Kaiser hits $1 billion operating gain in Q1


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Kaiser Permanente Monday posted a record $1 billion operating gain in its first quarter, just days after holding its largest-ever bond offering.

The Oakland, Calif.-based health plan and hospital giant eclipsed the $1 billion barrier on revenue of $18.1 billion. That compared with an operating gain of $701 million on revenue of $16.3 billion in the year-earlier quarter.

The 5.5% operating margin in the first quarter beat the strong 4.3% operating margin from the year-earlier period.

Not-for-profit Kaiser is the nation’s largest integrated health system with 11.7 million health plan members and 39 hospitals.

Its record first quarter was disclosed in a financial filing Monday.

Efforts to reach Kaiser for a comment late Monday were unsuccessful.

Kaiser’s performance was only nominally aided by contributions from its $1.8 billion acquisition of Seattle-based Group Health Cooperative on Feb. 1.

Group Health contributed $18 million of operating income on revenue of $709 million over the last two months of the quarter, the financial filing shows.

Kaiser earlier this month raised a record $4.4 billion through a series of three bond offerings to build out access points in its current markets and look for growth opportunities in communities neighboring its facilities. Those include hundreds of physician offices and outpatient centers across the country.

Kaiser reported operating income of $1.9 billion on revenue of $64.6 billion in full-year 2016 compared with operating income of $1.8 billion on revenue of $60.7 billion in the prior year.

In the first quarter of 2017, Kaiser also posted an investment gain of $582 million compared with an investment loss of $157 million in the year-ago period.

The operating gain coupled with the investment gain and other non-operating income pushed Kaiser to a net gain in the quarter of $1.56 billion.

Kaiser only books actual investment gains, not paper or unrealized gains in its investment portfolio.

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