Kaiser Permanente kicked off 2021 on a high note, having drawn $2 billion in profit in the first quarter.

Oakland, Calif.-based Kaiser’s strong net income in the quarter ended March 31 was a significant swing from its $1.1 billion net loss in the prior-year period, according to results released Friday. But the not-for-profit system noted $2 billion is still down about 60% from its net income of $3.2 billion in the first quarter of 2019, about a year before the COVID-19 pandemic struck.

Tom Meier, Kaiser’s corporate treasurer, told Modern Healthcare the system has benefited from a “pretty significant” year-over-year positive swing in investment income.

“We’re happy to see the financial markets have stabilized a little bit from the volatility we had a year ago,” he said. “We’re pleased with our results.”

But despite the stronger profit, Kaiser’s operating margin was slightly lower in the first quarter of 2021 at 4.4%, compared with 5.5% in the first quarter of 2020. Kaiser generated $1 billion in operating income in the quarter, compared with $1.3 billion in the prior-year period.

The integrated health system’s revenue grew 2.6% year-over-year, from $22.6 billion to $23.2 billion in the recently ended quarter. Expenses totaled $22.2 billion, 3.8% higher than in the prior-year period.

Meier said that’s because Kaiser continues to shoulder higher expenses related to the pandemic. The system treated almost 275,000 COVID-19 patients, performed more than 2 million COVID diagnostic tests and administered more than 3.4 million vaccine doses to members and non-members during the first quarter.

“Those are all costs that we didn’t have a year ago,” he said.

Membership totaled about 12.5 million as of March 31, an uptick of more than 129,000 since the end of 2020. Meier said pandemic-related job losses continue to push members from employer-sponsored commercial plans to government-sponsored and individual plans.

Kaiser’s capital spending declined slightly to $906 million in the quarter, compared with $912 million in the first quarter of 2020.

Kathy Lancaster, Kaiser’s chief financial officer, said in a statement that throughout the pandemic, Kaiser’s unique model enabled the system to transfer members from commercial and employer-sponsored plans to individual or government-sponsored plans.

“This meant members could keep their care provider and coverage, despite financial hardship or loss of employer-sponsored health coverage.”

Kaiser recently agreed to pay $18.9 million to settle two class-action lawsuits alleging it underpaid and underpromoted Black and Latino employees. The system has pledged to create programs to ensure fair and equitable pay and career advancement for its workers.