Kaiser Permanente closed its second quarter of the year with a billion dollars of operating income and a $3.3 billion bottom line—but operating headwinds on the horizon have leadership taking a hard look at the health system's cost structure and potential efficiencies.
The quarter’s performance is a step ahead of last year, when the integrated nonprofit reported $908 million of operating income and $2.1 billion in net income.
It’s also a fair jump in the scale of Kaiser’s operations. Consolidated operating revenues and expenses during the most recent quarter were $32.1 billion and $31.1 billion, respectively, up from $29.1 billion and $28.2 billion in the second quarter of 2024. These reflect a 3.2% operating margin in the second quarter of 2025 and a 3.1% operating margin in the second quarter of 2024.
Together with the year’s opening quarter, Kaiser now sits at about $63.9 billion of operating revenue and nearly $2 billion of operating income for the first half of the year. Kaiser said its operating income runs highest during the beginning of the year due to the timing of its health plan’s open enrollment.
Of note, this is the first quarter in which a year-over-year comparison is available following the Risant Health subsidiary’s acquisition of Geisinger Health on March 31, 2024—though its other major acquisition of Cone Health didn’t come until later that year.
Kaiser released the top-line numbers in a Friday press release, which is typically followed within a couple of weeks by a regulatory filing with more granular details. That release pointed to downward pressures of high member utilization, high acuity of care and costs of care delivery during the quarter, which were “partially offset” by tighter discretionary spending and unspecified additional business function efficiencies.
“While we are pleased with our second-quarter performance, like others in the health care industry, Kaiser Permanente is navigating a shifting landscape marked by an aging population and evolving consumer expectations, as well as the recently enacted federal budget reconciliation bill, which will reduce healthcare coverage and funding as health care costs rise,” CEO and Chair Greg A. Adams said of the numbers. “To meet these challenges, we are focused on enhancing quality, service and access, and redesigning our cost structure as we lead the shift toward value-based care that prioritizes affordability and improved patient outcomes.”
Membership in Kaiser and its subsidiary’s health plans was more than 13.1 million as of June 30, roughly in line with the total three months prior and roughly 600,000 members ahead of the year before.
“Favorable market conditions” drove nonoperating income of $2.2 billion during the quarter, which was up from the prior year’s $1.2 billion. Capital spending also increased from last year’s $889 million to $1.1 billion, for which the system pointed to ongoing facility and technology investments.
“In the second quarter, we continued to invest in our people, facilities, and technology to deliver the high-quality care and service that our members and patients expect,” Kathy Lancaster, executive vice president and chief financial officer, said in the release. “We are also leveraging innovation, strengthening performance and accelerating efficiencies to drive affordability and prepare for the financial impact of the new federal budget bill.”
Kaiser is the country’s largest health system by total operating revenue, which in 2024 hit nearly $115.8 billion thanks in no small part to the premiums it collects as a membership-based integrated system. With the recent acquisitions of Risant Health, the organization includes more than 50 hospitals and about 280,000 total employees.
Kaiser’s year-over-year gains and checked optimism for the coming years are in line with broader expectations for nonprofit systems, as described last week in a Fitch Ratings sector report touting higher margins but policy and demographic upheaval on the horizon.