Stock Analysis on Net
Stock Analysis on Net

Vertex Pharmaceuticals Inc. (NASDAQ:VRTX)

Analysis of Goodwill and Intangible Assets

Microsoft Excel

Goodwill and Intangible Asset Disclosure

Vertex Pharmaceuticals Inc., balance sheet: goodwill and intangible assets

US$ in thousands

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Goodwill 1,088,000 1,088,000 1,002,200 1,002,158 1,002,158
Finite-lived intangible assets, gross carrying amount 238,000 — — — —
Accumulated amortization (1,700) — — — —
Finite-lived intangible assets, net carrying amount 236,300 — — — —
In-process research and development 603,600 603,600 400,000 400,000 400,000
Other intangible assets, net 839,900 603,600 400,000 400,000 400,000
Goodwill and other intangible assets 1,927,900 1,691,600 1,402,200 1,402,158 1,402,158

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

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.
Other intangible assets, net Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Vertex Pharmaceuticals Inc. other intangible assets, net increased from 2021 to 2022 and from 2022 to 2023.
Goodwill and other intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Vertex Pharmaceuticals Inc. goodwill and other intangible assets increased from 2021 to 2022 and from 2022 to 2023.

Adjustments to Financial Statements: Removal of Goodwill

Vertex Pharmaceuticals Inc., adjustments to financial statements

US$ in thousands

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported) 22,730,200 18,150,900 13,432,500 11,751,808 8,318,465
Less: Goodwill 1,088,000 1,088,000 1,002,200 1,002,158 1,002,158
Total assets (adjusted) 21,642,200 17,062,900 12,430,300 10,749,650 7,316,307
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 17,580,400 13,912,700 10,100,000 8,686,815 6,085,244
Less: Goodwill 1,088,000 1,088,000 1,002,200 1,002,158 1,002,158
Shareholders’ equity (adjusted) 16,492,400 12,824,700 9,097,800 7,684,657 5,083,086

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

Vertex Pharmaceuticals Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Vertex Pharmaceuticals Inc., adjusted financial ratios

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Total Asset Turnover
Reported total asset turnover 0.43 0.49 0.56 0.53 0.50
Adjusted total asset turnover 0.46 0.52 0.61 0.58 0.57
Financial Leverage
Reported financial leverage 1.29 1.30 1.33 1.35 1.37
Adjusted financial leverage 1.31 1.33 1.37 1.40 1.44
Return on Equity (ROE)
Reported ROE 20.59% 23.88% 23.19% 31.22% 19.34%
Adjusted ROE 21.95% 25.90% 25.74% 35.29% 23.15%
Return on Assets (ROA)
Reported ROA 15.92% 18.30% 17.44% 23.07% 14.15%
Adjusted ROA 16.72% 19.47% 18.84% 25.23% 16.08%

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

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Vertex Pharmaceuticals Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Vertex Pharmaceuticals Inc. adjusted financial leverage ratio decreased from 2021 to 2022 and from 2022 to 2023.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Vertex Pharmaceuticals Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Vertex Pharmaceuticals Inc. adjusted ROA improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Vertex Pharmaceuticals Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Revenues 9,869,200 8,930,700 7,574,400 6,205,683 4,162,821
Total assets 22,730,200 18,150,900 13,432,500 11,751,808 8,318,465
Activity Ratio
Total asset turnover1 0.43 0.49 0.56 0.53 0.50
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Revenues 9,869,200 8,930,700 7,574,400 6,205,683 4,162,821
Adjusted total assets 21,642,200 17,062,900 12,430,300 10,749,650 7,316,307
Activity Ratio
Adjusted total asset turnover2 0.46 0.52 0.61 0.58 0.57

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

2023 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 9,869,200 ÷ 22,730,200 = 0.43

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 9,869,200 ÷ 21,642,200 = 0.46

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Vertex Pharmaceuticals Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Adjusted Financial Leverage

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Total assets 22,730,200 18,150,900 13,432,500 11,751,808 8,318,465
Shareholders’ equity 17,580,400 13,912,700 10,100,000 8,686,815 6,085,244
Solvency Ratio
Financial leverage1 1.29 1.30 1.33 1.35 1.37
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets 21,642,200 17,062,900 12,430,300 10,749,650 7,316,307
Adjusted shareholders’ equity 16,492,400 12,824,700 9,097,800 7,684,657 5,083,086
Solvency Ratio
Adjusted financial leverage2 1.31 1.33 1.37 1.40 1.44

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

2023 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 22,730,200 ÷ 17,580,400 = 1.29

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 21,642,200 ÷ 16,492,400 = 1.31

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Vertex Pharmaceuticals Inc. adjusted financial leverage ratio decreased from 2021 to 2022 and from 2022 to 2023.

Adjusted Return on Equity (ROE)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income 3,619,600 3,322,000 2,342,100 2,711,647 1,176,810
Shareholders’ equity 17,580,400 13,912,700 10,100,000 8,686,815 6,085,244
Profitability Ratio
ROE1 20.59% 23.88% 23.19% 31.22% 19.34%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income 3,619,600 3,322,000 2,342,100 2,711,647 1,176,810
Adjusted shareholders’ equity 16,492,400 12,824,700 9,097,800 7,684,657 5,083,086
Profitability Ratio
Adjusted ROE2 21.95% 25.90% 25.74% 35.29% 23.15%

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

2023 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 3,619,600 ÷ 17,580,400 = 20.59%

2 Adjusted ROE = 100 × Net income ÷ Adjusted shareholders’ equity
= 100 × 3,619,600 ÷ 16,492,400 = 21.95%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Vertex Pharmaceuticals Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income 3,619,600 3,322,000 2,342,100 2,711,647 1,176,810
Total assets 22,730,200 18,150,900 13,432,500 11,751,808 8,318,465
Profitability Ratio
ROA1 15.92% 18.30% 17.44% 23.07% 14.15%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income 3,619,600 3,322,000 2,342,100 2,711,647 1,176,810
Adjusted total assets 21,642,200 17,062,900 12,430,300 10,749,650 7,316,307
Profitability Ratio
Adjusted ROA2 16.72% 19.47% 18.84% 25.23% 16.08%

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

2023 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 3,619,600 ÷ 22,730,200 = 15.92%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 3,619,600 ÷ 21,642,200 = 16.72%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Vertex Pharmaceuticals Inc. adjusted ROA improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.