Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
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Humana Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Analysis of Solvency Ratios
- Analysis of Reportable Segments
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
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MVA
Humana Inc., MVA calculation
US$ in millions
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 Fair value of debt. See details »
2 Invested capital. See details »
The data reveals several notable financial trends over the five-year period.
- Market (fair) value of Humana
- This metric experienced growth from 2019 through 2022, increasing from approximately $55.9 billion to nearly $74.7 billion. However, there was a significant decline in 2023, where the market value dropped to about $56.4 billion, falling close to the 2019 level. This suggests a period of strong market valuation growth followed by a sharp contraction in the most recent year.
- Invested capital
- Invested capital demonstrated a steady upward trajectory from 2019 to 2021, rising from around $18.9 billion to just over $30.6 billion. After a slight decrease in 2022 to approximately $29.1 billion, invested capital rebounded in 2023 to about $30.2 billion. Overall, this indicates consistent investment activity with some minor fluctuations but no significant retrenchment.
- Market value added (MVA)
- MVA increased initially from roughly $37.0 billion in 2019 to $45.6 billion in 2022, reflecting growing market premium over the invested capital. However, in 2023, MVA fell sharply to approximately $26.2 billion, the lowest level across the observed period. This decline highlights a reduction in the market's perceived value added beyond the invested capital, paralleling the decrease in market value.
Overall, the data illustrates a period of growth in market valuation and invested capital until 2022, followed by a marked decline in market valuation and associated market value added in 2023. Invested capital remained relatively stable with minor variation, suggesting that the valuation downturn was primarily driven by market factors rather than changes in invested capital. This pattern may indicate external pressures or market sentiment shifts impacting company valuation in the latest year.
MVA Spread Ratio
Humana Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
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 MVA. See details »
2 Invested capital. See details »
3 2023 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Market Value Added (MVA)
- The market value added exhibits a fluctuating trend over the analyzed period. It commenced at 37,022 million USD in 2019, followed by a slight decline to 35,658 million USD in 2020. Subsequently, the MVA increased moderately to 37,671 million USD in 2021 and experienced a more significant rise to 45,570 million USD in 2022. However, in 2023, there was a pronounced decrease to 26,163 million USD, marking the lowest point within the five-year span.
- Invested Capital
- Invested capital showed an overall upward trajectory from 2019 through 2023. Starting at 18,877 million USD in 2019, there was a steady increase to 21,850 million USD in 2020 and a notable jump to 30,647 million USD in 2021. Although there was a slight decrease to 29,089 million USD in 2022, invested capital rose again to 30,225 million USD in 2023, representing a substantial net increase compared to the initial year.
- MVA Spread Ratio
- The MVA spread ratio indicates a general decline over the period under review. Beginning at a high of 196.12% in 2019, it decreased to 163.2% in 2020 and further dropped to 122.92% in 2021. There was a temporary recovery in 2022, with the ratio rising to 156.66%, but this was followed by a sharp decline to 86.56% in 2023, the lowest value recorded in the timeframe. This suggests a diminishing return on the invested capital relative to the market value added during the later years.
- Overall Analysis
- The financial data reveals that while the company increased its invested capital significantly over the five years, the market value added did not demonstrate consistent growth. The declining MVA spread ratio, particularly the steep drop in 2023, indicates that the economic value generated per unit of invested capital has diminished. The combination of increased capital investment and reduced efficiency in market value creation may warrant further investigation into operational or market factors affecting performance in the most recent year.
MVA Margin
Humana Inc., MVA 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) | ||||||
| Market value added (MVA)1 | ||||||
| External revenues | ||||||
| Add: Increase (decrease) in unearned revenues | ||||||
| Adjusted external revenues | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
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 MVA. See details »
2 2023 Calculation
MVA margin = 100 × MVA ÷ Adjusted external revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals notable trends in market value added (MVA), adjusted external revenues, and MVA margin over the five-year period from 2019 to 2023.
- Market Value Added (MVA)
- The MVA displayed fluctuations during the reviewed period. It decreased slightly from 37,022 million US dollars in 2019 to 35,658 million US dollars in 2020, followed by a moderate increase to 37,671 million US dollars in 2021. A significant rise occurred in 2022, with MVA reaching 45,570 million US dollars. However, in 2023, there was a sharp decline to 26,163 million US dollars, representing the lowest value within this timeframe.
- Adjusted External Revenues
- A consistent and robust upward trend characterized the adjusted external revenues. The revenues increased steadily each year, starting at 64,351 million US dollars in 2019 and rising to 105,285 million US dollars by 2023. This represents a substantial growth over the period, reflecting expanding business operations or enhanced revenue-generating strategies.
- MVA Margin
- The MVA margin, expressing the MVA as a percentage of adjusted external revenues, declined overall throughout the period. It started at 57.53% in 2019 and dropped to 46.87% in 2020, continuing its decrease to 45.49% in 2021. A modest recovery was seen in 2022 with the margin increasing to 49.25%. Nevertheless, the margin fell sharply again in 2023 to 24.85%, indicating a significant reduction in value creation relative to revenues in the final year.
In summary, while revenues grew steadily over the period, value added and its margin experienced volatility, with notable decreases in 2020 and especially in 2023. The divergence between growing revenues and declining MVA margin in 2023 suggests potential challenges in translating revenue growth into proportional market value creation during that year.