Kaiser Permanente’s recently filed midyear financial statements have new information on its plans to bring North Carolina’s Cone Health under the Risant Health umbrella.
The plan, unveiled in June, represents the second acquisition target for Kaiser’s subsidiary after it closed on Geisinger Health in March. Risant Health aims to bring together regional health systems that will continue to operate independently while collaborating on a tech-backed value-based care platform.
According to the Tuesday afternoon filing, the acquisition agreement has Risant providing a minimum of $1 billion in capital—inclusive of Cone Health internally generated and Risant Health funds—to the system up to five years after the deal’s closing date. These funds will support investments in Cone Health’s facilities, health equity and other capital projects.
Additionally, Risant Health will put up as much as $400 million during a capital commitment period to help Cone Health’s transition and integration, which will include initial implementation of the subsidiary’s value-based platform.
Finally, Risant Health will assure up to $300 million to support Cone Health’s growth over a decade following the deal’s close, which is still pending regulatory clearances.
Cone Health employs more than 13,000 people as well as over 700 physicians. For its 2023 fiscal year ended Sept. 30, it reported over $2.8 billion in total operating revenue, a $112.3 million operating income (4% operating margin) and a $197.6 million excess of revenue over expenses.
The filing’s disclosures reaffirm that the Cone Health acquisition is of a smaller scale as compared to the 10-hospital Geisinger Health, which reported $7.7 billion in total operating revenues during 2023. That agreement added assets valued at about $4.8 billion to Kaiser Permanente, per filings, and came with assurances of more than $2 billion in support over the coming years.
Kaiser Permanente, the country’s largest nonprofit health system by revenue, has more broadly pledged commitments of up to $5 billion in Risant Health over several years. Shortly after the Geisinger deal, the subsidiary’s leadership said it was aiming for “four to five” more health system acquisitions over the next half-decade.
“Risant Health has put a stake in the ground that care focused on evidence, equity, population health and improved outcomes must be the future of health care,” Greg Adams, chair and CEO of Kaiser Foundation Health Plan and Hospitals, as well as Risant’s board chair, said back in June. “Models like that of Kaiser Permanente, Cone Health and Geisinger will help make that possible.”
Tuesday’s second-quarter financial filing restates the $908 million operating income (3.1% operating margin) and $2.1 billion of net income the large nonprofit announced earlier this month. Halfway through 2024, Kaiser is sitting at over $1.8 billion of operating income and a $9.5 billion bottom line (boosted by a $4.6 billion gain from the Geisinger acquisition).
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