Hershey, Pa.-based Penn State Health reported a $131.2 million operating gain on $5 billion in revenue for the fiscal year ended June 30, a significant improvement from the prior year, according to its audited financial statements.
Seven things to know:
1. Operating income climbed 77% year over year. Penn State Health reported operating income of $131.2 million in fiscal 2026, up from $74.3 million in fiscal 2025. Its operating margin improved to about 2.6%, compared with 1.7% a year earlier.
2. Revenue grew faster than expenses. Total unrestricted revenue, gains and other support increased 10.8% to $4.97 billion, from $4.49 billion in fiscal 2025. Expenses rose 9.7% to $4.84 billion, from $4.41 billion.
3. Patient revenue increased by nearly $384 million. Net patient service revenue totaled $4.48 billion, up 9.4% from $4.1 billion a year earlier. Blue Cross/Highmark represented the system’s largest payer category at $1.87 billion, followed by Medicare at $1.25 billion and Medicaid at $548 million.
4. Labor remained the system’s largest expense. Salaries and benefits increased 10.1% to $2.82 billion. Medical supplies and drug expenses rose to $994.4 million from $898.7 million, while purchased services increased to $512.5 million from $473.2 million.
5. Investment gains strengthened the bottom line. Penn State Health recorded $159.6 million in investment income, up from $95.4 million a year earlier. Net income totaled $286.2 million, compared with $170.3 million in fiscal 2025. The system ultimately reported a $229 million increase in net assets for the year.
6. Liquidity strengthened while debt edged lower. Penn State Health ended June with $369.9 million in cash and cash equivalents and $1.23 billion in investments. Financial assets available for general use within one year totaled $2.06 billion, up from $1.89 billion a year earlier. Total long-term debt, including its current portion, stood at about $770.2 million, down from $778.6 million.
7. The system is pursuing $225 million in new debt to implement the Epic EHR and other capital projects. Penn State Health said it is pursuing about $225 million in new bonds to fund implementation of Epic’s EHR system — switching from Oracle Health/Cerner — and other capital costs. The five-hospital system aims to go live with the new EHR in the fourth quarter after beginning its implementation in June 2025.
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