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UnitedHealth Group ROIC %

: 9.16% (As of Sep. 2021)
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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. UnitedHealth Group's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2021 was 9.16%.

As of today (2022-01-16), UnitedHealth Group's WACC % is 6.31%. UnitedHealth Group's ROIC % is 8.98% (calculated using TTM income statement data). UnitedHealth Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


UnitedHealth Group ROIC % Historical Data

The historical data trend for UnitedHealth Group's ROIC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

UnitedHealth Group Annual Data
Trend Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
ROIC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.05 9.61 9.94 9.98 9.81

UnitedHealth Group Quarterly Data
Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 8.24 5.59 11.28 9.51 9.16

Competitive Comparison

For the Healthcare Plans subindustry, UnitedHealth Group's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

UnitedHealth Group ROIC % Distribution

For the Healthcare Plans industry and Healthcare sector, UnitedHealth Group's ROIC % distribution charts can be found below:

* The bar in red indicates where UnitedHealth Group's ROIC % falls into.



UnitedHealth Group ROIC % Calculation

UnitedHealth Group's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2020 is calculated as:

ROIC % (A: Dec. 2020 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2019 ) + Invested Capital (A: Dec. 2020 ))/ count )
=20903 * ( 1 - 23.98% )/( (152342 + 171624)/ 2 )
=15890.4606/161983
=9.81 %

where

UnitedHealth Group's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Sep. 2021 is calculated as:

ROIC % (Q: Sep. 2021 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Jun. 2021 ) + Invested Capital (Q: Sep. 2021 ))/ count )
=20836 * ( 1 - 20.78% )/( (179789 + 180800)/ 2 )
=16506.2792/180294.5
=9.16 %

where

Note: The Operating Income data used here is four times the quarterly (Sep. 2021) data.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


UnitedHealth Group  (NYSE:UNH) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROIC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, UnitedHealth Group's WACC % is 6.31%. UnitedHealth Group's ROIC % is 8.98% (calculated using TTM income statement data). UnitedHealth Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases. UnitedHealth Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.


UnitedHealth Group ROIC % Related Terms

Thank you for viewing the detailed overview of UnitedHealth Group's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.


UnitedHealth Group Business Description

UnitedHealth Group logo
Industry
Healthcare » Healthcare Plans NAICS : 524114 SIC : 6324
Address
9900 Bren Road East, UnitedHealth Group Center, Minnetonka, MN, USA, 55343
UnitedHealth Group is the largest private health insurance provider in the United States, providing medical benefits to 48 million members across its U.S. and international businesses at the end of 2020. As a leader in employer-sponsored, self-directed, and government-backed insurance plans, UnitedHealth has obtained massive scale in managed care. Along with its insurance assets, UnitedHealth's continued investments in its Optum franchises have created a healthcare services colossus that spans everything from medical and pharmaceutical benefits to providing outpatient care and analytics to both affiliated and third-party customers.
Executives
Renwick Glenn M director 6300 WILSON MILLS ROAD MAYFIELD VILLAGE OH 44143
Flynn Timothy Patrick director JPMORGAN CHASE & CO. 270 PARK AVENUE NEW YORK NY 10017
Wilensky Gail R director C/O QUEST DIAGNOSTICS 500 PLAZA DRIVE SECAUCUS NJ 07094
Hooper Michele J director C/O PPG INDUSTRIES, INC. ONE PPG PLACE PITTSBURGH PA 15272
Montgomery Rice Valerie Md director C/O UNITEDHEALTH GROUP 9900 BREN ROAD EAST, MN008-T502 MINNETONKA MN 55343
Hemsley Stephen J director 200 WASHINGTON AVE N SUITE 200 MINNEAPOLIS MN 55401
Burke Richard T director 3962 TOMAHAWK TRAIL MEDINA MN 55340
Mcnabb Frederick William Iii director C/O UNITEDHEALTH GROUP 9900 BREN ROAD EAST, MN-008-T502 MINNETONKA MN 55343
Noseworthy John H director 2000 GALLOPING HILL ROAD KENILWORTH NJ 07033
Rex John F officer: EVP Chief Financial Officer C/O UNITEDHEALTH GROUP 9900 BREN ROAD EAST, MN008-T502 MINNETONKA MN 55343
Lewis Patricia L officer: EVP and Chief HR Officer C/O UNITEDHEALTH GROUP 9900 BREN ROAD EAST, MN008-T502 MINNETONKA MN 55343
Mcmahon Dirk C officer: Chief Executive Officer, UHC C/O UNITEDHEALTH GROUP 9900 BREN ROAD EAST, MN008-T502 MINNETONKA MN 55343
Roos Thomas E officer: Chief Accounting Officer C/O UNITEDHEALTH GROUP 9900 BREN ROAD EAST, MN008-T502 MINNETONKA MN 55343
Short Marianne D officer: EVP & Chief Legal Officer C/O UNITEDHEALTH GROUP 9900 BREN ROAD EAST MINNETONKA MN 55343
Wichmann David S director, officer: Chief Executive Officer UNITEDHEALTH GROUP INC 9900 BREN RD E MINNETONKA MN 55343

UnitedHealth Group Headlines

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