Home Industries Health Services Brown Health reports $3.8M operating loss in Q3

Brown Health reports $3.8M operating loss in Q3

By

Katie Castellani

-

08/27/2025

default — BROWN HEALTH is in the red, reporting a $3.8 million operating loss in the third quarter fiscal year 2025 ending June 30, according to unaudited financial statements released Tuesday. /COURTESY OF BROWN UNIVERSITY HEALTH

PROVIDENCE – Brown University Health is back in the red, reporting a $3.8 million operating loss in the third quarter of fiscal year 2025 ending June 30, according to unaudited financial statements released Tuesday. This marks a steep drop from the $11.5 million operating income posted in the third quarter of 2024 and $8.8 million

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PROVIDENCE – Brown University Health is back in the red, reporting a $3.8 million operating loss in the third quarter of fiscal year 2025 ending June 30, according to unaudited financial statements released Tuesday. This marks a steep drop from the $11.5 million operating income posted in the third quarter of 2024 and $8.8 million posted in the previous quarter. The health system’s Rhode Island operations reported a $28.4 million operating income while the Massachusetts facilities posted a $32.2 million loss. This is the third-consecutive quarter in which the health system has reported earnings for Saint Anne’s Hospital in Fall River and Morton Hospital in Taunton. Brown Health purchased the Massachusetts facilities from Steward Health Care on Oct. 1 for approximately $175 million. Operating losses in Massachusetts grew by almost 53% since the second quarter of 2025, when the facilities reported a $21.1 million loss. Management attributed this decline to “continue volume related challenges” as well as higher supplies, compensation and benefit expenses. Patient volumes in Massachusetts have remained 11% below what they were before Steward filed for bankruptcy in May 2024. Brown Health management said they are focused on recruiting employees and managing staffing levels to the lower volumes until new workers start. On the other hand, Brown Health’s Rhode Island operating margins rose by $16.9 million over the same period last year. Management said this was primarily because of $14.4 million, or 78.5%, growth in profits from its pharmacy program. Despite the dip in operating income, the health system’s net income for the third quarter was $48.7 million compared with $13.3 million reported a year prior. Management said this improvement stems from higher investment income. The health system’s investment income rose from $4.5 million in the third quarter 2024 to $54.2 million in the most recent period. This boost in investment income also bolstered nonoperating gains, which rose to $52.5 million for the period, up from last year’s $1.3 million. Revenue for Brown Health’s Rhode Island operations was $964.4 million and the health system reported $161.4 million operating revenues for its Massachusetts facilities. Rhode Island’s operating revenue is up from the $872.9 million reported in the third quarter last year, while Massachusetts’ revenues have dipped slightly from the $164 million reported in the second quarter 2025. Patient service revenue in Rhode Island rose to $781.8 million during the quarter, a $57.8 million increase from the $724 million reported in the same period last year. This rise was driven by higher acuity and a better payor and rate mix, according to management. Other revenues in Rhode Island also rose from $94.4 million last year to $128 million in the most recent quarter. Inpatient revenues fell by $3.8 million as a result of a 4.7% drop in discharges. Meanwhile, outpatient revenues rose by $56.8 million, or 14.2%, over last year as the health system continues to see a shift from inpatient to outpatient. The health system’s pharmacy revenues rose to $106.1 million during the quarter, nearly a 51% increase over last year’s $70.4 million. Brown Health also incurred $20.1 million more in drug costs during the quarter, marking a 44.5% increase over last year. The improvements to pharmacy margins reflects a rise in specialty drug volume and greater eligibility of the 340B program, according to management. Operating expenses in Brown Health’s Rhode Island facilities were $935.9 million in the most recent quarter, up from last year’s $861.5 million. This was driven by a rise in spending on compensation and benefits as well as supplies and other expenses. Spending on compensation and benefits in Rhode Island was $532.3 million, up from last year’s $501.5 million. This primarily comes from more spending on operating and contract workers, merit increases, boosted physician support and other changes in compensation and fringe benefits. Supply costs in Rhode Island rose to $289.1 million for the quarter, a $41.5 million increase over last year’s $247.6 million. Part of this rise comes from the $20.1 million increase in drug costs, the rest represents spending on all other supplies, according to management. Massachusetts's patient service revenue was $155.9 million for the quarter, down from the previous period’s $157.6 million. Operating expenses totaled $193.6 million, up from the previous quarter’s $185.1 million. This includes $95 million in compensation and benefits, $66.7 million on supplies and other expenses, as well as $18.3 million in purchased services. Brown Health’s net assets rose by $76 million during the period, compared with a $10.4 million rise in net assets reported last year. This rise is mainly the result of a dramatic increase in net income as well as net gains on investments which were $23.8 million during the quarter, compared with $3 million last year. Cash, cash equivalents and restricted cash fell $29.1 million during the quarter, compared with a $32.9 million drop last year. During the quarter, Massachusetts reported 3,631 discharges and an average length of stay of 4.92 days. The Rhode Island hospitals reported 13,928 discharges and an average length of stay of 5.96 days, compared with 14,611 discharges and an average length of stay of 5.75 in the same period last year. On May 6, Saint Anne’s and Morton hospitals issued $416.8 million in taxable and tax-exempt debt, part of which was used to repay short-term borrowings. A spokesperson for Brown Health was not immediately available to answer Providence Business News’ questions on the financial performance. Katie Castellani is a PBN staff writer. You may contact her at Castellani@PBN.com.