Ardent Health, Inc 10-Q for FY2024 Q2

Ardent Health, Inc. (ARDT)

10-Q 2024-08-14 For: 2024-06-30

Added on April 12, 2026

About this 10-Q

Ardent Health, Inc filed this 10-Q on August 14, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).

Headline figures

Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.47B; up 7.5% from $1.37B a year earlier
Net income: $42.77M; up 29.3% from net income of $33.08M a year earlier
Diluted EPS: $0.34; up 30.8% from $0.26 a year earlier

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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended June 30, 2024

			or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

			Commission File Number: 001-42180

			Ardent Health Partners, Inc.
			(Exact name of registrant as specified in its charter)


Delaware		61-1764793
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
340 Seven Springs Way, Suite 100 Brentwood, Tennessee		37027
(Address of principal executive offices)		(Zip Code)
	(615) 296-3000
(Registrant’s telephone number, including area code)
Ardent Health Partners, LLC
(Former name, former address and former fiscal year, if changed since last report)


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Income Statements for the three and six months ended June 30, 2024 and 2023 (Unaudited)	1
	Condensed Consolidated Comprehensive Income Statements for the three and six months ended June 30, 2024 and 2023 (Unaudited)	2
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2024 and 2023 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45


PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	47
Item 6.	Exhibits	47
Signatures		49


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Total revenue	$	1,470,920	$	1,368,734	$	2,909,966	$	2,685,722
Expenses:
Salaries and benefits	624,058		598,291		1,245,567		1,190,359
Professional fees	271,903		234,720		536,597		468,571
Supplies	259,391		252,787		517,172		494,165
Rents and leases	24,986		25,407		49,841		48,724
Rents and leases, related party	36,965		36,364		74,164		72,501
Other operating expenses	115,319		108,830		237,151		217,384
Government stimulus income	—		(8,324)		—		(8,463)
Interest expense	18,160		18,692		37,421		36,813

Depreciation and amortization	36,312		34,670		71,663		69,372
Loss on debt extinguishment	1,898		—		1,898		—
Other non-operating gains	(255)		(520)		(255)		(522)

Total operating expenses	1,388,737		1,300,917		2,771,219		2,588,904
Income before income taxes	82,183		67,817		138,747		96,818
Income tax expense	15,222		12,111		25,935		17,330
Net income	66,961		55,706		112,812		79,488
Net income attributable to noncontrolling interests	24,191		22,630		42,995		42,269
Net income attributable to Ardent Health Partners, Inc.	$	42,770	$	33,076	$	69,817	$	37,219

Net income per share:
Basic and diluted	$	0.34	$	0.26	$	0.55	$	0.30
Weighted-average common shares outstanding:
Basic and diluted	126,115,301		126,115,301		126,115,301		126,115,301


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	66,961	$	55,706	$	112,812	$	79,488
Other comprehensive (loss) income
Change in fair value of interest rate swap	(3,051)		6,209		(2,100)		33
Other comprehensive (loss) income before income taxes	(3,051)		6,209		(2,100)		33
Income tax (benefit) expense related to other comprehensive (loss) income items	(796)		1,620		(548)		8
Other comprehensive (loss) income, net of income taxes	(2,255)		4,589		(1,552)		25
Comprehensive income	64,706		60,295		111,260		79,513
Net income attributable to noncontrolling interests	24,191		22,630		42,995		42,269
Comprehensive income attributable to Ardent Health Partners, Inc.	$	40,515	$	37,665	$	68,265	$	37,244


	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
Commitment and contingencies (see Note 9)
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


			Equity Attributable to Ardent Health Partners, Inc.							Noncontrolling Interests		Total Equity
	Redeemable Noncontrolling Interests		Common Units			Accumulated Other Comprehensive Income		Retained Earnings
			Units(*)	Amount
Balance at December 31, 2022	$	10,796	482,726,544	$	510,968	$	26,533	$	101,549	$	400,460	$	1,039,510
Net income attributable to Ardent Health Partners, Inc.	—		—	—		—		4,143		—		4,143
Net income attributable to noncontrolling interests	—		—	—		—		—		20,427		20,427
Net loss attributable to redeemable noncontrolling interests	(788)		—	—		—		—		—		—
Other comprehensive loss	—		—	—		(4,564)		—		—		(4,564)
Distributions to noncontrolling interests	—		—	—		—		—		(12,555)		(12,555)



Vesting of Class C Units	—		587,053	360		—		—		—		360
Balance at March 31, 2023	$	10,008	483,313,597	$	511,328	$	21,969	$	105,692	$	408,332	$	1,047,321
Net income attributable to Ardent Health Partners, Inc.	—		—	—		—		33,076		—		33,076
Net income attributable to noncontrolling interests	—		—	—		—		—		23,600		23,600
Net loss attributable to redeemable noncontrolling interests	(970)		—	—		—		—		—		—
Other comprehensive income	—		—	—		4,589		—		—		4,589
Distributions to noncontrolling interests	—		—	—		—		—		(19,254)		(19,254)


Redemption of equity attributable to noncontrolling interests	—		—	(14,990)		—		—		(11,034)		(26,024)
Vesting of Class C Units	—		558,013	182		—		—		—		182
Balance at June 30, 2023	$	9,038	483,871,610	$	496,520	$	26,558	$	138,768	$	401,644	$	1,063,490


	June 30, 2024		December 31, 2023
Current liabilities
Current installments of long-term debt	$	2,328	$	2,386
Accounts payable	80,319		103,274
Accrued salaries and benefits	36,828		34,730
Other accrued expenses and liabilities	61,233		53,684
Total current liabilities	180,708		194,074
Long-term debt, less current installments	6,842		8,044
Long-term operating lease liability	114,021		120,056
Long-term operating lease liability, related party	9,473		9,520
Self-insured liabilities	659		651
Other long-term liabilities	5,359		5,437
Total liabilities	$	317,062	$	337,782


	Carrying Amount				Fair Value
	June 30, 2024		December 31, 2023		June 30, 2024		December 31, 2023
Senior Secured Term Loan Facility	$	773,168	$	874,262	$	774,135	$	876,448
5.75% Senior Notes	$	299,551	$	299,506	$	283,076	$	259,822


		Three Months Ended June 30,				Six Months Ended June 30,
	Classification	2024		2023		2024		2023
Unrealized income recognized	AOCI	$	2,052	$	9,844	$	8,139	$	6,592
Loss reclassified from AOCI into earnings	Interest expense, net	(5,103)		(3,635)		(10,239)		(6,559)
Net change in AOCI		$	(3,051)	$	6,209	$	(2,100)	$	33


	Three Months Ended June 30,
(Unaudited, dollars in thousands)	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	%


	Three Months Ended June 30,
(in thousands)	2024		2023
Net income	$	66,961	$	55,706
Adjusted EBITDA Addbacks:
Income tax expense	15,222		12,111
Interest expense, net	18,160		18,692
Depreciation and amortization	36,312		34,670
Noncontrolling interest earnings	(24,191)		(22,630)
Loss on debt extinguishment	1,898		—
Other non-operating gains (a)	(255)		(520)

Restructuring, exit and acquisition-related costs (b)	5,561		3,461
Epic expenses, net (c)	426		240
Non-cash unit-based compensation expense	226		182
Loss from disposed operations	1,982		2
Adjusted EBITDA	$	122,302	$	101,914


Date (if redeemed during the 12 month period beginning on July 15 of the years indicated below)			Percentage
2024			102.875%
2025			101.438%
2026 and thereafter			100.000%


	Payments Due by Period
	Total		Less than 1 Year		1-3 Years		3-5 Years		After 5 Years

Long-term debt obligations, with interest	$	1,509,325	$	51,901	$	189,612	$	944,604	$	323,208
Deferred financing obligations, with interest	18,050		5,202		11,456		1,392		—
Operating leases	3,045,956		98,204		377,430		355,764		2,214,558
Estimated self-insurance liabilities	190,626		40,976		41,308		63,864		44,478
Total	$	4,763,957	$	196,283	$	619,806	$	1,365,624	$	2,582,244


Exhibit Number						Description

2.1*						Plan of Conversion
3.1						Certificate of Incorporation of Ardent Health Partners, Inc. (incorporated by reference to Exhibit 4.1 to the Registrant’s Form S-8 filed on July 17, 2024)
3.2						Bylaws of Ardent Health Partners, Inc. (incorporated by reference to Exhibit 4.2 to the Registrant’s Form S-8 filed on July 17, 2024)
4.1						Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant's Form S-1 /A filed on July 8, 2024)
10.1						Amendment No. 4 to Amended and Restated ABL Credit Agreement, dated June 26, 2024, among AHP Health Partners, Inc., AHS East Texas Health System, LLC, the Subsidiaries of AHP Health Partners, Inc. and AHS East Texas Health System, LLC, as Borrowers, the Guarantors, the Incremental Lenders, the other Lenders and L/C Issuers party thereto and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.10 to the Registrant’s Form S-1/A filed on July 8, 2024)
10.2#						Twelfth Amendment to Master Lease and Guaranty of Master Lease, dated June 21, 2024, among certain wholly-owned affiliates of Ventas, Inc. listed therein as “Landlord,” Ardent Health Partners, Inc. and certain affiliated entities of Ardent Health Partners, Inc. listed therein (incorporated by reference to Exhibit 10.25 to the Registrant’s Form S-1/A filed on July 8, 2024)
10.3						First Amendment to Relative Rights Agreement, dated as of June 3, 2024, among Bank of America, N.A., as administrative agent under the ABL Credit Agreement, Bank of America, N.A., as collateral agent under the ABL Credit Agreement, Bank of America, N.A., as administrative agent under the Term Loan Agreement, certain wholly owned affiliates of Ventas, Inc. listed therein as “Landlord,” Ardent Health Partners, Inc. and certain affiliated entities of Ardent Health Partners, Inc. listed therein (incorporated by reference to Exhibit 10.26 to the Registrant’s Form S-1 filed on June 21, 2024)
10.4#						Amended and Restated Statement of Work #1, dated as of June 25, 2024, by and between Ensemble RCM, LLC d/b/a Ensemble Health Partners and AHS Management Company, Inc. (incorporated by reference to Exhibit 10.30 to the Registrant’s Form S-1/A filed on July 8, 2024)
10.5#						Statement of Work #2, dated as of June 10, 2024, by and between Ensemble RCM, LLC d/b/a Ensemble Health Partners and AHS Management Company, Inc. (incorporated by reference to Exhibit 10.31 to the Registrant’s Form S-1/A filed on July 8, 2024)
10.6#						Statement of Work #3, dated as of June 25, 2024, by and between Ensemble RCM, LLC d/b/a Ensemble Health Partners and AHS Management Company, Inc. (incorporated by reference to Exhibit 10.32 to the Registrant’s Form S-1/A filed on July 8, 2024)
10.7†						Form of Indemnification Agreement between the registrant and its directors and certain officers (incorporated by reference to Exhibit 10.36 to the Registrant’s Form S-1/A filed on July 8, 2024)
10.8†						Ardent Health Partners, Inc. 2024 Omnibus Incentive Award Plan (incorporated by reference to Exhibit 10.37 to the Registrant’s Form S-1/A filed on July 8, 2024)
10.9†*						Form of Restricted Stock Award Agreement (Replacement Unvested C-1 Units) under the 2024 Omnibus Incentive Awar d Plan
10.10†*						Form of Restricted Stock Award Agreement (Replacement Unvested C-2 Units) under the 2024 Omnibus Incentive Award Plan
10.11†*						Form of Restricted Stock Unit Award Agreement (Employees) under the 2024 Omnibus Incentive Award Plan
10.12†*						Form of Restricted Stock Unit Award Agreement (Non-Employee Directors) under the 2024 Omnibus Incentive Award Plan
10.13#†*						Form of Performance Based Restricted Stock Unit Award Agreement under the 2024 Omnibus Incentive Award Plan
10.14*						Stock Ownership Guidelines
10.15†*						Executive Severance Plan
10.16†						Non-Employee Director Compensation Program (incorporated by reference to Exhibit 10.40 to the Registrant’s Form S-1/A filed on July 8, 2024)
10.17*						Strategic Advisory Services Letter Agreement, dated as of July 19, 2024, between EGI-AM Investments, L.L.C. and Ardent Health Partners, Inc.
10.18*						Nomination Agreement, dated as of July 19, 2024, among Ardent Health Partners, Inc., EGI-AM Investments, L.L.C. and ALH Holdings, LLC
10.19*						REIT Savings Letter Agreement, dated as of July 19, 2024, by and between Ardent Health Partners, Inc. and ALH Holdings, LLC


	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
	Amount		% of Revenue		Amount		% of Revenue		Amount		% of Revenue		Amount		% of Revenue
Medicare	$	578,163	39.3	%	$	533,805	39.0	%	$	1,147,646	39.4	%	$	1,070,157	39.8	%
Medicaid	155,334		10.6	%	153,691		11.2	%	311,612		10.7	%	307,843		11.5	%
Other managed care	634,476		43.1	%	582,169		42.5	%	1,247,593		42.9	%	1,126,162		41.9	%
Self-pay and other	77,914		5.3	%	74,017		5.5	%	155,132		5.4	%	134,577		5.1	%
Net patient service revenue	$	1,445,887	98.3	%	$	1,343,682	98.2	%	$	2,861,983	98.4	%	$	2,638,739	98.3	%
Other revenue	25,033		1.7	%	25,052		1.8	%	47,983		1.6	%	46,983		1.7	%
Total revenue	$	1,470,920	100.0	%	$	1,368,734	100.0	%	$	2,909,966	100.0	%	$	2,685,722	100.0	%


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Oklahoma	25.4	%	24.2	%	24.8	%		24.1	%
New Mexico	14.7	%	16.2	%	15.1	%		15.9	%
Texas	35.5	%	35.1	%	36.0	%		35.2	%
New Jersey	10.1	%	10.5	%	10.2	%		10.6	%
Other	14.3	%	14.0	%	13.9	%		14.2	%
Total	100.0	%	100.0	%	100.0	%		100.0	%


	Three Months Ended June 30,						Six Months Ended June 30,
	2024		% Change		2023		2024		% Change		2023
Operating Statistics
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


	Six Months Ended June 30,
	2024		2023
Cash flows provided by operating activities	$	105,749	$	65,546
Cash flows used in investing activities	(70,507)		(56,504)
Cash flows used in financing activities	(138,281)		(60,462)


Exhibit Number						Description

31.1*						Certification of Principal Executive Officer pursuant to SEC Rule 13a 14(a)/15d 14(a)
31.2*						Certification of Principal Financial Officer pursuant to SEC Rule 13a 14(a)/15d 14(a)
32.1**						Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**						Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*						Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH*						Inline XBRL Taxonomy Extension Schema Document
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


# Portions of this exhibit (indicated by “[***]”) have been omitted as the registrant has determined that (i) the omitted information is not material and (ii) the omitted information is the type that the registrant treats as private or confidential.
† Indicates a management contract or compensatory plan, contract or arrangement
* Filed herewith
** This certification will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.


Participant:
Grant Date:			July 17, 2024 (the effective date of the Conversion)
Total Number of Shares:			See the Appendix
Total Number of Open C-1 Units (to be converted into Shares upon the Conversion):			See the Appendix
Vesting Schedule:			See the Appendix


Ardent Health Partners, Inc.	Participant
By:	By:
Name:	Name:
Title:		(Print Name)


Participant:
Grant Date:
Total Number of RSUs:
Vesting Commencement Date:			March 31, 2024
Vesting Schedule:			The RSUs shall vest in three (3) substantially equal installments on each anniversary of the Vesting Commencement Date (rounding up to the nearest whole RSU on the first two (2) anniversary dates).


Participant:
Grant Date:
Total Target Number of PRSUs:
Vesting Schedule:			The PRSUs shall vest in accordance with the terms, including the achievement of the Performance Goals, set forth in the Appendix to this Grant Notice (the “Appendix”).


Adjusted EBITDAR Performance ($000s)	Percentage Earned	Performance Level
[***]	[***]	Maximum
[***]	[***]	Target
[***]	[***]	Threshold
[***]	0%	Below Threshold


Net Revenue Performance ($000s)	Percentage Earned	Performance Level
[***]	[***]	Maximum
[***]	[***]	Target
[***]	[***]	Threshold
[***]	0%	Below Threshold


Title			Guideline
Chief Executive Officer (“CEO”)			5 times annual base salary
Other Named Executive Officers			3 times annual base salary
Other Covered Executives			2 times annual base salary
Covered Directors			5 times annual cash retainer


			By: /s/ Martin J. Bonick Name: Martin J. Bonick Title: President & Chief Executive Officer (Principal Executive Officer)


			By: /s/ Alfred Lumsdaine Name: Alfred Lumsdaine Title: Chief Financial Officer (Principal Financial Officer)