Kaiser Permanente wrapped up a strong first half of 2024 with a solid quarter, reporting $908 million of operating income (3.1% operating margin) and more than $2.1 billion of net income.
The performance outpaced the $741 million operating income (2.9% operating margin) of last year's second quarter, according to top-line second-quarter numbers shared Friday. A year ago, the organization reported $2.079 billion of net income compared to $2.095 billion this past quarter.
The integrated nonprofit noted that it typically experiences higher operating margins in the first half of the year due to the annual enrollment cycle. "Lower operating margins in the second half of the year are not uncommon because expenses usually increase in part due to the impact of seasonal care while revenues stay relatively flat," the health system said in its financial disclosure.
The second-quarter financial results encompass Kaiser Foundation Health Plan, Kaiser Foundation Hospitals and their respective consolidated subsidiaries and affiliates.
In the three months ended June 30, the organization reported operating revenues of $29.1 billion and operating expenses of $28.2 billion in the second quarter compared to operating revenues of $25.2 billion and operating expenses of $24.4 billion in the same period a year ago.
Favorable financial market conditions drove other income (net of other expense) of $1.2 billion in the second quarter of 2024.
The organization's financial results in the second quarter include Geisinger, which joined Risant Health on March 31, 2024.
"In 2024, we remain focused on delivering high-quality care and service while evolving to meet changing customer and consumer expectations,” said Chair and CEO Greg A. Adams in a statement. “Our comprehensive approach to care—from early detection to treatment to recovery and beyond—is why we’re national leaders in cancer, cardiac, and other conditions. I am grateful to our dedicated employees and physicians as we continue to manage through high care volumes and care acuity to help our members and patients achieve their health goals.”
Oakland, California-based Kaiser Permanente membership was more than 12.5 million as of June 30. Membership for Risant Health affiliates was nearly 552,000, the organization reported.
Capital spending in the second quarter increased to $889 million, compared to $824 million a year ago, as the organization continued to invest strategically in facilities and technology.
“We are committed to our long-term strategy of improving patient outcomes and experiences while driving affordability,” said Executive Vice President and Chief Financial Officer Kathy Lancaster in a statement. “Our second-quarter financial performance allows us to continue to make investments in care and service.”
At the end of March, Kaiser Permanente closed its big-ticket purchase of 10-hospital Geisinger, part of its plan to form a multisystem, multiregional value-based care organization it’s calling Risant Health. Financial filings outlined up to $5 billion committed to Risant Health, $2 billion of which will be going to Geisinger through 2028.
Kaiser Permanente has laid off or has shared plans to lay off about 350 workers since last November, primarily among IT and administrative positions.
It also has been working to sell off $3.5 billion of its private investment holdings to secondary buyers to settle its cash constraints, The Wall Street Journal reported back in May The anonymous sources sited in that report said the system is aiming to sell off another similarly sized portion of the holdings later this year.
Kaiser Permanente is the country’s largest nonprofit health system by revenue. Across 2023, it logged more than $100 billion in both operating revenues and expenses as well as $329 million of operating income (0.3% operating margin) and about $4.1 billion in net profit.