Kaiser Permanente reports $1.55B net loss, red operations in Q3 2022

Kaiser Permanente faced a net loss of $1.55 billion for the quarter ended Sept. 30, a near-exact reversal of the $1.56 billion net profit it had reported a year ago.

Similar to its other recent quarters, the massive nonprofit integrated system’s bottom line was heavily influenced by a nearly $1.5 billion “other income and expense” loss largely attributed to “investment market conditions.”

Operations also flipped back into the red, though executives said in a late-Friday announcement that they were overall pleased with the organization’s performance in light of mounting economic hardships.

“I am proud of our ability to navigate the challenges of the past few years including a global economic crisis, the high cost of goods and services, supply chain issues, labor shortages and the pandemic while serving our 12.6 million members,” Greg A. Adams, chair and CEO of Kaiser Permanente said in a statement. “I continue to be inspired by the unwavering commitment and dedication of our Kaiser Permanente teams who through this unprecedented and unpredictable three-year period continue to provide high-quality, affordable care and service to our members and communities.”

Kaiser Permanente claimed $24.25 billion in total operating revenues, up slightly from the prior year’s $23.15 billion, according to topline financial numbers released late Friday. Total operating expenses also ticked upward from $23.12 billion to $24.33 billion.

The faster expense growth led the system to a $75 million operating loss and a corresponding -0.3% operating margin for the quarter. It had reported a $38 million operating gain and 0.2% operating margin in 2021’s third quarter.

Membership at the end of the third quarter was up by nearly 40,000 compared to the top of the year, the organization said, suggesting a decline from the 61,000 additional members touted at the end of the second quarter.

Kaiser Permanente tallied $820 million in capital spending during the third quarter, down slightly from last year’s $878 million. The organization’s year-to-date capital spend totaled $2.5 billion as of the end of September.

“Kaiser Permanente’s integrated model of care and coverage continues to provide long-term stability amid changing market conditions,” Kathy Lancaster, executive vice president and chief financial officer, said in a statement. “In the third quarter of 2022, we remained committed to our members, patients, and the communities we serve while controlling spending and investing in our capital program.”

Kaiser Permanente is coming off its most profitable calendar year to date. A “sharp increase” in investment returns had helped fuel an $8.1 billion net income for all of 2021 and was accompanied by $93.1 billion in total operating revenues and a 0.7% operating margin.

2022’s operations have been a bit more haphazard with the organization notching a -0.3% operating margin in the first quarter and a 0.4% operating margin in the second. Investment losses have been a constant in the new year, driving first- and second-quarter net losses of $961 million and $1.3 billion, respectively.