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 – 9.19% × 80,815 = -780
An analysis of the economic profit over the five-year period reveals a significant transition from value creation to value destruction. While the organization began the period generating a positive economic profit, there has been a consistent shift toward negative results, indicating that the operating returns are no longer sufficient to cover the cost of the capital employed.
- Invested Capital Trends
- A steady and uninterrupted increase in invested capital is observed, rising from 63,876 million US$ in 2021 to 80,815 million US$ by 2025. This expansion of the capital base suggests ongoing investment in assets or operations, yet this growth has not translated into a corresponding increase in operating profitability.
- Net Operating Profit After Taxes (NOPAT) Performance
- NOPAT exhibited volatility and an overall lack of growth relative to the invested capital. After a peak of 7,193 million US$ in 2021, profit levels declined to 6,415 million US$ in 2023. Although a recovery to 7,015 million US$ occurred in 2024, the figure retreated again to 6,650 million US$ in 2025, failing to keep pace with the expanding capital requirements.
- Cost of Capital Fluctuations
- The cost of capital remained relatively stable, with a slight increase to 10.10% between 2022 and 2023, followed by a gradual decline to 9.19% by 2025. While the downward trend in the cost of capital percentage in the final two years provided a marginal reduction in the capital charge, it was insufficient to counteract the effect of the larger invested capital base.
- Economic Profit Trajectory
- Economic profit experienced a severe decline, moving from a positive 935 million US$ in 2021 to a deficit of 780 million US$ by 2025. The shift into negative territory starting in 2023 highlights a growing gap between the NOPAT and the cost of capital, signaling that the investments made during this period have failed to generate returns exceeding the company's required rate of return.
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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$2,564 million, representing a deceleration in growth.
The consistent growth in invested capital suggests ongoing investment in the organization’s operations and expansion. The increasing reliance on debt financing, particularly between 2022 and 2024, warrants further investigation to assess the associated financial risk and the effectiveness of capital allocation.
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Cost of Capital
Elevance Health Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 74,814) | 74,814) | ÷ | 105,831) | = | 0.71 | 0.71 | × | 11.54% | = | 8.16% | ||
| Debt3 | 30,357) | 30,357) | ÷ | 105,831) | = | 0.29 | 0.29 | × | 4.48% × (1 – 21.00%) | = | 1.02% | ||
| Operating lease liability4 | 660) | 660) | ÷ | 105,831) | = | 0.01 | 0.01 | × | 4.05% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 105,831) | 1.00 | 9.19% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 11.54% | = | 8.65% | ||
| 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 | 9.52% | ||||||||||
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 | × | 11.54% | = | 9.55% | ||
| 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 | 10.10% | ||||||||||
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 | × | 11.54% | = | 9.59% | ||
| 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 | 10.10% | ||||||||||
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 | × | 11.54% | = | 9.25% | ||
| 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 | 9.80% | ||||||||||
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 | (780) | (433) | (624) | 96) | 935) | |
| Invested capital2 | 80,815) | 78,241) | 69,669) | 66,804) | 63,876) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -0.97% | -0.55% | -0.90% | 0.14% | 1.46% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | -2.25% | -4.49% | -4.67% | -2.43% | -1.95% | |
| Intuitive Surgical Inc. | 0.95% | 3.52% | -2.92% | -3.21% | 12.41% | |
| Medtronic PLC | -4.73% | -6.52% | -6.31% | -5.06% | -6.71% | |
| UnitedHealth Group Inc. | -0.99% | 0.12% | 5.02% | 4.06% | 3.91% | |
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 × -780 ÷ 80,815 = -0.97%
4 Click competitor name to see calculations.
An analysis of the economic value added metrics reveals a significant deterioration in value creation capabilities over the observed period. While the capital base expanded steadily, the company transitioned from generating economic profit to sustaining economic losses, indicating that returns on invested capital failed to exceed the cost of capital starting in 2023.
- Economic Profit Trends
- A sharp contraction in economic profit is evident, declining from a positive US$ 935 million in 2021 to a deficit of US$ 780 million by 2025. The transition into negative territory occurred in 2023, marking a shift toward value destruction. Despite a slight improvement in 2024, the trend deteriorated further in 2025, representing the lowest economic profit level in the five-year sequence.
- Invested Capital Growth
- Invested capital demonstrated a consistent upward trajectory, increasing from US$ 63,876 million in 2021 to US$ 80,815 million in 2025. This steady expansion suggests a continuous deployment of additional resources into the business; however, this growth in the capital base did not correlate with an increase in economic profit.
- Economic Spread Ratio Performance
- The economic spread ratio experienced a marked decline, falling from 1.46% in 2021 to -0.97% in 2025. The ratio turned negative in 2023, confirming that the return on invested capital dropped below the company's cost of capital. The persistent negative spread from 2023 through 2025 underscores an inefficiency in capital allocation, where the growth in invested capital has inversely affected the entity's ability to generate economic value.
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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 | (780) | (433) | (624) | 96) | 935) | |
| Operating revenue | 197,584) | 175,204) | 170,209) | 155,660) | 136,943) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -0.39% | -0.25% | -0.37% | 0.06% | 0.68% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | -3.17% | -6.44% | -6.94% | -3.41% | -2.81% | |
| Intuitive Surgical Inc. | 1.06% | 3.28% | -2.92% | -2.77% | 9.76% | |
| Medtronic PLC | -9.93% | -13.82% | -14.24% | -11.11% | -16.09% | |
| UnitedHealth Group Inc. | -0.44% | 0.06% | 2.50% | 2.08% | 1.92% | |
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 × -780 ÷ 197,584 = -0.39%
3 Click competitor name to see calculations.
Analysis of the company's economic value generation reveals a significant divergence between top-line growth and economic profitability. While operating revenue has consistently increased over the five-year period, economic profit has shifted from a positive contribution to a sustained negative trajectory, indicating that the returns generated are insufficient to cover the cost of capital employed.
- Economic Profit Trends
- A sharp decline is observed in economic profit, which fell from 935 million USD in 2021 to 96 million USD in 2022. The trajectory transitioned into negative territory in 2023 with a deficit of 624 million USD. Although there was a marginal improvement in 2024, with the deficit narrowing to 433 million USD, the value declined further to negative 780 million USD by 2025, signaling persistent economic value destruction.
- Operating Revenue Growth
- Operating revenue exhibits a steady and uninterrupted upward trend, rising from 136,943 million USD in 2021 to 197,584 million USD in 2025. This growth indicates an expansion in the scale of operations; however, the simultaneous decline in economic profit suggests that this expansion has not been accretive to shareholder value.
- Economic Profit Margin Performance
- The economic profit margin reflects the inefficiency of capital utilization relative to revenue growth. The margin eroded from 0.68% in 2021 to 0.06% in 2022, before becoming negative in 2023 at -0.37%. Despite a brief recovery to -0.25% in 2024, the margin worsened to -0.39% in 2025. This pattern indicates that the cost of the capital required to drive revenue growth has consistently outweighed the resulting operating returns since 2023.
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