Ardent Health topped the market’s revenue and earnings estimates, touting Wednesday solid adjusted admission and labor spend numbers despite what has proved to be a tumultuous first quarter for hospitals.
The publicly traded for-profit logged $1.6 billion of total revenue, which was up 7% year over year and 1.3% above Zacks Investment Research’s consensus estimate. Net income was $40 million, or 28 cents per share, beating the consensus estimate of 18 cents per share.
Similar to other for-profit health systems’ reports from the past few weeks, executives acknowledged the impacts of a weak respiratory season and severe winter storms on Ardent’s business, particularly in Texas, Oklahoma and New Jersey. That led to a 1.1% year-over-year decline in admissions, though CEO Marty Bonick said during Wednesday’s earnings call that the company “acted swiftly to reschedule surgeries and adjust labor to align with volume, mitigating the impact on our performance.”
At the same time, the company managed to grow its adjusted admissions (which include outpatient visits) by 2% over the prior year, while total surgeries also grew by 1.2%. Beyond operating flexibility, executives credited the growth to last year’s investments to expand Ardent’s footprint of urgent care centers and other access points.
“We probably have a bigger, disproportionate volume of clinics within our footprint” compared to peers, Bonick told analysts during a Q&A. “And so when you think about some of the weather impacts across the industry—and we were certainly part of that—it impacted admissions, but those strong outpatient services and access points continue to deliver for us along with strong volumes on the [ambulatory surgery center] side.”
Ardent also scored points with analysts on the earnings call for its cost management efforts, particularly around labor.
Salaries, wages and benefits expenses grew by 0.6% year over year, an improvement of 260 basis points when viewed as a percent of revenue, with average hourly rates per full-time equivalent growing 1%. Contract labor expenses declined more than 40% year over year back to pre-pandemic levels, executives said.
Bonick largely attributed the improvements to the company’s focus on “precision staffing,” or a systemic review of Ardent’s footprint and volumes to better target labor allocation. The company also renegotiated an agency labor contract with a major vendor, he said.
More broadly, Ardent has been pursuing a sweeping operations improvement initiative, called IMPACT (Improve Margins, Performance, Agility and Care Transformation), that the company previously said would drive $55 million of expected savings across 2026. Executives said the program continues to build on Q4’s improvements and is on track for that year’s $55 million savings goal.
More broadly, executives said they now have increased confidence that Ardent will hit its full-year 2026 financial targets.
“These results reflect improving execution across labor and supply cost, and reinforcing our focus on consistently delivering results through the controllable aspects of our business,” Bonick said.
Headwinds such as payers’ elevated denial activity and professional fee growth were both stable and within the company’s expectations, Bonick said.
The quarter’s activity among Affordable Care Act insurance exchange volumes was “relatively consistent, perhaps just slightly better” than Ardent expected, the CEO said, generally keeping the system on pace for its predicted $25 million EBITDA headwind due to the expiration of enhanced subsidies. Volumes on the exchanges were “actually up a percent or two” from projections, Chief Financial Officer Alfred Lumsdaine said, though commercial volumes excluding exchanges were “a little bit weaker.”
“Perhaps there’s a little bit of macroeconomic dynamic in play there, but I don’t think we’re seeing anything dramatically contrary to what our expectations were coming into the year,” he said.
Net patient service revenue per adjusted admission rose 5.5% year over year, which executives said stemmed from greater rates the company had negotiated from payers. However, the impact of those greater rates is being partially offset by a broader shift among marketplace consumers from silver to bronze plans, they noted.
Analysts also questioned the executives on Ardent’s dealmaking outlook, whether that be acquisitions or new joint ventures in which the company handles operations for a partner system. Bonick responded by saying the company is optimistic about any opportunities and has been having “growing conversations in that space,” but that it wants to be “very conservative and prudent in terms of where we’re going into, given the macro uncertainties in healthcare.”
“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,” Bonick said. “That discipline gives us confidence that we are on track to deliver on full-year financial targets.”
Ardent Health operates 30 acute care hospitals and more than 280 other care sites, with more than half of those hospitals operated on behalf of major nonprofit health systems or academic medical centers with which the for-profit partners. This past year, the company increased its revenues by 6% to $6.3 billion and grew its adjusted EBITDA to $545 million. Its stock closed Wednesday’s trading 7.5% below its pre-earnings open.