Renton, Wash.-based Providence recorded operating income of $4 million (0.1% operating margin) for the three months ended Sept. 30, 2026, down from $53 million (0.7% margin) during the same period last year, according to its Nov. 13 financial report.
Providence’s year-over-year comparisons reflect discontinued-operations accounting tied to its planned sale, transition or wind-down of Providence Health Group subsidiaries, including Providence Health Plan, which will exit the insurance business after a deal to transfer its Medicare Advantage business fell through. Most of its plans end Dec. 31, 2026. The system removed these subsidiaries’ results from individual continuing-operations line items for both 2026 and 2025.
Providence President and CEO Erik Wexler said the system is encouraged by its continued progress but expects HR 1 to bring significant reductions and changes to healthcare funding. He said “building greater financial resilience now will help us prepare for these headwinds while continuing to invest in our caregivers, ministries and the communities we serve.”
Five things to know:
1. Providence reported total operating revenue of $7.8 billion in the three months ended Sept. 30, up from $7.3 billion during the same period last year. Providence attributed the revenue growth to higher demand for patient services, with case-mix-adjusted admissions up 5%.
2. The 51-hospital health system reported total operating expenses of $7.8 billion in the quarter, up from $7.3 billion during the same period in 2025. Salaries and benefits increased 6% year over year, driven by higher employee benefit costs and partially offset by a 31% decrease in agency contract labor. Supply expenses increased 10%, driven by a 15% increase in pharmaceutical expenses and a 4% increase in medical supply expenses.
3. For the nine months ended Sept. 30, the nonprofit system reported $178 million in operating income, up from a $172 million operating loss during the same period last year. Operating revenue was $22.9 billion, up from $21.7 billion, and operating expenses were $22.7 billion, up from $21.9 billion.
4. Providence reported net income of $231 million through the third quarter of 2026, up from $83 million during the same nine-month period last year.
5. Kevin Smith, who most recently served as CFO of St. Louis-based SSM Health, joined Providence as executive vice president and CFO Oct. 26, succeeding Greg Hoffman, who retired.
