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.
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UnitedHealth Group Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Enterprise Value to FCFF (EV/FCFF)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Analysis of Revenues
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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 financial data reveals several notable trends and shifts in key performance indicators over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
-
The NOPAT experienced a generally positive trajectory from 2020 through 2023, increasing from $18,059 million to a peak of $26,672 million. However, in 2024, there was a significant decline to $18,940 million, marking a sharp reversal of the previous growth trend.
- Cost of Capital
-
The cost of capital exhibited moderate fluctuation within a narrow range between 9.76% and 10.08%. It slightly increased from 9.76% in 2020 to a peak of 10.08% in 2022, then gradually decreased to 9.85% by 2024, indicating relatively stable capital costs over the analyzed period.
- Invested Capital
-
Invested capital demonstrated consistent growth each year, rising from $130,513 million in 2020 to $198,557 million in 2024. This steady increase suggests ongoing capital deployment and asset base expansion.
- Economic Profit
-
Economic profit showed variability, starting at $5,322 million in 2020, slightly decreasing to $4,827 million in 2021, and then improving to $8,353 million in 2023, the highest within the timeframe. However, 2024 recorded a substantial negative economic profit of -$625 million, signaling a year in which the company's returns did not cover the cost of capital, despite increasing invested capital.
Overall, the data indicates a period of profitability improvement from 2020 to 2023, supported by growth in operating profit and invested capital, with cost of capital remaining fairly stable. Yet, the abrupt declines in both NOPAT and economic profit in 2024 underscore a potential shift in operational efficiency or external challenges impacting profitability and value creation.
Net Operating Profit after Taxes (NOPAT)
UnitedHealth Group Inc., NOPAT calculation
US$ 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.
- Economic Profit
- The economic profit showed a fluctuating trend over the analyzed period. Starting at 5,322 million US dollars in 2020, it declined to 4,827 million in 2021, then increased to 5,949 million in 2022, followed by a significant jump to 8,353 million in 2023. However, in 2024, a notable reversal occurred, with economic profit becoming negative at -625 million. This indicates a substantial deterioration in profitability for the latest year.
- Invested Capital
- Invested capital exhibited a consistent upward trend throughout the period. It increased year-over-year from 130,513 million US dollars in 2020 to 198,557 million in 2024. This steady growth suggests ongoing investment and expansion efforts by the company.
- Economic Spread Ratio
- The economic spread ratio, which measures the return over the cost of capital, initially declined from 4.08% in 2020 to 3.45% in 2021, followed by a slight recovery to 3.6% in 2022. A marked improvement occurred in 2023 with a rise to 4.57%. Nevertheless, in 2024, this ratio sharply declined into negative territory at -0.31%, reflecting the negative economic profit and indicating that the company's returns failed to cover its cost of capital during 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.
- Economic Profit
- The economic profit fluctuated over the reported periods. It started at 5,322 million US dollars in 2020, then declined to 4,827 million in 2021. A recovery followed in 2022 with an increase to 5,949 million, and a substantial rise to 8,353 million in 2023. However, a significant negative value of -625 million appeared in 2024, indicating a decline in economic profitability for that year.
- Adjusted Revenues, Customers
- Adjusted revenues showed a consistent upward trend throughout the five-year span. Beginning at 255,859 million US dollars in 2020, revenues increased steadily each year, reaching 395,038 million by the end of 2024. This represents continuous growth without any observed decline or stagnation.
- Economic Profit Margin
- The economic profit margin exhibited some variability. Initially, it was 2.08% in 2020, then decreased to 1.69% in 2021. A moderate recovery occurred in 2022, with a margin of 1.84%, followed by a further increase to 2.27% in 2023. In 2024, the margin fell sharply to -0.16%, reflecting decreased efficiency in generating economic profit relative to revenue.
Overall, the data reflect a pattern of continuous revenue growth accompanied by variability in economic profitability. The notable downturn in both economic profit and profit margin in 2024 contrasts with prior years' positive performance, signaling potential challenges affecting profitability despite rising revenues.