Elevance Health Inc. (NYSE:ELV)

Property, plant, and equipment disclosures reveal a shifting composition of assets over the five-year period. While gross property and equipment initially decreased, it has shown a recovery and subsequent growth in recent years. Net property and equipment demonstrates a generally positive trend, indicating investment outpacing depreciation, though the rate of growth is moderating.

Computer Software

Computer software, encompassing both purchased and internally developed assets, represents the largest component of gross property and equipment. This category experienced a decrease from 2021 to 2022, followed by consistent growth through 2025, reaching $7,068 million. This suggests continued investment in technology and digital infrastructure.

Computer Equipment, Furniture & Other Equipment

Computer equipment, furniture, and other equipment exhibited a significant decline from 2021 to 2022, decreasing from $1,314 million to $828 million. A partial recovery occurred in 2023 and 2024, stabilizing around $950 million, with a slight increase to $986 million in 2025. This could indicate a shift away from physical hardware towards cloud-based solutions or a period of reduced capital expenditure followed by moderate reinvestment.

Leasehold Improvements

Leasehold improvements demonstrate a steady increase from $641 million in 2021 to $744 million in 2024, before decreasing slightly to $665 million in 2025. This suggests ongoing investment in leased facilities, with a possible stabilization or minor reduction in recent activity.

Building and Improvements & Land and Improvements

Building and improvements and land and improvements represent a relatively small portion of the total asset base and both show a consistent decline throughout the period. Building and improvements decreased substantially from $172 million to $15 million, while land and improvements remained stable at $1 million. This indicates a potential strategic shift away from owning physical buildings and land, or a disposal of these assets.

Accumulated Depreciation and Amortization

Accumulated depreciation and amortization increased consistently throughout the period, from $4,340 million in 2021 to $4,056 million in 2025. While increasing, the rate of increase slowed in the later years, potentially due to the changing composition of the asset base with a greater proportion of software, which may have different depreciation profiles. The decrease from 2021 to 2022 is likely due to asset disposals.

Net Property and Equipment

Net property and equipment increased from $3,919 million in 2021 to $4,679 million in 2025. The growth rate decelerated in the later years, with the increase from 2024 to 2025 being minimal. This suggests that while investment continues, the impact on net assets is diminishing, potentially due to increased depreciation expense or a shift in investment strategy.

The analysis of property, plant, and equipment reveals evolving characteristics regarding asset age and useful life estimations. The average age ratio demonstrates fluctuation over the observed period, while estimations of total useful life and asset age remain relatively stable. These trends suggest potential shifts in asset acquisition and depreciation strategies.

Average Age Ratio

The average age ratio decreased significantly from 52.66% in 2021 to 39.38% in 2022. This indicates a relative shift towards newer assets within the property, plant, and equipment base. Following this decrease, the ratio increased to 44.85% in 2023, then slightly decreased to 44.15% in 2024, before rising again to 46.44% in 2025. This suggests a stabilization, with a slight tendency towards older assets in the most recent year.

Useful Life and Age Estimations

The estimated total useful life of assets remained constant at 9 years from 2022 through 2025, following a prior value of 12 years in 2021. This consistency suggests a standardized approach to depreciation calculations. The estimated age, representing the time elapsed since purchase, remained constant at 4 years from 2022 through 2025, following a prior value of 6 years in 2021. This indicates a consistent pattern of asset acquisition over the latter part of the period. Consequently, the estimated remaining life of the assets decreased from 6 years in 2021 and 2022 to 5 years from 2023 through 2025, reflecting the passage of time and the consistent age of the asset base.

The combination of a decreasing average age ratio in 2022, coupled with stable useful life and age estimations, implies a period of asset renewal or significant additions of newer equipment. The subsequent stabilization and slight increase in the average age ratio suggest a potential slowdown in asset replacement or a shift in capital expenditure strategies. Continued monitoring of these ratios is recommended to assess the long-term implications for asset management and depreciation expense.

An examination of the financial information reveals trends in property, plant, and equipment, specifically concerning accumulated depreciation, gross property and equipment values, and the average age ratio. Overall, the values suggest a dynamic period of asset management and potential reinvestment.

Accumulated Depreciation and Amortization

Accumulated depreciation and amortization decreased significantly from 2021 to 2022, falling from US$4,340 million to US$2,803 million. This substantial reduction could be attributed to asset disposals, impairment charges, or a change in depreciation methods. However, from 2022 onward, accumulated depreciation exhibits an increasing trend, reaching US$4,056 million by 2025. This indicates a resumption of depreciation expense accrual, likely due to new asset acquisitions or a reversal of prior adjustments.

Property and Equipment, Gross

The gross value of property and equipment decreased from US$8,259 million in 2021 to US$7,119 million in 2022, mirroring the decline in accumulated depreciation. Subsequently, the gross value increased consistently through 2025, reaching US$8,735 million. This upward trajectory suggests ongoing investment in property, plant, and equipment, potentially to support growth or replace aging assets.

Land and Improvements

The value of land and improvements remained consistently low and stable at US$1 million from 2022 through 2025, after a decrease from US$17 million in 2021. This suggests that land and improvements represent a relatively small and static portion of the overall asset base.

Average Age Ratio

The average age ratio decreased from 52.66% in 2021 to 39.38% in 2022, coinciding with the reduction in both gross property and equipment and accumulated depreciation. This decrease indicates a younger asset base in 2022. From 2022 to 2025, the average age ratio experienced a moderate increase, rising to 46.44%. This suggests a gradual aging of the asset base as new acquisitions are offset by the passage of time and continued depreciation. The ratio remains below the 2021 level, however, indicating the asset base is still relatively young compared to that year.

In summary, the period examined demonstrates a significant shift in asset values between 2021 and 2022, followed by a period of reinvestment and asset base growth through 2025. The average age ratio reflects these changes, indicating a younger asset base overall, despite a recent trend toward moderate aging.

Gross property and equipment values experienced volatility over the observed period. A decrease from US$8,259 million in 2021 to US$7,119 million in 2022 was followed by increases in subsequent years, reaching US$8,735 million in 2025. Land and improvements consistently remained minimal, at US$1 million from 2022 through 2025, after a value of US$17 million in 2021.

Depreciation and amortization expenses exhibited a consistent upward trend throughout the period. Beginning at US$668 million in 2021, these expenses rose to US$979 million in 2025, indicating increasing utilization or investment in depreciable assets.

Estimated Total Useful Life

The estimated total useful life of property and equipment decreased from 12 years in 2021 to 9 years in 2022, and remained constant at 9 years from 2022 through 2025. This reduction in estimated useful life in 2022 likely contributed to the increased depreciation and amortization expense observed in that year and subsequent periods. The consistent value from 2022-2025 suggests a stabilization of the company’s assessment of asset longevity.

The combination of fluctuating gross property and equipment values and consistently increasing depreciation expense, coupled with the reduced estimated useful life, suggests potential asset turnover or replacement activity. Further investigation into the composition of property and equipment, as well as capital expenditure patterns, would be necessary to fully understand these trends.

Analysis reveals notable trends in accumulated depreciation, annual depreciation expense, and the reported age of property, plant, and equipment. Accumulated depreciation decreased significantly from 2021 to 2022, then increased steadily through 2025. Simultaneously, depreciation and amortization expense exhibited a consistent upward trajectory over the five-year period. The reported time elapsed since purchase remained constant, suggesting a lack of significant new asset acquisitions relative to the existing asset base.

Accumulated Depreciation and Amortization

Accumulated depreciation and amortization experienced a substantial decline from US$4,340 million in 2021 to US$2,803 million in 2022. This decrease is a significant shift and warrants further investigation to understand the underlying cause, such as asset disposals, impairment charges, or changes in depreciation methods. Following 2022, accumulated depreciation increased each year, reaching US$4,056 million in 2025. This increase aligns with the rising depreciation expense, indicating ongoing depreciation of the remaining asset base.

Depreciation and Amortization Expense

Depreciation and amortization expense demonstrated a clear increasing trend, rising from US$668 million in 2021 to US$979 million in 2025. This represents a cumulative increase of approximately 46.6%. The consistent growth suggests either ongoing investment in depreciable assets prior to 2021, or a shift in the composition of the asset base towards assets with longer useful lives and therefore higher annual depreciation. The consistent increase, despite a constant reported age of assets, suggests a potential change in depreciation methods or a higher proportion of recently acquired assets.

Time Elapsed Since Purchase

The reported time elapsed since purchase remained at four years from 2022 through 2025, despite the increasing depreciation expense. This suggests that the company is not substantially replacing or adding to its property, plant, and equipment base. The consistent age, coupled with rising depreciation, could indicate that the existing asset base is aging and contributing to the higher depreciation charges. The initial value of 6 years in 2021 is an outlier and requires further investigation to understand the asset lifecycle at that point in time.

In summary, the observed trends suggest a potential shift in asset management strategy, with a focus on utilizing the existing asset base rather than significant reinvestment. The decrease in accumulated depreciation in 2022, followed by a subsequent increase, requires further scrutiny. The consistent rise in depreciation expense, alongside a stable reported asset age, warrants a detailed review of depreciation methods and asset composition.

Property and equipment, net, increased from US$3,919 million in 2021 to US$4,679 million in 2025, indicating a consistent expansion of the asset base over the five-year period. Land and improvements experienced a significant decrease from US$17 million in 2021 to US$1 million in 2022 and remained constant thereafter. Depreciation and amortization expenses have steadily risen, moving from US$668 million in 2021 to US$979 million in 2025. Concurrently, the estimated remaining useful life of property and equipment decreased from 6 years to 5 years between 2021 and 2023, and has remained at 5 years since.

Property and Equipment, Net

The net value of property and equipment demonstrates a compound annual growth rate of approximately 4.6% over the period. This growth suggests ongoing investment in fixed assets, potentially supporting business expansion or modernization efforts. The rate of increase slowed slightly between 2024 and 2025.

Land and Improvements

The substantial reduction in land and improvements in 2022, followed by stabilization, warrants further investigation. This could be due to asset disposals, reclassification of assets, or impairment charges. The consistently low value from 2022 onwards suggests this category represents a relatively small portion of the overall fixed asset base.

Depreciation and Amortization

The consistent increase in depreciation and amortization expense aligns with the growth in property and equipment, net. The rising expense also reflects the impact of the reduced estimated remaining life, as a shorter useful life results in higher annual depreciation charges. The compound annual growth rate of depreciation and amortization is approximately 8.8%.

Estimated Remaining Life

The decrease in estimated remaining life from 6 years to 5 years between 2021 and 2023 is a notable change. This reduction could be attributable to several factors, including changes in asset usage patterns, technological obsolescence, or a reassessment of asset lifecycles. Maintaining a consistent estimate of 5 years from 2023 to 2025 suggests a stabilization of this assessment.

The combined trends suggest a pattern of investment in property and equipment alongside a recognition of a shorter useful life for those assets, resulting in increased depreciation expense. Further analysis should investigate the specific nature of the asset additions and the rationale behind the change in estimated remaining life.