Sanford Health Posts 1.8% Operating Margin in 2025

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Sioux Falls, S.D.-based Sanford Health recorded an operating income of $210.9 million (1.8% operating margin) in 2025, down from an operating income of $400.3 million (5.2% margin) during the same period in the previous year. The decline in operating margin came despite a significant increase in total operating revenue, which reached $11.7 billion for the 12 months ended December 31, 2025, up from $7.7 billion in 2024.

Why it matters

The drop in Sanford Health's operating margin highlights the challenges health systems can face when undergoing major mergers and acquisitions, as the integration of operations and systems can lead to increased costs that outpace revenue growth in the short term. However, Sanford's significant increase in net income suggests the merger with Marshfield Clinic Health System may pay off in the long run.

The details

Sanford Health merged with Marshfield (Wis.) Clinic Health System at the beginning of 2025, creating a 56-hospital system with 4,500 providers and around 56,000 employees. The combined organization also operates two fully integrated health plans, research institutions and specialty pharmacies. While total operating revenue grew substantially, reaching $11.7 billion, operating expenses also increased significantly, up to $11.4 billion from $7.3 billion the prior year. Key expense increases included salaries and benefits ($5.3 billion vs. $3.8 billion), supplies and pharmaceutical expenses ($2.5 billion vs. $1.6 billion), and medical claims ($1.5 billion vs. $605.5 million).

• Sanford Health merged with Marshfield Clinic Health System at the beginning of 2025.
• The financial results are for the 12 months ended December 31, 2025.