Highmark operating income hits $121M in 1st half, propelled by covid funds, efficiency gains

Highmark Health, the Pittsburgh-based parent company of Highmark insurance and Allegheny Health Network, posted operating income of $121 million through the first half of the year, with solid performances from its main divisions.

That’s a marked decline, though, from the same time in 2024, when Highmark reported a $307 million operating gain.

Net income clocked in at $329 million so far this year, down from $417 million for the same period in 2024.

Allegheny Health Network was the organization’s top earner in the financial results released Thursday, posting $72 million in operating income.

The figure includes $52 million in reimbursements from the Federal Emergency Management Agency for money spent responding to covid-19.

That leaves the hospital network with $20 million earned through ordinary operations. It’s the second quarter in a row in which Allegheny Health Network made money without pandemic relief funds — a remarkable turnaround after five years of losses.

Patient volumes are up by 7% for physician visits, 5% for outpatient registrations, 4% for emergency room visits and 4% for inpatient discharges and observations.

More patients often equals more money for health care providers.

Brian Devine, chief financial officer for Allegheny Health Network, said a focus on efficiency is also paying off, with better supply chain management and less reliance on temporary, third-party clinical staff.

“This isn’t the first year we’ve grown at this level,” Devine told TribLive on a call with other Highmark executives. “But I think what is a little different is our results aren’t just driven by utilization or higher visits.”

Highmark Health Plans turned a $60 million profit. So did Highmark’s diversified businesses, namely United Concordia Dental and HM Insurance Group, which protects employers who self-fund their health benefits plans from large claims.

While the health insurance side made money, the $60 million haul is down from $304 million at the same point last year. At the time, Highmark cited strong government and commercial membership enrollment, especially as it expanded into Southeastern Pennsylvania.

Just as high usage helps medical providers, it pushes down profits for the health plans, according to Carl Daley, chief financial officer for Highmark.

“We expect the elevated trends of utilization we’re seeing to persist in the back half of the year,” Daley said.

He also noted the diversified business historically do well, making the results so far this year no surprise.

Highmark squeezed out a $15 million margin in the first quarter of this year.

Highmark’s integrated model includes Highmark Health Plans, an insurer that has 7.1 million members in Pennsylvania, West Virginia, Delaware and New York, as well as Allegheny Health Network, with its 14 hospitals and more than 2,600 doctors.

All told, Highmark has more than 44,000 employees.

The organization has $11.8 billion in cash and investments and total assets of $10.3 billion.