© 2007 American Registry of Professional Animal Scientists. Records of 813 steers enrolled in the New Mexico Ranch to Rail Program from 2000 to 2003 were used to evaluate the impact of feedlot morbidity on feedlot ADG, carcass characteristics and carcass value. Steers were classified based on the number of medical treatments during the feeding period. Morbidity categories were zero medical treatment (healthy), 1 medical treatment (ONE), and 2 or more (TWO+) medical treatments. Initial weight, initial price, and total initial value were not different between healthy and ONE and TWO+ steers combined (treated; P ≥ 0.12) or between ONE and TWO+ steers (P ≥ 0.57). The healthy steers had greater (P < 0.01) ADG with fewer (P < 0.01) days on feed than treated steers, whereas ADG was similar (P = 0.16) among treated steers. However, ONE steers tended (P = 0.06) to exhibit fewer days on feed than TWO+ steers. There was no difference in hot carcass weight, fat thickness, longissimus muscle area, marbling score, or calculated yield grade between healthy and treated steers (P ≥ 0.18), nor between ONE and TWO+ steers (P ≥ 0.16). There was a tendency (P = 0.08) for healthy steers to have higher price carcasses than treated steers, but carcass price between ONE and TWO+ steers were similar (P = 0.33). Consequently, healthy steers had higher (P < 0.01) gross income than treated steers, and ONE steers exhibited greater (P < 0.01) gross income than TWO+ steers. Morbidity in the finishing phase negatively impacts ADG, cost of production, carcass price, gross income, and as a result has the potential to reduce net return.