[Management View]
Ardent Health's management emphasized their strong positioning in growing mid-sized urban markets and their focus on expanding outpatient services. They highlighted their disciplined execution and strategic growth initiatives, including the expansion of their ambulatory and urgent care network.

[Outlook]
Management reaffirmed their full-year 2025 financial guidance despite payer denial headwinds and regulatory challenges. They plan to continue expanding their outpatient footprint and leveraging technology to drive clinical improvements and operational efficiency.

[Financial Performance]
- Revenue: $1.65 billion, up 11.9% YoY
- Adjusted EBITDA: $170 million, up 39% YoY
- Adjusted EBITDA margin: 10.3%, up 200 basis points
- Admissions: Up 6.6% YoY
- Inpatient surgeries: Up 9.2% YoY
- Outpatient surgeries: Down 3.8% YoY
- Operating cash flow: $117 million
- Liquidity: $541 million in cash, $1.1 billion in debt
- Net leverage: 2.7 times

[Q&A Highlights]
Question 1: Can you give us a percentage of what your exchange admissions that those terminated contracts represent? And update us on what you're seeing on the managed care front.
Answer: Significant growth in exchange volume this year, but some plans provided inadequate rates. Terminated one major plan, not quantified percentage. Denials have grown, impacting profitability. Focus on replacing terminated contracts with better-paying volume. About 65% contracted for 2026, aiming to close gaps in denial activity.

Question 2: Can you frame the average number of ambulatory access points for every inpatient asset you have? And the volume benefit from this strategy?
Answer: No specific target for ambulatory assets per hospital, currently close to double digits. Focus on growing unique patients served in each market. About 45% of urgent care patients were new to Ardent, with 30% having follow-up care within 30 days. Strategy aims to increase access points and capture new patient volume.

Question 3: Discuss your strong inpatient surgical growth and how this informs your decision to channel capital toward higher acuity inpatient capabilities.
Answer: Strong growth in orthopedics, cardiology, and general surgery. Service line rationalization has opened capacity for higher-margin procedures. Focus on higher-quality revenue and earnings.

Question 4: In markets where you exit exchange networks, what kind of volume would you expect to backfill with, and how would case mix evolve?
Answer: Expect backfill with better rates in commercial exchange business or other commercial endeavors. Strong transfer growth and efficiency initiatives will support high-quality admissions.

Question 5: What are the top levers to drive offsets to regulatory pressures, such as technology, AI, and supply chain?
Answer: Impact program focuses on productivity, supply chain, and technology. Virtual nursing and attending help drive efficiencies and load balancing. Aim to unlock efficiencies and enhance performance within 24 months.

Question 6: Update on demographic and job growth trends in your core markets.
Answer: Recruitment and retention efforts are bearing fruit. Markets are growing faster than the US average, with strong volume growth indicating market strength.

Question 7: How easy is it to backfill capacity with commercial volumes, and are you often at capacity?
Answer: Tertiary level hospitals are generally full, with continuous efforts to manage throughput and volume capacity. Focus on length of stay initiatives and transfer pull through to optimize admissions.

Question 8: Has the outlook for acquisitions changed due to the bill, and has your interest in deals changed?
Answer: Increased outreach and discussions since the bill. No change in growth outlook or appetite for acquisitions, but will be disciplined in market selection.

Question 9: Can you break down the $150 to $175 million impact of the OBBA, and is it more weighted to 2030-2035?
Answer: No specific breakdown for work requirements. Impact expected to ramp up slightly heavier in early years and then moderate.

Question 10: Discuss the trend with outpatient surgeries and any service line rationalization.
Answer: Declines in ophthalmology and ENT, but higher quality inpatient service lines backfilling. Impact from two-midnight rule also noted.

Question 11: Visibility into long-term prospects for Medicaid supplemental programs and potential exemptions.
Answer: Expect programs to qualify for grandfathering provisions. No additional risk compared to other approved programs.

Question 12: Forward CapEx priorities and any shifts due to the bill.
Answer: Consistent with prior commentary, with a focus on ambulatory build-out. No change in CapEx outlook.

Question 13: Impact of the phase-out of the inpatient-only list on inpatient growth.
Answer: No significant impact expected, as many patients have comorbid conditions requiring inpatient care. Focus on growing outpatient program.

Question 14: Acceleration of the impact program and timeline for margin expansion.
Answer: Intentional effort to accelerate margin expansion within 24 months. Focus on cost efficiency, payer contracting, and supplemental revenue opportunities.

Question 15: Performance of the NexCare acquisition.
Answer: Volumes consistent with expectations, contributing to growth.

Question 16: Core pricing revenue per adjusted admission and case mix increases.
Answer: Core rate increases around 4%, with New Mexico contributing significantly to overall growth.

[Sentiment Analysis]
Analysts were generally positive, focusing on the company's strong financial performance and strategic initiatives. Management maintained a confident tone, emphasizing their ability to navigate regulatory challenges and sustain growth.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 |
|-------------------------|------------------|------------------|
| Revenue | $1.65 billion | $1.47 billion |
| Adjusted EBITDA | $170 million | $122 million |
| Adjusted EBITDA Margin | 10.3% | 8.3% |
| Admissions | +6.6% YoY | N/A |
| Inpatient Surgeries | +9.2% YoY | N/A |
| Outpatient Surgeries | -3.8% YoY | N/A |
| Operating Cash Flow | $117 million | $120 million |
| Liquidity | $541 million | N/A |
| Net Leverage | 2.7 times | 3.0 times |

[Risks and Concerns]
- OBBA legislation could reduce Medicaid funding, impacting EBITDA by $150-$175 million by 2035.
- Persistent payer denial activity and termination of exchange contracts.
- Regulatory and reimbursement landscape changes.

[Final Takeaway]
Ardent Health demonstrated strong financial performance in Q2 2025, driven by strategic growth initiatives and operational efficiencies. Despite regulatory challenges, management remains confident in their ability to sustain growth and mitigate potential impacts through their impact program and strategic partnerships. The company's focus on expanding outpatient services and leveraging technology positions them well for future success.