Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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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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Return on Invested Capital (ROIC)
UnitedHealth Group Inc., ROIC 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, 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 NOPAT. See details »
2 Invested capital. See details »
3 2024 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes shows an overall increasing trend from 2020 through 2023, rising from $18,059 million in 2020 to a peak of $26,672 million in 2023. However, this is followed by a significant decline in 2024, where NOPAT falls to $18,940 million, nearly returning to the 2020 level. This suggests that profitability improved steadily for several years before facing a notable downturn in the most recent year.
- Invested Capital
- Invested capital consistently increased throughout the period analyzed. Starting at $130,513 million in 2020, it rose each year, reaching $198,557 million in 2024. This reflects ongoing investment or expansion efforts by the company, indicating growth in the asset base or capital employed.
- Return on Invested Capital (ROIC)
- The return on invested capital remained relatively stable from 2020 to 2023, fluctuating between approximately 13.5% and 14.6%, with a slight increase peaking at 14.59% in 2023. In 2024, ROIC dropped sharply to 9.54%, paralleling the decline in NOPAT despite the continued growth in invested capital. This decline in efficiency suggests that the company generated significantly lower returns on its increased capital base in the most recent year.
- Overall Analysis
- The data indicate a period of robust profit growth and capital investment from 2020 through 2023, accompanied by steady returns on invested capital. The substantial decline in profitability and ROIC in 2024, despite the highest level of invested capital recorded, signals a possible deterioration in operational efficiency or increased challenges impacting profitability. The divergence between rising invested capital and falling ROIC and NOPAT in 2024 warrants further investigation into the underlying causes affecting profit generation relative to the capital employed.
Decomposition of ROIC
UnitedHealth Group Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
An analysis of the financial ratios over the given periods reveals several notable trends. The Operating Profit Margin (OPM) demonstrates moderate fluctuations, initially declining from 9.15% in 2020 to 8.33% in 2021, then recovering to approximately 9.13% in 2022 and 9.14% in 2023 before experiencing a significant decrease to 6.31% in 2024. This suggests a relatively stable profitability performance through 2023, followed by a sharp decline in profitability in the most recent period.
The Turnover of Capital (TO) exhibits slight variability but remains relatively stable. It increased from 1.96 in 2020 to 2.04 in 2021, decreased marginally to 1.95 in 2022, then rose again to 2.01 in 2023 and slightly fell to 1.99 in 2024. Overall, this ratio indicates consistent asset utilization efficiency across the years without any drastic changes.
The metric "1 – Effective Cash Tax Rate (CTR)" fluctuates within a narrow band, ranging from 75.96% to 79.68%. It peaked at 79.68% in 2021, dipped to 76.75% in 2022, rose again to 79.36% in 2023, and then declined to the lowest point of 75.96% in 2024. These variations imply modest shifts in the effective cash tax burden over the periods, with 2024 showing a slight easing compared to previous years.
Return on Invested Capital (ROIC) shows a general upward trend from 13.84% in 2020 to a peak of 14.59% in 2023, indicating improving efficiency in generating returns from invested capital. However, in 2024, ROIC experiences a pronounced drop to 9.54%, representing a significant reduction in capital efficiency compared to prior years.
- Summary of Key Observations
- The company's profitability, as measured by OPM, remained mostly stable before declining sharply in the latest year, signaling potential operational challenges or increased costs.
- Capital turnover has been relatively consistent, suggesting steady asset management performance without major improvements or deterioration.
- Effective cash tax rates have shown modest fluctuations but no clear trend, indicating relatively stable tax obligations.
- ROIC improved gradually over the first four years but dropped significantly in the final period, mirroring the deterioration observed in operating profitability and raising concerns about overall capital efficiency.
In conclusion, the financial ratios suggest a period of relative operational and capital efficiency stability through 2023, followed by a noteworthy weakening in profitability and return metrics in 2024. Continuous monitoring and investigation into the factors contributing to this decline are recommended to address potential risks and enhance future performance.
Operating Profit Margin (OPM)
UnitedHealth Group Inc., OPM 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenues, customers | ||||||
| Add: Increase (decrease) in unearned revenues | ||||||
| Adjusted revenues, customers | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues, customers
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited fluctuations over the five-year period. Starting at $23,417 million in 2020, it experienced a slight increase to $23,733 million in 2021. A notable rise occurred in 2022 and 2023, reaching peaks of $29,466 million and $33,608 million respectively. However, in 2024, the NOPBT declined significantly to $24,934 million, indicating a reversal from the prior upward trend.
- Adjusted Revenues, Customers
- Adjusted revenues showed consistent and strong growth throughout the period. Revenues increased steadily from $255,859 million in 2020 to $395,038 million in 2024. This growth trajectory reflects a continuous expansion in the customer base or service scope, with the most substantial annual increases observed in the later years, particularly from 2021 onwards.
- Operating Profit Margin (OPM)
- The operating profit margin displayed some variability across the years. In 2020, the margin was 9.15%, dropping to 8.33% in 2021. It rebounded to around 9.13% and 9.14% in 2022 and 2023, maintaining stability near the earlier high level. However, in 2024, the margin decreased sharply to 6.31%, which may suggest increased costs or pricing pressures affecting profitability despite higher revenues.
- Overall Analysis
- The company demonstrated robust revenue growth alongside generally strong profitability from 2020 through 2023. The considerable increase in revenues indicates successful expansion or increased market penetration. However, profitability measures, particularly the NOPBT and operating profit margin, reveal volatility, with a notable decline in 2024. This suggests that while top-line growth continues, the company faced challenges in controlling operating costs or maintaining pricing power in the most recent year. The decline in both absolute profit and margin in 2024 warrants further investigation into operational efficiencies or market conditions impacting profitability.
Turnover of Capital (TO)
UnitedHealth Group Inc., TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues, customers | ||||||
| Add: Increase (decrease) in unearned revenues | ||||||
| Adjusted revenues, customers | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, 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 Invested capital. See details »
2 2024 Calculation
TO = Adjusted revenues, customers ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The analyzed financial data reveals several key trends over the five-year period from 2020 to 2024. The adjusted revenues related to customers demonstrate a consistent upward trajectory, reflecting a steady growth in the company's revenue-generating capacity. Starting at approximately 255.9 billion US dollars in 2020, revenues increased each year, reaching nearly 395.0 billion US dollars in 2024. This represents a substantial increase of over 54% over the period, indicating strong market demand and/or effective business expansion strategies.
Invested capital also exhibits an increasing trend across the same timeframe, starting at about 130.5 billion US dollars and rising steadily to roughly 198.6 billion US dollars by 2024. This growth in invested capital suggests ongoing capital expenditure or asset acquisition, likely aimed at supporting the company's expanding operations and future revenue growth.
The turnover of capital ratio, which measures how effectively the company utilizes its invested capital to generate revenue, remains relatively stable throughout the period. Beginning at 1.96 in 2020, it fluctuates slightly but maintains a range close to 2.0, peaking at 2.04 in 2021 and ending at 1.99 in 2024. This constancy indicates consistent efficiency in using capital investments to drive revenue, despite the significant increase in both revenues and capital invested.
- Adjusted Revenues, Customers
- Steady upward growth from 255.9 billion US dollars in 2020 to 395.0 billion in 2024, representing over 54% increase.
- Invested Capital
- Continuous increase from 130.5 billion US dollars in 2020 to 198.6 billion in 2024, indicating rising capital commitments.
- Turnover of Capital (TO)
- Relatively stable ratio around 2.0, demonstrating consistent efficiency in capital utilization despite growth in revenues and capital.
Effective Cash Tax Rate (CTR)
UnitedHealth Group Inc., CTR 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes exhibited fluctuations over the observed period. Starting from $5,358 million in 2020, the figure decreased to $4,823 million in 2021. Subsequently, it increased significantly to $6,851 million in 2022 and maintained a similar level in 2023 with $6,936 million. In 2024, it declined to $5,994 million. This pattern suggests variability in tax obligations, potentially influenced by changes in profitability or tax regulations.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes showed an initial slight increase from $23,417 million in 2020 to $23,733 million in 2021. A more pronounced growth occurred in 2022 and 2023, with values rising to $29,466 million and $33,608 million respectively, marking peak profitability within the period. However, in 2024, there was a notable decrease to $24,934 million, which indicates a reduction in operational earnings compared to the previous two years.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate displayed variability without a clear linear trend. It decreased from 22.88% in 2020 to 20.32% in 2021, increased again to 23.25% in 2022, then fell to 20.64% in 2023. In 2024, the rate rose to its highest point at 24.04%. These fluctuations in the tax rate could reflect changes in tax policy, tax planning strategies, or the composition of taxable income.
- Overall Analysis
- The company's operational performance, as reflected by net operating profit before taxes, peaked in 2023 but saw a decline in 2024. Cash operating taxes generally followed the profit trend, though with some discrepancies, especially in 2024 when taxes decreased alongside a notable drop in NOPBT. The effective cash tax rate moved inconsistently, indicating possible external tax influences or internal strategic adjustments. These patterns suggest a dynamic financial environment with varying operational success and tax impacts over the five-year span.