Sacramento, Calif.-based Sutter Health recorded income from operations of $454 million (7.3% margin) in the second quarter of 2026, up from $195 million (4% margin) in the same quarter last year, according to its Sept. 1 financial report.
Six things to know:
1. Sutter reported total operating revenue of $6.2 billion for the three months ended June 30, up 27.1% from $4.9 billion over the same period last year. Patient service revenues increased 30.6% to $5.5 billion, and premium revenues increased 4.3% to $581 million.
2. Total expenses were $5.8 billion, up 22.8% from $4.7 billion. Salaries and employee benefits increased 7.5% to $2.3 billion. Purchased services increased 12.3% to $1.6 billion. Supplies increased 23.7% to $798 million.
3. Much of the quarter’s revenue and expense growth was tied to California’s Medi-Cal hospital fee program. In June 2026, CMS approved the “most critical and significant portion” of a revised 2025 program application, allowing Sutter to recognize $872 million in hospital fee program revenue and $468 million in related expense for the first six months of the year, compared with just $4 million in revenue and no related expense in the same period last year.
4. Sutter and Minneapolis-based Allina Health on May 21 signed a definitive agreement formalizing plans to create a combined nonprofit health system spanning California, Minnesota and Wisconsin. The transaction would create a system with 39 hospitals and more than 400 care sites serving more than 5 million patients. The combined system plans over $2 billion in Minnesota and western Wisconsin investment, aimed at growing ambulatory access, building out specialty institutes, and expanding digital and AI tools. Under the proposed deal, Allina Health would become Sutter’s Upper Midwest Division while retaining its brand, board of directors and Minneapolis headquarters.
5. Sutter reported a net income of $1.2 billion during the second quarter of 2026, up from $667 million during the same period last year.
6. For the six months ended June 30, Sutter reported operating income of $538 million (4.7% margin), up from $281 million (2.9% margin) in the same period last year.
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