Phoenix-based Banner Health recorded an operating income of $338 million (2.8% operating margin) through the first three quarters of 2025, up from $198 million (1.8% margin) during the same period last year, according to its Nov. 17 financial report.
Banner attributed the $140 million improvement through the nine months ended Sept. 30 to modest volume growth and increases in supplemental Medicaid payments.
Operating revenue increased 5.1% year over year to $11.9 billion. Total admission increased 2.1% year over year. “Hospital outpatient registrations and ambulatory surgery cases grew 7.5% and 7% year over year. Inpatient surgical volume and hospital outpatient surgeries increased by 0.4% and 2.9%, respectively.
Total operating expenses increased 3.9% year over year to $11.6 billion. Contract labor costs decreased by 17.4% year over year through a combination of reduced rate and lower utilization. Hospital supply expense per adjusted admission increased 10.8% year over year, driven by inflationary pressure and increased utilization of high-priced oncology drugs.
Banner’s Plans and Networks division reported an operating loss of $53 million through the first three quarters of 2025. Banner’s managed Medicaid plans posted an operating income of $32 million, but those gains were offset by a $41 million operating loss by its Medicare Advantage product. Its commercial insurance joint venture, Banner|Aetna, reported a $62 million operating loss as its individual marketplace plan continued to be impacted by adverse claim experience that also drove a notable loss in 2024.
Total revenue for the Plans and Networks division decreased 16.2% year over year. This resulted from a 22.6% decline in full-risk member months, which was expected due to changes to benefits and pricing in the marketplace plan and the termination of an unprofitable delegated Medicare Advantage risk plan.
Banner said it is continuing to focus on growing its insurance business across commercial, Medicare and Medicaid products. The division’s revenue represented 21% of the system’s total operating revenue through the third quarter.
The health system reported a net income of $1.1 billion through the third quarter of 2025, up from $888 million during the same period last year.
