Riding strong revenue from its managed-care program, Columbia, Md.-based MedStar Health beat expectations with a 28% increase in its operating surplus for the first quarter of its fiscal 2015, though a significant loss on investments left the company with an overall deficit.
MedStar reported a $21.9 billion operating surplus on $1.2 billion in revenue for the three months ended Sept. 30, compared with a $17.1 million operating surplus on $1.1 billion in revenue during the same period the year prior. That's more than double the surplus for which the company had budgeted, thanks primarily to an 81.2% increase in premium revenue.
However, a $40.9 million unrealized loss on investments during the third quarter led to a total deficit of $7.8 million, compared with a $71 million surplus reported during the same period last year. The poor non-operating results were due to “the investment markets' below-budget performance” during the quarter, the company said in its earnings report.
MedStar Family Choice, the company's managed-care plan, is a growing source of system revenue. Premium revenue was $131.2 million, up 81.2% from the year prior and 20% higher than expected.
The Family Choice program, which provides Medicaid and Medicare managed-care services for 109,000 members in Washington, D.C., Maryland and Northern Virginia, accounted for 10.9% of the company's first-quarter revenue, compared with 6% last year. It also gained nearly 38,600 more members over the past year, a 54.5% increase.
MedStar's operating margin was 1.8% in the first quarter, up slightly from 1.5% during the same period last year.
Admissions were down 4.6% compared with the same time last year. Physician office visits shot up 14.2%, while emergency department visits stayed relatively the same. Observation cases were up 9.7%.
The company did not provide any information on its payer mix.
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