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 – 14.22% × 94,150 = -6,919
The period under review demonstrates a consistent pattern of negative economic profit. Net operating profit after taxes (NOPAT) fluctuated over the five-year span, while the cost of capital remained relatively stable. Invested capital generally increased, with a notable decrease in 2024, before rising significantly in 2025. These factors combined to produce ongoing economic losses.
- NOPAT Trend
- Net operating profit after taxes decreased from US$7,514 million in 2021 to US$6,425 million in 2022, then further declined to US$5,117 million in 2023. A modest recovery was observed in 2024, with NOPAT reaching US$5,400 million, followed by an increase to US$6,467 million in 2025. Despite the 2024 and 2025 improvements, NOPAT did not return to the levels seen in 2021.
- Cost of Capital
- The cost of capital exhibited slight variability. It increased from 14.26% in 2021 to 14.62% in 2022, then decreased slightly to 14.59% in 2023 and rose again to 14.72% in 2024. A decrease to 14.22% was noted in 2025, representing the lowest value within the observed period. These fluctuations were relatively minor and did not appear to be a primary driver of the negative economic profit.
- Invested Capital
- Invested capital generally trended upward, increasing from US$79,776 million in 2021 to US$82,814 million in 2022 and US$85,573 million in 2023. A decrease to US$82,071 million occurred in 2024, before a substantial increase to US$94,150 million in 2025. The significant rise in invested capital in 2025, coupled with the NOPAT level, contributed to the largest economic loss of the period.
- Economic Profit
- Economic profit remained negative throughout the entire period. The losses widened from US$-3,865 million in 2021 to US$-5,683 million in 2022, and further deteriorated to US$-7,370 million in 2023. While the loss decreased slightly to US$-6,682 million in 2024, it increased again to US$-6,919 million in 2025, representing the largest negative economic profit observed. The consistent negative economic profit indicates that the company’s returns are not covering its cost of capital.
In summary, the company experienced consistent economic losses over the five-year period. While NOPAT showed some recovery in later years, it was insufficient to offset the increasing invested capital and relatively stable cost of capital, resulting in continued negative economic profit.
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$6,467 million. Despite this recovery, the 2025 NOPAT figure remains below the 2021 level.
- Relationship between Net Income and NOPAT
- The values for net income and NOPAT are closely aligned throughout the period, suggesting a limited impact from financing costs or non-operating items. The proportional changes in both metrics are similar, indicating that the core operating profitability is the primary driver of overall profitability. However, the magnitude of the NOPAT decline in 2023 was greater than that of net income, potentially indicating changes in the tax rate or other adjustments between net income and NOPAT.
The recovery in both net income and NOPAT in the later years of the period suggests a potential stabilization or improvement in the company’s operating performance. Further investigation would be required to determine the underlying causes of these fluctuations and the sustainability of the recent recovery.
Cash Operating Taxes
Thermo Fisher Scientific Inc., cash operating taxes calculation
US$ 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$743 million. This fluctuating difference highlights the impact of timing differences between reported income tax expense and actual cash tax payments.
The observed trends indicate a complex tax profile, and continued monitoring of these figures is recommended to assess potential impacts on future cash flows and overall financial performance.
Invested Capital
Thermo Fisher Scientific Inc., invested capital calculation (financing approach)
US$ 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$53,407 million. The consistent increase in shareholders’ equity contributes to the overall growth in invested capital.
The increase in invested capital in 2025 is primarily driven by a substantial rise in debt & leases, despite continued growth in shareholders’ equity. The dip in invested capital in 2024 is attributable to the decrease in debt & leases, partially offset by the continued growth in shareholders’ equity. These fluctuations suggest potential shifts in the company’s capital structure and financing strategies.
Cost of Capital
Thermo Fisher Scientific Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 193,216) | 193,216) | ÷ | 231,506) | = | 0.83 | 0.83 | × | 16.59% | = | 13.85% | ||
| Debt obligations3 | 36,820) | 36,820) | ÷ | 231,506) | = | 0.16 | 0.16 | × | 2.76% × (1 – 21.00%) | = | 0.35% | ||
| Operating lease liability4 | 1,470) | 1,470) | ÷ | 231,506) | = | 0.01 | 0.01 | × | 4.70% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 231,506) | 1.00 | 14.22% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 16.59% | = | 14.44% | ||
| 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 | 14.72% | ||||||||||
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 | × | 16.59% | = | 14.32% | ||
| 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 | 14.59% | ||||||||||
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 | × | 16.59% | = | 14.41% | ||
| 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 | 14.62% | ||||||||||
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 | × | 16.59% | = | 14.08% | ||
| 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 | 14.26% | ||||||||||
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 | (6,919) | (6,682) | (7,370) | (5,683) | (3,865) | |
| Invested capital2 | 94,150) | 82,071) | 85,573) | 82,814) | 79,776) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -7.35% | -8.14% | -8.61% | -6.86% | -4.84% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 1.15% | -1.79% | -3.50% | 5.91% | 5.25% | |
| Amgen Inc. | 6.59% | -0.22% | 2.59% | 7.15% | 7.13% | |
| Bristol-Myers Squibb Co. | 6.08% | -21.61% | 1.96% | -0.75% | 1.51% | |
| Danaher Corp. | -10.60% | -10.77% | -11.53% | -6.53% | -5.70% | |
| Eli Lilly & Co. | 30.63% | 14.98% | 1.91% | 9.01% | 10.66% | |
| Gilead Sciences Inc. | 13.07% | -10.03% | 3.27% | 0.15% | 7.13% | |
| Johnson & Johnson | 12.04% | 2.36% | 0.52% | 5.77% | 10.84% | |
| Merck & Co. Inc. | 11.00% | 13.87% | -8.41% | 11.77% | 11.90% | |
| Pfizer Inc. | -3.38% | -3.07% | -9.19% | 18.35% | 11.51% | |
| Regeneron Pharmaceuticals Inc. | 14.29% | 17.11% | 13.91% | 19.28% | 63.02% | |
| Vertex Pharmaceuticals Inc. | 21.34% | -22.30% | 11.65% | 14.39% | 15.60% | |
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 × -6,919 ÷ 94,150 = -7.35%
4 Click competitor name to see calculations.
The economic spread ratio demonstrates a consistent pattern of negative values over the five-year period, indicating that the company’s returns on invested capital are consistently below its cost of capital. The magnitude of this underperformance has generally increased over time, before showing a slight moderation in the most recent year.
- Economic Spread Ratio Trend
- The economic spread ratio declined from -4.84% in 2021 to -8.61% in 2023, representing a worsening of economic value creation. This suggests an increasing gap between the cost of capital and the returns generated from invested capital. A slight improvement is observed in 2024 and 2025, with the ratio moving to -8.14% and -7.35% respectively, though it remains negative.
The negative economic profit figures corroborate the negative economic spread ratios. Economic profit consistently decreased from a loss of US$3,865 million in 2021 to a loss of US$7,370 million in 2023. While the loss moderated to US$6,682 million in 2024 and US$6,919 million in 2025, it remained substantial.
- Invested Capital Trend
- Invested capital generally increased from US$79,776 million in 2021 to US$94,150 million in 2025. However, the increase was not consistent year-over-year, with a decrease observed between 2023 and 2024. This suggests potential shifts in capital allocation strategies or asset base.
The combination of a consistently negative economic spread ratio and increasing invested capital suggests that the company is deploying more capital into ventures that are not generating returns sufficient to cover the cost of that capital. The recent moderation in the economic spread ratio, coupled with the stabilization of economic profit losses, may indicate early signs of improved capital allocation or operational efficiency, but further monitoring is warranted to confirm a sustained positive trend.
Economic Profit Margin
Thermo Fisher Scientific Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (6,919) | (6,682) | (7,370) | (5,683) | (3,865) | |
| Revenues | 44,556) | 42,879) | 42,857) | 44,915) | 39,211) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -15.53% | -15.58% | -17.20% | -12.65% | -9.86% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | 1.16% | -2.20% | -4.40% | 8.36% | 8.96% | |
| Amgen Inc. | 11.00% | -0.43% | 6.74% | 11.45% | 11.82% | |
| Bristol-Myers Squibb Co. | 7.48% | -28.03% | 2.94% | -1.16% | 2.61% | |
| Danaher Corp. | -32.49% | -33.23% | -37.87% | -16.21% | -14.25% | |
| Eli Lilly & Co. | 23.32% | 11.90% | 1.65% | 7.66% | 9.83% | |
| Gilead Sciences Inc. | 19.35% | -15.54% | 5.55% | 0.26% | 12.61% | |
| Johnson & Johnson | 17.66% | 2.83% | 0.60% | 6.92% | 11.33% | |
| Merck & Co. Inc. | 16.57% | 17.17% | -9.79% | 14.68% | 17.28% | |
| Pfizer Inc. | -7.55% | -6.52% | -23.89% | 20.09% | 12.29% | |
| Regeneron Pharmaceuticals Inc. | 13.19% | 15.00% | 12.69% | 19.41% | 42.62% | |
| Vertex Pharmaceuticals Inc. | 18.82% | -18.31% | 15.63% | 21.24% | 19.34% | |
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 × -6,919 ÷ 44,556 = -15.53%
3 Click competitor name to see calculations.
The economic profit margin demonstrates a consistent pattern of negative values and a declining trend over the five-year period. While revenues exhibit fluctuations, the economic profit margin consistently indicates that the company’s returns are insufficient to cover its cost of capital.
- Economic Profit Margin Trend
- The economic profit margin decreased from -9.86% in 2021 to -17.20% in 2023, representing a substantial deterioration in economic profitability. A slight improvement was observed in 2024, with the margin increasing to -15.58%, but this positive movement was not sustained, as the margin remained at -15.53% in 2025. This suggests that while there may be short-term fluctuations, the underlying issue of generating returns exceeding the cost of capital persists.
Revenues increased from US$39,211 million in 2021 to US$44,915 million in 2022, indicating growth in sales. However, revenues decreased to US$42,857 million in 2023 before stabilizing at US$42,879 million in 2024 and increasing slightly to US$44,556 million in 2025. Despite these revenue changes, the economic profit margin continued to be negative, indicating that revenue growth alone was not sufficient to generate positive economic profit.
- Relationship between Revenues and Economic Profit Margin
- The observed trend suggests a disconnect between revenue generation and economic profitability. While revenue increased over the period, the economic profit margin worsened, indicating that the cost of generating those revenues, or the cost of capital employed, increased at a faster rate than the revenues themselves. This could be due to factors such as increased operating expenses, higher capital investments, or a rising cost of capital.
The consistently negative economic profit values, coupled with the declining margin, highlight a potential concern regarding the company’s ability to create value for its investors. Continued monitoring of these metrics, alongside a detailed analysis of the underlying cost structure and capital allocation strategies, is recommended.