CVS Health Corp. (NYSE:CVS)

The analysis of the property, plant, and equipment data over the five-year period reveals several notable trends across different asset categories and overall net values.

Land

There is a consistent decline in the value of land assets, decreasing from $2,134 million in 2020 to $1,847 million in 2024. This downward trend suggests possible disposals or revaluations of land holdings over the years.

Building and Improvements

The value of buildings and related improvements shows a steady upward trajectory, growing from $3,950 million in 2020 to $4,632 million in 2024. This indicates ongoing investments or capital expenditures in infrastructure.

Fixtures and Equipment

This category exhibits a peak early in the period at $13,619 million in 2021, followed by a notable decline to $11,024 million in 2023, and a slight recovery to $11,716 million in 2024. The decline may reflect asset disposals, retirements, or shifts in equipment usage, with modest reinvestment in the latest year.

Leasehold Improvements

Leasehold improvements have shown a gradual increase, moving from $6,077 million in 2020 to $6,725 million in 2024. This steady growth suggests continual enhancements or renovations of leased properties.

Software

The software asset category demonstrates a strong and consistent upward growth, nearly doubling from $6,020 million in 2020 to $11,520 million in 2024. This substantial increase highlights significant investments in technology and digital assets.

Property and Equipment, Gross

The gross property and equipment values increased from $31,306 million in 2020 to $36,440 million in 2024, with a minor dip in 2023. Overall, this indicates net additions and capital expenditure activities that exceed asset retirements.

Accumulated Depreciation and Amortization

The accumulated depreciation shows an increasing absolute value, moving from -$18,700 million in 2020 to -$23,447 million in 2024, with a slight decrease in 2023. This pattern is consistent with aging assets and ongoing amortization, with possible fluctuations due to asset disposals or changes in depreciation policies.

Property and Equipment, Net

Net property and equipment values have remained relatively stable around $12,600 million to $13,200 million over the period, peaking slightly in 2023 before a small decline in 2024. This stability indicates that the net book value of assets is being maintained despite fluctuations in gross asset values and accumulated depreciation.

In summary, the data reflects a strategic emphasis on technology investments, as evidenced by the strong rise in software assets, and ongoing improvements in buildings and leasehold assets. Concurrently, reductions in land values and fixtures suggest selective asset disposals or shifts in capital allocation. The stable net property and equipment values indicate balanced management of asset additions and depreciations over the analysed period.

Average age ratio

The average age ratio exhibited a generally stable pattern from 2020 to 2023, fluctuating slightly between 64.1% and 65.89%. However, in 2024, there was a noticeable increase to 67.78%, indicating that on average, the company's property, plant, and equipment are aging, with a larger proportion of the assets' useful life having elapsed.

Estimated total useful life

The estimated total useful life of the assets remained constant at 14 years from 2020 through 2022. From 2023 onwards, this estimate decreased to 13 years, suggesting a reassessment of asset longevity, likely reflecting updated assumptions regarding the durability or expected service period of the assets.

Estimated age, time elapsed since purchase

The estimated age of the assets remained relatively consistent, at 9 years for most periods except in 2023 when it slightly decreased to 8 years. This minor reduction may be attributed to asset additions or retirements influencing the average age.

Estimated remaining life

The estimated remaining life was steady at 5 years from 2020 through 2022 but declined to 4 years from 2023 onwards. This trend aligns with the shortened total useful life estimation, indicating that the expected future service period of the current asset base has been reduced.

Property and Equipment, Gross

The gross value of property and equipment showed an overall increasing trend from 31,306 million US dollars in 2020 to 36,440 million US dollars in 2024. There was a steady increase from 2020 through 2022, a slight decline in 2023, followed by a notable rebound in 2024.

Accumulated Depreciation and Amortization

Accumulated depreciation and amortization also increased over the period, rising from 18,700 million US dollars in 2020 to 23,447 million US dollars in 2024. The growth was consistent except for a slight decrease between 2022 and 2023 before rising again in 2024, indicating ongoing asset usage and wear but possibly some revaluation or asset disposals affecting the 2023 figure.

Land

The value of land assets exhibited a gradual decrease each year, from 2,134 million US dollars in 2020 down to 1,847 million US dollars in 2024. This steady decline could suggest disposals or revaluation decreases in land holdings.

Average Age Ratio

The average age ratio, representing the proportion of accumulated depreciation relative to gross property and equipment, fluctuated slightly but generally increased over the five-year period. It started at 64.1% in 2020, dipped marginally in some years, but rose to 67.78% by 2024. This suggests that on average, assets are aging and the net book value is decreasing relative to gross values, reflecting the aging nature of the asset base despite new additions.

Property and equipment, gross

There is a general upward trend in the gross value of property and equipment over the observed period. The value increased from $31,306 million at the end of 2020 to $36,440 million by the end of 2024. Although there was a slight decline in 2023 compared to 2022, the overall trend remains positive, indicating ongoing investment or acquisitions in property and equipment.

Land

The value of land shows a consistent decline over the period. Starting at $2,134 million in 2020, it decreased steadily each year, reaching $1,847 million by the end of 2024. This decline suggests possible divestment, revaluation losses, or sales of land assets.

Depreciation expense

Depreciation expense has steadily increased from $2,100 million in 2020 to $2,600 million in 2024. This upward trend illustrates rising depreciation charges, which could be due to additions in depreciable assets or adjustments in depreciation methods.

Estimated total useful life

The estimated total useful life of the property and equipment decreased slightly from 14 years in 2020 through 2022 to 13 years in 2023 and 2024. This reduction may reflect changes in asset composition, accelerated wear and tear, or revisions in depreciation schedules.

Accumulated Depreciation and Amortization

The accumulated depreciation and amortization amount shows a general upward trend over the analyzed periods. Starting at $18,700 million in 2020, it increased to $20,654 million in 2021, then to $21,483 million in 2022. A slight decline occurred in 2023, decreasing to $20,699 million, before rising again to $23,447 million in 2024. This fluctuation in 2023 suggests a possible adjustment or write-off, followed by a recovery in the subsequent year.

Depreciation Expense

The depreciation expense exhibits a consistent increase throughout the period. It rose steadily from $2,100 million in 2020 to $2,300 million in 2021, then to $2,400 million in 2022. The upward trend continued with $2,500 million in 2023 and $2,600 million recorded in 2024. This consistent growth indicates ongoing depreciation charges on the property, plant, and equipment, potentially reflecting additions to the asset base or changes in depreciation methods.

Time Elapsed Since Purchase

The time elapsed since purchase generally remains stable, around 9 years for most of the periods, except in 2023 when it slightly decreased to 8 years. This minor variation might indicate changes in the asset mix or replacement of older assets with newer ones during that year. Overall, the near-constant duration suggests the company maintains a relatively steady turnover or age of property, plant, and equipment assets.

Summary Insights

Overall, the data indicates an increasing depreciation expense, aligning with the growth in accumulated depreciation over the years, apart from the dip in 2023. The consistent time span since purchase supports a stable asset aging profile. The temporary decrease in accumulated depreciation and time elapsed in 2023 may reflect asset disposals, revaluations, or changes in capital investment strategy during that period. The rising depreciation expense suggests continued capital expenditure or asset additions, contributing to increased consumption of fixed assets.

Net Property and Equipment

The net value of property and equipment exhibited a gradual increase from 12,606 million USD at the end of 2020 to a peak of 13,183 million USD by the end of 2023. However, there was a decline to 12,993 million USD by the end of 2024, indicating a slight reduction in net assets in the most recent period.

Land Value

The valuation of land consistently declined over the five-year period, decreasing from 2,134 million USD in 2020 to 1,847 million USD in 2024. This steady downward trajectory suggests potential disposals, revaluation adjustments, or lowered acquisitions of land assets.

Depreciation Expense

Depreciation expense showed a consistent upward trend, rising year-over-year from 2,100 million USD in 2020 to 2,600 million USD in 2024. The increase in annual depreciation indicates either an acquisition of depreciable assets or aging assets accelerating in depreciation charges.

Estimated Remaining Life of Assets

The estimated remaining useful life of property and equipment remained stable at five years from 2020 through 2022 but then decreased to four years for the years 2023 and 2024. This reduction may reflect an accelerated asset aging process or changes in asset composition, possibly due to recent investments having shorter useful lives or accelerated depreciation methods being applied.