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
IQVIA Holdings Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,268 – 17.75% × 21,926 = -2,625
An analysis of financial performance from 2018 to 2022 reveals a sustained period of negative economic profit. Despite significant growth in net operating profit after taxes (NOPAT), the returns generated were consistently lower than the required cost of capital relative to the total invested capital, resulting in a persistent destruction of economic value over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a strong upward trajectory, rising from 444 million in 2018 to a peak of 1,678 million in 2021. Although a decline to 1,268 million occurred in 2022, the operational profit remained substantially higher than the levels recorded between 2018 and 2020.
- Cost of Capital
- The cost of capital showed a continuous and incremental increase throughout the analyzed timeframe, rising from 16.54% in 2018 to 17.75% in 2022. This steady climb increased the minimum return threshold required to generate a positive economic profit.
- Invested Capital
- Invested capital remained relatively stable with a gradual growth trend, moving from 20,458 million in 2018 to 21,926 million in 2022. The moderate increase in the capital base suggests a steady expansion of assets utilized in operations.
- Economic Profit
- Economic profit remained negative across all five years, indicating that the company did not cover its cost of capital. The deficit narrowed significantly in 2021, reaching its highest point at -2,054 million, which correlated with the peak in NOPAT. However, this trend reversed in 2022, with the economic profit falling back to -2,625 million due to the simultaneous decrease in NOPAT and the increase in the cost of capital.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Net Operating Profit after Taxes (NOPAT)
IQVIA Holdings Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in unearned income.
4 Addition of increase (decrease) in restructuring reserve.
5 Addition of increase (decrease) in equity equivalents to net income attributable to IQVIA Holdings Inc..
6 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 375 × 3.12% = 12
7 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 428 × 21.00% = 90
8 Addition of after taxes interest expense to net income attributable to IQVIA Holdings Inc..
9 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 13 × 21.00% = 3
10 Elimination of after taxes investment income.
An analysis of the financial results from 2018 to 2022 reveals a significant expansion in both operating profitability and net earnings, characterized by a period of accelerated growth beginning in 2020.
- Net Operating Profit After Taxes (NOPAT) Trajectory
- NOPAT remained relatively stable between 2018 and 2019 before initiating a period of rapid escalation. A marked increase was recorded in 2020, culminating in a peak of 1,678 million US$ in 2021. While 2022 saw a correction with NOPAT declining to 1,268 million US$, the figure remains substantially higher than the levels observed prior to 2021.
- Net Income Performance
- Net income attributable to the company experienced a decline in 2019, falling to 191 million US$. This was followed by a recovery in 2020 and a subsequent surge in the following two years. By December 31, 2022, net income reached 1,091 million US$, reflecting a strong and consistent growth trend since 2019.
- Divergence Between Operating and Net Profitability
- A persistent gap is observed between NOPAT and net income across the entire period, which indicates the influence of non-operating items, such as interest expenses on debt. This variance was most pronounced in 2021, where NOPAT exceeded net income by 712 million US$. Notably, in 2022, a divergence in trends occurred: while NOPAT decreased, net income continued to rise, suggesting a reduction in non-operating costs or changes in the financing structure that favored the bottom line despite a decrease in core operating profit.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Cash Operating Taxes
IQVIA Holdings Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 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).
An analysis of the tax-related outflows from 2018 to 2022 reveals a general upward trajectory in both income tax expense and cash operating taxes, though the two metrics exhibit different growth patterns and magnitudes.
- Cash Operating Taxes Trend
- Cash operating taxes remained relatively stable between 2018 and 2020, fluctuating within a narrow range from 334 million to 356 million US dollars. However, a period of accelerated growth began in 2021, with outflows rising to 390 million US dollars and peaking at 469 million US dollars in 2022. This represents a total increase of approximately 37.6% over the five-year period.
- Income Tax Expense Volatility
- Income tax expense demonstrated significantly higher volatility compared to cash taxes. After an initial increase from 59 million US dollars in 2018 to 116 million US dollars in 2019, the expense declined to 72 million US dollars in 2020. Subsequently, a sharp upward trend occurred, with the expense reaching 163 million US dollars in 2021 and 260 million US dollars in 2022, marking a substantial increase from the 2018 baseline.
- Variance Between Cash Taxes and Accrual Expense
- A consistent and significant gap exists between cash operating taxes and income tax expense throughout the observed period. Cash operating taxes remained substantially higher than the reported income tax expense in every year. This divergence is particularly pronounced between 2018 and 2020, suggesting that cash tax obligations exceeded the period's recognized tax expenses, which is a critical consideration for calculating Economic Value Added (EVA) and determining the actual cash impact on operating profit.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Invested Capital
IQVIA Holdings Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 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).
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 unearned income.
5 Addition of restructuring reserve.
6 Addition of equity equivalents to equity attributable to IQVIA Holdings Inc.’s stockholders.
7 Removal of accumulated other comprehensive income.
8 Subtraction of marketable securities.
Invested capital exhibited a general upward trajectory over the five-year period ending December 31, 2022, rising from 20,458 million US dollars in 2018 to 21,926 million US dollars in 2022. This represents an overall increase of approximately 7.2%, characterized by a slight contraction in 2019 followed by a period of consistent annual growth.
- Total Reported Debt and Leases
- A consistent upward trend is observed in total reported debt and leases, which increased from 11,620 million US dollars in 2018 to 13,351 million US dollars in 2022. The most significant year-over-year increase occurred between 2019 and 2020, with debt rising by approximately 8.1%. A brief reduction was noted in 2021, followed by a return to growth in 2022.
- Stockholder Equity
- Equity attributable to stockholders demonstrated a general decline over the period, decreasing from 6,714 million US dollars in 2018 to 5,765 million US dollars in 2022. A sharp reduction of approximately 10.6% was recorded between 2018 and 2019. Following a phase of relative stability from 2019 through 2021, equity declined again in 2022, reflecting a contraction in the equity component of the capital base.
- Capital Structure Dynamics
- The expansion of invested capital was primarily driven by the increase in reported debt and leases, which offset the simultaneous decline in stockholder equity. This indicates a shift in the financing mix toward a higher reliance on debt to sustain and grow the capital base. By the end of 2022, the divergence between increasing debt levels and decreasing equity levels became the primary driver of the overall increase in total invested capital.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Cost of Capital
IQVIA Holdings Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 42,165) | 42,165) | ÷ | 55,050) | = | 0.77 | 0.77 | × | 22.11% | = | 16.93% | ||
| Long-term debt and finance lease liabilities3 | 12,510) | 12,510) | ÷ | 55,050) | = | 0.23 | 0.23 | × | 4.48% × (1 – 21.00%) | = | 0.80% | ||
| Operating lease liability4 | 375) | 375) | ÷ | 55,050) | = | 0.01 | 0.01 | × | 3.12% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 55,050) | 1.00 | 17.75% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 44,227) | 44,227) | ÷ | 57,121) | = | 0.77 | 0.77 | × | 22.11% | = | 17.12% | ||
| Long-term debt and finance lease liabilities3 | 12,441) | 12,441) | ÷ | 57,121) | = | 0.22 | 0.22 | × | 2.50% × (1 – 21.00%) | = | 0.43% | ||
| Operating lease liability4 | 453) | 453) | ÷ | 57,121) | = | 0.01 | 0.01 | × | 3.36% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 57,121) | 1.00 | 17.57% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 36,852) | 36,852) | ÷ | 50,247) | = | 0.73 | 0.73 | × | 22.11% | = | 16.21% | ||
| Long-term debt and finance lease liabilities3 | 12,868) | 12,868) | ÷ | 50,247) | = | 0.26 | 0.26 | × | 2.79% × (1 – 21.00%) | = | 0.56% | ||
| Operating lease liability4 | 527) | 527) | ÷ | 50,247) | = | 0.01 | 0.01 | × | 3.78% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 50,247) | 1.00 | 16.81% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 31,817) | 31,817) | ÷ | 44,291) | = | 0.72 | 0.72 | × | 22.11% | = | 15.88% | ||
| Long-term debt and finance lease liabilities3 | 11,925) | 11,925) | ÷ | 44,291) | = | 0.27 | 0.27 | × | 3.28% × (1 – 21.00%) | = | 0.70% | ||
| Operating lease liability4 | 549) | 549) | ÷ | 44,291) | = | 0.01 | 0.01 | × | 4.22% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 44,291) | 1.00 | 16.62% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 27,958) | 27,958) | ÷ | 39,421) | = | 0.71 | 0.71 | × | 22.11% | = | 15.68% | ||
| Long-term debt and finance lease liabilities3 | 10,850) | 10,850) | ÷ | 39,421) | = | 0.28 | 0.28 | × | 3.75% × (1 – 21.00%) | = | 0.82% | ||
| Operating lease liability4 | 613) | 613) | ÷ | 39,421) | = | 0.02 | 0.02 | × | 3.75% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 39,421) | 1.00 | 16.54% | ||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
IQVIA Holdings Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (2,625) | (2,054) | (2,831) | (2,927) | (2,940) | |
| Invested capital2 | 21,926) | 21,241) | 21,108) | 20,313) | 20,458) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -11.97% | -9.67% | -13.41% | -14.41% | -14.37% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 5.49% | 4.87% | — | — | — | |
| Amgen Inc. | 6.80% | 6.80% | — | — | — | |
| Bristol-Myers Squibb Co. | -1.21% | 1.09% | — | — | — | |
| Danaher Corp. | -6.63% | -5.80% | — | — | — | |
| Eli Lilly & Co. | 8.52% | 10.19% | — | — | — | |
| Gilead Sciences Inc. | -0.27% | 6.76% | — | — | — | |
| Johnson & Johnson | 5.29% | 10.35% | — | — | — | |
| Merck & Co. Inc. | 11.24% | 11.41% | — | — | — | |
| Pfizer Inc. | 17.97% | 11.14% | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 18.80% | 62.56% | — | — | — | |
| Thermo Fisher Scientific Inc. | -6.97% | -4.95% | — | — | — | |
| Vertex Pharmaceuticals Inc. | 13.84% | 15.05% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,625 ÷ 21,926 = -11.97%
4 Click competitor name to see calculations.
The analysis of economic value indicators reveals a consistent pattern of economic loss between 2018 and 2022. Throughout this five-year period, the entity failed to generate a positive economic profit, indicating that the returns on invested capital remained below the company's cost of capital.
- Economic Profit Trends
- Economic profit remained negative for all reported years, fluctuating between -2,940 million US dollars in 2018 and -2,054 million US dollars in 2021. A gradual reduction in economic losses was observed from 2018 through 2021, although this improvement was partially reversed in 2022, when losses widened to -2,625 million US dollars.
- Invested Capital Growth
- Invested capital exhibited a general upward trajectory, increasing from 20,458 million US dollars in 2018 to 21,926 million US dollars in 2022. With the exception of a slight contraction in 2019, the capital base expanded steadily, signifying an increase in the total resources deployed in the business.
- Economic Spread Ratio Performance
- The economic spread ratio remained consistently negative, reflecting the relationship between the economic profit and the invested capital. The ratio reached its most negative point in 2019 at -14.41% before trending upward to a peak of -9.67% in 2021. This improvement was followed by a decline to -11.97% in 2022. The sustained negative values of the spread ratio indicate a persistent inability to achieve a return that exceeds the cost of the invested capital over the analyzed timeframe.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Economic Profit Margin
IQVIA Holdings Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (2,625) | (2,054) | (2,831) | (2,927) | (2,940) | |
| Revenues | 14,410) | 13,874) | 11,359) | 11,088) | 10,412) | |
| Add: Increase (decrease) in unearned income | (28) | 573) | 238) | 7) | 22) | |
| Adjusted revenues | 14,382) | 14,447) | 11,597) | 11,095) | 10,434) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -18.25% | -14.22% | -24.41% | -26.38% | -28.18% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | 7.77% | 8.31% | — | — | — | |
| Amgen Inc. | 10.90% | 11.26% | — | — | — | |
| Bristol-Myers Squibb Co. | -1.87% | 1.88% | — | — | — | |
| Danaher Corp. | -16.48% | -14.50% | — | — | — | |
| Eli Lilly & Co. | 7.25% | 9.40% | — | — | — | |
| Gilead Sciences Inc. | -0.46% | 11.95% | — | — | — | |
| Johnson & Johnson | 6.34% | 10.83% | — | — | — | |
| Merck & Co. Inc. | 14.02% | 16.57% | — | — | — | |
| Pfizer Inc. | 19.67% | 11.89% | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 18.93% | 42.30% | — | — | — | |
| Thermo Fisher Scientific Inc. | -12.85% | -10.07% | — | — | — | |
| Vertex Pharmaceuticals Inc. | 20.42% | 18.65% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -2,625 ÷ 14,382 = -18.25%
3 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by persistent negative economic profit, indicating that the company did not generate returns sufficient to cover its cost of capital during this period. Despite the consistent deficit, there was a notable trend of improvement in efficiency and margin recovery that peaked in 2021 before experiencing a reversal in 2022.
- Economic Profit Trends
- Absolute economic profit remained negative throughout the five-year window. A gradual improvement was observed from 2018 to 2021, with the economic loss narrowing from US$ 2,940 million to a period low of US$ 2,054 million. However, this progress was partially offset in 2022, as the economic loss expanded again to US$ 2,625 million, suggesting an increase in the cost of capital or a reduction in net operating profit after tax relative to the invested capital.
- Revenue Growth and Scale
- Adjusted revenues exhibited a consistent upward trajectory for the majority of the period, growing from US$ 10,434 million in 2018 to US$ 14,447 million in 2021. This represents a significant expansion in scale, particularly between 2020 and 2021. Revenue remained relatively stable into 2022, ending at US$ 14,382 million.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the trend of the absolute economic profit but highlighted the relative efficiency of the operation. The margin improved steadily from -28.18% in 2018 to -14.22% in 2021, driven by both the reduction in absolute economic loss and the sharp increase in adjusted revenues. The subsequent decline to -18.25% in 2022 indicates a deterioration in value creation efficiency, as the revenue growth stalled while economic losses increased.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?