Elevance Health Inc. (NYSE:ELV)

The financial data reveals several important trends in the company’s performance over the five-year period from December 31, 2020, to December 31, 2024.

Net Operating Profit After Taxes (NOPAT)

The NOPAT values experienced a notable increase from 4,739 million USD in 2020 to a peak of 7,193 million USD in 2021. Subsequently, there was a decline in 2022 and 2023, reaching 6,415 million USD, followed by a recovery in 2024 to 7,015 million USD. Overall, NOPAT shows volatility but maintains a generally elevated level after 2020 compared to the initial value.

Cost of Capital

The cost of capital demonstrates an upward trend from 10.59% in 2020 to a high of 11.52% in 2022 and 2023, before decreasing to 10.8% in 2024. This indicates increasing capital expenses over the middle years, which slightly reduced in the final year observed.

Invested Capital

Invested capital consistently increased throughout the period, growing from 56,634 million USD in 2020 to 78,241 million USD in 2024. This steady increase suggests ongoing investment and expansion activities.

Economic Profit

Economic profit was negative in 2020 at -1,261 million USD, showed a positive turnaround in 2021 with 62 million USD, but returned to negative territory in the subsequent years (2022 to 2024). The magnitude of negative economic profit grew larger in 2023 (-1,608 million USD) and slightly improved but remained substantially negative in 2024 (-1,433 million USD). This pattern suggests that although operating profits were relatively strong, the returns did not sufficiently exceed the cost of capital, reflecting challenges in creating economic value despite increasing invested capital.

In summary, the data indicates that while the company has increased its operating profits and invested capital, the rising cost of capital and persistent negative economic profit in most years point to underlying profitability pressures. The positive NOPAT trend in 2021 was not sustained in subsequent years, and the economic profit metric highlights difficulties in achieving returns above the cost of capital, implying potential inefficiencies or heightened capital costs that may need to be addressed to improve economic value creation going forward.

Shareholders’ Net Income

The shareholders’ net income exhibited an upward trend from 2020 to 2021, increasing significantly from 4,572 million USD to 6,104 million USD. However, this upward momentum did not sustain in the following years. From 2021 to 2022, net income slightly decreased to 6,025 million USD, followed by a marginal decline in 2023 to 5,987 million USD. By the end of 2024, the figure remained relatively stable at 5,980 million USD, indicating a plateau after the initial growth.

Net Operating Profit After Taxes (NOPAT)

NOPAT showed a robust increase from 4,739 million USD in 2020 to 7,193 million USD in 2021, signaling improved operational effectiveness and profitability. Subsequent years showed a decline in NOPAT to 6,841 million USD in 2022 and further down to 6,415 million USD in 2023, suggesting a reduction in operating efficiency or increased costs during this period. Notably, there was a recovery in 2024, with NOPAT rising again to 7,015 million USD, reaching levels approaching the 2021 peak.

Overall Observations

Both shareholders’ net income and NOPAT experienced substantial growth from 2020 to 2021. Following this peak, net income maintained relatively steady levels with minor declines, while NOPAT exhibited more volatility, decreasing over two years before partially rebounding in 2024. This pattern could indicate external or operational factors affecting profitability after initial gains. The relative steadiness in net income compared to NOPAT fluctuations may also suggest effective management of non-operating factors such as taxes, financing costs, or extraordinary items during the period analyzed.

The financial data over the five-year period reveals several notable trends related to tax expenses and cash operating taxes.

Income Tax Expense

The income tax expense showed a general upward trend from 2020 to 2024, starting at 1,666 million US dollars in 2020 and increasing to 1,933 million US dollars in 2024. There was a slight dip in 2022 compared to 2021, where the expense decreased from 1,830 million to 1,750 million, followed by a minor further decline in 2023 to 1,724 million. However, the expense rose significantly in 2024, reaching the highest recorded value over the period.

Cash Operating Taxes

Cash operating taxes demonstrated greater volatility during the period. The value initially decreased from 2,363 million US dollars in 2020 to 1,823 million in 2021, indicating a substantial reduction of approximately 22.9%. This trend reversed in the following years, with cash operating taxes increasing to 1,931 million in 2022, then surging to 2,637 million in 2023. Although there was a slight decline in 2024 to 2,550 million, cash operating taxes remained well above the 2021 and 2022 levels.

Overall, the patterns suggest that while income tax expense has been relatively stable with minor fluctuations, cash operating taxes have experienced more pronounced changes with a sharp decline early in the period and a significant rebound later. The year 2024 marked a notable peak for income tax expense, and cash operating taxes remain elevated compared to the middle years of the timeframe.

Total Reported Debt & Leases

The total reported debt and leases show a consistent upward trend over the five-year period. Starting from US$20,992 million at the end of 2020, the figure rose to US$24,028 million in 2021, reflecting a substantial increase of approximately 14.5%. This growth continued at a slower but steady pace in 2022 and 2023, reaching US$25,046 million and US$25,969 million, respectively. The most significant increase occurred in 2024, where debt and leases climbed markedly to US$32,043 million. This sharp rise in the final year signals a potential strategic increase in leverage or financing activities.

Shareholders’ Equity

Shareholders' equity experienced a positive growth trajectory throughout the period. Beginning at US$33,199 million in 2020, equity expanded steadily to US$36,060 million in 2021 and US$36,307 million in 2022, showing moderate annual increases. The upward movement became more pronounced in the subsequent years, culminating in an equity balance of US$41,315 million by the end of 2024. This steady accumulation of equity suggests ongoing profitability or capital retention strategies enhancing the company’s net assets.

Invested Capital

Invested capital also displayed a consistent increasing pattern, starting from US$56,634 million in 2020 and growing annually through to 2024. Elevations to US$63,876 million in 2021, US$66,804 million in 2022, and US$69,669 million in 2023 illustrate gradual capital expansion. By 2024, invested capital reached US$78,241 million, indicating an accelerated growth rate. This trend points to ongoing investments in operational or business assets, which may correspond to expansion efforts or increased asset base supporting growth initiatives.

Overall Financial Position Insights

The data reveals a pattern of expanding financial resources alongside increasing obligations. The rise in total debt and leases is proportionally higher than the growth in shareholders' equity, especially in the latest period, reflecting potentially greater reliance on external financing. Simultaneously, the increase in invested capital suggests that the company has been actively deploying capital into its business operations. The balance between rising debt and equity levels indicates a leveraged growth strategy, which may affect risk profiles and financial flexibility going forward. Monitoring the impact of this leverage on profitability and cash flows would be essential for a comprehensive financial assessment.

Economic Profit

The economic profit shows significant volatility over the examined period. Starting with a substantial negative value of -1261 million USD in 2020, it improves to a positive figure of 62 million USD in 2021, indicating a brief period of value creation. However, the subsequent years reflect a return to negative values, with -851 million USD in 2022, a deeper decline to -1608 million USD in 2023, followed by a slight recovery to -1433 million USD in 2024. Overall, the economic profit remains predominantly negative, suggesting ongoing challenges in generating returns above the cost of capital.

Invested Capital

Invested capital exhibits a consistent upward trend throughout the years. The base figure of approximately 56.6 billion USD in 2020 increases steadily to 63.9 billion in 2021, 66.8 billion in 2022, 69.7 billion in 2023, and reaches 78.2 billion USD by the end of 2024. This growth suggests continued investments in assets or business operations, indicating expansion or scaling efforts despite fluctuating profitability.

Economic Spread Ratio

The economic spread ratio parallels the pattern seen in economic profit, displaying instability and predominantly negative values. Beginning at -2.23% in 2020, the ratio improves marginally into positive territory at 0.1% in 2021. From 2022 onward, it declines again into negative figures: -1.27% in 2022, -2.31% in 2023, and slightly less negative at -1.83% in 2024. This ratio underlines the firm's struggle to generate returns exceeding its capital costs for most of the period, except narrowly in 2021.

Operating Revenue

The operating revenue has demonstrated a consistent upward trend over the analyzed period. Starting at $120,808 million in 2020, it increased to $136,943 million in 2021, then continued to rise to $155,660 million in 2022, $170,209 million in 2023, and reached $175,204 million by the end of 2024. This steady growth indicates expanding business scale or increased market demand.

Economic Profit

The economic profit exhibited significant volatility. In 2020, the company recorded a negative economic profit of -$1,261 million, shifting to a positive figure of $62 million in 2021. However, this improvement was not sustained; economic profit declined sharply to -$851 million in 2022 and further deteriorated to -$1,608 million in 2023. By 2024, there was a slight improvement, with economic profit rising to -$1,433 million, though it remained significantly negative. This pattern suggests fluctuating cost management or capital charge impacts that outweighed operating profitability in most years.

Economic Profit Margin

The economic profit margin mirrored the trend of economic profit. Beginning with a negative margin of -1.04% in 2020, it marginally turned positive to 0.05% in 2021, indicating a brief period when returns exceeded the cost of capital. Subsequently, the margin declined to -0.55% in 2022, then dropped further to -0.94% in 2023, and slightly improved to -0.82% in 2024. These figures reveal persistent challenges in generating returns that surpass the company’s capital costs, despite growing revenues.

Overall Analysis

While operating revenues have shown robust and steady growth throughout the period, economic profit and its margin display considerable variability and generally negative results. The data suggest that despite increased sales or service volumes, the company struggled to translate revenue growth into sustainable economic value, possibly due to rising expenses, inefficiencies, or capital costs. The brief positive economic profit in 2021 constitutes an outlier rather than a consistent trend. The persistent negative economic profit margins indicate a need for strategic focus on cost control, efficiency improvements, or pricing strategies to enhance value creation.