Despite substantial year-over-year volume contributions and a likely cutback in federal subsidies impending, executives at Ardent Health played down the impact of exchange volumes on their earnings and said they won’t hesitate to cut off plans with low rates or frequent denials.
In fact, CEO Marty Bonick said during Wednesday morning’s earnings call that the for-profit system has already terminated “one of the largest plans that have been generating the volume increases for this year so far.”
Bonick told investors that the company’s hospitals “are by and large full” and that it would have little difficulty shifting out lower-paying exchange volume for “payer sources where we can be compensated appropriately.” That includes contracts for which “front-line rates may be great, but denials are eating into our profitability,” he said while noting that Ardent on the whole has a below-average rate of initial denials.
Chief Financial Officer Alfred Lumsdaine said Ardent is about 65% contracted for 2026 with some ongoing negotiations but that so far it is seeing a “consistent pattern in terms of the type of rates that we would want and expect. And, a big focus is on closing some of those gaps where we’re seeing—we’ll call it what it is—the denial activities being exploited.”
During the second quarter of 2025, Ardent’s exchange admissions rose 35% year over year compared to the roughly 8% of other Medicaid and commercial payer populations, reflecting a trend post-Medicaid redetermination enrollments also reported by its large for-profit peers. However, that exchange population “currently contributes less to EBITDA than its volume might suggest,” Bonick said, due to the denials, a disproportionate share of ER visits and reimbursements rates more closely align to Medicare than commercial volumes.
As such, executives similarly downplayed the potential earnings impact on Ardent should Congress allow enhanced subsidies for exchange plans to expire at the end of the year, which is expected to reduce enrollment. Strong underlying demand—alongside Ardent’s efforts to capture more volumes through outpatient expansions, including five urgent care centers and two imaging care centers set to open before year-end—should be able to fill in the gaps with more favorable returns, they said.
“There is a misconception that any revenue decline here would directly impact EBITDA, which is not necessarily the case, especially as we remain agile in adjusting operations to meet demand,” Bonick said. “Obviously, there are a number of moving parts, but we are committed to providing visibility as the policy landscape evolves and are optimistic about working with policymakers to mitigate effects.”
The commentary came alongside the disclosure of a solid second quarter for Ardent, which is now entering its second year as a public company.
Total revenue for the quarter grew 11.9% year over year to $1.65 billion. Net income attributable to Ardent was $73 million ($0.52 per diluted share), and adjusted EBITDA was $170 million.
Admissions rose 6.6% year over year while adjusted admissions increased by 1.6%. Total surgeries dipped 0.2%, with outpatient surgeries falling 3.8% but inpatient surgeries increasing 9.2%. Here, the executives pointed to intentional service line rationalization, as short duration but high-volume cases like ophthalmology made up much of the decline and high-acuity areas like orthopedics and cardiology increased.
“That’s modeling exactly as we would have hoped and expected, with higher quality and higher acuity inpatients backfilling that, albeit at smaller total numbers but with higher percentages,” Bonick said.
Net patient service revenue per adjusted admission rose 10.2% year over year, and, alongside the rise in adjusted admissions, fueled the top-line total revenue increase.
That performance and the approval of a New Mexico state directed payment program through 2025 led Ardent to reaffirm its full-year guidance, and its stock is trading about 6% higher as of Wednesday afternoon.
Executives, during the earnings call, also took time to highlight Ardent's improving balance sheet and liquidity, which they said leave the company open to strategic growth opportunities. For Ardent, that’s traditionally been joint ventures and partnerships with nonprofit health systems, especially academic systems, where the for-profit handles hospital operations. Outside interest and discussions regarding those deals has only picked up since the signing of the "one big, beautiful bill," Bonick shared.
As for the bill’s other impacts related to Medicaid funding cuts, executives outlined a “worst case scenario” in which earnings impacts are negligible through 2026 and 2027 but kick in during subsequent years. Assuming no material changes to the legislation, that could bring an EBITDA impact of $150 million to $175 million by 2035, they said.
“However, we do anticipate the net impact will likely be lower, supported by, at minimum, the Rural Hospital Fund and other state-level supplemental programs, though these are not yet finalized and cannot be quantified at this time,” Bonick said. The estimate also does not aim to model changes to Medicaid enrollment related to work requirements, though executives said they would expect that to be a minimal portion of their patient population and could be mitigated by enrollment in other types of insurance.