Essentia Health's operating margin dips below 1% as costs mount

Duluth, Minn.-based Essentia Health's operating performance was negatively affected by multimillion-dollar expansion projects in fiscal year 2018, according to financial documents.

Essentia saw net patient revenue grow almost 4 percent year over year to $2 billion in fiscal 2018. However, cost outpaced revenue growth, as total operating expenses climbed to $2.1 billion in fiscal 2018. As a result, Essentia's operating margin fell from 1.7 percent in fiscal 2017 to half a percent in 2018.

Essentia Health said its medical campus project contributed $12 million to the expenses. Operating performance was also negatively affected by $19 million in additional expenses.

Including these costs, Essentia's operating income fell to $11 million in fiscal 2018, compared to $33 million in fiscal 2017.

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