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 – 9.53% × 81,638 = -2,913
The financial performance from 2020 to 2024 indicates a transition from positive economic value creation to sustained economic loss. While there has been a consistent reduction in the invested capital base, this contraction has been insufficient to offset the combined impact of declining operating profitability and a rising cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A significant downward trajectory is evident, with NOPAT falling from US$ 9,227 million in 2020 to US$ 4,868 million in 2024. Although a temporary increase was recorded in 2022, the overall trend reflects a substantial contraction in the company's ability to generate operating earnings after taxes.
- Cost of Capital
- The cost of capital trended upward for most of the period, rising from 8.71% in 2020 to a peak of 9.73% in 2023, before slightly moderating to 9.53% in 2024. This increase in the hurdle rate has placed additional pressure on the organization to generate higher operating returns to remain economically viable.
- Invested Capital
- A steady decline in invested capital is observed, decreasing from US$ 93,748 million in 2020 to US$ 81,638 million in 2024. This represents a persistent reduction in the capital base employed in operations over the five-year analysis period.
- Economic Profit Analysis
- Economic profit transitioned from a positive US$ 1,058 million in 2020 to a negative position that persisted through 2024. The most severe value destruction occurred in 2023, with a deficit of US$ 3,512 million. The shift to consistent negative economic profit demonstrates that the return on invested capital has fallen below the cost of capital, resulting in the erosion of shareholder value despite the reduction in total invested capital.
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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.
- 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.
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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).
- 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.
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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.
- 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.
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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 | × | 11.71% | = | 8.64% | ||
| 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 | 9.53% | ||||||||||
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 | × | 11.71% | = | 8.98% | ||
| 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 | 9.73% | ||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 87,529) | 87,529) | ÷ | 116,741) | = | 0.75 | 0.75 | × | 11.71% | = | 8.78% | ||
| 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 | 9.54% | ||||||||||
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 | × | 11.71% | = | 7.64% | ||
| 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 | 8.64% | ||||||||||
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 | × | 11.71% | = | 7.63% | ||
| 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 | 8.71% | ||||||||||
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 | (2,913) | (3,512) | (869) | (1,602) | 1,058) | |
| Invested capital2 | 81,638) | 85,777) | 85,650) | 90,679) | 93,748) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -3.57% | -4.09% | -1.02% | -1.77% | 1.13% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | -4.47% | -4.65% | -2.40% | -1.92% | — | |
| Elevance Health Inc. | -0.52% | -0.85% | 0.18% | 1.50% | — | |
| Intuitive Surgical Inc. | 3.46% | -2.99% | -3.27% | 12.34% | — | |
| Medtronic PLC | -6.50% | -6.29% | -5.04% | -6.68% | — | |
| UnitedHealth Group Inc. | 0.17% | 5.07% | 4.11% | 3.96% | — | |
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 × -2,913 ÷ 81,638 = -3.57%
4 Click competitor name to see calculations.
The financial trajectory from 2020 to 2024 indicates a transition from economic value creation to a prolonged period of value destruction. While the organization maintained a positive economic profit at the start of the period, subsequent years have been characterized by negative returns that failed to cover the cost of invested capital.
- Economic Profit Trends
- A positive economic profit of 1,058 million USD was recorded in 2020, but this shifted to a deficit starting in 2021. The most severe contraction occurred in 2023, with economic profit falling to -3,512 million USD. Although there was a marginal recovery in 2024 to -2,913 million USD, the figure remains substantially negative, reflecting a consistent inability to generate returns above the required threshold for the last four years.
- Invested Capital Dynamics
- Invested capital exhibited a steady downward trend over the five-year horizon, decreasing from 93,748 million USD in 2020 to 81,638 million USD in 2024. This reduction suggests a contraction in the capital base or a strategic divestment of assets, though the reduction in capital has not been sufficient to reverse the negative economic profit trend.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrored the volatility of economic profit, moving from a positive 1.13% in 2020 to negative territory for the remainder of the period. The ratio reached its nadir in 2023 at -4.09%, signaling the widest gap between the return on capital and the cost of capital. The movement to -3.57% in 2024 indicates a slight improvement in capital efficiency, yet the ratio confirms that the organization continues to operate with a negative spread, thereby eroding shareholder value.
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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 | (2,913) | (3,512) | (869) | (1,602) | 1,058) | |
| Revenues from external customers | 246,148) | 194,099) | 179,361) | 172,529) | 159,157) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -1.18% | -1.81% | -0.48% | -0.93% | 0.66% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | -6.40% | -6.91% | -3.38% | -2.77% | — | |
| Elevance Health Inc. | -0.23% | -0.35% | 0.08% | 0.70% | — | |
| Intuitive Surgical Inc. | 3.22% | -2.98% | -2.82% | 9.71% | — | |
| Medtronic PLC | -13.78% | -14.19% | -11.06% | -16.04% | — | |
| UnitedHealth Group Inc. | 0.09% | 2.52% | 2.10% | 1.94% | — | |
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 × -2,913 ÷ 246,148 = -1.18%
3 Click competitor name to see calculations.
The financial performance over the analyzed period reveals a significant divergence between top-line revenue growth and the generation of economic value. While revenues expanded consistently from 2020 through 2024, economic profit transitioned from a positive state to a sustained deficit, indicating that the company struggled to generate returns exceeding its cost of capital for the majority of the period.
- Revenue Growth Trends
- External revenues demonstrated a consistent upward trajectory, rising from 159,157 million USD in 2020 to 246,148 million USD in 2024. The most pronounced acceleration occurred between 2023 and 2024, marking a substantial increase in the scale of operations.
- Economic Profit Performance
- Economic profit shifted from a positive 1,058 million USD in 2020 to a negative 1,602 million USD in 2021. After a temporary improvement in 2022 to -869 million USD, the deficit widened significantly to -3,512 million USD in 2023. By 2024, the figure improved slightly to -2,913 million USD, yet it remained deeply negative compared to the 2020 baseline.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the absolute economic profit trend, starting at 0.66% in 2020 before declining into negative territory. The margin reached its lowest point in 2023 at -1.81%, reflecting the period of greatest value erosion. Although the margin recovered to -1.18% in 2024, the persistence of negative values suggests that the increase in revenue did not translate into economic value creation.
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