Ardent Health, Inc.
For the period ended Mar 31, 2025. Filed May 7, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
ARDT$17.30+8.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001756655-24-000017
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0001628280-25-023210
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
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305 unchanged; 184 reworded; 118 added; 273 removed; 33 previous and 9 current paragraphs rearranged.
Tables are not compared: 9 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (118)
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statements for the year ended December 31, 2024 and related notes contained in the Annual Report. The following discussion
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current geopolitical instability, and impacts from the imposition of, or changes in, tariffs, as well as the potential impact on us
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of uncertain political, financial, credit and capital conditions; (2) possible reductions or other changes in Medicare, Medicaid
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and other state programs, including Medicaid supplemental payment programs, Medicaid waiver programs or state directed
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payments, that could have an adverse effect on our revenues and business; (3) reduction in the reimbursement rates paid by
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commercial payors, increased reimbursement denials or payment delays by commercial payors, our inability to retain and
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(4) security threats, catastrophic events and other disruptions affecting our, our service providers’ or our joint venture (“JV”)
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partners’ information technology and related systems, which have adversely affected, and could in the future adversely affect,
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our relationships with patients and business partners and subject us to legal claims and liabilities, reputational harm and
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business disruption and adversely affect our financial condition; (5) the highly competitive nature of the healthcare industry
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and continued industry trends towards clinical transparency and value-based purchasing may impact our competitive position;
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changes to physician utilization practices and treatment methodologies and other factors outside our control that impact
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demand for medical services and may reduce our revenues and ability to grow profitability; (8) continued industry trends
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facilities or other business operations; (11) exposure to certain risks and uncertainties by the JVs through which we conduct a
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facilities are heavily concentrated in Texas and Oklahoma, which makes us sensitive to regulatory, economic and competitive
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conditions and changes in those states; (15) negative impact of severe weather, climate change, and other factors beyond our
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control, which could restrict patient access to care or cause one or more facilities to close temporarily or permanently; (16)
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indebtedness and the ability to refinance such indebtedness on acceptable terms; (18) the impact of a deterioration of public
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health conditions associated with a future pandemic, epidemic or outbreak of infectious disease; (19) our failure to comply
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laws and regulations; (20) the impact of governmental claims or governmental investigations, payor audits and litigation
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failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements;
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(22) inability to or delay in building, acquiring, selling, renovating or expanding our healthcare facilities; (23) failure to
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requirements; (24) effects of changes in healthcare policy, including any reforms that may be undertaken by the current
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and an enhanced patient experience; (26) our status as a controlled company; (27) conflicts of interest between our
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SEC, including the Annual Report.
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events.
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Urgent Care Acquisitions
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On January 1, 2025, we completed the acquisitions of certain assets and operationsof 18 urgent care clinics in New Mexico
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and Oklahoma for a combined purchase price of $27.5 million. The consideration transferred consisted solely of cash. Upon
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closing of the acquisitions, approximately $4.1 million was placed into escrow to cover potential working capital adjustments
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and to secure certain representations and warranties pursuant to the terms of the purchase agreements. This escrow amount is
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included in the total purchase consideration of$27.5 million. Most of the combined purchase price for assets and operations
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acquired was recorded as goodwill with an immaterial portion allocated to identifiable assets acquired and liabilities assumed.
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The fair values of assets and liabilities recorded as of March 31, 2025 related to these acquisitions are provisional and will be
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finalized at the close of the measurement period.
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the Term Loan B Credit Agreement) plus 3.25% to Term SOFR plus 2.75% and from the base rate plus 2.25% to the base
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Staffing and Labor Trend
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our operating margins.
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period. The increase in total revenue for thethree months ended March 31, 2025 consisted of anincrease in adjusted
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admissions of 2.7% andan increase in net patient service revenue per adjusted admission of 1.2%. Theincrease in adjusted
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statements for the year ended December 31, 2023 included in our final prospectus dated July 17, 2024, filed with the
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Securities and Exchange Commission (the "SEC") on July 18, 2024 pursuant to Rule 424(b) (the "Final Prospectus") under
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the Securities Act of 1933, as amended (the "Securities Act"). The following discussion includes forward-looking statements
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period.
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forward-looking statements, including the risk factors and other cautionary statements described under the heading “Risk
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Factors” included in this Quarterly Report and those included within our Final Prospectus. Factors, risks, and uncertainties
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changes in government healthcare programs, including Medicare and Medicaid and supplemental payment programs and
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state directed payment arrangements; (2) reduction in the reimbursement rates paid by commercial payors, our inability to
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patients; (3) the highly competitive nature of the healthcare industry; (4) inability to recruit and retain quality physicians, as
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competition for staffing or a continued or increased shortage of experienced nurses; (6) changes to physician utilization
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practices and treatment methodologies and third-party payor controls designed to reduce inpatient services or surgical
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procedures that impact demand for medical services; (7) continued industry trends toward value-based purchasing, third party
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maintain existing relationships with JV partners or enter into relationships with additional healthcare system partners; (12) the
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business operations or against healthcare providers who provide services at our facilities; (13) the impact of government
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investigations, claims, audits, whistleblower and other litigation; (14) the impact of any security incidents affecting us or any
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third-party vendor upon which we rely; (15) inability or delay in our efforts to construct, acquire, sell, renovate or expand our
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permit, licensing and accreditation requirements, or the expansion of existing or the enactment of new laws or regulation
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(19) sensitivity to regulatory, economic and competitive conditions in the states in which our operations are heavily
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concentrated; (20) decreased demand for our services provided due to factors beyond our control, such as seasonal
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fluctuations in the severity of critical illnesses, pandemic, epidemic or widespread health crisis; (21) inability to accurately
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estimate market opportunity and forecasts of market growth; (22) general economic and business conditions, both nationally
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inability to demonstrate meaningful use of Electronic Health Record ("EHR") technology; (25) inability to continually
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enhance our hospitals with the most recent technological advances in diagnostic and surgical equipment; (26) effects of
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current and future health reform initiatives, including the Affordable Care Act, and the potential for changes to the Affordable
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Care Act, its implementation or its interpretation (including through executive orders and court challenges); (27) legal and
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comply with certain debt covenants and other significant operating and financial restrictions imposed on us by the agreements
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governing our indebtedness, and the effects that variable interest rates, and general economic factors could have on our
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operations, including our potential inability to service our indebtedness; (30) conflicts of interest with certain of our existing
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large stockholders; (31) effects of changes in federal tax laws; (32) increased costs as a result of operating as a public
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company; (33) risks related to maintaining an effective system of internal controls; (34) volatility of our share price and size
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of the public market for our common stock; (35) our guidance differing from actual operating and financial performance; (36)
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enhance patient experience; (37) the impact of recent decisions of the U.S. Supreme Court regarding the actions of federal
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2024 Supplemental Payment Program Updates
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A new Oklahoma directed payment program (the “Oklahoma DPP”) became effective on April 1, 2024. Under the Oklahoma
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DPP, hospitals receive directed payments in accordance with Oklahoma’s new Medicaid managed care delivery system,
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resulting in reimbursement near the average commercial rate. The existing upper payment limit component of Oklahoma’s
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Supplemental Hospital Offset Payment Program will remain in place for certain categories of Medicaid patients that continue
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to be enrolled in Oklahoma’s traditional Medicaid Fee for Service program. We have recognized total revenue of$48.6
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million under the Oklahoma DPP from the April 1, 2024 effective date through September 30, 2024.
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In March 2024, New Mexico’s Healthcare Delivery and Access Act (the “New Mexico HDA Act”) was signed into law.
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Report on Form 10-Q for the quarter ended September 30, 2024 (this "Quarterly Report") and our annual financial
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Report on Form 10-Q for the quarter ended March 31, 2025 (this "Quarterly Report") and our audited consolidated financial
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that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our
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includes forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never
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results to differ materially from those expressed or implied by such forward-looking statements. When reviewing the
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materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-
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discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In
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looking statements. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties
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particular, we encourage you to review the risks and uncertainties described in the section titled “Risk Factors” included
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that could impact our business. In particular, we encourage you to review the risks and uncertainties described in the section
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elsewhere in this Quarterly Report and our Final Prospectus. These risks and uncertainties could cause actual results to
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titled “Risk Factors” included elsewhere in this Quarterly Report and the Annual Report. These risks and uncertainties could
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differ materially from those projected in forward-looking statements contained in this Quarterly Report or implied by past
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cause actual results to differ materially from those projected in forward-looking statements contained in this Quarterly
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results and trends. Our historical results are not necessarily indicative of the results that may be expected for any period in
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Report or implied by past results and trends. Our historical results are not necessarily indicative of the results that may be
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the future, and our interim results are not necessarily indicative of the results we expect for the full fiscal year or any other
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expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full
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that could cause actual outcomes and results to be materially different from those contemplated include, among others: (1)
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forward-looking statements. Factors, risks, and uncertainties that could cause actual outcomes and results to be materially
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and in the regions in which we operate; (23) the impact of seasonal or severe weather conditions and climate change; (24)
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in the regions in which we operate, including the impact of challenging macroeconomic conditions and inflationary pressures,
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retain and negotiate favorable contracts with private third-party payors, or an increasing volume of uninsured or underinsured
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negotiate favorable contracts with private third party payors, or an increasing volume of uninsured or underinsured patients;
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well as increasing cost to contract with hospital-based physicians; (5) increased labor costs resulting from increased
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(6) inability to recruit and retain quality physicians, as well as increasing cost to contract with hospital-based physicians; (7)
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payor consolidation and care coordination among healthcare providers; (8) loss of key personnel, including key members of
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toward value-based purchasing, third party payor consolidation and care coordination among healthcare providers; (9)
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acquisitions or strategic joint ventures ("JVs") or inability to realize all of the anticipated benefits, including anticipated
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inability to successfully complete acquisitions or strategic JVs or inability to realize all of the anticipated benefits; (10)
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impact of known and unknown claims brought against our hospitals, physician practices, outpatient facilities or other
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liabilities because of professional liability and other claims brought against our hospitals, physician practices, outpatient
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synergies, of past acquisitions and the risk that transactions may not receive necessary government clearances; (11) failure to
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significant portion of our operations, including anticipated synergies, of past acquisitions and the risk that transactions may
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relating to permit, licensing and accreditation requirements; (17) failure to obtain drugs and medical supplies at favorable
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not receive necessary government clearances; (12) failure to obtain drugs and medical supplies at favorable prices or
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prices or sufficient volumes; (18) operational, legal and financial risks associated with outsourcing functions to third parties;
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sufficient volumes; (13) operational, legal and financial risks associated with outsourcing functions to third parties; (14) our
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and its restrictions and limitations on our business; (29) the impact of our significant indebtedness, including our ability to
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risks related to the Ventas Master Lease and its restrictions and limitations on our business; (17) the impact of our significant
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industry or to adjust our operations in response to changing laws and regulations; (10) inability to successfully complete
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with complex laws and regulations applicable to the healthcare industry or to adjust our operations in response to changing
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healthcare facilities; (16) our failure to comply with federal and state laws relating to Medicare and Medicaid enrollment,
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comply with federal and state laws relating to Medicare and Medicaid enrollment, permit, licensing and accreditation
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regulatory restrictions on certain of our hospitals that have physician owners; (28) risks related to the Ventas Master Lease
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presidential administration, and legal and regulatory restrictions on our hospitals that have physician owners; (25) the results
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the results of our efforts to use technology, including artificial intelligence, to drive efficiencies and quality initiatives and
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of our efforts to use technology, including artificial intelligence and machine learning, to drive efficiencies, better outcomes
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agencies; and (38) other risk factors described in our filings with the SEC.
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controlling stockholder and other holders of our common stock; and (28) other risk factors described in our filings with the
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We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report.
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We caution you that the foregoing list may not contain all of the risks and uncertainties that may affect the forward-looking
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You should not rely upon forward-looking statements as predictions of future events.
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statements made in this Quarterly Report. You should not rely upon forward-looking statements as predictions of future
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These statements are subject to risks, uncertainties, and other factors described in the “Risk Factors” section and elsewhere in
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These statements are subject to risks, uncertainties, and other factors described in the “Risk Factors” section and included in
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this Quarterly Report. We operate in a competitive and rapidly changing environment where new risks and uncertainties can
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the Annual Report. We operate in a competitive and rapidly changing environment where new risks and uncertainties can
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acute care hospitals and more than 200 sites of care with 1,808 employed and affiliated providers as of September 30, 2024,
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acute care hospitals and approximately 280 sites of care with 1,881 employed and affiliated providers as of March 31, 2025.
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an increase of 3.3% compared to September 30, 2023. Affiliated providers are physicians and advanced practice providers
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Affiliated providers, which have increased 9.2% compared to March 31, 2024, are physicians and advanced practice
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with whom we contract for services through a professional services agreement or other independent contractor agreement.
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providers with whom we contract for services through a professional services agreement or other independent contractor
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We hold a leading position in a majority of our markets, and we believe we are one of the leading healthcare systems based
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agreement. We hold a leading position in a majority of our markets, and we believe we are one of the leading healthcare
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on market share and our integrated network of hospitals, ambulatory facilities, and physician practices. We operate either
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systems based on market share and our integrated network of hospitals, ambulatory facilities, and physician practices. We
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independently or in partnership with premier academic medical centers, large not-for-profit hospital systems, community
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operate either independently or in partnership with premier academic medical centers, large not-for-profit hospital systems,
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physicians, and a community foundation through our well-established and differentiated JV model. Collectively, we operate
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community physicians, and a community foundation through our well-established and differentiated JV model. Collectively,
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as a unified organization with a consumer-centric approach to caring for our patients and our communities. Our strategic JV
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we operate with a consumer-centric approach to caring for our patients and our communities. Our strategic JV partners offer
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partners offer us significant advantages, including expanded access points, clinical talent availability, local brand recognition,
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us significant advantages, including expanded access points, clinical talent availability, local brand recognition, and scale that
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and scale that enable us to accelerate market penetration. We believe that we help our partners enhance their network and
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enable us to accelerate market penetration. We believe that we help our partners enhance their network and regional presence
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regional presence through our operational acumen. We strive to strengthen clinical services, drive operating improvements,
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through our operational acumen. We strive to strengthen clinical services, drive operating improvements, and centrally
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fiscal year or any other period.
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different from those contemplated include, among others: (1) general economic and business conditions, both nationally and
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brought against our hospitals, physician practices, outpatient facilities or other business operations; (21) actual or perceived
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Surprises Act prohibits providers from charging patients an amount beyond the in-network cost sharing amount for services
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principal payments; and no modification was made to the Term Loan B Credit Agreement as a result of this prepayment.
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interest rate by 50 basis points from Term SOFR plus 3.25% to Term SOFR plus 2.75% and from the base rate plus 2.25% to
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of one month (not to be less than 0.50% per annum), plus 1.00% per annum, in each case, plus an applicable margin, or (ii)
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based upon achievement of specified senior secured net leverage ratio levels) of net cash proceeds of certain
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lease of Hackensack Meridian Mountainside Medical Center.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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our senior management team; (9) our failure to comply with complex laws and regulations applicable to the healthcare
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6.5%, respectively, of our outstanding common stock.
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exceptions. For services for which balance billing is prohibited, the No Surprises Act includes provisions that may limit the
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The following table sets forth the consolidated results of our operations expressed in dollars and as a percentage of total
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Operating Results Summary for the Nine Months Ended September 30, 2024
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Total operating expenses increased $61.0 million for the three months ended September 30, 2024 compared to the same prior
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year period due to higher patient volumes butdecreased 1.0% as a percentage of total revenue. Thedecrease in total operating
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Salaries and benefits —Salaries and benefits, as a percentage of total revenue, were 43.8% for the three months ended
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Professional fees — Professional fees, as a percentage of total revenue, were 18.9% for the three months ended September
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Rents and leases, related party— Rents and leases, related party, consists of lease expense related to the Master Lease with
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Ventas ("Ventas Master Lease"), under which we lease 10 of our facilities, and other lease agreements with Ventas for certain
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the three months ended September 30, 2024 compared to income tax expense of$7.3 million, which equates to an effective
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statutory rate during the three months ended September 30, 2024 compared to the same prior year period. Additionally, the
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the three months ended September 30, 2024 compared to$17.9 million for the same prior year period consisted primarily of
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that are owned and operated though limited liability companies and consolidated by us for the three months ended September
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income attributable to ALH Holdings, LLC’s (a subsidiary of Ventas, a related party) minority interest in AHP Health
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to ongoing service line optimization efforts and execution on various supply chain cost reduction initiatives, including
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improved inventory management, standardized surgical supply procurement and strategic sourcing.
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Agreement and prepaid $100.0 million of the outstanding principal on our Term Loan B Facility. Additionally, on September
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tax rate of 17.2%, for the same prior year period. The increase in income tax expense was primarily driven by an increase in
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income before income taxes attributable to Ardent Health Partners, Inc., which resulted in an increase in taxes at the federal
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effective tax rate was further impacted by permanent differences resulting from the disallowance of certain equity-based
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Net income attributable to noncontrolling interests— Net income attributable to noncontrolling interests of$62.7 million for
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$59.8 million and$57.5 million of net income attributable to minority partners’ interests in hospitals and ambulatory services
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30, 2024 and 2023, respectively. Income from operations before income taxes related to these limited liability companies was
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and acquisition-related costs; expenses incurred in connection with the implementation of Epic Systems (“Epic”),
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2024 and 2023, respectively, and$0.6 million and$0.6 million for thenine months ended September 30, 2024 and 2023, respectively,
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system. These costs included professional fees of$0.5 million and$0.4 million for the three months ended September 30, 2024 and 2023,
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with principal due in quarterly installments of 0.25% of the initial $900.0 million principal amount (subject to certain
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reductions from time to time as a result of the application of prepayments), with the remaining balance due upon maturity of
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Term Loan B Credit Agreement. The repricing reduced the applicable interest rate by 50 basis points from Term SOFR plus
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(c)Restructuring, exit and acquisition-related costs represent (i) enterprise restructuring costs, including severance costs related to work