Elevance Health Inc. (NYSE:ELV)

Solvency ratios for the analyzed period demonstrate a generally stable, though subtly shifting, financial position. An incremental increase in leverage is observed alongside a declining ability to meet fixed and interest obligations. These trends warrant continued monitoring.

Debt Levels

Debt to equity, both with and without the inclusion of operating lease liabilities, remained relatively consistent between 2021 and 2023, fluctuating around 0.64 to 0.69. A moderate increase is apparent in 2024, rising to 0.76 and 0.78 respectively, before a slight decrease in 2025 to 0.73. Debt to capital ratios follow a similar pattern, increasing from approximately 0.39 to 0.43 over the period. Debt to assets also shows a gradual increase, moving from 0.23 to 0.27, with 2025 remaining at 0.27 when including operating lease liabilities.

Leverage

Financial leverage exhibited a slight increase from 2.70 in 2021 to 2.83 in 2022, followed by a minor decrease to 2.77 in 2023. It then increased again to 2.83 in 2024, and decreased slightly to 2.77 in 2025. This suggests a consistent reliance on financial leverage, with minimal fluctuation.

Coverage Ratios

A consistent downward trend is evident in both interest coverage and fixed charge coverage ratios. Interest coverage decreased steadily from 10.93 in 2021 to 5.79 in 2025. Fixed charge coverage mirrored this decline, moving from 8.48 to 5.42 over the same period. This indicates a diminishing capacity to cover interest and fixed charges with earnings, potentially increasing financial risk.

Overall, the observed trends suggest a gradual increase in financial leverage coupled with a weakening ability to comfortably meet debt obligations. While debt levels remain manageable, the declining coverage ratios suggest a need for careful monitoring of future earnings and debt management strategies.

The debt to equity ratio exhibits a generally increasing trend over the observed period. While fluctuations occur, total debt consistently rises while shareholders’ equity also increases, though at a varying pace. This results in a shifting balance between the two components of the ratio.

Debt to Equity Ratio - Overall Trend

The debt to equity ratio began at 0.64 in 2021 and increased to 0.66 in 2022. It then decreased slightly to 0.64 in 2023 before rising more substantially to 0.76 in 2024. The most recent year, 2025, shows a slight decrease to 0.73. This indicates a growing reliance on debt financing relative to equity, particularly evident in 2024.

Debt Component

Total debt demonstrates a consistent upward trajectory throughout the period. From US$23,031 million in 2021, it increases to US$32,046 million in 2025. The largest single-year increase occurs between 2023 and 2024, with an addition of US$6,112 million.

Equity Component

Shareholders’ equity also increases over the period, moving from US$36,060 million in 2021 to US$43,882 million in 2025. However, the rate of increase is not consistent. The increase from 2021 to 2022 is minimal, while more substantial growth is observed between 2022 and 2023, and again between 2023 and 2024. The increase from 2024 to 2025 is smaller than the previous year’s growth.

The observed increase in the debt to equity ratio, particularly the jump in 2024, suggests a potential shift in the company’s capital structure towards greater financial leverage. While equity is also growing, the pace of debt accumulation is outpacing it, leading to a higher proportion of debt financing.

The debt to equity ratio, incorporating operating lease liabilities, exhibits a generally increasing trend over the observed period. While fluctuations occur, total debt consistently remains a significant portion of shareholders’ equity.

Debt to Equity Ratio - Overall Trend

The ratio began at 0.67 in 2021 and rose to 0.69 in 2022. A slight decrease to 0.66 was noted in 2023, followed by a more substantial increase to 0.78 in 2024. The ratio moderated slightly in 2025, settling at 0.75. This indicates a growing reliance on debt financing relative to equity over the five-year period, with a particularly notable increase between 2023 and 2024.

Total Debt

Total debt, including operating lease liabilities, increased from US$24,028 million in 2021 to US$25,046 million in 2022, and further to US$25,969 million in 2023. A more significant rise occurred between 2023 and 2024, reaching US$32,043 million. The increase continued, albeit at a slower pace, to US$32,706 million in 2025. This consistent growth in debt contributes to the observed trend in the debt to equity ratio.

Shareholders’ Equity

Shareholders’ equity demonstrated a more moderate growth pattern. It increased from US$36,060 million in 2021 to US$36,307 million in 2022. Further increases were observed in subsequent years, reaching US$39,306 million in 2023, US$41,315 million in 2024, and US$43,882 million in 2025. While equity is growing, the rate of increase is generally lower than that of total debt, contributing to the rising debt to equity ratio.

The observed increase in the debt to equity ratio warrants further investigation to understand the underlying drivers of debt accumulation and the potential implications for the company’s financial flexibility and risk profile.

The Debt to Capital ratio for the analyzed period demonstrates a generally stable, yet slightly increasing, trend. Total debt exhibits consistent growth annually, while total capital also increases, though at varying rates. This results in a Debt to Capital ratio that fluctuates around the 0.40 level.

Total Debt

Total debt increased from US$23,031 million in 2021 to US$32,046 million in 2025. The largest single-year increase occurred between 2022 and 2023, with an increase of US$1,006 million, followed by a more substantial increase between 2023 and 2024 of US$6,112 million. Growth rates appear to be accelerating in the later years of the period.

Total Capital

Total capital also increased over the period, moving from US$59,091 million in 2021 to US$75,928 million in 2025. The rate of increase in total capital was not consistent. A relatively modest increase of US$1,330 million was observed between 2021 and 2022, while a larger increase of US$8,121 million occurred between 2024 and 2025.

Debt to Capital Ratio

The Debt to Capital ratio began at 0.39 in 2021 and rose to 0.40 in 2022. It then decreased slightly to 0.39 in 2023 before increasing to 0.43 in 2024. The ratio concluded the period at 0.42 in 2025. While the ratio remains relatively stable, the increase in 2024 suggests a greater reliance on debt financing relative to capital. The slight decrease in 2025 indicates a partial offset to this trend, but the ratio remains elevated compared to earlier years.

Overall, the company demonstrates a growing capital structure with increasing debt levels. The Debt to Capital ratio indicates a moderate level of financial leverage, with a slight upward trend in the most recent years. Continued monitoring of this ratio is recommended to assess potential changes in financial risk.

The debt to capital ratio, inclusive of operating lease liabilities, exhibits a generally stable pattern with a slight increase over the observed period. Total debt and total capital both increased in absolute terms, but the ratio’s movement indicates shifts in the company’s financing structure.

Debt to Capital Ratio Trend

The debt to capital ratio began at 0.40 in 2021 and increased to 0.41 in 2022. It then decreased slightly to 0.40 in 2023 before rising to 0.44 in 2024. The ratio concluded the period at 0.43 in 2025. This suggests a moderate increase in financial leverage over the five-year timeframe, with a more pronounced increase between 2023 and 2024.

Total Debt Evolution

Total debt, including operating lease liabilities, demonstrated consistent growth throughout the period, increasing from US$24,028 million in 2021 to US$32,706 million in 2025. The largest absolute increase occurred between 2023 and 2024, with an addition of US$6,074 million. This indicates an active pursuit of debt financing or increased obligations related to operating leases during that year.

Total Capital Evolution

Total capital, inclusive of operating lease liabilities, also increased consistently, moving from US$60,088 million in 2021 to US$76,588 million in 2025. The increase in capital generally kept pace with the increase in debt, but the acceleration of debt growth in 2024 resulted in a higher debt to capital ratio for that year.

The observed trend suggests the company is utilizing debt financing as part of its capital structure. While the ratio remains within a relatively narrow range, the increase in 2024 warrants further investigation to understand the drivers behind the increased leverage and its potential implications for financial risk.

The debt-to-assets ratio exhibits a generally stable pattern with a slight upward trend over the observed period. Initial values indicate a moderate level of financial leverage, which increases modestly towards the end of the period.

Debt to Assets Ratio - Overall Trend

The debt-to-assets ratio remained relatively consistent between 2021 and 2023, fluctuating around 0.23. A noticeable increase is observed in 2024, rising to 0.27, before decreasing slightly to 0.26 in 2025. This suggests a growing reliance on debt financing relative to the company’s asset base in 2024, followed by a minor stabilization.

Debt to Assets Ratio - Year-over-Year Changes

From 2021 to 2022, the ratio decreased from 0.24 to 0.23, indicating a slight improvement in the company’s solvency position. The ratio remained at 0.23 in 2023. The most significant change occurred between 2023 and 2024, with an increase of 0.04. The subsequent change from 2024 to 2025 was a decrease of 0.01.

Underlying Components

Total debt increased consistently throughout the period, from US$23,031 million in 2021 to US$32,046 million in 2025. Total assets also increased consistently, from US$97,460 million in 2021 to US$121,494 million in 2025. The faster growth of total debt in 2024 contributed to the peak in the debt-to-assets ratio for that year.

The observed trend suggests that while the company has been growing its asset base, it has also been increasing its debt levels. The increase in the debt-to-assets ratio in 2024 warrants further investigation to determine the reasons for the increased leverage and its potential implications for future financial performance.

The debt to assets ratio, including operating lease liability, exhibited a generally stable pattern over the observed period, with a slight increase in later years. Total debt increased consistently, while total assets also grew, resulting in nuanced shifts in the ratio.

Debt to Assets Ratio - Overall Trend

The debt to assets ratio remained relatively consistent between 2021 and 2023, holding at 0.25 in 2021 and 0.24 in both 2022 and 2023. A noticeable increase occurred in 2024, rising to 0.27, and remained at that level through 2025. This indicates a growing reliance on debt financing relative to the asset base in the latter part of the period.

Total Debt

Total debt, inclusive of operating lease liabilities, demonstrated a consistent upward trend throughout the five-year period. Beginning at US$24,028 million in 2021, it increased to US$25,046 million in 2022, US$25,969 million in 2023, and then experienced a more substantial increase to US$32,043 million in 2024. This growth continued, albeit at a slower pace, reaching US$32,706 million in 2025.

Total Assets

Total assets also exhibited a consistent upward trend, mirroring the increase in total debt. From US$97,460 million in 2021, assets grew to US$102,772 million in 2022, US$108,928 million in 2023, US$116,889 million in 2024, and finally US$121,494 million in 2025. The growth in assets partially offset the increase in debt, preventing a more dramatic rise in the debt to assets ratio.

The observed increase in the debt to assets ratio in 2024 and 2025 warrants further investigation to determine the underlying drivers and potential implications for the company’s financial flexibility and risk profile. While the ratio remains below 0.30, the trend suggests a potential shift in capital structure.

The financial leverage of the organization has remained relatively stable over the five-year period from 2021 to 2025. Total assets exhibited a consistent upward trend, increasing from US$97,460 million in 2021 to US$121,494 million in 2025. Shareholders’ equity also demonstrated growth, albeit at a slower pace, rising from US$36,060 million in 2021 to US$43,882 million in 2025.

Financial Leverage

The financial leverage ratio fluctuated modestly between 2.70 and 2.83 throughout the observed period. It began at 2.70 in 2021, increased to 2.83 in 2022, decreased slightly to 2.77 in 2023, and then rose again to 2.83 in 2024 before settling back to 2.77 in 2025. This indicates a consistent reliance on debt financing relative to equity, with minimal change in the degree of that reliance.

The parallel increases in both total assets and shareholders’ equity suggest that asset growth is being funded through a combination of debt and equity. The stability in the financial leverage ratio implies that the proportion of debt used to finance these assets has remained consistent, despite the overall growth in the company’s size. The slight variations observed in the ratio do not appear to indicate a significant shift in the organization’s capital structure strategy.

The observed trends suggest a balanced approach to financing growth, maintaining a consistent level of financial risk as measured by the financial leverage ratio. Further investigation into the composition of assets and the terms of the debt would provide a more comprehensive understanding of the organization’s financial position.

The interest coverage ratio demonstrates a consistent decline over the five-year period. While remaining positive, the trend indicates a weakening ability to meet interest obligations from current earnings.

Earnings before interest and tax (EBIT)

EBIT exhibited relative stability between 2021 and 2023, fluctuating around US$8.7 billion. A moderate increase was observed in 2024, reaching US$9.089 billion, but this was followed by a decrease in 2025 to US$8.112 billion. This fluctuation in EBIT contributes to the observed trend in interest coverage.

Interest expenses

Interest expenses increased steadily throughout the period. Starting at US$798 million in 2021, expenses rose to US$1.402 billion in 2025. This consistent increase in interest expenses places downward pressure on the interest coverage ratio.

Interest coverage ratio

The interest coverage ratio decreased from 10.93 in 2021 to 5.79 in 2025. The ratio declined year-over-year, indicating that earnings available to cover interest payments are becoming a smaller multiple of the interest expense. The decline accelerated between 2022 and 2025, with a more pronounced decrease in coverage.

The combined effect of relatively stable, then declining, earnings and increasing interest expenses resulted in a significant reduction in the interest coverage ratio. Continued monitoring of this ratio is warranted, as a further decline could signal increasing financial risk.

The period between 2021 and 2025 demonstrates a declining trend in fixed charge coverage. While earnings before fixed charges and tax remained relatively stable overall, fixed charges increased consistently, contributing to the observed decrease in the coverage ratio.

Earnings Before Fixed Charges and Tax

Earnings before fixed charges and tax exhibited a slight decrease from $8,984 million in 2021 to $8,763 million in 2022, followed by a recovery to $8,900 million in 2023 and a peak of $9,236 million in 2024. A subsequent decline to $8,228 million was noted in 2025. Despite fluctuations, the values remained within a relatively narrow range throughout the five-year period.

Fixed Charges

Fixed charges increased steadily throughout the analyzed period. Beginning at $1,059 million in 2021, they rose to $994 million in 2022, then continued upward to $1,185 million in 2023, $1,332 million in 2024, and ultimately reached $1,518 million in 2025. This consistent increase represents a growing obligation related to fixed financial commitments.

Fixed Charge Coverage

The fixed charge coverage ratio began at 8.48 in 2021 and initially improved to 8.82 in 2022. However, a consistent downward trend was then observed, with the ratio decreasing to 7.51 in 2023, 6.93 in 2024, and further declining to 5.42 in 2025. This indicates a diminishing ability to cover fixed charges with earnings before those charges and taxes are considered. The rate of decline accelerated in the later years of the period.

The increasing fixed charges, coupled with the relatively stable earnings before fixed charges and tax, are the primary drivers of the declining fixed charge coverage. Continued monitoring of these trends is warranted to assess potential impacts on financial flexibility.