Ardent Health Partners, Inc. (NYSE: ARDT) (“Ardent Health” or
the “Company”), a leading provider of healthcare in growing
mid-sized urban communities across the U.S., today announced
results for the second quarter ended June 30, 2024.
Second Quarter 2024 Financial Summary
(All comparisons versus the same prior year period, unless
otherwise noted)
- Total revenue of $1.47 billion, an increase of 7.5%
- Net income of $67 million
- Net income attributable to Ardent Health Partners, Inc. of $43
million, or $0.34 per basic and diluted share
- Adjusted EBITDA of $122 million, an increase of 20.0%
- Adjusted EBITDAR of $162 million
- Adjusted admissions increased 3.4%
- Net patient service revenue per adjusted admission increased
4.1%
- Cash flow from operating activities of $120 million, an
increase of $77 million
- Subsequent to the end of the quarter, the Company completed its
initial public offering ("IPO") of 13.8 million shares of common
stock for net proceeds (after underwriting discounts and
commissions but before other IPO costs) of $209 million, including
the full exercise of the underwriters' option to purchase
additional shares
Full-Year 2024 Financial Guidance
- Total revenue of between $5.75 billion and $5.90 billion
- Net income of between $247 million and $268 million
- Net income attributable to Ardent Health Partners, Inc. of
between $163 million and $182 million, or between $1.23 and $1.37
per basic and diluted share
- Adjusted EBITDA of between $415 million and $435 million
- Rent expense payable to real estate investment trusts ("REITs")
of $161 million1
_______________________
1
Rent expense payable to REITs consists of
rent expense related to a master lease agreement (the “Ventas
Master Lease”) with Ventas, Inc. ("Ventas"), lease agreements
associated with the MOB Transactions (defined below) and a lease
arrangement with Medical Properties Trust, Inc. ("MPT") for
Hackensack Meridian Mountainside Medical Center.
“Our second quarter results were highlighted by strong top-line
growth and margin expansion, driven by executing on our strategic
priorities and continuing to build our consumer-first healthcare
delivery model that optimizes access and provides care over the
course of a patient’s healthcare journey,” stated Marty Bonick,
President and Chief Executive Officer of Ardent Health. “Looking
ahead, we are well-positioned for continued growth with a
strengthened balance sheet and capital structure from the
successful completion of our IPO in July. We believe our dedication
to improving healthcare in the communities we serve and our
balanced growth strategy position us to deliver long-term value for
both our patients and shareholders.”
“Fundamentally, we continue to see broad-based demand for
healthcare across both inpatient and outpatient settings, while
systemic labor cost pressures continue to abate and normalize. This
stability enables us to sharpen our strategic focus on growth and
improving access to healthcare within our markets.”
“On the operational front, our team continued to successfully
execute on its operational excellence initiatives, resulting in
continued supply cost efficiencies and lower contract labor costs
relative to last year,” continued Bonick. “Service line
optimization drove an expected reduction in outpatient surgery
volumes, and, in turn, contributed to a higher level of net patient
service revenue per adjusted admission and improved margins,
relative to the second quarter of last year.”
“We currently expect that continued volume growth in our
markets, when combined with our strategic execution, should enable
us to deliver sustained profitable growth through the end of the
year,” said Bonick. “To that end, we have introduced our full year
2024 guidance, which reflects year-over-year growth in total
revenue of approximately 6% to 9% and year-over-year growth in
Adjusted EBITDA of 32% to 38%.”
“The completion of our IPO last month began an exciting new
chapter for Ardent Health,” continued Bonick. “After giving effect
to receipt of the IPO proceeds, our total available liquidity was
approximately $832 million as of the end of the second quarter,
giving us ample capital resources to pursue acquisitions by
leveraging our differentiated joint-venture model. We are actively
evaluating a strong pipeline of potential acquisition opportunities
that represent a strategic fit for our platform.”
Financial Performance Summary
Total revenue for the second quarter of 2024 was $1.47 billion,
compared to $1.37 billion in the second quarter of 2023, an
increase of 7.5%. The increase in total revenue reflected a 3.4%
increase in adjusted admissions and a 4.1% increase in net patient
service revenue per adjusted admission, when compared to the same
prior year period. Total revenue for the second quarter of 2024
also reflected a $13 million increase in supplemental program
revenue associated with the Oklahoma directed payment program
(“DPP”), which became effective on April 1, 2024.
For the second quarter of 2024, net income attributable to
Ardent Health Partners, Inc. was $43 million, or $0.34 per basic
and diluted share, compared to $33 million, or $0.26 per basic and
diluted share, in the second quarter of 2023. Adjusted EBITDA for
the second quarter of 2024 was $122 million, compared to $102
million in the same prior year period, an increase of 20.0%. The
increase in net income attributable to Ardent Health Partners, Inc.
and Adjusted EBITDA was driven by higher profitability resulting
primarily from an increase in patient volumes, improved
reimbursement rates, strategic service line optimization and
improved operating leverage through greater scale and cost
reduction initiatives.
Operating Performance Summary
The following table provides a summary of certain key operating
metrics for the second quarter of 2024 compared to the same prior
year period. See the footnotes of this press release for
definitions of the metrics below and a full list of key operating
metrics.
Three Months Ended June
30,
2024
2023
% Change
Adjusted admissions
85,763
82,964
3.4
%
Admissions
38,958
37,080
5.1
%
Inpatient surgeries
9,012
9,090
(0.9
)%
Outpatient surgeries
23,758
24,432
(2.8
)%
Total surgeries
32,770
33,522
(2.2
)%
Emergency room visits
156,287
152,915
2.2
%
Net patient service revenue per adjusted
admission
$
16,859
$
16,196
4.1
%
- Admissions for the second quarter of 2024 increased 5.1%
relative to the same prior year period. The increase in admissions
was primarily attributable to the impact of the two-midnight rule
and higher admissions through the emergency room, partly offset by
a reduction in inpatient surgeries.
- Surgeries for the second quarter of 2024 decreased 2.2%
when compared to the same prior year period. The decrease in
surgeries reflected a 0.9% decrease in inpatient surgeries and a
2.8% decrease in outpatient surgeries, relative to the second
quarter of 2023. The decrease in surgeries was primarily driven by
the Company’s strategic service line optimization efforts, which
resulted in a decrease in outpatient dental, otolaryngology and
ophthalmology cases. The reduction in inpatient surgery volumes
reflected a decrease in bariatric and gynecology procedures, partly
offset by an increase in higher acuity spine, neurology and urology
cases.
- Net patient service revenue per adjusted admission for
the second quarter of 2024 increased 4.1% when compared to the same
prior year period. The increase in net patient service revenue per
adjusted admission was primarily attributable to favorable shifts
in payor mix, improved service mix as a result of the Company's
service-line optimization initiatives, improved reimbursement
rates, and an increase in supplemental revenue of $13 million
associated with the Oklahoma DPP which became effective April 1,
2024.
Strategic Update
Ardent Health is committed to delivering long-term value
creation through a multi-faceted strategy focused on targeted
market share growth, operational excellence, and disciplined
capital allocation. The Company's growth strategy and overall value
proposition are driven by its culture of care and commitment to
improving healthcare in the markets it serves.
- Targeted market share growth: The Company intends to
enhance its leading positions within the markets it serves by
investing in acute care and ambulatory services and creating
additional access points through which patients can receive care.
The Company has identified a robust pipeline of ambulatory
opportunities that it intends to pursue, including urgent care
centers, ambulatory surgery centers, freestanding emergency rooms
and physician clinics. Through the end of the second quarter, the
Company has grown its ambulatory network through the addition of
eight urgent care centers and is evaluating additional expansion
opportunities for the second half of the year. In addition, the
Company intends to improve access and retention by growing its
network of employed providers. As of June 30, 2024, the Company's
affiliated provider network included 1,785 providers, an increase
of 6.5% compared to June 30, 2023.
- Operational excellence: Since 2022, the Company has
undertaken substantial efforts to centralize and standardize key
functions of the organization to reduce costs and improve
profitability. As a result of these efforts, the Company has
created a standardized and scaled platform connecting the
facilities in each of its markets. Going forward, the Company is
focused on improving its margin and operating leverage through the
further implementation of standardized practices across the
Company, enterprise-wide implementation of technology solutions to
drive efficiencies, service line optimization, and continued
implementation of uniform clinical practices. During the second
quarter, the Company executed on a variety of supply cost reduction
initiatives focusing on improved inventory management, standardized
surgical supply procurement and strategic sourcing. In addition,
the Company’s service line optimization efforts resulted in an
approximate 1.9% decrease in surgery cases during the first six
months of 2024, particularly within lower margin services lines,
such as dental, otolaryngology and ophthalmology. These service
line optimization efforts consequently benefited the Company’s
profitability through improved margins and higher net patient
service revenue per adjusted admission.
- Disciplined capital allocation: Ardent Health is focused
on a balanced approach to capital deployment with the goal of
pursuing opportunistic acquisitions into new markets while limiting
financial leverage. The Company is targeting expansion into similar
sized, growing, urban markets with significant unmet healthcare
needs. The Company is actively evaluating a pipeline of potential
acquisition targets that match its target criteria.
Balance Sheet, Cash Flow & Liquidity Update
As of June 30, 2024, the Company had total cash and cash
equivalents of $335 million and total debt (including current
maturities) of $1.09 billion. During the second quarter, the
Company opportunistically prepaid $100 million of outstanding
borrowings under its senior secured term loan facility using cash
on hand. The Company’s net leverage ratio as of June 30, 2024 was
2.3x, as calculated under the Company's credit agreements, and its
lease-adjusted net leverage ratio2 was 4.0x. At the end of the
second quarter, the Company’s total cash and available liquidity
was $624 million.
During the second quarter of 2024, net cash provided by
operating activities was $120 million, compared to $43 million in
the same prior year period. The increase in net cash provided by
operating activities relative to the second quarter of 2023 was
primarily attributable to an increase in net income and higher cash
flow generated by changes in net working capital.
On July 19, 2024, the Company completed its IPO of 12 million
shares of common stock at a price of $16 per share for gross
proceeds of $192 million, before deducting underwriting discounts,
commissions and other offering costs. Subsequent to the closing of
the IPO, the underwriters fully exercised their option to purchase
an additional 1.8 million shares at the IPO price of $16 per share
for total gross proceeds of $29 million. Including the full
exercise of the underwriters' option, total proceeds to the Company
from the IPO were $209 million, net of underwriting discounts and
commissions (but before other IPO costs). After giving effect to
receipt of the IPO proceeds, our total available liquidity as of
June 30, 2024 was approximately $832 million, and our pro forma
lease adjusted net leverage ratio was approximately 3.6x.
Financial Guidance
Today, the Company issued financial guidance for the full year
2024. All guidance is current as of the time provided and is
subject to change.
Full Year 2023 Actual
Full Year 2024
Projected
Low
High
(Dollars in millions, except per share
amount)
Amount
% Change vs. FY23
Amount
% Change vs. FY23
Total revenue
$5,409
$5,750
6.3%
$5,900
9.1%
Net income
$129
$247
91.5%
$268
107.8%
Net income attributable to Ardent Health
Partners, Inc.
$54
$163
201.9%
$182
237.0%
Adjusted EBITDA
$315
$415
31.7%
$435
38.1%
Rent expense payable to REITs
$157
$161
2.5%
$161
2.5%
Basic and diluted earnings per share
$0.43
$1.23
186.0%
$1.37
218.6%
The Company’s full year 2024 total revenue guidance reflects
projected adjusted admissions growth of 4.0% to 4.5% and projected
net patient service revenue per adjusted admission growth of 2.3%
to 4.4%.
The Company's full year 2024 total revenue guidance reflects an
estimated $27 million benefit compared to 2023 from the Oklahoma
DPP implementation. The Company's guidance does not reflect any
additional impacts from potential changes in state supplemental
payment programs in other states.
_______________________
2
Lease adjusted net leverage is defined as
the Company's net debt as of June 30, 2024, plus 8x trailing twelve
month REIT rent expense as of the end of the second quarter of
2024, divided by trailing twelve month Adjusted EBITDAR as of June
30, 2024.
The Company also expects that capital expenditures for the full
year 2024 will be in a range of between $170 million and $185
million.
The Company’s forecasted guidance is based on current plans and
expectations and is subject to a number of known and unknown
uncertainties and risks, including those set forth below under the
heading “Forward-Looking Statements.” The Company does not forecast
the impact of items such as, but not limited to, losses (gains) on
sales of facilities, losses on retirement of debt, legal claim
costs (benefits) and impairments of long-lived assets because the
Company does not believe that it can forecast these items with
sufficient accuracy. This is due to the inherent difficulty of
forecasting the timing or amount of various items that have not yet
occurred and are out of the Company’s control or cannot be
reasonably predicted.
Second Quarter 2024 Results Conference Call
The Company will host a conference call to discuss its second
quarter financial results on Thursday, August 15, 2024, at 10:00
a.m. Eastern Time.
A webcast of the conference call will be available in the
Investor Relations section of the Company’s corporate website at
https://ir.ardenthealth.com. To listen to a live broadcast, go to
the site at least 15 minutes prior to the scheduled start time in
order to register, download, and install any necessary audio
software.
To participate in the live teleconference:
United States Live: 1-888-596-4144 International
Live: 1-646-968-2525 Access Code: 4437657
To listen to a replay of the teleconference, which will be
available through August 22, 2024:
United States Replay: 1-800-770-2030 International
Replay: 1-609-800-9909 Access Code: 4437657
About Ardent Health
Ardent Health (NYSE: ARDT) is a leading provider of healthcare
in growing mid-sized urban communities across the U.S. With a focus
on people and investments in innovative services and technologies,
Ardent Health is passionate about making healthcare better and
easier to access. Through its subsidiaries, Ardent Health delivers
care through a system of 30 acute care hospitals and more than 200
sites of care with over 1,700 affiliated providers across six
states. For more information, please visit
www.ardenthealth.com.
Supplemental Non-GAAP Financial Information
We have included certain financial measures in this press
release that have not been prepared in a manner that complies with
U.S. generally accepted accounting principles ("GAAP"), including
Adjusted EBITDA and Adjusted EBITDAR. We define these terms as
follows:
- Adjusted EBITDA. Adjusted EBITDA is defined as net
income plus (i) provision for income taxes, (ii) interest expense
and (iii) depreciation and amortization expense (or EBITDA), as
adjusted to deduct net income attributable to noncontrolling
interests, and excludes the effects of other non-operating losses
(gains), restructuring, exit and acquisition-related costs,
expenses incurred in connection with the implementation of Epic
Systems ("Epic"), our integrated health information technology
system, non-cash unit-based compensation expense, and operations.
Adjusted EBITDA is a non-GAAP performance measure used by
our management and external users of our financial statements, such
as investors, analysts, lenders, rating agencies and other
interested parties, to evaluate companies in our industry. Adjusted
EBITDA is a performance measure that is not defined under GAAP and
is presented in this report because our management considers it an
important analytical indicator that is commonly used within the
healthcare industry to evaluate financial performance and allocate
resources. Further, our management believes that Adjusted EBITDA is
a useful financial metric to assess our operating performance from
period to period by excluding certain material non-cash items and
unusual or non-recurring items that we do not expect to continue in
the future and certain other adjustments we believe are not
reflective of our ongoing operations and our performance.
Because not all companies use identical calculations, our
presentation of the non-GAAP measure may not be comparable to other
similarly titled measures of other companies. While we
believe this is a useful supplemental performance measure for
investors and other users of our financial information, you should
not consider the non-GAAP measure in isolation or as a substitute
for net income or any other items calculated in accordance with
GAAP. Adjusted EBITDA has inherent material limitations as a
performance measure, because it adds back certain expenses to net
income, resulting in those expenses not being taken into account in
the performance measure. We have borrowed money, so interest
expense is a necessary element of our costs. Because we have
material capital and intangible assets, depreciation and
amortization expense are necessary elements of our costs. Likewise,
the payment of taxes is a necessary element of our operations.
Because Adjusted EBITDA excludes these and other items, it has
material limitations as a measure of our performance.
- Adjusted EBITDAR. Adjusted EBITDAR is defined as
Adjusted EBITDA further adjusted to add back rent expense payable
to REITs, which consists of rent expense pursuant to the Ventas
Master Lease, lease agreements associated with the MOB Transactions
(defined below) and a lease arrangement with MPT for the Hackensack
Meridian Mountainside Medical Center. Adjusted EBITDAR is a
commonly used non-GAAP financial measure used by our management,
research analysts, investors and other interested parties to
evaluate and compare the enterprise value of different companies in
our industry. Adjusted EBITDAR excludes: (1) certain material
noncash items and unusual or non-recurring items that we do not
expect to continue in the future; (2) certain other adjustments
that do not impact our enterprise value; and (3) rent expense
payable to our REITs. We operate 30 acute care hospitals, 12 of
which we leased from two REITs, Ventas and MPT, pursuant to
long-term lease agreements. Additionally, during 2022 we completed
the sale of 18 medical office buildings to Ventas in exchange for
$204.0 million and concurrently entered into agreements to lease
the real estate back from Ventas over a 12-year initial term with
eight options to renew for additional five-year terms (the "MOB
Transactions"). Our management views both the two long-term lease
agreements with Ventas and MPT, as well as the MOB Transactions, as
more like financing arrangements than true operating leases, with
rent payable to such REITs being similar to interest expense. As a
result, our capital structure is different than many of our
competitors, especially those whose real estate portfolio is
predominately owned and not leased. Excluding the rent payable to
such REITs allows investors to compare our enterprise value to
those of other healthcare companies without regard to differences
in capital structures, leasing arrangements and geographic markets,
which can vary significantly among companies. Our management also
uses Adjusted EBITDAR as one measure in determining the value of
prospective acquisitions or divestitures. Finally, financial
covenants in certain of our lease agreements, including the Ventas
Master Lease, use Adjusted EBITDAR as a measure of compliance.
Adjusted EBITDAR does not reflect our cash requirements for leasing
commitments. As such, our presentation of Adjusted EBITDAR should
not be construed as a performance or liquidity measure.
Because not all companies use identical calculations, our
presentation of non-GAAP measures may not be comparable to other
similarly titled measures of other companies. While we
believe these are useful supplemental financial measures for
investors and other users of our financial information, you should
not consider non-GAAP measures in isolation or as a substitute for
net income or any other items calculated in accordance with GAAP.
Adjusted EBITDAR has inherent material limitations as a valuation
measure, because it adds back certain expenses to net income,
resulting in those expenses not being taken into account in the
valuation measure. The payment of taxes and rent is a necessary
element of our valuation. Because Adjusted EBITDAR exclude these
and other items, it has material limitations as a measure of our
valuation.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995
and are based on current expectations and assumptions that are
subject to risks and uncertainties. Forward-looking statements
include all statements that are not historical facts. The words
"anticipate," "assume," "believe," "continue," "could," "estimate,"
"expect," "intend," "may," "plan," "potential," "predict,"
"project," "future," "will," "seek," "foreseeable," the negative
version of these words, or similar terms and phrases are intended
to identify forward-looking statements. These forward-looking
statements include, but are not limited to, statements regarding
anticipated financial performance and financial position, including
our financial outlook for the full year 2024 and other statements
that are not historical facts. These forward-looking statements are
neither promises nor guarantees, but involve risks and
uncertainties that may cause actual results to differ materially
from those contained in the forward-looking statements. Our actual
results could differ materially from those anticipated in these
forward-looking statements for many reasons, including, but not
limited to, the following: (1) changes in government healthcare
programs, including Medicare and Medicaid and supplemental payment
programs and state directed payment arrangements; (2) reduction in
the reimbursement rates paid by commercial payors, our inability to
retain and negotiate favorable contracts with private third-party
payors, or an increasing volume of uninsured or underinsured
patients; (3) the highly competitive nature of the healthcare
industry; (4) inability to recruit and retain quality physicians,
as well as increasing cost to contract with hospital-based
physicians; (5) increased labor costs resulting from increased
competition for staffing or a continued or increased shortage of
experienced nurses; (6) changes to physician utilization practices
and treatment methodologies and third party-payor controls designed
to reduce inpatient services or surgical procedures that impact
demand for medical services; (7) continued industry trends toward
value-based purchasing, third party payor consolidated and care
coordination among healthcare providers; (8) loss of key personnel,
including key members of our senior management team; (9) our
failure to comply with complex laws and regulations applicable to
the healthcare industry or to adjust our operations in response to
changing laws and regulations; (10) inability to successfully
complete acquisitions or strategic joint ventures (“JVs”) or
inability to realize all of the anticipated benefits, including
anticipated synergies, of past acquisitions and the risk that
transactions may not receive necessary government clearances; (11)
failure to maintain existing relationships with JV partners or
enter into relationships with additional healthcare system
partners; (12) the impact of known and unknown claims brought
against our hospitals, physician practices, outpatient facilities
or other business operations or against healthcare providers that
provide services at our facilities; (13) the impact of government
investigations, claims, audits, whistleblower and other litigation;
(14) the impact of any security incidents affecting us or any
third-party vendor upon which we rely; (15) inability or delay in
our efforts to construct, acquire, sell, renovate or expand our
healthcare facilities; (16) our failure to comply with federal and
state laws relating to Medicare and Medicaid enrollment, permit,
licensing and accreditation requirements, or the expansion of
existing or the enactment of new laws or regulation relating to
permit, licensing and accreditation requirements; (17) failure to
obtain drugs and medical supplies at favorable prices or sufficient
volumes; (18) operational, legal and financial risks associated
with outsourcing functions to third parties; (19) sensitivity to
regulatory, economic and competitive conditions in the states in
which our operations are heavily concentrated; (20) decreased
demand for our services provided due to factors beyond our control,
such as seasonal fluctuations in the severity of critical
illnesses, pandemic, epidemic or widespread health crisis; (21)
inability to accurately estimate market opportunity and forecasts
of market growth; (22) general economic and business conditions,
both nationally and in the regions in which we operate; (23) the
impact of seasonal or severe weather conditions and climate change;
(24) inability to demonstrate meaningful use of Electronic Health
Record technology; (25) inability to continually enhance our
hospitals with the most recent technological advances in diagnostic
and surgical equipment; (26) effects of current and future health
reform initiatives, including the Affordable Care Act, and the
potential for changes to the Affordable Care Act, its
implementation or its interpretation (including through executive
orders and court challenges); (27) legal and regulatory
restrictions on certain of our hospitals that have physician
owners; (28) risks related to the Ventas Master Lease and its
restrictions and limitations on our business; (29) the impact of
our significant indebtedness, including our ability to comply with
certain debt covenants and other significant operating and
financial restrictions imposed on us by the agreements governing
our indebtedness, and the effects that variable interest rates, and
general economic factors could have on our operations, including
our potential inability to service our indebtedness; (30) conflicts
of interest with the existing stockholders; (31) effects of changes
in federal tax laws; (32) increased costs as a result of operating
as a public company; (33) risks related to maintaining an effective
system of internal controls; (34) lack of a public market for our
common stock; (35) volatility of our share price; (36) our guidance
differing from actual operating and financial performance; (37) the
results of our efforts to use technology, including artificial
intelligence, to drive efficiencies and quality initiatives and
enhance patient experience; (38) the impact of recent decisions of
the U.S. Supreme Court regarding the actions of federal agencies;
and (39) other risk factors described in our filings with the
Securities and Exchange Commission.
Many of the important factors that will determine these results
are beyond our ability to control or predict. You are cautioned not
to put undue reliance on any forward-looking statements, which
speak only as of the date of this press release. Except as
otherwise required by law, we do not assume any obligation to
publicly update or release any revisions to these forward-looking
statements to reflect events or circumstances after the date of
this news release or to reflect the occurrence of unanticipated
events. All references to “Company,” “Ardent Health,” “we,” “our”
and “us” as used throughout this release refer to Ardent Health
Partners, Inc. and its affiliates, unless stated otherwise or
indicated by context.
Ardent Health Partners,
Inc.
Condensed Consolidated Income
Statements
(Dollars in thousands, except per
share amounts)
Unaudited
Three Months Ended June
30,
2024
2023
Amount
%
Amount
%
Total revenue
$
1,470,920
100.0
%
$
1,368,734
100.0
%
Expenses:
Salaries and benefits
624,058
42.4
%
598,291
43.7
%
Professional fees
271,903
18.5
%
234,720
17.1
%
Supplies
259,391
17.6
%
252,787
18.5
%
Rents and leases
24,986
1.7
%
25,407
1.9
%
Rents and leases, related party
36,965
2.5
%
36,364
2.7
%
Other operating expenses
115,319
7.9
%
108,830
7.8
%
Government stimulus income
—
0.0
%
(8,324
)
(0.6
)%
Interest expense
18,160
1.2
%
18,692
1.4
%
Depreciation and amortization
36,312
2.5
%
34,670
2.5
%
Loss on debt extinguishment
1,898
0.1
%
—
0.0
%
Other non-operating gains
(255
)
0.0
%
(520
)
0.0
%
Total operating expenses
1,388,737
94.4
%
1,300,917
95.0
%
Income before income taxes
82,183
5.6
%
67,817
5.0
%
Income tax expense
15,222
1.0
%
12,111
0.9
%
Net income
66,961
4.6
%
55,706
4.1
%
Net income attributable to noncontrolling
interests
24,191
1.6
%
22,630
1.7
%
Net income attributable to Ardent Health
Partners, Inc.
$
42,770
2.9
%
$
33,076
2.4
%
Net income per share:
Basic and diluted
$
0.34
$
0.26
Weighted-average common shares
outstanding:
Basic and diluted
126,115,301
126,115,301
Ardent Health Partners,
Inc.
Condensed Consolidated Income
Statements
(Dollars in thousands, except per
share amounts)
Unaudited
Six Months Ended June
30,
2024
2023
Amount
%
Amount
%
Total revenue
$
2,909,966
100.0
%
$
2,685,722
100.0
%
Expenses:
Salaries and benefits
1,245,567
42.8
%
1,190,359
44.3
%
Professional fees
536,597
18.4
%
468,571
17.4
%
Supplies
517,172
17.8
%
494,165
18.4
%
Rents and leases
49,841
1.7
%
48,724
1.8
%
Rents and leases, related party
74,164
2.5
%
72,501
2.7
%
Other operating expenses
237,151
8.1
%
217,384
8.1
%
Government stimulus income
—
0.0
%
(8,463
)
(0.3
)%
Interest expense
37,421
1.3
%
36,813
1.4
%
Depreciation and amortization
71,663
2.5
%
69,372
2.6
%
Loss on debt extinguishment
1,898
0.1
%
—
0.0
%
Other non-operating gains
(255
)
0.0
%
(522
)
0.0
%
Total operating expenses
2,771,219
95.2
%
2,588,904
96.4
%
Income before income taxes
138,747
4.8
%
96,818
3.6
%
Income tax expense
25,935
0.9
%
17,330
0.6
%
Net income
112,812
3.9
%
79,488
3.0
%
Net income attributable to noncontrolling
interests
42,995
1.5
%
42,269
1.6
%
Net income attributable to Ardent Health
Partners, Inc.
$
69,817
2.4
%
$
37,219
1.4
%
Net income per share:
Basic and diluted
$
0.55
$
0.30
Weighted-average common shares
outstanding:
Basic and diluted
126,115,301
126,115,301
Ardent Health Partners,
Inc.
Condensed Consolidated
Statements of Cash Flows
(Dollars in thousands)
Unaudited
Six Months Ended June
30,
2024
2023
Cash flows from operating
activities:
Net income
$
112,812
$
79,488
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
71,663
69,372
Other non-operating gains
—
(45
)
Loss on debt extinguishment
1,898
—
Amortization of deferred financing costs
and debt discounts
2,857
2,842
Deferred income taxes
(923
)
3,886
Unit-based compensation
738
542
Loss from non-consolidated affiliates
2,139
3,416
Changes in operating assets and
liabilities, net of effect of acquisitions and divestitures:
Accounts receivable
62,021
(50,398
)
Inventories
540
(906
)
Prepaid expenses and other current
assets
(42,791
)
(1,394
)
Accounts payable and other accrued
expenses and liabilities
(85,810
)
(15,239
)
Accrued salaries and benefits
(19,395
)
(26,018
)
Net cash provided by operating
activities
105,749
65,546
Cash flows from investing
activities:
Investment in acquisitions, net of cash
acquired
(7,800
)
—
Purchases of property and equipment
(62,765
)
(54,950
)
Other
58
(1,554
)
Net cash used in investing activities
(70,507
)
(56,504
)
Cash flows from financing
activities:
Proceeds from insurance financing
arrangements
6,026
19,368
Proceeds from long-term debt
1,798
1,225
Payments of principal on insurance
financing arrangements
(4,337
)
(9,527
)
Payments of principal on long-term
debt
(104,843
)
(8,296
)
Debt issuance costs
(2,444
)
—
Payments of initial public offering
costs
(2,824
)
—
Distributions to noncontrolling
interests
(31,657
)
(31,809
)
Redemption of equity attributable to
noncontrolling interests
—
(26,024
)
Other
—
(5,399
)
Net cash used in financing activities
(138,281
)
(60,462
)
Net decrease in cash and cash
equivalents
(103,039
)
(51,420
)
Cash and cash equivalents at beginning of
year
437,577
456,124
Cash and cash equivalents at end of
year
$
334,538
$
404,704
Supplemental Cash Flow
Information:
Non-cash purchase of property and
equipment
$
4,929
$
9,009
Deferred offering costs not yet paid
$
4,825
$
—
Ardent Health Partners,
Inc.
Condensed Consolidated Balance
Sheets
(Dollars in thousands)
Unaudited
June 30, 2024 (1)
December 31, 2023 (1)
Assets
Current assets:
Cash and cash equivalents
$
334,538
$
437,577
Accounts receivable
720,989
775,452
Inventories
105,010
105,485
Prepaid expenses
135,545
77,281
Other current assets
205,223
222,290
Total current assets
1,501,305
1,618,085
Property and equipment, net
807,285
811,089
Operating lease right of use assets
256,648
260,003
Operating lease right of use assets,
related party
935,298
941,150
Goodwill
852,001
844,704
Other intangible assets, net
76,930
76,930
Deferred income taxes
34,720
32,491
Other assets
144,504
147,106
Total assets
$
4,608,691
$
4,731,558
Liabilities and Equity
Current liabilities:
Current installments of long-term debt
$
10,725
$
18,605
Accounts payable
371,098
474,543
Accrued salaries and benefits
248,358
267,685
Other accrued expenses and liabilities
278,378
233,271
Total current liabilities
908,559
994,104
Long-term debt, less current
installments
1,081,963
1,168,253
Long-term operating lease liability
230,047
235,241
Long-term operating lease liability,
related party
925,916
932,090
Self-insured liabilities
240,618
243,552
Other long-term liabilities
58,931
76,002
Total liabilities
3,446,034
3,649,242
Redeemable noncontrolling interests
3,668
7,302
Equity:
Common units (Unlimited units authorized;
485,909,683 and 484,922,828 units issued and outstanding as of June
30, 2024 and December 31, 2023, respectively)
497,620
496,882
Accumulated other comprehensive income
17,009
18,561
Retained earnings
225,270
155,453
Equity attributable to Ardent Health
Partners, Inc.
739,899
670,896
Noncontrolling interests
419,090
404,118
Total equity
1,158,989
1,075,014
Total liabilities and equity
$
4,608,691
$
4,731,558
(1)
As of June 30, 2024 and December 31, 2023,
the unaudited condensed consolidated balance sheet included total
liabilities of consolidated variable interest entities of $317.1
million and $337.8 million, respectively. Refer to Note 2 of the
Company's unaudited condensed consolidated financial statements
included in its Quarterly Report on Form 10-Q for further
discussion.
Ardent Health Partners,
Inc.
Operating Statistics
Unaudited
Three Months Ended June
30,
Six Months Ended June
30,
2024
% Change
2023
2024
% Change
2023
Total revenue (in thousands)
$
1,470,920
7.5
%
$
1,368,734
$
2,909,966
8.3
%
$
2,685,722
Hospitals operated (at period end) (1)
30
(3.2
)%
31
30
(3.2
)%
31
Licensed beds (at period end) (2)
4,287
(0.8
)%
4,323
4,287
(0.8
)%
4,323
Utilization of licensed beds (3)
46
%
4.5
%
44
%
46
%
2.2
%
45
%
Admissions (4)
38,958
5.1
%
37,080
77,427
5.3
%
73,563
Adjusted admissions (5)
85,763
3.4
%
82,964
168,076
3.3
%
162,655
Inpatient surgeries (6)
9,012
(0.9
)%
9,090
17,958
0.2
%
17,925
Outpatient surgeries (7)
23,758
(2.8
)%
24,432
45,981
(2.7
)%
47,253
Emergency room visits (8)
156,287
2.2
%
152,915
313,869
4.3
%
300,978
Patient days (9)
179,047
2.6
%
174,514
358,173
1.5
%
352,947
Total encounters (10)
1,408,970
2.1
%
1,380,655
2,821,442
3.3
%
2,730,545
Average length of stay (11)
4.60
(2.3
)%
4.71
4.63
(3.5
)%
4.80
Net patient service revenue per adjusted
admission (12)
$
16,859
4.1
%
$
16,196
$
17,028
5.0
%
$
16,223
(1)
Hospitals operated (at period end).
This metric represents the total number of hospitals operated by us
at the end of the applicable period, irrespective of whether the
hospital real estate is (i) owned by us, (ii) leased by us or (iii)
held through a controlling interest in a JV. This metric includes
the managed clinical operations of the hospital at UT Health North
Campus in Tyler, Texas ("UT Health North Campus Tyler") a hospital
owned by The University of Texas Health Science Center at Tyler
("UTHSCT"), an affiliate of The University of Texas System. Since
we only manage the clinical operations of UT Health North Campus
Tyler, the financial results of such entity are not consolidated
under Ardent Health Partners, Inc.
On April 30, 2024, we closed UT Health
East Texas Specialty Hospital, a long-term acute care hospital (the
“LTAC Hospital”) in Tyler, Texas. The LTAC Hospital's inventory and
fixed assets were transferred or repurposed to be used by our other
hospitals. The LTAC Hospital had 36 licensed patient beds and
accounted for approximately $0.1 million and $2.9 million of total
revenue and a pre-tax loss of $0.5 million and pre-tax income of
$0.1 million for the three months ended June 30, 2024 and 2023,
respectively, and approximately $2.7 million and $5.8 million of
total revenue and a pre-tax loss of $0.6 million and $0.1 million
for the six months ended June 30, 2024 and 2023, respectively.
(2)
Licensed beds (at period end). This
metric represents the total number of beds for which the
appropriate state agency licenses a facility, regardless of whether
the beds are actually available for patient use.
(3)
Utilization of licensed beds. This
metric represents a measure of the actual utilization of our
inpatient facilities, computed by (i) dividing patient days by the
number of days in each period, and (ii) further dividing that
number by average licensed beds, which is calculated by dividing
total licensed beds (at period end) by the number of days in the
period, multiplied by the number of days in the period the licensed
beds were in existence.
(4)
Admissions. This metric represents
the number of patients admitted for inpatient treatment during the
applicable period.
(5)
Adjusted admissions. This metric is
used by management as a general measure of combined inpatient and
outpatient volume. Adjusted admissions provides management with a
key performance indicator that considers both inpatient and
outpatient volumes by applying an inpatient volume measure
(admissions) to a ratio of gross inpatient and outpatient revenue
to gross inpatient revenue. Gross inpatient and outpatient revenue
reflect gross inpatient and outpatient charges prior to estimated
contractual adjustments, uninsured discounts, implicit price
concessions, and other discounts. The calculation of adjusted
admissions is summarized as follows:
Adjusted Admissions = Admissions x
(Gross Inpatient Revenue + Gross Outpatient
Revenue)
Gross Inpatient Revenue
(6)
Inpatient surgeries. This metric
represents the number of surgeries performed on patients who have
been admitted to our hospitals. Pain management, c-sections, and
certain diagnostic procedures are excluded from inpatient
surgeries.
(7)
Outpatient surgeries. This metric
represents the number of surgeries performed on patients who have
not been admitted to our hospitals. Pain management, c-sections,
and certain diagnostic procedures are excluded from outpatient
surgeries.
(8)
Emergency room visits. This metric
represents the total number of patients provided with emergency
room treatment during the applicable period.
(9)
Patient days. This metric
represents the total number of days of care provided to patients
admitted to our hospitals during the applicable period.
(10)
Total encounters. This metric
represents the total number of events where healthcare services are
rendered resulting in a billable event during the applicable
period. This includes both hospital and ambulatory patient
interactions.
(11)
Average length of stay. This metric
represents the average number of days admitted patients stay in our
hospitals.
(12)
Net patient service revenue per
adjusted admission. This metric represents net patient service
revenue divided by adjusted admissions for the applicable period.
Net patient service revenue reflects gross inpatient and outpatient
charges less estimated contractual adjustments, uninsured
discounts, implicit price concessions, and other discounts.
Ardent Health Partners,
Inc.
Supplemental Non-GAAP
Disclosures
(Dollars in thousands)
Unaudited
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net income
$
66,961
$
55,706
$
112,812
$
79,488
Adjusted EBITDA
Addbacks:
Income tax expense
15,222
12,111
25,935
17,330
Interest expense, net
18,160
18,692
37,421
36,813
Depreciation and amortization
36,312
34,670
71,663
69,372
Noncontrolling interest earnings
(24,191
)
(22,630
)
(42,995
)
(42,269
)
Loss on debt extinguishment
1,898
—
1,898
—
Other non-operating gains (1)
(255
)
(520
)
(255
)
(522
)
Restructuring, exit and
acquisition-related costs (2)
5,561
3,461
7,898
9,962
Epic expenses, net (3)
426
240
1,015
978
Non-cash unit-based compensation
expense
226
182
738
542
Loss (income) from disposed operations
1,982
2
1,986
(68
)
Adjusted EBITDA
$
122,302
$
101,914
$
218,116
$
171,626
(1)
Other non-operating gains include gains
and losses realized on certain non-recurring events or events that
are non-operational in nature, including gains realized on certain
asset divestitures.
(2)
Restructuring, exit and
acquisition-related costs represent (i) enterprise restructuring
costs, including severance costs related to work force reductions
of $5.0 million and $3.2 million for the three months ended June
30, 2024 and 2023, respectively, and $6.9 million and $9.3 million
for the six months ended June 30, 2024 and 2023, respectively; (ii)
penalties and costs incurred for terminating pre-existing contracts
at acquired facilities of $0.2 million and $0.2 million for the
three months ended June 30, 2024 and 2023, respectively, and $0.4
million and $0.5 million for the six months ended June 30, 2024 and
2023, respectively; and (iii) third-party professional fees and
expenses, salaries and benefits, and other internal expenses
incurred in connection with potential and completed acquisitions of
$0.4 million and $0.1 million for the three months ended June 30,
2024 and 2023, respectively, and $0.6 million and $0.2 million for
the six months ended June 30, 2024 and 2023, respectively.
(3)
Epic expenses, net consist of various
costs incurred in connection with the implementation of Epic, our
health information technology system. These costs included
professional fees of $0.4 million and $0.2 million for the three
months ended June 30, 2024 and 2023, respectively, and $1.0 million
and $1.0 million for the six months ended June 30, 2024 and 2023,
respectively. Epic expenses do not include the ongoing costs of the
Epic system.
Ardent Health Partners,
Inc.
Supplemental Non-GAAP
Disclosures
(Dollars in thousands)
Unaudited
Three Months Ended June
30,
Six Months Ended June
30,
2024
2024
Net income
$
66,961
$
112,812
Adjusted EBITDAR
Addbacks:
Income tax expense
15,222
25,935
Interest expense, net
18,160
37,421
Depreciation and amortization
36,312
71,663
Noncontrolling interest earnings
(24,191
)
(42,995
)
Loss on debt extinguishment
1,898
1,898
Other non-operating gains (1)
(255
)
(255
)
Restructuring, exit and
acquisition-related costs (2)
5,561
7,898
Epic expenses, net (3)
426
1,015
Non-cash unit-based compensation
expense
226
738
Loss from disposed operations
1,982
1,986
Rent expenses payable to REITs (4)
39,769
79,770
Adjusted EBITDAR
$
162,071
$
297,886
(1)
Other non-operating gains include gains
and losses realized on certain non-recurring events or events that
are non-operational in nature, including gains realized on certain
asset divestitures.
(2)
Restructuring, exit and
acquisition-related costs represent (i) enterprise restructuring
costs, including severance costs related to work force reductions
of $5.0 million and $6.9 million for the three and six months ended
June 30, 2024, respectively; (ii) penalties and costs incurred for
terminating pre-existing contracts at acquired facilities of $0.2
million and $0.4 million for the three and six months ended June
30, 2024, respectively; and (iii) third-party professional fees and
expenses, salaries and benefits, and other internal expenses
incurred in connection with potential and completed acquisitions of
$0.4 million and $0.6 million for the three and six months ended
June 30, 2024, respectively.
(3)
Epic expenses, net consist of various
costs incurred in connection with the implementation of Epic, our
health information technology system. These costs included
professional fees of $0.4 million and $1.0 million for the three
and six months ended June 30, 2024, respectively. Epic expenses do
not include the ongoing costs of the Epic system.
(4)
Rent expense payable to REITs consists of
rent expense of $37.0 million and $74.2 million related to the
Ventas Master Lease and lease agreements associated with MOB
Transactions with Ventas and rent expense of $2.8 million and $5.6
million related to a lease arrangement with MPT for the lease of
Hackensack Meridian Mountainside Medical Center for the three and
six months ended June 30, 2024, respectively.
Ardent Health Partners,
Inc.
Supplemental Non-GAAP
Disclosures
(Dollars in millions)
Unaudited
For the Full Year
Ending
December 31, 2024
Low
High
Net income
$
247
$
268
Adjusted EBITDA
Addbacks:
Income tax expense
43
48
Interest expense, net
72
71
Depreciation and amortization
150
148
Noncontrolling interest earnings
(84
)
(86
)
Loss on debt extinguishment
2
2
Cybersecurity Incident insurance proceeds,
net (1)
(46
)
(46
)
Restructuring, exit and
acquisition-related costs
12
11
Epic expenses, net
2
2
Non-cash unit-based compensation
expense
15
15
Income from disposed operations
2
2
Adjusted EBITDA
$
415
$
435
(1)
Cybersecurity Incident insurance proceeds,
net represents estimated insurance recovery proceeds net of
incremental information technology and litigation costs associated
with the ransomware cybersecurity incident that occurred in
November 2023 (the "Cybersecurity Incident"), impacting and
disrupting a number of the Company's operational and informational
technology systems.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240814899242/en/
Media Relations: Rebecca Kirkham Ardent Health
rebecca.kirkham@ardenthealth.com (615) 296-3000
Investor Relations:
Investor.Relations@ardenthealth.com
Ardent Health Partners (NYSE:ARDT)
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