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.
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Economic Profit
HCA Healthcare Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes showed a generally increasing trend from 2017 to 2021. Starting at $4,332 million in 2017, it increased significantly to $5,865 million in 2018 and then stabilized around $5,941 million in 2019. A slight decline was observed in 2020 to $5,607 million, possibly reflecting external challenges during that period. However, a notable recovery and substantial growth occurred in 2021, with NOPAT reaching $9,050 million, indicating enhanced operational efficiency or improved market conditions.
- Cost of Capital
- The cost of capital steadily increased throughout the period, beginning at 12.37% in 2017 and rising each year to reach 15.26% in 2021. This upward trend suggests increasing risk perceptions, higher required returns by investors, or shifts in the capital structure that may have influenced the company’s financing costs.
- Invested Capital
- Invested capital displayed consistent growth from $27,635 million in 2017 to $36,837 million in 2021. This increase reflects ongoing investments in assets or expansion activities. The incremental growth rate reduced slightly in 2020 compared to previous years, consistent with the broader economic conditions, but resumed in 2021.
- Economic Profit
- Economic profit exhibited volatility over the period. Starting at $913 million in 2017, it climbed to a peak of $1,568 million in 2018, followed by a decline to $1,251 million in 2019 and a more substantial drop to $485 million in 2020. The sharp recovery to $3,429 million in 2021 stands out, indicating significant value creation beyond the cost of capital, driven by both increased NOPAT and management of invested capital and costs.
Net Operating Profit after Taxes (NOPAT)
HCA Healthcare Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in equity equivalents to net income attributable to HCA Healthcare, Inc..
3 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
4 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
5 Addition of after taxes interest expense to net income attributable to HCA Healthcare, Inc..
- Net Income Attributable to HCA Healthcare, Inc.
- The net income shows a general upward trend over the analyzed period. Starting at 2,216 million US dollars in 2017, the figure increased significantly to 3,787 million in 2018, representing strong growth. There was a slight decline in 2019 to 3,505 million, followed by a moderate recovery in 2020 to 3,754 million. Notably, the net income surged markedly in 2021, reaching 6,956 million US dollars, indicating a substantial increase and a possible improvement in operational efficiency or market conditions.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values also exhibit a consistent upward trajectory with minor fluctuations. Beginning at 4,332 million US dollars in 2017, it rose steadily to 5,865 million in 2018 and slightly higher to 5,941 million in 2019. A small decrease occurred in 2020, with NOPAT declining to 5,607 million. However, a significant increase is evident in 2021, with NOPAT rising sharply to 9,050 million US dollars. This substantial growth in 2021 may reflect enhanced operational performance or effective cost management, contributing to improved profitability after taxes.
Cash Operating Taxes
HCA Healthcare Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Provision for Income Taxes
- The provision for income taxes exhibited a fluctuating pattern over the five-year period. Initially, there was a decline from 1,638 million US dollars in 2017 to 946 million in 2018. This was followed by an increase in 2019 to 1,099 million. In 2020, the provision slightly decreased to 1,043 million, but surged significantly in 2021 to 2,112 million US dollars, representing the highest level in the observed timeframe.
- Cash Operating Taxes
- Cash operating taxes showed a general upward trend despite some variability. The amount decreased from 1,829 million US dollars in 2017 to 1,319 million in 2018, then marginally declined again to 1,225 million in 2019. However, there was a notable increase in 2020 to 1,505 million, followed by a substantial rise in 2021 to 2,444 million US dollars, reaching the peak value for the period under review.
- Comparative Analysis
- Both the provision for income taxes and cash operating taxes demonstrated significant increases in 2021, more than doubling their respective lows in 2018 and 2019. The divergence in trends between 2017 and 2018 indicates an initial reduction phase before a strong upward movement. The cash operating taxes consistently remained higher than the provision for income taxes each year, suggesting a potential difference in the timing or recognition of tax expenses compared to actual tax payments.
Invested Capital
HCA Healthcare Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of equity equivalents to stockholders’ equity (deficit) attributable to HCA Healthcare, Inc..
4 Removal of accumulated other comprehensive income.
5 Subtraction of construction in progress.
- Total reported debt & leases
-
This liability metric showed a generally stable pattern throughout the observed periods, fluctuating slightly but remaining within the range of approximately US$33 billion to US$37 billion. Specifically, the value decreased from US$34.8 billion in 2017 to US$33.1 billion in 2020, followed by an increase to US$36.7 billion in 2021. This trend suggests a degree of active debt management, with a reduction during the 2018-2020 period and an increase in the most recent year.
- Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc.
-
The equity position exhibited a significant improvement from a negative value of US$6.8 billion in 2017 to nearly break-even at US$572 million in 2020, indicating a substantial repair of shareholders’ equity over this four-year span. However, in 2021, there was a reversal back to a negative equity balance of US$933 million, though this deficit was still less severe than the initial figures at the beginning of the period. This reflects volatility in retained earnings or other components influencing equity, as well as possible impacts of operational or non-operational factors on equity structure.
- Invested capital
-
A steady and continuous increase in invested capital is evident across the five-year timeframe, rising from US$27.6 billion in 2017 to US$36.8 billion in 2021. This indicates ongoing investment activity and capital deployment in the business, suggesting expansion or renewal efforts. The upward trend is consistent year-over-year without any contractions or plateaus, signaling sustained capital growth.
Cost of Capital
HCA Healthcare Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2017-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
HCA Healthcare Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit Trends
- Economic profit exhibited significant fluctuations over the analyzed period. It increased from 913 million US dollars at the end of 2017 to a peak of 1568 million in 2018, followed by a decline to 1251 million in 2019. There was a substantial drop in 2020, falling to 485 million, likely impacted by economic or operational challenges during that year. However, a marked recovery occurred in 2021, with economic profit reaching 3429 million, the highest value in the period.
- Invested Capital Patterns
- Invested capital showed a consistent upward trend throughout the entire period. Starting at 27,635 million US dollars in 2017, it steadily increased each year, reaching 36,837 million by the end of 2021. This indicates ongoing investment or capital allocation growth despite the fluctuations in profitability metrics.
- Economic Spread Ratio Analysis
- The economic spread ratio, an indicator of return relative to cost of capital, also demonstrated variability. It rose sharply from 3.31% in 2017 to 5.27% in 2018, then decreased to 3.73% in 2019 and further to a low of 1.4% in 2020. In 2021, there was a significant rebound to 9.31%, suggesting improved efficiency or profitability relative to capital cost.
- Overall Insights
- Across the five years, there is evidence of persistent capital growth alongside volatile profitability and return metrics. The substantial decline in economic profit and spread ratio in 2020 contrasts with the sharp recovery in 2021, highlighting resilience and potential operational or market improvements. The rising invested capital base may underpin these financial dynamics, reflecting strategic investments that ultimately contributed to enhanced economic profit and returns.
Economic Profit Margin
HCA Healthcare Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Revenues
- The revenues exhibited a consistent upward trend over the five-year period. Starting at $43,614 million in 2017, revenues increased annually to reach $58,752 million in 2021. This represents a cumulative growth of approximately 34.7%, indicating sustained expansion in the company's sales or service volume.
- Economic profit
- Economic profit showed notable fluctuations throughout the years. It began at $913 million in 2017 and rose significantly to $1,568 million in 2018. However, 2019 and 2020 saw declines to $1,251 million and $485 million, respectively. The following year, 2021, economic profit surged dramatically to $3,429 million, marking the highest point in the period studied. This sharp increase in 2021 suggests a significant improvement in operational efficiency or profitability beyond revenue growth alone.
- Economic profit margin
- The economic profit margin followed a pattern similar to economic profit, reflecting changes in profitability relative to revenue. It increased from 2.09% in 2017 to 3.36% in 2018, then declined to 2.44% in 2019 and further dropped to 0.94% in 2020. In 2021, the margin rose substantially to 5.84%, indicating an enhanced ability to convert revenues into economic profit. The margin’s volatility suggests periods of variable cost management or operational challenges, followed by a notable recovery in profitability efficiency in 2021.
- Overall Analysis
- The data reveals steady revenue growth accompanied by volatile economic profits and margins over the analyzed period. While revenues consistently increased each year, economic profit and economic profit margin experienced dips during 2019 and 2020, a period that may correlate with external challenges or increased expenses. The strong rebound in 2021, with economic profit and margin reaching their highest levels, highlights a significant turnaround in the company’s financial performance, pointing to improved cost controls, higher operational efficiency, or other profitability-enhancing factors. This suggests that despite challenges in the middle years, the firm successfully strengthened its economic profit generation by the end of the period.