Labor costs push Trinity Health's operating income down 58%

Higher labor costs put pressure on Trinity Health's margins in the first six months of fiscal year 2022, according to financial documents released Feb. 25. 

Livonia, Mich.-based Trinity Health posted revenue of $10.22 billion in the six months ended Dec. 31. That's down less than 1 percent from $10.28 billion in the same period of fiscal year 2021. Excluding provider relief fund grants, the system's revenue was up 3.5 percent year over year. 

Trinity's operating expenses for the first six months of fiscal year 2022 increased by 5 percent to $10.1 billion. The health system said the increase was primarily driven by higher labor costs linked to staffing shortages and wage inflation. 

Trinity reported operating income of $295.8 million in the first six months of fiscal year 2022, compared to operating income of $710.6 million in the same period a year earlier. Operating income in the first half of fiscal year 2022 included a $127.2 million gain on the sale of Gateway Health Plan. 

Excluding provider relief grants and the gain on the sale of the health plan, Trinity Health closed out the first half of the current fiscal year with an operating margin of 0.4 percent, compared to a 1.8 percent operating margin in the same period a year earlier. 

"Downward pressure on margins was caused by expense growth outpacing revenue growth, primarily due to pandemic related labor costs," Trinity said in an earnings release

After factoring in investments and nonoperating items, Trinity posted net income of $878.1 million for the first six months of fiscal year 2022, down from $2.7 billion in the same period a year earlier. 

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