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⚠ Returns Fell With the CureModerate threat

Gilead Sciences (GILD) — threat to the moat

Gilead's return on invested capital fell from 77.5% in 2015 to between 2.8% and 22.7% since 2018, dragged down in acquisition years.

At the hepatitis C peak Gilead earned extraordinary returns: 77.5% on invested capital in 2015 and 40.6% in 20161. Since 2018 the return has been between 2.8% and 22.7%2, and below an 8% hurdle in 2020 and 20243.

Gilead acquired IPR&D and IPR&D impairments ($bn)5.92020 acquired4.72024 acquired4.22024 impaired1.02025 acquired0.62025 impairedGilead Forms 10-K FY2020 and FY2025, income statement
The low years are the deal years.

The two bad years were acquisition years. In 2020 Gilead booked a $4.5 billion acquired IPR&D charge for Forty Seven4; in 2024 a $4.2 billion Trodelvy impairment and $3.8 billion of CymaBay IPR&D5. The underlying HIV business earned well throughout; the deals pulled the average down.

2025's 22.7%6 shows what Gilead earns in a year without large charges. 2026 will show the opposite, with an operating loss guided7.

2017 was distorted by a different charge: an estimated $5.5 billion net charge for the Tax Cuts and Jobs Act8, which cut net income to $4,628 million9. In 2020 the effective tax rate reached 94.7%10. Gilead's reported profits have been bent by one-off items in a third of the last nine years, which is why the cash measures matter more.

The fair measure is the average over five years. If it stays below 12%, the acquisitions are costing the owners most of what the franchise earns above its cost of capital.

References
  1. Moat Explorer calcAt the hepatitis C peak Gilead earned extraordinary returns: 77.5% on invested capital in 2015 and 40.6% in 2016.
    Moat Explorer calculation, repo method (tools_roic_edgar.py logic) on Gilead Sciences filings: return on invested capital 77.5% (2015), 40.6%, 20.3%, 13.3%, 11.4%, 5.8%, 14.6%, 11.8%, 13.6%, 2.8%, 22.7% (2025). 2023-2025 computed by hand because Gilead stopped tagging CashAndCashEquivalentsAtCarryingValue after 2022, using CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents: invested capital = total assets - current liabilities - cash: 2022 46,522; 2023 62,125 - 11,280 - 6,085 = 44,760; 2024 58,995 - 12,004 - 9,991 = 37,000; 2025 59,023 - 11,813 - 7,564 = 39,646 ($ millions). 2025 NOPAT = operating income 10,022 x (1 - 1,286 / 9,796 = 13.1% tax) = 8,706; average invested capital (37,000 + 39,646) / 2 = 38,323; 8,706 / 38,323 = 22.7%. 2024: 1,662 x (1 - 30.6%) = 1,154 over (44,760 + 37,000) / 2 = 40,880 = 2.8%. 2023: 7,605 x (1 - 18.2%) = 6,221 over (46,522 + 44,760) / 2 = 45,641 = 13.6%. — FY2015-FY2025 · publ. October 2026 · source ↗
    Method: NOPAT (operating income times one minus the effective tax rate, capped at 35%) divided by average operating invested capital (total assets less current liabilities less cash and equivalents); SEC EDGAR XBRL for 2015-2022 and the 10-K balance sheets for 2023-2025. Marketable securities are not deducted.
  2. Moat Explorer calcSince 2018 the return has been between 2.8% and 22.7%, and below an 8% hurdle in 2020 and 2024.
    Moat Explorer calculation, repo method (tools_roic_edgar.py logic) on Gilead Sciences filings: return on invested capital 77.5% (2015), 40.6%, 20.3%, 13.3%, 11.4%, 5.8%, 14.6%, 11.8%, 13.6%, 2.8%, 22.7% (2025). 2023-2025 computed by hand because Gilead stopped tagging CashAndCashEquivalentsAtCarryingValue after 2022, using CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents: invested capital = total assets - current liabilities - cash: 2022 46,522; 2023 62,125 - 11,280 - 6,085 = 44,760; 2024 58,995 - 12,004 - 9,991 = 37,000; 2025 59,023 - 11,813 - 7,564 = 39,646 ($ millions). 2025 NOPAT = operating income 10,022 x (1 - 1,286 / 9,796 = 13.1% tax) = 8,706; average invested capital (37,000 + 39,646) / 2 = 38,323; 8,706 / 38,323 = 22.7%. 2024: 1,662 x (1 - 30.6%) = 1,154 over (44,760 + 37,000) / 2 = 40,880 = 2.8%. 2023: 7,605 x (1 - 18.2%) = 6,221 over (46,522 + 44,760) / 2 = 45,641 = 13.6%. — FY2015-FY2025 · publ. October 2026 · source ↗
    Method: NOPAT (operating income times one minus the effective tax rate, capped at 35%) divided by average operating invested capital (total assets less current liabilities less cash and equivalents); SEC EDGAR XBRL for 2015-2022 and the 10-K balance sheets for 2023-2025. Marketable securities are not deducted.
  3. Moat Explorer calcSince 2018 the return has been between 2.8% and 22.7%, and below an 8% hurdle in 2020 and 2024.
    Moat Explorer calculation, repo method (tools_roic_edgar.py logic) on Gilead Sciences filings: return on invested capital 77.5% (2015), 40.6%, 20.3%, 13.3%, 11.4%, 5.8%, 14.6%, 11.8%, 13.6%, 2.8%, 22.7% (2025). 2023-2025 computed by hand because Gilead stopped tagging CashAndCashEquivalentsAtCarryingValue after 2022, using CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents: invested capital = total assets - current liabilities - cash: 2022 46,522; 2023 62,125 - 11,280 - 6,085 = 44,760; 2024 58,995 - 12,004 - 9,991 = 37,000; 2025 59,023 - 11,813 - 7,564 = 39,646 ($ millions). 2025 NOPAT = operating income 10,022 x (1 - 1,286 / 9,796 = 13.1% tax) = 8,706; average invested capital (37,000 + 39,646) / 2 = 38,323; 8,706 / 38,323 = 22.7%. 2024: 1,662 x (1 - 30.6%) = 1,154 over (44,760 + 37,000) / 2 = 40,880 = 2.8%. 2023: 7,605 x (1 - 18.2%) = 6,221 over (46,522 + 44,760) / 2 = 45,641 = 13.6%. — FY2015-FY2025 · publ. October 2026 · source ↗
    Method: NOPAT (operating income times one minus the effective tax rate, capped at 35%) divided by average operating invested capital (total assets less current liabilities less cash and equivalents); SEC EDGAR XBRL for 2015-2022 and the 10-K balance sheets for 2023-2025. Marketable securities are not deducted.
  4. ReportedIn 2020 Gilead booked a $4.5 billion acquired IPR&D charge for Forty Seven; in 2024 a $4.2 billion Trodelvy impairment and $3.8 billion of CymaBay IPR&D. The underlying HIV business earned well throughout; the deals pulled the average down.
    Gilead Sciences Form 10-K for 2020 - the Immunomedics ($20.6 billion) and Forty Seven (about $4.7 billion) acquisitions, acquired IPR&D and the 94.7% effective tax rate. — FY2020 · publ. February 2021 · source ↗
  5. ReportedIn 2020 Gilead booked a $4.5 billion acquired IPR&D charge for Forty Seven; in 2024 a $4.2 billion Trodelvy impairment and $3.8 billion of CymaBay IPR&D. The underlying HIV business earned well throughout; the deals pulled the average down.
    Gilead Sciences Form 10-K for 2024 - the Trodelvy IPR&D impairments of $2.4 billion and $1.8 billion, the CymaBay acquisition and the 2024 income statement. — FY2024 · publ. February 2025 · source ↗
  6. Moat Explorer calc2025's 22.7% shows what Gilead earns in a year without large charges.
    Moat Explorer calculation, repo method (tools_roic_edgar.py logic) on Gilead Sciences filings: return on invested capital 77.5% (2015), 40.6%, 20.3%, 13.3%, 11.4%, 5.8%, 14.6%, 11.8%, 13.6%, 2.8%, 22.7% (2025). 2023-2025 computed by hand because Gilead stopped tagging CashAndCashEquivalentsAtCarryingValue after 2022, using CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents: invested capital = total assets - current liabilities - cash: 2022 46,522; 2023 62,125 - 11,280 - 6,085 = 44,760; 2024 58,995 - 12,004 - 9,991 = 37,000; 2025 59,023 - 11,813 - 7,564 = 39,646 ($ millions). 2025 NOPAT = operating income 10,022 x (1 - 1,286 / 9,796 = 13.1% tax) = 8,706; average invested capital (37,000 + 39,646) / 2 = 38,323; 8,706 / 38,323 = 22.7%. 2024: 1,662 x (1 - 30.6%) = 1,154 over (44,760 + 37,000) / 2 = 40,880 = 2.8%. 2023: 7,605 x (1 - 18.2%) = 6,221 over (46,522 + 44,760) / 2 = 45,641 = 13.6%. — FY2015-FY2025 · publ. October 2026 · source ↗
    Method: NOPAT (operating income times one minus the effective tax rate, capped at 35%) divided by average operating invested capital (total assets less current liabilities less cash and equivalents); SEC EDGAR XBRL for 2015-2022 and the 10-K balance sheets for 2023-2025. Marketable securities are not deducted.
  7. Reported2026 will show the opposite, with an operating loss guided.
    Gilead Sciences second-quarter 2026 results release, Form 8-K exhibit 99.1 - revenue by product, income statement, cash flow, balance sheet, pipeline updates and 2026 guidance - income statement, EPS, cash flow, balance sheet and 2026 guidance. — Q2 2026 · publ. 4 August 2026 · source ↗
  8. Reported2017 was distorted by a different charge: an estimated $5.5 billion net charge for the Tax Cuts and Jobs Act, which cut net income to $4,628 million.
    Gilead Sciences Form 10-K for 2019 - the Galapagos collaboration and the 2017 tax reform charge. — FY2019 · publ. February 2020 · source ↗
  9. Reported2017 was distorted by a different charge: an estimated $5.5 billion net charge for the Tax Cuts and Jobs Act, which cut net income to $4,628 million.
    SEC EDGAR XBRL company facts for Gilead Sciences (CIK 882095): revenue 32,639 (2015), 30,390, 26,107, 22,127 (2018); net income attributable 18,108 (2015), 13,501, 4,628, 5,455 (2018); diluted EPS 11.91 (2015), 9.94, 3.51, 4.17; dividends declared per share 1.29 (2015), 1.84, 2.08, 2.28, 2.52, 2.72, 2.84, 2.92; buybacks 10,002 (2015) and 11,001 (2016); acquired IPR&D 939 (2021) and 944 (2022); $ millions. — FY2014-FY2025 · publ. 2026 · source ↗
  10. ReportedIn 2020 the effective tax rate reached 94.7%.
    Gilead Sciences Form 10-K for 2020 - the Immunomedics ($20.6 billion) and Forty Seven (about $4.7 billion) acquisitions, acquired IPR&D and the 94.7% effective tax rate. — FY2020 · publ. February 2021 · source ↗
Sources
Generated October 4, 2026