Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
- Aggregate Accruals
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Profitability Ratios (Summary)
Elevance Health Inc., profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 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).
A consistent decline in profitability is observed across the examined metrics from 2021 through the projected figures for 2025. While all ratios remain positive, the downward trajectories suggest increasing pressure on earnings relative to revenue and invested capital.
- Gross Profit Margin
- The gross profit margin experienced a gradual decrease from 17.09% in 2021 to a projected 14.26% in 2025. This indicates a shrinking difference between revenue and the cost of goods sold, potentially due to rising input costs or increased competitive pricing pressure.
- Operating and Net Profit Margins
- Both operating and net profit margins demonstrate similar declining trends. The operating profit margin decreased from 5.15% in 2021 to 3.33% in 2025, while the net profit margin fell from 4.46% to 2.87% over the same period. These declines suggest increasing operating expenses and/or non-operating costs are impacting overall profitability.
- Return on Equity (ROE)
- Return on equity, a measure of how effectively the company generates profits from shareholder investments, decreased steadily from 16.93% in 2021 to 12.90% in 2025. This decline, while remaining in positive territory, suggests diminishing returns for equity holders.
- Return on Assets (ROA)
- The return on assets, indicating the efficiency of asset utilization in generating profits, also exhibited a consistent downward trend, moving from 6.26% in 2021 to 4.66% in 2025. This suggests the company is generating less profit per dollar of assets employed.
The concurrent declines across all five profitability ratios suggest a systemic issue impacting the company’s ability to translate revenue into profit and generate returns for investors. Further investigation into the underlying drivers of these trends, such as cost structures, pricing strategies, and asset management efficiency, is warranted.
Return on Sales
Return on Investment
Gross Profit Margin
Elevance Health Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Operating revenue | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Operating revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin exhibited a generally declining trend over the five-year period. While gross profit increased in absolute terms, the rate of increase in operating revenue was comparatively higher, resulting in margin compression.
- Gross Profit Margin Trend
- In 2021, the gross profit margin stood at 17.09%. It decreased to 16.79% in 2022 and remained constant at that level in 2023. A further decline was observed in 2024, with the margin falling to 15.92%. The most significant decrease occurred in 2025, where the gross profit margin reached 14.26%.
The consistency of the gross profit margin between 2022 and 2023 suggests a period of relative stability in the relationship between cost of goods sold and revenue. However, the subsequent declines in 2024 and 2025 indicate increasing pressure on profitability from either rising costs or pricing pressures, or a combination of both. The accelerating decline in 2025 warrants further investigation.
- Gross Profit and Operating Revenue Relationship
- Gross profit increased from US$23,403 million in 2021 to US$28,183 million in 2025. Operating revenue experienced a more substantial increase, rising from US$136,943 million in 2021 to US$197,584 million in 2025. This disparity in growth rates is the primary driver of the observed decrease in the gross profit margin.
The continued growth in operating revenue, despite the declining gross profit margin, suggests the company is successfully expanding its top line. However, maintaining or improving profitability will require attention to cost management and pricing strategies.
Operating Profit Margin
Elevance Health Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Operating revenue | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Operating Profit Margin, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Operating profit margin = 100 × Operating income ÷ Operating revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin exhibited a consistent decline over the five-year period. While operating income generally increased from 2021 to 2023, the growth in operating revenue outpaced it, leading to a contraction in profitability. This trend continued into 2024 and 2025, with further decreases in the operating profit margin despite continued revenue growth.
- Operating Profit Margin Trend
- The operating profit margin decreased from 5.15% in 2021 to 3.33% in 2025. This represents a total decrease of 1.82 percentage points over the period. The most significant decline occurred between 2023 and 2025, with a decrease of 1.14 percentage points.
Operating income increased from US$7,048 million in 2021 to US$7,685 million in 2022, and then to US$7,614 million in 2023, before decreasing to US$7,282 million in 2024 and US$6,571 million in 2025. Operating revenue demonstrated consistent growth, increasing from US$136,943 million in 2021 to US$197,584 million in 2025. The faster rate of revenue growth relative to operating income is the primary driver of the declining operating profit margin.
- Revenue and Income Relationship
- The increasing operating revenue, coupled with a relatively stagnant and then declining operating income, suggests potential pressures on cost control or pricing power. While the company is generating more revenue, it is becoming less efficient at converting that revenue into operating profit.
The consistent decrease in the operating profit margin warrants further investigation into the underlying factors contributing to this trend. Analysis of cost of goods sold, operating expenses, and competitive pressures would be beneficial to understand the drivers behind the margin compression.
Net Profit Margin
Elevance Health Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Shareholders’ net income | ||||||
| Operating revenue | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Net Profit Margin, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Net profit margin = 100 × Shareholders’ net income ÷ Operating revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin demonstrates a consistent downward trend over the five-year period. While shareholders’ net income remained relatively stable, operating revenue increased significantly, driving the decline in profitability as a percentage of revenue.
- Net Profit Margin Trend
- In 2021, the net profit margin stood at 4.46%. This decreased to 3.87% in 2022, representing a decline of approximately 0.59 percentage points. The downward trend continued in 2023, with the margin falling to 3.52%, and further to 3.41% in 2024. By 2025, the net profit margin had reached 2.87%, a cumulative decrease of 1.59 percentage points from 2021.
The consistent increase in operating revenue did not translate into a proportional increase in shareholders’ net income. Although operating revenue grew from US$136,943 million in 2021 to US$197,584 million in 2025, shareholders’ net income experienced a modest decrease from US$6,104 million to US$5,662 million over the same period. This suggests increasing costs or pricing pressures are impacting the company’s ability to convert revenue into profit.
- Revenue and Net Income Relationship
- The relationship between operating revenue and shareholders’ net income indicates that the company is experiencing diminishing returns on revenue growth. While revenue increased substantially, net income remained relatively flat and ultimately declined, contributing to the observed decrease in the net profit margin.
The declining net profit margin warrants further investigation into the underlying factors affecting profitability. Potential areas of focus include cost of goods sold, operating expenses, and pricing strategies. A detailed analysis of these components is necessary to understand the drivers behind the observed trend and to identify potential areas for improvement.
Return on Equity (ROE)
Elevance Health Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Shareholders’ net income | ||||||
| Shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| ROE, Sector | ||||||
| Health Care Equipment & Services | ||||||
| ROE, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
ROE = 100 × Shareholders’ net income ÷ Shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Equity (ROE) demonstrates a consistent, albeit declining, trend over the five-year period. Shareholders’ net income remained relatively stable between 2021 and 2023, with a more noticeable decrease in 2025. Simultaneously, Shareholders’ equity exhibited a steady increase throughout the period. The combined effect of these movements is a gradual reduction in ROE.
- ROE Trend
- ROE began at 16.93% in 2021 and decreased to 12.90% in 2025. This represents a cumulative decline of approximately 4.03 percentage points over the five years. The most significant decrease occurred between 2023 and 2025, with a drop of 1.57 percentage points.
- Shareholders’ Net Income
- Shareholders’ net income experienced minimal fluctuation from 2021 to 2023, ranging between US$5,987 million and US$6,104 million. A decrease to US$5,662 million was observed in 2025, suggesting potential challenges in maintaining profitability during that year.
- Shareholders’ Equity
- Shareholders’ equity consistently increased throughout the period, moving from US$36,060 million in 2021 to US$43,882 million in 2025. This growth in equity, while positive, contributed to the dilution of ROE as net income did not increase at the same rate.
The observed decline in ROE, coupled with the increasing equity base, suggests that the company is reinvesting capital but not necessarily generating proportionally higher returns on that investment. Further investigation into the drivers of equity growth and net income fluctuations is warranted to understand the underlying causes of this trend.
Return on Assets (ROA)
Elevance Health Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Shareholders’ net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| ROA, Sector | ||||||
| Health Care Equipment & Services | ||||||
| ROA, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
ROA = 100 × Shareholders’ net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibits a consistent downward trend over the five-year period. While Shareholders’ net income remains relatively stable, Total assets demonstrate continuous growth, driving the decline in ROA.
- Overall Trend
- A clear decreasing pattern is observed in ROA, moving from 6.26% in 2021 to 4.66% in 2025. This indicates a diminishing ability to generate profit from its asset base.
- Year-over-Year Changes
- From 2021 to 2022, ROA decreased from 6.26% to 5.86%, representing a decline of 0.40 percentage points. The rate of decline accelerated between 2022 and 2023, with ROA falling to 5.50%, a decrease of 0.36 percentage points. The decrease continued, albeit at a slower pace, from 2023 to 2024, with ROA reaching 5.12%, a reduction of 0.38 percentage points. The most significant decrease occurred between 2024 and 2025, where ROA dropped to 4.66%, a decrease of 0.46 percentage points.
- Relationship to Underlying Components
- Shareholders’ net income experienced a slight decrease over the period, falling from US$6,104 million in 2021 to US$5,662 million in 2025. However, Total assets increased substantially, growing from US$97,460 million in 2021 to US$121,494 million in 2025. This substantial asset growth, coupled with relatively stable net income, is the primary driver of the observed ROA decline.
The consistent growth in total assets without a corresponding increase in profitability suggests potential inefficiencies in asset utilization or a shift in asset composition towards less profitable holdings. Further investigation into the composition of assets and the factors influencing net income would be beneficial.