Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Express Scripts Holding Co., EBITDA 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).
The financial trajectory from 2013 to 2017 is characterized by consistent growth across all primary profitability metrics, with a notable acceleration in net income relative to operational earnings.
- EBITDA Performance
- Earnings before interest, tax, depreciation and amortization showed an overall upward trend, rising from 6.07 billion US dollars in 2013 to 7.34 billion US dollars in 2017. A brief contraction is observed in 2014, where the value declined to 5.89 billion US dollars, followed by a recovery and steady growth through 2017.
- Net Income Acceleration
- Net income attributable to the company exhibited the most significant growth rate among the analyzed metrics. Starting at 1.84 billion US dollars in 2013, it increased to 4.52 billion US dollars by 2017. This growth is markedly more aggressive than the growth seen in EBITDA, suggesting a significant improvement in the conversion of operational earnings to bottom-line profit.
- Operating Profitability and Amortization
- A divergence is noted between the growth of EBITDA and EBIT. While EBITDA grew by approximately 21% over the period, EBIT grew by approximately 52%, rising from 3.63 billion US dollars to 5.54 billion US dollars. This pattern indicates a reduction in the total amount of depreciation and amortization expenses relative to overall earnings over the five-year span.
- Tax and Interest Influence
- Earnings before tax (EBT) increased steadily from 3.03 billion US dollars in 2013 to 4.93 billion US dollars in 2017. The fact that net income grew at a faster rate than EBT suggests a decrease in the effective tax rate or a reduction in other liabilities impacting the final net income figure.
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Enterprise Value to EBITDA Ratio, Current
Express Scripts Holding Co., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 68,388,005) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 7,338,900) |
| Valuation Ratio | |
| EV/EBITDA | 9.32 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Abbott Laboratories | 15.16 |
| Elevance Health Inc. | 9.02 |
| Intuitive Surgical Inc. | 37.29 |
| Medtronic PLC | 14.22 |
| UnitedHealth Group Inc. | 18.41 |
Based on: 10-K (reporting date: 2017-12-31).
1 Click competitor name to see calculations.
If the company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.
Otherwise, if the company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.
Enterprise Value to EBITDA Ratio, Historical
Express Scripts Holding Co., historical EV/EBITDA 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) | ||||||
| Enterprise value (EV)1 | 58,090,748) | 54,675,184) | 58,275,458) | 74,781,795) | 71,810,588) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 7,338,900) | 7,276,500) | 6,723,200) | 5,892,000) | 6,073,400) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 7.92 | 7.51 | 8.67 | 12.69 | 11.82 | |
| Benchmarks | ||||||
| EV/EBITDA, 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).
3 2017 Calculation
EV/EBITDA = EV ÷ EBITDA
= 58,090,748 ÷ 7,338,900 = 7.92
4 Click competitor name to see calculations.
The financial metrics between 2013 and 2017 reveal a significant compression in the Enterprise Value to EBITDA multiple. This trend is characterized by a divergence where Enterprise Value generally declined while operational earnings expanded, leading to a lower valuation multiple over the observed period.
- Enterprise Value Trends
- Enterprise Value reached a peak of approximately 74.78 billion USD in 2014. Following this peak, a substantial reduction occurred, with the value falling to 58.28 billion USD in 2015 and reaching a period low of 54.68 billion USD in 2016. A marginal recovery was noted in 2017, with the value rising to 58.09 billion USD.
- EBITDA Performance
- Operational profitability showed a consistent upward trajectory after a minor decline in 2014. EBITDA grew from 6.07 billion USD in 2013 to 7.34 billion USD in 2017. This growth indicates a steady increase in the company's ability to generate cash flow from core operations despite the fluctuations in total enterprise valuation.
- EV/EBITDA Ratio Interpretation
- The EV/EBITDA ratio experienced a sharp contraction, moving from a high of 12.69 in 2014 to a low of 7.51 in 2016. Although the ratio slightly increased to 7.92 in 2017, it remained significantly lower than the levels seen in 2013 and 2014. This pattern suggests a market re-rating of the company's valuation or a shift in the perceived risk and growth profile relative to its earnings capacity.
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