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.
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Cigna Group pages available for free this week:
- Balance Sheet: Assets
- Cash Flow Statement
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
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Economic Profit
Cigna Group, economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes initially showed a strong figure of 9,227 million US dollars in 2020. However, there was a marked decline in 2021 to 6,235 million, followed by a moderate recovery to 7,303 million in 2022. Subsequently, the NOPAT decreased sharply in 2023 to 4,831 million and remained relatively flat in 2024 at 4,868 million. Overall, the trend indicates a significant reduction in operating profitability over the five-year period.
- Cost of Capital
- The cost of capital exhibited a gradual increase from 7.65% in 2020 to a peak of 8.47% in 2023, before slightly decreasing to 8.32% in 2024. This upward trend suggests rising expenses associated with financing or risk perceptions over the period, which may exert pressure on profitability and investment returns.
- Invested Capital
- Invested capital demonstrated a declining trend over the period. Starting at 93,748 million dollars in 2020, it decreased steadily to 81,638 million by 2024. The reduction suggests a potential divestment or lower reinvestment in capital assets, which could reflect strategic shifts or cost containment measures.
- Economic Profit
- Economic profit showed substantial volatility and a generally negative trend. Positive economic profit of 2,056 million in 2020 dropped to a loss of 634 million in 2021, briefly returning to a marginal positive figure of 180 million in 2022. Thereafter, economic profit significantly deteriorated to negative 2,437 million in 2023 and negative 1,927 million in 2024. This pattern indicates that the company increasingly failed to generate returns above its cost of capital, reflecting deteriorating value creation over the timeframe analyzed.
- Summary Insights
- The data reveals a challenging financial environment marked by declining operating profit, increasing cost of capital, reduced invested capital, and worsening economic profit. The significant drop in NOPAT alongside rising costs of capital adversely affected economic profitability, signaling potential issues in operational efficiency or market conditions. The decrease in invested capital may represent a strategic response to these challenges but has not yet translated into improved economic profit. Overall, the trends suggest the need for strategic reassessment to restore value generation and financial performance.
Net Operating Profit after Taxes (NOPAT)
Cigna Group, NOPAT calculation
US$ in millions
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 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in equity equivalents to shareholders’ net income.
3 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
4 2024 Calculation
Tax benefit of interest expense on long-term and short-term debt = Adjusted interest expense on long-term and short-term debt × Statutory income tax rate
= × 21.00% =
5 Addition of after taxes interest expense to shareholders’ net income.
- Shareholders’ Net Income
- The shareholders’ net income demonstrates a fluctuating but overall downward trend over the five-year period. Starting at US$ 8,458 million in 2020, it declined significantly in 2021 to US$ 5,365 million. A recovery is observed in 2022, with an increase to US$ 6,668 million, but this is followed by consecutive decreases in 2023 and 2024, reaching US$ 5,164 million and US$ 3,434 million respectively. The decline from 2020 to 2024 amounts to approximately 59%, indicating decreasing profitability returned to shareholders.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibits a somewhat similar pattern to shareholders’ net income, with a decline from US$ 9,227 million in 2020 to US$ 6,235 million in 2021. It improved moderately in 2022 to US$ 7,303 million, but then experienced a marked drop to US$ 4,831 million in 2023. Contrary to shareholders’ net income, NOPAT shows a slight recovery in 2024, increasing marginally to US$ 4,868 million. Despite the recovery in 2024, NOPAT decreased by roughly 47% when comparing 2020 to 2024, signaling reduced operational efficiency or increased costs impacting the company’s profitability after tax.
- Comparative Observations
- Both financial indicators show volatility, with notable declines early in the period followed by partial recoveries and subsequent decreases. Shareholders’ net income declined more steeply than NOPAT over the five years, particularly between 2023 and 2024. The divergence in trends for 2023 and 2024, where shareholders’ net income continued falling while NOPAT rebounded slightly, suggests potential impacts from non-operating items, taxes, or other extraordinary factors affecting net income specifically. Overall, the trends point to challenges in maintaining consistent profitability and returns to shareholders over the recent years.
Cash Operating Taxes
Cigna Group, cash operating taxes calculation
US$ in millions
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).
- Income Taxes
- The income taxes exhibit significant fluctuations over the years. In 2020, the amount stood at 2,379 million US dollars before experiencing a notable decline to 1,367 million in 2021. Subsequently, there was an increase to 1,607 million in 2022, followed by a sharp drop to 141 million in 2023. In 2024, income taxes rose again to 1,491 million. The volatility suggests changes in taxable income, tax planning strategies, or legislative impacts during this period.
- Cash Operating Taxes
- Cash operating taxes show a downward trend with some fluctuations. Starting at 3,064 million US dollars in 2020, the value fell sharply to 1,864 million in 2021. There was then an increase to 2,363 million in 2022, followed by a decline to 2,097 million in 2023 and further to 1,901 million in 2024. Despite the fluctuations, the overall pattern points towards a reduction in cash tax outflows over the five-year period.
- Comparative Analysis
- Comparing income taxes and cash operating taxes reveals that cash operating taxes consistently remain higher than income taxes across all years. Both metrics have experienced declines from 2020 to 2021, followed by recoveries in 2022. However, while income taxes sharply fell in 2023 to a very low level, cash operating taxes decreased more moderately that year. The 2024 data indicates a recovery in income taxes to near previous levels, whereas cash operating taxes continued a slight downward trend. This pattern may reflect timing differences between tax accruals and payments, or changes in tax assets and liabilities.
Invested Capital
Cigna Group, invested capital calculation (financing approach)
US$ in millions
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 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of equity equivalents to shareholders’ equity.
4 Removal of accumulated other comprehensive income.
- Total reported debt & leases
- The total reported debt and leases showed an overall downward trend from 2020 to 2023, decreasing from 33,562 million US dollars in 2020 to 31,375 million US dollars in 2023. However, in 2024, there was a slight increase to 31,972 million US dollars. This indicates a general reduction in debt levels over the period with a minor reversal in the final year.
- Shareholders’ equity
- Shareholders’ equity consistently declined over the analyzed period, starting at 50,321 million US dollars in 2020 and decreasing each year to reach 41,033 million US dollars in 2024. This represents a significant reduction, suggesting that the company's net assets or retained earnings diminished over time, which might impact its financial stability and capital structure.
- Invested capital
- Invested capital exhibited a steady decline from 93,748 million US dollars in 2020 to 81,638 million US dollars in 2024. The decrease was gradual without any abrupt changes, reflecting a possible contraction in the total capital used for business operations. This trend corresponds with the reductions seen in both debt and equity, implying overall scaling down of the company's capital base.
Cost of Capital
Cigna Group, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
Economic Spread Ratio
Cigna Group, economic spread ratio 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) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
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 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit shows significant fluctuations over the five-year period. It started positively at 2,056 million US dollars in 2020, then declined sharply to a negative 634 million in 2021. A modest recovery occurred in 2022, with economic profit rising to 180 million, but this was followed by a substantial drop into negative territory again, reaching -2,437 million in 2023 and slightly improving to -1,927 million in 2024. Overall, the trend suggests increasing challenges in generating economic profit, with recurring losses in the latter years.
- Invested Capital
- Invested capital has demonstrated a steady decline across the period. Beginning at 93,748 million US dollars in 2020, it decreased gradually each year to 81,638 million by 2024. This reduction suggests a contraction in the investment base or asset utilization which may be influencing the economic profit levels observed.
- Economic Spread Ratio
- The economic spread ratio, reflecting the return on invested capital relative to the cost of capital, aligns closely with the economic profit trends. It started positive at 2.19% in 2020 before turning negative to -0.7% in 2021. A slight improvement was seen in 2022 to 0.21%, followed by significant negative values of -2.84% in 2023 and -2.36% in 2024. These negative spreads indicate that the company’s returns did not cover its capital costs during the latter years, which correlates with the reported economic losses.
Economic Profit Margin
Cigna Group, economic 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) | ||||||
| Economic profit1 | ||||||
| Revenues from external customers | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
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 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues from external customers
= 100 × ÷ =
3 Click competitor name to see calculations.
- Revenues from external customers
- The revenues demonstrate a consistent upward trend over the five-year period. Starting at approximately $159.16 billion in 2020, revenues increased steadily each year, reaching $246.15 billion by 2024. This represents a significant growth in sales volume or pricing, indicating expanding market activity or effective revenue generation strategies.
- Economic profit
- The economic profit exhibits considerable volatility throughout the timeframe. In 2020, economic profit was positive at $2.06 billion but turned negative in 2021, showing a loss of $634 million. It recovered marginally in 2022 to $180 million but declined sharply in 2023 and 2024 to losses of $2.44 billion and $1.93 billion, respectively. This pattern suggests challenges in converting revenue growth into value creation or managing costs effectively.
- Economic profit margin
- The economic profit margin mirrors the fluctuations of economic profit in relative terms. Starting with a positive margin of 1.29% in 2020, it dropped to a negative 0.37% in 2021, then slightly improved to 0.1% in 2022. However, the margin deteriorated significantly to -1.26% in 2023 and remained negative at -0.78% in 2024. This indicates that despite rising revenues, the profitability relative to sales has weakened, highlighting potential issues in efficiency or cost control.
- Overall Analysis
- While there is a clear and substantial increase in revenue across the years, the economic profit and its margin reveal persistent difficulties in sustaining profitability. The transition from positive to negative economic profit after 2020 suggests increased costs or diminished competitive advantage. The data imply that revenue growth alone has not translated into proportional value creation, and attention may be needed on cost structures, operational efficiencies, or strategic initiatives to restore positive economic returns.