Kaiser Permanente to Sell up to $3.5 Billion in Private-Equity Holdings amid Cash Constraints

Kaiser Permanente to Sell $3.5 Billion in Private-Equity Holdings

Kaiser Permanente, a prominent healthcare system, is planning to sell up to $3.5 billion of its holdings in private-equity funds, according to a report by The Wall Street Journal. The decision is said to be driven by cash constraints, with Kaiser working with investment bank Jefferies Financial Group to offload the stakes to secondary buyers.

While a spokesperson for Kaiser denied that the sale is due to liquidity concerns, stating it was a regular investment decision after reviewing its portfolio, the move has raised eyebrows in the industry. The system’s investment portfolio supports its employee retirement and pension program, as reported by Becker’s.

The news comes as Kaiser recently released its Q1 financial results, showing operating income of $935 million for the first quarter of this year, a significant increase from the same period in 2023. However, the operating income was below historical first-quarter trends leading up to the pandemic, with cost pressures such as high utilization and care acuity cited as contributing factors.

Last year, Kaiser formed the not-for-profit Risant Health to accelerate the adoption of value-based care, with the acquisition of Geisinger Health being a key milestone. The system reported a one-time gain related to this acquisition in Q1, driven by favorable financial market conditions.

Looking ahead, Kaiser plans to acquire more community-based health systems in the coming years. The system noted that its operating margin is typically strongest in the first quarter due to the timing of the open enrollment cycle, followed by lower margins in the subsequent quarters as expenses increase.

For more information, you can reach out to the writer at SMorse@himss.org.