Chicago-based CommonSpirit Health reported operating income of $2 million in the second quarter of fiscal 2026, representing a 0% operating margin, according to a financial report released February 13. This marks a significant decline from the $135 million operating income (1.3% margin) recorded during the same period last year.
The health system’s total revenue for the three months ending December 31 reached $10.5 billion, an increase from $10.1 billion in the prior-year quarter. Net patient revenue also rose, climbing to $9.9 billion from $9.3 billion. However, these gains were offset by a corresponding increase in operating expenses, which totaled $10.5 billion compared to $10 billion the previous year.
A breakdown of expenses reveals increases across multiple categories. Salaries and benefits totaled $5.3 billion, up from $5.1 billion, while supply costs rose to $1.7 billion from $1.6 billion. Purchased services and other expenses increased to $3 billion, compared to $2.8 billion in the same quarter last year.
Despite the flat operating income, CommonSpirit recorded a net income of $456 million for the quarter, a substantial improvement over the $100 million net income reported in the second quarter of fiscal 2025.
CommonSpirit is in the process of exiting its joint venture with Tenet Healthcare, Conifer Health Solutions and plans to bring revenue cycle operations in-house. This move, intended to improve operational integration, efficiency, and patient experience, involves a $1.9 billion payment from CommonSpirit to Tenet over three years, as well as a $540 million redemption of CommonSpirit’s 23.8% stake in Conifer. Conifer will continue to provide services through 2026 while the transition is underway.
When adjusted to exclude the impact of the California Provider Fee Program, CommonSpirit recorded an operating loss of $78 million, equating to a -0.8% margin. According to an annual report, normalizing for the California provider fee program, operating losses for the year ended June 30, 2025, were $225 million, compared to $87 million the prior year.
