Nonprofit hospital financial performance softened modestly in fiscal 2025 with the median earnings before interest, depreciation and amortization (EBIDA) margin declined to 5.9% from 6.2% in fiscal 2024, according to a Moody’s Ratings report released Aug. 13.
“Revenue growth continued to surpass expense growth, but by a narrower margin, as expense growth accelerated and remained elevated,” Moody’s said in the report. “Sustained patient demand, reimbursement gains and growth across major volume measures supported revenue growth, although most utilization growth rates slowed compared with fiscal 2024.”
Here are 10 notes on nonprofit and public hospital finances from the report, which is based on an analysis of audited fiscal 2025 financial statements for 201 freestanding hospitals, single-state health systems and multistate systems that Moody’s rates. The 201 organizations included in Moody’s medians represent about 66% of the nonprofit and public healthcare entities the ratings agency rates, with a median rating of A2.
1. The median EBIDA margin declined to 5.9% in fiscal 2025 from 6.2% in fiscal 2024. EBIDA growth slowed to 5.2%, down sharply from 20.3% growth the year before. Despite the decline, the margin remained above fiscal 2023 levels, though it stayed below the 8 to 9% margins hospitals posted before the COVID-19 pandemic.
2. The median operating margin slipped to 1.2% in fiscal 2025 from 1.3% in fiscal 2024, while median operating income fell 13.3%, as expense growth largely offset the benefits of continued solid revenue growth.
3. Financial performance remained uneven across rating categories. Median EBIDA margins were 8% for Aa-rated organizations, 6.1% for A-rated organizations, 4.1% for Baa-rated organizations and 2.5% for organizations rated below Baa, “underscoring greater operating pressure among lower-rated organizations with less flexibility,” Moody’s said.
4. Median operating revenue growth was 8.9% in fiscal 2025, still outpacing median expense growth of 8.5%, though the gap narrowed considerably. Revenue growth slowed from 9.6% in fiscal 2024, while expense growth accelerated from 7.3%.
5. Revenue growth was supported by higher patient activity, pharmacy growth, expanded Medicaid supplemental payment programs in some states, and stronger commercial reimbursement tied to effective payer negotiations. The slowdown from fiscal 2024 partly reflects one-time payments from the Federal Emergency Management Agency and a 340B drug pricing remedy that did not recur in fiscal 2025.
6. Expenses grew from an already elevated base, driven by continued wage pressures, clinical staffing needs and inflation in pharmaceuticals, supplies and purchased services.
7. Unrestricted cash and investments grew by a median of 8.3% in fiscal 2025, pushing the median to $1.33 billion from $1.31 billion, aided by positive cash flow and investment gains. Median days cash on hand, however, edged down to 188 days from 193 as higher expenses diluted the benefit of stronger reserves.
8. Liquidity remained strongest among higher-rated organizations. Median days cash on hand was 280 for Aa-rated systems and 191 for A-rated systems, compared with 117 for Baa-rated systems and 71 for those rated below Baa.
9. Leverage improved modestly. Median total adjusted debt-to-adjusted cash flow improved to 3.4x from 3.5x, while median debt-to-operating revenue fell to 26.2%, a five-year low. Median unrestricted cash and investments-to-total adjusted debt held essentially stable at 162%.
10. Patient volumes continued to grow but at a slower pace than in fiscal 2024. Median inpatient admissions growth fell to 3.3% from 4.9%, while growth in combined admissions and observation stays slowed to 2.3% and outpatient surgery growth held steady at 1.7%. Capital spending rose to a median of 1.3 times depreciation, supported by 18.2% growth in additions to property, plant and equipment, though the median age of plant remained elevated at 12.9 years.
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