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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Humana Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	2,726)	3,053)	3,172)	3,874)	3,029)
Cost of capital²	7.88%	8.14%	7.65%	8.17%	8.35%
Invested capital³	30,225)	29,089)	30,647)	21,850)	18,877)

Economic profit⁴	344)	686)	827)	2,089)	1,453)

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,726 – 7.88% × 30,225 = 344

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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.	Humana Inc. economic profit decreased from 2021 to 2022 and from 2022 to 2023.

Humana Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income attributable to Humana	2,489)	2,806)	2,933)	3,367)	2,707)
Deferred income tax expense (benefit)¹	(164)	(100)	15)	195)	162)
Increase (decrease) in allowance for doubtful accounts²	18)	(13)	11)	3)	(10)
Increase (decrease) in unearned revenues³	(20)	32)	(64)	71)	(36)
Increase (decrease) in equity equivalents⁴	(166)	(81)	(38)	269)	116)
Interest expense	493)	401)	326)	283)	242)
Interest expense, operating lease liability⁵	23)	19)	23)	18)	18)
Adjusted interest expense	516)	420)	349)	301)	260)
Tax benefit of interest expense⁶	(108)	(88)	(73)	(63)	(55)
Adjusted interest expense, after taxes⁷	408)	332)	276)	238)	206)
Net income (loss) attributable to noncontrolling interest	(5)	(4)	1)	—)	—)
Net operating profit after taxes (NOPAT)	2,726)	3,053)	3,172)	3,874)	3,029)

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for doubtful accounts.

³ Addition of increase (decrease) in unearned revenues.

⁴ Addition of increase (decrease) in equity equivalents to net income attributable to Humana.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 593 × 3.90% = 23

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 516 × 21.00% = 108

⁷ Addition of after taxes interest expense to net income attributable to Humana.

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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.	Humana Inc. NOPAT decreased from 2021 to 2022 and from 2022 to 2023.

Humana Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Provision for income taxes	836)	762)	485)	1,307)	763)
Less: Deferred income tax expense (benefit)	(164)	(100)	15)	195)	162)
Add: Tax savings from interest expense	108)	88)	73)	63)	55)
Cash operating taxes	1,108)	950)	543)	1,175)	656)

Based on: 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), 10-K (reporting date: 2019-12-31).

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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.	Humana Inc. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Humana Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Book overdraft	353)	298)	326)	320)	225)
Short-term debt	1,443)	2,092)	1,953)	600)	699)
Long-term debt	10,213)	9,034)	10,541)	6,060)	4,967)
Operating lease liability¹	593)	608)	731)	484)	448)
Total reported debt & leases	12,602)	12,032)	13,551)	7,464)	6,339)
Stockholders’ equity	16,262)	15,311)	16,080)	13,728)	12,037)
Net deferred tax (assets) liabilities²	(48)	27)	698)	659)	341)
Allowance for doubtful accounts³	88)	70)	83)	72)	69)
Unearned revenues⁴	266)	286)	254)	318)	247)
Equity equivalents⁵	306)	383)	1,035)	1,049)	657)
Accumulated other comprehensive (income) loss, net of tax⁶	999)	1,304)	(42)	(391)	(156)
Noncontrolling interests	56)	59)	23)	—)	—)
Adjusted stockholders’ equity	17,623)	17,057)	17,096)	14,386)	12,538)
Invested capital	30,225)	29,089)	30,647)	21,850)	18,877)

Based on: 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), 10-K (reporting date: 2019-12-31).

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 unearned revenues.

⁵ Addition of equity equivalents to stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Humana Inc. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Humana Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	43,915)	43,915)	÷	56,332)	=	0.78	0.78	×	9.08%	=	7.08%
Debt³	11,824)	11,824)	÷	56,332)	=	0.21	0.21	×	4.63% × (1 – 21.00%)	=	0.77%
Operating lease liability⁴	593)	593)	÷	56,332)	=	0.01	0.01	×	3.90% × (1 – 21.00%)	=	0.03%
Total:	56,332)					1.00					7.88%

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 »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	63,199)	63,199)	÷	74,600)	=	0.85	0.85	×	9.08%	=	7.69%
Debt³	10,793)	10,793)	÷	74,600)	=	0.14	0.14	×	3.69% × (1 – 21.00%)	=	0.42%
Operating lease liability⁴	608)	608)	÷	74,600)	=	0.01	0.01	×	3.20% × (1 – 21.00%)	=	0.02%
Total:	74,600)					1.00					8.14%

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 »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	53,783)	53,783)	÷	68,295)	=	0.79	0.79	×	9.08%	=	7.15%
Debt³	13,781)	13,781)	÷	68,295)	=	0.20	0.20	×	2.97% × (1 – 21.00%)	=	0.47%
Operating lease liability⁴	731)	731)	÷	68,295)	=	0.01	0.01	×	3.20% × (1 – 21.00%)	=	0.03%
Total:	68,295)					1.00					7.65%

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 »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	48,752)	48,752)	÷	57,508)	=	0.85	0.85	×	9.08%	=	7.70%
Debt³	8,272)	8,272)	÷	57,508)	=	0.14	0.14	×	3.90% × (1 – 21.00%)	=	0.44%
Operating lease liability⁴	484)	484)	÷	57,508)	=	0.01	0.01	×	3.70% × (1 – 21.00%)	=	0.02%
Total:	57,508)					1.00					8.17%

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 »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	49,010)	49,010)	÷	55,899)	=	0.88	0.88	×	9.08%	=	7.96%
Debt³	6,441)	6,441)	÷	55,899)	=	0.12	0.12	×	3.94% × (1 – 21.00%)	=	0.36%
Operating lease liability⁴	448)	448)	÷	55,899)	=	0.01	0.01	×	4.10% × (1 – 21.00%)	=	0.03%
Total:	55,899)					1.00					8.35%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Humana Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	344)	686)	827)	2,089)	1,453)
Invested capital²	30,225)	29,089)	30,647)	21,850)	18,877)
Performance Ratio
Economic spread ratio³	1.14%	2.36%	2.70%	9.56%	7.70%
Benchmarks
Economic Spread Ratio, Competitors⁴
Abbott Laboratories	-1.99%	0.22%	0.66%	-2.60%	-3.92%
Cigna Group	-2.26%	0.78%	-0.20%	2.69%	-0.52%
CVS Health Corp.	0.45%	-4.00%	-0.02%	0.43%	-0.35%
Elevance Health Inc.	-1.02%	-0.20%	1.08%	-0.90%	-0.07%
Intuitive Surgical Inc.	5.26%	4.98%	20.59%	8.58%	25.26%
Medtronic PLC	-4.12%	-2.88%	-4.48%	-3.60%	-2.51%
UnitedHealth Group Inc.	5.68%	4.72%	4.58%	5.15%	5.18%

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 344 ÷ 30,225 = 1.14%

⁴ Click competitor name to see calculations.

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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.	Humana Inc. economic spread ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Humana Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	344)	686)	827)	2,089)	1,453)

External revenues	105,305)	92,488)	82,877)	76,001)	64,387)
Add: Increase (decrease) in unearned revenues	(20)	32)	(64)	71)	(36)
Adjusted external revenues	105,285)	92,520)	82,813)	76,072)	64,351)
Performance Ratio
Economic profit margin²	0.33%	0.74%	1.00%	2.75%	2.26%
Benchmarks
Economic Profit Margin, Competitors³
Abbott Laboratories	-2.96%	0.31%	0.96%	-4.54%	-7.15%
Cigna Group	-1.00%	0.37%	-0.11%	1.58%	-0.32%
CVS Health Corp.	0.17%	-1.54%	-0.01%	0.22%	-0.19%
Elevance Health Inc.	-0.42%	-0.09%	0.51%	-0.42%	-0.04%
Intuitive Surgical Inc.	5.25%	4.30%	16.20%	8.80%	18.72%
Medtronic PLC	-9.30%	-6.33%	-10.75%	-8.86%	-5.97%
UnitedHealth Group Inc.	2.82%	2.42%	2.25%	2.63%	2.53%

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted external revenues
= 100 × 344 ÷ 105,285 = 0.33%

³ Click competitor name to see calculations.

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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.	Humana Inc. economic profit margin deteriorated from 2021 to 2022 and from 2022 to 2023.

Humana Inc. (NYSE:HUM)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin