Advocate Health recently reported its first half results, which showed that the Charlotte-based health care system had operating income of $85.7 million on revenue of $15.2 billion. It’s now calling itself the third-largest U.S. nonprofit healthcare system.
Including investment gains, Advocate had net income of $998 million during the six months, or essentially a billion dollars. Results fluctuate with the stock and bond markets, of course. The June 30 balance sheet shows net assets of $25 billion, which vastly exceeds Advocate’s $10.9 billion in long-term debt and other non-current liabilities.
That rock-solid financial position is why State Treasurer Dale Folwell jokes that Advocate is an investment company with some hospitals and clinics attached. The less cynical view is that such robust reserves enable the system to weather economic downturns and spend billions on expansions in its Charlotte and Winston-Salem markets, as noted in this recent Business North Carolina story.
Advocate’s report also provided details that shows the relative scope of its three main entities:
- Advocate Aurora Health, which is mainly the group’s hospitals and clinics in the Chicago and Milwaukee metro areas, had revenue of $7.8 billion in the first half. The Atrium Health operation, which includes the Charlotte area and Georgia operations, had revenue of $4.2 billion, while the Atrium Health Wake Forest Baptist division reported $2.3 billion.
- Advocate Aurora had an operating profit of $134 million during the period, compared with $58 million at Atrium Health’s Charlotte market and a loss of $14.4 million at Wake Forest Baptist.
- When investment gains are included, Advocate Aurora reported a net gain of $379 million in the first half, compared with $336 million in the Charlotte market and $62 million at Wake Forest Baptist. The latter system has much smaller investment holdings than the other two groups.
- In terms of the underlying business, Advocate Aurora reported 5.2 million physician visits and 626,500 hospital patient days. The Charlotte division reported 3.1 million physician visits and about 965,000 patient days. And Wake Forest Baptist had about 172,400 patient days, and didn’t report physician visits.
Savvy dealmaking by CEO Gene Woods enabled Charlotte’s Atrium Health to take charge of the Wake Forest Baptist system in Winston-Salem in late 2020 and the Advocate Aurora system in 2022 through combinations that entailed little cash changing hands.
And with so much turmoil in U.S. healthcare creating lots of opportunities, no one expects Woods to slow down his M&A machine.