changes in capital charges, operating expenses, or strategic investments that impacted the net economic value generated.