For-profit health systems' financial performance in 2025—and what to expect in 2026
- Jordan Peterson
- 1 day ago
- 12 min read
All the major for‑profit health systems have hosted their fourth set of earnings calls for 2025, sharing both their Q4 2025 performance and their 2026 outlook. These players function as a near‑real‑time “dashboard” for demand, pricing power, cost pressures, and strategic bets across the delivery system—offering helpful intel on the direction of the healthcare industry as a whole (even if they occupy a somewhat unique position within the provider world, as we'll discuss more throughout).
In today's post, we’ll summarize the sub-sector-level trends we saw across 2025, dive into the details of the largest players' financial performance, and outline what we’re watching for moving forward.
Read on to get our full commentary, or use the links below to jump to a specific area of interest:
High-level trends across for-profit health systems' financial performance in 2025
For-profits’ steady margin performance was a notable outlier as most industry sectors struggled—but policy headwinds temper 2026 outlook
The obvious takeaway from the for-profits health systems' financial performance in 2025 is that for-profit health systems were one of the few standouts in an otherwise challenging year for the healthcare industry. Most of the traditional players (including most providers, insurers, and life sciences companies) struggled due to rising costs and utilization. This was certainly true for most health systems: Median health system margins fell in 2025, at least relative to average levels seen in 2024.
According to data pulled from Strata, median margins for systems (regardless of ownership type) hovered between 1-1.5% across 2025. The absolute numbers matter less than the trend over time, since each data aggregator measures margins in a slightly different way. But the visualization above paints a clear picture of margin trends over the past couple of years: Finances were under extreme pressure in 2023 as hospitals were still experiencing depressed margins in the wake of the pandemic. Labor and supply costs were still elevated, and volumes had yet to fully rebound. Things took a turn for the better in 2024 as costs began to come down and utilization finally rebounded. But across 2025, median margins declined once again. Volume continued to grow for many organizations, but costs rose faster than revenue (we will come back to this in more detail in just a bit). These pressures hit almost all types of health systems, including for‑profits—but for‑profits seem to have weathered those challenges more effectively than their not-for-profit peers.
Across the board, most of the for‑profits showed revenue growth and improved profitability, reinforcing positive outlooks for 2026. We’d narrow their outsized performance down to three main factors. The for‑profits have been:
Nimbler at responding to cost challenges.
More aggressive in investing in AI-based revenue cycle technologies.
Ready to take advantage of strong growth in revenue, especially in outpatient and higher-acuity services.
That’s not to say that for‑profits are totally immune to the headwinds facing the broader industry. We’ll lay out some of the key challenges leaders pointed to in the earnings calls as we proceed. But first, let’s dive into the three main factors that led to their outsized performance.
For-profits are nimbler at responding to cost challenges
Regardless of ownership type, providers on all sides are seeing both labor and non-labor expenses continue to rise.
Labor expenses: Many of the for‑profit health systems called out professional fees (i.e., paying for clinicians’ work, separate from the facility fee) in their Q4 2025 earnings calls, highlighting high‑single‑digit growth in physician costs.
Ardent Health: Called out 8% growth in professional fees in Q4 2025.
CHS: Noted that medical specialist fees were were up 4.6% year-over-year in Q4 2025.
HCA: Projected "continued physician cost pressures" across 2026 with "high single digits of growth."
This challenge is not exclusive to for-profits: Labor expenses increased 4.2% from December 2024 to December 2025 across all health systems. Unlike during the pandemic—when nursing and contract labor drove labor expenses—physician expenses were the major driving force this past year: total expense per physician FTE reached approximately $1.2 million for the quarter, up 6.3% from the third quarter of 2025 and 8.9% compared with Q4 2024. This increase stems from upward pressure on wages, high turnover rates, continued reliance on contract labor, and supply chain challenges. Professional fees will likely continue to pressure for‑profit margins in 2026, with all the for‑profits flagging them as a 2026 headwind.
Non-labor expenses: Labor expense growth is actually being outpaced by growth in non‑labor expenses (drugs, supplies, and purchased services), which saw 9% year‑over‑year growth from December 2024 to December 2025. The rise in non‑labor expenses fits with what we’re calling “the great utilization shift”—the shift from procedural care to medical care. Medical care is generally more expensive and less profitable (because it requires disproportionately more costly resources, like drugs, but at lower reimbursement levels) than procedural care. Most hospital sub‑sectors (especially non‑profits, including rural hospitals, community hospitals, and AMCs) are seeing margins slide because of this shift. But, at least for now, for‑profits seem to be handling this shift relatively well. In fact, many of the for‑profits called out rising acuity—and the associated increase in volumes—as both a growth opportunity and a revenue booster. And the relatively large size of the major for-profit chains gives them a natural scale-based advantage in managing drug and supply costs and negotiations.
For-profits have long been known for their cost discipline. And they appear to be actively positioning themselves to handle rising costs through investments in operational efficiency, workforce optimization, and technology deployments—which brings us to our next trend: For-profits have been aggressively investing in AI solutions.
For-profits have been more aggressive in investing in AI-based revenue cycle technologies
As we’ve covered previously, the AI arms race between payers and providers continues to ramp up. Historically, payers were “winning” that race as they had more resources to devote toward AI revenue cycle solutions. In response, providers have invested heavily in technological capabilities (i.e. predictive capabilities, routine error minimization, reimbursement accuracy, appeals) over the past couple of years, drawing them closer to the hefty level of resources that payers accrued while providers were contending with the pandemic. For‑profits are more likely than the rest of their provider peers to have the resources and scale to invest in AI solutions—likely related to their stronger financial performance.
Payers have clearly noticed these investments. Many of the national insurers called out providers’ “aggressive tactics” in their own earnings calls—using them as justification to further ramp up their own AI and automation. The tension isn’t going anywhere in 2026; if anything, it will intensify as both sides use technology to protect margins and push administrative burden onto the other.
For-profits are ready to take advantage of strong growth in revenue—with some aggressively pursuing acquisition while others pursue strategic diversification
The outpatient shift has been a steady fixture within the industry for years at this point, but the pace has picked up in 2025/2026. While overall M&A activity was down in 2025, health systems continued to eye outpatient and vertical deals that align with growth in ambulatory surgery centers (ASCs) and same day procedures. CMS' recent HOPPS final rule cancellation of the IPO list (set to phase out by January 1, 2028) will only further accelerate the shift.
For-profits are clearly leading the ASC charge, with the most notable example being the partnership between Tenet Healthcare and United Surgical Partners International (USPI). In 2025, Tenet continued its expansion of its ASC footprint through USPI, the ASC arm of Tenet Healthcare, bringing its total to 556 facilities nationwide in 2025. (In contrast, smaller, not-for profit systems have been less active in the ASC space. Instead, they are prioritizing alliances to stabilize finances and preserve access to essential services.)
But M&A isn’t the only story in the for-profit world. We’ve also seen numerous examples of for-profits refocusing on their core operations through divestiture. In general, for-profits tend to be much more aggressive about pulling out of unprofitable markets. CHS has been the prime example here, as it has undergone a number of strategic divestitures over the past few years. CHS has sold about 35% of portfolio since 2019 as it works to exit underperforming or non-strategic markets and free up cash. The strategy appears to be paying off—CHS signaled at the end of last year that they plan to slow down its divestitures heading into 2026 now that debt is trending down.
It’s clear that for-profits aren’t just “growth machines.” They are also willing to shrink to grow—exiting weaker markets to double down on core regions and higher-margin sites of care.
Multiple policy changes threaten for-profits’ 2026 outlook
Of course, for-profits have their own share of challenges that impacted 2025 performance and will likely ramp up in 2026.
Expiration of the ACA subsidies
The most commonly-cited headwind heading into 2026 is the expiration of the ACA enhanced subsidies (as of the end of 2025). All of the for‑profits are projecting that the expiration of the subsidies will deteriorate their commercial mix as patients lose coverage and either move to Medicaid or become uninsured, triggering downstream effects on bad debt, uncompensated care, and ultimately EBITDA.
Of course, the actual impact depends heavily on how effectively states are able to get patients enrolled in alternative coverage. For example:
HCA expects a 15%-20% decline in exchange volumes and to lose between $600 million and $900 million in 2026.
Tenet is projecting a 20% reduction in ACA enrollment and lower earnings by about $250 million in 2026.
UHS estimates a decline by 25% to 30% in ACA enrollment, resulting in a $75 million headwind in 2026.
These projections mirror the membership declines insurers are also forecasting, which we covered in our Q4 2025 insurer performance review.
Impacts of the One Big Beautiful Bill—specifically Medicaid payments
At the same time, for-profit systems are preparing for the impacts from the One Big Beautiful Bill Act (OBBBA). Some for-profit leaders projected hundreds of millions of dollars of losses in their earnings call.
While coverage loss projections have dominated much of the coverage of OBBBA, for-profit leaders pointed to a separate, but related, Medicaid provision of OBBBA as an even bigger source of concern. For-profits seem particularly worried about supplemental Medicaid payment uncertainty—which have been a major contributor to revenue over the past few years. OBBBA restricts new Medicaid state-directed payments (capping payments at 100% of Medicare rates in expansion states and 110% in non-expansion states while also gradually cutting existing payments). These payments have been a major revenue source of revenue, totaling more than $100 billion in annual Medicaid spending.
While safety net hospitals and not-for-profits will obviously feel this impact more than for-profits (given their heavier reliance on Medicaid), the for-profits are still preparing for impact. For example, HCA projected that the loss of the Medicaid state supplemental payment programs will lead to a loss of between $250 million to $450 million in 2026.
In sum, OBBBA is a bigger story for safety‑net and academic systems than for the big for‑profit chains—but even the for‑profits will lose some cushion from supplemental funding just as other headwinds hit.
Deep dives into specific players
Let’s dive into how each of the major for-profit health systems performed in 2026. These are the five systems that dominate the publicly traded, acute‑care hospital operator space in terms of hospital count, revenue, and national footprint
Ardent Health
Ardent Health reported a strong financial performance for Q4 2025, with revenue of $1.61 billion (essentially flat year-over-year—mostly due to payer denials and professional fee growth) and an EPS of $0.32 (slightly below forecasts). Leaders attributed strong performance to strong 2025 admissions and adjusted admissions growth of 5.3% and 2.3%, respectively.
Ardent’s 2026 outlook is mixed. Ardent anticipates a $50 million cash flow headwind in 2026 due to payroll cycle timing. At the same time, Ardent is focusing on a number of strategic initiatives to drive growth and efficiency:
IMPACT program: Ardent's multi-year operational improvement initiative targets margin enhancement, process agility, and care transformation, with targeted cost savings in both labor and operational expenses. The program is already producing early wins (increase in expected annualized savings, decrease in contract labor, moderated salary/wage growth, and improved OR performance). Leaders expect that the program’s savings will continue to build through 2026, positioning Ardent to grow adjusted EBITDA even with other macro heads wind, such as OBBBA’s Medicaid redeterminations.
AI investments: Ardent continues to invest in AI, including AI-assisted virtual care, AI-enhanced scribe technology, and AI-enabled continuous vital sign monitoring. Leaders shared that Advent has already seen improvements in clinical outcomes and operational efficiencies from its AI investments , which leaders believe will continue to act as tailwinds going into 2026.
Despite the overall strong annual performance, Ardent’s stock fell by 7.47% in premarket trading, reflecting investor concerns about the flat revenue growth in the fourth quarter and the anticipated $50 million cash flow headwind in 2026.
Community Health Systems (CHS)
CHS reported a moderate fourth quarter, with revenue of $3.11 billion (falling slightly short against a forecast of $3.14 billion) and an EPS of -$0.01 (surpassing the forecasted -$0.05). Despite a challenging environment, leaders shared that they were able maintain stable net revenues and EBITDA amid a reduced facility portfolio.
Some of the bright spots reflected CHS’ focus on strategic investments and operational efficiencies. In addition to CHS’s aforementioned aggressive divesture strategy, leaders also highlighted strategic growth and investments in technology, completing a multi-year Oracle cloud ERP rollout (which generated about $50 million in savings in 2025), adding between 500 and 600 beds to its core portfolio (including freestanding EDs, ASCs, and outpatient clinics), and investing in AI (such as virtual assistants to improve documentation accuracy).
Following the earnings announces, CHS’ stock dropped 4.19%,, reflecting investor concerns over the revenue miss and broader market conditions—specifically how healthcare exchange volumes could impact 2026 revenue and concerns about consumer confidence.
HCA Healthcare
HCA saw very strong financial performance across 2025. Leaders attributed the strong performance to “investments in network expansion, workforce development, and advancing clinical capabilities.” Despite a slight revenue miss ($19.51 billion against a forecasted $19.67 billion), EPS surpassed expectations, coming in at $8.01 against a forecast of $7.45.
Leaders reinforced that they remain confident about HCA’s outlook heading into 2026, coming off 19 consecutive quarters of volume growth, driven by investments in network expansion, workforce development, and clinical capabilities.
Active on the M&A front. The company continues to expand its network, adding approximately 100 outpatient units in 2025.
Investment in the multi-year Resiliency Program: HCA invested across three critical areas—organizational (new capabilities aligned around the company’s operating imperatives), management systems to enhance execution, and leadership development. Leaders stated these investments have allowed HCA to “invest significantly in our networks, our people, and our AI and tech agenda”, positioning them well for 2026.
Leaders acknowledged there will be significant headwinds going in 2026, including the expiration of the enhanced premium tax credits and the ongoing developments related to Medicaid supplemental payment programs.
Despite the fourth quarter revenue miss, investors remain optimistic, leading HCA’s stock to surge 11.16% in pre-market trading.
Tenet Health
Tenet capped off a strong 2025 with a strong fourth quarter. Tenet reported net operating revenue of $5.5 billion (up from $5.1 billion in Q4 2024) and slightly surpassing expectations. The company’s EPS of $4.70 in Q4 2025 also surpassed expectations of $4.02. Leaders attributed the strong growth to high-acuity procedures and strategic investments in robotics and specialty platforms.
Ambulatory care: Tenet’s ambulatory care segment, which includes USPI, generated $580 million in adjusted EBITDA during the fourth quarter, a 9.4% increase over the prior-year period.
Revenue cycle platform: Tenet’s recent Conifer Health Solutions transaction essentially lets it regain full strategic control of Conifer while monetizing its partnership with CommonSpirit, yielding around $2.7 billion in total value to Tenet. Leaders are highlighting the deal as a platform to double down on AI‑ and automation‑driven revenue cycle services.
Overall, CHS leaders are optimistic going into 2026 due to “ongoing strength in demand and acuity, physician recruitment, and service line expansion, as well as additional sites of care joining the portfolio.”
Despite these positive results, Tenet’s stock price declined slightly by 1.06%, reflecting broader market concerns including potential impacts from changes in the exchange marketplace and potential volatility in managed care contracting rates.
Universal Health Services (UHS)
UHS reported strong Q4 2025 results, capping off a mixed 2025. UHS slightly missed Q4 2025 revenue expectations with actual revenue of $4.49 billion against a forecasted $4.51 billion—but still a 9% year-over year increase. However, UHS met Q4 2025 EPS forecasts of $5.88.
Leaders attributed overall performance to growth in its acute care and behavioral health segments. Notably, UHS acquired Talkspace (a virtual behavioral care provider) in early 2026, further cementing their focus on behavioral health.
Following the earnings release, Universal Health Services’ stock fell by 9.37% in after-hours trading. This decline reflects investor concerns over the revenue miss, potential challenges in the Las Vegas acute care market (market softness has impacted acute care volumes), and potential declines in healthcare insurance exchange volumes.
Parting thoughts: What can we expect in 2026?
Overall, the for-profit systems weathered the industry-wide pressures relatively well in 2025. But with these pressures expected to continue into 2026, we’ll be keeping an eye on how the health systems continue to react. There are three major areas we’ll be watching.
“The great utilization shift” will continue to ramp up: The Baby Boomers will only keep getting older, accelerating the shift to medical care and keeping cost pressures up. This will favor systems with strong inpatient medicine and post‑acute networks but will strain those whose margins depend heavily on elective procedures.
Multiple policy and payment pressures will hit in 2026: As we’ve covered, health systems will start to feel the effects of the enhanced subsidies and impacts from OBBBA over the next few years.
Payer-provider friction: Payer-provider friction—escalated by AI use on both sides—was a dominant theme at our recent Revenue Cycle Summit. The friction embedded in today's payer-provider relationship is not a technical problem awaiting a smarter solution—it is a structural and economic feature of the system, and one that AI appears more likely to intensify than resolve in the near term.
But it’s not just AI that causing friction between payers and providers. Across the second half of 2025, we saw an uptick in hospitals and health systems opting to end or not renew contracts with some MA plans over administrative challenges. However, for-profits seemed to have avoided broad drops that would disrupt revenue and upset their patient population. Instead, they’ve opted for targeting renegotiations and network narrowing. We’ll see if that trend continues across the next year.
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