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The SEC has warned companies about using misleading numbers. Photo: Chip Somodevilla / Getty Images

The largest U.S. pharmaceutical companies are among the most profitable entities in the world, but they also routinely report figures that paint a much rosier picture of their financials, based on a report from the bank Credit Suisse.

Why it matters: The Securities and Exchange Commission has warned companies not to use misleading financial statistics, or else face penalties.

The details: Credit Suisse analyzed financial filings of eight major drug companies by comparing their profits based on generally accepted accounting principles (GAAP) versus their profits that excluded the effects of one-time items like layoffs or merger expenses (or non-GAAP).

The report found "the spread between GAAP and non-GAAP results has widened." A drug company's non-GAAP profits were 80% higher on average than their actual profits over the past four years.

The biggest users of the accounting games were Allergan and Teva, according to Credit Suisse. Over the past 15 quarters:

  • Allergan had a net loss of $13.8 billion, but after taking out amortization and numerous other items, the company reported a non-GAAP profit of $17.3 billion.
  • Teva reported a $229 million net loss and a $17.5 billion non-GAAP profit.

Between the lines: Most of the biggest drug companies are still flush with cash and benefit from the prices of their products, even though they often dress up their numbers.

Get smart: Always look at a company's net income and GAAP numbers first.

Go deeper

Schumer's m(aj)ority checklist

Senate Minority Leader Chuck Schumer. Photo: Tasos Katopodis/Getty Images

Capitalizing on the Georgia runoffs, achieving a 50-50 Senate and launching an impeachment trial are weighty to-dos for getting Joe Biden's administration up and running on Day One.

What to watch: A blend of ceremonies, hearings and legal timelines will come into play on Tuesday and Wednesday so Chuck Schumer can actually claim the Senate majority and propel the new president's agenda.

The dark new reality in Congress

National Guard troops keep watch at security fencing. Photo: Kent Nishimura/Los Angeles Times via Getty Images

This is how bad things are for elected officials and others working in a post-insurrection Congress:

  • Rep. Norma Torres (D-Calif.) said she had a panic attack while grocery shopping back home.
  • Rep. Jim McGovern (D-Mass.) said police may also have to be at his constituent meetings.
  • Rep. Adam Kinzinger (R-Ill.) told a podcaster he brought a gun to his office on Capitol Hill on Jan. 6 because he anticipated trouble with the proceedings that day.
Off the Rails

Episode 3: Descent into madness ... Trump: "Sometimes you need a little crazy"

Photo illustration: Sarah Grillo/Axios. Photos: Tom Williams/CQ-Roll Call, Chip Somodevilla/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 3: The conspiracy goes too far. Trump's outside lawyers plot to seize voting machines and spin theories about communists, spies and computer software.

President Trump was sitting in the Oval Office one day in late November when a call came in from lawyer Sidney Powell. "Ugh, Sidney," he told the staff in the room before he picked up. "She's getting a little crazy, isn't she? She's really gotta tone it down. No one believes this stuff. It's just too much."