Kaiser Permanente continues rebound with $25.2B in Q2 revenue
Operating income was $741 million for the second quarter of the year compared to operating income of $89 million in Q2 2022.
Photo: Martin Barraud/Getty Images
After a rough financial year in 2022, Kaiser Permanente got off to a strong start to begin the year and has continued to rebound, finishing the second quarter of 2023 with $25.2 billion in operating revenues, versus $24.4 billion in expenses. Revenues went up year-over-year (from $23.5 billion in Q2 2022) and expenses went down (from $23.4 billion).
For the second quarter, net income was $2.1 billion, compared to a net loss of $1.3 billion in the same period of 2022.
Operating income was $741 million for the second quarter of the year, compared to operating income of $89 million in the second quarter of 2022.
That performance marks a drastic turnaround after Kaiser struggled last year. In Q1 2022 alone, the organization posted a net loss of $961 million, as well as a quarterly loss of $899 million in the category of other income and expenses.
By the end of the second quarter last year, Kaiser was reporting a $1.3 billion net loss, against an operating gain of $89 million. The first half of 2022 saw the company down $2.26 billion overall, with just $17 million added from operations, good for a flat margin.
WHAT'S THE IMPACT
This year, Kaiser said financial market conditions were favorable, leading to strong investment income with other income (net of other expenses) of $1.3 billion for the second quarter, compared to a $1.4 billion loss in the second quarter of 2022. For the second quarter, net income was $2.1 billion, compared to a net loss of $1.3 billion in the same period of 2022.
"The post-pandemic financial pressures have led many in the industry to cut back on care and service," said Chair and CEO Greg Adams. "At Kaiser Permanente, we remain focused on improving access and affordability for our patients, members, and communities, which requires continued investment in care and coverage."
Kaiser said it historically sees higher operating margins in the first half of the year and lower operating margins in the second half of the year, as expenses tend to increase throughout the year relative to operating revenues, due in part to the annual enrollment cycle and seasonal care.
Membership as of June 30 was nearly 12.7 million, reflecting a growth of more than 81,000 members since Dec. 31. Kaiser Permanente began an outreach campaign to its Medicaid members in the second quarter to ensure they have the necessary enrollment information as states go through the mandated process of eligibility redetermination.
Capital spending in the second quarter was $824 million, compared to $789 million in the same period last year. As of June 30, Kaiser Permanente had 622 medical offices, 39 hospitals, and 43 retail and employee clinics.
THE LARGER TREND
In April 2022, Kaiser pledged $400 million toward economic development and housing. This doubled the nonprofit organization's financial commitment to its Thriving Communities social impact investment fund. The Thriving Communities Fund, which was launched in 2018 with $200 million, is on track to create and preserve 15,000 units of affordable housing by 2025. Doubling the fund, the system said, will allow it to increase that total to preserve 30,000 units by 2030.
Also last year, Kaiser entered into a five-year collaboration for health benefit access and specialty pharmacy services with Evernorth, Cigna Corporation's health services business. The agreement initially focused on access to Cigna's PPO provider network for Kaiser members who need urgent or emergency care and are traveling outside of the health system's service areas, and on specialty pharmacy services, with Evernorth President and CEO Eric Palmer calling it "an opportunity to unlock meaningful savings."
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
