Ardent Health Partners, LLC Q1 FY2025 earnings call

Marty Bonick emphasized Ardent is well-positioned for multifaceted long-term growth with three key areas: driving market share growth in existing footprint, expanding outpatient and acute care hospital footprint with ~$500 million cash and 3 times lease-adjusted net leverage, and driving margin expansion via operational initiatives. Dave Caspers joined as Chief Operating Officer effective March 31. Supply chain cost as a percent of revenue declined 60 basis points year-over-year. Physician professional fees growth rate was 6% in Q1 2025, down from 13% in the same period last year. The 18 NextCare urgent care clinics acquisition's integration is expected to yield downstream volumes in Tulsa and Albuquerque. Ardent is seeing more potential M&A candidates and increased interest in its joint venture model from academic and non-profit partners.

Ardent Health Partners reported first quarter 2025 revenue increased 4% to $1.5 billion. Adjusted EBITDA grew 2.5% to $98 million. Admissions grew 7.6%, driven by strong flu season and optimized transfer center operations. Inpatient surgery growth was 3.4%. Adjusted admissions increased 2.7%, which is within the upper end of the 2025 full-year outlook of 2% to 3%. Net patient service revenue per adjusted admission grew 1.2%. The integration of the 18 NextCare urgent care clinics acquired on January 1, 2025 is expected to generate additional downstream volumes in the Tulsa and Albuquerque markets.

Ardent reaffirmed its full-year 2025 financial guidance, stating it remains firmly on track to meet it. S&P upgraded Ardent's credit rating to B+ from B due to improved net leverage and cash flow profile.

Risks include uncertain regulatory environment affecting M&A opportunities, potential impact of payor claim denials on EBITDA, and tariff outlook with potential mid-single-digit million-dollar EBITDA impact in 2025.

Q: Whit Mayo inquired about seasonality and EBITDA decline.

A: Alfred Lumsdaine responded it's normal with factors like flu season bringing volumes but also lower acuity and cost premiums, payer denials having a year-over-year impact, and Q1 having cost burdens like raises and timing issues.

Q: Ann Hynes asked about supply chain initiatives and admission growth.

A: Marty Bonick stated Ardent participates with HealthTrust as a GPO partner, sees utilization improvement in service lines, and admission growth is driven by flu season, service line rationalization, and transfer center optimization. Alfred Lumsdaine added it's also due to strength of markets.

Q: Craig Hettenbach asked about demand durability.

A: Marty Bonick responded that markets we're in grow on average ~3% annually, and operational improvements support durable volume growth.

Q: Ben Hendrix asked about expansion initiatives.

A: Marty Bonick mentioned focus on expanding outpatient access points, pipeline of M&A with more inbound calls from academic partners, and valuations being in normal industry range with accretive acquisitions.

Q: Joanna Gajuk asked about non-profit partnerships and New Mexico DPP.

A: Marty Bonick said there are ongoing conversations with potential opportunities, hopeful for Q2 approval of New Mexico DPP.

Q: Matthew Gillmor asked about exchange volumes and professional expenses.

A: Alfred Lumsdaine said exchange volumes grew significantly with admissions up 40% in Q1, and Marty Bonick noted professional expenses growth is moderating from peak but still above normal inflation.

Q: Benjamin Rossi asked about transfer center operations and guidance range.

A: Marty Bonick explained regionalized transfer center operations using Epic EHR to optimize patient placement, and Alfred Lumsdaine mentioned factors affecting guidance range include professional fees pressure, payer behaviors, and tariffs.