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]

Financial Data and Key Metrics Changes - First quarter revenue increased by 4% to $1.5 billion compared to the prior year, driven by a 2.7% growth in adjusted admissions and a 1.2% increase in net patient service revenue per adjusted admission [11][12] - Adjusted EBITDA grew by 2.5% to $98 million, with supply costs as a percentage of revenue declining by 60 basis points year over year [7][16] - Total cash at the end of the first quarter was $495 million, with total debt outstanding at $1.1 billion, resulting in a total available liquidity of $790 million [16][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% [5][12] - The growth rate of physician professional fees was 6%, down from 13% in the same period last year, indicating a moderation in cost growth [7][63] - The integration of 18 NexCare Urgent Care clinics is expected to generate additional downstream volumes in the Tulsa and Albuquerque markets [8] Market Data and Key Metrics Changes - The company is experiencing strong demand in its existing markets, with an average market growth rate of about 3% per year [40] - Exchange volume growth was significant, with admissions in the quarter growing by 40%, contributing to mid-single digits as a percentage of revenue [60] 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 [4][9] - A disciplined approach to evaluating M&A opportunities is being pursued, with increased interest in the company's joint venture model from potential academic and non-profit partners [8][9] - The company aims to achieve margin expansion of 100 to 200 basis points over the next several years through operational initiatives and supply chain efficiencies [7][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of demand, attributing strong volume growth to operational improvements and the strength of the markets [40] - The company reaffirmed its full-year 2025 financial guidance, indicating a solid start to the year and strong momentum [9][17] - Management noted that while payer claim denials have increased, they do not expect a significant impact compared to the latter half of 2024 [13][28] Other Important Information - The company is in the final stages of recruiting a Chief Development Officer to support its focus on M&A activities [4] - S&P upgraded the company's credit rating to B+ from B, reflecting improved net leverage and cash flow profile [17] Q&A Session Summary Question: Inquiry about seasonality and EBITDA decline - Management indicated that a sequential decline in EBITDA is not abnormal and attributed it to various factors including flu season impacts and timing issues [22][26] Question: Follow-up on elevated denials - Management confirmed that the increase in denials is consistent with previous trends and highlighted a slowdown in payments on clean claims [28][29] Question: Supply chain initiatives and opportunities - Management noted participation in a GPO and ongoing improvements in service line utilization as key areas for margin expansion [30][31] Question: Update on expansion initiatives - Management reported a growing pipeline for new market opportunities and emphasized the importance of strategic acquisitions [46][53] Question: New Mexico DPP program approval timeline - Management expressed hope for approval by the end of Q2, based on positive indications from state and CMS conversations [54][56] Question: Exchange volumes and payer mix - Management confirmed strong exchange growth, with admissions increasing significantly and operating in mid-single digits as a percentage of revenue [60]

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 2024 [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% and outpatient surgeries declining by 2.3% [6][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 [8] Market Data and Key Metrics Changes - The company is experiencing strong demand trends in its existing markets, with an average market growth rate of about 3% per year [40] - Exchange volume growth was significant, with admissions in the quarter growing by 40%, contributing to mid-single digits as a percentage of revenue [61] 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] - 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] - The strategic focus includes operational excellence initiatives aimed at driving margin expansion over the next several years [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of demand, attributing strong volume growth to operational improvements and the strength of the markets [40] - The company is optimistic about achieving its full-year 2025 financial guidance, reaffirming its outlook based on solid Q1 performance [18][19] - 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 is in the final stages of recruiting a Chief Development Officer to support its focus on M&A activities [5] - The company’s credit rating was upgraded to B+ from B, reflecting improved net leverage and cash flow profile [17] Q&A Session Summary Question: Inquiry about seasonality and EBITDA decline - Management indicated that the sequential decline in EBITDA is not abnormal and attributed it to various seasonal factors, including the impact of flu season and timing of payments [23][25] Question: Follow-up on elevated denials - Management confirmed that the elevated denials are consistent with previous trends and noted a slowdown in payments even on clean claims [27][29] Question: Supply chain initiatives and opportunities - Management highlighted participation in a GPO and ongoing improvements in service line utilization as key areas for margin expansion [31][32] Question: Update on expansion initiatives - Management reported a growing pipeline for new market opportunities and emphasized the importance of being disciplined in evaluating potential acquisitions [45][47] Question: New Mexico DPP program approval timeline - Management expressed hope for approval by Q2, noting positive signs from discussions with elected officials [56][58] Question: Exchange volumes and payer mix - Management confirmed strong exchange growth, with admissions in Q1 growing significantly and operating in mid-single digits as a percentage of revenue [60][61]

Financial Performance - Total revenue for 1Q25 was $1497 million, a 40% year-over-year increase[15] - Adjusted EBITDA for 1Q25 was $98 million, a 25% year-over-year increase[15] - Adjusted EBITDA margin was 66% in 1Q25, a decrease of 10 basis points year-over-year[15] Operating Metrics - Admissions increased by 76% year-over-year, totaling 41389[15] - Adjusted Admissions increased by 27% year-over-year, totaling 84536[15] - Net Patient Service Revenue per Adjusted Admission increased by 12% year-over-year, reaching $17402[15] Capital Structure - The company has $495 million in ABL Capacity and $295 million in total cash, resulting in $790 million available liquidity[32] - Net leverage is 26x and lease-adjusted net leverage is 30x[32] 2025 Full Year Guidance - Total revenue is projected to be between $6200 million and $6450 million[38] - Adjusted EBITDA is projected to be between $575 million and $615 million[38]

Financial Performance - Total revenue for Q1 2025 was $1.50 billion, reflecting a 4.0% year-over-year growth[3] - Net income attributable to Ardent Health was $41 million, or $0.29 per diluted share, compared to $27 million, or $0.21 per diluted share in Q1 2024[11] - Adjusted EBITDA increased 2.5% year-over-year to $98 million[11] - Total revenue for Q1 2025 was $1,497,234, an increase of 4.0% from $1,439,046 in Q1 2024[27] - Net income attributable to Ardent Health Partners, Inc. for Q1 2025 was $41,383, representing a 53.3% increase from $27,047 in Q1 2024[27] - Basic net income per share increased to $0.30 in Q1 2025 from $0.21 in Q1 2024, reflecting a 42.9% growth[27] - Net income for Q1 2025 increased to $58,965, up from $45,851 in Q1 2024[39] - Adjusted EBITDA for Q1 2025 was $98,201, compared to $95,814 in Q1 2024, marking a growth of 2.0%[39] Operational Metrics - Admissions rose by 7.6% year-over-year, driven by a heightened flu season and solid inpatient surgery growth[5] - Adjusted admissions grew by 2.7% year-over-year, tracking toward the upper end of the 2025 guidance[5] - Emergency room visits increased by 2.3% year-over-year to 161,249[7] - The number of admissions in Q1 2025 rose to 41,389, a 7.6% increase from 38,469 in Q1 2024[34] - Utilization of licensed beds improved to 50% in Q1 2025, up from 46% in Q1 2024, representing an 8.7% increase[34] - The average length of stay for patients increased to 4.74 days in Q1 2025, compared to 4.66 days in Q1 2024[34] Financial Guidance - The company reaffirmed its full-year 2025 guidance, projecting total revenue between $6.2 billion and $6.45 billion[10] - The guidance for full-year 2025 net income is projected between $342 million and $386 million[50] - Adjusted EBITDA guidance for the full year 2025 is estimated to be between $575 million and $615 million[51] Cash and Debt Position - As of March 31, 2025, total cash and cash equivalents were $495 million, with total debt of $1.1 billion[8] - The company's net leverage ratio was 1.4x, and the lease-adjusted net leverage ratio was 3.0x as of March 31, 2025[8] - Cash and cash equivalents at the end of Q1 2025 were $495,044, down from $556,785 at the end of Q4 2024[32] - Long-term debt, less current installments, was $1,090,549 as of March 31, 2025, slightly up from $1,085,818 at the end of 2024[32] - Total assets decreased to $4,911,257 in Q1 2025 from $4,956,100 at the end of 2024[32] Strategic Initiatives - The company is evaluating a growing pipeline of attractive inorganic growth opportunities to enhance long-term value for stockholders[5] - The company is focused on leveraging technology, including artificial intelligence and machine learning, to enhance operational efficiencies and patient outcomes[23] - The company closed UT Health East Texas Specialty Hospital, transferring its assets to other facilities, indicating a strategic consolidation effort[35] - The company operated 30 hospitals at the end of Q1 2025, a decrease of 3.2% from 31 hospitals at the end of Q1 2024[34]

Operations and Market Presence - Ardent Health Partners operates 30 acute care hospitals and approximately 280 sites of care, serving over 1.2 million unique patients with approximately 5.8 million visits in 2024 [13]. - The company operates in eight mid-sized urban markets across six states, with an average of more than 500 beds per hospital, positioning itself for continued growth in these markets [21]. - The estimated market share for Ardent's hospitals ranges from 15.8% to 59.0% across different markets, indicating a strong competitive position [24]. - The company operates 18 JV-operated hospitals across various markets, with majority ownership interests in most of them [31]. - The joint venture with UTHSCT allows the company to share earnings on a 70% (Ardent) / 30% (UTHSCT) basis, despite owning 100% of the assets of the hospitals involved [32]. - The company aims to enter new markets through acquisitions and partnerships, focusing on joint ventures with leading not-for-profit and academic health systems [79]. Healthcare Services and Quality - The company has a provider network of over 1,800 providers, including more than 390 primary care providers and over 1,450 specialists, which supports its value-based care initiatives covering over 220,000 lives [27]. - In 2024, Ardent achieved a 7.2% increase in Sepsis Bundle compliance, leading to a greater than 13% reduction in Septic Shock mortality and a 33% decrease in catheter-associated urinary tract infections [20]. - Ardent's hospitals have received recognition for safety and quality, with 81% of graded hospitals achieving a Leapfrog Hospital Safety Grade of A or B, compared to the national average of 56% [20]. - The company has over 80 value-based care contracts and plans to expand its participation in these programs to drive better health and cost outcomes [76]. Technology and Innovation - The implementation of a system-wide Epic technology platform has improved care coordination and operational standardization, earning a "Gold Stars 9" level designation from Epic [28]. - The company leverages advanced technologies, including artificial intelligence and remote patient monitoring, to enhance patient care and outcomes [29]. - The company has invested nearly $37.0 million in enhanced technologies over the last three years to broaden service capabilities and increase patient engagement [30]. - The BioButton device has shown an approximately 9-hour reduction in length of stay (LOS) in medical surgical units where it is used [30]. - The implementation of a single instance of Epic as the clinical operating platform aims to improve clinical efficiency and financial outcomes [67]. Financial Performance and Market Trends - The U.S. national healthcare expenditures (NHE) represented approximately 17% of GDP, or nearly $4.9 trillion, in 2023, with projections to grow to over $7.7 trillion by 2032 [44]. - Hospital expenditures are expected to rise at an average annual growth rate of 5.8% from 2023 to 2032, outpacing the GDP growth rate of 4.3% [44]. - The serviceable addressable market for the company is estimated to be approximately $800 billion in 2020, expected to grow at an average annual growth rate of approximately 5.7% to nearly $1.4 trillion by the end of the decade [47]. - Hospital services accounted for nearly $1.5 trillion, or approximately 31% of total healthcare spending in 2023, expected to grow to $2.4 trillion by 2032 [49]. - Physician and clinical services represented nearly $1.0 trillion, or approximately 20% of total spending in 2023, projected to increase to approximately $1.5 trillion by 2032 [49]. Regulatory Environment and Compliance - Regulatory compliance is critical, as failure to meet laws and regulations could result in penalties, loss of licenses, and inability to participate in government programs [143]. - The use of artificial intelligence in clinical decision-making is under increased regulatory scrutiny, with potential future laws affecting its implementation [149][150]. - Recent U.S. Supreme Court decisions have introduced regulatory uncertainty, impacting the healthcare industry's compliance landscape [151]. - The Affordable Care Act (ACA) has expanded health insurance coverage and reduced Medicare spending growth, but its future is uncertain due to ongoing legislative attempts to amend it [152]. - The Anti-Kickback Statute prohibits remuneration to induce referrals for services covered by federal healthcare programs, with severe penalties for violations [157]. Cybersecurity and Operational Challenges - The Cybersecurity Incident in November 2023 had an estimated pre-tax impact of approximately $74 million, including lost revenues and remediation costs [187]. - The company experienced delays in billing claims and obtaining reimbursements and payments through the first quarter of 2024 due to the Cybersecurity Incident [189]. - The company faced three consolidated class action lawsuits due to a Cybersecurity Incident, involving approximately 38,000 individuals alleging data mismanagement [190]. - The company activated incident response protocols and engaged cybersecurity experts immediately upon detecting the Cybersecurity Incident [187]. - The unauthorized actor acquired a copy of certain personal information and PHI of a limited number of patients and employees, but did not gain access to the EHR platform [187]. Workforce and Human Resources - As of December 31, 2024, the company employed approximately 24,900 individuals, including over 19,200 full-time employees [199]. - The company is experiencing significant challenges in recruiting and retaining qualified medical personnel due to industry-wide labor shortages [200]. - The company has established nursing and medical residency programs across five states to improve access to care and build a pipeline of skilled providers [206]. - The company invests in employee safety and welfare, maintaining a secure workplace and promoting a culture of well-being [204].