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
Thermo Fisher Scientific 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
= 6,467 – 14.34% × 94,150 = -7,035
An analysis of the financial performance from 2021 to 2025 reveals a persistent inability to generate positive economic profit, indicating that the returns on invested capital remained below the company's cost of capital throughout the period. While there are signs of operational recovery in recent years, the overall economic value added remained negative.
- Net Operating Profit After Taxes (NOPAT)
- A significant downward trend was observed between 2021 and 2023, with NOPAT falling from 7,514 million US$ to a low of 5,117 million US$. However, a recovery phase began in 2024 and continued into 2025, with the 2025 figure reaching 6,467 million US$, although this remains below the 2021 baseline.
- Cost of Capital
- The cost of capital remained relatively stable over the five-year horizon, fluctuating within a narrow range between 14.34% and 14.85%. This stability suggests that the external financing environment and the company's risk profile remained consistent, meaning the negative economic profit is driven more by operational returns and capital deployment than by changes in the cost of funding.
- Invested Capital
- Invested capital showed a general upward trajectory, increasing from 79,776 million US$ in 2021 to a peak of 94,150 million US$ in 2025. A brief contraction occurred in 2024, where capital decreased to 82,071 million US$, before rising sharply the following year. The expansion of the capital base without a proportional increase in NOPAT has contributed to the continued erosion of economic value.
- Economic Profit
- Economic profit remained negative throughout the entire period, indicating consistent value destruction. The deficit widened from -3,964 million US$ in 2021 to a peak loss of -7,479 million US$ in 2023. Despite a slight improvement in 2024 to -6,787 million US$, the figure regressed to -7,035 million US$ in 2025. This trend underscores a persistent gap between the earnings generated by the company's operations and the required return on its invested capital.
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Net Operating Profit after Taxes (NOPAT)
Thermo Fisher Scientific 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.
3 Addition of increase (decrease) in accrued restructuring costs.
4 Addition of increase (decrease) in equity equivalents to net income attributable to Thermo Fisher Scientific Inc..
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,470 × 4.70% = 69
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,488 × 21.00% = 312
7 Addition of after taxes interest expense to net income attributable to Thermo Fisher Scientific Inc..
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 993 × 21.00% = 209
9 Elimination of after taxes investment income.
Net income attributable to Thermo Fisher Scientific Inc. and Net Operating Profit After Taxes (NOPAT) both demonstrate fluctuations over the five-year period. While net income shows a relatively stable pattern, NOPAT exhibits a more pronounced decline followed by recovery.
- Net Income Trend
- Net income attributable to Thermo Fisher Scientific Inc. decreased from US$7,725 million in 2021 to US$6,950 million in 2022. A further decrease was observed in 2023, reaching US$5,995 million. Subsequently, net income increased to US$6,335 million in 2024 and continued to rise to US$6,704 million in 2025, though it did not return to the 2021 level.
- NOPAT Trend
- NOPAT experienced a more significant decline than net income. Starting at US$7,514 million in 2021, it decreased to US$6,425 million in 2022. The decline accelerated in 2023, falling to US$5,117 million. A modest recovery occurred in 2024, with NOPAT reaching US$5,400 million. The most substantial increase within the observed period occurred between 2024 and 2025, with NOPAT rising to US$6,467 million. Despite this recovery, the 2025 NOPAT figure remains below the 2021 level.
- Relationship between Net Income and NOPAT
- The values for net income and NOPAT are closely aligned throughout the period, suggesting a limited impact from financing costs or non-operating items. The proportional changes in both metrics are similar, indicating that the core operating profitability is the primary driver of overall profitability. However, the magnitude of the NOPAT decline in 2023 was greater than that of net income, potentially indicating changes in the tax rate or other adjustments between net income and NOPAT.
The recovery in both net income and NOPAT in the later years of the period suggests a potential stabilization or improvement in the company’s operating performance. Further investigation would be required to determine the underlying causes of these fluctuations and the sustainability of the recent recovery.
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Cash Operating Taxes
Thermo Fisher Scientific Inc., cash operating taxes calculation
US$ 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 provision for income taxes and cash operating taxes exhibited distinct trends between 2021 and 2025. A significant decrease in the provision for income taxes is apparent over the period, while cash operating taxes demonstrate more fluctuation.
- Provision for Income Taxes
- The provision for income taxes decreased substantially from US$1,109 million in 2021 to US$284 million in 2023. A moderate increase was then observed in 2024, reaching US$657 million, followed by a further decrease to US$547 million in 2025. This represents an overall decline of approximately 50.7% from 2021 to 2025.
- Cash Operating Taxes
- Cash operating taxes remained relatively stable between 2021 and 2023, fluctuating around US$1,800 million. A notable increase occurred in 2024, with cash operating taxes rising to US$1,946 million. However, a considerable decrease was recorded in 2025, falling to US$1,290 million. The net change from 2021 to 2025 is a decrease of approximately 30.9%.
The divergence between the provision for income taxes and cash operating taxes suggests potential differences in temporary versus permanent tax differences. The substantial reduction in the provision for income taxes, coupled with the fluctuating cash operating taxes, warrants further investigation into the underlying factors driving these trends, such as changes in tax regulations, deferred tax asset realization, or shifts in the composition of taxable income.
- Relationship between Provision and Cash Taxes
- In 2021, cash operating taxes exceeded the provision for income taxes by US$757 million. This difference narrowed in 2022 to US$1,103 million and further decreased in 2023 to US$1,417 million. The gap widened again in 2024 to US$1,289 million before decreasing significantly in 2025 to US$743 million. This fluctuating difference highlights the impact of timing differences between reported income tax expense and actual cash tax payments.
The observed trends indicate a complex tax profile, and continued monitoring of these figures is recommended to assess potential impacts on future cash flows and overall financial performance.
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Invested Capital
Thermo Fisher Scientific Inc., invested capital calculation (financing approach)
US$ 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 accrued restructuring costs.
5 Addition of equity equivalents to total Thermo Fisher Scientific Inc. shareholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of investments measured at fair value on a recurring basis.
The invested capital of the company demonstrates an overall increasing trend between 2021 and 2025, though with some fluctuation. Total reported debt & leases and total shareholders’ equity both contribute to this figure, and their individual movements influence the overall invested capital.
- Invested Capital Trend
- Invested capital increased from US$79,776 million in 2021 to US$82,814 million in 2022, representing a growth of approximately 3.8%. Further growth was observed in 2023, reaching US$85,573 million. A slight decrease occurred in 2024, with invested capital falling to US$82,071 million. However, a significant increase is noted in 2025, with invested capital reaching US$94,150 million.
- Debt & Leases
- Total reported debt & leases remained relatively stable between 2021 and 2023, fluctuating around US$36 billion. A decrease was observed in 2024, falling to US$32,775 million. This downward trend was reversed in 2025, with debt & leases increasing substantially to US$40,855 million.
- Shareholders’ Equity
- Total shareholders’ equity exhibited consistent growth throughout the period. It increased from US$40,793 million in 2021 to US$43,978 million in 2022, US$46,735 million in 2023, and US$49,584 million in 2024. This growth continued into 2025, reaching US$53,407 million. The consistent increase in shareholders’ equity contributes to the overall growth in invested capital.
The increase in invested capital in 2025 is primarily driven by a substantial rise in debt & leases, despite continued growth in shareholders’ equity. The dip in invested capital in 2024 is attributable to the decrease in debt & leases, partially offset by the continued growth in shareholders’ equity. These fluctuations suggest potential shifts in the company’s capital structure and financing strategies.
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Cost of Capital
Thermo Fisher Scientific Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 193,216) | 193,216) | ÷ | 231,506) | = | 0.83 | 0.83 | × | 16.74% | = | 13.97% | ||
| Debt obligations3 | 36,820) | 36,820) | ÷ | 231,506) | = | 0.16 | 0.16 | × | 2.76% × (1 – 21.00%) | = | 0.35% | ||
| Operating lease liability4 | 1,470) | 1,470) | ÷ | 231,506) | = | 0.01 | 0.01 | × | 4.70% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 231,506) | 1.00 | 14.34% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 202,902) | 202,902) | ÷ | 233,131) | = | 0.87 | 0.87 | × | 16.74% | = | 14.57% | ||
| Debt obligations3 | 28,729) | 28,729) | ÷ | 233,131) | = | 0.12 | 0.12 | × | 2.64% × (1 – 21.00%) | = | 0.26% | ||
| Operating lease liability4 | 1,500) | 1,500) | ÷ | 233,131) | = | 0.01 | 0.01 | × | 4.60% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 233,131) | 1.00 | 14.85% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 213,722) | 213,722) | ÷ | 247,687) | = | 0.86 | 0.86 | × | 16.74% | = | 14.44% | ||
| Debt obligations3 | 32,458) | 32,458) | ÷ | 247,687) | = | 0.13 | 0.13 | × | 2.48% × (1 – 21.00%) | = | 0.26% | ||
| Operating lease liability4 | 1,507) | 1,507) | ÷ | 247,687) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 247,687) | 1.00 | 14.72% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 212,353) | 212,353) | ÷ | 244,438) | = | 0.87 | 0.87 | × | 16.74% | = | 14.54% | ||
| Debt obligations3 | 30,500) | 30,500) | ÷ | 244,438) | = | 0.12 | 0.12 | × | 1.92% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 1,585) | 1,585) | ÷ | 244,438) | = | 0.01 | 0.01 | × | 3.20% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 244,438) | 1.00 | 14.75% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 211,310) | 211,310) | ÷ | 249,026) | = | 0.85 | 0.85 | × | 16.74% | = | 14.20% | ||
| Debt obligations3 | 36,247) | 36,247) | ÷ | 249,026) | = | 0.15 | 0.15 | × | 1.49% × (1 – 21.00%) | = | 0.17% | ||
| Operating lease liability4 | 1,469) | 1,469) | ÷ | 249,026) | = | 0.01 | 0.01 | × | 2.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 249,026) | 1.00 | 14.39% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt obligations. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Thermo Fisher Scientific 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 | (7,035) | (6,787) | (7,479) | (5,788) | (3,964) | |
| Invested capital2 | 94,150) | 82,071) | 85,573) | 82,814) | 79,776) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -7.47% | -8.27% | -8.74% | -6.99% | -4.97% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 0.54% | -2.40% | -4.11% | 5.32% | 4.71% | |
| Amgen Inc. | 6.11% | -0.67% | 2.15% | 6.66% | 6.66% | |
| Bristol-Myers Squibb Co. | 5.48% | -22.18% | 1.38% | -1.40% | 0.91% | |
| Danaher Corp. | -10.72% | -10.89% | -11.66% | -6.65% | -5.82% | |
| Eli Lilly & Co. | 29.94% | 14.28% | 1.21% | 8.31% | 9.99% | |
| Gilead Sciences Inc. | 12.42% | -10.66% | 2.68% | -0.45% | 6.60% | |
| Johnson & Johnson | 11.34% | 1.67% | -0.18% | 5.09% | 10.15% | |
| Merck & Co. Inc. | 10.27% | 13.14% | -9.17% | 11.01% | 11.20% | |
| Pfizer Inc. | -3.81% | -3.50% | -9.60% | 17.82% | 10.99% | |
| Regeneron Pharmaceuticals Inc. | 13.62% | 16.44% | 13.24% | 18.61% | 62.36% | |
| Vertex Pharmaceuticals Inc. | 20.56% | -23.09% | 10.85% | 13.60% | 14.81% | |
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 × -7,035 ÷ 94,150 = -7.47%
4 Click competitor name to see calculations.
The analysis of economic value generation from 2021 through 2025 reveals a period of persistent value erosion, characterized by negative economic profit and a negative economic spread ratio throughout the five-year horizon. While there are signs of stabilization in the latter years, the organization has not yet achieved a positive spread, indicating that returns on invested capital have remained below the cost of capital.
- Economic Profit Trends
- Economic profit remained consistently negative over the analyzed period, reflecting a failure to generate returns exceeding the required cost of capital. The deficit expanded from -3,964 million USD in 2021 to a peak loss of -7,479 million USD in 2023. A marginal recovery was observed in 2024 with a value of -6,787 million USD, followed by a slight regression to -7,035 million USD in 2025.
- Invested Capital Dynamics
- Invested capital exhibited a general upward trajectory, growing from 79,776 million USD in 2021 to 94,150 million USD by 2025. A notable fluctuation occurred in 2024, where invested capital decreased to 82,071 million USD, before surging to its highest level in 2025. This suggests significant capital deployment in the final year despite the ongoing negative economic profit.
- Economic Spread Ratio Analysis
- The economic spread ratio demonstrated a deteriorating trend in the first three years, falling from -4.97% in 2021 to a low of -8.74% in 2023. This indicates an increasing gap between the return on capital and the cost of capital. However, a corrective trend emerged in the subsequent period, with the ratio improving to -8.27% in 2024 and -7.47% in 2025. Although the ratio remains negative, the upward movement suggests a gradual narrowing of the spread deficit.
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Economic Profit Margin
Thermo Fisher Scientific 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 | (7,035) | (6,787) | (7,479) | (5,788) | (3,964) | |
| Revenues | 44,556) | 42,879) | 42,857) | 44,915) | 39,211) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -15.79% | -15.83% | -17.45% | -12.89% | -10.11% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | 0.54% | -2.95% | -5.16% | 7.52% | 8.04% | |
| Amgen Inc. | 10.18% | -1.32% | 5.60% | 10.67% | 11.04% | |
| Bristol-Myers Squibb Co. | 6.74% | -28.77% | 2.07% | -2.18% | 1.57% | |
| Danaher Corp. | -32.86% | -33.60% | -38.27% | -16.51% | -14.53% | |
| Eli Lilly & Co. | 22.79% | 11.35% | 1.04% | 7.07% | 9.22% | |
| Gilead Sciences Inc. | 18.38% | -16.51% | 4.56% | -0.76% | 11.67% | |
| Johnson & Johnson | 16.64% | 2.01% | -0.21% | 6.10% | 10.61% | |
| Merck & Co. Inc. | 15.48% | 16.26% | -10.67% | 13.73% | 16.26% | |
| Pfizer Inc. | -8.52% | -7.44% | -24.97% | 19.50% | 11.73% | |
| Regeneron Pharmaceuticals Inc. | 12.58% | 14.42% | 12.08% | 18.73% | 42.17% | |
| Vertex Pharmaceuticals Inc. | 18.13% | -18.96% | 14.56% | 20.07% | 18.36% | |
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 ÷ Revenues
= 100 × -7,035 ÷ 44,556 = -15.79%
3 Click competitor name to see calculations.
The financial performance from 2021 to 2025 is characterized by a consistent failure to achieve positive economic profit, indicating that the returns generated were insufficient to cover the company's cost of capital throughout the analyzed period.
- Economic Profit Trajectory
- A sustained negative trend is observed in economic profit, which deepened from -3,964 million USD in 2021 to a peak deficit of -7,479 million USD in 2023. Although a partial recovery occurred in 2024 with losses narrowing to -6,787 million USD, the figure declined again to -7,035 million USD by the end of 2025.
- Revenue Fluctuations
- Revenues exhibited volatility over the five-year span. An initial increase was noted in 2022, reaching 44,915 million USD, followed by a contraction in 2023 and 2024, where values remained near 42,800 million USD. A recovery trend emerged in 2025, with revenues rising to 44,556 million USD.
- Economic Profit Margin Dynamics
- The economic profit margin remained negative throughout the period, reflecting a persistent erosion of economic value. The margin deteriorated from -10.11% in 2021 to a low of -17.45% in 2023. A slight stabilization followed, with the margin improving to -15.83% in 2024 and maintaining a similar level of -15.79% in 2025.
Overall, the data indicates that despite a recovery in top-line revenue by 2025, the company has not been able to reverse the negative economic profit margin, suggesting that the cost of capital continues to exceed the net operating profit after tax.
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