Nonprofit health systems are beginning to regain financial footing, but fiscal second-quarter (the three months ending Dec. 31, 2025) results show that recovery remains uneven across the sector, with revenue growth and volume gains offset by persistent expense pressures.
Three of the largest nonprofit systems — CommonSpirit, Ascension and Providence — posted stronger bottom-line results year over year, but operating margins remain thin or negative as labor and supply costs continue to weigh on performance.
Here’s how the three systems performed in the fiscal second quarter, according to financial documents obtained by Becker’s.
Chicago-based CommonSpirit reported essentially break-even operating performance in the fiscal second quarter, as expense growth offset revenue gains.
Operating revenue totaled $10.4 billion, up from $10.1 billion in the same period last year. Operating expenses increased to $10.5 billion from $10 billion.
The system recorded operating income of $2 million, down from $135 million in the prior-year period, with its operating margin declining to 0% from 1.3%.
Despite weaker operating performance, CommonSpirit reported net income of $456 million, up from $100 million a year earlier, driven by $454 million in nonoperating income, including investment gains.
Expenses continued to rise across key categories. Salaries and benefits increased to $5.3 billion from $5.1 billion, while supply costs rose to $1.7 billion from $1.6 billion.
Excluding adjustments related to the California Provider Fee Program, CommonSpirit reported an operating loss of $78 million, or a -0.8% margin.
“While our positive financial trajectory demonstrates our collective progress, the work is far from over,” CFO Michael Browning said in a news release. “Our continued commitment to prioritizing volume growth, ensuring we are paid for the care we provide, and a sustained focus on the highest quality care will be instrumental in ensuring long-term sustainability.”
Renton, Wash.-based Providence reported significant improvement in operating performance in the quarter, though results remained negative on an as-reported basis.
Operating revenue increased to $7.8 billion from $7 billion in the prior-year period. Operating expenses rose to $7.7 billion from $7.3 billion.
The system reported an operating loss of $314 million, improved from a $436 million loss a year earlier. Its operating margin improved slightly to -4.0% from -6.2%.
Operating EBITDA was $66 million, compared to a loss of $118 million in the prior-year period.
On a pro forma basis — which adjusts for restructuring and other items — Providence reported operating income of $97 million, compared to a $253 million loss a year earlier. Pro forma operating EBITDA rose to $477 million from $65 million.
Providence said results were driven by higher patient volumes and revenue growth, partially offset by cost pressures and $354 million in restructuring charges tied to asset rationalization and workforce reductions. The system also recorded $281 million in gains related to divestitures and partnerships.
“Throughout 2025, our teams demonstrated strong financial discipline and operational focus,” CFO Greg Hoffman said in a March 26 news release. “We managed expenses responsibly, improved productivity and continued to enhance the efficiency of our care delivery. These efforts helped us navigate reimbursement, regulatory, inflationary and workforce pressures while supporting high-quality care for the communities we serve.”
St. Louis-based Ascension reported improved operating performance in its fiscal second quarter, continuing a broader trend of financial stabilization.
Operating revenue totaled $6 billion for the three months ended Dec. 31, 2025, down from $6.4 billion in the same period last year. Operating expenses declined to $6 billion from $6.5 billion.
The system reported an operating loss of $51.6 million, an improvement from a $143.2 million loss a year earlier. Its operating margin improved to -0.9% from -2.2%.
After accounting for nonoperating items, Ascension posted net income of $270.2 million, compared to a $110.2 million net loss in the prior-year period. The improvement was driven largely by $411.7 million in investment gains.
Ascension also cited continued operational improvements, including stronger patient volumes and more efficient care delivery. For the six months ended Dec. 31, same-facility revenue increased 10% year over year, and length of stay improved by 1.9%.
“Stronger operating results are being driven by more efficient care delivery and increased demand across key services, allowing us to reinvest in access, clinical capabilities and community-based care,” Saurabh Tripathi, executive vice president and CFO, said. “We continue to exercise strong discipline in capital deployment as we expand clinical care to our communities.”
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