Trinity Health more than doubled its operating income in the recently ended quarter by selling its stake in a managed care organization that offers Medicaid and Medicare plans in Pennsylvania.
The Livonia, Michigan-based health system recorded a $127 million gain from the sale of Gateway Health Plan to Highmark Health in the quarter ended Sept. 30. The not-for-profit company’s operating income not including the sale was $106 million, which would have equated to an operating margin of 2.1%. Including the sale’s proceeds, it was 4.7%. Trinity Health posted a 2.4% operating margin in the year-ago quarter.
Following the acquisition, Highmark Health rebranded the insurance operation and will sell Blue Cross and Blue Shield policies under the name Highmark Wholecare.
The transaction, which closed Aug. 31, also generated a $62.5 million dividend distribution and case proceeds of almost $322 million for the seller, according to Trinity Health’s financial statement. The company didn’t respond to a request for comment.
Prior to the deal, Highmark Health and Trinity Health each held 50% ownership stakes in Gateway Health Plan, which has more than 355,000 members. The insurer offers Medicaid plans in 40 Pennsylvania counties and Medicare plans in 58 Pennsylvania counties. Highmark Health and Mercy Health, a Trinity Health subsidiary, started Gateway Health Plan in 1992.
“With this agreement, we can now fully leverage Highmark’s innovative Living Health model to deliver a more coordinated, personalized, technology-enabled experience for our members,” Karen Hanlon, Highmark Health’s chief operating officer and Highmark Wholecare’s interim CEO, said in a news release when the deal closed.
Trinity Health, Catholic system with almost 90 hospitals, posted just under $5 billion in revenue in the quarter ended Sept. 30, compared with $4.8 billion in the 2020 period, a 3.7% year-over-year increase. Expenses were $4.9 billion in the recently ended quarter, up 3.9% year-over-year.