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MDGL, Madrigal Pharmaceuticals Inc.

Pharmaceuticals consumer brand UnprofitableDistress / turnaround

A pharmaceutical business, where patents grant a temporary monopoly the pipeline must keep refilling.

Latest annual: FY2025 10-K

MDGL · Madrigal Pharmaceuticals Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$958M

+432.1% YoY

Vital signs · TTM, with 5-yr average

Revenue $1.1B 5-yr avg $228M

Operating margin −27.7% 5-yr avg −153.9%

ROIC −38% 5-yr avg −69%

Owner-earnings margin −24% 5-yr avg −137%

Free cash flow margin −24% 5-yr avg −137%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

Situation: Unprofitable. No sustained operating profit across the record; an earnings multiple has nothing to rest on. What the record does show is revenue, the gross-margin trajectory, and the burn against the cash on hand. Distress / turnaround. Thin interest coverage, or operating cash burned against real debt, across the record. The balance sheet carries this situation; the debt schedule sets the clock.
What moves the needle: Operating margin has run around −276% through the cycle, the operating line deeply negative — so the lever is the path to a margin at all: revenue growth against the cost curve and the cash runway, not the level of a margin that isn't there yet. Stock-based pay runs about 44% of sales, a real and recurring claim on owners that the GAAP margin understates. Read this kind of business on the pipeline against the patent cliff, and pricing. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has rarely cleared the cost of capital (median −61%, above 15% in 0 of 8 years). Owner earnings, the cash-based check, have been thin too. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

The record

Ten years of arithmetic, read across the cycle.

The record, 2012–2025

realized figures from each filing · older years to the left

2012’12	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$147K	$0	$0	$0	$0	$0	$0	$0	$180M	$958M	$1.1B	RevenueRevenue
n/m	—	—	—	—	—	—	—	242%	85%	81%	SG&A / revenueSG&A/rev
n/m	—	—	—	—	—	—	—	131%	41%	40%	R&D / revenueR&D/rev
($61M)	($32M)	($41M)	($95M)	($207M)	($242M)	($294M)	($380M)	($498M)	($300M)	($314M)	Operating incomeOp. inc.
n/m	—	—	—	—	—	—	—	−276.4%	−31.3%	−27.7%	Operating marginOp. mgn
($63M)	($31M)	($33M)	($84M)	($202M)	($242M)	($295M)	($374M)	($466M)	($288M)	($309M)	Net incomeNet inc.
											Cash flow & returns
($54M)	($22M)	($26M)	($42M)	($158M)	($184M)	($225M)	($324M)	($456M)	($190M)	($268M)	Operating cash flowOp. cash
$738K	$77K	$96K	$112K	$471K	$405K	$467K	$527K	$1M	$2M	$2M	DepreciationDeprec.
$5M	$6M	($6M)	$19M	$23M	$31M	$38M	($862K)	($71M)	($905K)	($71M)	Working capital & otherWC & other
$505K	$125K	$22K	$172K	$334K	$209K	$217K	$1M	$1M	$467K	$4M	CapexCapex
343.5%	—	—	—	—	—	—	—	0.8%	0.0%	0.4%	Capex / revenueCapex/rev
($55M)	($22M)	($26M)	($42M)	($158M)	($184M)	($225M)	($325M)	($457M)	($190M)	($270M)	Owner earningsOwner earn.
n/m	—	—	—	—	—	—	—	−253.5%	−19.8%	−23.8%	Owner earnings marginOE mgn
($55M)	($22M)	($26M)	($42M)	($158M)	($184M)	($225M)	($326M)	($457M)	($190M)	($272M)	Free cash flowFCF
n/m	—	—	—	—	—	—	—	−253.7%	−19.8%	−24.1%	Free cash flow marginFCF mgn
—	-75%	-8%	-20%	-88%	-120%	—	-71%	-51%	-32%	-38%	ROICROIC
-84%	-17%	-7%	-20%	-84%	-123%	-150%	-92%	-62%	-48%	-57%	Return on equityROE
−84%	−17%	−7%	−20%	−84%	−123%	−150%	−92%	−62%	−48%	−57%	Retained to equityRetained/eq
											Balance sheet
$101M	$192M	$57M	$47M	$54M	$36M	$332M	$100M	$100M	$199M	$372M	Cash & investmentsCash+inv
—	—	—	—	—	—	—	$0	$54M	$134M	$187M	ReceivablesReceiv.
—	—	—	—	—	—	—	$0	$34M	$75M	$112M	InventoryInvent.
$6M	$2M	$2M	$1M	$1M	$21M	$24M	$28M	$44M	$49M	$61M	Accounts payablePayables
—	—	—	—	—	—	—	($28M)	$44M	$160M	$239M	Operating working capitalOper. WC
$101M	$192M	$485M	$440M	$285M	$272M	$361M	$637M	$1.0B	$1.2B	$1.2B	Current assetsCur. assets
$23M	$10M	$8M	$25M	$47M	$77M	$116M	$119M	$169M	$310M	$338M	Current liabilitiesCur. liab.
4.3×	19.1×	57.5×	17.5×	6.1×	3.5×	3.1×	5.4×	6.1×	4.0×	3.5×	Current ratioCurr. ratio
$103M	$192M	$485M	$442M	$287M	$273M	$363M	$641M	$1.0B	$1.3B	$1.2B	Total assetsAssets
$4M	—	—	—	—	$0	$49M	$115M	$118M	$340M	$340M	Total debtDebt
($96M)	—	—	—	—	($36M)	($282M)	$16M	$18M	$141M	($31M)	Net debt / (cash)Net debt
—	—	—	—	—	—	-74.1×	-29.9×	-33.9×	-13.5×	-11.7×	Interest coverageInt. cov.
$75M	$182M	$477M	$417M	$240M	$196M	$197M	$405M	$754M	$603M	$543M	Shareholders’ equityEquity
n/m	—	—	—	—	—	—	—	44.3%	10.2%	9.8%	Stock comp / revenueSBC/rev
											Per share
59.4M	12.2M	14.8M	15.4M	15.4M	16.5M	17.1M	18.7M	21.3M	22.4M	29.0M	Shares out (diluted)Shares
$0.00	$0.00	$0.00	$0.00	$0.00	$0.00	$0.00	$0.00	$8.47	$42.72	$39.01	Revenue / shareRev/sh
$-1.06	$-2.54	$-2.22	$-5.45	$-13.09	$-14.63	$-17.23	$-19.99	$-21.90	$-12.85	$-10.66	EPS (diluted)EPS
$-0.92	$-1.83	$-1.73	$-2.71	$-10.22	$-11.14	$-13.13	$-17.38	$-21.47	$-8.47	$-9.29	Owner earnings / shareOE/sh
$-0.92	$-1.83	$-1.73	$-2.71	$-10.22	$-11.14	$-13.13	$-17.43	$-21.48	$-8.47	$-9.38	Free cash flow / shareFCF/sh
$0.01	$0.01	$0.00	$0.01	$0.02	$0.01	$0.01	$0.08	$0.07	$0.02	$0.15	Cap. spending / shareCapex/sh
$1.26	$14.88	$32.24	$27.06	$15.54	$11.86	$11.52	$21.69	$35.46	$26.86	$18.72	Book value / shareBVPS

The diluted share count moved ×1/4.85 into 2017 — shares retired, not a split the totals corroborate — and the per-share figures carry the counts as filed.

Per-share growththe realized rate an owner's share compounded

	13-yr	5-yr
Revenue / share	+111.8%/yr	—
Capital spending / share	+7.1%/yr	−0.8%/yr
Book value / share	+26.5%/yr	+11.6%/yr

The record, charted

FY2012–2025

Each measure over its full record; the current point and the worst year marked.

Share count

22Mpeak FY2012

ROIC

−32%low FY2021

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

($190M)owner earningsvs.($288M)net incomelow FY2024

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business turned a $288M loss into ($190M) of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	($288M)	($466M)	($374M)	($295M)	($242M)
Depreciation & amortizationnon-cash charge added back	+$2M	+$1M	+$527K	+$467K	+$405K
Stock-based compensationreal costnon-cash, but a real cost	+$98M	+$80M	+$50M	+$32M	+$27M
Working capital & othertiming of cash in and out, other non-cash items	−$905K	−$71M	−$862K	+$38M	+$31M
Cash from operations	($190M)	($456M)	($324M)	($225M)	($184M)
Maintenance capital expenditurethe spending needed just to hold position and volume	−$467K	−$1M	−$527K	−$217K	−$209K
Owner earnings	($190M)	($457M)	($325M)	($225M)	($184M)
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	—	−$366K	−$952K	—	—
Free cash flow	($190M)	($457M)	($326M)	($225M)	($184M)
Owner-earnings marginowner earnings ÷ revenue	-20%	-254%	—	—	—

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $98M), owner earnings is nearer ($288M).

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? -13.5×

Does not cover its interest

Operating income ($300M) ÷ interest expense $22M

What this means
A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.
How heavy is the debt, net of cash? $98M

Net debt against an operating loss

Cash $199M + ST investments $43M − debt $340M

What this means
Netting $242M of cash and short-term investments against $340M of debt leaves $98M owed, with no operating profit this year to measure it against — understand that combination before anything else about the company. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 1572d

Long (60+ days)

DSO 51 + DIO 4383 − DPO 2862 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital -71%

Below average through the cycle

8-yr median, range -120%–-8%; -32% latest = NOPAT ($237M) ÷ invested capital $744M

Industry peers: median 4%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 8 years (it ran -32% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin -254%

Consumes cash through the cycle

3-yr median margin, range -37170%–-20%; latest ($190M) = operating cash ($190M) − maintenance capex $467K

Industry peers: median 17%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's -20% of revenue this year, a -254% median across 3 years. Treating stock comp as the real expense it is (less $98M of SBC) leaves ($288M).
Are earnings backed by cash? ($190M)

Loss, and burning cash

Net income ($288M) · cash from operations ($190M)

What this means
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did not.

How is the cash used?

Where do the earnings go? —

No surplus to allocate

What this means
The business didn't generate positive Owner Earnings this year, so any distributions came from the balance sheet or borrowing, not from operations.
Investing or harvesting? 0.31×

Harvesting

Capex $467K ÷ depreciation $2M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 2 of 5 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Miss

Revenue ≥ $2B · $958M

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Pass

Current ratio ≥ 2× · 4.01×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Pass

Debt ≤ working capital · $340M vs $935M WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Miss

A profit every year (10-yr record) · 10 loss years

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth —

Earnings +33% over the record · —

What this means
Earnings were negative early in the record, a growth rate isn't meaningful.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $-16.31/share (latest year $-12.50), the averaged base the calculator's gate runs on, and book value is $26.14/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2012–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 0 of 10

What this means
Lost money in 10 year(s), look at what happened there before trusting the average.
Return on capital ≥ 15% 0 of 4 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin −276% (median, 3 yrs)

What this means
Over the 3 years on record the operating margin has run around −276% — too short a record to call a through-cycle trend, but that is the level the business earns at.
Reinvestment, incremental ROIC —

What this means
The reinvested base moved too little against the change in profit to read a reliable return on it here — the figure would be a small-denominator artifact, not a moat. Judge this one on the owner-earnings record and the cash it returns instead.
Worst year 2012 · −41456.5% op. margin

What this means
Operations went underwater in 2012, understand why before trusting the good years.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

In its own filing Raised, but not as a competitor

The filing raises AI among its risks, but in other terms (security, regulation, energy or the like), not as a competitor to its product.

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$1.2B

Cash & short-term investments$372M
Receivables$187M
Inventory$112M
Other current assets$511M

Current liabilities$338M

Accounts payable$61M
Other current liabilities$277M

Current ratio3.50×all current assets ÷ what's due · Graham looked for 2×

Quick ratio3.16×stricter: inventory excluded

Cash ratio1.10×strictest: cash alone against what's due

Working capital$844Mthe cushion left after near-term bills

Cash runway1.4 yrsthe business is consuming cash; this is how long the cash on hand lasts at that rate

Revenue, latest quarter vs. a year ago+126.8%the freshest read on whether the business is still growing

Current ratio, recent quarters8.7× → 3.5×

Deeper floors

Tangible book value$536Mequity stripped of goodwill & intangibles

Net current asset value$498MGraham's net-net: current assets less all liabilities

Debt incl. operating leases$347M$7M of it operating leases

Deferred revenue$5Mcustomer cash collected before delivery; operating float

From the company's latest filing.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Paul A. Friedman	$5.3M	$1.2M	($184M)
2022	Paul A. Friedman	$5.4M	$38.4M	($225M)
2023	Bill Sibold	$32.3M	$42.3M	($325M)
2023	Paul A. Friedman	$9.6M	$2.4M	($325M)
2024	Bill Sibold	$12.2M	$30.7M	($457M)
2025	Bill Sibold	$19.2M	$84.1M	($190M)

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership17.6%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio47:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$98M
The slice of the business handed to employees in shares this year, 10% of revenue. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Revenue recognition, Inventory, Stock compensation as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Pharmaceuticals

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
PBHPrestige Consumer Healthcare	$1.1B	56%	29.0%	8%	21%
ACADACADIA Pharmaceuticals Inc.	$1.1B	94%	-54.1%	-48%	-29%
MDGLMadrigal Pharmaceuticals Inc.	$958M	99%	-276.4%	-61%	-254%
IONSIonis Pharmaceuticals	$944M	99%	-16.9%	-11%	-14%
ANIPANI Pharmaceuticals Inc.	$883M	62%	8.8%	4%	17%
HRMYHarmony Biosciences Holdings Inc.	$868M	79%	26.7%	38%	32%
ARWRArrowhead Pharmaceuticals	$829M	—	-106.8%	-51%	-77%
COLLCollegium Pharmaceutical Inc.	$781M	56%	6.8%	44%	31%
Group median	—	79%	-5.1%	-4%	2%

The price

What a price has to assume.

What the price implies

reverse-DCF

Madrigal Pharmaceuticals Inc. is profitable, but owner earnings are negative this year because capital spending currently outruns operating cash, a build-out, so the owner-earnings reverse-DCF has no positive base to grow. We read the price from both ends instead: type a price to see the steady-state profitability it demands, then set the mature margin you would believe and weigh the two against each other. Nothing leaves your browser unless you enter it in your notebook.

Today’s price $

The assumptions Required return 9% Years to get there 10 Revenue growth 0% Mature owner-earnings margin 15%

Enter a price to run it.

Owner earnings it must reach—

Margin the price demands—

Owner-earnings margin today−24%

Two reads of one future. From your price: the owner earnings the company must reach, valued at a mature multiple and discounted back at your rate, expressed as the margin it implies on revenue grown at your rate. From your belief: the mature margin you would credit, set on the dial above. When the margin the price demands runs above the one you would believe, you are paying for a future taken on faith. For a deep cyclical at a trough, normalized through-cycle earnings are the better lens; this mode is for the genuinely unprofitable, and for the profitable business whose capital spending currently outruns its cash.

Weigh MDGL against another business →

The owners of MDGL: the meeting and the votes →

Cite: Owner Scorecard, "Madrigal Pharmaceuticals Inc. (MDGL), the owner's record," https://ownerscorecard.com/c/MDGL, data as of 2026-07-09.

Manual order: ← MDB its page in the Manual MDLN →

Industry order: ← LYEL the Pharmaceuticals chapter MDWD →