Ardent Health Partners, Inc.(ARDT) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements 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] - 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] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) 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 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] - On January 1, 2025, Ardent acquired 18 urgent care clinics in New Mexico and Oklahoma for $27.5 million in cash[129] - 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][132] - In September 2024, the Term Loan B Facility was repriced, reducing the applicable interest rate by 50 basis points[131] Results of Operations 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] - 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] - 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] Supplemental Non-GAAP Information 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 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] 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] - The company leases 10 hospitals under the Ventas Master Lease, incurring related party rent expense of $38.1 million in Q1 2025[188][190] Quantitative and Qualitative Disclosures About Market Risk 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] - 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] - 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] Controls and Procedures 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] - 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] PART II - OTHER INFORMATION Legal Proceedings 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][223] The settlement's financial impact is not expected to be material Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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][226] Other Information 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]