CommonSpirit Health grew its revenues by 8.5% during its 2026 fiscal year while trimming its operating losses by $257 million, notwithstanding the multibillion-dollar hit it absorbed earlier this year to bring revenue cycle management in house.
The 156-hospital nonprofit system, one of the nation’s largest, reported $42.4 billion in total operating revenues during the 12-month period ending June 30, 2026, according to financial statements shared Thursday. The tally reflects rising volumes and additional supplemental revenues from states like Nebraska, Colorado and, most notably, California when compared to the year prior, management wrote in a filing.
That helped the system trim its 12-month operating loss, before special charges, from $687 million (-1.8% operating margin) to $430 million (-1.0% operating margin). EBITDA (earnings before interest, taxes, depreciation and amortization) improved by $479 million to over $1.9 billion.
That performance was pressured by increased spending on supplies and purchased services, though tightened length of stay at its hospitals, reduced contract labor spend and overall increased labor productivity pushed the balance closer to zero, the system said.
“Fiscal year 2026 demonstrates clear operational progress. While our EBITDA growth underscores the resilience of our core business, we recognize the persistent headwinds posed by an increasingly complex payer environment and rising costs,” CommonSpirit Chief Financial Officer Michael P. Browning said of the numbers in a statement. “Our focus remains on navigating these external pressures through disciplined cost management and continued clinical innovation.”
As CommonSpirit continues to work through its Project Impact improvement plan, the chief example of its efforts to boost long-term operating performance is its decision earlier this year to terminate services with Tenet Healthcare’s Conifer Health Solutions, sell its stake in that business and bring revenue cycle functions in-house. Doing so resulted in nearly $2.8 billion of costs tied to contract termination, restructuring and asset impairment that it recognized in the 2026 fiscal year as special charges.
More broadly, management wrote in the financial filing that it is working to further improve its operating performance by:
- Further growing its volumes, with a particular focus on fleshing out its networks with non-inpatient offerings
- “Revenue realization improvements” including a crackdown on payer denials and ongoing managed care negotiations
- Labor cost management through standardized staffing model rollouts
- Various expense reduction efforts including supply chain contract renegotiation, revisiting its purchased service contracts and more length-of-stay improvements
- Rethinking its current service lines in markets “where performance is currently below requirements.”
Breaking down volume trends, CommonSpirit’s filing described a 3.9% year-over-year increase in adjusted admissions and a 1.9% decline in length of stay. While those helped boost the year’s performance, slipping payer mix and difficulties in revenue collection hampered CommonSpirit’s inflow.
On the expense side, a 5.2% year-over-year increase in salaries and benefits spending was largely attributed to volume and salary growth, though the spending line as a percentage of net patient revenue still declined from 55.5% to 53.4% amid productivity improvements. Supplies spending rose 5.6% in total and 1.6% per adjusted admission, while purchased services rose 12.6% in total or 8.4% per adjusted admission.
CommonSpirit logged over $2.5 billion of net nonoperating income on the back of $2.4 billion in net investment income. Together with its operating numbers and the special charges, the organization recorded a $810 million loss for its bottom line.
“With fiscal year 2027 well underway, we are committed to advancing a sustainable ministry that provides high-quality, innovative care for generations to come,” Browning said.
CommonSpirit also noted in the filing its plans to sell its 49.75% ownership interest in Mercy Care, an insurance plan in Phoenix, Arizona, to Aetna. The deal is expected to close in the ongoing fiscal year, with Aetna also planning to acquire the remaining share of the business from Ascension, per separate financial documents filed by the parties.
Additionally, CommonSpirit just wrapped its sale of a four-hospital system in eastern Ohio to UPMC, and is in the process of handing off three more North Dakota hospitals to Altru Health System.
CommonSpirit was the country’s second-largest nonprofit health system by operating revenue in 2025, behind only Kaiser Permanente. The Catholic system counts more than 2,600 care sites, 156 hospitals (20 of which are operated through unconsolidated joint ventures) and more than 160,000 employees within its 24-state footprint.
It reported over $4.6 billion in total community benefits and charity care government program reimbursement deficits in its most recent fiscal year, $518 million behind its tally from the year prior.