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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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

CVS Health Corp., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	9,673)	3,871)	9,170)	9,067)	8,359)
Cost of capital²	6.73%	7.12%	7.03%	6.21%	6.32%
Invested capital³	134,844)	123,703)	130,882)	136,669)	140,079)

Economic profit⁴	603)	(4,943)	(30)	584)	(491)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 9,673 – 6.73% × 134,844 = 603

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	CVS Health Corp. economic profit decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

CVS Health Corp., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income attributable to CVS Health	8,344)	4,149)	7,910)	7,179)	6,634)
Deferred income tax expense (benefit)¹	(676)	(2,075)	(428)	(564)	(649)
Increase (decrease) in allowance for credit losses²	10)	(6)	(19)	39)	32)
Increase (decrease) in restructuring charge liability³	150)	—)	—)	—)	—)
Increase (decrease) in equity equivalents⁴	(516)	(2,081)	(447)	(525)	(617)
Interest expense	2,658)	2,287)	2,503)	2,907)	3,035)
Interest expense, operating lease liability⁵	800)	813)	872)	918)	944)
Adjusted interest expense	3,458)	3,100)	3,375)	3,825)	3,979)
Tax benefit of interest expense⁶	(726)	(651)	(709)	(803)	(836)
Adjusted interest expense, after taxes⁷	2,732)	2,449)	2,666)	3,022)	3,143)
Net investment income	(1,153)	(838)	(1,199)	(798)	(1,011)
Investment income, before taxes	(1,153)	(838)	(1,199)	(798)	(1,011)
Tax expense (benefit) of investment income⁸	242)	176)	252)	168)	212)
Investment income, after taxes⁹	(911)	(662)	(947)	(630)	(799)
(Income) loss from discontinued operations, net of tax¹⁰	—)	—)	—)	9)	—)
Net income (loss) attributable to noncontrolling interest	24)	16)	(12)	13)	(3)
Net operating profit after taxes (NOPAT)	9,673)	3,871)	9,170)	9,067)	8,359)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for credit losses.

³ Addition of increase (decrease) in restructuring charge liability.

⁴ Addition of increase (decrease) in equity equivalents to net income attributable to CVS Health.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 17,775 × 4.50% = 800

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 3,458 × 21.00% = 726

⁷ Addition of after taxes interest expense to net income attributable to CVS Health.

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 1,153 × 21.00% = 242

⁹ Elimination of after taxes investment income.

¹⁰ Elimination of discontinued operations.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	CVS Health Corp. NOPAT decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

CVS Health Corp., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Income tax provision	2,805)	1,463)	2,522)	2,569)	2,366)
Less: Deferred income tax expense (benefit)	(676)	(2,075)	(428)	(564)	(649)
Add: Tax savings from interest expense	726)	651)	709)	803)	836)
Less: Tax imposed on investment income	242)	176)	252)	168)	212)
Cash operating taxes	3,965)	4,013)	3,407)	3,769)	3,638)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	CVS Health Corp. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

CVS Health Corp., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Short-term debt	200)	—)	—)	—)	—)
Current portion of long-term debt	2,772)	1,778)	4,205)	5,440)	3,781)
Long-term debt, excluding current portion	58,638)	50,476)	51,971)	59,207)	64,699)
Operating lease liability¹	17,775)	18,478)	19,823)	20,395)	20,522)
Total reported debt & leases	79,385)	70,732)	75,999)	85,042)	89,002)
Total CVS Health shareholders’ equity	76,461)	71,015)	75,075)	69,389)	63,864)
Net deferred tax (assets) liabilities²	4,311)	3,749)	6,270)	6,794)	7,294)
Allowance for credit losses³	343)	333)	339)	358)	319)
Restructuring charge liability⁴	150)	—)	—)	—)	—)
Equity equivalents⁵	4,804)	4,082)	6,609)	7,152)	7,613)
Accumulated other comprehensive (income) loss, net of tax⁶	297)	1,465)	(965)	(1,414)	(1,019)
Noncontrolling interests	175)	300)	306)	312)	306)
Adjusted total CVS Health shareholders’ equity	81,737)	76,862)	81,025)	75,439)	70,764)
Investments⁷	(26,278)	(23,891)	(26,142)	(23,812)	(19,687)
Invested capital	134,844)	123,703)	130,882)	136,669)	140,079)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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 restructuring charge liability.

⁵ Addition of equity equivalents to total CVS Health shareholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of investments.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	CVS Health Corp. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

CVS Health Corp., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	95,705)	95,705)	÷	172,131)	=	0.56	0.56	×	9.35%	=	5.20%
Debt³	58,651)	58,651)	÷	172,131)	=	0.34	0.34	×	4.32% × (1 – 21.00%)	=	1.16%
Operating lease liability⁴	17,775)	17,775)	÷	172,131)	=	0.10	0.10	×	4.50% × (1 – 21.00%)	=	0.37%
Total:	172,131)					1.00					6.73%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	114,235)	114,235)	÷	180,366)	=	0.63	0.63	×	9.35%	=	5.92%
Debt³	47,653)	47,653)	÷	180,366)	=	0.26	0.26	×	4.07% × (1 – 21.00%)	=	0.85%
Operating lease liability⁴	18,478)	18,478)	÷	180,366)	=	0.10	0.10	×	4.40% × (1 – 21.00%)	=	0.36%
Total:	180,366)					1.00					7.12%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	137,538)	137,538)	÷	221,518)	=	0.62	0.62	×	9.35%	=	5.80%
Debt³	64,157)	64,157)	÷	221,518)	=	0.29	0.29	×	4.00% × (1 – 21.00%)	=	0.92%
Operating lease liability⁴	19,823)	19,823)	÷	221,518)	=	0.09	0.09	×	4.40% × (1 – 21.00%)	=	0.31%
Total:	221,518)					1.00					7.03%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	92,490)	92,490)	÷	188,825)	=	0.49	0.49	×	9.35%	=	4.58%
Debt³	75,940)	75,940)	÷	188,825)	=	0.40	0.40	×	3.92% × (1 – 21.00%)	=	1.25%
Operating lease liability⁴	20,395)	20,395)	÷	188,825)	=	0.11	0.11	×	4.50% × (1 – 21.00%)	=	0.38%
Total:	188,825)					1.00					6.21%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	93,899)	93,899)	÷	188,727)	=	0.50	0.50	×	9.35%	=	4.65%
Debt³	74,306)	74,306)	÷	188,727)	=	0.39	0.39	×	4.09% × (1 – 21.00%)	=	1.27%
Operating lease liability⁴	20,522)	20,522)	÷	188,727)	=	0.11	0.11	×	4.60% × (1 – 21.00%)	=	0.40%
Total:	188,727)					1.00					6.32%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

CVS Health Corp., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	603)	(4,943)	(30)	584)	(491)
Invested capital²	134,844)	123,703)	130,882)	136,669)	140,079)
Performance Ratio
Economic spread ratio³	0.45%	-4.00%	-0.02%	0.43%	-0.35%
Benchmarks
Economic Spread Ratio, Competitors⁴
Abbott Laboratories	-1.88%	0.32%	0.77%	-2.50%	-3.82%
Cigna Group	-2.26%	0.78%	-0.20%	2.69%	-0.52%
Elevance Health Inc.	-0.91%	-0.09%	1.19%	-0.80%	0.04%
Humana Inc.	1.13%	2.35%	2.69%	9.55%	7.69%
Intuitive Surgical Inc.	5.68%	5.39%	21.01%	8.99%	25.67%
Medtronic PLC	-3.72%	-2.48%	-4.07%	-3.21%	-2.11%
Shockwave Medical Inc.	13.80%	26.08%	-16.38%	-82.55%	-43.54%
UnitedHealth Group Inc.	5.70%	4.74%	4.60%	5.17%	5.20%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 603 ÷ 134,844 = 0.45%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	CVS Health Corp. economic spread ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

CVS Health Corp., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	603)	(4,943)	(30)	584)	(491)
Revenues from customers	356,623)	321,629)	290,912)	267,908)	255,765)
Performance Ratio
Economic profit margin²	0.17%	-1.54%	-0.01%	0.22%	-0.19%
Benchmarks
Economic Profit Margin, Competitors³
Abbott Laboratories	-2.80%	0.45%	1.11%	-4.36%	-6.96%
Cigna Group	-1.00%	0.37%	-0.11%	1.58%	-0.32%
Elevance Health Inc.	-0.37%	-0.04%	0.56%	-0.38%	0.02%
Humana Inc.	0.32%	0.74%	0.99%	2.74%	2.25%
Intuitive Surgical Inc.	5.66%	4.66%	16.53%	9.22%	19.02%
Medtronic PLC	-8.39%	-5.45%	-9.77%	-7.89%	-5.02%
Shockwave Medical Inc.	12.71%	16.94%	-12.04%	-111.15%	-160.96%
UnitedHealth Group Inc.	2.83%	2.43%	2.26%	2.64%	2.54%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues from customers
= 100 × 603 ÷ 356,623 = 0.17%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	CVS Health Corp. economic profit margin deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

CVS Health Corp. (NYSE:CVS)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin