What caused RVMD's EPS to underperform in 2024?

The EPS of Revolution Medicines (RVMD) underperformed in 2024 due to a combination of factors:

1. Financial Performance: Revolution Medicines reported a net loss of $194.57 million for the quarter ending December 31, 2024. This significant loss, coupled with no reported revenue for the quarter, indicates a substantial financial strain that would naturally result in a negative EPS.

RVMD Basic Earnings per Share, Net Income...

2. Operating and Gross Margins: The company's operating margin and gross margin were not provided for the MRQ, which makes it difficult to analyze the profitability of its operations. However, a negative net income combined with high R&D expenses suggests that the company's costs may have outweighed its revenues, leading to a negative EPS.

RVMD R&D Expenses

3. Increased R&D Expenses: The R&D expenses for Revolution Medicines were $188.1 million for the quarter ending December 31, 2024. Such high expenses are a common feature of biotech companies as they invest heavily in drug development. However, when these expenses are not matched by revenue, they can lead to a negative EPS.
4. Strategic Investments and Market Conditions: The company has been actively investing in its pipeline and clinical trials, which could have temporarily strained its financials. Additionally, the broader market conditions and potential indirect impacts of tariffs could have affected its financial performance.

In summary, Revolution Medicines' EPS underperformance in 2024 was likely a result of a combination of factors including financial losses, high R&D expenses, and strategic investments.