CVS Health Corp. (NYSE:CVS)

Current Income Tax Expense

The current income tax expense demonstrates some fluctuations over the five-year period. Starting at 3133 million US dollars in 2020, it decreased slightly to 2950 million in 2021. In 2022, there was a notable increase to 3538 million, followed by a small decline to 3481 million in 2023. The figure then dropped significantly to 2134 million in 2024. Overall, the current tax expense shows variability with a peak around 2022 and a considerable reduction in the final year.

Deferred Income Tax Expense

The deferred income tax expense is consistently negative throughout the period, indicating deferred tax benefits or reductions in taxable income relative to accounting income. Starting at -564 million US dollars in 2020, the amount decreases in magnitude to -428 million in 2021. There is a sharp increase in the absolute value of the deferred tax expense in 2022, reaching -2075 million, suggesting significant deferred tax adjustments that year. In 2023, the deferred expense lessens to -676 million, and in 2024, it slightly decreases further to -572 million. The trend shows considerable volatility, with a pronounced spike in 2022 compared to other years.

Total Income Tax Provision

The overall income tax provision, representing the sum of current and deferred expenses, reflects these underlying trends. Beginning at 2569 million US dollars in 2020, it decreases marginally to 2522 million in 2021. In 2022, there is a marked decline to 1463 million, largely driven by the substantial increase in deferred tax benefits during that year. The provision then increases sharply again to 2805 million in 2023, before dropping to 1562 million in 2024. These fluctuations mirror the interplay between current and deferred tax components, indicating atypical tax expense behavior, particularly around 2022.

Summary Insights

The data indicates that the company experienced considerable variability in its income tax expenses over the five years analyzed. The current tax expense remained relatively stable with moderate fluctuations until a sharp decline in the latest year. Deferred tax expenses were volatile, with an extraordinary spike in deferred tax benefits in 2022, significantly impacting the total tax provision. This spike may suggest changes in tax regulations, adjustments in timing differences, asset valuation changes, or other tax planning strategies employed during that period. The overall tax provision trend reflects these dynamics, with significant year-to-year changes rather than a steady pattern.

The analysis of the annual financial data reveals several noteworthy trends concerning the company's tax-related metrics over the five-year period ending December 31, 2024.

Statutory Income Tax Rate

The statutory income tax rate remained stable at 21% throughout the entire period, indicating a consistent tax policy environment or jurisdictional stability affecting the company.

State Income Taxes, Net of Federal Tax Benefit

State income taxes showed variability, initially increasing from 3.2% in 2020 to 4.1% in 2021, followed by a decrease back to 3.2% in 2022. However, the rate rose again to 3.7% in 2023 and peaked at 4.6% in 2024. This fluctuation suggests changes in state tax obligations or adjustments in the company’s operations affecting state taxable income.

Health Insurer Fee

The health insurer fee was applicable only in 2020 at 2.2%, with no recorded values in subsequent years, reflecting the discontinuation or elimination of this fee after 2020.

Legal Charges

Legal charges as a percentage of the tax rate appeared irregularly, with no values recorded in 2020 and 2021, a notable 3.5% in 2022, zero in 2023, and a minor 0.5% in 2024. This pattern indicates episodic legal expenses impacting tax considerations mainly in 2022 and to a lesser extent in 2024.

Basis Difference Upon Disposition of Subsidiary

This item fluctuated with a negative 1.2% impact in 2020, an increase to 1.7% in 2022, and no values reported in other years. The variability may reflect specific corporate transactions related to subsidiaries in those years.

Prior Year Refunds and Unrecognized Tax Benefits

The company recorded benefits associated with prior year refunds and unrecognized tax benefits in 2021 and 2022, with negative percentages of -1.2% and -2.7%, respectively. This indicates tax recoveries or adjustments resulting in tax rate reductions during those years.

Tax Credits

Tax credits were absent in earlier years but appeared as negative impacts starting in 2022 at -0.6%, then -0.3% in 2023, and further increased in magnitude to -1.2% in 2024. This trend reflects a growing utilization or recognition of tax credits, which contributed to reducing the effective tax burden.

Other

Other factors influencing the tax rate showed minor fluctuations, declining from 1.1% in 2020 to 0.3% in 2021, turning slightly negative at -0.1% in 2022, then increasing to 0.7% and 0.5% in the final two years. The changes in this category represent miscellaneous tax-related adjustments with limited overall impact.

Effective Income Tax Rate

The effective income tax rate decreased from 26.3% in 2020 to 24.2% in 2021, rebounded to 26% in 2022, and then moderately declined over the next two years to 25.1% in 2023 and 25.4% in 2024. Despite some fluctuations, the effective rate consistently remained above the statutory rate, primarily driven by state taxes and other adjustments.

Overall, the data illustrate a stable statutory tax environment contrasted with variability in state taxes, legal charges, and other tax adjustments. The periodic recognition of tax credits and prior year benefits contributed to moderating the effective tax rate, which remained relatively steady but consistently above the statutory baseline. These patterns suggest active tax management practices and periodic fluctuations due to specific events such as subsidiary dispositions and legal matters.

The financial data exhibits several notable trends across various items over the five-year period ending in 2024. A general decline is observed in both lease and rent expenses as well as related liabilities, indicating potentially lower rental costs or a reduced portfolio of leased properties. Specifically, lease and rents outflows decreased from 5,742 million USD in 2020 to 4,763 million USD in 2024, while the corresponding liabilities followed a similar downward trajectory from -5,368 million USD to -4,125 million USD.

Legal charges show a dramatic increase in 2022, peaking at 1,260 million USD, followed by a slight reduction but remaining substantially elevated compared to 2021 levels. This spike could signal one or more significant legal events influencing the company's financials.

Inventory levels display a fluctuating but overall declining trend, dropping from 80 million USD in 2020 to 68 million USD in 2024, which may suggest tighter inventory management or changes in operational scale. Employee benefits costs have decreased steadily from 238 million USD in 2020 to 168 million USD in 2024, with a slight uptick noted in 2023. This decline might reflect workforce optimization or changes in benefits structure.

Provisions for bad debts and other allowances have generally increased, reaching a high of 606 million USD in 2023 before slightly decreasing to 593 million USD in 2024, possibly indicating greater exposure to credit risk or changes in customer payment behavior.

Net operating loss and capital loss carryforwards show a decreasing trend from 568 million USD in 2020 to 272 million USD in 2024, though interrupted by a temporary increase in 2023. This fluctuation might relate to tax planning or operational results.

Deferred income balances have remained relatively stable but with a gradual downward tendency, decreasing from 43 million USD in 2020 to 47 million USD in 2024 after peaking in 2021. Insurance reserves have decreased notably, from 489 million USD in 2020 to 381 million USD in 2024, reflecting potential improvements in risk management or claims experience.

Investments show a peak in 2022 at 293 million USD, followed by a sharp decline to 21 million USD by 2024. This volatility might indicate changes in investment strategy or asset disposition. Payroll tax deferrals recorded in 2020 and 2021 were completely eliminated in subsequent years, aligning with the timeline of pandemic-related tax relief programs.

Other miscellaneous assets increased from 500 million USD in 2020 to 486 million USD in 2024, showing moderate variability over time. Deferred income tax assets before valuation allowance exhibit an increase peaking in 2022 at 8,653 million USD, then a slight decrease to 7,908 million USD by 2024. The valuation allowance fluctuated accordingly, reducing the net deferred tax assets which overall decreased from 7,774 million USD in 2020 to 7,607 million USD in 2024.

Retirement benefits liabilities increased in magnitude over the years, reaching -172 million USD in 2024 from -29 million USD in 2020, indicative of growing obligations or changes in actuarial assumptions.

Depreciation and amortization expenses exhibit a declining trend from -8,750 million USD in 2020 to -7,116 million USD in 2024, after a mid-period dip in 2022. This reduction could be linked to asset write-offs or shifts in capital expenditure strategies.

Deferred income tax liabilities have steadily decreased from -14,568 million USD in 2020 to -11,413 million USD in 2024, contributing to the overall reduction in net deferred income tax liabilities from -6,794 million USD to -3,806 million USD in the same timeframe.

The financial data reveals several noteworthy trends related to deferred income tax assets and liabilities over the specified periods.

Deferred Income Tax Assets

Available data for the year ending December 31, 2023, indicates the presence of deferred income tax assets amounting to US$131 million. There is no recorded data for previous years or for the subsequent year ending December 31, 2024, which could suggest either a lack of material deferred tax assets in those periods or an absence of reporting.

Deferred Income Tax Liabilities

Deferred income tax liabilities demonstrate a decreasing trend over the five-year span. Starting at US$6,794 million at the end of 2020, the liabilities decrease consistently to US$3,806 million by the end of 2024. The most significant reduction appears from 2021 to 2022, where the liabilities declined from US$6,270 million to US$3,880 million, reflecting a reduction of approximately 38%. Thereafter, a minor increase was noted in 2023, rising to US$4,311 million, before further decreasing again in 2024.

Overall, the data suggests a gradual unwinding or reduction of deferred income tax liabilities, with a relatively small and transient recognition of deferred income tax assets in 2023. The decreases in liabilities may imply the resolution of timing differences or tax positions that previously created these deferred tax obligations. The presence of assets only in one period may warrant further examination to understand their nature and relevance within the broader tax strategy context.

Total Assets

Reported total assets displayed relative stability from 2020 to 2022, with a slight dip in 2022 followed by a marked increase in 2023 and a continued modest rise in 2024. The adjusted total assets closely mirror the reported figures, indicating minimal adjustments impacting the asset base over the periods examined.

Total Liabilities

Reported total liabilities show a gradual decline from 2020 through 2022, then a notable increase in 2023 and a further modest rise in 2024. The adjusted liabilities follow a similar pattern but are consistently lower than reported liabilities, suggesting that adjustments reduced the liabilities reported, particularly evident in 2020 and 2021.

Shareholders’ Equity

The reported shareholders’ equity figures generally increased from 2020 through 2021, then experienced a decrease in 2022, followed by a recovery in 2023 and a small decline again in 2024. Adjusted shareholders’ equity was consistently higher than the reported amounts in all years, maintaining a similar trend pattern, which implies that adjustments have enhanced equity values compared to reported figures.

Net Income Attributable to CVS Health

Reported net income rose from 2020 to 2021, then dropped sharply in 2022, rebounded substantively in 2023, and decreased again in 2024. Adjusted net income follows a comparable trajectory but registers lower amounts than the reported net income, particularly in 2022 and 2024, indicating specific adjustments that significantly reduced net income in those years.

Overall Trend Observations

The company’s financial position, as measured by total assets, has grown steadily in recent years after a brief decrease. Liabilities decreased initially but rebounded more strongly starting 2023, showing increased financing or operational obligations. Shareholders' equity has fluctuated but remains generally stable with a positive bias, especially after adjustments. Net income exhibits considerable volatility, with important losses in profitability in 2022 and 2024 after adjustments, reflecting possibly volatile operational results or the impact of income tax adjustments.

The analysis of the financial ratios over the five-year period demonstrates notable fluctuations in profitability and efficiency metrics, both on reported and adjusted bases.

Net Profit Margin

The reported net profit margin exhibits a decline from 2.68% in 2020 to 1.24% in 2024, with a particularly sharp drop in 2022 to 1.29% followed by a partial recovery in 2023. The adjusted net profit margin shows a similar trajectory but with generally lower values, falling from 2.47% in 2020 to 1.09% in 2024. The adjusted figures drop more significantly in 2022 to 0.64%, indicating that adjustments related to income tax effects have a considerable impact on reported profitability.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios increase steadily from 1.16 in 2020 to 1.46 in 2024. This consistent upward trend suggests improvements in asset utilization efficiency over the period, with no differences between reported and adjusted values, indicating stable asset management irrespective of income tax adjustments.

Financial Leverage

Reported financial leverage remains relatively stable, fluctuating slightly between 3.10 and 3.35. Adjusted financial leverage presents a consistently lower level than reported, starting at 3.03 in 2020 and increasing moderately to 3.19 in 2024. The gap between reported and adjusted leverage narrows over time, which may reflect changes in accounting treatments or tax-related adjustments.

Return on Equity (ROE)

Reported ROE peaks at 10.91% in 2023 after a significant drop to 5.84% in 2022, before falling again to 6.11% in 2024. Adjusted ROE follows a similar but amplified pattern, with a low of 2.77% in 2022 and a peak at 9.49% in 2023, subsequently decreasing to 5.09% in 2024. The adjusted ROE values are consistently lower, indicating that tax adjustments materially reduce reported equity returns.

Return on Assets (ROA)

Reported ROA declines sharply in 2022 from 3.39% to 1.82%, then rebounds to 3.34% in 2023 before falling again to 1.82% in 2024. Adjusted ROA similarly experiences a drop from 3.21% in 2021 to 0.91% in 2022, followed by recovery and a decrease to 1.60% in 2024. The adjusted ROA remains below the reported ROA across all periods, reflecting the influence of income tax adjustments on asset profitability.

Reported Net Income Attributable to CVS Health

The reported net income shows variability over the five-year period. There was an increase from 7,179 million US dollars in 2020 to 7,910 million in 2021, followed by a notable decline to 4,149 million in 2022. This was succeeded by a recovery to 8,344 million in 2023, and another decrease to 4,614 million in 2024. The fluctuations indicate a lack of consistent growth and potential volatility in earnings.

Adjusted Net Income Attributable to CVS Health

The adjusted net income follows a similar pattern of fluctuation but generally presents lower values than the reported net income. It increased from 6,615 million US dollars in 2020 to 7,482 million in 2021, dropped sharply to 2,074 million in 2022, rose again to 7,668 million in 2023, and decreased to 4,042 million in 2024. These adjustments suggest that certain factors affecting reported earnings are excluded in adjusted figures, yet the overall trend of volatility remains evident.

Reported Net Profit Margin

The reported net profit margin exhibits a fluctuating but downward-leaning trend. Starting at 2.68% in 2020, it slightly increased to 2.72% in 2021 before dropping sharply to 1.29% in 2022. It then recovered to 2.34% in 2023 but declined again to 1.24% in 2024. This indicates variability in profitability relative to revenue, with margins nearly halving in the lower years compared to the peaks.

Adjusted Net Profit Margin

The adjusted net profit margin similarly reflects fluctuating profitability but consistently remains lower than the reported margin. It moved from 2.47% in 2020 to 2.57% in 2021, then declined significantly to 0.64% in 2022, recovered to 2.15% in 2023, and decreased to 1.09% in 2024. The adjusted margins show more pronounced lows and a generally weaker profit position compared to the reported margins, pointing to the impact of adjustments on perceived profitability.

Overall Analysis

Both reported and adjusted net incomes, alongside their corresponding profit margins, depict a pattern of substantial fluctuations over the analyzed period. Peaks in profitability and income in 2021 and 2023 are interspersed with significant declines in 2022 and 2024. The divergence between reported and adjusted figures suggests that non-recurring items or other adjustments materially affect the company’s earnings. These trends imply an environment of instability in financial performance, with profitability and income levels not demonstrating sustained growth or stability.

The data reveals trends in total assets and asset turnover ratios over a five-year period. The total assets, both reported and adjusted, exhibit minor fluctuations but generally follow an upward trajectory.

Total Assets

Reported total assets increased slightly from 230,715 million US dollars in 2020 to 232,999 million in 2021, before experiencing a small decline to 228,275 million in 2022. Subsequently, total assets rose significantly to 249,728 million in 2023 and continued to grow, reaching 253,215 million in 2024.

The adjusted total assets closely mirror the reported figures with minimal differences, suggesting that adjustments related to income tax had negligible impact on the asset base presented.

Total Asset Turnover

The total asset turnover ratio shows a steady and continuous improvement throughout the period. Starting at 1.16 in 2020, the ratio rose to 1.25 in 2021, indicating improved efficiency in generating sales from assets.

This upward trend gains momentum with further increases to 1.41 in 2022, then 1.43 in 2023, and finally reaching 1.46 in 2024. The adjusted total asset turnover ratio is identical to the reported figure, reinforcing consistency in asset utilization measures between reported and adjusted data.

The rising asset turnover ratio alongside increasing total assets suggests enhanced operational efficiency and potentially higher revenue generation relative to the asset base.

Overall, the financial data indicates stable growth in the asset base combined with progressive improvements in asset utilization over the observed periods. The adjustments for deferred income tax appear to have minimal effect on these key figures, implying consistency in financial reporting metrics related to asset size and turnover.

The analysis of the financial data reveals several notable trends concerning total assets, shareholders’ equity, and financial leverage over the five-year period.

Total Assets

Both reported and adjusted total assets show a generally stable pattern with slight fluctuations. Total assets increased marginally from 230,715 million US dollars in 2020 to 253,215 million US dollars in 2024. Notably, there was a decrease in 2022, with reported assets dropping from 232,999 million to 228,275 million, then recovering strongly by 2024. Adjusted total assets mirror this pattern closely, indicating consistency between reported and adjusted measures.

Shareholders’ Equity

Reported shareholders’ equity experienced moderate volatility. Beginning at 69,389 million US dollars in 2020, it peaked in 2021 at 75,075 million, then saw a decline in 2022 to 71,015 million, followed by a rise to 76,461 million in 2023 and a slight decrease to 75,560 million in 2024. Adjusted shareholders’ equity values are consistently higher than reported figures, suggesting upward adjustments are made for deferred income tax impacts or other factors. The adjusted equity also peaked in 2021 at 81,345 million and declined thereafter, ending at 79,366 million in 2024. Despite this decline post-2021 peak, the adjusted equity remains above the 2020 base level, indicating growth over the period.

Financial Leverage

Financial leverage ratios indicate the extent of debt financing relative to equity. Reported financial leverage decreased from 3.32 in 2020 to a low of 3.10 in 2021 but then gradually increased to 3.35 by 2024. Adjusted financial leverage follows a similar trend with lower absolute values: declining from 3.03 in 2020 to 2.86 in 2021 and gradually rising to 3.19 in 2024. This pattern suggests an initial reduction in leverage, possibly reflecting deleveraging or increased equity, followed by a mild increase in leverage ratios in recent years, indicative of a slight rise in debt relative to equity.

Overall, the financial data demonstrate a steady growth in total assets and equity after some mid-period fluctuations. Adjusted figures consistently exceed reported values for equity and suggest a more conservative assessment of leverage. The modest increase in financial leverage toward the end of the period warrants attention to maintain balanced capital structure management.

The financial data reveals several notable trends in terms of income, equity, and return on equity (ROE) for the periods under review.

Net Income (Reported and Adjusted)

Reported net income shows fluctuations with an initial increase from 7,179 million USD in 2020 to 7,910 million USD in 2021, followed by a sharp decline to 4,149 million USD in 2022. It rebounds significantly in 2023 to 8,344 million USD but decreases again in 2024 to 4,614 million USD. Adjusted net income follows a similar pattern but generally presents lower values. The adjusted figure rises from 6,615 million USD in 2020 to 7,482 million USD in 2021, declines sharply to 2,074 million USD in 2022, improves to 7,668 million USD in 2023, and again falls to 4,042 million USD in 2024. This pattern indicates volatility in profitability with substantial recovery phases after steep decreases.

Total Shareholders’ Equity (Reported and Adjusted)

Reported shareholders' equity increases steadily from 69,389 million USD in 2020 to 75,075 million USD in 2021, then slightly decreases to 71,015 million USD in 2022, before rising again to 76,461 million USD in 2023 and marginally decreasing to 75,560 million USD in 2024. Adjusted shareholders’ equity consistently remains higher than reported equity, starting at 76,183 million USD in 2020 and rising to 81,345 million USD in 2021, followed by a reduction to 74,764 million USD in 2022. It then recovers to 80,772 million USD in 2023 with a slight dip to 79,366 million USD in 2024. Both reported and adjusted equity show moderate volatility, with general upward trends interrupted by periods of decline, particularly noticeable in 2022.

Return on Equity (ROE) (Reported and Adjusted)

Reported ROE demonstrates a peak at 10.54% in 2021, followed by a significant decline to 5.84% in 2022. It then recovers strongly to 10.91% in 2023 but falls again to 6.11% in 2024. Adjusted ROE exhibits a comparable trend, peaking at 9.2% in 2021, dropping sharply to 2.77% in 2022, rebounding to 9.49% in 2023, and subsequently declining to 5.09% in 2024. This volatility in ROE aligns with the fluctuations observed in net income and equity levels, indicating periods of higher profitability followed by reduced returns on equity.

Net Income Trends

Reported net income attributable to the entity exhibits notable fluctuations over the examined periods. It peaked at 7,910 million USD in 2021, subsequently dropping sharply to 4,149 million USD in 2022. Following this decline, there was a significant recovery to 8,344 million USD in 2023, only to fall again to 4,614 million USD in 2024. These oscillations indicate an unstable earnings pattern with alternating substantial gains and reductions.

Adjusted net income follows a similar volatile pattern, though consistently lower than the reported figures. It reached a high of 7,482 million USD in 2021, then decreased markedly to 2,074 million USD in 2022. A strong rebound occurred in 2023 with 7,668 million USD, followed by another decline to 4,042 million USD in 2024. This pattern suggests that adjustments, potentially for deferred income taxes or other items, moderate but do not eliminate the income volatility.

Total Assets Analysis

Both reported and adjusted total assets show a relatively steady upward trend through the periods, increasing from 230,715 million USD in 2020 to 253,215 million USD in 2024. Slight decrease occurred in 2022 followed by considerable increases in subsequent years. The close alignment between reported and adjusted total assets suggests minimal impact of adjustments on asset valuation.

Return on Assets (ROA) Evaluation

Reported ROA mirrors the net income pattern, with highs in 2021 (3.39%) and 2023 (3.34%), and lows in 2022 (1.82%) and 2024 (1.82%). This indicates fluctuating profitability relative to asset base, consistent with income volatility.

Adjusted ROA is consistently lower than reported ROA across all periods, showing a peak of 3.21% in 2021 and a notable drop to 0.91% in 2022. It improved in 2023 to 3.07% but declined again to 1.6% in 2024. The differences reflect the effect of adjustments, highlighting periods of materially reduced effective profitability.

Overall Observations

The data indicates a pattern of significant income and profitability volatility within the analyzed timeframe, evident in both reported and adjusted figures. Despite this, the asset base has steadily grown, suggesting ongoing investment or asset accumulation strategies.

Adjustments to income and ROA, likely stemming from deferred income tax considerations or similar accounting practices, consistently reduce the reported profitability metrics, underscoring the importance of considering these adjustments for a more conservative assessment of financial performance.