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
Cigna Group, economic profit 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 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
= 4,868 – 9.57% × 81,638 = -2,941
An analysis of the economic value added reveals a transition from positive economic profit in 2020 to persistent value destruction throughout the subsequent four years. The overall trajectory is characterized by a substantial contraction in operating profitability coupled with an increase in the cost of capital, leading to a sustained inability to meet the minimum required return on invested capital.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a significant downward trend, falling from 9,227 million US$ in 2020 to 4,868 million US$ by 2024. Although a moderate recovery was observed in 2022, the figures for 2023 and 2024 indicate a stabilization at a much lower level, representing a decrease of approximately 47% relative to the 2020 peak.
- Cost of Capital and Invested Capital
- The cost of capital rose from 8.74% in 2020 to a peak of 9.76% in 2023, before slightly receding to 9.57% in 2024. This increase in the hurdle rate occurred simultaneously with a steady reduction in invested capital, which declined from 93,748 million US$ in 2020 to 81,638 million US$ in 2024. The reduction in the capital base was insufficient to offset the decline in operating profits and the rising cost of financing.
- Economic Profit Performance
- Economic profit shifted from a positive 1,029 million US$ in 2020 to negative territory starting in 2021. The value destruction intensified in 2023, reaching a deficit of 3,543 million US$. While 2024 showed a marginal improvement to -2,941 million US$, the company remained in a state of economic loss, indicating that the return on invested capital remained below the weighted average cost of capital for four consecutive years.
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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
= 0 × 4.29% = 0
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
= 1,500 × 21.00% = 315
5 Addition of after taxes interest expense to shareholders’ net income.
The financial performance between 2020 and 2024 is characterized by a general contraction in both operating and net profitability, punctuated by a temporary recovery in 2022.
- Net Operating Profit After Taxes (NOPAT) Trend
- NOPAT experienced a volatile trajectory, starting at 9,227 million USD in 2020 and decreasing to 6,235 million USD in 2021. A partial recovery occurred in 2022, with the value rising to 7,303 million USD, followed by a sharp decline to 4,831 million USD in 2023. The metric demonstrated stabilization in 2024, ending the period at 4,868 million USD, which represents a marginal increase of approximately 0.7% from the previous year.
- Shareholders' Net Income Trend
- Net income followed a similar downward trajectory, initiating at 8,458 million USD in 2020 and falling to 5,365 million USD in 2021. After a temporary increase to 6,668 million USD in 2022, a consistent decline was observed, with figures dropping to 5,164 million USD in 2023 and further decreasing to 3,434 million USD by 2024. This represents a cumulative decrease of approximately 59% over the five-year observation window.
- Comparative Analysis of Operating vs. Net Profitability
- A consistent gap exists where NOPAT remains higher than shareholders' net income, indicating that non-operating expenses, interest, or other non-core financial items have consistently reduced the final earnings available to shareholders. This divergence became most pronounced in 2024, where NOPAT of 4,868 million USD exceeded net income of 3,434 million USD by approximately 1,434 million USD, suggesting an increased impact of non-operating factors in the final year of the period.
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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).
An analysis of tax expenditures from 2020 to 2024 reveals a marked divergence between reported income taxes and cash operating taxes. While both metrics exhibit volatility, cash operating taxes demonstrate a more consistent baseline, whereas income taxes show extreme fluctuations, particularly during the 2023 fiscal year.
- Cash Operating Tax Trends
- Cash operating taxes peaked in 2020 at 3,064 million US dollars before experiencing a decline to 1,864 million US dollars in 2021. A recovery occurred in 2022, with figures rising to 2,363 million US dollars, followed by a gradual downward trajectory to 1,901 million US dollars by the end of 2024. This suggests a general reduction in the actual cash outflow for taxes over the observed period.
- Income Tax Volatility
- Income taxes exhibit significant instability, characterized by a sharp decline from 2,379 million US dollars in 2020 to 1,367 million US dollars in 2021. The most notable anomaly occurs in 2023, where income taxes dropped precipitously to 141 million US dollars, before rebounding sharply to 1,491 million US dollars in 2024.
- Cash-to-Accrual Divergence
- A consistent gap exists where cash operating taxes remain higher than reported income taxes. This variance is most pronounced in 2023, where cash operating taxes of 2,097 million US dollars stood in stark contrast to the reported income tax of 141 million US dollars. Such a discrepancy typically indicates substantial non-cash tax adjustments, deferred tax assets, or liabilities impacting the reported income statement without reducing the actual cash outflow.
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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.
The capital structure analysis from 2020 through 2024 indicates a consistent reduction in the total amount of invested capital. This decline reflects a contraction in the funding base, with total invested capital decreasing from 93,748 million USD in 2020 to 81,638 million USD by the end of 2024.
- Invested Capital Trends
- A progressive downward trend is observed in total invested capital, which fell by approximately 12.9% over the five-year period. The most significant contraction occurred between 2021 and 2022, while 2023 showed a period of relative stability before another decline in 2024.
- Shareholders' Equity Analysis
- Shareholders' equity served as the primary driver of the reduction in invested capital. Equity decreased from 50,321 million USD in 2020 to 41,033 million USD in 2024, representing a total reduction of approximately 18.5%. While a moderate increase was recorded in 2023, it was offset by a sharp decline in 2024, which reached the lowest level within the analyzed period.
- Debt and Lease Obligations
- Total reported debt and leases exhibited higher stability relative to equity. After reaching a peak of 34,265 million USD in 2021, the balance transitioned to a slightly lower range, ending at 31,972 million USD in 2024. The limited variance in debt levels suggests that the overall decrease in invested capital was predominantly driven by equity movements rather than a significant deleveraging strategy.
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Cost of Capital
Cigna Group, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 82,903) | 82,903) | ÷ | 112,259) | = | 0.74 | 0.74 | × | 11.75% | = | 8.68% | ||
| Debt3 | 29,356) | 29,356) | ÷ | 112,259) | = | 0.26 | 0.26 | × | 4.29% × (1 – 21.00%) | = | 0.89% | ||
| Operating lease liability4 | —) | —) | ÷ | 112,259) | = | 0.00 | 0.00 | × | 4.29% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 112,259) | 1.00 | 9.57% | ||||||||||
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 | 98,272) | 98,272) | ÷ | 128,095) | = | 0.77 | 0.77 | × | 11.75% | = | 9.02% | ||
| Debt3 | 29,378) | 29,378) | ÷ | 128,095) | = | 0.23 | 0.23 | × | 4.07% × (1 – 21.00%) | = | 0.74% | ||
| Operating lease liability4 | 445) | 445) | ÷ | 128,095) | = | 0.00 | 0.00 | × | 3.45% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 128,095) | 1.00 | 9.76% | ||||||||||
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 | 87,529) | 87,529) | ÷ | 116,741) | = | 0.75 | 0.75 | × | 11.75% | = | 8.81% | ||
| Debt3 | 28,752) | 28,752) | ÷ | 116,741) | = | 0.25 | 0.25 | × | 3.89% × (1 – 21.00%) | = | 0.76% | ||
| Operating lease liability4 | 460) | 460) | ÷ | 116,741) | = | 0.00 | 0.00 | × | 2.80% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 116,741) | 1.00 | 9.58% | ||||||||||
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 | 72,032) | 72,032) | ÷ | 110,326) | = | 0.65 | 0.65 | × | 11.75% | = | 7.67% | ||
| Debt3 | 37,699) | 37,699) | ÷ | 110,326) | = | 0.34 | 0.34 | × | 3.66% × (1 – 21.00%) | = | 0.99% | ||
| Operating lease liability4 | 595) | 595) | ÷ | 110,326) | = | 0.01 | 0.01 | × | 2.81% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 110,326) | 1.00 | 8.67% | ||||||||||
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 | 73,655) | 73,655) | ÷ | 113,058) | = | 0.65 | 0.65 | × | 11.75% | = | 7.66% | ||
| Debt3 | 38,760) | 38,760) | ÷ | 113,058) | = | 0.34 | 0.34 | × | 3.96% × (1 – 21.00%) | = | 1.07% | ||
| Operating lease liability4 | 643) | 643) | ÷ | 113,058) | = | 0.01 | 0.01 | × | 3.51% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 113,058) | 1.00 | 8.74% | ||||||||||
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 | (2,941) | (3,543) | (900) | (1,629) | 1,029) | |
| Invested capital2 | 81,638) | 85,777) | 85,650) | 90,679) | 93,748) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -3.60% | -4.13% | -1.05% | -1.80% | 1.10% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | -4.49% | -4.67% | -2.43% | -1.95% | — | |
| Elevance Health Inc. | -0.55% | -0.90% | 0.14% | 1.46% | — | |
| Intuitive Surgical Inc. | 3.52% | -2.92% | -3.21% | 12.41% | — | |
| Medtronic PLC | -6.52% | -6.31% | -5.06% | -6.71% | — | |
| UnitedHealth Group Inc. | 0.12% | 5.02% | 4.06% | 3.91% | — | |
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 × -2,941 ÷ 81,638 = -3.60%
4 Click competitor name to see calculations.
The financial performance regarding economic value creation exhibits a marked transition from value generation to consistent value destruction over the five-year period analyzed. While the company began the period in a positive economic position, a sustained trend of negative economic profit has persisted from 2021 through 2024.
- Economic Profit
- A positive economic profit of 1,029 million USD was recorded in 2020, indicating that returns exceeded the cost of capital. However, this shifted to a deficit starting in 2021. The most significant deterioration occurred in 2023, where economic profit reached a low of -3,543 million USD. A slight recovery was observed in 2024, with the deficit narrowing to -2,941 million USD, although it remains substantially below the break-even point.
- Invested Capital
- A consistent downward trend in invested capital is evident, decreasing from 93,748 million USD in 2020 to 81,638 million USD by the end of 2024. This represents a total reduction of approximately 12.9% over the period, suggesting a contraction in the capital base utilized to generate returns.
- Economic Spread Ratio
- The economic spread ratio mirrors the volatility of economic profit. After a positive start of 1.10% in 2020, the ratio turned negative in 2021 (-1.80%). Despite a marginal improvement in 2022 (-1.05%), the ratio declined sharply to -4.13% in 2023. The 2024 figure of -3.60% indicates a slight moderation in the spread deficit, yet confirms that the return on invested capital continues to trail the cost of capital by a significant margin.
The correlation between the declining invested capital and the deepening negative economic spread suggests that the reduction in the capital base has been insufficient to offset the decline in operational returns relative to the cost of capital. The overall trajectory indicates a persistent challenge in achieving economic value added since 2020.
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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 | (2,941) | (3,543) | (900) | (1,629) | 1,029) | |
| Revenues from external customers | 246,148) | 194,099) | 179,361) | 172,529) | 159,157) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -1.19% | -1.83% | -0.50% | -0.94% | 0.65% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | -6.44% | -6.94% | -3.41% | -2.81% | — | |
| Elevance Health Inc. | -0.25% | -0.37% | 0.06% | 0.68% | — | |
| Intuitive Surgical Inc. | 3.28% | -2.92% | -2.77% | 9.76% | — | |
| Medtronic PLC | -13.82% | -14.24% | -11.11% | -16.09% | — | |
| UnitedHealth Group Inc. | 0.06% | 2.50% | 2.08% | 1.92% | — | |
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 × -2,941 ÷ 246,148 = -1.19%
3 Click competitor name to see calculations.
The financial performance from 2020 to 2024 reveals a divergent trend between revenue growth and the generation of economic value. While top-line growth remained consistent and accelerated toward the end of the period, the company experienced a transition from positive economic value creation to a sustained period of economic loss, where the cost of capital exceeded operating returns.
- Economic Profit Trends
- A positive economic profit of US$ 1,029 million was recorded in 2020, but this shifted to a negative US$ 1,629 million in 2021. Although there was a partial recovery in 2022 to US$ -900 million, a significant downturn occurred in 2023, with economic profit dropping to US$ -3,543 million. The period concluded with a moderate improvement in 2024, as the figure rose to US$ -2,941 million.
- Revenue Trajectory
- Revenues from external customers demonstrated uninterrupted growth over the five-year horizon. Starting at US$ 159,157 million in 2020, revenues climbed steadily to US$ 194,099 million by 2023. A sharp acceleration was observed in 2024, with revenues increasing to US$ 246,148 million, representing a significant expansion in the scale of operations.
- Economic Profit Margin Analysis
- The economic profit margin transitioned from a positive 0.65% in 2020 to a negative 0.94% in 2021. Following a slight correction to -0.50% in 2022, the margin deteriorated to its lowest point of -1.83% in 2023. Despite the substantial increase in total revenue in 2024, the margin remained negative at -1.19%, suggesting that the growth in revenue was not sufficient to offset the capital charges required to generate those earnings.
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