Bristol Myers tops S&P 500 with largest intangible adjustment in 2021

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Bristol-Myers Squibb (NYSE:BMY) reported $10B worth of an adjustment as amortization of intangible in 2021, leading the S&P 500 as companies increasingly look to cushion their financials to exclude billions of dollars’ worth of items, MarketWatch reported citing financial data provider Calcbench.

Based on a sample of 2021 earnings releases of 123 companies that were randomly selected from the S&P 500, Calcbench said that amortization of intangibles was the single biggest category of adjustments that made up half of all adjustments.

While Broadcom (AVGO) and Johnson & Johnson (JNJ) topped the sample with $5.8B and $5.3B worth of adjustments for amortization of intangibles, respectively, Bristol-Myers (BMY), which was not part of the group, led all S&P 500 components, according to Calcbench.

That expanded drugmaker’s 2021 non-GAAP per-share earnings to $7.51 while GAAP earnings remained at $3.12. Bristol-Myers (BMY) recorded the biggest adjustment of $9B in 2020 study too.

Calcbench sample indicated a $460M average increase in non-GAAP net income compared to GAAP net income per company, representing about 14% of GAAP net income.

“Should GAAP accounting rules change and not require the amortization of intangibles? Should they just be tested annually like goodwill? Maybe this change should be only for the pharmaceutical industry?” the report questioned.

Despite a 2016 crackdown of Securities and Exchange Commission to rein in the proliferation of non-GAAP numbers, a large number of S&P 500 constituents resumed the practice during the pandemic, according to the report.

“These findings question the informative value of as-reported GAAP Net income and raise questions about companies’ motivations in reporting Adjusted Net Income,” the researchers added.

It shows that companies think GAAP accounting does not reflect their performance in terms of financial profitability, Chief Executive of Calcbench Pranav Ghai said. “GAAP makes them present a narrative, but they want to tell their own story.”

See how non-GAAP earnings differ from GAPP earnings.

Take a deep dive into Bristol Myers’ (BMY) 2021 earnings which beat Street forecasts in the last three quarters.