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
Elevance Health Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 6,650 – 9.31% × 80,815 = -875
The financial trajectory from 2021 to 2025 indicates a significant transition from value creation to consistent value destruction. While the company maintained a positive economic profit in 2021, this metric deteriorated rapidly, entering negative territory by 2023 and remaining there through 2025.
- Invested Capital Trends
- A consistent and aggressive expansion of invested capital is observed throughout the period. Capital deployment increased from 63,876 million US$ in 2021 to 80,815 million US$ by 2025. This steady growth indicates a continuous increase in the company's asset base or funding requirements to support operations.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT has exhibited volatility and an overall lack of growth commensurate with the increase in invested capital. After declining from 7,193 million US$ in 2021 to a low of 6,415 million US$ in 2023, a temporary recovery occurred in 2024 (7,015 million US$) before falling again to 6,650 million US$ in 2025. The inability of operating profits to scale alongside the capital base has put downward pressure on economic value.
- Cost of Capital and Economic Profit Dynamics
- The cost of capital peaked at 10.24% in 2022 and 2023 before trending downward to 9.31% by 2025. Despite this reduction in the cost of capital, the economic profit continued to decline or remain deeply negative. The economic profit plummeted from 851 million US$ in 2021 to -875 million US$ in 2025. This divergence suggests that the increase in the total capital charge—driven by the rising invested capital—far outweighed the benefits of a lower cost of capital percentage and stagnant operating profits.
The overall pattern reveals a structural imbalance where the growth in invested capital has not yielded a proportional increase in net operating profit. Consequently, the entity has failed to generate returns exceeding its cost of capital for the majority of the analyzed period, resulting in a sustained erosion of economic value.
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Net Operating Profit after Taxes (NOPAT)
Elevance Health Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in equity equivalents to shareholders’ net income.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 660 × 4.05% = 27
5 2025 Calculation
Tax benefit of interest expenses = Adjusted interest expenses × Statutory income tax rate
= 1,429 × 21.00% = 300
6 Addition of after taxes interest expense to shareholders’ net income.
Analysis of the presented financial information reveals trends in both shareholders’ net income and net operating profit after taxes (NOPAT) over a five-year period. While shareholders’ net income demonstrates a consistent, albeit gradual, decline, NOPAT exhibits more fluctuation.
- Shareholders’ Net Income
- Shareholders’ net income decreased steadily from US$6,104 million in 2021 to US$5,662 million in 2025. This represents a cumulative decrease of approximately 7.9% over the five-year period. The annual declines were relatively consistent, ranging from approximately 0.7% to 2.2% year-over-year.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT experienced a more varied trajectory. It decreased from US$7,193 million in 2021 to US$6,415 million in 2023, representing a decline of approximately 10.8%. However, NOPAT then increased significantly to US$7,015 million in 2024, before decreasing again to US$6,650 million in 2025. The increase in 2024 suggests a potential improvement in operational efficiency or a favorable shift in the business environment during that year. The subsequent decrease in 2025 partially offsets the gains made in 2024.
The divergence between the trends in shareholders’ net income and NOPAT is noteworthy. While net income consistently declined, NOPAT demonstrated volatility, including a substantial increase in 2024. This suggests that factors beyond core operational profitability, such as changes in financing costs, non-operating income/expenses, or tax rates, may be influencing shareholders’ net income. Further investigation into these areas would be beneficial to understand the drivers behind the observed trends.
- Relationship between NOPAT and Net Income
- In 2021, NOPAT exceeded shareholders’ net income by US$1,089 million. This difference narrowed in 2022 to US$816 million, and further to US$502 million in 2023. In 2024, NOPAT exceeded net income by US$1,035 million, and in 2025, the difference was US$988 million. The fluctuating difference between these two metrics indicates changes in the proportion of earnings attributable to shareholders versus operational performance.
Overall, the financial information indicates a weakening trend in shareholders’ net income coupled with fluctuating operational profitability as measured by NOPAT. The increase in NOPAT in 2024 is a positive sign, but the subsequent decline in 2025 warrants further scrutiny.
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Cash Operating Taxes
Elevance Health Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The reported income tax expense and cash operating taxes exhibit distinct patterns over the five-year period. While income tax expense generally remains relatively stable, cash operating taxes demonstrate more significant fluctuations.
- Income Tax Expense
- Income tax expense decreased from US$1,830 million in 2021 to US$1,750 million in 2022, followed by a further slight decrease to US$1,724 million in 2023. A subsequent increase is observed in 2024, reaching US$1,933 million, before a substantial decline to US$1,049 million in 2025. This suggests potential impacts from changes in tax regulations, accounting adjustments, or profitability levels.
- Cash Operating Taxes
- Cash operating taxes increased from US$1,823 million in 2021 to US$1,931 million in 2022. A notable increase occurred in 2023, with cash operating taxes reaching US$2,637 million, followed by a slight decrease to US$2,550 million in 2024. A significant decrease is then observed in 2025, with cash operating taxes falling to US$1,627 million. This pattern indicates a greater sensitivity to underlying business operations and potentially timing differences between reported income tax expense and actual cash outflows for taxes.
The divergence between income tax expense and cash operating taxes is particularly pronounced in 2023, 2024, and 2025. This difference could be attributed to factors such as deferred tax assets or liabilities, changes in tax credits utilized, or variations in the timing of tax payments relative to reported income. The substantial decrease in both income tax expense and cash operating taxes in 2025 warrants further investigation to understand the underlying drivers.
- Relationship between Metrics
- In 2021 and 2022, cash operating taxes closely mirrored income tax expense. However, from 2023 onwards, a growing disparity emerges. This suggests that non-cash tax items are becoming increasingly influential in the overall tax profile. The largest difference is seen in 2025, where cash operating taxes are significantly lower than income tax expense.
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Invested Capital
Elevance Health Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of equity equivalents to shareholders’ equity.
5 Removal of accumulated other comprehensive income.
The invested capital of the organization demonstrates a consistent upward trend over the five-year period. Total reported debt & leases and shareholders’ equity both contribute to this increase, with invested capital representing the sum of these two components.
- Total Reported Debt & Leases
- Total reported debt & leases increased from US$24,028 million in 2021 to US$32,706 million in 2025. The rate of increase accelerated between 2022 and 2024, growing by US$6,074 million, significantly larger than the increase observed between 2021 and 2022 (US$1,018 million). The increase from 2024 to 2025 was more moderate, at US$663 million.
- Shareholders’ Equity
- Shareholders’ equity also exhibited growth throughout the period, rising from US$36,060 million in 2021 to US$43,882 million in 2025. The growth was relatively consistent year-over-year, with increases ranging from US$247 million to US$2,509 million annually. The largest single-year increase occurred between 2022 and 2023.
- Invested Capital
- As a result of the increases in both debt & leases and shareholders’ equity, invested capital grew from US$63,876 million in 2021 to US$80,815 million in 2025. The growth rate of invested capital mirrors the trends in its components, with a notable acceleration between 2023 and 2024, increasing by US$8,572 million. The increase from 2024 to 2025 was US$2,564 million, representing a deceleration in growth.
The consistent growth in invested capital suggests ongoing investment in the organization’s operations and expansion. The increasing reliance on debt financing, particularly between 2022 and 2024, warrants further investigation to assess the associated financial risk and the effectiveness of capital allocation.
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Cost of Capital
Elevance Health Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 74,814) | 74,814) | ÷ | 105,831) | = | 0.71 | 0.71 | × | 11.71% | = | 8.28% | ||
| Debt3 | 30,357) | 30,357) | ÷ | 105,831) | = | 0.29 | 0.29 | × | 4.48% × (1 – 21.00%) | = | 1.02% | ||
| Operating lease liability4 | 660) | 660) | ÷ | 105,831) | = | 0.01 | 0.01 | × | 4.05% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 105,831) | 1.00 | 9.31% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 88,781) | 88,781) | ÷ | 118,417) | = | 0.75 | 0.75 | × | 11.71% | = | 8.78% | ||
| Debt3 | 28,825) | 28,825) | ÷ | 118,417) | = | 0.24 | 0.24 | × | 4.39% × (1 – 21.00%) | = | 0.84% | ||
| Operating lease liability4 | 811) | 811) | ÷ | 118,417) | = | 0.01 | 0.01 | × | 3.96% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 118,417) | 1.00 | 9.64% | ||||||||||
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 | 118,517) | 118,517) | ÷ | 143,160) | = | 0.83 | 0.83 | × | 11.71% | = | 9.69% | ||
| Debt3 | 23,794) | 23,794) | ÷ | 143,160) | = | 0.17 | 0.17 | × | 4.05% × (1 – 21.00%) | = | 0.53% | ||
| Operating lease liability4 | 849) | 849) | ÷ | 143,160) | = | 0.01 | 0.01 | × | 3.66% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 143,160) | 1.00 | 10.24% | ||||||||||
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 | 115,673) | 115,673) | ÷ | 139,194) | = | 0.83 | 0.83 | × | 11.71% | = | 9.73% | ||
| Debt3 | 22,589) | 22,589) | ÷ | 139,194) | = | 0.16 | 0.16 | × | 3.83% × (1 – 21.00%) | = | 0.49% | ||
| Operating lease liability4 | 932) | 932) | ÷ | 139,194) | = | 0.01 | 0.01 | × | 2.98% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 139,194) | 1.00 | 10.24% | ||||||||||
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 | 110,657) | 110,657) | ÷ | 138,066) | = | 0.80 | 0.80 | × | 11.71% | = | 9.38% | ||
| Debt3 | 26,412) | 26,412) | ÷ | 138,066) | = | 0.19 | 0.19 | × | 3.51% × (1 – 21.00%) | = | 0.53% | ||
| Operating lease liability4 | 997) | 997) | ÷ | 138,066) | = | 0.01 | 0.01 | × | 2.69% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 138,066) | 1.00 | 9.93% | ||||||||||
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 »
Economic Spread Ratio
Elevance Health Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (875) | (530) | (719) | 4) | 851) | |
| Invested capital2 | 80,815) | 78,241) | 69,669) | 66,804) | 63,876) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -1.08% | -0.68% | -1.03% | 0.01% | 1.33% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | -2.33% | -4.57% | -4.75% | -2.51% | -2.02% | |
| Intuitive Surgical Inc. | 1.16% | 3.74% | -2.71% | -2.99% | 12.62% | |
| Medtronic PLC | -4.80% | -6.60% | -6.38% | -5.14% | -6.78% | |
| UnitedHealth Group Inc. | -1.14% | -0.04% | 4.85% | 3.88% | 3.74% | |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -875 ÷ 80,815 = -1.08%
4 Click competitor name to see calculations.
The financial performance from 2021 to 2025 demonstrates a significant deterioration in economic value creation. A transition from positive value addition to persistent value destruction is evident, characterized by a decline in economic profit despite a consistent increase in the capital base.
- Economic Profit Trends
- A sharp downward trajectory is observed in economic profit, which fell from 851 million US dollars in 2021 to a near-breakeven point of 4 million US dollars in 2022. This decline accelerated into negative territory starting in 2023, reaching -719 million US dollars, followed by a slight recovery to -530 million US dollars in 2024, and a further drop to -875 million US dollars by 2025. This pattern indicates that the entity has been unable to generate returns sufficient to cover its cost of capital for the majority of the analyzed period.
- Invested Capital Expansion
- Invested capital exhibits a steady upward trend throughout the five-year period. The capital base grew from 63,876 million US dollars in 2021 to 80,815 million US dollars in 2025. This consistent expansion of the asset base occurred concurrently with the decline in economic profit, suggesting that the additional capital deployed did not yield proportional increases in economic returns.
- Economic Spread Ratio Analysis
- The economic spread ratio confirms the erosion of value, shifting from a positive 1.33% in 2021 to a negligible 0.01% in 2022. From 2023 onward, the ratio remained negative, recording -1.03% in 2023, -0.68% in 2024, and -1.08% in 2025. The persistence of a negative spread indicates that the return on invested capital has remained consistently below the weighted average cost of capital, signaling a systemic failure to create economic value during the latter part of the period.
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Economic Profit Margin
Elevance Health Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (875) | (530) | (719) | 4) | 851) | |
| Operating revenue | 197,584) | 175,204) | 170,209) | 155,660) | 136,943) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -0.44% | -0.30% | -0.42% | 0.00% | 0.62% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | -3.28% | -6.55% | -7.06% | -3.52% | -2.92% | |
| Intuitive Surgical Inc. | 1.31% | 3.48% | -2.70% | -2.58% | 9.93% | |
| Medtronic PLC | -10.08% | -13.98% | -14.41% | -11.28% | -16.28% | |
| UnitedHealth Group Inc. | -0.51% | -0.02% | 2.41% | 1.99% | 1.83% | |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Operating revenue
= 100 × -875 ÷ 197,584 = -0.44%
3 Click competitor name to see calculations.
Analysis of financial performance between 2021 and 2025 reveals a significant divergence between top-line growth and economic value creation. While operating revenue expanded consistently throughout the period, the ability to generate economic profit deteriorated, transitioning from positive value creation to sustained value destruction.
- Operating Revenue Trends
- A consistent upward trajectory in operating revenue is observed, rising from 136,943 million US dollars in 2021 to 197,584 million US dollars by 2025. This indicates a steady increase in the scale of operations and market reach over the five-year period.
- Economic Profit Performance
- Economic profit experienced a sharp decline, starting at 851 million US dollars in 2021 before falling to nearly zero in 2022. From 2023 through 2025, the figures remained negative, reaching a low of -875 million US dollars by the end of the period. This trend indicates that the company's returns were insufficient to cover its cost of capital from 2023 onwards.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the deterioration in absolute economic profit. The margin started at 0.62% in 2021, dropped to 0.00% in 2022, and remained in negative territory for the subsequent three years, ending at -0.44% in 2025. The persistence of a negative margin despite increasing operating revenues suggests that the costs associated with the capital employed grew disproportionately relative to the operating income generated.
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