Elevance Health Inc. (NYSE:ELV)

The income tax expense exhibited fluctuating behavior over the five-year period. Current tax expense generally increased from 2021 to 2023, followed by a decrease in 2024 and a substantial decline in 2025. Deferred tax expense, conversely, transitioned from a positive expense to a significant benefit over the same timeframe.

Current Tax Expense

Current tax expense increased from US$1,650 million in 2021 to US$1,746 million in 2022, representing a 5.8% increase. Further growth was observed in 2023, reaching US$2,414 million, a 38.5% increase from the prior year. However, 2024 saw a decrease to US$2,294 million, a 5.0% reduction. The most significant change occurred in 2025, with current tax expense falling to US$1,327 million, a 42.3% decrease from 2024.

Deferred Tax Expense (Benefit)

Deferred tax expense was US$180 million in 2021 and decreased substantially to US$4 million in 2022. This trend continued into a significant benefit in 2023, with a negative US$690 million, indicating a substantial reduction in tax liabilities due to deferred tax assets realization or changes in deferred tax liabilities. The benefit persisted in 2024 at negative US$361 million and continued, though lessened, in 2025 at negative US$278 million.

Total Income Tax Expense

Total income tax expense initially decreased slightly from US$1,830 million in 2021 to US$1,750 million in 2022. It then remained relatively stable at US$1,724 million in 2023 before increasing to US$1,933 million in 2024. A considerable decrease was observed in 2025, with total income tax expense falling to US$1,049 million, driven primarily by the reduction in current tax expense and the continued deferred tax benefit.

The shift from deferred tax expense to benefit suggests potential changes in the company’s temporary differences between book and tax bases of assets and liabilities, or changes in tax planning strategies. The fluctuations in current tax expense likely correlate with changes in pre-tax income, tax rates, or applicable tax credits and deductions.

The effective income tax rate exhibited fluctuations over the five-year period. While the statutory federal income tax rate remained constant at 21.00%, the effective income tax rate demonstrated variability, suggesting influences beyond the standard corporate tax rate.

Effective Income Tax Rate Trend

In 2021, the effective income tax rate was 23.10%, exceeding the statutory rate. This indicates the presence of factors increasing the tax burden, potentially including state taxes, non-deductible expenses, or adjustments related to prior year tax effects. The rate decreased to 22.50% in 2022 and further to 22.30% in 2023, suggesting a lessening of these factors or changes in the company’s financial activities. A notable increase to 24.50% occurred in 2024, reversing the prior trend and again exceeding the statutory rate. However, a significant decline to 15.60% was observed in 2025, falling substantially below the statutory rate.

The considerable decrease in the effective income tax rate in 2025 warrants further investigation. This could be attributable to tax benefits realized during the year, such as tax credits, changes in the geographic mix of earnings, or the recognition of deferred tax assets. The increase in 2024, following two years of decline, also merits scrutiny to understand the underlying drivers of the change. The consistent difference between the statutory and effective rates throughout most of the period highlights the importance of considering factors beyond the standard corporate tax rate when assessing the company’s tax position.

Variance from Statutory Rate

The effective income tax rate consistently deviated from the statutory rate, with the exception of 2025. From 2021 to 2023, the rate was above the statutory rate, indicating a higher tax burden. The substantial drop in 2025 resulted in a rate significantly below the statutory rate, potentially indicating substantial tax-reducing events.

Continued monitoring of the effective income tax rate is recommended to identify any emerging trends and to assess the impact of tax planning strategies and changes in tax legislation.

The composition of deferred tax assets and liabilities exhibits notable shifts over the five-year period. Overall, a net deferred tax liability position is maintained throughout, though the magnitude of the liability decreases initially before stabilizing. Significant changes are observed in several underlying components, impacting both deferred tax assets and deferred tax liabilities.

Deferred Tax Assets

Deferred tax assets, before the valuation allowance, demonstrate a consistent upward trend, increasing from US$1,742 million in 2021 to US$2,431 million in 2025. This growth is primarily driven by increases in federal and state carryforwards, which more than double from US$201 million to US$617 million over the period. Foreign carryforwards also contribute to this increase, appearing in 2024 and growing to US$236 million by 2025. Accrued expenses, bad debt reserves, and insurance reserves also contribute, though with more fluctuation. The valuation allowance against these assets also increases steadily, from US$212 million in 2021 to US$311 million in 2025, suggesting increasing uncertainty regarding the realization of these assets.

Deferred Tax Liabilities

Deferred tax liabilities are dominated by U.S. federal and state intangible assets, which consistently represent the largest component, decreasing from US$2,071 million in 2021 to US$2,447 million in 2025. Capitalized software also represents a substantial portion, declining from US$777 million to US$439 million. Other significant liabilities include those related to retirement assets and lease right-of-use assets, which show moderate decreases over the period. Investment basis related liabilities appear in 2022 and 2025, contributing to the overall liability. The overall trend in deferred tax liabilities is a decrease from US$4,232 million in 2021 to US$3,931 million in 2025, though the rate of decrease slows in later years.

Net Deferred Tax Position

The net deferred tax liability position improves from US$2,702 million in 2021 to US$1,811 million in 2025. The initial improvement is more pronounced, decreasing to US$1,897 million in 2022, before stabilizing in subsequent years. This is attributable to the faster growth of deferred tax assets relative to deferred tax liabilities in the earlier part of the period. The stabilization suggests a balancing of factors affecting both asset and liability recognition.

Fluctuations in accrued expenses, bad debt reserves, and insurance reserves suggest potential changes in underlying business operations and accounting estimates. The emergence of foreign carryforwards in 2024 and their subsequent growth indicate increased international activity or changes in foreign tax regulations. The decline in capitalized software liabilities may reflect amortization or impairment of software assets. The consistent valuation allowance suggests ongoing assessment of the realizability of deferred tax assets.

The deferred tax asset balance exhibited an overall increasing trend throughout the observed period. Conversely, deferred tax liabilities, net, demonstrated a more volatile pattern, initially decreasing significantly before stabilizing and experiencing a slight increase.

Deferred Tax Asset Trend

The deferred tax asset increased from US$103 million in 2021 to US$137 million in 2022, representing a growth of approximately 33%. This growth continued into 2023, reaching US$228 million, a substantial increase from the prior year. A slight decrease was noted in 2024, with the asset value falling to US$206 million. However, the asset rebounded in 2025, closing at US$298 million, marking a new high within the analyzed timeframe.

Deferred Tax Liability Trend

Deferred tax liabilities, net, began at US$2,805 million in 2021. A significant decrease was observed in 2022, falling to US$2,034 million. This downward trend continued, albeit at a slower pace, with the balance reaching US$1,970 million in 2023. In 2024, the liabilities increased to US$2,148 million, and this level was largely maintained in 2025, with a reported value of US$2,110 million.

The substantial decrease in net deferred tax liabilities between 2021 and 2023, coupled with the concurrent increase in the deferred tax asset, suggests potential shifts in the company’s temporary differences or changes in applicable tax laws. The stabilization of liabilities in the later years, alongside continued asset growth, indicates a widening net deferred tax asset position.

Net Deferred Tax Position

The difference between net deferred tax liabilities and deferred tax assets has narrowed over the period. In 2021, net deferred tax liabilities exceeded the asset by US$2,702 million. By 2025, this difference had decreased to US$1,812 million, indicating a reduction in the overall deferred tax liability position relative to the asset.

The financial information reveals adjustments made to reported figures, primarily relating to the removal of deferred tax assets and liabilities. These adjustments impact total assets, total liabilities, shareholders’ equity, and ultimately, shareholders’ net income over the five-year period from 2021 to 2025.

Asset Adjustments

Reported total assets demonstrate a consistent upward trend, increasing from US$97,460 million in 2021 to US$121,494 million in 2025. However, the adjusted total assets, reflecting the removal of deferred tax items, show a slightly lower, yet similar, growth pattern, ranging from US$97,357 million in 2021 to US$121,196 million in 2025. The difference between reported and adjusted assets remains relatively stable across the period, suggesting a consistent impact from deferred tax adjustments.

Liability Adjustments

Reported total liabilities also exhibit an increasing trend, moving from US$61,332 million in 2021 to US$77,468 million in 2025. The adjusted total liabilities follow a similar trajectory, starting at US$58,527 million in 2021 and reaching US$75,358 million in 2025. The adjustments to liabilities are consistently negative, indicating a reduction in reported liabilities when deferred tax items are removed. The gap between reported and adjusted liabilities widens slightly over time, suggesting a growing deferred tax impact on the reported liability position.

Shareholders’ Equity Adjustments

Reported shareholders’ equity shows modest growth, increasing from US$36,060 million in 2021 to US$43,882 million in 2025. Conversely, adjusted shareholders’ equity presents a more substantial increase, beginning at US$38,762 million in 2021 and culminating at US$45,693 million in 2025. The positive adjustments to shareholders’ equity indicate that the removal of deferred tax items increases the reported equity position. The difference between reported and adjusted equity is most pronounced in 2021 and 2025, suggesting a more significant impact in those years.

Net Income Adjustments

Reported shareholders’ net income declines gradually from US$6,104 million in 2021 to US$5,662 million in 2025. The adjusted shareholders’ net income, however, shows a different pattern. While initially similar to the reported net income, it dips significantly in 2023 to US$5,297 million before recovering to US$5,384 million in 2025. The adjustments to net income are positive in 2021 and 2022, negative in 2023, and positive in 2024 and 2025. This suggests that the removal of deferred tax items had a varying impact on net income, decreasing it in 2023 but increasing it in other years.

In summary, the adjustments related to deferred taxes consistently increase shareholders’ equity and have a fluctuating impact on reported net income. The impact on total assets and liabilities is present but less pronounced, with adjustments consistently reducing both reported figures. The changes suggest a dynamic tax position requiring ongoing monitoring and potential reassessment.

The financial metrics presented demonstrate a consistent pattern when adjusted for the removal of deferred tax impacts. Generally, the adjusted ratios are modestly lower than their reported counterparts, suggesting deferred taxes contribute positively to reported profitability and returns. However, the trends observed across both reported and adjusted figures are largely similar, indicating the adjustments do not fundamentally alter the overall financial narrative.

Profitability

Both reported and adjusted net profit margins exhibit a declining trend from 2021 through 2025. The reported margin decreased from 4.46% to 2.87%, while the adjusted margin decreased from 4.59% to 2.72%. The difference between the reported and adjusted margins remains relatively stable, around 0.13%, throughout the period. This suggests a consistent impact from deferred taxes on reported net income.

Asset Turnover

Total asset turnover shows a slight increase from 2021 to 2023, peaking at 1.56 and 1.57 for reported and adjusted values respectively, before stabilizing around 1.50-1.63. The adjustments for deferred taxes have a negligible effect on the reported asset turnover ratio.

Financial Leverage

Financial leverage remains relatively stable across the period, fluctuating between 2.51 and 2.83 for reported values and 2.65 and 2.83 for adjusted values. The removal of deferred tax liabilities results in a lower leverage ratio, indicating a reduced level of financial risk when considering only operating assets and liabilities. The difference between reported and adjusted leverage is approximately 0.15-0.20.

Return on Equity (ROE)

A consistent downward trend is observed in both reported and adjusted ROE, decreasing from 16.93% to 12.90% and 16.21% to 11.78% respectively. The adjustment for deferred taxes consistently lowers the ROE, reflecting the impact of these taxes on shareholder equity. The difference between reported and adjusted ROE is approximately 0.7-1.2%.

Return on Assets (ROA)

ROA also demonstrates a declining trend from 2021 to 2025, with reported values decreasing from 6.26% to 4.66% and adjusted values decreasing from 6.45% to 4.44%. Similar to ROE, the adjusted ROA is consistently lower than the reported ROA, again due to the impact of deferred taxes. The difference between reported and adjusted ROA is approximately 0.2-0.3%.

In summary, the adjustments related to deferred taxes consistently result in lower profitability and return ratios, but do not significantly alter the observed trends. The company exhibits a general decline in profitability and returns over the analyzed period, irrespective of the deferred tax adjustments.

The period under review demonstrates a generally declining trend in both reported and adjusted shareholders’ net income, alongside corresponding decreases in net profit margins. While fluctuations exist, the overall trajectory points to diminishing profitability over the five-year span.

Reported Shareholders’ Net Income

Reported shareholders’ net income experienced a slight decrease from US$6,104 million in 2021 to US$6,025 million in 2022. This was followed by a more pronounced decline to US$5,987 million in 2023, remaining relatively stable at US$5,980 million in 2024 before decreasing further to US$5,662 million in 2025. This indicates a consistent erosion of reported profitability.

Adjusted Shareholders’ Net Income

Adjusted shareholders’ net income mirrored the trend of reported net income, beginning at US$6,284 million in 2021 and decreasing to US$6,029 million in 2022. A more substantial decrease was observed in 2023, falling to US$5,297 million. A partial recovery occurred in 2024, with adjusted net income rising to US$5,619 million, but this was not sustained, with a further decline to US$5,384 million in 2025. The adjusted figures suggest that excluding certain items does not fully offset the underlying decline in core profitability.

Reported Net Profit Margin

The reported net profit margin decreased steadily from 4.46% in 2021 to 3.41% in 2024, before falling to 2.87% in 2025. This consistent decline suggests increasing pressure on profitability, potentially due to rising costs or decreasing revenue growth. The rate of decline appears to be accelerating in the later years.

Adjusted Net Profit Margin

The adjusted net profit margin followed a similar pattern to the reported margin, starting at 4.59% in 2021 and decreasing to 2.72% in 2025. While initially higher than the reported margin, the adjusted margin converged with the reported margin over time, indicating that the adjustments made were not sufficient to maintain profitability levels. The adjusted margin also experienced its largest single-year decline between 2022 and 2023.

In summary, both reported and adjusted profitability metrics demonstrate a consistent downward trend throughout the analyzed period. The convergence of the reported and adjusted margins suggests that the underlying business performance is the primary driver of the declining profitability, rather than one-time or non-recurring items.

The reported and adjusted total assets exhibited a consistent upward trend from 2021 through 2025. Correspondingly, both the reported and adjusted total asset turnover ratios demonstrated an overall positive trajectory during the same period, although with some fluctuation.

Total Assets

Reported total assets increased from US$97,460 million in 2021 to US$121,494 million in 2025, representing a cumulative growth of approximately 24.6%. Adjusted total assets followed a similar pattern, rising from US$97,357 million to US$121,196 million, a cumulative increase of roughly 24.5% over the five-year period. The difference between reported and adjusted total assets remained relatively small across all years, suggesting minimal adjustments were made.

Total Asset Turnover

The reported total asset turnover ratio increased from 1.41 in 2021 to 1.63 in 2025. An initial increase was observed from 2021 to 2022 (1.41 to 1.51), followed by a further increase to 1.56 in 2023. A slight decrease to 1.50 occurred in 2024 before returning to 1.63 in 2025, reaching its highest value within the observed timeframe.

The adjusted total asset turnover ratio mirrored the trend of the reported ratio. It rose from 1.41 in 2021 to 1.63 in 2025, with similar fluctuations observed in 2023 and 2024 (1.52, 1.57, 1.50 respectively). The values for the reported and adjusted ratios were identical in each year, indicating that the adjustments to total assets did not impact the calculated turnover ratio.

The consistent increase in the total asset turnover ratio suggests improving efficiency in asset utilization. The company generated more revenue per dollar of assets in 2025 compared to 2021. The slight dip in 2024 warrants further investigation, but the subsequent recovery in 2025 indicates it may have been a temporary fluctuation.

In summary, the observed trends suggest a growing asset base coupled with increasing efficiency in generating revenue from those assets. The consistency between reported and adjusted figures indicates that asset adjustments do not materially affect the overall assessment of asset utilization.

An examination of the financial information reveals trends in both reported and adjusted financial leverage over a five-year period. Both measures of total assets and shareholders’ equity generally increased during the period, though adjustments to these figures result in differing leverage calculations.

Total Assets

Reported total assets increased steadily from US$97,460 million in 2021 to US$121,494 million in 2025. Adjusted total assets followed a similar pattern, rising from US$97,357 million to US$121,196 million over the same timeframe. The difference between reported and adjusted total assets remained relatively consistent throughout the period, suggesting a systematic adjustment is being applied.

Shareholders’ Equity

Reported shareholders’ equity exhibited incremental growth, moving from US$36,060 million in 2021 to US$43,882 million in 2025. Adjusted shareholders’ equity also increased, starting at US$38,762 million and reaching US$45,693 million in 2025. Notably, adjusted shareholders’ equity was higher than reported shareholders’ equity in 2021, 2023, 2024, and 2025, but lower in 2022. This suggests the adjustments to shareholders’ equity are not consistently positive.

Reported Financial Leverage

Reported financial leverage, calculated as total assets divided by shareholders’ equity, fluctuated modestly. It began at 2.70 in 2021, rose to 2.83 in 2022, decreased to 2.77 in 2023, and then returned to 2.83 in 2024 before settling at 2.77 in 2025. This indicates a relatively stable capital structure from a reported perspective.

Adjusted Financial Leverage

Adjusted financial leverage demonstrated a similar trend, though with slightly lower values. It increased from 2.51 in 2021 to 2.69 in 2022, then decreased to 2.65 in 2023, rose to 2.70 in 2024, and concluded at 2.65 in 2025. The adjusted leverage ratio consistently remained below the reported leverage ratio throughout the period, indicating that the adjustments to assets and equity result in a lower assessment of financial risk. The difference between the reported and adjusted leverage ratios remained relatively small, suggesting the adjustments, while impactful, do not fundamentally alter the overall leverage profile.

In summary, both reported and adjusted financial leverage remained relatively stable over the five-year period. The adjustments to assets and equity consistently resulted in a lower leverage ratio, suggesting a more conservative financial position when considering these adjustments.

Analysis reveals fluctuations in shareholders’ net income, both reported and adjusted, over the five-year period. Shareholders’ equity, similarly, demonstrates a general upward trajectory, though with some variation. These movements influence reported and adjusted return on equity (ROE) calculations, exhibiting distinct trends worthy of examination.

Shareholders’ Net Income

Reported shareholders’ net income experienced a slight decrease from US$6,104 million in 2021 to US$6,025 million in 2022, followed by a further decline to US$5,987 million in 2023. It remained relatively stable at US$5,980 million in 2024 before decreasing to US$5,662 million in 2025. Adjusted shareholders’ net income mirrored this pattern, with a decrease from US$6,284 million in 2021 to US$5,384 million in 2025, though with a slight increase observed in 2024.

Shareholders’ Equity

Reported shareholders’ equity consistently increased throughout the period, rising from US$36,060 million in 2021 to US$43,882 million in 2025. Adjusted shareholders’ equity also showed an overall upward trend, moving from US$38,762 million in 2021 to US$45,693 million in 2025. However, adjusted equity experienced a decrease between 2021 and 2022.

Reported Return on Equity

Reported ROE decreased steadily from 16.93% in 2021 to 12.90% in 2025. This decline corresponds with the observed decrease in reported net income and, while equity increased, the income reduction had a more significant impact on the ratio. The rate of decline appeared to accelerate between 2022 and 2025.

Adjusted Return on Equity

Adjusted ROE also exhibited a downward trend, decreasing from 16.21% in 2021 to 11.78% in 2025. While a decrease was observed each year, the decline was less consistent than that of the reported ROE. A slight increase was noted in adjusted ROE from 12.90% in 2023 to 12.99% in 2024, before resuming its downward trajectory. The adjusted ROE consistently remained below the reported ROE throughout the period.

The convergence of reported and adjusted ROE towards 12.90% in 2023 suggests that the adjustments made to net income and equity are having a diminishing effect on the overall ROE calculation. The consistent decline in both reported and adjusted ROE warrants further investigation into the underlying factors impacting profitability and equity management.

Analysis reveals a generally declining trend in both reported and adjusted return on assets (ROA) over the five-year period. While adjusted shareholders’ net income demonstrates some fluctuation, it does not fully offset the increasing trend in total assets, leading to the observed ROA compression. The difference between reported and adjusted ROA remains relatively consistent, suggesting the adjustments applied are systematically impacting the reported figures.

Reported ROA

Reported ROA decreased steadily from 6.26% in 2021 to 4.66% in 2025. The largest single-year decline occurred between 2022 and 2023, falling from 5.86% to 5.50%. The rate of decline appears to be accelerating in the later years of the period.

Adjusted ROA

Adjusted ROA also exhibits a downward trend, moving from 6.45% in 2021 to 4.44% in 2025. Similar to the reported ROA, the most significant decrease is observed between 2022 and 2023, decreasing from 5.87% to 4.87%. While the adjusted ROA consistently exceeds the reported ROA, the gap narrows slightly in the later years.

Shareholders’ Net Income

Reported shareholders’ net income shows a modest decline throughout the period, decreasing from US$6,104 million in 2021 to US$5,662 million in 2025. Adjusted shareholders’ net income mirrors this trend, with a more pronounced decrease from US$6,284 million to US$5,384 million. The adjustments to net income are generally positive in 2021 and 2022, but negative in 2023, 2024, and 2025.

Total Assets

Both reported and adjusted total assets demonstrate a consistent upward trend, increasing from US$97,460 million in 2021 to US$121,494 million in 2025. This growth in asset base, coupled with the relatively stable or declining net income, is a primary driver of the observed ROA decline. The increase in assets appears to be accelerating over time.

In summary, the observed decline in both reported and adjusted ROA is primarily attributable to the faster rate of asset growth compared to the growth in net income. The adjustments made to net income and total assets consistently result in slightly higher ROA figures, but do not alter the overall downward trend.