Englewood, Colo.-based Catholic Health Initiatives' revenue growth was restrained in the first quarter of fiscal year 2018 due to Hurricane Harvey, and the system ended the period with an operating loss. However, like many systems, it benefited from higher investment income.
CHI's operating revenues remained virtually flat year over year at $3.7 billion, according to recently released unaudited financial documents. CHI said its operating results for the first quarter of fiscal year 2018, which ended Sept. 30, were negatively impacted by Hurricane Harvey, which caused the temporary evacuation and closure of two of its facilities in Texas in late August. Due to a volume shortfall caused by the hurricane, CHI's Texas region took a $25.8 million hit.
After factoring in expenses and one-time charges, CHI ended the first quarter of fiscal year 2018 with an operating loss of $77.9 million, compared to an operating loss of $180.7 million in the same period of the year prior.
Fueled by an increase in investment gains, CHI recorded a net surplus of $135.3 million in the three months ended Sept. 30, compared to a net surplus of $36.6 million in the same period a year earlier.
Dean Swindle, CHI's president for enterprise business lines and CFO, said the system continues to make progress in efforts to turn around its finances. "We did not expect an organizational turnaround to be quick or easy — but we have made substantial progress in recent months and expect that trend to accelerate throughout this fiscal year," he said. "We've taken all the necessary steps in our transformation to a higher-performing organization — and we certainly expect the numbers to reinforce that as we move through the 2018 fiscal year."
CHI has been pursuing a merger with San Francisco-based Dignity Health since October 2016, and CHI said the two organizations are in the final stages of the due diligence process. On an earnings call in October, Dignity Health Senior Executive Vice President and CFO Daniel Morissette said the complexities of the deal are compounded by headwinds expected in the healthcare industry and the cultural components involved in marrying two large health systems.
CHI has operations in 17 states and includes 100 hospitals. Dignity Health has 39 hospitals and operates in California, Arizona and Nevada.
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Editor's note: This article was updated Nov. 10 to include Mr. Swindle's quote.