Ascension’s finances continued their upward trajectory in the quarter ended Dec. 31 as the nonprofit’s trimmed portfolio and “access-focused strategies” drove healthier margins and earnings.
For the most recent quarter, the second of its financial year, Ascension reported a $51.6 million loss from operations (-0.9% operating margin), which was down from Q1’s $87.9 million operating loss (-1.4% operating margin) and Q2 2025’s $143.2 million operating loss (-2.2% operating margin).
“This quarter’s results show continued improvement in financial performance alongside growth in patient volumes and service utilization,” Saurabh Tripathi, executive vice president and chief financial officer of Ascension, said in a release. “Stronger operating results are being driven by more efficient care delivery and increased demand across key services, allowing us to reinvest in access, clinical capabilities and community-based care. We continue to exercise strong discipline in capital deployment as we expand clinical care to our communities.”
Across the first half of the fiscal year, Ascension now sits at a roughly $138.5 million operating loss (-1.1% operating margin), as opposed to last year’s $364.5 million operating loss (-2.6% operating margin).
Net income for the quarter and the half were $270.2 million and $607.9 million, respectively, both more than $300 million ahead of the prior year.
Ascension has spent multiple quarters shaking off the long-tail impact of a cybersecurity attack, but much of the performance change stems from its longitudinal efforts to offload several hospitals and other facilities while expanding its ambulatory services, community-based care and other acute service lines in core markets.
While as-recorded total discharges across six months declined from 311,507 to 243,374, same-facility total discharges grew by 2.1%. On a same-facility basis, equivalent discharges rose by 0.2%, inpatient surgery visits by 1.7% and emergency rooms by 0.6%, with outpatient surgery declining by 0.2%.
“Looking ahead, Ascension remains focused on advancing its growth strategy through continued investment in core service lines, expansion of ancillary services and growth of its ambulatory footprint to better serve patients and communities across its Markets,” management wrote in its discussion of the results. The linchpin of that ambulatory growth is a $3.9 billion deal to acquire 34-state AmSurg, announced last year.
Ascension’s total operating revenues across the past six months dropped by $1.4 billion, or 10.1%, to $12.1 billion while its total operating expenses fell $1.5 billion, or 11.2%. The drops were due to the divestments, as a same-facility comparison showed a 10.3% year-over-year increase for revenues but just 4.3% for expenses.
Accompanying the same-facility volume increases, Ascension noted its revenues benefitted from slight improvement in payer mix and case mix index “while the system expanded capacity and backfilled inpatient service volumes as other procedures continue to shift to outpatient settings.
“While reimbursement rates have provided limited mitigation to escalating costs over the last two fiscal years, recent managed care negotiations with commercial payors have yielded larger increases, improving [net patient service revenue] rates,” management added.
Ascension said its increased same-facility expenses were “more than offset” by the revenue gains, but acknowledged that increased acuity increased same-facility cost per equivalent discharge by 5%. Still, the system was able to reduce same-facility average length of stay by 1.9%, “demonstrating enhanced operational efficiency and quality of care.”
Six-month, same-facility spending on salaries, wages and benefits rose 3.1% from the prior year due to “volume, acuity and investment in our associates” that included 4.3% higher average hourly wage increases.
A release announcing the numbers also highlighted $1.5 billion of community benefit provided during the six-month period, as well as expansions like a new emergency care facility and telehealth maternity services in Florida.
“These results show Ascension is continuing to strengthen operations and expand access for people and communities,” Eduardo Conrado, President and (as of Jan. 1) CEO of Ascension, said in a release. “We are building a more consistent and predictable way of operating, putting people first by making care easier to access, easier to navigate, and delivered in the right setting at the right time. We are modernizing how we deliver care around what people need, making it more connected and improving the experience for patients, families, and communities.”
As of Dec. 31, Ascension had 284 days of cash on hand, a 56-day increase since the end of the prior fiscal year on June 30, 2025 due to two substantial bond issuances executed in late 2025. The $25 billion nonprofit operates 90 wholly owned or consolidated hospitals, with noncontrolling ownership interests in another 29, and employs about 97,000 people.
At January’s J.P. Morgan Healthcare Conference, the system’s leadership said it is targeting an operating income margin of 0.5% for the current fiscal year, a roughly 2% margin for fiscal 2027 and about 3% margin for fiscal 2028 with its current operations. Adding its planned merger and acquisition activity into the mix is expected to boost the lattermost year to a 4% margin, or roughly $1.1 billion to $1.2 billion of operating income.
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