Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
CVS Health Corp., profitability ratios
Based on: 10-K (reporting date: 2024-12-31), 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).
The profitability profile of the organization exhibits a consistent downward trend in core margins over the five-year period ending December 31, 2024, characterized by systemic erosion of gross profitability and significant volatility in net returns.
- Gross Profit Margin
- A continuous and linear decline is observed, with the margin contracting from 18.01% in 2020 to 13.29% in 2024. This sustained decrease suggests an increasing cost of goods sold relative to revenue or a reduction in pricing power over the analyzed period.
- Operating and Net Profit Margins
- Both margins demonstrate significant instability. Operating profit margin fell from 5.19% in 2020 to a low of 2.41% in 2022, followed by a partial recovery to 3.85% in 2023, before dropping again to 2.30% in 2024. Net profit margin mirrors this volatility, ending the period at 1.24%, which is less than half of its 2020-2021 levels.
- Return on Equity (ROE)
- ROE displays a cyclical pattern of contraction and recovery. After remaining stable around 10% in 2020 and 2021, it dropped sharply to 5.84% in 2022. A strong rebound occurred in 2023, reaching a peak of 10.91%, but this was followed by a substantial decline to 6.11% in 2024.
- Return on Assets (ROA)
- ROA trends are closely aligned with net profit margins and ROE. The metric peaked at 3.39% in 2021 and recovered to 3.34% in 2023, but experienced significant dips in 2022 and 2024, closing the period at 1.82%.
Overall, the data indicates a weakening of profitability efficiency. While 2023 provided a temporary respite in operating efficiency and shareholder returns, the 2024 figures suggest a return to the broader downward trajectory, particularly regarding the inability to stabilize gross margins.
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Gross Profit Margin
CVS Health Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 49,248) | 53,278) | 53,456) | 50,849) | 48,248) | |
| Revenues from customers | 370,656) | 356,623) | 321,629) | 290,912) | 267,908) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 13.29% | 14.94% | 16.62% | 17.48% | 18.01% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 50.93% | 50.28% | 51.54% | 52.21% | — | |
| Elevance Health Inc. | 15.92% | 16.79% | 16.79% | 17.09% | — | |
| Intuitive Surgical Inc. | 67.46% | 66.39% | 67.44% | 69.32% | — | |
| Medtronic PLC | 65.34% | 65.67% | 67.98% | 65.19% | — | |
| UnitedHealth Group Inc. | 21.31% | 23.64% | 24.09% | 23.60% | — | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues from customers
= 100 × 49,248 ÷ 370,656 = 13.29%
2 Click competitor name to see calculations.
An examination of the financial performance from 2020 to 2024 reveals a consistent divergence between revenue growth and gross profitability. While the top line has expanded steadily over the five-year period, there is a pronounced and continuous decline in the gross profit margin.
- Revenue Growth Trends
- Revenues from customers exhibited uninterrupted growth, rising from US$ 267,908 million in 2020 to US$ 370,656 million in 2024. This trajectory indicates a significant and steady expansion in the scale of business operations.
- Gross Profit Trajectory
- Gross profit experienced a period of moderate growth between 2020 and 2022, reaching a peak of US$ 53,456 million. However, this trend reversed after 2022; gross profit declined slightly in 2023 and decreased more sharply to US$ 49,248 million in 2024. Consequently, the absolute gross profit in 2024 is lower than the levels recorded in 2021, 2022, and 2023, despite the substantial increase in total revenue.
- Gross Profit Margin Erosion
- The gross profit margin has undergone a systematic contraction every year. The margin decreased from 18.01% in 2020 to 17.48% in 2021, 16.62% in 2022, 14.94% in 2023, and finally to 13.29% in 2024. This consistent downward trend demonstrates that the cost of sales has grown at a faster rate than revenue growth.
The data suggests a significant compression in operational efficiency. The period between 2023 and 2024 is particularly critical, as it marks a phase where increasing sales volume no longer correlates with an increase in absolute gross profit. The decline to a five-year low margin of 13.29% indicates that the costs associated with generating revenue have intensified, outweighing the benefits of the expanding revenue base.
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Operating Profit Margin
CVS Health Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 8,516) | 13,743) | 7,746) | 13,193) | 13,911) | |
| Revenues from customers | 370,656) | 356,623) | 321,629) | 290,912) | 267,908) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 2.30% | 3.85% | 2.41% | 4.54% | 5.19% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 16.27% | 16.15% | 19.16% | 19.56% | — | |
| Elevance Health Inc. | 4.16% | 4.47% | 4.94% | 5.15% | — | |
| Intuitive Surgical Inc. | 28.12% | 24.80% | 25.35% | 31.89% | — | |
| Medtronic PLC | 15.89% | 17.56% | 18.15% | 14.89% | — | |
| UnitedHealth Group Inc. | 8.17% | 8.80% | 8.83% | 8.40% | — | |
| Operating Profit Margin, Sector | ||||||
| Health Care Equipment & Services | 8.25% | 8.71% | 9.26% | 9.13% | — | |
| Operating Profit Margin, Industry | ||||||
| Health Care | 12.50% | 12.79% | 18.74% | 18.04% | — | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Revenues from customers
= 100 × 8,516 ÷ 370,656 = 2.30%
2 Click competitor name to see calculations.
Analysis of the financial performance from 2020 to 2024 reveals a consistent expansion in top-line revenue coupled with significant volatility and an overall decline in operating profitability.
- Revenue Growth Trends
- Revenues from customers exhibited steady year-over-year growth, increasing from 267,908 million US dollars in 2020 to 370,656 million US dollars by 2024. This represents a continuous upward trajectory in scale throughout the analyzed period.
- Operating Income Volatility
- Operating income failed to track the growth of revenues, characterized by sharp fluctuations. While figures remained relatively stable between 2020 and 2021, a substantial contraction occurred in 2022, where income dropped to 7,746 million US dollars. Despite a recovery to 13,743 million US dollars in 2023, operating income fell again to 8,516 million US dollars in 2024.
- Operating Profit Margin Erosion
- The operating profit margin reflects a clear downward trend, decreasing from 5.19% in 2020 to 2.30% in 2024. This compression indicates that operating expenses have grown at a faster rate than revenues. The margin reached a period low of 2.41% in 2022, experienced a partial recovery to 3.85% in 2023, and ultimately declined to its lowest point of 2.30% at the end of 2024.
The divergence between increasing revenues and diminishing operating margins suggests a decrease in operational efficiency or a significant increase in the cost of delivering services over the five-year duration.
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Net Profit Margin
CVS Health Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to CVS Health | 4,614) | 8,344) | 4,149) | 7,910) | 7,179) | |
| Revenues from customers | 370,656) | 356,623) | 321,629) | 290,912) | 267,908) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 1.24% | 2.34% | 1.29% | 2.72% | 2.68% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 31.95% | 14.27% | 15.88% | 16.42% | — | |
| Elevance Health Inc. | 3.41% | 3.52% | 3.87% | 4.46% | — | |
| Intuitive Surgical Inc. | 27.81% | 25.24% | 21.25% | 29.85% | — | |
| Medtronic PLC | 11.36% | 12.03% | 15.90% | 11.97% | — | |
| UnitedHealth Group Inc. | 3.65% | 6.09% | 6.25% | 6.06% | — | |
| Net Profit Margin, Sector | ||||||
| Health Care Equipment & Services | 6.09% | 6.43% | 7.05% | 7.14% | — | |
| Net Profit Margin, Industry | ||||||
| Health Care | 8.84% | 11.49% | 14.65% | 15.24% | — | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Net profit margin = 100 × Net income attributable to CVS Health ÷ Revenues from customers
= 100 × 4,614 ÷ 370,656 = 1.24%
2 Click competitor name to see calculations.
An analysis of the financial performance between 2020 and 2024 reveals a divergence between consistent top-line revenue growth and volatile bottom-line profitability. While total revenues increased steadily each year, net income and the resulting profit margins experienced significant fluctuations, indicating that revenue expansion did not translate into stable earnings growth.
- Revenue Trajectory
- A consistent upward trend is observed in revenues from customers, which grew from 267,908 million US dollars in 2020 to 370,656 million US dollars by 2024. This represents a sustained increase in the scale of operations over the five-year period.
- Net Income Fluctuations
- Net income attributable to the entity exhibited high volatility. Following a peak of 7,910 million US dollars in 2021, earnings dropped sharply to 4,149 million US dollars in 2022. A strong recovery occurred in 2023, reaching a five-year high of 8,344 million US dollars, before declining again to 4,614 million US dollars in 2024.
- Net Profit Margin Analysis
- The net profit margin mirrored the volatility of net income, characterized by a cyclical pattern of contraction and expansion. The margin remained relatively stable between 2.68% in 2020 and 2.72% in 2021, but fell to 1.29% in 2022. Although a recovery to 2.34% was achieved in 2023, the margin reached its lowest point in the analyzed period by December 31, 2024, at 1.24%.
The correlation between rising revenues and falling margins in 2024 suggests an increase in operating costs or non-operating expenses that outweighed the gains from higher sales volume. The inability to maintain a stable profit margin despite a larger revenue base indicates significant pressure on the company's cost structure.
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Return on Equity (ROE)
CVS Health Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to CVS Health | 4,614) | 8,344) | 4,149) | 7,910) | 7,179) | |
| Total CVS Health shareholders’ equity | 75,560) | 76,461) | 71,015) | 75,075) | 69,389) | |
| Profitability Ratio | ||||||
| ROE1 | 6.11% | 10.91% | 5.84% | 10.54% | 10.35% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Abbott Laboratories | 28.12% | 14.83% | 18.90% | 19.75% | — | |
| Elevance Health Inc. | 14.47% | 15.23% | 16.59% | 16.93% | — | |
| Intuitive Surgical Inc. | 14.13% | 13.51% | 11.98% | 14.32% | — | |
| Medtronic PLC | 7.32% | 7.30% | 9.59% | 7.01% | — | |
| UnitedHealth Group Inc. | 15.55% | 25.22% | 25.87% | 24.09% | — | |
| ROE, Sector | ||||||
| Health Care Equipment & Services | 16.02% | 17.13% | 18.40% | 17.28% | — | |
| ROE, Industry | ||||||
| Health Care | 15.74% | 19.40% | 24.82% | 25.44% | — | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
ROE = 100 × Net income attributable to CVS Health ÷ Total CVS Health shareholders’ equity
= 100 × 4,614 ÷ 75,560 = 6.11%
2 Click competitor name to see calculations.
The Return on Equity (ROE) exhibits significant volatility between 2020 and 2024, characterized by inconsistent profitability cycles. While the shareholders' equity base remained relatively stable over the five-year period, the ROE fluctuated sharply, driven primarily by substantial swings in net income.
- ROE Performance Trends
- A pattern of cyclicality is observed in the ROE, which began at 10.35% in 2020 and reached a peak of 10.91% in 2023. This growth was interrupted by two sharp declines: a drop to 5.84% in 2022 and a subsequent decrease to 6.11% in 2024. These fluctuations indicate a lack of stability in the annual returns generated on equity.
- Impact of Net Income Volatility
- The fluctuations in ROE are directly correlated with the volatility of net income. The significant contractions in ROE observed in 2022 and 2024 correspond with periods where net income fell to 4,149 million and 4,614 million, respectively. Conversely, the recovery in 2023 was fueled by a surge in net income to 8,344 million, the highest value in the analyzed period.
- Equity Base Analysis
- Total shareholders' equity remained relatively constant, fluctuating within a range of 69,389 million to 76,461 million. Because the equity base did not undergo drastic expansion or contraction, the observed changes in ROE are almost exclusively attributable to operational profitability rather than changes in capital structure or aggressive share buybacks.
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Return on Assets (ROA)
CVS Health Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to CVS Health | 4,614) | 8,344) | 4,149) | 7,910) | 7,179) | |
| Total assets | 253,215) | 249,728) | 228,275) | 232,999) | 230,715) | |
| Profitability Ratio | ||||||
| ROA1 | 1.82% | 3.34% | 1.82% | 3.39% | 3.11% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Abbott Laboratories | 16.46% | 7.82% | 9.31% | 9.40% | — | |
| Elevance Health Inc. | 5.12% | 5.50% | 5.86% | 6.26% | — | |
| Intuitive Surgical Inc. | 12.39% | 11.64% | 10.19% | 12.58% | — | |
| Medtronic PLC | 4.09% | 4.13% | 5.54% | 3.87% | — | |
| UnitedHealth Group Inc. | 4.83% | 8.18% | 8.19% | 8.15% | — | |
| ROA, Sector | ||||||
| Health Care Equipment & Services | 6.57% | 7.05% | 7.49% | 7.28% | — | |
| ROA, Industry | ||||||
| Health Care | 5.73% | 7.19% | 9.66% | 9.46% | — | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
ROA = 100 × Net income attributable to CVS Health ÷ Total assets
= 100 × 4,614 ÷ 253,215 = 1.82%
2 Click competitor name to see calculations.
The financial performance from 2020 to 2024 is characterized by significant volatility in net income, which has directly resulted in a fluctuating Return on Assets (ROA). While the asset base has remained relatively stable with a gradual upward trajectory, the profitability metrics exhibit a cyclical pattern of contraction and recovery.
- Net Income Volatility
- Net income attributable to CVS Health demonstrates substantial variance over the five-year period. After an initial increase from 7,179 million USD in 2020 to 7,910 million USD in 2021, a sharp decline occurred in 2022, with earnings falling to 4,149 million USD. A strong recovery followed in 2023, reaching a peak of 8,344 million USD, before another significant decrease to 4,614 million USD was recorded in 2024.
- Asset Base Growth
- Total assets have shown a steady long-term increase, growing from 230,715 million USD in 2020 to 253,215 million USD in 2024. Aside from a marginal dip in 2022, the asset base has expanded, indicating a continuous growth in the company's resource footprint.
- Return on Assets (ROA) Analysis
- The ROA mirrors the instability of the net income figures. The ratio peaked in 2021 at 3.39% and again in 2023 at 3.34%. Conversely, the ROA experienced two significant troughs, dropping to 1.82% in both 2022 and 2024. This suggests that the fluctuations in asset efficiency are driven primarily by earnings volatility rather than shifts in the total asset structure, as the 2024 ROA returned precisely to the 2022 low despite a larger asset base.
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