Phoenix-based Banner Health reported operating income of $431.2 million (5.1% operating margin) during the first half of 2026, up from $251.2 million (3.2% margin) during the same period last year, according to its Aug. 17 financial report.
Five things to know:
1. Banner Health recorded total operating revenue of $8.4 billion for the six months ended June 30, up from $7.9 billion during the same period last year. The system attributed $236 million of its year-over-year revenue growth to increases in the Arizona Medicaid state directed payment program. Net patient service revenue totaled $6.4 billion, up from $5.8 billion. Medical insurance premiums totaled $1.5 billion, down from $1.7 billion, driven primarily by the termination of the individual marketplace plan within Banner’s commercial insurance joint venture, Banner|Aetna. Coverage changes in ACA marketplace plans led to a $54 million year-over-year reduction in net healthcare revenue.
2. Banner’s Care Delivery division, which includes its hospitals and employed physician groups, posted operating income of $206.5 million, down from $262.5 million a year earlier. The system pointed to flat hospital volumes and a double-digit increase in employee medical benefit costs as the main drivers of the decline.
3. Banner’s Plans and Networks division swung to a $32.6 million operating gain from a $20.1 million loss a year earlier. The turnaround was driven largely by Banner|Aetna, the system’s commercial insurance joint venture, which posted a $25 million operating gain compared with a $32 million loss in the first half of 2025 following its exit from the individual ACA marketplace.
4. Total operating expenses were $7.9 billion, up from $7.6 billion. Salaries, benefits and contract labor totaled $3.6 billion, up from $3.4 billion. Supplies totaled $1.5 billion, up from $1.4 billion. Medical claims cost totaled $1 billion, down from $1.2 billion.
5. The system reported net income of $966.6 million in the first half of 2026, up from $694.7 million during the same period last year.
