A drop in investment income sent Novant to a bigger loss in the third quarter

Novant Health Inc. remained on track for a significant financial loss in fiscal 2022, driven mostly by another quarterly decline in investment income.

The health system reported Tuesday that it had a loss of $145.08 million in the third quarter, compared with a surplus of $69.33 million a year earlier.

Excess revenue in a for-profit organization like Novant equals profit in a for-profit business.

For three quarters, Novant’s loss was $455.89 million, compared with a surplus of $460.66 million in the same period in 2021.

In both cases, Novant was adversely affected by the general decline in the stock market.

The investment income loss was $98.23 million in the third quarter, widening the three-quarter loss to $386.08 million.

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By comparison, in fiscal 2021, Novant had investment income of $29.2 million in the third quarter and just under $286 million over the three quarters.

For-profit hospitals such as Novant, Atrium Health Wake Forest Baptist and Cone Health depend on investment income to boost their bottom line.

Atrium Health and Wake Forest Baptist Medical Center currently issue separate quarterly and annual financial statements.

Atrium, Baptist and Cone also reported significant investment losses in their most recent quarter.

Basic Finance

When excluding investment income and other non-core revenue sources, Novant had a loss of $34.6 million in the third quarter, compared with $45.4 million in operating income a year ago.

For three quarters, the operating loss was $75.2 million, compared with just under $181 million in operating income a year ago.

In the Triad, Novant owns and operates Forsyth, Clemmons, Kernersville and Thomasville Medical Centers, as well as Medical Park Hospital in Winston-Salem. The system has a total of 28,092 employees, including about 8,145 in Forsyth County.

Total operating income for the three quarters was $5.36 billion, down 0.9% year over year.

Core patient revenue fell 3.3% to $4.89 billion. Novant reported $472.2 million in “other income,” compared with $355.9 million a year ago.

Spending was $5.44 billion, up 3.9%.

Employee wages and benefits increased 6.1% to $3.1 billion, partly reflecting Novant’s January 2021 increase in the minimum wage for more than 2,000 systemwide employees from $12.50 to $15 per hour.

At the time, the system said nearly 900 Triad employees would benefit from the pay increase.

Supplies and equipment expenses rose 2.4% to $2.04 billion, with much of the increase coming from higher costs related to specialized treatment for COVID-19.

Novant spent $327.9 million on capital investments in the three quarters, compared with $208.5 million a year ago.

Novant’s report was listed without comment as usual on the Securities Rulemaking Board’s website, www.emma.msrb.org.

The reports are primarily aimed at bondholders and rating agencies and are usually filed about two months after the end of the quarter.

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