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]
Ardent Health Partners, Inc.(ARDT) - 2025 Q1 - Earnings Call Transcript