Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
Express Scripts Holding Co., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The analysis of market value added between 2013 and 2017 reveals a period of initial growth followed by a significant contraction and subsequent stabilization.
- Market Value Trends
- Market capitalization reached a peak in 2014 at 77,541,403 thousand USD. This was followed by a substantial decline over the next two years, reaching a low of 58,233,626 thousand USD in 2016, before exhibiting a modest recovery to 60,984,100 thousand USD by the end of 2017.
- Invested Capital Trajectory
- Invested capital showed a consistent downward trend from 2013 to 2016, decreasing from 41,289,230 thousand USD to 35,712,343 thousand USD. A slight reversal of this trend occurred in 2017, with invested capital rising to 37,007,152 thousand USD.
- Market Value Added (MVA) Performance
- MVA increased from 33,450,288 thousand USD in 2013 to a peak of 38,919,195 thousand USD in 2014, reflecting strong market confidence relative to the capital employed. However, a sharp erosion of value occurred between 2014 and 2016, with MVA falling to 22,521,284 thousand USD. The period ended with a slight recovery to 23,976,948 thousand USD in 2017.
The divergence between market value and invested capital was most pronounced in 2014, representing the height of shareholder value creation. While the company maintained a positive MVA throughout the entire period, the significant reduction in MVA after 2014 indicates a diminished market premium over the book value of invested capital.
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MVA Spread Ratio
Express Scripts Holding Co., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 23,976,948) | 22,521,284) | 24,713,358) | 38,919,195) | 33,450,288) | |
| Invested capital2 | 37,007,152) | 35,712,343) | 37,411,086) | 38,622,209) | 41,289,230) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 64.79% | 63.06% | 66.06% | 100.77% | 81.01% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2017 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 23,976,948 ÷ 37,007,152 = 64.79%
4 Click competitor name to see calculations.
The analysis of shareholder value creation between 2013 and 2017 reveals a period of significant volatility in market valuation relative to the capital employed in the business.
- Market Value Added (MVA)
- The MVA exhibited an initial upward trajectory, peaking in December 2014 at 38,919,195 thousand USD. Following this peak, a substantial contraction occurred, with the value falling to 24,713,358 thousand USD in 2015 and reaching a period low of 22,521,284 thousand USD in 2016. A marginal recovery was observed by the end of 2017, with the value rising to 23,976,948 thousand USD.
- Invested Capital
- Invested capital showed a consistent downward trend from 2013 through 2016, decreasing from 41,289,230 thousand USD to 35,712,343 thousand USD. This reduction in the capital base was interrupted in 2017, when invested capital increased slightly to 37,007,152 thousand USD.
- MVA Spread Ratio
- The MVA spread ratio mirrored the volatility of the absolute MVA, rising from 81.01% in 2013 to a peak of 100.77% in 2014. A sharp decline followed, with the ratio dropping to 66.06% in 2015 and further to 63.06% in 2016. The ratio remained relatively stable toward the end of the period, closing at 64.79% in 2017. This pattern indicates that while the company maintained a positive spread—creating value in excess of its invested capital—the magnitude of this value creation efficiency decreased significantly after 2014.
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MVA Margin
Express Scripts Holding Co., MVA margin calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 23,976,948) | 22,521,284) | 24,713,358) | 38,919,195) | 33,450,288) | |
| Revenues | 100,064,600) | 100,287,500) | 101,751,800) | 100,887,100) | 104,098,800) | |
| Performance Ratio | ||||||
| MVA margin2 | 23.96% | 22.46% | 24.29% | 38.58% | 32.13% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 MVA. See details »
2 2017 Calculation
MVA margin = 100 × MVA ÷ Revenues
= 100 × 23,976,948 ÷ 100,064,600 = 23.96%
3 Click competitor name to see calculations.
The financial performance regarding market value creation between 2013 and 2017 is characterized by an initial peak followed by a significant contraction and subsequent stabilization. While revenue remained relatively stagnant throughout the period, the market's valuation of the company's added value experienced notable volatility.
- Market Value Added (MVA)
- MVA experienced an upward trajectory early in the period, peaking in 2014 at 38,919,195 thousand USD. This was followed by a sharp decline in 2015, where the value dropped to 24,713,358 thousand USD. A further slight decrease occurred in 2016, reaching a period low of 22,521,284 thousand USD, before a marginal recovery to 23,976,948 thousand USD was observed in 2017.
- Revenue Trends
- Revenues remained remarkably stable over the five-year analysis window, hovering around the 100 billion USD mark. The figures transitioned from 104,098,800 thousand USD in 2013 to 100,064,600 thousand USD by 2017. This relative constancy indicates that the fluctuations in MVA were not a result of significant shifts in top-line revenue growth.
- MVA Margin Performance
- The MVA margin closely tracked the absolute MVA trends, rising from 32.13% in 2013 to a high of 38.58% in 2014. A substantial compression followed, with the margin falling to 24.29% in 2015 and hitting a minimum of 22.46% in 2016. A slight recovery to 23.96% was noted in 2017. Because the margin declined while revenues remained flat, the contraction suggests a reduction in the market's valuation of the company relative to its invested capital during the 2015-2016 period.
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