Cleveland-based University Hospitals reported a $105.7 million operating loss and a -2.8% operating margin through the first six months of 2026, compared with $97.7 million in operating income and a 2.7% margin during the same period in 2025.
The year-over-year swing was heavily influenced by a $182 million nonrecurring gain from the sale of the system’s outpatient laboratory services business in the first quarter of 2025, according to financial documents published Aug. 27.
Eight things to know:
1. University Hospitals reported $3.73 billion in operating revenue through June 30, up 4.8% from $3.6 billion during the first six months of 2025. Operating expenses increased 10.8% to $3.8 billion from $3.5 billion.
2. The system posted a -2.8% operating margin and a $105.7 million operating loss, compared with a 2.7% operating margin and $97.7 million in operating income during the same period in 2025. The prior-year results included $192.9 million in nonrecurring items, largely tied to the outpatient laboratory business sale.
3. Excluding nonrecurring items, operating performance was slightly weaker year over year. University Hospitals reported a $105.9 million loss from continuing operations, compared with a $95.2 million loss in the first six months of 2025. Its operating margin from continuing operations was about -2.9%, compared with -2.8% a year earlier.
4. Operating revenue from continuing operations rose 9.3% to $3.67 billion, up from $3.4 billion during the same period in 2025. Net patient service revenue increased 9.6% to $3.4 billion from $3.1 billion. Growth was driven by the academic medical center, specialty pharmacy and infusion services and the system’s physician organization.
5. Patient care supply costs rose 18.1% to $1.04 billion, up from $879.4 million a year earlier, while labor costs increased 4.6% to $1.93 billion from $1.85 billion. The system said pharmaceuticals accounted for most of the supply-cost increase, driven largely by specialty pharmacy, infusion and oncology volumes.
6. Patient volumes increased across several key measures. Adjusted discharges rose 3.3% to 143,099 from 138,586, while inpatient discharges increased 1.8% to 52,297 from 51,378. Inpatient surgeries rose 3.4% to 14,678 from 14,196, and outpatient surgeries increased 2.8% to 54,946 from 53,455. Emergency department visits declined 1.8% to 212,956 from 216,775.
7. University Hospitals ended June with $2.6 billion in unrestricted liquidity, up from $2.4 billion at June 30, 2025, but essentially flat from year-end 2025. Days cash on hand stood at 130, compared with 132 at June 30, 2025 and 137 at Dec. 31, 2025. Total debt rose to $1.8 billion from $1.7 billion at June 30, 2025.
8. The system is targeting an operating margin of 1.5% to 3%. University Hospitals said its revenue and expense initiatives generated more than $200 million in operating income improvement in 2025 and identified another $160 million in improvements for 2026. Those efforts include reducing premium labor, improving documentation and coding, lowering denials and bad debt, cutting supply waste and consolidating physical locations.
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