Stock Analysis on Net

UnitedHealth Group Inc. (NYSE:UNH)

$24.99

Economic Value Added (EVA)

Microsoft Excel

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

UnitedHealth Group Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 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), 10-K (reporting date: 2020-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =


Net Operating Profit After Taxes (NOPAT)
The net operating profit after taxes showed a general upward trend from 18,059 million US dollars in 2020 to a peak of 26,672 million US dollars in 2023. However, in 2024, there was a marked decline to 18,940 million US dollars, indicating a significant drop in operating profitability in the most recent year.
Cost of Capital
The cost of capital remained relatively stable over the period, fluctuating slightly around 10%. It began at 9.73% in 2020, increased gradually to a peak of 10.05% in 2022, and then decreased marginally to 9.82% by 2024. This stability suggests consistent financing costs and risk perceptions.
Invested Capital
Invested capital consistently increased throughout the timeframe, starting at 130,513 million US dollars in 2020 and rising steadily each year to reach 198,557 million US dollars in 2024. This growth indicates ongoing investment in the company’s assets and operations.
Economic Profit
Economic profit exhibited variability over the years. After starting at 5,361 million US dollars in 2020, it decreased slightly to 4,871 million in 2021, then increased to 6,001 million in 2022 and further to a high of 8,409 million in 2023. However, in 2024, economic profit turned negative, dropping to -566 million US dollars. This reversal suggests that in 2024, the company's returns did not cover its cost of capital, signaling potential challenges in value creation during that year.

Net Operating Profit after Taxes (NOPAT)

UnitedHealth Group Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net earnings attributable to UnitedHealth Group common shareholders
Deferred income tax expense (benefit)1
Increase (decrease) in receivables allowances2
Increase (decrease) in unearned revenues3
Increase (decrease) in equity equivalents4
Interest expense
Interest expense, operating lease liability5
Adjusted interest expense
Tax benefit of interest expense6
Adjusted interest expense, after taxes7
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 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), 10-K (reporting date: 2020-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in receivables allowances.

3 Addition of increase (decrease) in unearned revenues.

4 Addition of increase (decrease) in equity equivalents to net earnings attributable to UnitedHealth Group common shareholders.

5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

7 Addition of after taxes interest expense to net earnings attributable to UnitedHealth Group common shareholders.


Net Earnings attributable to UnitedHealth Group common shareholders
The net earnings showed a generally upward trend from 2020 to 2023, increasing from 15,403 million US dollars in 2020 to a peak of 22,381 million US dollars in 2023. However, in 2024, there was a notable decline to 14,405 million US dollars, indicating a significant reduction compared to the previous year and even below the 2021 level.
Net Operating Profit After Taxes (NOPAT)
NOPAT also exhibited growth over the first four years, rising from 18,059 million US dollars in 2020 to a peak of 26,672 million US dollars in 2023. Similar to net earnings, 2024 saw a decrease in NOPAT to 18,940 million US dollars, which is considerably lower than the 2023 figure but still above the 2020 and 2021 levels.
Overall Analysis
Both net earnings and NOPAT demonstrated strong performance growth from 2020 through 2023, suggesting operational improvements and profitability enhancements during this period. The sharp decline in both metrics in 2024 indicates a reversal of these positive trends, potentially due to adverse business conditions, increased costs, or other factors affecting profitability. Despite the decline, the 2024 NOPAT remains above earlier years, implying some retained operational efficiency compared to the start of the observed period.

Cash Operating Taxes

UnitedHealth Group Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Provision for income taxes
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Cash operating taxes

Based on: 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), 10-K (reporting date: 2020-12-31).


The analysis of the tax-related financial data over the five-year period reveals several noteworthy trends.

Provision for income taxes
The provision for income taxes exhibited some fluctuations during the observed period. An initial decrease occurred from 4,973 million USD in 2020 to 4,578 million USD in 2021. This was followed by an increase to 5,704 million USD in 2022 and a further rise to 5,968 million USD in 2023. However, the provision dropped significantly to 4,829 million USD in 2024. Overall, the provision peaked in 2023 before declining in the last reported year.
Cash operating taxes
Cash operating taxes mirrored a somewhat similar overall pattern but with more pronounced changes. After decreasing from 5,358 million USD in 2020 to 4,823 million USD in 2021, there was a substantial rise to 6,851 million USD in 2022 and a slight increase to 6,936 million USD in 2023. The amount then declined to 5,994 million USD in 2024. This suggests that cash operating taxes experienced greater volatility compared to the provision for income taxes, with notable escalations in 2022 and 2023 before easing in 2024.

In summary, both provision for income taxes and cash operating taxes showed a general pattern of decline in the initial year, followed by significant increases in the middle years of the period, peaking around 2023, and subsequently decreasing in 2024. The larger magnitude of changes in cash operating taxes compared to provision for income taxes may warrant further investigation to understand the underlying causes.


Invested Capital

UnitedHealth Group Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Short-term borrowings and current maturities of long-term debt
Long-term debt, less current maturities
Operating lease liability1
Total reported debt & leases
Shareholders’ equity attributable to UnitedHealth Group
Net deferred tax (assets) liabilities2
Receivables allowances3
Unearned revenues4
Equity equivalents5
Accumulated other comprehensive (income) loss, net of tax6
Redeemable noncontrolling interests
Nonredeemable noncontrolling interests
Adjusted shareholders’ equity attributable to UnitedHealth Group
Invested capital

Based on: 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), 10-K (reporting date: 2020-12-31).

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 revenues.

5 Addition of equity equivalents to shareholders’ equity attributable to UnitedHealth Group.

6 Removal of accumulated other comprehensive income.


Total reported debt & leases
The total reported debt and leases exhibit a consistent upward trend over the five-year period. Starting at $47,914 million in 2020, it increases gradually each year, reaching $81,793 million by 2024. The most significant growth appears between 2023 and 2024, where the increase surpasses previous annual increments, indicating a potentially higher reliance on debt financing or capital lease arrangements in the most recent year.
Shareholders’ equity attributable to UnitedHealth Group
Shareholders’ equity shows a steady increase from $65,491 million in 2020 to $92,658 million in 2024. The equity base grows consistently each year without any declines, reflecting accumulation of retained earnings or issuance of additional equity capital. The growth rate appears relatively stable, with a slightly accelerated increase from 2022 onwards, suggesting strengthening financial foundation.
Invested capital
Invested capital also demonstrates a continual rise, moving from $130,513 million in 2020 to $198,557 million in 2024. This indicator grows substantially over the period, with the largest yearly increments occurring between 2021 and 2022, and then especially from 2023 to 2024. The rising invested capital corresponds with the increases in both debt and equity, indicating expanded capital deployment or asset base growth.

Cost of Capital

UnitedHealth Group Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Commercial paper, long-term debt and other financing obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in millions

2 Equity. See details »

3 Commercial paper, long-term debt and other financing obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Commercial paper, long-term debt and other financing obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

2 Equity. See details »

3 Commercial paper, long-term debt and other financing obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Commercial paper, long-term debt and other financing obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Commercial paper, long-term debt and other financing obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Commercial paper, long-term debt and other financing obligations3 ÷ = × × (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 Commercial paper, long-term debt and other financing obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Commercial paper, long-term debt and other financing obligations3 ÷ = × × (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 Commercial paper, long-term debt and other financing obligations. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

UnitedHealth Group Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Abbott Laboratories
CVS Health Corp.
Elevance Health Inc.
Intuitive Surgical Inc.
Medtronic PLC

Based on: 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), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.


Economic Profit
The economic profit demonstrates a fluctuating pattern over the analyzed period. It initially decreases from 5361 million USD in 2020 to 4871 million USD in 2021, followed by a recovery in 2022 reaching 6001 million USD and a substantial increase to 8409 million USD in 2023. However, in 2024, a significant decline occurs, resulting in a negative economic profit of -566 million USD. This sudden downturn suggests challenges impacting profitability or increased costs that offset economic gains in the latest period.
Invested Capital
Invested capital shows consistent growth throughout the five-year span. Beginning at 130,513 million USD in 2020, it rises steadily each year, reaching 198,557 million USD by 2024. This upward trend indicates ongoing investment in assets or operations, with an approximate 52% increase over the period, reflecting expansion or increased capital deployment.
Economic Spread Ratio
The economic spread ratio, representing the return spread over invested capital, generally decreases from 4.11% in 2020 to 3.48% in 2021 but improves to 3.63% in 2022 and then significantly rises to 4.6% in 2023. In 2024, however, this ratio turns negative at -0.29%, mirroring the decline in economic profit and indicating that the returns on invested capital have eroded below the cost of capital. This shift highlights a loss in value creation in the latest year.

Economic Profit Margin

UnitedHealth Group Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
 
Revenues, customers
Add: Increase (decrease) in unearned revenues
Adjusted revenues, customers
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Abbott Laboratories
CVS Health Corp.
Elevance Health Inc.
Intuitive Surgical Inc.
Medtronic PLC

Based on: 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), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues, customers
= 100 × ÷ =

3 Click competitor name to see calculations.


Adjusted Revenues, Customers
The adjusted revenues for customers demonstrate a consistent upward trend over the five-year period. Starting from 255,859 million USD at the end of 2020, revenues increased year over year, reaching 395,038 million USD by the end of 2024. This indicates continuous growth in customer-related revenue streams, reflecting expanding market penetration or increased pricing power.
Economic Profit
The economic profit shows a fluctuating pattern. From 5,361 million USD in 2020, it declined to 4,871 million USD in 2021, then rose significantly to 6,001 million USD in 2022 and further increased to 8,409 million USD in 2023. However, there is a sharp reversal in 2024 with economic profit turning negative at -566 million USD. This abrupt downturn signals issues that may have emerged in the latest year, such as increased costs, reduced operational efficiencies, or other economic challenges.
Economic Profit Margin
Economic profit margin tracks a relatively stable-to-improving pattern from 2.1% in 2020, dipping to 1.71% in 2021, then progressively increasing to 2.29% in 2023. The margin, however, plummets to -0.14% in 2024, aligning with the negative economic profit observed that year. This negative margin suggests that the company did not generate positive economic value over its invested capital in 2024, pointing toward operational or financial difficulties during that period.
Overall Trends and Insights
The consistent revenue growth over the period indicates a strong top-line expansion, likely driven by effective sales efforts or market growth. Despite this, economic profitability does not mirror this positive trend continuously, particularly with the significant downturn in 2024. The negative economic profit and margin in the latest year suggest a divergence between revenue growth and profitability, possibly caused by rising expenses, changing market conditions, or investment inefficiencies. This discrepancy warrants further investigation into cost management, pricing strategies, or external economic factors impacting profitability.