Ardent Health Services

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: Thank you for standing by. Welcome to Ardent Health first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. Thank you. I would now like to turn the conference over to Dave Steiber, the Senior Vice President of Investor Relations. You may begin.

Dave Steiber, Senior Vice President of Investor Relations, Ardent Health Services: Thank you, operator, and welcome to Ardent Health’s first quarter 2026 earnings conference call. Joining me today is Ardent President and Chief Executive Officer, Marty Bonick, and Chief Financial Officer, Alfred Lumsdaine. Marty and Alfred will provide prepared remarks, and then we will open the line to questions. Before I turn the call over to Marty, I want to remind everyone that today’s discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today’s forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Further, this call will include a discussion of certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDAR.

Reconciliation of these measures to the closest GAAP financial measure is included in our quarterly earnings press release and supplemental earnings presentation, which were both issued yesterday evening after the market closed and are available at ardenthealth.com. With that, I’ll turn the call over to Marty.

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: Thank you, Dave, and good morning. We appreciate everyone joining the call and webcast. During the first quarter, we built on the positive momentum exiting 2025 to deliver strong financial results. Revenue increased 7% and Adjusted EBITDA grew 26%. Both adjusted admissions and higher acuity surgical activity showed positive growth even with the transient impacts related to weather and a light flu season, which reflects the underlying demand in our markets. Importantly, our strong first quarter results underscore the resiliency of our operating model and disciplined execution amidst a challenging backdrop. Further, this performance reflects effective cost management across the organization and prudent investment decisions. Our first quarter performance is a solid start to the year and provides increased visibility and confidence as we track towards our 2026 financial targets. To frame today’s conversation, I’m going to focus my comments on three key areas.

First, I will cover our first quarter results. Second, I will provide an update on the IMPACT Program, our work to improve margins, performance, agility, and care transformation. Third, I will share updates on key 2026 focus areas. Let’s start with first quarter results. We had a good quarter that included strong cost management, particularly in SWB and supplies, that drove 110 basis points of Adjusted EBITDA margin expansion. I’m pleased with how we navigated transient challenges in the quarter. Like many of our peers, we experienced severe winter storms in certain markets and lighter respiratory season. This resulted in fewer admissions and some disruption to our typical seasonal pattern. As conditions evolved, we acted swiftly to reschedule surgeries and adjust labor to align with volume, mitigating the impact on performance.

We also have been strategically focused on surgeon recruitment and productivity as a part of our Capacity IQ strategy. Capacity IQ is our system-wide approach to managing capacity and demand strategically, aligning where we invest, how we deploy clinical talent, and how we utilize assets to drive volume, mix, and throughput across the enterprise with a focus on key service lines. Collectively, these actions helped drive first quarter total surgery growth of 1.2% year-over-year, which is a 100 basis point improvement over full year 2025 growth. Adjusted admissions increased 2%, which is in the middle of our 2026 guidance range. At the same time, labor management was strong again, and the significant improvement that began in the fourth quarter persisted into the first quarter.

Specifically, we reduced salaries, wages, and benefits expense per AA by 1.4% in the first quarter. Supply expense per AA growth was a modest 1.7%. Taken together, these results reflect improving execution across labor and supply cost, reinforcing our focus on consistently delivering results through the controllable aspects of our business. I now would like to shift to the two industry headwinds we’ve previously discussed. Payer denial trends were stable in the first quarter compared to fourth quarter, and we continue to work with Ensemble to drive improved denial management and recovery efforts. Professional fees were consistent with expectations in the first quarter and are tracking in line with our 2026 target. While it’s early in the year, we are encouraged these headwinds are stabilizing consistent with our expectations. Turning to our IMPACT Program.

We continue to be pleased with our progress against our initiatives to further optimize cost and strengthen margins. Importantly, we remain on track to deliver $55 million in savings this year. The improvements we began delivering in the fourth quarter of last year continued to manifest on the P&L in the first quarter, reflecting consistent execution and durability. Precision Staffing initiatives resulted in first quarter salaries, wages, and benefits expense growth of only 0.6%. Additionally, we reduced contract labor expenses by over 40% to $15 million in the first quarter, driving a 160 basis points year-over-year improvement in contract labor as a percent of salaries, wages, and benefits expense.

In addition to labor discipline, we are driving incremental supply cost efficiencies under the IMPACT Program. First quarter results reflect a broader set of strategic initiatives to leverage our scale and purchasing power with vendors, including improved rebates on physician preference items by moving to a single or dual-sourced vendor model. We also renegotiated key cardiovascular and med-surg distribution contracts, which are beginning to yield savings. What’s also important is that these margin improvement activities are not episodic. They represent repeatable operating improvements across staffing, supply chain, and throughput embedded into how we run the business. Lastly, I’ll shift to an update on some key 2026 focus areas, starting with outpatient growth. We continue to advance our ambulatory strategy, expanding capacity in markets where we see strong demand and attractive returns. During the first quarter, we opened four urgent care centers across our Texas, New Mexico, and Idaho markets.

For the remainder of the year, we expect to open 2 ASCs, 1 freestanding ED, and 1 urgent care facility. Once fully ramped, these assets should drive incremental volumes. We’re also focused on using AI and digital tools in a disciplined way to support consistent execution and improve operating efficiency across the enterprise. Our approach is practical and operational, deploying technology where it helps us to transform care delivery, enabling us to better manage staffing, enhance patient safety, and use resources more effectively. For example, in February, we announced a partnership with hellocare.ai to implement an enterprise-wide AI-assisted virtual care platform across more than 2,000 patient rooms. Deployment is underway. We expect all markets to be completed by year-end. Within this initiative, virtual patient monitoring, including virtual sitting, is already live across our markets.

This centralized technology-enabled model strengthens patient safety while allowing us to deploy clinical resources more efficiently at scale. It has already demonstrated the ability to prevent harm in its early use. While our initial focus is on patient safety and care quality, these tools also support our broader labor efficiency and cost discipline objectives as we scale the platform. To summarize, the first quarter represents a strong start to the year and managing through transient admission volume softness. Our model continues to demonstrate durability and resiliency, and execution against our IMPACT initiatives is translating into stronger operating efficiency and margin improvement. While we recognize the healthcare environment remains dynamic and certain external factors are outside our control, our focus remains squarely on the elements that we can control: cost discipline, operational execution, and capital allocation.

That discipline gives us confidence that we are on track to deliver on full year financial targets we established on our fourth quarter earnings call. With that, I will turn the call over to Alfred.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Thanks, Marty. Good morning, everyone. Building on Marty’s comments, we’re pleased with our first quarter performance and the momentum we’ve generated early in the year. Before I summarize first quarter results, I’d like to share some general context on flu and severe weather dynamics. As we’ve previously discussed, while flu fluctuations can impact volume metrics, they tend to be lower acuity events. As such, flu volatility typically has a less pronounced impact on earnings than on revenue, but still requires disciplined operational adjustments to flex staffing and manage costs accordingly. As for this year’s winter storms, they affected Ardent markets in Texas, Oklahoma, and New Jersey. We managed through these events very well, and I commend our clinicians and leaders for their response and their commitment to patient care.

With that said, first quarter revenue of $1.6 billion represents an increase of 7% compared to the prior year. Adjusted EBITDA for the first quarter increased 26% over the prior year to $124 million, with the associated margin expanding 110 basis points to 7.7%. Similarly, pre-NCI Adjusted EBITDAR margin expanded 100 basis points to 11.5%. During the first quarter, we recorded a $10.9 million pre-tax gain within other operating expenses from an increase in the carrying value of an investment option that we hold in a privately held company. Excluding this benefit, Adjusted EBITDA growth was 15%. In terms of volumes, first quarter admissions decreased 1.1%.

However, adjusted admissions grew 2.0%, which is right at the midpoint of our full year guidance range of 1.5%-2.5%. Additionally, total surgeries grew 1.2%, driven primarily by outpatient surgery growth of 1.7%. As Marty mentioned, we continue to make significant progress optimizing our labor expense. As a percent of revenue, SW&B improved 260 basis points compared to the prior year period, reflecting our focus on Precision Staffing and reducing reliance on contract labor. Contract labor as a percent of SW&B improved to 2.2% in the first quarter from 3.8% in the year ago quarter and 2.6% in the fourth quarter of 2025. Additionally, employed labor rates were favorable.

Our average hourly rate per FTE for the first quarter of 2026 was up just 1% year-over-year. As a % of revenue, supply expense improved 50 basis points compared to the prior year, benefiting from our IMPACT Program initiatives, specifically related to enhanced leverage with vendor contracts and improved rebates. Professional fees as a % of revenue increased 100 basis points compared to the prior year period. Sequential quarter growth was 2.4%. This was fully consistent with our expectations. For context, professional fees for Q1 2026 have a tough year-over-year comparison, given the step-up that started in the third quarter of 2025. Moving on to cash flow and liquidity. We ended the first quarter with total cash of $610 million and total debt outstanding of $1.1 billion.

Our total available liquidity at the end of the first quarter was $0.9 billion. Our strong balance sheet gives us flexibility, and our capital deployment approach remains return driven and disciplined, with a clear preference for high margin service line, ambulatory growth and operational investments. Cash used in operating activities during the first quarter was $60 million, compared to $25 million used in the first quarter of 2025, which benefited from the collection of business insurance proceeds related to our 2023 cybersecurity incident. As a reminder, the first quarter is traditionally our weakest cash flow quarter, largely due to payment timing on year-end accruals, including 401K matching and annual incentive payments. Capital expenditures during the first quarter were $28 million, and we expect that to ramp through the year.

We finished the quarter with total net leverage of 1.0 times and lease-adjusted net leverage of 2.6 times, an improvement from the 3.0 times at the end of Q1 2025. As we look to the rest of 2026, we continue to be mindful of various industry factors, including potential HIX disruption and macroeconomic conditions that could dampen consumer sentiment. We are very pleased with our first quarter results and the increased confidence and visibility we have towards achieving the $55 million of IMPACT Program savings. At the same time, it is still early in the year, and we believe it is prudent and appropriate to maintain our full-year financial guidance, including revenue and Adjusted EBITDA. With that, I will turn the call back over to Marty for concluding remarks.

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: Thank you, Alfred. I want to leave you with three key takeaways. First, our first quarter results reflect execution outperforming the environment, demonstrating the strength of our operating model and ability to deliver strong earnings even when volumes are below typical levels. Second, our IMPACT Program is delivering measurable and repeatable results under Chief Operating Officer Dave Caspers’ leadership. The structural operational improvements we have put in place are strengthening performance, and we remain on track to achieve our 2026 savings commitment. Third, we remain financially strong and disciplined with a balance sheet and strategy that position us to create long-term shareholder value. The strong start to the year gives us increased confidence in our 2026 financial guidance and serves as a solid foundation to continue building momentum as the year progresses.

Before I turn the call over for questions, I want to recognize our 25,000 team members and 2,000 affiliated providers across Ardent. This is a time of significant change in healthcare, and their resilience, agility and unwavering commitment to our purpose have been critical to our progress. Every day, they continue to adapt, improve how we operate, and deliver high-quality care to the people and communities we serve. Their dedication is the foundation that allows us to navigate change and position Ardent for long-term success. With that, I will turn the call over to the operator for our question and answer session.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Jason Cassorla with Guggenheim. Please go ahead.

Jason Cassorla, Analyst, Guggenheim: Good morning. Thanks. Maybe, to start on seasonality, could you just help us in how we should be thinking about EBITDA progression for the rest of this year? You have a number of moving pieces with Medicaid supplemental payment timing, some of the headwinds you discussed, run rating, IMPACT Program benefits, and the like. I guess, any help with how we should think about the second quarter, including if you expect EBITDA to be roughly in line with the first quarter when excluding the one-time investment gain benefit. You know, the exchange headwind remains out there, but any help around the second half in terms of EBITDA progression would be helpful. Thanks.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Sure. Hey, Jason, this is Alfred. Yeah, happy to talk about seasonality at a high level. You know, typically, just to baseline on what we normally see, we, like many, we see a very strong Q4 seasonally, as we see a lot of electives, with deductibles and co-pays met. Conversely, the weakest quarter is typically Q1. Historically, you might see a stronger Q2 than Q3 on a seasonal basis between those two as you get a lot more position vacations and the like in the summer months. I would actually expect though that Q2 and Q3 to be more comparable to each other. As we’ve discussed, we’ll see a ramping of our IMPACT Programs through the year, so there’ll be a little bit of an increase.

I would expect to see those quarters more in line with one another. In terms of Q1 to Q2, I would think we would see a very small, modest step up, again, largely driven by throughput on

Supplemental program standpoint, we don’t have anything significant, you know, any approvals that we’re waiting on or anything like that. There’s always gonna be some timing dynamics involved in supplementals, but we wouldn’t see anything dramatic. When we think about that step up though that I just referred to, I’m actually excluding the gain from our that $10.9 million gain from the privately held investment and really basing it off of, you know, a 113 number, and we would step up, you know, a little bit from that.

Jason Cassorla, Analyst, Guggenheim: Got it. Okay. Very helpful. If I could just follow up. I wanted to ask about payer mix trends. It would be helpful if you could give us a sense of volume growth or volume trends, I guess, by payer in the quarter relative to the 2% total volume growth. Maybe if you could just focus specifically on commercial, excluding the exchanges, how you’re seeing demand develop, if you think there’s kind of any impacts at this point from the macro environment or anything else kind of note on commercial excluding exchange volume trends. Thanks.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Sure. This is Alfred again. Yeah, from a payer mix perspective, I would say that, you know, what we saw in Q1 was relatively consistent with our expectations. We did see, you know, perhaps from just a exchange volume perspective, a little bit stronger on the exchange where we’re actually up 1% or 2%. Generally speaking, on a year-over-year basis, a little bit weaker on the core commercial excluding exchange. You know, perhaps there’s a little bit of macroeconomic dynamic in play there, I don’t think we’re seeing anything contrary to, you know, dramatically contrary to what our expectations were coming into the year.

Jason Cassorla, Analyst, Guggenheim: Got it. Thank you.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: The next question comes from the line of Matthew Gillmor with KeyBank. Please go ahead.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services0: Hey, thanks for the question, and good morning. Maybe asking on the contract labor dynamic, obviously really impressive results there. Can you give us a sense for some of the initiatives that are allowing that performance? I was curious, on a go-forward basis, how much more room do you think you have to go there? Do you get to a point on contract labor where it actually becomes inefficient to drop it down any further?

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: Hey, Matthew Gillmor, this is Marty Bonick. Yes, a great question. The team has been very focused on this, and we talked last year about keeping some contract labor in order to be able to process the amount of transfers coming into our hospitals and making sure we can capture that demand. As we’ve continued to refine, one of the things that we did last year was renegotiated a key agency contract with a major vendor to improve both our rates. We’ve gone back and systemically looked across our footprint in terms of where the best utilization is, so we can still maximize the volume, while making sure that we’ve got the right labor in place to drive the performance. We call that Precision Staffing.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: We’re focusing on both the speed to hire, scheduling, premium pay, and overtime across our footprint so that we can reduce our limitations on contract, outside contract labor. Where we’ve gotten to, we’ve seen a continued seasonal progression, or I’m sorry, a sequential progression downward on contract labor, and we are now in line with where we were pre-pandemic. I think we’re stabilizing out, where we would probably expect to see that land. We are just about 2.2% of SWB in Q1, which is a demonstrable improvement from the 3.8% in the first quarter of 2025 and the 2.6% in Q4 of 2025.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services0: Great. Following up on some of the exchange discussion, I heard Alfred’s comment about a 1%-2% growth in exchanges. Can you just help us sort of level set in terms of the $35 million of EBITDA headwind from exchanges, how that was sort of factored into the accounting with the assumption that some of those exchange volumes you saw in the first quarter may actually end up being uninsured?

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Sure. This is Alfred, Matt. A good point of clarity. You know, I think what we saw in Q1 was relatively consistent with our expectations from the $35 million. We certainly are working with our revenue cycle partner, Ensemble, to capture what exposure we have for clawbacks, for disenrollments that might happen, non-payment of premiums, after the end of the quarter, so appropriately reserved for that exposure as we ended the quarter. In addition, you saw within the exchange, while admissions were up, you know, just a little, you actually saw a big movement underneath in the metal levels, particularly out of the silver into bronze, something on the order of 12%. You know, those bronze levels carry significantly higher co-pays and deductibles.

The actual throughput from a revenue standpoint, from a or an EBITDA standpoint because of the higher deductibles and co-pays, you know, is lower. A long way to say, you know, I think the financial throughput from our $35 million expectation was relatively consistent, perhaps just slightly better.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services0: Okay. Thanks very much.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: The next question comes from the line of Scott Fidel with Goldman Sachs. Please go ahead.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services3: Hi. Thanks. Good morning. Interested if you could give us an update just on how discussions may be percolating in the background around JVs and, you know, sort of what the activity level you would say, Marty, has been like there year to date, you know, relative to maybe the last year. I know, you know, it’s been slow out of the gate here the last couple of years on that. You know, maybe what you think the catalyst may be, you know, to getting a JV or two, you know, announced looking out, you know, the next 6 to 12 months?

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: Scott, this is Marty Bonick. You know, from the onset, we’ve had a tripart growth strategy. The first being to continue to improve our margins on our core book of business. Second, expand our outpatient footprint within our core markets. Third, opportunistically look for M&A. On that last point, as we’ve talked about, we’ve had, under Chris Shapley, our Chief Development Officer’s arrival, growing conversations in that space. We continue to remain optimistic about our opportunities for either JV or outright acquisition opportunities. We are being very conservative and prudent in terms of where we’re going into.

Given the macro uncertainties in healthcare, we want to make sure that as we look for new target opportunities, they either complement our existing markets or are new markets that we feel that we can go in and make a difference in terms of having the right growth characteristics. Again, our markets are growing better than the average U.S. rates. We’re looking for markets we can enter with those similar characteristics, and we do believe they’re out there. And we’re making, you know, continued progress from our perspective on how we look at that, but these are going to be strategic and methodically placed as we continue.

The pipeline still looks strong, and we’re making sure that any potential M&A that we do is going to be accretive to the organization.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services3: Okay. Thank you. Maybe a follow-up, maybe for Alfred, around, I know you’ve already given us a few pieces of the volume story and with the exchanges and commercial. Maybe if you could expand that out, you know, to some of the other government lines in terms of thinking about Medicare with, you know, both fee-for-service and Medicare Advantage, you know, what volume trends have looked like there? As well, around Medicaid. I know some of your peers have talked about Medicaid vols being, you know, a little lower than expected, just around some of the conversions there. Just curious what you’ve been seeing on the Medicaid volume side as well. Thanks.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Yeah, I’ll start on the Medicare side. We, you know, saw strength in the Medicare line in Q1, particularly in the MA line, compared to the traditional fee-for-service. Overall, Medicare as a % of our revenues was up on a year-over-year basis. Medicaid was essentially flat down just a hair. I believe is largely from redetermination activity, but very, you know, very slight. Again, essentially flat on a year-over-year basis.

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: This is Marty. That was from a revenue perspective. On admissions basis, you know, a little bit down in both the Medicare and Medicaid line. We talked about the impact on flu and respiratory being a little bit lighter, which is typically seen in that Medicare category, a lower case mix index generally with that population. Nothing outside of the implied guidance that we gave around, you know, volumes mix.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services3: Okay. Thank you.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: The next question comes from the line of A.J. Rice with UBS. Please go ahead.

A.J. Rice, Analyst, UBS: Thanks. Hi, everybody. Your adjusted admission growth of 2%, that’s a little better than what we saw from peers. I wonder if you look at it, you mentioned obviously some lower intensity stuff with flu getting impacted. What are across geographies, across service lines, anything to call out there that areas of particular strength that are worth noting?

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: A.J., this is Marty. Yeah, we focused last year, pretty heavily on expanding our access points, particularly in urgent cares and we probably have a bigger disproportionate volume of clinics within our footprint. When you think about some of the weather impacts across the industry, and we were certainly part of that, it impacted admissions. The strong outpatient services and access points continued to deliver for us, along with strong volumes on the ASC side. Nothing really to call out regionally. You know, pretty evenly spread across the markets. You know, the only caveat being where we had some weather impact, particularly in Texas, Oklahoma, and our New Jersey markets.

A.J. Rice, Analyst, UBS: Maybe for a follow-up, I know you mentioned that the payer denials has sort of trended in line with expectation. I wonder if I could get you to comment more broadly on what you’re seeing with respect to managed care contracting generally, any change in sort of rate update trends, price, terms that they’re asking for, and sort of where you guys are at for contracting for this year in 2027?

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: Yeah. Wait, this is Marty again. We’re substantially contracted. All contracted about 89% for 2026. Still seeing headline numbers, you know, similar to what we saw in the last year. To your point, we are focused on the terms within those contracts and just strengthening some of the language around denials and underpayments. As you referenced, we have seen that stabilize since that spike in the second half of last year for the second straight quarter. We’re encouraged by that, and you’re really working with our Ensemble Health Partners and internally to make sure that we’re collecting every dollar for the services that we’re providing. We’re encouraged about the progress we’re making and still more work to do. Denials, you know, remain too high across the industry.

With the way managed care is reporting out, thus far in the year, we’re hopefully that they’ve estimated their run rates appropriately and that we’ll see that pull-through come back on the other side.

A.J. Rice, Analyst, UBS: And, and this is AJ.

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: Okay.

A.J. Rice, Analyst, UBS: The only other thing I would add on the on the managed care contracting front is we’ve continued to make investments in that in our team and in our focus in the transparency tools.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Utilizing that to ensure that we’re getting, you know, appropriately compensated in our client rates. Yeah, as Marty noted, essentially 90% contracted for 2026. We do have some open negotiations now, and, you know, working very hard at those, you know, given the backdrop, to be sure, we get the appropriate rate increases for the markets that we’re in.

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: Okay. Thanks so much.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: The next question comes from Ann Hynes with Mizuho Securities. Please go ahead.

Ann Hynes, Analyst, Mizuho Securities: Great. Thank you. Can you remind us, from your, what’s in brand new ACA guidance for just an increase in bad debt and deterioration of collectibles, and if that’s coming in line with your expectations? My second question is just on professional fees. I know that you said it was in line with your expectations. Can you remind us what’s embedded in guidance? Because some of your peers have noted that has come in worse than expectations. Thanks.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Sure. Hey, Ann, this is Alfred. I’ll start on the first part of your question. Yeah, with denials, very much in line with our expectations and without any sort of material change in the trajectory. We’re right on, you know, what we would have expected from a throughput, from an accounts receivable and bad debt perspective. You know, I would say no change there. Now, as you know, we embedded in our expectations not a material improvement from the step-up that we saw in the back half of 2025. You know, again, we’re pleased with the progress we’re making on track, if not, you know, maybe just a little bit ahead of where we would have expected to be.

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: This is Marty. On the pro fee side, you know, very much consistent with our expectations. Last year in the 1st quarter, I would note that we had about a 6% increase, which included a favorable settlement. So it’s a little bit of a tough comp when you look at that 1st half or that 1st quarter comparison. That pro fee step-up that we experienced really started in 3rd quarter of 2025, so the comparison’s going to be a little bit harder till we get to the back half of this year. If we look at that sequential growth to get a better sense of the trend from Q4 to Q1, it’s about a 2.4% increase, which was definitely in line with our projections.

can’t speak about the other peers, but, you know, it seems like this is stabilizing where we had expected to. Still growing, you know, north of basic inflation, but, in line with our expectations.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: This is Alfred. To Marty’s point, as a consequence of seeing that step-up in the back half of 2025, we would expect the year-over-year increase to moderate, you know, once we get to the back half of this year. As Marty said, we’re right in line with our expectations entering the year.

Ann Hynes, Analyst, Mizuho Securities: Thank you.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: The next question comes from the line of Kevin Fischbeck with Bank of America. Please go ahead.

Kevin Fischbeck, Analyst, Bank of America: Great. Thanks. Just I think I know the answer to this, but just want to make sure. Obviously, it sounds like you guys feel very good about the quarter. You talked a lot about increased confidence. You got kind of a one-time gain in the quarter, but you reaffirmed guidance. I just want to make sure that I understand. Is this just kind of normal course? You wouldn’t expect to increase guidance with Q1, and that’s all this is, and you’ll update normally with Q2? Is there something more in Q1 that you’re really kind of waiting to see and get more clarity on before you feel comfortable updating the outlook?

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: No, I appreciate the question, Kevin. I would just say as a matter of practice, we think it’s appropriately prudent not to touch our guidance after just 1 quarter.

Kevin Fischbeck, Analyst, Bank of America: Okay. All right. This is kind of the way you would normally provide guidance in a given year. And then on the professional fee number, like, you know, what do you think the year-over-year growth rate should look like in the back half of the year? I guess 2 and a half% increase sequentially is still kind of implies a pretty high year-over-year annualized growth rate in the back half. I just want to make sure I’m thinking about that right.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Sure. This is Alfred. Kevin, I think, you know, we would expect it to moderate into single digits, high single digit type range, you know, below the double digit trajectory that we’ve been saying.

Kevin Fischbeck, Analyst, Bank of America: Okay. Perfect. Just maybe last question. Any color on volumes and how they progressed through the quarter? I guess it sounds like Q1 obviously impacted by storms. Was it relatively consistent through the quarter, or was there kind of a ramp as you exited March relative to the, to January?

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: This is Marty. Definitely saw, you know, January impacted by volumes, some rebound in February and then, you know, sort of the normal spring break activity you would see in March and, you know, into early April. You know, definitely a lumpy start, but, you know, exited consistent within the range of expectations around our volume and, you know, as exhibited with our 2% AA growth. You know, feel like we’re squarely in place to continue that trend.

Kevin Fischbeck, Analyst, Bank of America: All right. Great. Thanks.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: The next question comes from the line of Benjamin Rossi with JPMorgan. Please go ahead.

Benjamin Rossi, Analyst, JPMorgan: Great. Good morning. Thanks for taking my questions. Just following up on the denials commentary. Across collections, how are denials, underpayments, and bad debt interacting to start the year? Are you seeing more situations or changes in patient behavior where maybe an initially insured patient accounts are ultimately behaving more like self-pay due to denials or coverage changes?

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: This is Alfred, Ben. I would say we haven’t seen any pronounced changes in that activity and working real closely with Ensemble. You know, candidly, our collections have been, you know, quite strong both through the end of last year and through Q1. Yeah, I would not say we’ve seen any difference in how those dynamics are interacting.

Benjamin Rossi, Analyst, JPMorgan: Okay. Just on the expense side regarding supply management, looked to be a bright spot following your previous supply chain initiatives and procurement and some of the increased cadence under the IMPACT Program. Are there any areas of particular outperformance to call out, and how do you consider the sustainability of this performance as you pursue your broader margin improvement goals?

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: This is Marty. Yeah, our IMPACT Program, you know, had a number of focuses. You know, we talked about some of the SWB. Supply chain was definitely another target that we’ve been focusing on. We expect that those things will continue to ramp, as Alfred said, in the second half of the year, but we’re pleased with the progress we’ve seen thus far. We’ve got a number of different initiatives that are included in there. It’s a lot of different tentacles that touch the supply chain. You know, first quarter results included improvements on rebates, physician preference items, moving to either single or dual source vendor models, and we’ll be continuing that throughout the year.

We’re pleased with the progress that we saw in the first quarter and expect that will continue to produce inside of our savings on the IMPACT Program, as you mentioned. There’s a number of things that were happening in focusing on cardiovascular med-surg distribution contracts, and all of those things are starting to produce as we expected.

Benjamin Rossi, Analyst, JPMorgan: Understood. Thanks.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Thank you.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: The next question comes from the line of Craig Hettenbach with Morgan Stanley. Please go ahead.

Craig Hettenbach, Analyst, Morgan Stanley: Yes, thank you. Marty, as you continue to kind of deploy and adopt AI tools, how are you thinking about kind of the tangible impact on the business, just from a margin perspective and kind of reasonable timeline of that kind of flowing through the margins over time?

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: Yeah. Thanks, Craig. It’s Marty. I think we’re very much still in the early innings. You know, from a platform perspective, we’re fortunate to have strong partners like Ensemble. They’re deploying over $100 million of capital into their AI and tech stack that we’re benefiting by and starting to see the impacts of from a yield perspective, as Alfred talked about with some of the denials and recruitment of payments and cash flow. With Epic, there’s a lot of embedded technology in there that’s going to aid our clinicians in terms of making better decisions, but also providing better efficiency and pull through through the organization, whether that comes from surgical scheduling, optimization, physician interactions.

Other things that we’ve invested in with ambient listening, some of the AI tools that we’re using at the bedside are helping with both productivity, length of stay. As we mentioned, the virtual cost or the virtual sitting and the virtual nursing program that we’re doing is improving both patient care and will lead to cost improvements. We’re in the early innings of this. Each of these are going to have small but incremental improvements to the SWB and to our efficiency across the organization. We’re very excited about, you know, the future improvements to come as we look at productivity across our physician practices, our business practices and, you know, just clinical throughput.

I would say we’re early, but we do expect this to be part of our margin progression, and this is the care transformation component of our IMPACT Program.

Craig Hettenbach, Analyst, Morgan Stanley: Got it.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: The only thing I would is we’re equally excited about the incremental access that these tools will provide in terms of improving throughput and improving patient output.

Craig Hettenbach, Analyst, Morgan Stanley: Got it. Thank you. Then just to follow up on the M&A backdrop and understanding kind of the disciplined approach you’re taking, are you seeing any change in terms of asset values across the space, as you evaluate the pipeline?

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: This is Marty. You know, I think that we’re seeing for the types of assets we’re looking, I mean, these are not changing from sort of industry multiples. I know that there’s been some headline numbers on single assets that are getting bought up by strategics. We’re going to be very disciplined in our M&A prospects to make sure that whatever we engage with on that is going to be something that we can see, you know, near term accretion call in the first year to 2 in a delevering from whatever purchase price we get into. There’s different methods, you know, that we’re looking at in terms of how we might partner with different people and through that JV process. Too early to tell.

You know, we’re gonna be very disciplined in terms of what we chase and not go after things that have a high price tag to it.

Craig Hettenbach, Analyst, Morgan Stanley: Okay. Thank you.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: The next question comes from the line of Whit Mayo with Leerink Partners. Please go ahead.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services4: Hey, I just wanted to get an update on the ambulatory strategy. Just any views in the pipeline this year, maybe how much capital you think you’re gonna earmark for any of that development activity.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Sure. This is Alfred Lumsdaine. I think Marty talked about, you know, what we have in the pipeline from a development and perspective, and that is certainly in our expectations that we put out in the guide from a capital deployment standpoint. You know, it’s we believe in a very, I’d say, sustained moderate pace of development. I think you’ve seen the impact, though, of our ambulatory strategy flow through as you’ve seen the growth we had in our adjusted admission numbers, which again, perhaps were a little better than some in the industry from a growth perspective. We think that’s just a reflection of the increased investment and throughput in that investment on a year-over-year basis.

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: With this, Marty, the other thing I’d add to that is, you know, we did have a small incremental step up in our capital spend. The majority of that is going to that growth inside of those core markets. Contemplated in the guidance that we gave out from a capital perspective, to Alfred Lumsdaine’s point, we’re making sure that the investments we’re making in this ambulatory space, that it may have some startup cost or a small drag while they’re ramping up are, you know, not dragging down the company as we’re building towards those higher margin activities in the out years.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services4: Okay. Maybe just to follow up here on malpractice. I know we had a headwind last year that’s non-recurring, but just how did medmal develop within the quarter and just any expectations, thoughts, observations would be great.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Sure. No, appreciate that question, Whit. Yeah, on, clearly we had, the non-recurring item that we booked last year at Q3 related to largely related to a single physician. Now, it is a tough environment from a medmal perspective, and we certainly have seen a step-up in premium primarily in the state of New Mexico. We were encouraged by the legislature taking action with putting in legislative caps this year, which they’ve done in the past, and those had eroded over time. We were encouraged by the new laws. It’s become very difficult to recruit physicians in the state of New Mexico.

We think that will provide some relief over time from a premium perspective, but because the new law was untested, on a year-over-year basis, you know, we saw a fairly pronounced increase in our medical malpractice insurance premium. But again, we are encouraged and would expect relief going forward as the, you know, as the law takes hold going forward. Because again, most of the pressure is in the single, the single market in New Mexico.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services4: Great. Okay. Thanks, guys.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: The next question comes from the line of Ben Hendrix with RBC Capital Markets. Please go ahead.

Ben Hendrix, Analyst, RBC Capital Markets: Thank you very much. Appreciate all the commentary about the IMPACT Program, the contract labor improvement, supply chain efforts there. I just wanted to see if there was any kind of longer term opportunity to fold the, you know, the work you’re doing around denials and professional fees into the IMPACT Program and work towards some longer term targets. To that point, is there any takeaways from the work you’ve done on Ensemble on kind of where DSO could go, you know, on through continuous improvement programs or where you could get margin pickup on the longer term professional fee mitigation? Thanks.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Thanks for the question, Ben. This is Alfred. Yeah, we’re obviously, you know, it’s a very dynamic environment when you’re talking about payer denials. What I would say is that we do have work streams embedded in the IMPACT Program associated with revenue integrity, which includes denials and collections. Those can play out over longer periods of time because of the dynamic. We have made investments internally in, as I mentioned, in our managed care team. That’s not so much just to isolate the negotiation of contracts, but as Marty indicated, you know, how are we actually embedding in contractual language to improve the outcomes as it relates to denials and collections activity.

But again, those play out, I would say, over longer periods of time than the cost management initiatives, which have, you know, a much more near-term visibility to yield. We absolutely do have a number of initiatives towards improving both denials, collections, and recovery on the back end of denied claims. That clearly is an important component of our IMPACT Program, but you have a longer tenor to throughput. On your question on where could DSO go, you know, we were very, you know, we finished 2025 in a very strong position, saw a significant step down in DSO. We’ve been able to largely maintain that. I think we’re pleased with where we are.

You always want to do, you know, you always want to do better. You know, in that mid-40-day range is where we think we should be. You know, it’s right similar to where we are right now. Just focusing on maintaining and improving where we can. From a overall DSO perspective, we’re quite pleased where we are.

Ben Hendrix, Analyst, RBC Capital Markets: Great. Thank you.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: Our last question comes from the line of Raj Kumar with Stephens. Please go ahead.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services2: Hey, I appreciate all the, you know, the puts and takes with the kind of HIX volumes and the underlying dynamics between metal tiers. I guess, you know, maybe I’m just trying to figure out, since you guys have called out previously that that population may have not been as profitable for you as your peers, but then you did some recontracting last year, in the back half. I guess just curious on any kind of commentary around, you know, per member profitability, on those claims that have been paid so far.

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: This is Marty. We, yes, there definitely has been a focus on strengthening the yield on those contracts as we go through. There’s a lot of them, and we’ve got six different states to operate in. For right now, I’d say that we’re still in the early innings of seeing that improvement. You know, that’s exacerbated by the metal changes that Alfred talked about. Where we’re getting better rates now, we’re seeing some shift in that population to lower tiered metals. There will be some rebalancing.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: This is something that we’re, you know, very carefully watching and adjusting to in real time as the, you know, this population settles out, and we get to see where things ultimately land with the effectuation of disenrollments and other things that are still projected to be coming. You know, the good news is our states have been relatively stable in terms of re-enrollment into these plans, but we have to see where they settle out and then which plans they settle into to see how the recontracting efforts ultimately play through from a revenue growth perspective.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services2: Got it. As my follow-up, I know other OpEx was higher, but then, you know, there’s a DPP comp, maybe some reserving dynamics for the exchange population, and then the increased malpractice. Any way to kind of bucket that, you know, as you kind of bridge year-over-year, just kind of, as we kind of better think about that cost rolling forward?

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services: Yeah, I think you’ve hit the nail on the head in terms of the underlying drivers, which would be embedded provider taxes from supplemental programs associated with the supplemental revenues and the step up in medmal, medical malpractice, premium and overall expense. In terms of bucketing, I would say the majority is still simply provider taxes and associated with supplemental revenues with the step up in medical malpractice expense on a year over year basis, I think was roughly in the $10 million-$11 million range.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services2: Great. Thank you.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: We have no further questions at this time. I would like to turn us back to Marty Bonick for closing remarks.

Marty Bonick, President and Chief Executive Officer, Ardent Health Services: Thank you all for your participation and questions in our first quarter earnings. We’ve entered 2026 with operational momentum, financial strength, and strategic clarity around our strategic objectives. We are confident in our ability to execute. We appreciate everybody’s support. Thank you for today’s time.

Alfred Lumsdaine, Chief Financial Officer, Ardent Health Services1: Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.