Dive Brief:
- Kaiser Permanente nearly tripled its operating income last year, even as the integrated healthcare conglomerate weathered rising expenses.
- Kaiser, which recorded results alongside its subsidiary Risant Health, recorded operating income of $1.4 billion last year, up from $569 million in 2024 as the nonprofit continued to invest in operational improvements, according to earnings results released last week.
- Still, expenses rose by more than $11 billion last year as Kaiser said rising medication costs and other line items made providing care more expensive.
Dive Insight:
It’s the second year Kaiser has reported annual financial results alongside its subsidiary Risant Health, which Kaiser created to acquire and operate other nonprofit hospitals. Risant launched in 2024 and completed its first two acquisitions within the same year, buying Pennsylvania-based Geisinger Health and North Carolina-based Cone Health. Kaiser executives have said they plan to buy about five health systems within the first few years of operation.
As of Dec. 31, Kaiser’s portfolio had swelled to 55 hospitals and over 840 medical offices.
In addition to expanding Kaiser’s portfolio, Risant’s acquisitions have also been beneficial for its balance sheet. In its nine-month earnings released through Sept. 30, Kaiser said Risant added around $9.4 billion in operating revenue from its total geographic markets, compared with Kaiser’s roughly $86 billion portfolio.
Although Kaiser hasn’t yet broken out its year-end earnings performance by subsidiary, the nonprofit doubled its operating margin in 2025, from a 0.5% margin in 2024 to a 1.1% margin last year.
Kaiser’s margin recovery follows the same trajectory as the nonprofit hospital sector as it looks to stabilize after operational pressures from rising expenses and workforce burnout. The median nonprofit hospital margin was around 1% in August, up from 0.4% in 2024, according to credit agency Fitch Ratings.
Still, Kaiser said it navigated an increasingly complex healthcare environment in 2025, including rising expenses, more complex care and increasing volumes.
Expenses were rising across all of Kaiser’s expense line items as of September, including pharmaceuticals, outside medical costs, and salaries and benefits. Costs have been mounting for hospitals across the sector as medical expenses grow faster than inflation and labor costs remain elevated.
The system said it’s been below the industry average for days cash on hand compared to other systems with similar credit, although the nonprofit has enough cash for its daily operations.
Improvements in operational efficiencies, including reducing outside medical expenses, helped mitigate increasing costs and allowed Kaiser to improve its operating margin last year, Kaiser CEO Greg Adams said in a press release.
“Through our employees’ and physicians’ unwavering focus on quality and affordability, we were able to achieve a 1.1% operating margin while addressing the increased demand for care, higher care acuity, and the rising costs of care,” Adams said in a statement.
Kaiser logged $9.3 billion in net income for the year, a nearly $4 billion decrease from 2024 when Kaiser included a one-time $6.8 billion line-item from the Geisinger and Cone acquisitions.
A favorable market boosted Kaiser’s investment income higher, adding to its net income. Kaiser used the investment income to support its $4.8 billion in capital spending on projects in 2025 to meet California earthquake hospital mandates and add other technology improvements.
At the same time, the nonprofit is navigating a strike among more than 30,000 workers at facilities in California and Hawaii. The strike, which is expected to lengthen wait times or close some facilities, entered its third week on Monday.
