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.
Economic Profit
Gilead Sciences Inc., economic profit 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 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
= 9,207 – 8.68% × 42,812 = 5,493
The financial performance from 2021 through 2025 is characterized by significant volatility in operating profitability and economic value creation. While the capital base has undergone a gradual contraction, the ability to generate returns above the cost of capital has fluctuated sharply, culminating in a substantial recovery in the final period.
- Net Operating Profit After Taxes (NOPAT)
- A highly inconsistent trend is observed in NOPAT, which fell from 6,897 million US$ in 2021 to 3,687 million US$ in 2022, followed by a partial recovery to 5,086 million US$ in 2023. A sharp contraction occurred in 2024, resulting in a negative NOPAT of 796 million US$, before a significant surge to 9,207 million US$ in 2025, marking the highest operating profit in the analyzed period.
- Cost of Capital
- The cost of capital exhibits a general upward trajectory, rising from 7.50% in 2021 to 8.68% by 2025. This steady increase suggests a rising hurdle rate for investments, which places additional pressure on the organization to generate higher operating returns to maintain positive economic value added.
- Invested Capital
- Invested capital shows a consistent downward trend, decreasing from 47,782 million US$ in 2021 to 42,812 million US$ in 2025. This reduction indicates a contraction of the capital base, potentially reflecting divestments, asset depreciation, or a strategic shift toward a leaner capital structure.
- Economic Profit
- Economic profit mirrors the volatility of NOPAT, alternating between value creation and value destruction. A positive economic profit of 3,313 million US$ in 2021 shifted to a marginal loss of 32 million US$ in 2022 and recovered to 1,398 million US$ in 2023. The most severe decline occurred in 2024, with an economic loss of 4,549 million US$, before rebounding strongly to 5,493 million US$ in 2025.
The correlation between the decline in invested capital and the eventual surge in economic profit suggests that the improvement in 2025 was driven by a substantial increase in operating efficiency rather than capital expansion. Despite the increasing cost of capital, the sharp rise in NOPAT in the final year was sufficient to offset the capital charges and maximize economic value.
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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
= 605 × 3.53% = 21
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,045 × 21.00% = 220
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
= 350 × 21.00% = 74
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$8,510 million. This indicates a significant improvement in operational profitability and overall earnings, potentially driven by new products, cost reductions, or favorable market conditions.
The fluctuations in NOPAT, particularly the substantial loss in 2024 followed by a strong recovery in 2025, warrant further investigation to understand the underlying drivers of these changes. The divergence between NOPAT and net income trends in 2024 also merits closer scrutiny.
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Cash Operating Taxes
Gilead Sciences Inc., cash operating taxes calculation
US$ 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.
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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$22,703 million.
The fluctuations in stockholders’ equity appear to have a more substantial impact on the overall invested capital trend, particularly the decline observed in 2024. While debt & leases experienced some volatility, its impact was less pronounced than the changes in equity. The combined effect of these components resulted in the observed decrease in invested capital over the period.
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Cost of Capital
Gilead Sciences Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 183,283) | 183,283) | ÷ | 207,030) | = | 0.89 | 0.89 | × | 9.38% | = | 8.30% | ||
| Debt, net3 | 23,142) | 23,142) | ÷ | 207,030) | = | 0.11 | 0.11 | × | 4.15% × (1 – 21.00%) | = | 0.37% | ||
| Operating lease liability4 | 605) | 605) | ÷ | 207,030) | = | 0.00 | 0.00 | × | 3.53% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 207,030) | 1.00 | 8.68% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 142,356) | 142,356) | ÷ | 167,202) | = | 0.85 | 0.85 | × | 9.38% | = | 7.98% | ||
| Debt, net3 | 24,235) | 24,235) | ÷ | 167,202) | = | 0.14 | 0.14 | × | 4.11% × (1 – 21.00%) | = | 0.47% | ||
| Operating lease liability4 | 611) | 611) | ÷ | 167,202) | = | 0.00 | 0.00 | × | 3.37% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 167,202) | 1.00 | 8.46% | ||||||||||
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 | 91,627) | 91,627) | ÷ | 116,095) | = | 0.79 | 0.79 | × | 9.38% | = | 7.40% | ||
| Debt, net3 | 23,797) | 23,797) | ÷ | 116,095) | = | 0.20 | 0.20 | × | 3.91% × (1 – 21.00%) | = | 0.63% | ||
| Operating lease liability4 | 671) | 671) | ÷ | 116,095) | = | 0.01 | 0.01 | × | 3.22% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 116,095) | 1.00 | 8.05% | ||||||||||
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 | 104,133) | 104,133) | ÷ | 127,673) | = | 0.82 | 0.82 | × | 9.38% | = | 7.65% | ||
| Debt, net3 | 22,962) | 22,962) | ÷ | 127,673) | = | 0.18 | 0.18 | × | 3.55% × (1 – 21.00%) | = | 0.50% | ||
| Operating lease liability4 | 578) | 578) | ÷ | 127,673) | = | 0.00 | 0.00 | × | 2.80% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 127,673) | 1.00 | 8.16% | ||||||||||
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 | 76,926) | 76,926) | ÷ | 107,416) | = | 0.72 | 0.72 | × | 9.38% | = | 6.72% | ||
| Debt, net3 | 29,900) | 29,900) | ÷ | 107,416) | = | 0.28 | 0.28 | × | 3.51% × (1 – 21.00%) | = | 0.77% | ||
| Operating lease liability4 | 590) | 590) | ÷ | 107,416) | = | 0.01 | 0.01 | × | 3.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 107,416) | 1.00 | 7.50% | ||||||||||
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 | 5,493) | (4,549) | 1,398) | (32) | 3,313) | |
| Invested capital2 | 42,812) | 44,333) | 45,824) | 45,565) | 47,782) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 12.83% | -10.26% | 3.05% | -0.07% | 6.93% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 0.92% | -2.01% | -3.73% | 5.69% | 5.05% | |
| Amgen Inc. | 6.40% | -0.40% | 2.41% | 6.95% | 6.94% | |
| Bristol-Myers Squibb Co. | 5.87% | -21.81% | 1.75% | -0.98% | 1.30% | |
| Danaher Corp. | -10.74% | -10.91% | -11.68% | -6.67% | -5.84% | |
| Eli Lilly & Co. | 30.38% | 14.72% | 1.65% | 8.75% | 10.41% | |
| Johnson & Johnson | 11.78% | 2.11% | 0.26% | 5.52% | 10.59% | |
| Merck & Co. Inc. | 10.74% | 13.62% | -8.67% | 11.51% | 11.65% | |
| Pfizer Inc. | -3.56% | -3.24% | -9.35% | 18.13% | 11.30% | |
| Regeneron Pharmaceuticals Inc. | 14.03% | 16.85% | 13.65% | 19.02% | 62.77% | |
| Thermo Fisher Scientific Inc. | -7.48% | -8.28% | -8.75% | -7.00% | -4.98% | |
| Vertex Pharmaceuticals Inc. | 21.07% | -22.58% | 11.36% | 14.11% | 15.32% | |
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 × 5,493 ÷ 42,812 = 12.83%
4 Click competitor name to see calculations.
Analysis of economic value added reveals a period of significant volatility in value creation, contrasted by a steady contraction in the capital base. The relationship between economic profit and invested capital indicates a fluctuating ability to generate returns above the required cost of capital.
- Invested Capital Trends
- A consistent downward trend is observed in invested capital, which decreased from 47,782 million US dollars in 2021 to 42,812 million US dollars by 2025. This gradual reduction suggests a strategic decrease in the capital employed or a systematic optimization of the balance sheet over the five-year duration.
- Economic Profit Volatility
- Economic profit demonstrates extreme instability, characterized by alternating cycles of gain and loss. After a positive result in 2021, the figure dropped to a near-zero value in 2022, recovered partially in 2023, and plummeted to a significant deficit of 4,549 million US dollars in 2024. A sharp recovery occurred in 2025, reaching a period high of 5,493 million US dollars.
- Economic Spread Ratio Performance
- The economic spread ratio mirrors the volatility of economic profit, serving as a primary indicator of capital efficiency. The ratio fluctuated from 6.93% in 2021 to a low of -10.26% in 2024, indicating periods where the return on capital did not exceed the cost of capital. The ratio concluded the period at 12.83% in 2025, representing the highest level of economic value generation relative to invested capital within the analyzed timeframe.
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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 | 5,493) | (4,549) | 1,398) | (32) | 3,313) | |
| Product sales | 28,915) | 28,610) | 26,934) | 26,982) | 27,008) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 19.00% | -15.90% | 5.19% | -0.12% | 12.27% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | 0.93% | -2.48% | -4.68% | 8.04% | 8.62% | |
| Amgen Inc. | 10.67% | -0.79% | 6.28% | 11.14% | 11.50% | |
| Bristol-Myers Squibb Co. | 7.22% | -28.29% | 2.63% | -1.52% | 2.25% | |
| Danaher Corp. | -32.92% | -33.67% | -38.34% | -16.57% | -14.59% | |
| Eli Lilly & Co. | 23.12% | 11.70% | 1.42% | 7.44% | 9.60% | |
| Johnson & Johnson | 17.28% | 2.53% | 0.31% | 6.62% | 11.07% | |
| Merck & Co. Inc. | 16.19% | 16.85% | -10.10% | 14.35% | 16.93% | |
| Pfizer Inc. | -7.94% | -6.89% | -24.33% | 19.85% | 12.06% | |
| Regeneron Pharmaceuticals Inc. | 12.96% | 14.78% | 12.45% | 19.15% | 42.45% | |
| Thermo Fisher Scientific Inc. | -15.81% | -15.85% | -17.47% | -12.91% | -10.13% | |
| Vertex Pharmaceuticals Inc. | 18.58% | -18.54% | 15.25% | 20.83% | 18.99% | |
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 × 5,493 ÷ 28,915 = 19.00%
3 Click competitor name to see calculations.
The analysis of economic value creation from 2021 to 2025 reveals a pattern of extreme volatility in economic profit and margins, contrasting with a relatively stable trend in product sales. While revenue remains consistent, the company's ability to generate returns above its cost of capital has fluctuated significantly, alternating between periods of value creation and value destruction.
- Product Sales Performance
- Product sales demonstrated minimal variance over the five-year period, maintaining a baseline around US$ 27 billion. A slight growth trend emerged toward the end of the period, with sales increasing to US$ 28.61 billion in 2024 and US$ 28.92 billion in 2025. This stability indicates that the volatility observed in economic profit is not driven by fluctuations in top-line revenue.
- Economic Profit Volatility
- Economic profit exhibited a cyclical and erratic trajectory. After a strong start of US$ 3,313 million in 2021, the figure dropped to a near-break-even loss of US$ 32 million in 2022. A partial recovery occurred in 2023 with a profit of US$ 1,398 million, followed by a sharp decline to a deficit of US$ 4,549 million in 2024. The period concluded with a substantial peak of US$ 5,493 million in 2025, marking the highest level of value creation in the analyzed timeframe.
- Economic Profit Margin Trends
- The economic profit margin mirrored the volatility of the absolute economic profit, shifting from 12.27% in 2021 to -0.12% in 2022. The margin recovered to 5.19% in 2023 before collapsing to its lowest point of -15.90% in 2024. The final year showed a significant rebound to 19.00%. These wide swings suggest that the company's operational efficiency and capital allocation effectiveness have been inconsistent relative to its sales volume.
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