Financial Data and Key Metrics Changes - Year-to-date adjusted EBITDA increased by 30%, with a revised full-year guidance of $530 million to $555 million due to industry-wide cost pressures [4][17] - Revenue for the third quarter grew by 8.8% to $1.58 billion, or 11.7% excluding a one-time revenue adjustment [15][17] - Adjusted EBITDA for the third quarter rose by 46% to $143 million, with margins expanding by 240 basis points to 9.1% [7][15] Business Line Data and Key Metrics Changes - Admissions growth was 5.8% in the third quarter, with year-to-date admissions up 6.7% [6][14] - Adjusted admissions increased by 2.9%, consistent with the 2025 guidance range of 2-3% [7][14] - Inpatient surgery growth was 9.7% in the third quarter, while outpatient surgeries declined by 1.8% [14] Market Data and Key Metrics Changes - The company's markets are growing two to three times faster than the national average, supported by rising care complexity [6][23] - Strong demand across markets is expected to continue, providing a foundation for strategic growth [6][23] Company Strategy and Development Direction - The company is focused on optimizing costs and strengthening margins through its impact program, which includes contract renegotiations and staffing adjustments [10][11] - Strategic investments will continue to support long-term growth, with plans to open several urgent care and imaging centers in 2026 [21][22] - The company aims to enhance operational efficiencies in labor, supply chain, and revenue cycle management [11][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged persistent industry-wide cost pressures, particularly in professional fees and payer denials, impacting earnings more than anticipated [4][9] - Despite these challenges, management remains confident in the company's ability to deliver sustainable growth and long-term shareholder value [5][23] - The company is taking decisive actions to mitigate the impact of industry headwinds and strengthen performance [9][10] Other Important Information - The company recorded a $43 million revenue reduction due to a change in accounting estimate related to the transition to the Kodiak RCA net revenue platform [18] - An increase of $54 million in professional and general liability reserves was attributed to adverse claims development in the New Mexico market [19] Q&A Session Summary Question: What are the headwinds and tailwinds for 2026? - Management indicated that it is too early to provide definitive guidance for 2026 but noted strong durable demand and ongoing outpatient development [26][28] Question: Are there discussions about implementing a share repurchase program? - Management stated it would be premature to discuss a share repurchase program but emphasized a commitment to optimizing shareholder value [30] Question: What drove the increase in professional fees? - The increase in professional fees was attributed to pressures in anesthesia and radiology, with expectations for moderation in the future [58][60] Question: How widespread is the payer denial issue? - Payer denials have increased across managed care, Medicare, Medicaid, and health exchanges, prompting the company to ramp up appeals and litigation efforts [44][46] Question: How is the company addressing the elevated denial activity? - The company is focusing on improving contract terms and increasing the number of appeals filed, with a significant rise in demand letters sent to payers [46][48] Question: What is the status of contract negotiations for 2026? - Management reported that approximately three-quarters of contracts for 2026 have been negotiated, with a focus on improving yield under contracts [81]