Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Paying user area
Try for free
UnitedHealth Group Inc. pages available for free this week:
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to UnitedHealth Group Inc. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
UnitedHealth Group Inc., economic profit calculation
US$ in millions
| 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 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The period under review demonstrates fluctuating economic profit performance. Net operating profit after taxes (NOPAT) generally increased from 2020 to 2023, but experienced a substantial decline in 2024. Invested capital consistently rose throughout the period, while the cost of capital remained relatively stable. These factors combined to produce a varied economic profit trajectory.
- Economic Profit Trend
- Economic profit exhibited an initial increase from US$3,526 million in 2020 to US$5,755 million in 2023. This positive trend suggests improving value creation for shareholders during those years. However, 2024 saw a significant reversal, with economic profit falling to a loss of US$3,361 million. This indicates that the return generated on invested capital was insufficient to cover the cost of that capital in the most recent year.
- NOPAT and Invested Capital Relationship
- While NOPAT increased from 2020 to 2023, the growth in invested capital was proportionally higher. This suggests diminishing returns on invested capital during this period. The substantial decrease in NOPAT in 2024, coupled with continued growth in invested capital, directly contributed to the negative economic profit observed in that year.
- Cost of Capital Stability
- The cost of capital remained relatively consistent, fluctuating between 11.14% and 11.52% over the five-year period. This indicates that external market conditions impacting the company’s funding costs were largely stable. The consistent cost of capital highlights that changes in economic profit were primarily driven by variations in NOPAT and invested capital, rather than shifts in the required rate of return.
The shift to negative economic profit in 2024 warrants further investigation. A detailed analysis of the factors contributing to the decline in NOPAT is recommended to understand the underlying causes and inform future strategic decisions. The continued increase in invested capital, despite declining profitability, also requires scrutiny to ensure efficient capital allocation.
Net Operating Profit after Taxes (NOPAT)
UnitedHealth Group Inc., NOPAT calculation
US$ in millions
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 receivables allowances.
3 Addition of increase (decrease) in unearned revenues.
4 Addition of increase (decrease) in equity equivalents to net earnings attributable to UnitedHealth Group common shareholders.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net earnings attributable to UnitedHealth Group common shareholders.
- Net Earnings attributable to UnitedHealth Group common shareholders
- The net earnings showed a generally upward trend from 2020 to 2023, increasing from 15,403 million US dollars in 2020 to a peak of 22,381 million US dollars in 2023. However, in 2024, there was a notable decline to 14,405 million US dollars, indicating a significant reduction compared to the previous year and even below the 2021 level.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT also exhibited growth over the first four years, rising from 18,059 million US dollars in 2020 to a peak of 26,672 million US dollars in 2023. Similar to net earnings, 2024 saw a decrease in NOPAT to 18,940 million US dollars, which is considerably lower than the 2023 figure but still above the 2020 and 2021 levels.
- Overall Analysis
- Both net earnings and NOPAT demonstrated strong performance growth from 2020 through 2023, suggesting operational improvements and profitability enhancements during this period. The sharp decline in both metrics in 2024 indicates a reversal of these positive trends, potentially due to adverse business conditions, increased costs, or other factors affecting profitability. Despite the decline, the 2024 NOPAT remains above earlier years, implying some retained operational efficiency compared to the start of the observed period.
Cash Operating Taxes
UnitedHealth Group Inc., cash operating taxes calculation
US$ in millions
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).
The analysis of the tax-related financial data over the five-year period reveals several noteworthy trends.
- Provision for income taxes
- The provision for income taxes exhibited some fluctuations during the observed period. An initial decrease occurred from 4,973 million USD in 2020 to 4,578 million USD in 2021. This was followed by an increase to 5,704 million USD in 2022 and a further rise to 5,968 million USD in 2023. However, the provision dropped significantly to 4,829 million USD in 2024. Overall, the provision peaked in 2023 before declining in the last reported year.
- Cash operating taxes
- Cash operating taxes mirrored a somewhat similar overall pattern but with more pronounced changes. After decreasing from 5,358 million USD in 2020 to 4,823 million USD in 2021, there was a substantial rise to 6,851 million USD in 2022 and a slight increase to 6,936 million USD in 2023. The amount then declined to 5,994 million USD in 2024. This suggests that cash operating taxes experienced greater volatility compared to the provision for income taxes, with notable escalations in 2022 and 2023 before easing in 2024.
In summary, both provision for income taxes and cash operating taxes showed a general pattern of decline in the initial year, followed by significant increases in the middle years of the period, peaking around 2023, and subsequently decreasing in 2024. The larger magnitude of changes in cash operating taxes compared to provision for income taxes may warrant further investigation to understand the underlying causes.
Invested Capital
UnitedHealth Group Inc., invested capital calculation (financing approach)
US$ in millions
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 unearned revenues.
5 Addition of equity equivalents to shareholders’ equity attributable to UnitedHealth Group.
6 Removal of accumulated other comprehensive income.
- Total reported debt & leases
- The total reported debt and leases exhibit a consistent upward trend over the five-year period. Starting at $47,914 million in 2020, it increases gradually each year, reaching $81,793 million by 2024. The most significant growth appears between 2023 and 2024, where the increase surpasses previous annual increments, indicating a potentially higher reliance on debt financing or capital lease arrangements in the most recent year.
- Shareholders’ equity attributable to UnitedHealth Group
- Shareholders’ equity shows a steady increase from $65,491 million in 2020 to $92,658 million in 2024. The equity base grows consistently each year without any declines, reflecting accumulation of retained earnings or issuance of additional equity capital. The growth rate appears relatively stable, with a slightly accelerated increase from 2022 onwards, suggesting strengthening financial foundation.
- Invested capital
- Invested capital also demonstrates a continual rise, moving from $130,513 million in 2020 to $198,557 million in 2024. This indicator grows substantially over the period, with the largest yearly increments occurring between 2021 and 2022, and then especially from 2023 to 2024. The rising invested capital corresponds with the increases in both debt and equity, indicating expanded capital deployment or asset base growth.
Cost of Capital
UnitedHealth Group Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Commercial paper, long-term debt and other financing obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Commercial paper, long-term debt and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Commercial paper, long-term debt and other financing obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Commercial paper, long-term debt and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Commercial paper, long-term debt and other financing obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Commercial paper, long-term debt and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Commercial paper, long-term debt and other financing obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Commercial paper, long-term debt and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Commercial paper, long-term debt and other financing obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Commercial paper, long-term debt and other financing obligations. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
UnitedHealth Group Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
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 Click competitor name to see calculations.
The economic spread ratio exhibited a fluctuating pattern over the five-year period. Initially, the ratio demonstrated a decline, followed by a period of improvement, and ultimately concluded with a substantial negative value.
- Economic Spread Ratio Trend
- The economic spread ratio began at 2.70% in 2020, decreasing to 2.01% in 2021. A modest recovery was observed in 2022, with the ratio reaching 2.16%. Further improvement occurred in 2023, increasing to 3.15%. However, this positive trend reversed sharply in 2024, resulting in a ratio of -1.69%.
Economic profit generally increased from 2020 to 2023, coinciding with the initial rise in the economic spread ratio. However, the significant decrease in economic profit in 2024 appears to be the primary driver of the negative economic spread ratio observed in that year.
- Invested Capital
- Invested capital consistently increased throughout the period, moving from US$130,513 million in 2020 to US$198,557 million in 2024. This continuous growth in invested capital occurred alongside the fluctuations in economic profit and the economic spread ratio.
The divergence between the increasing invested capital and the declining economic profit in 2024 suggests a potential decrease in the efficiency with which capital is being deployed. The negative economic spread ratio in 2024 indicates that the company’s return on invested capital was less than its cost of capital during that year.
- Relationship between Economic Profit and Spread Ratio
- A strong correlation exists between economic profit and the economic spread ratio. Positive economic profit values generally correspond to positive spread ratios, and vice versa. The substantial decline in economic profit in 2024 directly resulted in the negative economic spread ratio for that year.
Economic Profit Margin
UnitedHealth Group Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues, customers | ||||||
| Add: Increase (decrease) in unearned revenues | ||||||
| Adjusted revenues, customers | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
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 ÷ Adjusted revenues, customers
= 100 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin exhibited a fluctuating pattern over the five-year period. Initially, the margin demonstrated growth followed by a significant decline in the most recent year analyzed.
- Economic Profit Margin Trend
- The economic profit margin began at 1.38% in 2020, decreasing to 0.99% in 2021. A modest recovery was observed in 2022, with the margin reaching 1.11%. Further improvement occurred in 2023, as the margin increased to 1.56%. However, a substantial downturn occurred in 2024, resulting in a negative margin of -0.85%.
Economic profit itself mirrored this trend, increasing from US$3,526 million in 2020 to US$5,755 million in 2023 before experiencing a considerable decrease to a loss of US$3,361 million in 2024. This suggests a strong correlation between overall economic profit and the economic profit margin.
- Revenue Growth and Margin Relationship
- Adjusted revenues consistently increased throughout the period, moving from US$255,859 million in 2020 to US$395,038 million in 2024. Despite this revenue growth, the economic profit margin did not consistently benefit. The decline in margin in 2024, despite higher revenues, indicates that the increase in costs or the reduction in operational efficiency outpaced revenue gains.
The negative economic profit margin in 2024 is a notable development, signaling that the company’s returns did not cover its cost of capital during that year. This warrants further investigation into the factors contributing to the decreased profitability.
- Key Observations
- The period demonstrates a clear shift in performance in the final year. While revenue continued to climb, profitability, as measured by economic profit and the economic profit margin, experienced a significant reversal. This suggests potential challenges related to cost management, capital allocation, or competitive pressures.