Stock Analysis on Net

CVS Health Corp. (NYSE:CVS) 

Economic Value Added (EVA)

Microsoft Excel

Economic Profit

CVS Health Corp., economic profit calculation

US$ in millions

Microsoft Excel
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 5,319 9,523 3,871 9,170 9,067
Cost of capital2 7.25% 7.50% 8.01% 7.89% 6.89%
Invested capital3 131,642 134,694 123,703 130,882 136,669
 
Economic profit4 (4,222) (578) (6,032) (1,160) (347)

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
= 5,3197.25% × 131,642 = -4,222

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. CVS Health Corp. economic profit increased from 2022 to 2023 but then slightly decreased from 2023 to 2024 not reaching 2022 level.

Net Operating Profit after Taxes (NOPAT)

CVS Health Corp., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income attributable to CVS Health 4,614 8,344 4,149 7,910 7,179
Deferred income tax expense (benefit)1 (572) (676) (2,075) (428) (564)
Increase (decrease) in allowance for credit losses2 64 10 (6) (19) 39
Increase (decrease) in equity equivalents3 (508) (666) (2,081) (447) (525)
Interest expense 2,958 2,658 2,287 2,503 2,907
Interest expense, operating lease liability4 766 800 813 872 918
Adjusted interest expense 3,724 3,458 3,100 3,375 3,825
Tax benefit of interest expense5 (782) (726) (651) (709) (803)
Adjusted interest expense, after taxes6 2,942 2,732 2,449 2,666 3,022
Net investment income (2,153) (1,153) (838) (1,199) (798)
Investment income, before taxes (2,153) (1,153) (838) (1,199) (798)
Tax expense (benefit) of investment income7 452 242 176 252 168
Investment income, after taxes8 (1,701) (911) (662) (947) (630)
(Income) loss from discontinued operations, net of tax9 9
Net income (loss) attributable to noncontrolling interest (28) 24 16 (12) 13
Net operating profit after taxes (NOPAT) 5,319 9,523 3,871 9,170 9,067

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 allowance for credit losses.

3 Addition of increase (decrease) in equity equivalents to net income attributable to CVS Health.

4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 16,650 × 4.60% = 766

5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 3,724 × 21.00% = 782

6 Addition of after taxes interest expense to net income attributable to CVS Health.

7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 2,153 × 21.00% = 452

8 Elimination of after taxes investment income.

9 Elimination of discontinued operations.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. CVS Health Corp. NOPAT increased from 2022 to 2023 but then slightly decreased from 2023 to 2024 not reaching 2022 level.

Cash Operating Taxes

CVS Health Corp., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Income tax provision 1,562 2,805 1,463 2,522 2,569
Less: Deferred income tax expense (benefit) (572) (676) (2,075) (428) (564)
Add: Tax savings from interest expense 782 726 651 709 803
Less: Tax imposed on investment income 452 242 176 252 168
Cash operating taxes 2,464 3,965 4,013 3,407 3,769

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).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. CVS Health Corp. cash operating taxes decreased from 2022 to 2023 and from 2023 to 2024.

Invested Capital

CVS Health Corp., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Short-term debt 2,119 200
Current portion of long-term debt 3,624 2,772 1,778 4,205 5,440
Long-term debt, excluding current portion 60,527 58,638 50,476 51,971 59,207
Operating lease liability1 16,650 17,775 18,478 19,823 20,395
Total reported debt & leases 82,920 79,385 70,732 75,999 85,042
Total CVS Health shareholders’ equity 75,560 76,461 71,015 75,075 69,389
Net deferred tax (assets) liabilities2 3,806 4,311 3,749 6,270 6,794
Allowance for credit losses3 407 343 333 339 358
Equity equivalents4 4,213 4,654 4,082 6,609 7,152
Accumulated other comprehensive (income) loss, net of tax5 120 297 1,465 (965) (1,414)
Noncontrolling interests 170 175 300 306 312
Adjusted total CVS Health shareholders’ equity 80,063 81,587 76,862 81,025 75,439
Investments6 (31,341) (26,278) (23,891) (26,142) (23,812)
Invested capital 131,642 134,694 123,703 130,882 136,669

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 equity equivalents to total CVS Health shareholders’ equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of investments.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. CVS Health Corp. invested capital increased from 2022 to 2023 but then slightly decreased from 2023 to 2024.

Cost of Capital

CVS Health Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 79,707 79,707 ÷ 157,200 = 0.51 0.51 × 10.74% = 5.44%
Debt3 60,843 60,843 ÷ 157,200 = 0.39 0.39 × 4.64% × (1 – 21.00%) = 1.42%
Operating lease liability4 16,650 16,650 ÷ 157,200 = 0.11 0.11 × 4.60% × (1 – 21.00%) = 0.38%
Total: 157,200 1.00 7.25%

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 95,705 95,705 ÷ 172,131 = 0.56 0.56 × 10.74% = 5.97%
Debt3 58,651 58,651 ÷ 172,131 = 0.34 0.34 × 4.32% × (1 – 21.00%) = 1.16%
Operating lease liability4 17,775 17,775 ÷ 172,131 = 0.10 0.10 × 4.50% × (1 – 21.00%) = 0.37%
Total: 172,131 1.00 7.50%

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 114,235 114,235 ÷ 180,366 = 0.63 0.63 × 10.74% = 6.80%
Debt3 47,653 47,653 ÷ 180,366 = 0.26 0.26 × 4.07% × (1 – 21.00%) = 0.85%
Operating lease liability4 18,478 18,478 ÷ 180,366 = 0.10 0.10 × 4.40% × (1 – 21.00%) = 0.36%
Total: 180,366 1.00 8.01%

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 137,538 137,538 ÷ 221,518 = 0.62 0.62 × 10.74% = 6.67%
Debt3 64,157 64,157 ÷ 221,518 = 0.29 0.29 × 4.00% × (1 – 21.00%) = 0.92%
Operating lease liability4 19,823 19,823 ÷ 221,518 = 0.09 0.09 × 4.40% × (1 – 21.00%) = 0.31%
Total: 221,518 1.00 7.89%

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 92,490 92,490 ÷ 188,825 = 0.49 0.49 × 10.74% = 5.26%
Debt3 75,940 75,940 ÷ 188,825 = 0.40 0.40 × 3.92% × (1 – 21.00%) = 1.25%
Operating lease liability4 20,395 20,395 ÷ 188,825 = 0.11 0.11 × 4.50% × (1 – 21.00%) = 0.38%
Total: 188,825 1.00 6.89%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

CVS Health Corp., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 (4,222) (578) (6,032) (1,160) (347)
Invested capital2 131,642 134,694 123,703 130,882 136,669
Performance Ratio
Economic spread ratio3 -3.21% -0.43% -4.88% -0.89% -0.25%
Benchmarks
Economic Spread Ratio, Competitors4
Abbott Laboratories -2.26% -2.57% -0.35% 0.10% -3.16%
Cigna Group -2.33% -2.81% 0.24% -0.67% 2.22%
Elevance Health Inc. -1.83% -2.30% -1.27% 0.10% -2.22%
Intuitive Surgical Inc. 10.02% 3.57% 3.28% 18.90% 6.88%
Medtronic PLC -5.04% -4.79% -3.55% -5.16% -4.25%
UnitedHealth Group Inc. -0.29% 4.59% 3.62% 3.47% 4.10%

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 × -4,222 ÷ 131,642 = -3.21%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. CVS Health Corp. economic spread ratio improved from 2022 to 2023 but then slightly deteriorated from 2023 to 2024 not reaching 2022 level.

Economic Profit Margin

CVS Health Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 (4,222) (578) (6,032) (1,160) (347)
Revenues from customers 370,656 356,623 321,629 290,912 267,908
Performance Ratio
Economic profit margin2 -1.14% -0.16% -1.88% -0.40% -0.13%
Benchmarks
Economic Profit Margin, Competitors3
Abbott Laboratories -3.24% -3.82% -0.50% 0.14% -5.52%
Cigna Group -0.77% -1.24% 0.12% -0.35% 1.31%
Elevance Health Inc. -0.82% -0.94% -0.55% 0.05% -1.04%
Intuitive Surgical Inc. 9.32% 3.56% 2.84% 14.87% 7.06%
Medtronic PLC -10.68% -10.81% -7.79% -12.38% -10.46%
UnitedHealth Group Inc. -0.15% 2.28% 1.86% 1.71% 2.09%

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 ÷ Revenues from customers
= 100 × -4,222 ÷ 370,656 = -1.14%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. CVS Health Corp. economic profit margin improved from 2022 to 2023 but then slightly deteriorated from 2023 to 2024 not reaching 2022 level.