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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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 economic profit profile demonstrates significant volatility over the five-year period, characterized by alternating cycles of value creation and value destruction. While the capital base has undergone a gradual contraction, the overall economic performance is primarily driven by substantial fluctuations in operating profitability.
- Net Operating Profit After Taxes (NOPAT)
- An inconsistent trajectory is observed in NOPAT, which experienced a sharp decline from 6,897 million in 2021 to 3,687 million in 2022. Following a partial recovery in 2023, the figure fell into negative territory in 2024, reaching -796 million, before rebounding strongly to a period peak of 9,207 million in 2025.
- Cost of Capital
- The cost of capital exhibits a steady upward trend, increasing from 7.49% in 2021 to 8.66% by 2025. This persistent rise indicates an increasing hurdle rate, meaning the company must generate higher operating returns to achieve positive economic profit.
- Invested Capital
- A consistent downward trend is evident in invested capital, which decreased from 47,782 million in 2021 to 42,812 million in 2025. This reduction suggests a strategic contraction of the capital base or a decrease in the total assets employed in operations.
- Economic Profit Analysis
- Economic profit mirrors the volatility of NOPAT, showing a pattern of instability. Positive economic profit was recorded in 2021, 2023, and 2025, with the highest value creation occurring in 2025 at 5,499 million. Conversely, value destruction occurred in 2022 and 2024, with the most severe deficit of -4,542 million observed in 2024, coinciding with the negative NOPAT and a rising cost of capital.
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 analysis of economic value added from 2021 to 2025 reveals a period of significant volatility in value creation, contrasted by a steady and gradual reduction in the capital base. While invested capital has followed a consistent downward trajectory, economic profit and the corresponding spread ratio have experienced sharp fluctuations, alternating between periods of wealth generation and value destruction.
- Economic Spread Ratio Trends
- The economic spread ratio exhibits extreme variance over the five-year period. A positive spread of 6.94% in 2021 declined to a near-zero level of -0.06% in 2022. Although a partial recovery to 3.06% occurred in 2023, the ratio collapsed to its lowest point of -10.25% in 2024. This volatility culminated in a sharp rebound in 2025, reaching a period high of 12.84%, indicating a substantial increase in the return over the cost of capital.
- Economic Profit Performance
- Economic profit mirrors the volatility seen in the spread ratio. The figures transitioned from a gain of 3,318 million USD in 2021 to a marginal loss in 2022, followed by a recovery to 1,404 million USD in 2023. A significant deficit of 4,542 million USD was recorded in 2024, marking the most substantial period of value destruction. The trend reversed sharply in 2025, with economic profit rising to 5,499 million USD, the highest value in the analyzed timeframe.
- Invested Capital Dynamics
- Unlike the erratic nature of profit and spread, invested capital demonstrates a stable downward trend. The capital base decreased from 47,782 million USD in 2021 to 42,812 million USD by 2025. This consistent contraction suggests a strategic reduction in the asset base or a systematic return of capital, which may have contributed to the amplified spread ratio observed in 2025 as the denominator of the calculation decreased.
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.
The analysis of economic profit and associated margins reveals a period of significant volatility between 2021 and 2025, characterized by sharp fluctuations in value creation despite relatively stable top-line product sales.
- Product Sales Trends
- Product sales remained remarkably consistent from 2021 through 2023, hovering around the 27 billion US dollar mark. A growth phase emerged in 2024 and 2025, with sales increasing to 28.61 billion US dollars and 28.92 billion US dollars, respectively. This suggests a steady revenue base that does not correlate directly with the volatility seen in economic profit.
- Economic Profit Volatility
- Economic profit exhibited extreme instability over the five-year period. After starting at 3.32 billion US dollars in 2021, the figure plummeted to a marginal loss of 26 million US dollars in 2022, recovered to 1.40 billion US dollars in 2023, and then experienced a severe decline to a loss of 4.54 billion US dollars in 2024. A substantial recovery occurred in 2025, reaching a peak of 5.50 billion US dollars.
- Economic Profit Margin Fluctuations
- The economic profit margin mirrored the volatility of the absolute economic profit figures. The margin shifted from 12.29% in 2021 to -0.10% in 2022, then climbed to 5.21% in 2023 before dropping to a period low of -15.88% in 2024. The cycle concluded with a significant expansion to 19.02% in 2025, representing the highest margin within the analyzed timeframe.
- Correlation Analysis
- A divergence is observed between revenue growth and economic value creation. While product sales grew modestly by approximately 7% from 2021 to 2025, economic profit experienced erratic swings. The sharp contraction in 2024 followed by the surge in 2025 indicates that the drivers of economic profit—likely capital charges or non-operating expenses—exerted a far greater influence on the bottom line than the stability of sales revenue.