Stock Analysis on Net

Gilead Sciences Inc. (NASDAQ:GILD)

Economic Value Added (EVA)

Microsoft Excel

Economic Profit

Gilead Sciences Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1 (796) 5,086 3,687 6,897 633
Cost of capital2 5.95% 5.72% 5.76% 5.39% 5.28%
Invested capital3 44,333 45,824 45,565 47,782 50,285
 
Economic profit4 (3,435) 2,465 1,065 4,322 (2,021)

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

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= -7965.95% × 44,333 = -3,435

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. Gilead Sciences Inc. economic profit increased from 2022 to 2023 but then decreased significantly from 2023 to 2024.

Net Operating Profit after Taxes (NOPAT)

Gilead Sciences Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income attributable to Gilead 480 5,665 4,592 6,225 123
Deferred income tax expense (benefit)1 (1,842) (995) (1,555) (112) (223)
Increase (decrease) in allowances for credit losses2 (4) 1 8 3 4
Increase (decrease) in equity equivalents3 (1,846) (994) (1,547) (109) (219)
Interest expense 977 944 935 1,001 984
Interest expense, operating lease liability4 21 22 16 18 24
Adjusted interest expense 998 966 951 1,019 1,008
Tax benefit of interest expense5 (209) (203) (200) (214) (212)
Adjusted interest expense, after taxes6 788 763 751 805 796
(Gain) loss on marketable securities 5 2 1 (42)
Interest income (281) (376) (106)
Investment income, before taxes (276) (374) (105) (42)
Tax expense (benefit) of investment income7 58 79 22 9
Investment income, after taxes8 (218) (295) (83) (33)
Net income (loss) attributable to noncontrolling interest (52) (26) (24) (34)
Net operating profit after taxes (NOPAT) (796) 5,086 3,687 6,897 633

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

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 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 611 × 3.37% = 21

5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 998 × 21.00% = 209

6 Addition of after taxes interest expense to net income attributable to Gilead.

7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 276 × 21.00% = 58

8 Elimination of after taxes investment income.

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. Gilead Sciences Inc. NOPAT increased from 2022 to 2023 but then decreased significantly from 2023 to 2024.

Cash Operating Taxes

Gilead Sciences Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Income tax expense 211 1,247 1,248 2,077 1,580
Less: Deferred income tax expense (benefit) (1,842) (995) (1,555) (112) (223)
Add: Tax savings from interest expense 209 203 200 214 212
Less: Tax imposed on investment income 58 79 22 9
Cash operating taxes 2,205 2,366 2,981 2,403 2,006

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

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. Gilead Sciences Inc. cash operating taxes decreased from 2022 to 2023 and from 2023 to 2024.

Invested Capital

Gilead Sciences Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current portion of long-term debt and other obligations, net 1,815 1,798 2,273 1,516 2,757
Long-term debt, net, excluding current portion 24,896 23,189 22,957 25,179 28,645
Operating lease liability1 611 671 578 590 715
Total reported debt & leases 27,322 25,658 25,808 27,285 32,117
Total Gilead stockholders’ equity 19,330 22,833 21,240 21,069 18,202
Net deferred tax (assets) liabilities2 (1,654) 392 1,432 3,017 2,612
Allowances for credit losses3 52 56 55 47 44
Equity equivalents4 (1,602) 448 1,487 3,064 2,656
Accumulated other comprehensive (income) loss, net of tax5 (132) (28) (2) (83) 60
Noncontrolling interest (84) (84) (31) (5) 19
Adjusted total Gilead stockholders’ equity 17,512 23,169 22,694 24,045 20,937
Construction in progress6 (501) (661) (719) (1,057) (856)
Marketable debt securities7 (2,342) (2,218) (2,491) (1,913)
Invested capital 44,333 45,824 45,565 47,782 50,285

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

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.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Gilead Sciences Inc. invested capital increased from 2022 to 2023 but then decreased significantly from 2023 to 2024.

Cost of Capital

Gilead Sciences Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 142,356 142,356 ÷ 167,202 = 0.85 0.85 × 6.43% = 5.47%
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 5.95%

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 × 6.43% = 5.07%
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 5.72%

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 × 6.43% = 5.24%
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 5.76%

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 × 6.43% = 4.60%
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 5.39%

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 »

Capital (fair value)1 Weights Cost of capital
Equity2 78,901 78,901 ÷ 115,316 = 0.68 0.68 × 6.43% = 4.40%
Debt, net3 35,700 35,700 ÷ 115,316 = 0.31 0.31 × 3.53% × (1 – 21.00%) = 0.86%
Operating lease liability4 715 715 ÷ 115,316 = 0.01 0.01 × 3.32% × (1 – 21.00%) = 0.02%
Total: 115,316 1.00 5.28%

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

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

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 (3,435) 2,465 1,065 4,322 (2,021)
Invested capital2 44,333 45,824 45,565 47,782 50,285
Performance Ratio
Economic spread ratio3 -7.75% 5.38% 2.34% 9.05% -4.02%
Benchmarks
Economic Spread Ratio, Competitors4
AbbVie Inc. -2.95% -4.67% 4.77% 4.21% -3.56%
Amgen Inc. -0.06% 2.75% 7.32% 7.30% 11.63%
Bristol-Myers Squibb Co. -22.34% 1.22% -1.58% 0.74% -14.77%
Danaher Corp. -7.80% -8.55% -3.59% -2.89% -4.28%
Eli Lilly & Co. 15.09% 1.95% 9.31% 11.04% 17.72%
Johnson & Johnson 1.49% -0.37% 4.90% 9.96% 4.76%
Merck & Co. Inc. 13.36% -8.94% 11.24% 11.41% 4.25%
Pfizer Inc. -3.48% -9.57% 17.86% 11.03% -3.63%
Regeneron Pharmaceuticals Inc. 21.18% 18.02% 23.37% 67.07% 38.56%
Thermo Fisher Scientific Inc. -4.60% -5.10% -3.32% -1.45% -0.50%
Vertex Pharmaceuticals Inc. -22.67% 11.28% 14.03% 15.24% 28.52%

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

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -3,435 ÷ 44,333 = -7.75%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Gilead Sciences Inc. economic spread ratio improved from 2022 to 2023 but then deteriorated significantly from 2023 to 2024.

Economic Profit Margin

Gilead Sciences Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 (3,435) 2,465 1,065 4,322 (2,021)
Product sales 28,610 26,934 26,982 27,008 24,355
Performance Ratio
Economic profit margin2 -12.01% 9.15% 3.95% 16.00% -8.30%
Benchmarks
Economic Profit Margin, Competitors3
AbbVie Inc. -3.63% -5.86% 6.75% 7.19% -8.07%
Amgen Inc. -0.11% 7.15% 11.73% 12.10% 18.60%
Bristol-Myers Squibb Co. -28.98% 1.83% -2.46% 1.29% -31.32%
Danaher Corp. -24.07% -28.07% -8.91% -7.23% -12.54%
Eli Lilly & Co. 12.00% 1.68% 7.92% 10.19% 17.73%
Johnson & Johnson 1.79% -0.43% 5.88% 10.42% 5.67%
Merck & Co. Inc. 16.53% -10.41% 14.01% 16.56% 5.06%
Pfizer Inc. -7.42% -24.88% 19.55% 11.78% -8.83%
Regeneron Pharmaceuticals Inc. 18.58% 16.44% 23.53% 45.35% 37.57%
Thermo Fisher Scientific Inc. -8.80% -10.18% -6.13% -2.95% -0.94%
Vertex Pharmaceuticals Inc. -18.61% 15.14% 20.71% 18.89% 37.42%

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

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Product sales
= 100 × -3,435 ÷ 28,610 = -12.01%

3 Click competitor name to see calculations.

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. Gilead Sciences Inc. economic profit margin improved from 2022 to 2023 but then deteriorated significantly from 2023 to 2024.