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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UnitedHealth Group Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Profitability Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Analysis of Revenues
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Economic Profit
UnitedHealth Group Inc., economic profit calculation
US$ in millions
| 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 generally increasing trend from 2020 to 2023, rising from 18,059 million USD to 26,672 million USD. However, in 2024, there was a significant decline to 18,940 million USD, which represents a notable decrease compared to the previous year. This suggests a potential challenge in maintaining profitability at the same growth rate in the most recent period.
- Cost of Capital
- The cost of capital fluctuated slightly over the five-year period, starting at 9.75% in 2020, peaking at 10.07% in 2022, and then gradually declining to 9.84% by 2024. These changes indicate a modest shift in the company's weighted average cost of capital, with the cost being relatively stable but showing a slight easing in the latest year.
- Invested Capital
- There was a consistent increase in invested capital over the timeframe, rising steadily from 130,513 million USD in 2020 to 198,557 million USD in 2024. This growth reflects ongoing investment and asset expansion, which may have implications for future revenue generation and profit potential.
- Economic Profit
- Economic profit experienced variability during this period. It decreased from 5,336 million USD in 2020 to 4,843 million USD in 2021, then improved to 5,968 million USD in 2022 and further to 8,373 million USD in 2023. Despite these positive movements, there was a sharp reversal in 2024, with economic profit turning negative to -604 million USD. This indicates that, in 2024, the returns on invested capital did not cover the cost of capital, reflecting a deterioration in value creation for shareholders.
Net Operating Profit after Taxes (NOPAT)
UnitedHealth Group Inc., NOPAT calculation
US$ in millions
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
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
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
| 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 exhibited a fluctuating trend over the observed period. It started at 5,336 million USD in 2020, experienced a decline to 4,843 million USD in 2021, followed by a notable recovery and increase in 2022 and 2023 to 5,968 million USD and 8,373 million USD, respectively. However, in 2024, it sharply dropped to a negative value of -604 million USD, indicating a significant downturn in profitability.
- Invested Capital
- The invested capital consistently increased each year, reflecting ongoing capital allocation and expansion. From 130,513 million USD in 2020, the invested capital rose steadily to 198,557 million USD by 2024. This growth represents an approximate 52% increase over the five-year span, suggesting continued investment in assets or operations.
- Economic Spread Ratio
- The economic spread ratio demonstrated variability throughout the period, starting at 4.09% in 2020 and declining to 3.46% in 2021. It then recovered slightly to 3.61% in 2022 before achieving its highest point at 4.58% in 2023. In 2024, it turned negative to -0.3%, paralleling the negative economic profit of the same year, which may indicate that returns on invested capital fell below the cost of capital, negatively affecting value generation.
- Overall Insight
- The company exhibited strong growth in invested capital and generally positive economic profit and spread ratios from 2020 through 2023, with 2023 notably being the peak year in terms of profitability and spread efficiency. The sharp downturn in 2024, with negative economic profit and economic spread ratio, signals a deterioration in economic value creation that warrants further investigation to identify underlying causes such as increased costs, lower returns, or market conditions affecting operational performance.
Economic Profit Margin
UnitedHealth Group Inc., economic profit margin calculation, comparison to benchmarks
| 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.
- Economic Profit
- The economic profit experienced fluctuations over the five-year period. Starting at $5,336 million in 2020, it decreased to $4,843 million in 2021. There was a recovery and growth in 2022 and 2023, reaching $5,968 million and $8,373 million, respectively. However, in 2024, economic profit sharply declined, resulting in a negative value of -$604 million. This indicates a significant downturn in profitability in the most recent year.
- Adjusted Revenues from Customers
- Revenues increased steadily each year, demonstrating consistent growth. Beginning at $255,859 million in 2020, revenues rose to $285,002 million in 2021, followed by continued increases to $322,636 million in 2022, $367,813 million in 2023, and reaching $395,038 million in 2024. This pattern reflects sustained expansion in revenue generation despite the dip in economic profit in 2024.
- Economic Profit Margin
- The economic profit margin showed variability across the examined timeframe. It started at 2.09% in 2020, decreased to 1.7% in 2021, then improved to 1.85% in 2022 and further to 2.28% in 2023. In 2024, however, the margin turned negative at -0.15%, mirroring the decline in economic profit and indicating that profitability relative to revenues was adversely impacted in that year.