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CommonSpirit Health posted $40 million in operating income in the second quarter of fiscal 2020 (PDF), its first operating gain since the health system was formed through the merger of Catholic Health Initiatives and Dignity Health last year.

The Chicago-based health system—the largest nonprofit health system in the country by revenue—cited a revenue jump to $7.5 billion, up 3.2% from $7.2 billion during the same quarter the prior year. The health system reported its total net income was $579 million, up from a loss of $724 million in the same quarter a year earlier.

In its first consolidated financial report last year after merging, the health system reported a net loss of $290 million on revenue of almost $29 billion, down from $1.1 billion in earnings on $29 billion in revenue in fiscal 2019. The health system’s operating loss was much higher when taking into account special charges and merger-related costs.

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CommonSpirit operates 137 hospitals and hundreds of additional facilities in 21 states.

The health system has called diversifying and increasing revenue from non-acute care settings “a strategic priority.” They reported a 4.1% increase in outpatient services. CommonSpirit’s home care and hospice care business grew 10.5% in the first half of the fiscal year compared to the previous year. Barely 30% of the company’s revenue came from value-based agreements with payers, employers and government programs, officials said.

“These results demonstrate that we are gaining traction with the strategy and operating model we’ve put in place,” said Daniel Morissette, CommonSpirit’s senior executive vice president and chief financial officer, in a statement.

“A year into our new organization we have a clear vision and well-defined strategy, we are growing in key markets and service lines, and we are keeping our expenses in check,” he said. “We still have significant work to do to realize our ambitious growth and savings goals, but there is no question that these results represent a step in the right direction.”