Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- Income Statement
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Net Profit Margin since 2005
- Current Ratio since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
- Aggregate Accruals
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Return on Invested Capital (ROIC)
Elevance Health Inc., ROIC 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
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 Invested capital. See details »
3 2025 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The period under review demonstrates a consistent decline in Return on Invested Capital (ROIC). While Net Operating Profit After Taxes (NOPAT) exhibits some fluctuation, it generally trends downward alongside a steady increase in Invested Capital, resulting in the observed ROIC decrease.
- Return on Invested Capital (ROIC)
- ROIC decreased from 11.26% in 2021 to 8.23% in 2025. This represents a cumulative decline of approximately 27.1% over the five-year period. The rate of decline appears to be moderating, with smaller decreases observed in later years compared to earlier ones.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT experienced a decrease from US$7,193 million in 2021 to US$6,415 million in 2023, representing a decline of approximately 10.8%. A slight recovery to US$7,015 million was noted in 2024, followed by a further decrease to US$6,650 million in 2025. This suggests potential challenges in maintaining profitability despite revenue generation.
- Invested Capital
- Invested Capital consistently increased throughout the period, rising from US$63,876 million in 2021 to US$80,815 million in 2025. This represents a cumulative increase of approximately 26.6%. The increasing capital base, without a corresponding increase in NOPAT, contributes significantly to the declining ROIC.
The combination of a relatively stable, but ultimately decreasing, NOPAT and a consistently increasing Invested Capital base indicates that the company is deploying more capital to generate a smaller return. This trend warrants further investigation to determine the underlying drivers and potential mitigation strategies.
Decomposition of ROIC
Elevance Health Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | = | × | × | ||||
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The period under review demonstrates a generally declining trend in profitability as measured by Return on Invested Capital (ROIC). This decline appears to be driven by a combination of factors relating to operating performance and tax efficiency. A decomposition of ROIC, utilizing the DuPont formula, reveals specific areas of change.
- Operating Profit Margin (OPM)
- The Operating Profit Margin exhibited a decrease from 6.58% in 2021 to 4.19% in 2025. While there was a slight recovery to 5.46% in 2024, the overall trend is downward, indicating diminishing profitability from core operations. The most significant decline occurred between 2022 and 2023, and again between 2023 and 2025.
- Turnover of Capital (TO)
- The Turnover of Capital, representing the efficiency with which capital is utilized to generate revenue, generally increased from 2.14 in 2021 to 2.44 in 2023, before decreasing to 2.24 in 2024 and recovering to 2.44 in 2025. This suggests an initial improvement in capital efficiency, followed by a temporary dip, and then a return to the higher level. The fluctuations indicate potential changes in asset utilization strategies or revenue generation efficiency.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The factor representing the benefit of tax shields (1 – Effective Cash Tax Rate) decreased from 79.78% in 2021 to 70.87% in 2023, before partially recovering to 80.34% in 2025. This indicates a reduction in the tax-reducing effects, potentially due to changes in tax laws or the company’s tax position. The decline in this factor contributes to the overall decrease in ROIC.
- Return on Invested Capital (ROIC)
- The Return on Invested Capital decreased consistently throughout the period, moving from 11.26% in 2021 to 8.23% in 2025. This decline aligns with the observed trends in Operating Profit Margin and the Effective Cash Tax Rate adjustment. While the Turnover of Capital showed some improvement, it was not sufficient to offset the negative impacts of declining profitability and tax efficiency. The rate of decline appears to be slowing in the most recent period.
In summary, the observed decline in ROIC is attributable to a combination of decreasing operating profitability and a fluctuating, but generally lower, benefit from tax shields. While capital turnover showed some positive movement, its impact was limited in mitigating the overall downward trend in returns.
Operating Profit Margin (OPM)
Elevance Health Inc., OPM 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Operating revenue | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
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 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Operating revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited a generally declining trend over the five-year period, although with some fluctuation. Net operating profit before taxes also showed variability, while operating revenue consistently increased.
- Operating Profit Margin (OPM)
- The operating profit margin decreased from 6.58% in 2021 to 5.64% in 2022, representing a notable decline. A further decrease was observed in 2023, with the margin falling to 5.32%. A slight recovery occurred in 2024, with the OPM increasing to 5.46%. However, 2025 saw a more substantial decrease, with the margin dropping to 4.19%, the lowest point in the observed period.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes decreased from US$9,016 million in 2021 to US$8,772 million in 2022. It then increased to US$9,052 million in 2023 and further to US$9,564 million in 2024, reaching its highest value. In 2025, NOPBT decreased significantly to US$8,277 million.
- Operating Revenue
- Operating revenue demonstrated consistent growth throughout the period. It increased from US$136,943 million in 2021 to US$155,660 million in 2022, US$170,209 million in 2023, US$175,204 million in 2024, and reached US$197,584 million in 2025.
Despite the consistent growth in operating revenue, the operating profit margin did not follow suit. The decreasing OPM, particularly the decline in 2025, suggests that the rate of cost increases may have exceeded the rate of revenue growth, or that pricing pressures impacted profitability. The fluctuation in NOPBT, coupled with the revenue growth, further indicates a dynamic relationship between revenue generation and operational efficiency.
Turnover of Capital (TO)
Elevance Health Inc., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating revenue | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Abbott Laboratories | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
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 Invested capital. See details »
2 2025 Calculation
TO = Operating revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The period under review demonstrates a generally positive trajectory in operating revenue, while invested capital also increased, though with some fluctuation in the rate of growth. The turnover of capital ratio, a measure of how efficiently invested capital is used to generate revenue, exhibits a pattern of initial improvement followed by a slight dip and subsequent recovery.
- Operating Revenue
- Operating revenue increased consistently across the observed period, moving from US$136,943 million in 2021 to US$197,584 million in 2025. The largest year-over-year increase occurred between 2022 and 2023, with growth slowing slightly between 2023 and 2024 before accelerating again into 2025.
- Invested Capital
- Invested capital also increased over the period, rising from US$63,876 million in 2021 to US$80,815 million in 2025. The rate of increase was more moderate than that of operating revenue. A noticeable acceleration in the growth of invested capital is observed between 2023 and 2024.
- Turnover of Capital (TO)
- The turnover of capital ratio increased from 2.14 in 2021 to 2.33 in 2022, and further to 2.44 in 2023, indicating improving efficiency in capital utilization. A slight decrease to 2.24 was recorded in 2024. However, the ratio rebounded to 2.44 in 2025, reaching the same level as in 2023. This suggests that the dip in 2024 may have been a temporary fluctuation, and the company has regained its prior level of capital efficiency.
Overall, the observed trends suggest a business that is growing its revenue base and expanding its capital base. The turnover of capital ratio indicates a generally efficient use of capital, with a minor disruption in 2024 that was subsequently corrected.
Effective Cash Tax Rate (CTR)
Elevance Health Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
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 Cash operating taxes. See details »
3 2025 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The effective cash tax rate exhibited considerable fluctuation over the five-year period. Cash operating taxes generally increased from 2021 to 2023, before declining in 2025. Net operating profit before taxes demonstrated a more moderate pattern, with a slight decrease in 2022, followed by increases in 2023 and 2024, and a decrease in 2025.
- Effective Cash Tax Rate (CTR) - Trend Analysis
- The effective cash tax rate began at 20.22% in 2021, increasing to 22.01% in 2022. A significant rise was then observed in 2023, reaching 29.13%. This was followed by a decrease to 26.66% in 2024, and a further decline to 19.66% in 2025. This suggests potential changes in the company’s tax profile, including possible shifts in the mix of taxable income or utilization of tax credits and deductions.
- Relationship between NOPBT and Cash Taxes
- While net operating profit before taxes generally trended upwards from 2021 to 2024, the cash operating taxes did not follow a consistent pattern. The increase in the effective cash tax rate in 2023, despite an increase in NOPBT, indicates a larger proportion of pre-tax income was paid in cash taxes during that year. The decrease in the effective cash tax rate in 2025, coinciding with a decrease in NOPBT, suggests a potential offset in tax liabilities.
The volatility in the effective cash tax rate warrants further investigation to understand the underlying drivers. Factors such as changes in tax legislation, jurisdictional mix of earnings, and the utilization of tax planning strategies could all contribute to these fluctuations.