Jefferson Health reported a $104 million operating loss in first quarter of fiscal 2026

Jefferson Health reported a $104 million operating loss for the three months that ended Sept. 30, as its insurance business continued to drag down results, the Philadelphia region’s largest health system told bondholders Friday.

The loss included $19.4 million in restructuring charges for employee severance related to earlier job cuts and moves designed to make the system more efficient, according to the bond document.

Expenses related to Jefferson’s layoff last month of 600 to 700 people were not part of that restructuring charge and will be reported as part of the current quarter.

Excluding restructuring costs in the first quarter of fiscal 2026, Jefferson’s operating loss was $84.4 million, compared with a $89.4 million loss for the same period a year ago.

“We have a multiyear plan to strengthen our financial sustainability, and this is just the beginning. We are operating ahead of our projected plan,” Thomas Jefferson University’s chief financial officer, Michael Harrington, said in an email. The university owns the 32-hospital nonprofit health system.

Here are more details:

Revenue: Jefferson reported $4.2 billion in revenue for the quarter. In the same quarter last year, revenue was $3.4 billion. This year includes three months of Lehigh Valley Health Network operations compared to two months last year. Jefferson acquired the system in August 2024.

To boost revenue, Jefferson is working with government and private insurers to boost rates, Harrington said. “Pennsylvania’s commercial reimbursement rates remain among the lowest in the nation, which continues to challenge hospitals and health systems across the Commonwealth,” he said.

Last month, Jefferson announced that it would terminate Lehigh Valley Health Network’s contracts with UnitedHealthcare next year, saying the nation’s largest health insurer was paying less than their negotiated rates.

In the realm of Medicaid, Pennsylvania’s new budget has an overall 8% increase for the state-federal program that insures low-income people. That’s not expected to be enough to eliminate losses for Medicaid insurers like Health Partners Plans, which Jefferson acquired in 2021.

Expenses: Jefferson noted that its insurance business lost $44.3 million in the quarter, compared to $25.6 million a year ago.

“Like others in healthcare and higher education, we continue to face significant industry headwinds, including rising pharmaceutical costs and the growing use of GLP-1 drugs within our health plan business,” Harrington said.

Also notable: Jefferson’s first quarter revenue included $8 million from a COVID-19-era employee retention program.

The health system’s number of days of cash on hand was just shy of 132 on Sept. 30, down slightly from 135 on June 30.