Ascension Posts $1.1B Net Loss For 2024 After May Cyberattack

Dive Brief:

• Ascension was on track for a strong financial recovery in 2024, until it was hit by a cyberattack in May that led to costly systemwide disruptions and operation delays, the system reported in a securities filing this week.
• The system reported an operating loss of $332 million for the first 10 months of the year ended April 30 — a significant improvement compared to the $1.9 billion loss it reported during the same period the year prior. However, Ascension’s operating loss ballooned to $1.8 billion by the end of its fiscal year.
• In the filing, Ascension attributed much of its loss to the cyberattack, stating, “a significant portion of Ascension’s year over year financial improvements were reduced” by the incident.

Dive Insight:

The cyberattack at Ascension had far-reaching effects, forcing the health system to shut down pharmacies, divert ambulances, switch to manual record keeping and close critical systems at many of its 136 hospitals across its 18-state portfolio. 

Ascension said it restored its electronic health record services in mid-June and has diversified its claims clearinghouse to protect from future breaches. However, its investigation into the breach remains ongoing.

Prior to the attack, Ascension had been on track to have a stronger financial year, according to 10-month operating metrics reported by the system. The health system reported a loss from recurring operations of $79 million for the 10 months of its fiscal year — a fraction of the $1.2 billion loss from recurring operations reported in the same period the year prior.

In the first 10 months of the year, Ascension reported a 2% increase in same facility overall volume compared to the same period the year prior, with notable volume improvements in total discharges, emergency room visits and inpatient surgeries, according to the filing.

The progress was welcome news for a system that has struggled to rebound financially since the COVID-19 pandemic. In 2023, Ascension posted a nearly $3 billion net loss as it struggled to rebuild patient volumes and rein in expense growth.

However, the attack set back Ascension’s momentum, according to the filing.

“This incident resulted in delays in revenue cycle processes, including insurance verification processes, claims submission and payment processing, as well as the incurrence of certain remediation costs, which collectively led to negative impacts to results of operations and cash flows during May and June 2024,” Ascension wrote in its annual filing.

To demonstrate the impact of the cyberattack, management displayed financial results pre- and post-attack, breaking out results in the first 10-months of the year and the full fiscal year. 

During May and June, same facility volumes dropped between 8% to 12% on average compared to the same period the previous year, in part due to delayed or rescheduled procedures because of the cyberattack.

The decline in patient volumes dinged Ascension’s growth in net patient service revenue for the full year. During its first 10 months, Ascension was on track to grow patient revenue by 5.4% year over year. However, by the close of 2024 that pace had slowed to just 0.9% growth year over year.

Operating expenses increased slightly year over year, rising by 0.4% or $123 million. Ascension cut total salaries, wages and benefits spending by 1.4% year over year, but saw increases in supply and purchase services.

Ascension finished the fiscal year ended June 30 with a nearly $1.1 billion net loss.

Now that immediate recovery efforts have ended, Ascension EVP and Chief Financial Officer Saurabh Tripathi said in a statement accompanying the earnings that the health system will turn its focus back to growing patient volumes.

The health system is also diversifying its portfolio, according to the securities filing.

Ascension has recently focused on growing its ancillary services and ambulatory networks, including Ascension RX, which offers specialty pharmacy services and mail order pharmacy services.

The health system also plans to invest in ambulatory surgery centers, imaging and outpatient physical therapy sites, according to the filing.

Meanwhile, Ascension continues to divest less profitable hospitals. This year the system has announced intentions to offload facilities in Alabama and Illinois in deals with UAB Health and Prime Healthcare, respectively.