Financial Analysis

Stock-based Compensation Expense We recognize share-based payments to employees as compensation expense using the fair value method. The fair value of restricted stock units, including PSUs, is based on the intrinsic value on the date of grant. The fair value of shares purchased pursuant to the ESPP and stock options is calculated using the Black-Scholes option pricing model. Stock-based compensation expense, measured at the grant date based on the fair value of the award, is typically recognized ratably over the requisite service period. During the three years ended December 31, 2025 , we recognized the following stock-based compensation expense: Year ended December 31, 2025 2024 2023 (in millions) Stock-based compensation expense by type of award: Restricted stock units (including PSUs) $ 672.1 $ 689.1 $ 563.7 ESPP share issuances 27.0 18.2 15.8 Stock options 1.2 1.8 4.0 Stock-based compensation expense related to inventories (14.4) (10.6) (2.3) Total stock-based compensation expense included in Total costs and expenses $ 685.9 $ 698.5 $ 581.2 Stock-based compensation expense by line item: Cost of sales $ 11.1 $ 7.5 $ 7.5 Research and development expenses 415.4 425.8 354.9 Selling, general and administrative expenses 259.4 265.2 218.8 Total stock-based compensation expense included in Total costs and expenses 685.9 698.5 581.2 Income tax effect (128.6) (251.6) (167.5) Total stock-based compensation expense, net of tax $ 557.3 $ 446.9 $ 413.7 We capitalize a portion of our s …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Fair Value Measurements The following fair value hierarchy is used to classify assets and liabilities based on observable inputs and unobservable inputs used to determine the fair value of our financial assets and liabilities: Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. The following table sets forth our financial assets and liabilities subject to fair value measurements by level within the fair value hierarchy: As of December 31, 2025 As of December 31, 2024 Fair Value Hierarchy Fair Value Hierarchy Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 (in millions) Financial instruments carried at fair value (asset positions): Cash equivalents $ 2,779.1 $ 1,770.7 $ 1,008.4 $ $ 1,687.1 $ 613.3 $ 1,073.8 $ Marketable securities: Corporate equity securities 16.6 16.6 36.6 36.6 U.S. Treasury securities 1,864.9 1,864.9 1,602.0 1,566.8 35.2 U.S. government agency securi …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Goodwill and Other Intangible Assets Intangible Assets Other intangible assets, net consisted of the following: As of December 31, 2025 As of December 31, 2024 Estimated Useful lives Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in millions, except useful lives) In-process research and development Indefinite $ 224.6 $ $ 224.6 $ 603.6 $ $ 603.6 Finite-lived intangible assets - marketed products 10 to 12 years 238.0 (42.1) 195.9 238.0 (21.9) 216.1 Finite-lived intangible assets - assembled workforce 3 years 7.7 (4.0) 3.7 7.7 (1.5) $ 6.2 Total other intangible assets, net $ 470.3 $ (46.1) $ 424.2 $ 849.3 $ (23.4) $ 825.9 In March 2025, based on results from a Phase 1/2 clinical trial evaluating our VX-264 clinical program in patients with T1D, we concluded that VX-264 will not be advancing further in clinical development. Based on this event, we performed an interim impairment test on the fair value of our VX-264 indefinite-lived in-process research and development asset that we acquired from Semma Therapeutics, Inc. in 2019. As a result, using the multi period earnings method of the income approach, we recorded a full intangible asset impairment charge of $379.0 million in the first quarter of 2025. As of December 31, 2025 , our remaining indefinite-lived in-process research and development assets were associated with our T1D program. In 2023, we recorded a total of $238.0 million of finite …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

In com e Taxes We are subject to U.S. federal, state, and foreign income taxes. The components of income before provision for income taxes consisted of the following: Year ended December 31, 2025 2024 2023 (in millions) United States $ 2,821.2 $ (1,369.7) $ 3,089.1 Foreign 1,822.0 1,618.2 1,290.7 Income before provision for income taxes $ 4,643.2 $ 248.5 $ 4,379.8 The components of our provision for income taxes consisted of the following: Year ended December 31, 2025 2024 2023 (in millions) Current taxes: Federal $ 679.1 $ 704.9 $ 900.4 State 35.9 118.2 46.2 Foreign 485.8 309.8 350.1 Total current taxes 1,200.8 1,132.9 1,296.7 Deferred taxes: Federal (527.0) (438.7) (569.9) State (22.1) (48.7) (21.9) Foreign 38.3 138.6 55.3 Total deferred taxes (510.8) (348.8) (536.5) Provision for income taxes $ 690.0 $ 784.1 $ 760.2 Unremitted Earnings As of December 31, 2025 , we do not consider a portion of the earnings of our foreign subsidiaries to be indefinitely reinvested. Upon repatriation of the non-indefinitely invested earnings in the form of distributions or otherwise, we could be subject to immaterial U.S. federal withholding taxes payable to various foreign countries and income taxes in certain states. There are no material deferred taxes recorded on the excess of financial statement reporting over the tax basis of our investments in our foreign subsidiaries. Any permanently reinvested basis differences could reverse if we sell our foreign subsidiaries or various other events …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases A summary of our most significant leases, including real estate and embedded leases with contract manufacturing organizations, is as follows: Corporate Headquarters In 2011, we entered into two lease agreements, pursuant to which we lease approximately 1.1 million square feet of office and laboratory space in two buildings in Boston, Massachusetts for a term of 15 years (our Corporate Headquarters). In August 2024, we amended the existing lease agreements to, among other terms, extend the lease termination dates from December 2028 to June 2044 (the Amendments). We have the option to extend the amended leases for up to two additional ten -year periods. The Amendments did not grant us any additional rights of use not contemplated in the existing lease agreements. As a result, we accounted for the Amendments as modifications that extended the terms of the existing leases and reassessed the classification of the leases as of their effective dates. We remeasured the lease liabilities using our incremental borrowing rate as of the effective date of the Amendments and classified the leases associated with our Corporate Headquarters as operating leases. As a result, we obtained right-of-use operating lease assets of $847.9 million in exchange for operating lease obligations of $1.0 billion and reduced our finance lease liabilities and property and equipment by $275.3 million and $107.5 million , respectively. Jeffrey Leiden Center for Biologics, Cell and Genetic Therapies Camp …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Recently Adopted Accounting Standards Segment Reporting In 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires public entities to disclose significant segment expenses and other segment items. ASU 2023-07 also requires public entities to provide in interim periods all disclosures about a reportable segments profit or loss and assets that are currently required annually. ASU 2023-07 became effective for the annual period starting on January 1, 2024, and for the interim periods starting on January 1, 2025. We have disclosed significant segment expenses, other segment items, and our measure of segment profit or loss in Note Q, Segment Information. Income Tax Disclosures In 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold. ASU 2023-09 became effective for the annual period starting on January 1, 2025. The adoption of ASU 2023-09, on a prospective basis, resulted in expansion of our income tax footnote disclosures in Note O, Income Taxes, including a more detailed effective tax rate reconc …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Segment Information Segment reporting is prepared on the same basis that our chief executive officer, who is our chief operating decision maker (CODM), manages the business, makes operating decisions and assesses performance. We operate in one segment, pharmaceuticals. We have selected net income (loss) as our reported measure of segment profit or loss because it is regularly provided to our CODM, allows our CODM to allocate resources because it encapsulates the results of our processes that generate revenues and expenses, and is important to the users of our financial statements. Enterprise-wide disclosures about revenues, significant customers, significant segment expenses, and property and equipment, net by location are presented below. Revenues by Product Product revenues, net consisted of the following: Year ended December 31, 2025 2024 2023 (in millions) TRIKAFTA/KAFTRIO $ 10,312.7 $ 10,238.6 $ 8,944.7 ALYFTREK 837.8 Other product revenues 820.1 781.5 924.5 Total product revenues, net $ 11,970.6 $ 11,020.1 $ 9,869.2 In 2025 , Other product revenues included $115.8 million from CASGEVY and $59.6 million from JOURNAVX. In 2024 , Other product revenues included CASGEVY product revenues of $10.0 million and there were no revenues from JOURNAVX. The remaining Other product revenues are related to KALYDECO, ORKAMBI, and SYMDEKO/ SYMKEVI, our other CF products . R evenues by Geographic Location Product revenues, net are allocated based on the location of the customer. Other re …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Commitments and Contingencies 2022 Credit Facility In July 2022, Vertex and certain of its subsidiaries entered into a $500.0 million unsecured revolving facility (the Credit Agreement) with Bank of America, N.A., as administrative agent and the lenders referred to therein (the Lenders), which matures on July 1, 2027. The Credit Agreement was not drawn upon at closing and we have not drawn upon it to date. Amounts drawn pursuant to the Credit Agreement, if any, will be used for general corporate purposes. Subject to satisfaction of certain conditions, we may request that the borrowing capacity for the Credit Agreement be increased by an additional $500.0 million. Additionally, the Credit Agreement provides a sublimit of $100.0 million for letters of credit. Any amounts borrowed under the Credit Agreement will bear interest, at our option, at either a base rate or a Secured Overnight Financing Rate (SOFR), in each case plus an applicable margin. Under the Credit Agreement, the applicable margins on base rate loans range from 0.000% to 0.500% and the applicable margins on SOFR loans range from 1.000% to 1.500%, in each case based on our consolidated leverage ratio (the ratio of our total consolidated funded indebtedness to our consolidated EBITDA for the most recently completed four fiscal quarter period). Any amounts borrowed pursuant to the Credit Agreement are guaranteed by certain of our existing and future domestic subsidiaries, subject to certain exceptions. The Credit Ag …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Stock-based Compensation Expense and Share Repurchase Programs Stock-based compensation expense During the three and nine months ended September 30, 2025 and 2024, we recognized the following stock-based compensation expense: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions) Stock-based compensation expense by type of award: Restricted stock units (including PSUs) $ 190.8 $ 184.8 $ 517.1 $ 522.7 ESPP share issuances 8.5 3.4 21.2 13.7 Stock options 1.2 1.8 Stock-based compensation expense related to inventories (4.4) (3.6) (11.2) (7.5) Total stock-based compensation expense included in Total costs and expenses $ 194.9 $ 184.6 $ 528.3 $ 530.7 Stock-based compensation expense by line item: Cost of sales $ 2.8 $ 1.9 $ 7.9 $ 5.5 Research and development expenses 116.0 111.0 315.7 327.5 Selling, general and administrative expenses 76.1 71.7 204.7 197.7 Total stock-based compensation expense included in Total costs and expenses 194.9 184.6 528.3 530.7 Income tax effect (47.5) (64.6) (159.2) (224.3) Total stock-based compensation expense, net of tax $ 147.4 $ 120.0 $ 369.1 $ 306.4 Share repurchase program In February 2023, our Board of Directors approved a share repurchase program (the 2023 Share Repurchase Program), pursuant to which we were authorized to repurchase up to $3.0 billion of our common stock. As of September 30, 2025, we had repurchased the full amount authorized under the 2023 Share Repurchase Program. In May 2025, our B …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Fair Value Measurements The following fair value hierarchy is used to classify assets and liabilities based on observable inputs and unobservable inputs used to determine the fair value of our financial assets and liabilities: Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. The following table sets forth our financial assets and liabilities subject to fair value measurements by level within the fair value hierarchy: As of September 30, 2025 As of December 31, 2024 Fair Value Hierarchy Fair Value Hierarchy Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 (in millions) Financial instruments carried at fair value (asset positions): Cash equivalents $ 1,216.6 $ 505.5 $ 711.1 $ $ 1,687.1 $ 613.3 $ 1,073.8 $ Marketable securities: Corporate equity securities 9.4 9.4 36.6 36.6 U.S. Treasury securities 1,937.7 1,937.7 1,602.0 1,566.8 35.2 U.S. government agency securities …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Taxes We are subject to U.S. federal, state, and foreign income taxes. During the three and nine months ended September 30, 2025 and 2024, we recorded the following provisions for income taxes and effective tax rates as compared to our income (loss) before provision for income taxes. Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions, except percentages) Income (loss) before provision for income taxes $ 1,298.8 $ 1,224.1 $ 3,312.2 $ (888.0) Provision for income taxes $ 215.9 $ 178.7 $ 550.1 $ 560.6 Effective tax rate 16.6 % 14.6 % 16.6 % (63.1) % Our effective tax rates for the three and nine months ended September 30, 2025 were lower than the U.S. statutory rate primarily due to a benefit from a research and development tax credit study that was completed in the third quarter of 2025, excess tax benefits related to stock-based compensation, and increased utilization of foreign tax credits, partially offset by changes in uncertain tax positions. Our effective tax rate for the three months ended September 30, 2024 was lower than the U.S. statutory rate primarily due to a benefit from a research and development tax credit study that was completed in the third quarter of 2024 and excess tax benefits related to stock-based compensation, partially offset by changes in uncertain tax positions. Our effective tax rate for the nine months ended September 30, 2024 was materially different than the U.S. statutory rate primarily due t …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Recently Adopted Accounting Standards Segment Reporting As noted in Note A, Nature of Business and Accounting Policies, in our 2024 Annual Report on Form 10-K, we adopted Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07) for our annual period ended December 31, 2024. ASU 2023-07 requires public entities to disclose significant segment expenses and other segment items for both interim and annual periods. For interim periods, ASU 2023-07 also requires all disclosures about a reportable segments profit or loss and assets that were previously required annually. These disclosures are included in Note M, Segment Information. Recently Issued Accounting Standards Income Tax Disclosures In 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold. ASU 2023-09 becomes effective for the annual period starting on January 1, 2025. We anticipate that the adoption of ASU 2023-09 will expand our income tax footnote disclosures, including a more detailed effective tax rate reconciliation. Disaggregation of Income Statement Expenses In 2024, the …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

"Segment Information Revenues by Product Product revenues, net consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions) TRIKAFTA/KAFTRIO $ 2,653.6 $ 2,585.0 $ 7,740.2 $ 7,517.8 ALYFTREK 247.0 457.7 Other product revenues 175.8 186.9 582.7 590.3 Total product revenues, net $ 3,076.4 $ 2,771.9 $ 8,780.6 $ 8,108.1 In the three and nine months ended September 30, 2025, ""Other product revenues"" included $16.9 million and $61.5 million, respectively, from CASGEVY, and $19.6 million and $32.9 million, respectively, from JOURNAVX. In the three and nine months ended September 30, 2024, Other product revenues were $2.0 million from CASGEVY and there were no revenues from JOURNAVX. The remaining Other product revenues are related to KALYDECO, ORKAMBI, and SYMDEKO/SYMKEVI, our other CF products. Product Revenues by Geographic Location Product revenues, net by geographic region, based on the location of the customer, consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions) United States $ 1,976.3 $ 1,713.5 $ 5,457.3 $ 4,847.7 Outside of the United States Europe 836.9 847.7 2,574.4 2,621.9 Other 263.2 210.7 748.9 638.5 Total product revenues outside of the United States 1,100.1 1,058.4 3,323.3 3,260.4 Total product revenues, net $ 3,076.4 $ 2,771.9 $ 8,780.6 $ 8,108.1 Significant Segment Expenses Significant segment expenses are set forth in the foll …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing