UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________________________________ FORM 10-Q _______________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-42180 Ardent Hea ...

Ardent Health (ARDT) Q2 2025 Earnings Call August 06, 2025 10:00 AM ET Speaker0Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Ardent Health Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.Thank you. I'd now like to turn the call over to Dave Styblo, Senior Vice President of In ...

Financial Performance - Total revenue for 2Q25 was $1645 million, an increase of 11.9% year-over-year[14, 18] - Adjusted EBITDA for 2Q25 was $170 million, a 38.9% increase year-over-year[14, 18] - Adjusted EBITDA margin for 2Q25 was 10.3%, a 200 bps expansion[14, 18] - For the first half of 2025, total revenue reached $3143 million, reflecting an 8.0% year-over-year growth[14] - Adjusted EBITDA for YTD 2Q25 was $268 million, up 22.9% year-over-year[14] - Adjusted EBITDA margin for YTD 2Q25 was 8.5%, a 100 bps increase[14] Operating Metrics - Admissions increased by 6.6% year-over-year in 2Q25[14, 26] - Adjusted admissions increased by 1.6% year-over-year in 2Q25 and 2.2% year-to-date[14, 16, 22] - Net patient service revenue per adjusted admission increased by 10.2% year-over-year[14, 25, 27] Payor Mix - Managed Care accounted for 44.7% of Net Patient Service Revenue in 2Q25, an increase of 80 bps year-over-year[29, 30] - Medicare accounted for 40.0% of Net Patient Service Revenue in 2Q25[29, 32] - Medicaid accounted for 10.7% of Net Patient Service Revenue in 2Q25[29, 33]

Ardent Health, Inc. (ARDT) came out with quarterly earnings of $0.52 per share, beating the Zacks Consensus Estimate of $0.3 per share. This compares to earnings of $0.35 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +73.33%. A quarter ago, it was expected that this company would post earnings of $0.21 per share when it actually produced earnings of $0.29, delivering a surprise of +38.1%.Over the last four quarters, the comp ...

Group 1 - Ardent Health's shares fell by 13.7% on July 16th due to a downgrade by BofA Securities [1] - The downgrade was prompted by concerns over recent legislative changes that may adversely affect the company [1] Group 2 - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow and growth potential [1] - The service includes a stock model account, cash flow analyses of exploration and production firms, and live sector discussions [2]

Summary of Ardent Health Partners (ARDT) 2025 Conference Call Company Overview - Ardent Health Partners operates as a multi-hospital, multi-system healthcare provider in eight mid-sized urban markets across six states [2][3] - The company is positioned in strong, growing markets, with growth rates approximately three times faster than the national average [3] Core Growth Strategies 1. **Ambulatory Footprint Expansion**: Focus on growing the ambulatory services outside traditional hospital settings, capturing additional market share [4] 2. **Opportunistic New Growth**: Targeting new markets, especially as 37% of hospitals are currently losing money, creating opportunities for entry [4] 3. **Internal Margin Expansion**: Expecting margin improvement of 100 to 200 basis points over the next three to four years through centralization and standardization of services [5][4] Financial Performance - Strong organic growth has resumed post-COVID, with significant admissions and inpatient surgeries reported in Q1 [8][9] - Year-over-year comparisons indicate a strong demand growth, despite a slight decrease in acuity levels [11][12] - The company has seen a reduction in supply costs as a percentage of revenue due to supply chain initiatives [15] Challenges and Risks - Increased denial activity from payers has been noted, particularly in Q2 and Q3, impacting cash cycles and payment timelines [23][25] - The company anticipates minimal tariff exposure in 2025, quantified as mid-single digits in millions [17][18] Medicaid and Regulatory Environment - Proposed changes to Medicaid are expected to be incremental rather than revolutionary, with no significant impact anticipated on the company's operations [27][30] - The company is confident in the continuation of existing Medicaid programs and is awaiting approvals from CMS [34][35] Development and Integration Activities - Integration of 18 urgent care clinics is ongoing, with positive early results in patient acquisition and follow-up services [39][41] - A new Chief Development Officer has been appointed to enhance growth strategies, particularly in M&A activities [42] Market Outlook - The company is focused on mid-sized urban markets with positive growth rates, aiming to expand its presence in these areas [48][49] - Overall, the company maintains a positive outlook for 2025, reaffirming guidance based on strong demand and strategic initiatives [36][38]

Summary of Arden Health Partners Conference Call Company Overview - **Company**: Arden Health Partners - **Industry**: Healthcare Facilities and Managed Care Key Points Volume Trends - Q1 volumes were at the higher end of full-year guidance, indicating strong performance despite calendar headwinds such as flu season [2][3] - The company operates in eight mid-sized urban markets that are growing approximately three times faster than the U.S. average, contributing to volume growth [4] - Strategies such as service line development and rationalization are in place to sustain and accelerate volume growth [5] Outpatient vs. Inpatient Trends - Outpatient volumes were weaker compared to inpatient volumes, attributed to calendar impacts and economic uncertainty [6] - The company is focusing on expanding outpatient services, including urgent care and ambulatory surgical centers (ASCs), to capture more patient volume [8][10] - The total addressable market consists of approximately 5.6 million people in the company's markets, with significant opportunities for outpatient growth [9] Joint Venture Model - Arden's joint venture model is unique in the publicly traded hospital sector, allowing for operational efficiencies and improved service delivery [21][22] - Partnerships with academic institutions, such as the University of Texas, have led to improved services and financial performance [24][27] - The model fosters a "flywheel effect," enhancing recruitment and training of medical professionals [27] Labor and Cost Management - The workforce has stabilized, with a reduction in contract labor usage from COVID-19 peaks [46][47] - The company is focused on improving nurse retention and reducing turnover, which has positively impacted labor costs [47] - Professional fees, which account for about 7% of revenues, are a growing cost pressure, but the company is negotiating with payers to manage these costs [51][52] Regulatory Environment - The company is optimistic about the durability of directed payment programs (DPPs) and believes initial proposals will not negatively impact existing programs [30][31] - There are ongoing discussions in Congress regarding physician payment reforms, with hopes for sustainable solutions [55][57] Growth Strategy - Arden is exploring acquisition opportunities to expand its market presence, particularly in struggling hospitals [66][67] - The company is managing cash flow tightly while balancing slow payments from payers and capital expenditures [68] Financial Outlook - The company expects continued margin improvement through operational efficiencies and outpatient growth, with a long-term volume growth target of 2-3% [8][40] - The focus remains on building a scalable and robust operating model to enhance profitability [41][42] Additional Insights - The company emphasizes the importance of physician relationships in driving patient volume and ensuring facility-based care referrals [28][29] - There is a noted increase in denial rates, but the majority of claims are being paid, indicating a focus on improving revenue cycle management [62][63] This summary encapsulates the key insights and strategic directions discussed during the conference call, highlighting Arden Health Partners' operational performance, market strategies, and financial outlook.

Core Viewpoint - Ardent Health Partners, Inc. (ARDT) has shown a significant price increase of 19.4% over the past four weeks, with analysts projecting a mean price target of $20.25, indicating a potential upside of 36.6% from the current price of $14.83 [1] Price Targets and Analyst Consensus - The average price target for ARDT is based on 10 short-term estimates, ranging from a low of $15.50 to a high of $24, with a standard deviation of $2.80, suggesting a variability in analyst predictions [2] - The lowest estimate indicates a 4.5% increase, while the highest suggests a 61.8% upside, highlighting the range of potential outcomes [2] - A low standard deviation signifies a strong agreement among analysts regarding the stock's price direction, which can serve as a starting point for further research [9] Earnings Estimates and Analyst Optimism - Analysts have shown growing optimism regarding ARDT's earnings prospects, as indicated by a strong consensus in revising EPS estimates higher, which correlates with potential stock price movements [11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 0.7%, with two estimates moving higher and one lower [12] - ARDT holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, suggesting a strong potential for upside in the near term [13]

PART I - FINANCIAL INFORMATION [Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q1 2025 report total revenue of **$1.50 billion** and net income attributable to Ardent of **$41.4 million** Condensed Consolidated Income Statement Highlights (Q1 2025 vs Q1 2024) | Metric (in thousands, except per share) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenue** | $1,497,234 | $1,439,046 | | Income before income taxes | $74,198 | $56,564 | | Net income | $58,965 | $45,851 | | **Net income attributable to Ardent** | **$41,383** | **$27,047** | | Diluted EPS | $0.29 | $0.21 | Condensed Consolidated Balance Sheet Highlights | Metric (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $495,044 | $556,785 | | Total assets | $4,911,257 | $4,956,100 | | Total long-term debt (incl. current) | $1,108,308 | $1,095,052 | | Total liabilities | $3,346,781 | $3,433,743 | | Total equity | $1,564,668 | $1,521,199 | Condensed Consolidated Statements of Cash Flows Highlights (Q1 2025 vs Q1 2024) | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(24,787) | $(14,689) | | Net cash used in investing activities | $(23,122) | $(31,638) | | Net cash used in financing activities | $(13,832) | $(18,484) | | **Net decrease in cash** | **$(61,741)** | **$(64,811)** | - As of March 31, 2025, the company operated **30 acute care hospitals** across six states[22](index=22&type=chunk) - On January 1, 2025, the company acquired **18 urgent care clinics** in New Mexico and Oklahoma for a combined purchase price of **$27.5 million**[59](index=59&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q1 2025 financial performance, highlighting a **4.0% revenue increase to $1.50 billion**, strong liquidity of **$790.1 million**, and **Adjusted EBITDA of $98.2 million** [Overview and Recent Developments](index=21&type=section&id=Overview%20and%20Recent%20Developments) Ardent operates **30 acute care hospitals** and recently acquired **18 urgent care clinics for $27.5 million**, completed an **IPO raising $208.6 million**, and repriced its Term Loan B Facility - The company operates **30 acute care hospitals** and approximately **280 sites of care**, with a focus on a differentiated joint venture (JV) model[128](index=128&type=chunk) - On January 1, 2025, Ardent acquired **18 urgent care clinics** in New Mexico and Oklahoma for **$27.5 million** in cash[129](index=129&type=chunk) - In July 2024, the company completed its IPO, raising total net proceeds of approximately **$208.6 million**, and converted from an LLC to a corporation[25](index=25&type=chunk)[132](index=132&type=chunk) - In September 2024, the Term Loan B Facility was repriced, reducing the applicable interest rate by **50 basis points**[131](index=131&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q1 2025 total revenue grew **4.0% to $1.50 billion** driven by patient volume increases, with operating expenses decreasing due to a **$21.5 million insurance recovery**, resulting in **$41.4 million net income attributable to Ardent** Key Operating Statistics (Q1 2025 vs Q1 2024) | Operating Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total revenue (in thousands) | $1,497,234 | $1,439,046 | 4.0% | | Admissions | 41,389 | 38,469 | 7.6% | | Adjusted admissions | 84,536 | 82,313 | 2.7% | | Emergency room visits | 161,249 | 157,582 | 2.3% | | Net patient service revenue per adjusted admission | $17,402 | $17,204 | 1.2% | - Other non-operating gains of **$21.3 million** in Q1 2025 were primarily from **$21.5 million** in insurance recovery proceeds related to the prior Cybersecurity Incident[167](index=167&type=chunk) - Salaries and benefits increased to **43.9% of revenue** from **43.2% YoY**, mainly due to an **$8.8 million** increase in equity-based compensation[161](index=161&type=chunk) - Supplies expense decreased to **17.3% of revenue** from **17.9% YoY**, attributed to cost reduction initiatives and an increase in lower acuity cases[163](index=163&type=chunk) [Supplemental Non-GAAP Information](index=27&type=section&id=Supplemental%20Non-GAAP%20Information) The company's non-GAAP measures show **Adjusted EBITDA of $98.2 million** for Q1 2025, up from **$95.8 million** in Q1 2024, and **Adjusted EBITDAR of $139.1 million** Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $58,965 | $45,851 | | Income tax expense | $15,233 | $10,713 | | Interest expense | $14,176 | $19,261 | | Depreciation and amortization | $36,201 | $35,351 | | Cybersecurity Incident recoveries, net | $(19,705) | — | | Equity-based compensation | $9,263 | $512 | | **Adjusted EBITDA** | **$98,201** | **$95,814** | Adjusted EBITDAR Reconciliation (Q1 2025, in thousands) | Line Item | Amount | | :--- | :--- | | Adjusted EBITDA | $98,201 | | Rent expense payable to REITs | $40,887 | | **Adjusted EBITDAR** | **$139,088** | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, Ardent maintained strong liquidity with **$495.0 million in cash** and **$790.1 million in total available liquidity**, managing primary cash requirements including **$22.9 million in Q1 2025 capital expenditures** - As of March 31, 2025, the company had total cash and cash equivalents of **$495.0 million** and total available liquidity of **$790.1 million**[180](index=180&type=chunk) Summary of Cash Flows (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(24,787) | $(14,689) | | Net cash used in investing activities | $(23,122) | $(31,638) | | Net cash used in financing activities | $(13,832) | $(18,484) | - Capital expenditures for property and equipment were **$22.9 million** for the three months ended March 31, 2025[187](index=187&type=chunk) - The company leases **10 hospitals** under the Ventas Master Lease, incurring related party rent expense of **$38.1 million** in Q1 2025[188](index=188&type=chunk)[190](index=190&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure on its **$767.4 million variable-rate debt**, partially hedged by **$401.1 million in interest rate swaps**, with a **1% rate change impacting annual interest expense by $3.7 million** - The company is exposed to interest rate risk on its **$767.4 million** of outstanding variable rate debt as of March 31, 2025[216](index=216&type=chunk) - To mitigate risk, the company has interest rate swap agreements with notional amounts totaling **$401.1 million**, effectively converting a portion of its variable-rate debt to fixed-rate[217](index=217&type=chunk) - A hypothetical **one percent change** in interest rates would result in a **$3.7 million** increase or decrease in the company's annual interest expense[218](index=218&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) As of March 31, 2025, the company's disclosure controls and procedures were deemed effective, with no material changes to internal control over financial reporting during Q1 2025 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[220](index=220&type=chunk) - No changes in internal control over financial reporting occurred during Q1 2025 that have materially affected, or are reasonably likely to materially affect, internal controls[221](index=221&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions, including a pending settlement for the **November 2023 Cybersecurity Incident** class action lawsuit, which is not expected to materially impact financial condition - A settlement agreement was executed on October 4, 2024, to resolve the consolidated class action litigation stemming from the **November 2023 Cybersecurity Incident**[108](index=108&type=chunk)[223](index=223&type=chunk) The settlement's financial impact is not expected to be material [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors from those previously disclosed in its Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the Annual Report have occurred[224](index=224&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company withheld **82,735 common shares** at an average price of **$13.76 per share** to satisfy tax obligations from restricted stock unit vesting, not under a repurchase plan Equity Security Purchases (Q1 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 1,212 | $14.25 | | Feb 2025 | — | — | | Mar 2025 | 81,523 | $13.75 | | **Total** | **82,735** | **$13.76** | - The shares were withheld to satisfy tax obligations related to the vesting of restricted stock unit awards; there were no publicly announced repurchase programs[225](index=225&type=chunk)[226](index=226&type=chunk) [Other Information](index=35&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2025 - No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2025[229](index=229&type=chunk)

Financial Data and Key Metrics Changes - First quarter revenue increased by 4% to $1.5 billion compared to the prior year, driven by adjusted admissions growth of 2.7% and net patient service revenue per adjusted admission growth of 1.2% [12][14] - Adjusted EBITDA grew by 2.5% to $98 million, with growth impacted by an increase in payer claim denials compared to the first quarter of the previous year [15][18] - Total cash at the end of the first quarter was $495 million, with total debt outstanding at $1.1 billion, resulting in total available liquidity of $790 million [17] Business Line Data and Key Metrics Changes - Admissions grew by 7.6%, with inpatient surgery growth at 3.4%, while outpatient surgeries declined by 2.3% [14] - Supply costs as a percentage of revenue declined by 60 basis points year over year, indicating improved supply chain efficiencies [8] - The growth rate of physician professional fees was 6%, down from 13% during the same period last year, showing signs of moderation [8][16] Market Data and Key Metrics Changes - The company reported strong exchange volume growth, with admissions in the quarter growing by 40%, reflecting improved enrollment in exchanges and new plans [61] - The overall market growth is estimated at about 3% per year, indicating durable demand in the company's operating regions [39] Company Strategy and Development Direction - The company is focused on expanding its outpatient and acute care hospital footprint, supported by approximately $500 million in cash and a favorable lease-adjusted net leverage ratio of three times [5][10] - A new Chief Operating Officer has been appointed to enhance strategic growth and operational excellence initiatives [5][41] - The company is actively pursuing M&A opportunities, with increased interest in its joint venture model from potential academic and non-profit partners [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year 2025 financial guidance, reaffirming strong demand trends and operational improvements [10][19] - The company is optimistic about the approval of the 2025 New Mexico DPP program, which is currently awaiting final CMS approval [12][57] - Management noted that while there are pressures from professional fees and payer behaviors, they expect underlying EBITDA growth to accelerate in the latter half of the year [15][72] Other Important Information - The company has seen a notable increase in payer claim denials, which has impacted cash flow, but this is not expected to be a long-term trend [15][29] - The company’s credit rating was upgraded to B+ from B, reflecting improved net leverage and cash flow profile [18] Q&A Session Summary Question: Inquiry about seasonality and sequential EBITDA decline - Management indicated that the sequential decline in EBITDA is not abnormal and attributed it to various seasonal factors, including the impact of the flu season [25][26] Question: Follow-up on elevated denials and payer behavior - Management confirmed that the elevated denials are consistent with previous trends and noted a slowdown in payments even on clean claims [28][29] Question: Supply chain initiatives and margin expansion opportunities - Management highlighted participation in a GPO and ongoing efforts to improve utilization within service lines as key opportunities for margin expansion [32][33] Question: Update on expansion initiatives and market opportunities - Management reported a growing pipeline of potential acquisitions and partnerships, particularly with academic institutions, and emphasized the importance of being disciplined in evaluating these opportunities [46][54] Question: Status of the New Mexico DPP program approval - Management expressed optimism about the approval process for the New Mexico DPP program, expecting it to be finalized soon [57][59] Question: Exchange volumes and payer mix - Management noted significant growth in exchange volumes, with admissions growing by 40% in the quarter, and indicated that exchange revenue is now in the mid-single digits as a percentage of total revenue [61][62]