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:
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Capital Asset Pricing Model (CAPM)
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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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
= – × =
The financial performance over the five-year period demonstrates notable fluctuations and trends in key metrics related to profitability and capital efficiency.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows a generally positive trajectory from 2020 through 2023, increasing from $18,059 million to $26,672 million. However, in 2024, there is a sharp decline to $18,940 million, representing a significant reduction compared to the previous year. This suggests that operating profitability improved steadily before a considerable downturn.
- Cost of Capital
- The cost of capital remained fairly stable across the five years, fluctuating slightly between 9.8% and 10.12%. The small variations indicate a relatively consistent cost environment for the company’s capital. The slight decrease to 9.89% in 2024 may reflect changes in market conditions or capital structure.
- Invested Capital
- The invested capital consistently increased every year, rising from $130,513 million in 2020 to $198,557 million in 2024. This steady growth suggests ongoing investments and expansion in the company’s asset base and capital employed.
- Economic Profit
- Economic profit, which accounts for the cost of capital, presents a mixed picture. After a slight decrease from $5,274 million in 2020 to $4,773 million in 2021, it recovered and increased in 2022 and 2023 to $5,886 million and $8,284 million respectively. Nevertheless, there is a notable reversal in 2024, with economic profit falling into negative territory at -$698 million, indicating that the company's returns failed to cover its cost of capital during that year.
Overall, the data reflects a period of expansion and improving profitability through 2023, followed by a marked deterioration in 2024. Despite increased invested capital, the decline in NOPAT and the shift to negative economic profit suggest challenges in maintaining adequate returns relative to the capital employed. The stability in cost of capital implies that changes in performance are more related to operational outcomes than financing conditions.
Net Operating Profit after Taxes (NOPAT)
UnitedHealth Group Inc., NOPAT calculation
US$ 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 showed fluctuations over the given period. Starting at USD 5,274 million in 2020, it decreased to USD 4,773 million in 2021. Thereafter, it increased to USD 5,886 million in 2022 and further significantly rose to USD 8,284 million in 2023. However, in 2024, economic profit dropped sharply to a negative value of USD -698 million, signalling a significant deterioration in economic value creation for that year.
- Invested Capital
- Invested capital demonstrated a consistent upward trend throughout the period. It increased from USD 130,513 million in 2020 to USD 198,557 million in 2024. This steady growth indicates ongoing investment or accumulation of capital assets in the business across the years.
- Economic Spread Ratio
- The economic spread ratio, which reflects the difference between return on invested capital and the cost of capital, started at 4.04% in 2020. It declined to 3.41% in 2021 and showed a moderate recovery to 3.56% in 2022. In 2023, this ratio improved significantly to 4.53%, suggesting enhanced efficiency in utilizing capital or improved profitability relative to its cost. However, in 2024, the ratio turned negative to -0.35%, indicating that the return on invested capital was below the cost of capital in that year, which aligns with the observed negative economic profit.
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
- Economic profit shows a fluctuating trend over the five-year period. Starting at 5,274 million US dollars in 2020, there is a decline to 4,773 million in 2021. This is followed by a notable increase in 2022 and 2023, reaching a peak of 8,284 million. However, 2024 experiences a sharp reversal, dropping to a negative value of -698 million, indicating a loss in economic profit.
- Adjusted Revenues, Customers
- This metric demonstrates consistent growth across all years. Beginning at 255,859 million US dollars in 2020, revenues increase steadily each year, reaching 395,038 million in 2024. This upward tendency suggests expanding business operations or customer base throughout the period analyzed.
- Economic Profit Margin
- The economic profit margin follows a somewhat volatile pattern similar to economic profit itself. It starts at 2.06% in 2020 and declines to 1.67% in 2021. There is then a moderate recovery with increases to 1.82% in 2022 and a more substantial rise to 2.25% in 2023. In 2024, it falls below zero to -0.18%, reflecting the negative economic profit situation of that year and indicating reduced profitability relative to revenue.