Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
AmerisourceBergen Corp., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,392,410 – 10.22% × 13,020,519 = 1,061,663
The analysis of economic value creation reveals a significant transition from consistent value destruction to substantial value creation over the observed six-year period. The trajectory is marked by an initial narrowing of losses, a severe anomalous downturn in 2020, and a robust recovery that resulted in positive economic profit by the end of the period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated a steady growth pattern from 2017 to 2019, increasing from US$ 771.5 million to US$ 1.19 billion. This growth was interrupted by a critical decline in 2020, where NOPAT plummeted to a loss of US$ 4.62 billion. Following this contraction, a strong rebound occurred, with NOPAT reaching US$ 1.78 billion in 2021 and further expanding to US$ 2.39 billion in 2022.
- Invested Capital and Cost of Capital
- The cost of capital remained remarkably stable throughout the period, fluctuating minimally between a high of 10.22% in 2022 and a low of 9.36% in 2021. Invested capital showed an overall upward trend, growing from US$ 10.87 billion in 2017 to US$ 13.02 billion in 2022. A notable exception occurred in 2020, when invested capital dropped sharply to US$ 7.13 billion before returning to levels above US$ 12.9 billion in subsequent years.
- Economic Profit Trends
- Economic profit remained negative between 2017 and 2020, indicating that the operating returns were insufficient to cover the cost of capital. The value destruction trend improved from 2017 to 2019, with the deficit shrinking from US$ 316.5 million to US$ 28.5 million. The 2020 fiscal year saw an extreme spike in value destruction, with economic profit falling to negative US$ 5.33 billion. A fundamental shift occurred in 2021, as economic profit turned positive at US$ 571.2 million and nearly doubled to US$ 1.06 billion by 2022, signaling that the entity began generating returns in excess of its weighted average cost of capital.
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Net Operating Profit after Taxes (NOPAT)
AmerisourceBergen Corp., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances for returns and credit losses.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to AmerisourceBergen Corporation.
5 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,022,472 × 3.22% = 32,924
6 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 264,906 × 21.00% = 55,630
7 Addition of after taxes interest expense to net income (loss) attributable to AmerisourceBergen Corporation.
8 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 21,309 × 21.00% = 4,475
9 Elimination of after taxes investment income.
The financial performance of AmerisourceBergen Corporation between 2017 and 2022 is characterized by a period of initial growth, a severe contraction in 2020, and a subsequent robust recovery. Both Net Income and Net Operating Profit After Taxes (NOPAT) exhibit a high degree of correlation, reflecting a shared sensitivity to the operational events of the period.
- Net Income Trends
- Net income experienced significant volatility over the six-year period. After a substantial increase from 364.48 million USD in 2017 to 1.66 billion USD in 2018, the figure declined to 855.37 million USD in 2019. A critical downturn occurred in 2020, resulting in a net loss of 3.41 billion USD. However, the company demonstrated a strong recovery in subsequent years, returning to profitability with 1.54 billion USD in 2021 and 1.70 billion USD in 2022.
- Net Operating Profit After Taxes (NOPAT) Analysis
- NOPAT showed a consistent upward trajectory from 2017 to 2019, rising from 771.53 million USD to 1.19 billion USD. This growth was abruptly reversed in 2020, where NOPAT plummeted to a loss of 4.62 billion USD, a more severe decline than that observed in net income. The recovery phase was pronounced, with NOPAT increasing to 1.78 billion USD in 2021 and reaching a period peak of 2.39 billion USD by September 30, 2022.
- Comparative Performance and Operational Impact
- The disparity between net income and NOPAT is most evident during the 2020 fiscal year, where the operating loss exceeded the net loss by approximately 1.21 billion USD. This suggests that non-operating items or tax adjustments may have partially mitigated the impact of the operational collapse. By 2022, NOPAT grew more aggressively than net income, indicating an improvement in core operational efficiency and a strengthened capacity to generate value from operating assets relative to the 2017-2019 baseline.
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Cash Operating Taxes
AmerisourceBergen Corp., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).
The financial data indicates significant volatility in both the provision for income taxes and cash operating taxes over the six-year period from 2017 to 2022. There is a notable divergence between accounting tax provisions and actual cash tax outflows, suggesting the influence of deferred tax assets, liabilities, or one-time tax adjustments.
- Provision for Income Taxes Trend
- The provision for income taxes exhibited extreme fluctuations, characterized by alternating years of tax expenses and significant tax benefits. While 2017, 2019, 2021, and 2022 recorded positive provisions, 2018 and 2020 saw substantial tax benefits of US$ 438.5 million and US$ 1.89 billion, respectively. The 2020 benefit represents the most significant variance in the period, indicating a major non-recurring tax event or accounting adjustment.
- Cash Operating Taxes Analysis
- Cash operating taxes followed a less volatile but still irregular pattern compared to the accounting provision. Outflows remained positive from 2017 through 2019, with a peak in 2018 at US$ 403.9 million. A reversal occurred in 2020, where a cash tax benefit of US$ 316.6 million was realized. By 2021 and 2022, cash operating taxes stabilized, returning to a range between US$ 371.5 million and US$ 385.7 million.
- Relationship Between Provision and Cash Taxes
- A distinct lack of correlation is observed between the provision for income taxes and cash operating taxes in several periods. In 2018, a tax benefit was recognized in the provision, yet cash taxes increased to US$ 403.9 million. Similarly, in 2020, the cash tax benefit of US$ 316.6 million was considerably smaller than the reported provision benefit of US$ 1.89 billion. This disparity highlights a gap between the accrual-based tax expense and the actual liquidity impact on the organization.
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Invested Capital
AmerisourceBergen Corp., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of LIFO reserve. See details »
5 Addition of equity equivalents to total AmerisourceBergen Corporation stockholders’ equity (deficit).
6 Removal of accumulated other comprehensive income.
Invested capital exhibited significant volatility between 2017 and 2022, characterized by initial growth, a sharp contraction in 2020, and a subsequent recovery to peak levels by 2022.
- Invested Capital Trends
- Total invested capital increased from 10.87 billion in 2017 to approximately 12.35 billion by 2019. A substantial decline occurred in 2020, where the value dropped to 7.13 billion, representing a decrease of approximately 42% from the prior year. A rapid recovery followed, with capital increasing to 12.90 billion in 2021 and reaching a period high of 13.02 billion in 2022.
- Debt and Lease Obligations
- Total reported debt and leases showed a general upward trajectory over the six-year period. After increasing from 3.70 billion in 2017 to 4.76 billion in 2018, levels remained relatively stable through 2020. A significant spike was observed in 2021, with debt reaching 7.81 billion, before moderating to 6.73 billion in 2022.
- Stockholders' Equity Volatility
- Stockholders' equity experienced extreme fluctuations, transitioning from positive balances to deficits. Initial growth from 2.06 billion in 2017 to 2.93 billion in 2018 was followed by a precipitous drop to a deficit of 1.02 billion in 2020. While equity returned to a positive position of 223 million in 2021, it reverted to a deficit of 212 million by 2022.
- Correlation of Capital Components
- The sharp decline in invested capital in 2020 is directly correlated with the emergence of a substantial equity deficit, while debt levels remained relatively constant. The restoration of invested capital in 2021 and 2022 was primarily driven by the significant increase in total reported debt and leases, which offset the continued instability and recurring deficits in stockholders' equity.
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Cost of Capital
AmerisourceBergen Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 33,875,680) | 33,875,680) | ÷ | 40,098,925) | = | 0.84 | 0.84 | × | 11.66% | = | 9.85% | ||
| Debt3 | 5,200,773) | 5,200,773) | ÷ | 40,098,925) | = | 0.13 | 0.13 | × | 3.00% × (1 – 21.00%) | = | 0.31% | ||
| Operating lease liability4 | 1,022,472) | 1,022,472) | ÷ | 40,098,925) | = | 0.03 | 0.03 | × | 3.22% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 40,098,925) | 1.00 | 10.22% | ||||||||||
Based on: 10-K (reporting date: 2022-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 25,737,771) | 25,737,771) | ÷ | 33,921,091) | = | 0.76 | 0.76 | × | 11.66% | = | 8.85% | ||
| Debt3 | 7,061,813) | 7,061,813) | ÷ | 33,921,091) | = | 0.21 | 0.21 | × | 2.67% × (1 – 21.00%) | = | 0.44% | ||
| Operating lease liability4 | 1,121,507) | 1,121,507) | ÷ | 33,921,091) | = | 0.03 | 0.03 | × | 2.86% × (1 – 21.00%) | = | 0.07% | ||
| Total: | 33,921,091) | 1.00 | 9.36% | ||||||||||
Based on: 10-K (reporting date: 2021-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 20,813,049) | 20,813,049) | ÷ | 25,818,802) | = | 0.81 | 0.81 | × | 11.66% | = | 9.40% | ||
| Debt3 | 4,527,659) | 4,527,659) | ÷ | 25,818,802) | = | 0.18 | 0.18 | × | 3.56% × (1 – 21.00%) | = | 0.49% | ||
| Operating lease liability4 | 478,094) | 478,094) | ÷ | 25,818,802) | = | 0.02 | 0.02 | × | 3.72% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 25,818,802) | 1.00 | 9.94% | ||||||||||
Based on: 10-K (reporting date: 2020-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 18,082,027) | 18,082,027) | ÷ | 22,853,434) | = | 0.79 | 0.79 | × | 11.66% | = | 9.22% | ||
| Debt3 | 4,297,412) | 4,297,412) | ÷ | 22,853,434) | = | 0.19 | 0.19 | × | 3.67% × (1 – 21.00%) | = | 0.55% | ||
| Operating lease liability4 | 473,995) | 473,995) | ÷ | 22,853,434) | = | 0.02 | 0.02 | × | 3.67% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 22,853,434) | 1.00 | 9.83% | ||||||||||
Based on: 10-K (reporting date: 2019-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 18,834,530) | 18,834,530) | ÷ | 23,432,588) | = | 0.80 | 0.80 | × | 11.66% | = | 9.37% | ||
| Debt3 | 4,151,757) | 4,151,757) | ÷ | 23,432,588) | = | 0.18 | 0.18 | × | 3.67% × (1 – 24.50%) | = | 0.49% | ||
| Operating lease liability4 | 446,301) | 446,301) | ÷ | 23,432,588) | = | 0.02 | 0.02 | × | 3.67% × (1 – 24.50%) | = | 0.05% | ||
| Total: | 23,432,588) | 1.00 | 9.91% | ||||||||||
Based on: 10-K (reporting date: 2018-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 17,328,800) | 17,328,800) | ÷ | 21,121,320) | = | 0.82 | 0.82 | × | 11.66% | = | 9.56% | ||
| Debt3 | 3,534,621) | 3,534,621) | ÷ | 21,121,320) | = | 0.17 | 0.17 | × | 3.81% × (1 – 35.00%) | = | 0.41% | ||
| Operating lease liability4 | 257,899) | 257,899) | ÷ | 21,121,320) | = | 0.01 | 0.01 | × | 3.81% × (1 – 35.00%) | = | 0.03% | ||
| Total: | 21,121,320) | 1.00 | 10.01% | ||||||||||
Based on: 10-K (reporting date: 2017-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
AmerisourceBergen Corp., economic spread ratio calculation, comparison to benchmarks
| Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 1,061,663) | 571,164) | (5,328,631) | (28,533) | (199,963) | (316,457) | |
| Invested capital2 | 13,020,519) | 12,902,673) | 7,128,161) | 12,346,959) | 12,285,847) | 10,870,238) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 8.15% | 4.43% | -74.75% | -0.23% | -1.63% | -2.91% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Abbott Laboratories | -2.43% | -1.95% | — | — | — | — | |
| Elevance Health Inc. | 0.14% | 1.46% | — | — | — | — | |
| Intuitive Surgical Inc. | -3.21% | 12.41% | — | — | — | — | |
| Medtronic PLC | -5.06% | -6.71% | — | — | — | — | |
| UnitedHealth Group Inc. | 4.06% | 3.91% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).
1 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 1,061,663 ÷ 13,020,519 = 8.15%
4 Click competitor name to see calculations.
The financial performance from 2017 to 2022 demonstrates a significant transition from value destruction to value creation. After several years of negative economic profit and a severe contraction in 2020, the company achieved a positive economic spread, indicating that the return on invested capital has exceeded the cost of capital in the most recent periods.
- Economic Profit Trends
- A gradual improvement in economic profit was observed between 2017 and 2019, with losses narrowing from -316.5 million to -28.5 million. This trajectory was interrupted by a substantial decline in 2020, where economic profit fell to -5.3 billion. However, a strong recovery followed, resulting in a positive economic profit of 571.2 million in 2021 and further growth to 1.06 billion by September 30, 2022.
- Invested Capital Fluctuations
- Invested capital showed a steady increase from 10.87 billion in 2017 to 12.35 billion in 2019. A sharp reduction occurred in 2020, with capital dropping to 7.13 billion. Following this contraction, invested capital returned to previous levels, reaching 12.90 billion in 2021 and stabilizing at 13.02 billion in 2022.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrored the volatility of economic profit. The ratio improved from -2.91% in 2017 to -0.23% in 2019, nearly reaching a break-even point. A critical outlier occurred in 2020, with the ratio plunging to -74.75%. The subsequent two years marked a definitive pivot toward value creation, with the ratio climbing to 4.43% in 2021 and peaking at 8.15% in 2022.
The correlation between the recovery of invested capital and the surge in the economic spread ratio suggests a successful realignment of capital efficiency. The shift from a deeply negative spread in 2020 to a positive 8.15% in 2022 confirms that the company is now generating returns significantly above its cost of capital.
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Economic Profit Margin
AmerisourceBergen Corp., economic profit margin calculation, comparison to benchmarks
| Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 1,061,663) | 571,164) | (5,328,631) | (28,533) | (199,963) | (316,457) | |
| Revenue | 238,587,006) | 213,988,843) | 189,893,926) | 179,589,121) | 167,939,635) | 153,143,826) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 0.44% | 0.27% | -2.81% | -0.02% | -0.12% | -0.21% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Abbott Laboratories | -3.41% | -2.81% | — | — | — | — | |
| Elevance Health Inc. | 0.06% | 0.68% | — | — | — | — | |
| Intuitive Surgical Inc. | -2.77% | 9.76% | — | — | — | — | |
| Medtronic PLC | -11.11% | -16.09% | — | — | — | — | |
| UnitedHealth Group Inc. | 2.08% | 1.92% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).
1 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × 1,061,663 ÷ 238,587,006 = 0.44%
3 Click competitor name to see calculations.
An analysis of the financial performance from 2017 to 2022 reveals a period of consistent revenue expansion contrasted with significant volatility in economic value creation. While top-line growth remained steady, the company's ability to generate returns above its cost of capital fluctuated considerably, culminating in a transition from value destruction to value creation in the final two years of the period.
- Revenue Growth Trends
- Revenue exhibited a consistent upward trajectory throughout the six-year period, growing from 153.1 billion US dollars in 2017 to 238.6 billion US dollars in 2022. This steady increase indicates a sustained expansion of the company's operational scale and market reach.
- Economic Profit Volatility
- Economic profit remained negative between 2017 and 2020, indicating that the company was not generating returns exceeding its cost of capital during this window. A notable recovery trend was observed from 2017 to 2019, where losses narrowed from 316.5 million US dollars to 28.5 million US dollars. However, a substantial anomaly occurred in 2020, with economic profit plummeting to a deficit of 5.3 billion US dollars. Following this contraction, a sharp reversal occurred, with the company achieving positive economic profit of 571.2 million US dollars in 2021 and 1.06 billion US dollars in 2022.
- Economic Profit Margin Dynamics
- The economic profit margin closely mirrored the absolute economic profit trends. The margin improved from -0.21% in 2017 to nearly break-even at -0.02% in 2019. The sharp decline in 2020 resulted in a margin of -2.81%, representing a significant peak in value erosion relative to revenue. The subsequent recovery saw the margin pivot to positive territory, reaching 0.27% in 2021 and further expanding to 0.44% by 2022, confirming a shift toward sustainable economic value addition.
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