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Analysis

Coronavirus Craters Mayo Clinic Q1 Revenues

By John Commins  
   May 19, 2020

Net operating income dropped 88% for the first three months of 2020, after a near-total shutdown of elective and outpatient services in the final two weeks of March.

Revenue growth at Mayo Clinic fell off a cliff in the final two weeks of the first quarter, owing to the shutdown of outpatient and elective services because of the coronavirus pandemic.

The famed, Rochester, Minnesota-based health system started the quarter in January "with strong performance" and net operating income of $153.1 million, a 6.7% margin for the first two months.

Volumes and revenues continued to be strong through the first half of March, until elective and outpatient services were shuttered on March 23.

"Mayo's 2020 first quarter results spanned two very different environments," Mayo said in a Q1 in-house analysis. "The practice experienced strong revenue growth of 8.2% in January and February over last year but was reduced by the contraction of the practice due to COVID-19 in March."

"With the onset of COVID-19, medical service revenue finished at $842 million, resulting in a net operating loss of $124 million for the month," Mayo reported.

Net operating revenues were $29 million for the quarter, down from $241 million in the first quarter of 2019, a drop of 88%.

Total revenue fell by 3.8% to $3.22 billion. Net Medical Service Revenue was $2.81 billion, up 0.7% from Q1 2019.

Mayo reported cash and investments of $10.55 billion on March 31, a drop of $647.7 million since December 31, 2019, "due largely to the volatility of the financial markets."

Key metrics Days Cash on Hand (252), Cash to Debt (252%) Debt to Capitalization (35%), and Days Revenue Outstanding (62.4) were down slightly from Q1 2019, suggesting that despite the dire quarter, the health system's finances were relative stable, Mayo said.

“Mayo's 2020 first quarter results spanned two very different environments. The practice experienced strong revenue growth of 8.2% in January and February over last year but was reduced by the contraction of the practice due to COVID-19 in March.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: James R. Martin / Shutterstock


KEY TAKEAWAYS

Net operating revenues were $29 million for the quarter, down from $241 million in the first quarter of 2019, a drop of 88%.

Mayo reported cash and investments of $10.55 billion on March 31, a drop of $647.7 million since December 31, 2019.

Days Cash on Hand (252), Cash to Debt (252%) Debt to Capitalization (35%), and Days Revenue Outstanding (62.4) were down slightly.


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