West Reading, Pa.-based Tower Health reported a positive operating margin for fiscal year 2025, marking its first annual profit since 2018, according to financial documents published Aug. 14.
Eight things to know:
1. For the 12 months ending June 30, 2025, Tower posted $5.9 million in operating income (0.3% margin) compared to a $17.51 million (-0.9% margin) operating loss in fiscal 2024. The System’s operating cash flow margin was $137.2 million (6.7%), up from $97.4 million (5%) in fiscal 2024.
2. Tower Health’s revenue increased 4.5% year over year to $2.05 billion, while expenses increased 3.3% to $2.04 billion. Reading Hospital was a key driver, generating $228.9 million in operating income (15.2% margin) in fiscal 2025, while Phoenixville and Pottstown hospitals narrowed their combined losses to $38.3 million (-10.8% margin) from $55.9 million (-16.7% margin) the prior year.
3. Tower’s turnaround follows several difficult years. The system closed two hospitals, sold or shuttered multiple urgent care centers and laid off employees. In July, it transitioned revenue cycle, patient access and other administrative functions to Ensemble Health Partners, shifting about 675 employees to the vendor.
4. In June 2024, Tower secured $142 million through a refinancing deal with bondholders, nearly doubling days cash on hand and extending repayment terms. Leaders called the agreement “substantial liquidity support” that gave the system time to advance its recovery plan.
5. Despite the positive results, Tower still faces long-term financial pressure. The health system’s long-term debt exceeds $1.3 billion, and it ended FY 2025 with 38 days cash on hand.
6. Tower President and CEO Michael Stern, formerly president and COO, played a central role in the health system’s turnaround efforts. He succeeded Sue Perrotty as CEO in early 2025. Former CFO Mike Eesley recently returned to his role as chief transformation officer while Brian Rayme, former CFO of Johns Hopkins Bayview Medical Center in Baltimore, was appointed Tower’s new CFO.
7. Mr. Stern has sharpened the system’s focus on financial sustainability, cultural transformation and strategic alignment. He launched the “Tower Experience” initiative to elevate interactions across the system — from front-desk staff to billing — emphasizing engagement, service and a more human-centered culture. He’s also championed a unified operational approach, urging leaders to treat their roles like CEOs and leverage collective resources to strengthen systemwide performance. Under his leadership, Tower Health is now advancing a three-year strategic plan focused on stability, high-quality care and a reenergized workforce.
8. Former CEO Ms. Perrotty, who now sits on the board of directors, emphasized the importance of transparency and engagement during her tenure. She launched “wildly important goals” (WIGs) that empowered departments to implement 90-day initiatives, generating more than $5 million in savings last year. She also made financial literacy a priority: “If your people don’t know the numbers, they can’t help you achieve your financial goals,” she told Becker’s in a February interview.
