Q4 2025 Ardent Health Inc Earnings Call

March 5, 2026

Speaker #2: Good morning, and thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ardent Health Partners Q4 and Full Year 2025 Earnings Call.

Speaker #2: All lines have been placed in mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad, and to withdraw your question, simply press star one again.

Speaker #2: I would now like to turn the call over to Dave Styblo, Senior Vice President of Investor Relations. Please go ahead.

Speaker #3: Thank you, operator, and welcome to Ardent Health Fourth Quarter 2025 Earnings Conference Call. Joining me today is Ardent President and Chief Executive Officer, Marty Bonick, and Chief Financial Officer, Alfred Lumsdaine.

David Styblo: Thank you, operator. Welcome to Ardent Health's Q4 2025 Earnings Conference Call. Joining me today is Ardent President and Chief Executive Officer, Marty Bonick, and Chief Financial Officer, Alfred Lumsdaine. Marty and Alfred will provide prepared remarks. We will open the line to questions. Before I turn the call over to Marty, I want to remind everyone that today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Further, this call will include the discussion of certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDAR, and free cash flow.

Dave Styblo: Thank you, operator. Welcome to Ardent Health's Q4 2025 Earnings Conference Call. Joining me today is Ardent President and Chief Executive Officer, Marty Bonick, and Chief Financial Officer, Alfred Lumsdaine. Marty and Alfred will provide prepared remarks. We will open the line to questions. Before I turn the call over to Marty, I want to remind everyone that today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Further, this call will include the discussion of certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDAR, and free cash flow.

Speaker #3: Marty and Alfred will provide prepared remarks, and then we will open the line to questions. Before I turn the call over to Marty, I want to remind everyone that today's discussion contains forward-looking statements about future business and financial expectations.

Speaker #3: Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties. Including the risks described in our periodic reports filed with the Securities and Exchange Commission.

Speaker #3: Except as required by law, we undertake no obligation to update our forward-looking statements. Further, this call will include the discussion of certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDAR, and free cash flow.

Speaker #3: Reconciliation of these measures to the closest GAAP financial measure is included in our quarterly earnings press release and supplemental earnings presentation which were both issued yesterday evening after the market closed and are available at ardenthealth.com.

David Styblo: Reconciliation of these measures to the closest GAAP financial measure is included in our quarterly earnings press release and supplemental earnings presentation, which were both issued yesterday evening after the market closed and are available at ardenthealth.com. With that, I'll turn the call over to Marty.

Dave Styblo: Reconciliation of these measures to the closest GAAP financial measure is included in our quarterly earnings press release and supplemental earnings presentation, which were both issued yesterday evening after the market closed and are available at ardenthealth.com. With that, I'll turn the call over to Marty.

Speaker #3: With that, I'll turn the call over to Marty.

Speaker #4: Thank you, Dave, and good morning. We appreciate everyone joining the call and webcast. During our third quarter call, we committed to taking swift and challenges that had intensified.

Marty Bonick: Thank you, Dave, and good morning. We appreciate everyone joining the call and webcast. During our Q3 call, we committed to taking swift and decisive action to address certain industry challenges that had intensified. The initiatives were designed to strengthen our operating model and better position the company for long-term earnings growth. I'm pleased to share that our Q4 results reflected a number of positive developments and encouraging signs of progress as a result of the actions we took since our last update. Key industry headwinds that we flagged as accelerating on the Q3 call, including professional fees and other rate pressures driven by payer denials, showed stability in Q4. Additionally, our keen focus on disciplined execution and expense optimization is already starting to pay dividends and drove solid Q4 earnings performance.

Speaker #4: The initiatives were designed to strengthen our operating model and better position the company for long-term earnings growth. I'm pleased to share that our fourth quarter results reflected a number of positive developments and encouraging signs of progress as a result of the actions we took since our last update.

Speaker #4: Key industry headwinds that we flagged as accelerating on the third quarter call, including professional fees and other rate pressures driven by payer denials, showed stability in 4Q.

Speaker #4: Additionally, our keen focus on disciplined execution and expense optimization is already starting to pay dividends and drove solid fourth quarter earnings performance. Furthermore, we generated robust cash flow that was above our expectations, resulting in nearly a 50% increase in full-year 2025 operating cash flow.

Marty Bonick: Furthermore, we generated robust cash flow that was above our expectations, resulting in nearly a 50% increase in full year 2025 operating cash flow. In short, I'm pleased with our finish to 2025 and the momentum that we've built exiting the year. Importantly, we expect operating performance traction to further ramp throughout 2026. To frame today's conversation, I'm going to focus my comments on three key areas. First, I'll walk you through Q4 performance, which resulted in 2025 reporting our highest-ever revenue, EBITDA, and operating cash flow. Second, I'll provide color on our IMPACT program, our work to improve margins, performance, agility, and care transformation, and how those actions are strengthening our business along with an update on industry challenges we highlighted last quarter. Third, I will share context around our 2026 financial guidance.

Speaker #4: In short, I'm pleased with our finish to 2025 and the momentum that we've built exiting the year. Importantly, we expect operating performance traction to further ramp throughout 2026.

Speaker #4: To frame today's conversation, I'm going to focus my comments on three key areas. First, I'll walk you through fourth quarter performance, which resulted in 2025 recording our highest ever revenue, EBITDA, and operating cash flow.

Speaker #4: Second, I'll provide color on our impact program, our work to improve margins, performance, agility, and care transformation, and how those actions are strengthening our business along with an update on industry challenges we highlighted last quarter.

Speaker #4: And third, I will share context around our 2026 financial guidance. Let's start with fourth quarter performance in 2025 results. We reported solid fourth quarter revenue supported by durable industry demand.

Marty Bonick: Let's start with Q4 performance and 2025 results. We reported solid Q4 revenue supported by durable industry demand. This capped off a strong 2025, where we grew full year revenue by 6% to $6.3 billion, squarely in the middle of our 2025 guidance range. Underpinning this performance was strong 2025 admissions and adjusted admissions growth of 5.3% and 2.3% respectively. Q4 Adjusted EBITDA benefited from the IMPACT program initiatives to optimize revenue and streamline the business. For full year 2025, we grew Adjusted EBITDA 9% and expanded margin 20 basis points. We also generated significant operating cash flow of $223 million in Q4 and $471 million during 2025, up 49% from 2024.

Speaker #4: This capped off a strong 2025, where we grew full-year revenue by 6% to $6.3 billion, squarely in the middle of our 2025 guidance range.

Speaker #4: Underpinning this performance was strong 2025 admissions and adjusted admissions growth of 5.3% and 2.3%, respectively. Fourth quarter adjusted EBITDA benefited from the impact program initiatives to optimize revenue and streamline the business.

Speaker #4: For full year 2025, we grew adjusted EBITDA 9% and expanded margin 20 basis points. We also generated significant operating cash flow of $223 million in Q4 and $471 million during 2025, up 49% from 2024.

Speaker #4: Our improving earnings profile, along with diligent work to maximize collections, contributed to the large increase. Finally, we strengthened our balance sheet during the year.

Marty Bonick: Our improving earnings profile, along with diligent work to maximize collections, contributed to the large increase. Finally, we strengthened our balance sheet during the year. We increased cash by approximately $150 million to over $700 million at the end of 2025. We reduced our lease-adjusted net leverage nearly half a turn to 2.5x. That's a good segue into the second topic of today's discussion, our IMPACT program progress and an update on industry challenges. We are pleased with the traction of IMPACT-driven initiatives to further optimize costs and strengthen margins.

Speaker #4: We increased cash by approximately $150 million to over $700 million at the end of 2025, and we reduced our least adjusted net leverage nearly half a turn to 2.5 times.

Speaker #4: That's a good segue into the second topic of today's discussion: our impact program progress and an update on industry challenges. We are pleased with the traction of impact-driven initiatives to further optimize costs and strengthen margins.

Speaker #4: During the third quarter call, we sized $40 million of annualized Impact Program savings that we expected would ramp during the fourth quarter of 2025 and reach run rate entering 2026.

Marty Bonick: During the Q3 call, we sized $40 million of annualized IMPACT program savings that we expected would ramp during Q4 2025 and reach run rate entering 2026. We are on track to deliver on that target and are raising the expected contribution to approximately $55 million, which Alfred will discuss shortly. Importantly, IMPACT is a multi-year operating model transformation, improving not only margins, but our performance, agility, and care transformation. These efforts are reflected in the P&L. For example, we activated precision staffing initiatives that resulted in Q4 salary, wages, and benefit expenses declining 0.4% year-over-year. Similarly, we reduced SWB per adjusted admission by 2%, which is a significant inflection from the 4% growth during the first three quarters of 2025.

Speaker #4: We are on track to deliver on that target and are raising the expected contribution to approximately $55 million, which Alfred will discuss shortly. Importantly, IMPACT is a multi-year operating model transformation, improving not only margins but our performance, agility, and care transformation.

Speaker #4: These efforts are reflected in the P&L. For example, we activated precision staffing initiatives that resulted in fourth quarter salary, wages, and benefit expenses declining 0.4% year over year.

Speaker #4: Similarly, we reduced SWB per adjusted admission by 2%, which is a significant inflection from the 4% growth during the first three quarters of 2025.

Speaker #4: Within SWB, we reduced contract labor expenses by 26% to $17 million in the fourth quarter. To put that into context, contract labor accounted for only 2.6%.

Marty Bonick: Within SWB, we reduced contract labor expenses by 26% to $17 million in Q4. To put that into context, contract labor accounted for only 2.6% of SWB in Q4, which is the lowest it's been since 2019 when we were running in the mid 2% range. These improvements are being driven by focused efforts to optimize precision staffing, drive operating room excellence, and expand virtual care. In contract labor, we renegotiated a key contract to improve our rates. We reduced overall utilization by accelerating our speed to hire and leveraging real-time management tools. This enabled us to reduce agency labor FTEs by approximately 175 in the last 4 months of 2025.

Speaker #4: Of SWB in Q4, which is the lowest it’s been since 2019, when we were running in the mid-2% range. These improvements are being driven by focused efforts to optimize precision staffing, drive operating room excellence, and expand virtual care.

Speaker #4: In contract labor, we renegotiated a key contract to improve our rates and we reduced overall utilization by accelerating our speed to hire and leveraging real-time management tools.

Speaker #4: This enabled us to reduce agency labor FTEs by approximately 175 in the last four months of 2025. In the operating room, which is one of our highest impact areas for improving performance, we increased first-case on-time starts by over 10 percentage points in 4Q versus 3Q and expect to continue on that progress this year.

Marty Bonick: In the operating room, which is one of our highest impact areas for improving performance, we increased first case on-time starts by over 10 percentage points in Q4 versus Q3 and expect to continue on that progress this year. Additionally, we continue to see significant value in care transformation through our virtual care activities, including virtual nursing, patient monitoring, and provider coverage. As we have shared previously, these programs have improved workflows, eased staffing pressures, and strengthened clinical support across our hospitals. Building on this success, we announced a partnership with HelloCare AI last week to launch an enterprise-wide AI-assisted virtual care expansion that will span more than 2,000 patient rooms by year-end. This will establish a connected, scalable virtual care network across all markets, improving safety, operational efficiency, and enabling better utilization of clinical talent.

Speaker #4: Additionally, we continue to see significant value in care transformation through our virtual care activities, including virtual nursing, patient monitoring, and provider coverage. As we've shared previously, these programs have improved workflows, eased staffing pressures, and strengthened clinical support across our hospitals.

Speaker #4: Building on this success, we announced a partnership with HelloCare AI last week to launch an enterprise-wide AI-assisted virtual care expansion that will span more than 2,000 patient rooms by year-end.

Speaker #4: This will establish a connected, scalable virtual care network across all markets, improving safety, operational efficiency, and enabling better utilization of clinical talent. Stepping back, I'm encouraged by the traction of our impact program built throughout Q4 and the momentum it provides heading into 2026 as we manage well-known industry pressures.

Marty Bonick: Stepping back, I'm encouraged by the traction our IMPACT program built throughout Q4 and the momentum it provides heading into 2026 as we manage well-known industry pressures. On that front, I wanted to provide a brief update on the two pressure points we experienced in Q3. Payer denials in Q4 held generally consistent with Q3, We are starting to see some improvements on the margin, aided by our partnership with Ensemble. Specifically, we've been focused on denial integrity and more consistent application of our contractual tools, yielding better predictability in the revenue cycle. Likewise, professional fees also moderated in Q4, with growth decelerating to 8% from 11% in Q3. Our strategic recontracting and vendor transitions are having a positive impact. While it's still early, the Q4 data points are directionally favorable on both industry challenges.

Speaker #4: On that front, I wanted to provide a brief update on the two pressure points we experienced in the third quarter. Payer denials in 4Q held generally consistent with 3Q, and we are starting to see some improvements on the margin, aided by our partnership with Ensemble.

Speaker #4: Specifically, we've been focused on denial integrity and more consistent application of our contractual tools, yielding better predictability in the revenue cycle. Likewise, professional fees also moderated in Q4, with growth decelerating to 8% from 11% in Q3.

Speaker #4: Our strategic recontracting and vendor transitions are having a positive impact. While it's still early, the 4Q data points are directionally favorable on both industry challenges.

Marty Bonick: Pivoting to our third discussion point, I want to address our 2026 outlook. We enter this year encouraged by tangible progress from our IMPACT program and expect to continue building momentum throughout the year. We remain highly focused on optimizing revenue, disciplined expense management, and productivity, the levers most within our control, all while delivering excellent quality care to patients. In terms of industry demand, our positioning remains a strong cornerstone as our markets continue to grow 2 to 3 times faster than the national average and are further bolstered by rising care complexity. These structural trends reinforce our long-term growth thesis while we continue to overcome the impact of well-known industry headwinds. With that backdrop, we are issuing 2026 Adjusted EBITDA guidance of $485 to $535 million.

Speaker #4: Pivoting to our third discussion point, I want to address our 2026 outlook. We enter this year encouraged by tangible progress from our impact program and expect to continue building momentum throughout the year.

Speaker #4: Removing highly focused on optimizing revenue, disciplined expense management, and productivity, the levers most within our control all while delivering excellent quality care to patients.

Speaker #4: In terms of industry demand, our positioning remains a strong cornerstone as our markets continue to grow two to three times faster than the national average and are further bolstered by rising care complexity.

Speaker #4: These structural trends reinforce our long-term growth thesis while we continue to overcome the impact of well-known industry headwinds. With that backdrop, we are issuing 2026 adjusted EBITDA guidance of $485 to $535 million.

Marty Bonick: As Alfred will detail, this reflects tailwinds of mid-single digit core earnings growth and IMPACT program savings we now estimate will contribute about $55 million in 2026 at the midpoint, up from our $40 million estimate. Those benefits will largely help offset headwinds that include a prudent estimate for potential exchange disruption. We believe this is an appropriate posture to start the year given the broader market uncertainties. Importantly, we expect Adjusted EBITDA to return to growth in 2027 after lapping this year's annualization of payer denial and professional fee headwinds and as IMPACT program savings build through 2026. Before turning the call over to Alfred, I want to underscore that the deployment of AI and other technology continues to be an important part of Ardent's transformation strategy.

Speaker #4: As Alfred will detail, this reflects tailwinds of mid-single-digit core earnings growth and impact program savings we now estimate will contribute about $55 million in 2026 at the midpoint, up from our $40 million estimate.

Speaker #4: Those benefits will largely help offset headwinds that include a prudent estimate for potential exchange disruption. We believe this is an appropriate posture to start the year given the broader market uncertainties.

Speaker #4: Importantly, we expect adjusted EBITDA to return to growth in 2027 after lapping this year's annualization of payer denial and professional fee headwinds and as impact program savings build through 2026.

Speaker #4: Before turning the call over to Alfred, I want to underscore that the deployment of AI and other technology continues to be an important part of Arden's transformation strategy.

Marty Bonick: We've taken a progressive, disciplined approach to building the infrastructure required to deploy these tools at scale, and that foundation is enabling us to advance additional initiatives this year. The takeaway is simple: Our single instance of Epic and enterprise-wide technology foundation gives us a structural efficiency advantage that continues to widen over time. We are seeing tangible benefits in coding accuracy, labor efficiency, clinical throughput, and quality. As for Ardent Health, you heard earlier that we are expanding AI-assisted virtual care across the full enterprise in 2026, supporting a virtual-first approach that improves access, streamlines care delivery, and extends the operating efficiencies already demonstrated in several markets. Our AI-enhanced Scribe technology reduces clinical documentation time by 35% for physicians, enhances documentation quality, and supports appropriate revenue capture.

Speaker #4: We've taken a progressive, disciplined approach to building the infrastructure required to deploy these tools at scale and that foundation is enabling us to advance additional initiatives this year.

Speaker #4: The takeaway is simple: our single instance of Epic and enterprise-wide technology foundation gives us a structural efficiency advantage that continues to widen over time.

Speaker #4: We are seeing tangible benefits in coding accuracy, labor efficiency, clinical throughput, and quality. As for Ardent, you heard earlier that we are expanding AI-assisted virtual care across the full enterprise in 2026, supporting a virtual-first approach that improves access, streamlines care delivery, and extends the operating efficiencies already demonstrated in several markets.

Speaker #4: Our AI-enhanced Scribe technology reduces clinical documentation time by 35% for physicians, enhances documentation quality, and supports appropriate revenue capture. Adoption continues to grow, with Ardent providers now using the AI Scribe in approximately 85% of patient visits, nearly double the industry average.

Marty Bonick: Adoption continues to grow, with Ardent Health providers now using the AI Scribe in approximately 85% of patient visits, about double the industry average. We continue to deploy medical wearables that enable continuous vital sign monitoring. In markets where implemented, this technology has reduced mortality by up to 15% and shortened length of stay by approximately one-third of a day. We are leveraging technology to support both clinical staff and operating room scheduling. This provides frontline leaders with real-time insights into staffing patterns and surgeons access to pull forward cases to maximize our operating room utilization. Importantly, our single instance of Epic remains a core differentiator, standardizing and optimizing workflows, enhancing provider scheduling, and consistently delivering strong clinical outcomes, including top quartile sepsis performance. Collectively, these tools have and will continue to make Ardent Health more efficient and enable us to deliver best-in-class patient care and quality.

Speaker #4: Additionally, we continue to deploy medical wearables that enable continuous vital sign monitoring. In markets where implemented, this technology has reduced mortality by up to 15% and shortened length of stay by approximately one-third of a day.

Speaker #4: Finally, we are leveraging technology to support both clinical staff and operating room scheduling. This provides frontline leaders with real-time insights into staffing patterns and surgeons access to pull-forward cases to maximize our operating room utilization.

Speaker #4: And importantly, our single instance of Epic remains a core differentiator—standardizing and optimizing workflows, enhancing provider scheduling, and consistently delivering strong clinical outcomes, including top-quartile sepsis performance.

Speaker #4: Collectively, these tools have and will continue to make Arden more efficient and enable us to deliver best-in-class patient care and quality. With that, I'll turn it over to Alfred to provide more detail on our fourth-quarter financial performance outlook.

Marty Bonick: With that, I'll turn it over to Alfred to provide more detail on our Q4 financial performance and outlook.

Alfred Lumsdaine: Thanks, Marty. Good morning, everyone. Building on Marty's comments, we're pleased with our Q4 results and our momentum exiting the year. Q4 revenue of $1.61 billion was essentially flat compared to the prior year and in line with our expectations. As a reminder, we recorded 2 quarters of financial benefit related to the New Mexico DPP program in the prior year period. Adjusting for this, year-over-year revenue growth would have been approximately 3%. In terms of volumes, Q4 admissions increased 1.5%, adjusted admissions grew 2%, and surgeries were essentially flat. Q4 Adjusted EBITDA of $134 million was 2% above our implied guidance midpoint, driven by expense discipline, operating efficiencies, and our IMPACT program initiatives. As Marty noted, these actions contributed to SW&B cost savings.

Speaker #2: Thanks, Marty, and good morning, everyone. Building on Marty's comments, we're pleased with our fourth-quarter results and our momentum exiting the year. Fourth-quarter revenue of $1.61 billion was essentially flat compared to the prior year and in line with our expectations.

Speaker #2: As a reminder, we recorded two quarters of financial benefit related to the New Mexico DPP program in the prior year period. Adjusting for this, year-over-year revenue growth would have been approximately 3%.

Speaker #2: In terms of volumes, fourth-quarter admissions increased 1.5%, adjusted admissions grew 2%, and surgeries were essentially flat. Fourth-quarter adjusted EBITDA of $134 million was 2% above our implied guidance midpoint, driven by expense discipline, operating efficiencies, and our impact program initiatives.

Speaker #2: As Marty noted, these actions contributed to SW&B cost savings. After increasing 6.7% for the first nine months of 2025 compared with the prior year period, salaries, wages, and benefits declined 0.4% in the fourth quarter year-over-year, reflecting our focus on precision staffing and reducing reliance on contract labor.

Alfred Lumsdaine: After increasing 6.7% for the first 9 months of 2025 compared with the prior year period, salaries, wages, and benefits declined 0.4% in Q4 year-over-year, reflecting our focus on precision staffing and reducing reliance on contract labor. For the full year 2025, revenue increased 6% to $6.3 billion and Adjusted EBITDA grew 9% to $545 million, with margins expanding 20 basis points to 8.6%. Similarly, pre-NCI Adjusted EBITDAR margin also expanded 20 basis points to 12.7%. We generated robust operating cash flow of $471 million in 2025, up nearly 50% over the prior year, and free cash flow net of non-controlling interest distributions was $170 million.

Speaker #2: For the full year 2025, revenue increased 6% to $6.3 billion, and adjusted EBITDA grew 9% to $545 million. With margins expanding 20 basis points to 8.6%, similarly, pre-NCI adjusted EBITDA margin also expanded 20 basis points to 12.7%.

Speaker #2: We generated robust operating cash flow of $471 million in 2025, up nearly 50% over the prior year. And free cash flow net of non-controlling interest distributions was $170 million.

Alfred Lumsdaine: This is an outstanding result and reflects the work we've done to improve collections and correspondingly reduce AR days. Of note, the timing of our last payroll cycle in 2026 will create about a $50 million cash flow headwind year-over-year. We also strengthened our balance sheet during 2025. At the end of the Q4, our lease-adjusted net leverage was 2.5x, which was an improvement from 2.9x at the end of 2024, and our total net leverage was 0.8x. Additionally, we increased total cash by over $150 million, finishing the year with $710 million. At 31 December 2025, our total debt outstanding was $1.1 billion, and total available liquidity was $1 billion.

Speaker #2: This is an outstanding result and reflects the work we've done to improve collections, and correspondingly, reduce AR days. Of note, the timing of our last payroll cycle in 2026 will create about a $50 million cash flow headwind year-over-year.

Speaker #2: We also strengthened our balance sheet during 2025. At the end of the fourth quarter, our lease-adjusted net leverage was 2.5 times, which was an improvement from 2.9 times at the end of 2024, and our total net leverage was 0.8 times.

Speaker #2: Additionally, we increased total cash by over $150 million finishing the year with $710 million. At December 31, 2025, our total debt outstanding was $1.1 billion.

Alfred Lumsdaine: We also repurchased $3 million of stock during Q4 and had $47 million remaining under our repurchase authorization at 31 December. Turning to 2026 financial guidance. We expect revenue of $6.4 to 6.7 billion or 3.6% growth at the midpoint. We expect adjusted admissions growth of 1.5% to 2.5%, which contemplates expected exchange disruption from the expiration of the enhanced subsidies. Our Adjusted EBITDA guidance is $485 to 535 million, and I'd like to add some context and key assumptions behind that. Adjusted EBITDA for the full year of 2025 was $545 million. From there, we estimate our jumping off base to be approximately $475 million.

Speaker #2: And total available liquidity was $1 billion. We also repurchased $3 million of stock during the fourth quarter and had $47 million remaining under our repurchase authorization at December 31.

Speaker #2: Now, turning to 2026 financial guidance, we expect revenue of $6.4 to $6.7 billion, or 3.6% growth at the midpoint. We expect adjusted admissions growth of 1.5% to 2.5%, which contemplates expected exchange disruption from the expiration of the enhanced subsidies.

Speaker #2: Our adjusted EBITDA guidance is $485 to $535 million. And I'd like to add some context and key assumptions behind that. Adjusted EBITDA for the full year of 2025 was $545 million.

Alfred Lumsdaine: This reflects approximately $50 million from the annualization of headwinds we discussed on our Q3 earnings call. Those primarily related to elevated professional fees and rate pressures, including elevated payer denials. The remaining approximately $20 million impact reflects restoration of short-term incentive compensation, which was below the typical baseline target in 2025. From the $475 million 2025 jump-off base, our midpoint of guidance assumes 2026 core earnings growth of approximately 4%. Additionally, we expect our IMPACT program to generate approximately $55 million in Adjusted EBITDA in 2026, up from the $40 million estimate that we shared at the end of Q3. This creates a year-over-year tailwind of approximately $50 million, given that we recognized about $5 million of IMPACT program savings in 2025.

Speaker #2: From there, we estimate our jumping-off base to be approximately $475 million. This reflects approximately $50 million from the annualization of headwinds we discussed on our Q3 earnings call.

Speaker #2: Those primarily related to elevated professional fees and rate pressures, including elevated payer denials. The remaining approximately $20 million impact reflects restoration of short-term incentive compensation, which was below the typical baseline target in 2025.

Speaker #2: From the $475 million 2025 jump-off base, our midpoint of guidance assumes 2026 core earnings growth of approximately 4%. Additionally, we expect our impact program to generate approximately $55 million in adjusted EBITDA in 2026, up from the $40 million estimate that we shared at the end of Q3.

Speaker #2: This creates a year-over-year tailwind of approximately $50 million given that we recognized about $5 million of impact program savings in 2025. This higher target incorporates additional opportunities we've identified across revenue and expense optimization, primarily in controllable salaries, wages, and benefits.

Alfred Lumsdaine: This higher target incorporates additional opportunities we've identified across revenue and expense optimization, primarily in controllable salaries, wages, and benefits. Finally, we estimate the exchange headwind will be approximately $35 million. Collectively, this results in a 2026 Adjusted EBITDA guidance midpoint of $510 million. Our outlook excludes any potential benefit from the Rural Health Fund. Additionally, while we're already executing on IMPACT program savings pull-through, our work is far from finished, and we plan to continue to identify and execute on additional opportunities. With regard to payer denials and professional fees, we're not factoring in any improvement in our outlook from the back half of 2025, despite some indication that pressures are at least beginning to moderate. Finally, we believe the exchange headwind we have assumed in our guidance contemplates an appropriately sober view of the associated disruption risks.

Speaker #2: Finally, we estimate the exchange headwind will be approximately $35 million collectively. This results in a 2026 adjusted EBITDA guidance midpoint of $510 million. Our outlook excludes any potential benefit from the Rural Health Fund.

Speaker #2: Additionally, while we're already executing on impact program savings pull-through, our work is far from finished, and we plan to continue to identify and execute on additional opportunities.

Speaker #2: With regard to payer denials and professional fees, we're not factoring in any improvement in our outlook from the back half of 2025, despite some indication that pressures are at least beginning to moderate.

Speaker #2: Finally, we believe the exchange headwind we've assumed in our guidance contemplates an appropriately sober view of the associated disruption risks. In short, our goal is to establish prudent adjusted EBITDA guidance in light of the current industry headwinds and tailwinds.

Alfred Lumsdaine: In short, our goal is to establish prudent Adjusted EBITDA guidance in light of the current industry headwinds and tailwinds. I'll conclude by noting that we feel confident in our ability to return to Adjusted EBITDA growth in 2027. As we transition into the second half of 2026, we expect to begin lapping the annualization of the industry headwinds that accelerated in the back half of 2025. Additionally, we anticipate the IMPACT program savings will build through 2026 and thereby augment 2027 core earnings growth and position us to grow Adjusted EBITDA even with the BBB's Medicaid redeterminations beginning next year. With that, I'd like to turn the call back over to Marty for concluding remarks.

Speaker #2: I'll conclude by noting that we feel confident in our ability to return to adjusted EBITDA growth in 2027, as we transition into the second half of 2026.

Speaker #2: We expect to begin lapping the annualization of the industry headwinds that accelerated in the back half of 2025. Additionally, we anticipate the impact program savings will build through 2026, and thereby augment 2027 core earnings growth and position us to grow adjusted EBITDA even with the triple B's Medicaid redeterminations beginning next year.

Marty Bonick: Thank you, Alfred. I want to leave you with 3 key takeaways from today's call. First, our Q4 results reflected solid earnings performance as we quickly addressed the industry headwinds outlined last quarter. These actions helped drive our strongest revenue, EBITDA, and operating cash flow in our history. Second, our IMPACT program continues to accelerate under Chief Operating Officer Dave Caspers's leadership. The operational improvements underway are strengthening the business. We have raised our 2026 savings target, and pressure points at payer denials and professional fees have stabilized with early indications of improvement. Third, we have established prudent 2026 guidance and expect to return to EBITDA growth in 2027. We remain financially strong and strategically positioned to create long-term shareholder value.

Speaker #2: With that, I'd like to turn the call back over to Marty for concluding remarks.

Speaker #1: Thank you, Alfred. I want to leave you with three key takeaways from today's call. First, our fourth-quarter results reflected solid earnings performance as we quickly addressed the industry headwinds outlined last quarter.

Speaker #1: These actions helped drive our strongest revenue EBITDA and operating cash flow in our history. Second, our impact program continues to accelerate under Chief Operating Officer Dave Kasper's leadership.

Speaker #1: The operational improvements underway are strengthening the business. We have raised our 2026 savings target and pressure points of payer denials and professional fees have stabilized with early indications of improvement.

Speaker #1: Third, we have established prudent 2026 guidance and expect to return to EBITDA growth in 2027. We remain financially strong and strategically positioned to create long-term shareholder value.

Marty Bonick: In 2025, we generated $471 million in operating cash flow and strengthened our balance sheet, giving us the flexibility to invest through cycles and deploy capital to support long-term growth. Looking ahead, these fundamentals position us to expand margins and grow Adjusted EBITDA over the next several years. Before I turn the call over for questions, I want to recognize our 25,000 team members and 2,000 affiliated providers across Ardent. Their resilience, agility, and unwavering commitment to our purpose have been critical to our progress. Every day, they continue to adapt, improve how we operate, and deliver high-quality care to the people and communities we serve. Their dedication is the foundation that allows us to navigate change and positions Ardent for long-term success.

Speaker #1: In 2025, we generated $471 million in operating cash flow and strengthened our balance sheet, giving us the flexibility to invest through cycles and deploy capital to support long-term growth.

Speaker #1: Looking ahead, these fundamentals position us to expand margins and grow adjusted EBITDA over the next several years. Before I turn the call over for questions, I want to recognize our 25,000 team members and 2,000 affiliated providers across Ardent.

Speaker #1: This is a time of significant change in healthcare, and their resilience, agility, and unwavering commitment to our purpose have been critical to our progress.

Speaker #1: Every day, they continue to adapt, improve how we operate, and deliver high-quality care to the people and communities we serve. Their dedication is the foundation that allows us to navigate change and positions Ardent for a long-term success.

Marty Bonick: With that, I will turn the call over to the operator for question and answer session.

Operator: Thank you. We'll now begin the question and answer session. At this time, I would like to remind everyone in order to ask a question, please press star followed by the 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. We kindly ask everyone to limit themselves to 1 question and 1 follow-up to accommodate all questions. Thank you. Our first question comes from the line of Ann Hynes with Mizuho. Please go ahead.

Speaker #1: With that, I will turn the call over to the operator for question and answer session.

Speaker #3: Thank you, we'll now begin the question and answer session. At this time, I would like to remind everyone in order to ask a question, please press star followed by the number one on your telephone keypad.

Speaker #3: And if you would like to withdraw your question, simply press star one again. We kindly ask everyone to limit themselves to one question and one follow-up to accommodate all questions.

Ann Hynes: Good morning. Thank you. On some guidance assumptions or maybe a little bit more details. You said professional fees. Can you remind us what the actual increase in professional fees was in 2025 and what you expect the year-over-year increase to be in 2026? With the enhanced subsidies, I know bad debt can be an issue, especially in Q1. Do you have Should we assume greater, maybe lower net revenue growth in Q1, just given that we're not 100% sure how many people will be kicked off, we might not have visibility into that until later this spring? Like, how should we assume bad debt through the year in your assumptions? Thanks.

Speaker #3: Thank you. Our first question comes from the line of Anne Hines with Mizuho. Please go ahead.

Speaker #4: Good morning. Thank you. Just on some guidance assumptions, so maybe a little bit more details. So you said professional fees. Can you remind us what the actual increase in professional fees was in 2025 and what you expect the year-over-year increase to be in 2026?

Speaker #4: And then also, with the enhanced subsidies, I know bad debt can be an issue, especially in Q1. Do you have greater should we assume greater maybe lower net revenue growth in Q1, just given that we're not 100% sure how many people will be kicked off and we might not have visibility into that until later this spring?

Alfred Lumsdaine: Thanks, Ann. Appreciate the questions. Professional fee growth year-over-year, 2025 was in the, you know, roughly 9 high single-digit range. We are making similar assumptions into 2026, consistent with our comments, with denials and pro fee growth, not expecting significant reduction from these elevated rates. You know, it would be upside if we did see some improvement in those. On the second half of your question on the enhanced subsidies, would we see lower growth from a revenue standpoint in Q1? I mean, I think some of it's just gonna depend on the timing. You know, I'm sure you're familiar with the 90-day grace period. You know, we'll have to see how that plays through. It's too early for us to really speak to that dynamic.

Speaker #4: How should we assume bad debt through the year in your assumptions? Thanks.

Speaker #1: Thanks, Anne. Appreciate the questions. Professional fee growth year-over-year 2025 was in the roughly nine, high single-digit range. We are making similar assumptions into 2026.

Speaker #1: Consistent with our comments with denials and pro-fee growth, not expecting significant reduction from these elevated rates. And it would be upside if we did see some improvement in those.

Speaker #1: On the second half of your question on the enhanced subsidies and would we see lower growth from a revenue standpoint in Q1, I mean, I think some of it's just going to depend on the timing.

Speaker #1: I'm sure you're familiar with the 90-day grace period. We'll have to see how that plays through. It's too early for us to really speak to that dynamic as you saw from our guide.

Alfred Lumsdaine: You know, as you saw from our guide, we think we're being prudent in our overall assumptions as it relates to the, to the HIX enrollment expectations.

Ann Hynes: Thanks.

Speaker #1: We think we're being prudent in our overall assumptions as it relates to the Hicks enrollment expectations.

Operator: Our next question comes from the line of Matthew Gilmore with KeyBanc Capital Markets. Please go ahead.

Speaker #4: Thanks.

[Analyst] (KeyBanc Capital Markets): Hey, good morning. This is Zach on for Matt. Could you guys provide some detail on your underlying HIX assumptions as it pertains to expected volumes declines in 2026? What % are you assuming shift to other coverage versus uninsured?

Speaker #3: Our next question comes from the line of Matthew Gilmore with KeyBank Capital Markets. Please go ahead.

Speaker #1: Hey, good morning. This is Zach on from Matt. Could you guys provide some detail on your underlying Hicks assumptions as it pertains to expected volume declines in 2026?

Marty Bonick: Yeah, Zach, this is Marty. You know, the good news is, you know, given the expectations in the market for HIX enrollment declines, our markets were actually up. New Mexico was up, Texas was up. We're seeing, you know, some good pull-through on the initial side. You know, I think the uncertainty comes in terms of what happens after the grace period, how many of those people defect. We're planning for enrollment to decline about 20%.

Speaker #1: And then what percent are you assuming shift to other coverage versus uninsured?

Speaker #5: Yeah, Zach, this is Marty. The good news is given the expectations in the market for Hicks enrollment declines, our markets were actually up. New Mexico was up, Texas was up, and so we were seeing some good pull-through on the initial side.

Speaker #5: I think the uncertainty comes in terms of what happens after the grace period and how many of those people defect. We're planning for enrollment to decline about 20% as we play through the fluctuation of that impact.

Marty Bonick: As we play through the fluctuation of that impact. We're assuming about 10% to 15% move to employer-sponsored coverage, and the rest go to self-pay. You know, we assume that the utilization will be about 30% lower in that cohort.

Speaker #5: And we're assuming about 10 to 15% move to employer-sponsored coverage and the rest go to self-pay so we assume that the utilization will be about 30% lower in that

Joanna Gajuk: Great. Just for the $15 million increase in the IMPACT program, can you provide some detail on, like, how those were identified? Maybe bucket those savings, whether it be revenue integrity, cost takeouts, or other methods that you guys are producing those savings.

[Analyst] (KeyBanc Capital Markets): Great. Just for the $15 million increase in the IMPACT program, can you provide some detail on, like, how those were identified? Maybe bucket those savings, whether it be revenue integrity, cost takeouts, or other methods that you guys are producing those savings.

Speaker #1: Cohort

Speaker #2: Great . And then , just for the $15 million increase in the impact program , can you provide some detail on how those are identified ?

Marty Bonick: Yeah, this is Alfred. I would say of that $15 million increment that we've identified, the vast majority currently is in the SW&B line.

Alfred Lumsdaine: Yeah, this is Alfred. I would say of that $15 million increment that we've identified, the vast majority currently is in the SW&B line.

Speaker #2: Maybe bucket those savings , whether it be revenue integrity , cost , takeouts or other methods that you guys are producing , those savings .

Speaker #3: Yeah. This is Alfred. I would say, of that $15 million increment that we've identified, the vast majority currently is in the SE and V line.

Joanna Gajuk: Great. Thank you.

[Analyst] (KeyBanc Capital Markets): Great. Thank you.

Operator: Our next question comes from the line of Raj Kumar with Stephens. Please go ahead.

Raj Kumar: Hey, good morning. Maybe just kind of would be helpful to get a perspective on the kind of impact initiatives that have a longer lead time until, you know, the benefits materialize. Just kind of when we think about, you know, the commentary on 2027 return to EBITDA growth and then kind of thinking about the sustainability of that earnings growth heading into 2028 as you kind of incur some of the BBA-related headwinds, just kind of curious on, you know, how much more tank there, or how much more fuel there is left on the kind of impact initiatives front on those kind of longer lead time initiatives?

Speaker #2: Great . Thank you

Speaker #4: Our next question comes from the line of Raj Kumar with Stephens . Please go ahead

Speaker #5: Hey . Hi . Good morning . Maybe just kind of would be helpful to get a perspective on the kind of impact initiatives that have a longer lead time until , you know , the benefits materialized and just kind of when we think about , you know , the commentary on 2027 return to EBITDA growth and then then kind of thinking about the sustainability of that earnings growth heading into 28 as you kind of incur some of the OB related headwinds .

Speaker #5: Just kind of curious on , you know , how much more tank there or how much more fuel there is left on the kind of impact initiatives front on those kind of longer lead time initiatives

Marty Bonick: Yeah, thanks. This is Marty. You know, as stated before, the IMPACT initiatives are meant to be multiyear and durable and sustainable. As we look at the BBB impacts coming down the line, we're very confident that with the technology improvements that I mentioned in AI, these are gonna be multiple tailwinds that we're gonna be able to continue to capitalize on. As Alfred said, SW&B is an early target because it's the most direct full control, but we know that we still have opportunities in the supply chain that we're harvesting, you know, continued opportunities in the revenue cycle, as we continue to enhance our coding, our collections, and denials management and overturning those denials. There's multiple factors.

Speaker #1: Yeah , thanks . This is Marty . You know , as I stated before , the impact initiatives are meant to be multi-year and durable and sustainable .

Speaker #1: As we look at the impacts coming down the line , we're very confident that with the technology improvements that I mentioned in AI , these are going to be multiple tailwinds that we're going to be able to continue to capitalize on .

Speaker #1: As Alfred said , the NB is is an early target because it's the most direct , well controlled . But we know that we still have opportunities in the supply chain that we're harvesting , you know , continue opportunities in this revenue cycle as we continue to enhance our our coding , our collections and denials , management and overturning those denials .

Marty Bonick: You know, the early wins, as Alfred talked about, we are harvesting. We expect these to continue and magnify over the continuing years to come out to offset those headwinds that we have. We feel very confident in our ability to continue to harvest these and direct them for the future.

Speaker #1: And so there's multiple factors . And so , you know that the early wins , as Alfred talked about , we are harvesting .

Speaker #1: But we expect these to continue, and magnify over the continuing years to come, to offset headwinds that we have. So we feel very confident in

Raj Kumar: Got it. Maybe as my follow-up, just kind of thinking about, you know, some of the kind of moving pieces in 2026 guidance. I guess, is there any kind of Q1, you know, volume impact from the winter storms that's embedded in? Maybe any call out on that would be helpful.

Speaker #6: Our

Speaker #1: Ability to continue to harvest these and direct them for the future.

Speaker #5: Got it . And then maybe as my follow up just kind of thinking about , you know , some of the kind of moving pieces in 2026 guidance , I guess .

Marty Bonick: Yeah. Obviously, for us, the primary impacts were in the Texas, East Texas, and Oklahoma markets from Winter Storm Vern. Of course, we did, you know, went into full mode to ensure that we're rescheduling canceled surgeries. Did see some of that lost volume at the tail end of January come back in February. We're not pointing to that for any sustainable impact. You know, you could have maybe just a very, very, immaterial impact to Q1 overall, but not looking for that from any kind of an enduring, dynamic.

Alfred Lumsdaine: Yeah. Obviously, for us, the primary impacts were in the Texas, East Texas, and Oklahoma markets from Winter Storm Vern. Of course, we did, you know, went into full mode to ensure that we're rescheduling canceled surgeries. Did see some of that lost volume at the tail end of January come back in February. We're not pointing to that for any sustainable impact. You know, you could have maybe just a very, very, immaterial impact to Q1 overall, but not looking for that from any kind of an enduring, dynamic.

Speaker #5: Is there any kind of one ? Q you know , volume impact from the winter storms ? That's embedded in maybe any call out on that would be helpful ?

Speaker #3: Yeah , obviously for us , the primary impacts were in the Texas , East Texas and Oklahoma markets from winter storm burn . Of course , we did .

Speaker #3: You know , went into full mode to ensure that we're rescheduling cancelled surgeries . Did see some of that lost volume at the tail end of January .

Speaker #3: Come back in February . We're not pointing to that for any sustainable impact . You know , you could have maybe just a very , very immaterial impact to Q1 overall .

Raj Kumar: Great. Thank you.

Operator: Our next question comes from the line of Ben Hendrix with RBC Capital Markets. Please go ahead.

Speaker #3: But not looking for that from any kind of an enduring dynamic

Michael Murray: Hi, this is Michael Murray on for Ben. Your guidance called for 3.6% revenue growth at the midpoint, and you project core earnings growth of 4%. Slight core margin expansion, but you know, that obviously excludes the headwinds that you called out. I wanted to see if there's anything to call out on your core operations cost structure, or is some of the margin expansion you would normally see rolled up in that IMPACT program?

Speaker #5: Great . Thank you .

Speaker #4: Our next question comes from the line of Ben Hendricks with RBC Capital Markets . Please go ahead .

Speaker #7: Hi . This is Michael Murray on for Ben . Your guidance calls for 3.6% revenue growth at the . And you project core earnings growth of 4% .

Speaker #7: So, slight margin expansion. But you know that obviously excludes the headwinds that you called out. So I wanted to see if there's anything to call out on your core operations.

Marty Bonick: No, I don't think there's anything in particular that I would call out. That core margin expansion is similar to what we saw in 2025 once you exclude the headwinds that we've talked about at length. You know, very consistent. You know, again, obviously we've talked about the HIX dynamics as well, but, no, there's really nothing to call out. You know, we've seen, we believe, sustainable efforts to improve, you know, both the labor line and the supplies line.

Alfred Lumsdaine: No, I don't think there's anything in particular that I would call out. That core margin expansion is similar to what we saw in 2025 once you exclude the headwinds that we've talked about at length. You know, very consistent. You know, again, obviously we've talked about the HIX dynamics as well, but, no, there's really nothing to call out. You know, we've seen, we believe, sustainable efforts to improve, you know, both the labor line and the supplies line.

Speaker #7: Cost structure or some of the margin expansion—you would normally see that rolled up in that impact program.

Speaker #3: No, I don't think there's anything in particular that I would call out. That core margin expansion is similar to what we saw in 2025.

Speaker #3: Once you exclude the headwinds that we've talked about at length . And so , you know , very consistent , you know , again , obviously we we've talked about the Hicks dynamics as well .

Michael Murray: Okay. My follow-up. On professional fees, appreciate the commentary on high single-digit growth expectations for the year. Should we expect a bigger headwind in the first half versus the second half? If so, what growth rate do you believe you'll end the year at? Thank you.

Speaker #3: But no , there's really nothing to call out . You know , we've seen we believe sustainable efforts to improve , you both the labor line and the supplies line

Speaker #7: Okay . And then my follow up on professional fees appreciate the commentary on high single digit growth expectations for the year . Should we expect a bigger headwind in the first half versus the second half ?

Marty Bonick: Yeah. I would continue to stick with that, you know, high single digits growth, where again, as we mentioned in our commentary, we're not modeling in any substantial improvements. I think a similar rate throughout the year would not be inappropriate.

Alfred Lumsdaine: Yeah. I would continue to stick with that, you know, high single digits growth, where again, as we mentioned in our commentary, we're not modeling in any substantial improvements. I think a similar rate throughout the year would not be inappropriate.

Speaker #7: And if so , what growth rate do you believe you'll end the year at ? Thank you .

Speaker #8: Yeah , I would .

Speaker #3: Continue to stick with that. You have high single digits growth where, again, as we mentioned in our commentary, we're not modeling in any substantial improvement.

Michael Murray: Thank you.

Operator: Our next question comes from the line of Kevin Fischbeck with Bank of America. Please go ahead.

Speaker #3: So I think a similar rate throughout the year would not be an appropriate

Joanna Gajuk: Hi, good morning. This is Joanna Gajuk in, filling for Kevin. Thanks for taking the question. First one, just to follow up on the IMPACT program cost saves. Sounds like, you know, you expect more in the future, but as we just think about that number for 2026, is there some sort of timeline, should we think about, you know, a run rate number, you expect to be at, you know, when you exit 2026 in these cost savings?

Speaker #7: Thank you .

Speaker #4: Our next question comes from the line of Kevin Fischbeck with Bank of America . Please go ahead

Speaker #9: Hi . Good morning . This is Joanna and Kevin . Thanks for taking the questions . So first one , just to follow up on the impact program cost savings .

Speaker #9: And it like , you know , you expect more in the future . But as we just think about the number for 26 , is there some sort of timeline .

Marty Bonick: Yeah, thanks, Joanna. Yeah, from a ramping perspective, the 40 plus the 15 is, you know, I would say fully identified and being executed on. You know, there will be a modest amount of ramp into 2027 on that. You know, the larger opportunity would be anything else that we identify during the year and are able to effectuate, and that would create additional impact, no pun intended, into 2027.

Alfred Lumsdaine: Yeah, thanks, Joanna. Yeah, from a ramping perspective, the 40 plus the 15 is, you know, I would say fully identified and being executed on. You know, there will be a modest amount of ramp into 2027 on that. You know, the larger opportunity would be anything else that we identify during the year and are able to effectuate, and that would create additional impact, no pun intended, into 2027.

Speaker #9: And should we think about , you a run rate number you expect to be at . You when you exit 26 ? In this cost savings

Speaker #8: Yeah . Thanks , Joanna .

Speaker #3: Yeah . From a ramping perspective , the 40 plus , the 15 is , I would say fully identified . And being executed on .

Speaker #3: And you know , there will be a modest amount of wrap into 27 on that . But , you know , the larger opportunity would be anything else that we identified during the year and are effectuate and , and that would create additional impact , no pun intended , into 2027 .

Joanna Gajuk: Okay. Modest ramp, but I guess the point you were making before is that there's additional programs, right? Like to 2026 you have, you know, on whatever you identified, there's a little bit of a ramp, but it's more about like incrementally finding additional savings after you achieve that-.

Speaker #9: Okay . So modest ramp , but I guess the point you are making before is that there's additional programs , right ? So like through 26 , you have , you know , on whatever you identified , there's a little bit of a ramp , but it's more about like incrementally finding additional savings after you achieve that target for this year .

Marty Bonick: Yes. I think so.

Alfred Lumsdaine: Yes. I think so.

Joanna Gajuk: ... target for this year. Okay. Different topic. I appreciate the comments about the core growth being 4%. You know, when we look at things, we exclude the DPP benefit, because we're assuming, like, there's not much of a growth, I guess, in that sort of fee bucket. If we do that, we get to implied growth excluding the DPP. You know, everything else besides the DPPs will have to grow, you know, 12%. That seems like a high growth. Can you walk us through, like, what, you know, what's driving that fast growth?

Speaker #9: Okay . And different topic . So I appreciate the comments about the core growth being 4% . And you know , when we look at things we we exclude the , the DPP benefit because we assuming like there's not much of a growth , I guess in that so to speak , bucket .

Speaker #9: So if we do that , we get to implied growth excluding the DPP . So you know , everything else besides the DPP will have to grow , you know , 12% .

Marty Bonick: Well, I guess I would start with saying that the DPPs are volume-based, states are growing, and we certainly, in addition, have strategies to capture share as well. I would not, I would not say that DPPs would be flat. Second, going back to the previous question as well, you know, we generated a similar core growth to that 4% number in 2025 when you adjust for those incremental headwinds of the PROPs and prior denials. You know, we've laid out what our volume growth expectations are of 1.5% to 2.5%. I would also add our rate of increase on our commercial contracts. We're roughly 90% contracted for the year, and we're seeing rate increases of between 4% to 5%.

Alfred Lumsdaine: Well, I guess I would start with saying that the DPPs are volume-based, states are growing, and we certainly, in addition, have strategies to capture share as well. I would not, I would not say that DPPs would be flat. Second, going back to the previous question as well, you know, we generated a similar core growth to that 4% number in 2025 when you adjust for those incremental headwinds of the PROPs and prior denials. You know, we've laid out what our volume growth expectations are of 1.5% to 2.5%. I would also add our rate of increase on our commercial contracts. We're roughly 90% contracted for the year, and we're seeing rate increases of between 4% to 5%.

Speaker #9: So that that seems like a high growth . So can you walk us through like what ? You know , what's driving that fast growth ?

Speaker #3: Well , I guess I would start with saying that the DP's are volume based . States are growing . And we certainly in addition , have strategies to capture share as well .

Speaker #3: So I would not I would not say that DPP would be flat , but then second , going back to the previous question as well , you know , we generated a similar core growth to that 4% number in 2025 .

Speaker #3: When you adjust for those incremental headwinds of trophies , and denials , you know , we've laid out what our volume growth expectations are of one and a half to 2.5% .

Marty Bonick: All leads us to be, very comfortable with that, $20 million expectation from core growth.

Alfred Lumsdaine: All leads us to be, very comfortable with that, $20 million expectation from core growth.

Speaker #3: And then I would also add our rate of increase on our commercial contracts . We're roughly 90% contracted for the year . And we're saying rate increases of between 4 to 5% , all leads us to be very comfortable with that .

Joanna Gajuk: All right. You said the DPP, sorry, just follow up on that. All your programs, the DPP programs are volume-based, I guess, if the enrollment in Medicaid enrollment is declining in these states, like, what happens with that funding?

Speaker #3: $20 million expectation from core growth .

Speaker #9: All right . And then you said the DPP sorry . Just follow up on that . So all your programs the DPP programs are volume based .

Marty Bonick: Yeah, that would be an exposure if Medicaid, and then again, depending on where those lives go. Yeah.

Alfred Lumsdaine: Yeah, that would be an exposure if Medicaid, and then again, depending on where those lives go. Yeah.

Speaker #9: But I guess if the enrollment in Medicaid enrollment is declining in these states , like what what happens with with that funding ?

Marty Bonick: This is Marty. As we saw in previous years, you know, some of that Medicaid disenrollment actually attributed to positive commercial conversion. You know, again, we feel very confident, as Alfred said, in terms of the core growth algorithm we've outlined and consistent with prior performance.

Speaker #3: Yeah , that would be an exposure if Medicaid and then again , depending on where those lives go .

Speaker #1: Yeah . And this is Marty , as we saw in previous years , you know , some of that Medicaid Disenrollment actually attributed to positive commercial conversion .

Joanna Gajuk: Great. Thank you so much.

Operator: Our next question comes from the line of Whit Mayo with Leerink Partners. Please go ahead.

Speaker #1: And so , you know , again , we feel very confident , as Alfred said , in terms of the core growth algorithm we've outlined and consistent with prior performance

Whit Mayo: Hey, was hoping to get an update on the ambulatory or outpatient strategy. You guys acquired some urgent care assets, I think, in the last year or so. You know, maybe give us a look at the pipeline, what does it look like, and do you feel like you're in line or behind on your targets?

Speaker #9: Great . Thank you so much .

Speaker #4: Our next question comes from the line of Mayo with Luring Partners. Please go ahead.

Speaker #10: Hey , I was hoping to get an update on the ambulatory or outpatient strategy you guys acquired some urgent care assets . I think in the last year or so , but , you know , maybe give us a look at the pipeline .

Marty Bonick: Hey, Whit, this is Marty. Yeah, we feel like, you know, our ASC and ambulatory strategy has been continuing to develop. We started with the urgent cares and had good success with those, opening up access points, I think that contributed to a lot of the positive growth that we saw when you look across the peer group. This year, we're continuing to focus on and growing that, opening up a new obstetric ED department in our Oklahoma market, opening up five new urgent cares, one hospital-based ASC, another HOPD ASC, and a freestanding ED in Texas. We feel like, again, we're continuing to deploy capital in a disciplined way to continue to grow that outpatient market share and capture the shift of where a lot of these volumes are going.

Speaker #10: What does it look like ? And do you feel like you're in line or behind on your targets ?

Speaker #1: Hey , whit , this is Marty . Yeah . We feel like , you know , our ASC and ambulatory strategy has been continuing to develop .

Speaker #1: We started with the urgent cares and had good success with those opening up access points . And I think that contributed to a lot of the positive growth that we saw .

Speaker #1: When you look across the peer group this year , we're continuing to focus on growing that , opening up a new obstetric ed department and our Oklahoma market , opening up five new urgent cares , one hospital based ASC and other Hopd , ASC and a freestanding Ed in Texas .

Marty Bonick: We feel we're very much on pace and continuing to deploy capital in a very rational manner.

Speaker #1: And so we feel like again , we're continuing to deploy capital in a disciplined way to continue to grow that outpatient market share and capture the shift of where a lot of these volumes are going .

Whit Mayo: Okay. Maybe for Alfred, cash flow this year, any reason that it wouldn't grow in line with your EBITDA? I think you mentioned there were some timing factors that influenced the shape of cash flow this past year.

Speaker #1: And so we feel we're very much on pace and continuing to deploy capital in a very rational manner.

Speaker #10: Okay . And then maybe for Alfred , cash flow this year , any reason that it wouldn't grow in line with your your EBITDA ?

Marty Bonick: Sure. Thanks, Whit. Yeah, obviously, we were really pleased with the robust cash flow that we generated for the full year, as I called out in my opening comments, that we did have a dynamic of our last payroll cycle being fully accrued at the end of the year, and next year that, you know, effectively will be paid right before the end of the year. That's about a $50 million headwind from a year-over-year perspective, and then it starts to build every year again. That's simply from a timing perspective. Otherwise, we would expect cash flows to follow consistent with our 2026 guidance.

Alfred Lumsdaine: Sure. Thanks, Whit. Yeah, obviously, we were really pleased with the robust cash flow that we generated for the full year, as I called out in my opening comments, that we did have a dynamic of our last payroll cycle being fully accrued at the end of the year, and next year that, you know, effectively will be paid right before the end of the year. That's about a $50 million headwind from a year-over-year perspective, and then it starts to build every year again. That's simply from a timing perspective. Otherwise, we would expect cash flows to follow consistent with our 2026 guidance.

Speaker #10: I think you mentioned there were some timing factors that influenced the shape of cash flow this past year.

Speaker #3: Sure . Thanks , yeah . Obviously we were really pleased with the robust cash flow that we generated for the full year from a as I called out in in my opening comments that we did have a dynamic of a our last payroll cycle being fully accrued at the end of the year .

Speaker #3: And next year that , you know , effectively will be paid right before the end of the year . And that's about a $50 million headwind from a year over year perspective .

Whit Mayo: Can I squeeze in one more just on the Rural Health Fund?

Speaker #3: And then it starts to build every year again . And that's simply from a timing perspective . Otherwise , we would expect cash flows to follow consistent with our 2026 guidance .

Marty Bonick: Sure.

Alfred Lumsdaine: Sure.

Whit Mayo: Do you believe that any of your hospitals qualify for that? That's it. Thanks, guys.

Marty Bonick: Yeah, Whit, this is Marty. Yes, we do believe that, you know, given our footprint, in sort of mid-sized urban markets with regional spokes, with primary and secondary level hospitals, that we should qualify. You know, we think that maybe upwards of a third of our hospitals could qualify now. We're closely working with our state governments to understand how they're utilizing these funds and going to be deploying those. You know, it does seem that they are gonna be deploying these funds greater than just hospitals, to support the entire rural care network.

Speaker #10: Can I squeeze in one more just on the rural Health Fund ? Do you believe that any of your hospitals qualify for that and that's it .

Speaker #10: Thanks , guys .

Speaker #1: Yeah . With this Marty . Yes , we do believe that , you know , given our footprint , you know , sort of the midsize urban markets with regional spokes with primary and secondary level hospitals that we should qualify .

Speaker #1: You know , we think that maybe upwards of a third of our hospitals could qualify . Now , we're closely working with our state governments to understand how their utilizing these funds and going to be deploying those .

Marty Bonick: With our clinic presence, you know, we think that we've got a good story to tell, and good rationale based upon some of the technology that we've deployed and continue to deploy out in the markets, our virtual attending program being an example, of how we're keeping patients close to home and supporting those local hospitals and local markets. We're working very closely with our vendors and with the states to make sure that we can capture as much of that as possible. At this point. You know, it's too early to tell what's going to happen in terms of how those are going to be distributed or when. We did not include any of that in our guide. That would be potential upside. You know, there's a, you know, a couple of good points.

Speaker #1: You know, it does seem that they are going to be deploying these funds greater than just hospitals, to support the entire rural care network.

Speaker #1: But with our clinic presence , you know , we think that we've got a good story to tell and good rationale based upon some of the technology that we've deployed and continue to deploy out in the markets .

Speaker #1: Our virtual attending program is an example of how we're keeping patients close to home and supporting those local hospitals and local markets. And so, we're working very closely with our vendors and with the states to make sure that we can capture as much of that as possible at this point.

Marty Bonick: Our two largest states in terms of Texas and Oklahoma have also been two that Texas received the largest allocation from the government, and Oklahoma, I think, was the fifth highest in the country. Those were some good, you know, proof points and antidotes that will hopefully help and pay out based upon how we've been supporting the rural networks and supporting those rural hospitals.

Speaker #1: You know , it's too early to tell what's going to happen in terms of how those are going to be distributed or when .

Speaker #1: So we did not include any of that in our guide . So that would be potential upside . And , you know , there's a couple of good points .

Speaker #1: Our two largest states in terms of Oklahoma , have also been two of the Texas received the largest allocation from the government . And Oklahoma I think was the fifth highest in the country .

Operator: Cool. Thanks. Our next question comes from the line of Scott Fidel with Goldman Sachs. Please go ahead.

Whit Mayo: Cool. Thanks.

Speaker #1: So those are some good , you know , proof points and anecdotes that will hopefully help and pay out based upon how we've been supporting the rural networks .

Operator: Our next question comes from the line of Scott Fidel with Goldman Sachs. Please go ahead.

Sarah: Hi. You've got Sarah on for Scott. Can you please describe how the Q4 volume trends compare to your expectations? With the exchange open enrollment and Medicare AEP complete, what further perspectives do you have on sustaining volume growth this year?

[Analyst] (Goldman Sachs): Hi. You've got Sarah on for Scott. Can you please describe how the Q4 volume trends compare to your expectations? With the exchange open enrollment and Medicare AEP complete, what further perspectives do you have on sustaining volume growth this year?

Speaker #1: And, you know, supporting those rural hospitals.

Speaker #10: Cool . Thanks .

Speaker #4: Our next question comes from the line of Scott Fidel with Goldman Sachs . Please go ahead .

Marty Bonick: Hey, Sarah, this is Marty. I'll take the first part of that. Yeah, I think the volume was very consistent with what we thought. You know, in Q4 of 2024, we were overlapping or lapping some of the Two-Midnight Rule. That contributed to a little bit of a deceleration. Otherwise, volumes were very strong and adjusted admissions continue to grow. If we look across all of our statistics, volume statistics, for full year 2025, we were, you know, sort of best in class in the peer group. Demand for our services continues to remain strong in our markets. Number 1 or 2 in majority of the markets that we serve, and our markets are growing 2 to 3 times faster.

Speaker #11: Hi . You've got Sarah on for Scott . Can you please describe how the four Q2 volume trends compare to your expectations ? And then with the exchange , open enrollment and Medicare AEP complete what further perspectives do you have on sustaining volume growth this year ?

Speaker #1: Hey Sarah , this is Marty . I'll take the first part of that . You know , I think the volume was very consistent with what we thought .

Speaker #1: You know , in Q4 of 24 , we were overlapping or lapping some of the two midnight rule . And so that contributed to a little bit of a deceleration .

Speaker #1: But otherwise volumes were very strong . And adjusted admissions continue to grow . And if we look across all of our statistics volume statistics for full year 2025 , we , you know , sort of best in class in the peer group .

Marty Bonick: You know, the slowdown in Q4, you know, was consistent with lapping that Two-Midnight Rule and, you know, focusing on high acuity growth versus just growth for growth's sake.

Speaker #1: And so , you know , demand for our services continues to remain strong in our markets . Number 1 or 2 , in majority of the markets that we serve .

Marty Bonick: On the second part of your question, this is Alfred. Under the assumptions we laid out, pertaining to the exchange dynamics, the headwind that we would expect associated with adjusted admissions from the HIX disenrollment would be upwards of 50 basis points.

Alfred Lumsdaine: On the second part of your question, this is Alfred. Under the assumptions we laid out, pertaining to the exchange dynamics, the headwind that we would expect associated with adjusted admissions from the HIX disenrollment would be upwards of 50 basis points.

Speaker #1: And our markets are growing 2 to 3 times faster . So you know , the slowdown in Q4 , you know , was was consistent with lapping that two midnight rule .

Speaker #1: And , you know , focusing on high acuity growth versus just growth for growth's sake .

Speaker #3: On the second part of your question , this is , Alfred , under the assumptions we laid out pertaining to the exchange dynamics , the headwind that we would expect associated with adjusted admissions from the Higgs disenrollment would be upwards of 50 basis points .

Sarah: Thank you. Just with the progress in payer denial activity, can you provide any color here on the impact of Q4 performance and how we should think about that benefit on a go-forward basis?

[Analyst] (Goldman Sachs): Thank you. Just with the progress in payer denial activity, can you provide any color here on the impact of Q4 performance and how we should think about that benefit on a go-forward basis?

Marty Bonick: This is Marty. Yeah, the Q4, you know, we did see, you know, some moderation or stabilization from Q3, the elevated Q3. You know, we're expecting that to, you know, continue. We've got, you know, the second half of the year from 2024 or 2025, I should say, that, you know, we're expecting to continue into 2025 but then moderating. That's the view.

Speaker #11: Thank you . And then just with the progress in payer denial , activity , can you provide any color here on the impact of for Q performance and how we should think about that benefit on a go forward basis

Speaker #1: This is Marty . Yeah , the fourth quarter . You know , we did see , you know , some moderation or stabilization from Q3 .

Speaker #1: The elevated Q3 . And , you know , we're expecting that to , continue . We've got , you know , the second half of the year from 24 or 25 , I should say that , we're expecting to continue into 25 .

Marty Bonick: Yeah, this is Alfred. I would just say, add that, you know, overall, we did see, you know, some slight improvements, very modest in late in the year. You know, don't wanna take any month or weeks and project that out as a trend. However, you know, we're both optimistic that the work we're doing with Ensemble to curtail and combat the denial trends will yield some benefit. However, you know, we wanna be very sober and realistic and to Marty's point, in not projecting that to be sustained, and just deal with the reality of what we experienced in the last half of 2025.

Alfred Lumsdaine: Yeah, this is Alfred. I would just say, add that, you know, overall, we did see, you know, some slight improvements, very modest in late in the year. You know, don't wanna take any month or weeks and project that out as a trend. However, you know, we're both optimistic that the work we're doing with Ensemble to curtail and combat the denial trends will yield some benefit. However, you know, we wanna be very sober and realistic and to Marty's point, in not projecting that to be sustained, and just deal with the reality of what we experienced in the last half of 2025.

Speaker #1: But then, moderating. So that's a view.

Speaker #3: Yeah . This is Alfred . I would just say add that , you know , overall we did see , you know , some slight improvements , very modest in the late in the year , you know , I don't want to take any month or weeks .

Speaker #3: And and project that out as a trend . However , you know , we're both optimistic that the work we're doing with ensemble to curtail and combat the denial trends will yield some benefit .

Sarah: Perfect. Thank you, guys.

[Analyst] (Goldman Sachs): Perfect. Thank you, guys.

Speaker #3: However , you know , we want to be very sober and realistic in to Marty's point and not projecting that to be sustained and just deal with the reality of what we experienced in the last half of 2025 .

Operator: Our next question comes from the line of Craig Hettenbach from Morgan Stanley. Please go ahead.

Craig Hettenbach: Yes, thank you. Appreciate all the color on the Exchange implications this year. Outside of that, can you give us a sense in terms of other payer mix in terms of Medicaid, Medicare, commercial Exchange, just kind of what you're expecting from a volume perspective this year?

Speaker #11: Perfect. Thank you, guys.

Speaker #4: Our next question comes from the line of Craig Hettenbach from Morgan Stanley. Please go ahead.

Speaker #12: Yes . Thank you . Appreciate all the color on the exchange implications . This year . Outside of that , can you give us a sense in terms of other other payer mix in terms of Medicaid , Medicare , commercial exchange , just kind of what you're expecting from a volume perspective , this year

Marty Bonick: Yeah, this is Alfred, Craig. Yeah, I think we gave the color as it pertains to the exchange dynamics. You know, just as a reminder, we ended last year with 6% of our admin, 7% of our revenues from an exchange perspective. Just a little bit lower than, I'd say, the industry average from an overall exposure standpoint. Otherwise, you know, I wouldn't say we expect any significant material shifts in our planning other than what we lined out from an exchange perspective. Of course, where do those lives end up?

Alfred Lumsdaine: Yeah, this is Alfred, Craig. Yeah, I think we gave the color as it pertains to the exchange dynamics. You know, just as a reminder, we ended last year with 6% of our admin, 7% of our revenues from an exchange perspective. Just a little bit lower than, I'd say, the industry average from an overall exposure standpoint. Otherwise, you know, I wouldn't say we expect any significant material shifts in our planning other than what we lined out from an exchange perspective. Of course, where do those lives end up?

Speaker #3: Yeah , this is Alfred Craig . Yeah , I think we gave the color as it pertains to the exchange dynamics . And , you know , just as a reminder , we we ended last year with 6% of our ad , 7% of our revenues from an exchange perspective .

Speaker #3: So just a little bit of lower than I'd say the industry average from an overall exposure standpoint . Otherwise , you know , I wouldn't I wouldn't say we're we expect any significant material shifts in our planning other than what we lined out from an exchange perspective .

Marty Bonick: One dynamic, I think it's a little too early to tell, but we've seen just a little bit, you know, as we've seen this inexorable march of traditional Medicare moving to MA, that seems to be slowing or maybe even reversing a bit in early data. I would say that's not, you know, we didn't necessarily forecast that as a trend, but we would view that as a positive development if it continues.

Alfred Lumsdaine: One dynamic, I think it's a little too early to tell, but we've seen just a little bit, you know, as we've seen this inexorable march of traditional Medicare moving to MA, that seems to be slowing or maybe even reversing a bit in early data. I would say that's not, you know, we didn't necessarily forecast that as a trend, but we would view that as a positive development if it continues.

Speaker #3: And then , of course , where do those lives ? And up one dynamic , I think it's a little too early to to tell , but we've seen just a little bit , you know , as we've seen this inexorable march of traditional Medicare moving to Ma , that seems to be slowing , or maybe even reversing a bit in , in early data .

Craig Hettenbach: Got it. Then, Marty, just following up on all the technology initiatives, how do you think about that in terms of just timeline of beginning to move the needle from a margin perspective, and things we should be watching for around that?

Speaker #3: I would say that's not you know , we didn't necessarily forecast that as a trend , but we would view that as a positive development if it continues .

Speaker #12: Got it . And then Marty , just following up on all the technology initiatives , how do you think about that in terms of just timeline of beginning to move the needle from a margin perspective and things we should be watching for around that

Marty Bonick: Yeah, Craig. We've got a number of things that I outlined that we're deploying. You know, the HelloCare virtual care is building off of a successful pilot that we already started in East Texas. We'll be rolling that out across the entire system or entire company by the end of this year. We expect that benefit to continue to ramp. We're starting in a very focused way with our virtual nursing and sitting programs, which should have a direct financial benefit as well as a quality benefit to our patients.

Speaker #1: Yeah , we've got a number of things that I outlined that we're deploying . You know , the hello care virtual care is a building off of a successful pilot that we already started in East Texas .

Speaker #1: We'll be rolling that out across the the entire system , entire company , by the end of this year . So we expect that benefit to continue to ramp .

Marty Bonick: you know, as we continue on that, as I mentioned before, we saw positive success with our virtual attending, where we're actually bringing specialists from the metro areas into some of those rural areas and helping to keep those patients close to home, which allows us to keep some of those lower acuity transfers in our primary and secondary markets, while making room for the higher acuity cases to come into tertiary centers. That's an example. This will continue to ramp throughout the year, as well as other initiatives that we have in flight, you know, across the board from both the back-end business side as well as on the frontline clinical side and staffing and scheduling in between.

Speaker #1: We're starting in a very focused way with our virtual nursing and sitting programs , which should have a direct financial benefit as well as a quality benefit to our patients .

Speaker #1: And , you know , as we continue on that , as I mentioned before , we saw a positive success with our virtual attending , where we're actually bringing specialists from the metro areas into some of those rural areas and helping to keep those patients close to home , which allows us to keep some of those lower acuity transfers in our primary and secondary markets while making room for the higher acuity cases to come into the tertiary centers .

Marty Bonick: These will continue to ramp, and this is part of our care transformation, the C and a T of IMPACT, that we expect to continue to ramp over the next several years as AI becomes more and more prominent. You know, we've had a very labor-dependent business across this industry, and I think AI is going to be a liberator. You know, we're looking into new ways of helping to extend our primary care reach with AI and helping patients to do that so we can expand panels. There, there's a lot of focus in this area to actually transform the way in which we deliver care, make it more accessible, make it more affordable, and transform the cost structure for the business. We're excited about the future possibilities.

Speaker #1: And so that's an example . But this will continue to ramp throughout the year , as well as other initiatives that we have in flight .

Speaker #1: You know , across the board from both the back end business side as well as on the front line clinical side and staffing and scheduling in between .

Speaker #1: So these will continue to ramp . And this is part of our care transformation . C and T of impact that we expect to continue to ramp over the next several years .

Speaker #1: As AI becomes more and more prominent , you know , we've had a very labor dependent business across this industry , and I think AI is going to be a liberator .

Speaker #1: You know, we're looking into new ways of helping to extend our primary care reach with AI and helping patients to do that, so we can expand panels.

Benjamin Rossi: Helpful. Thank you.

Craig Hettenbach: Helpful. Thank you.

Speaker #1: And so there's a lot of focus in this area to actually transform the way in which we deliver care , make it more accessible , make it more affordable , and transform the cost structure for the business .

Operator: Our next question comes from the line of Benjamin Rossi with J.P. Morgan. Please go ahead.

Benjamin Rossi: Hey, good morning. Thanks for taking my questions here. Just in assessing the uptick in average length of stay to close the year, I appreciate that you've been making some efforts to try and bring this down through improved rounding and some of your new investments into virtual care. What do you think have been some of the limiting factors in bringing this figure down this year? Are you seeing any variation in length of stay across your payer classes between Medicaid, Medicare, and commercial, particularly among your exchange volumes?

Speaker #1: So we're excited about the future possibilities.

Speaker #12: Helpful . Thank you .

Speaker #4: Our next question comes from the line of Benjamin Rossi with JP Morgan . Please go ahead .

Speaker #13: Hey , good morning . Thanks for taking my questions here . Just in assessing an uptick in average length of stay to close the year , I appreciate that you've been making some efforts to try and bring this down through improved rounding .

Speaker #13: And some of your new investments into virtual care. What do you think have been some of the limiting factors in bringing this figure down?

Marty Bonick: This is Marty. Thanks. You know, length of stay is, you know, a factor of acuity and a factor of efficiency inside the hospital. You know, as our acuity continues to grow, that raw length of stay will, you know, also likely have a corresponding impact. As we look at a sort of a geometric mean length of stay, you know, we've actually seen very good performance, and the technology investments that we're making are helping with that efficiency. You know, I think that the length of stay is a continued focus across all of our hospitals. It's a, it's a quality measure, it's a safety measure, and it's an efficiency measure. You know, we think that we're managing that and still have some opportunity to improve.

Speaker #13: Year? And are you seeing any variation in length of stay across your payer classes between Medicaid, Medicare, and commercial, particularly among your exchange volumes?

Speaker #1: Hey , Ben , this is Marty . Thanks . You know , length of stay is , you know , a factor of acuity and a factor of efficiency inside the hospital .

Speaker #1: You know , as our acuity continues to grow , that raw length of stay will , also likely have a corresponding impact . But as we look at a sort of a geometric mean length of stay , you know , we've actually seen very good performance .

Speaker #1: And that technology investments that we're making are helping with that efficiency. So, you know, I think that the length of stay is a continued focus across all of our hospitals.

Benjamin Rossi: Understood. I guess just as a follow-up from the policy side. With the CMS WISeR model and Medicare fee for service, since you'll have some of this program overlapping in a few of your states in your footprint, are you thinking about any potential impact in 2026 as CMS starts rolling out these AI-based tools for prior auth? Do you factor this into your embedded assumptions for denial rates into 2026? Sounds like you aren't assuming a meaningful shift in denial trends during the year, so just curious on any color there.

Speaker #1: It's a it's a quality measure . It's a safety measure . And it's a it's efficiency measure . But you know , we think that we're managing that and still have some opportunity to improve

Speaker #13: Understood . And I guess this is a follow up from the policy side with the CMS wiser model and Medicare fee for service .

Speaker #13: some of this program overlapping in a few of your states and your footprint , are you thinking about any potential impact in 2026 as CMS starts rolling out these AI based tools for prior auth ?

Marty Bonick: As Alfred outlined, we're taking a very prudent look at denials and not making any dramatic assumptions from it changing. That being said, you know, to the WISeR question, you know, it does overlap in a couple of our smaller markets. You know, our work with Epic and, you know, that is an advantage we have. Epic has been working collaboratively with both payers and providers, and we're part of that work group to advance ways in which we can streamline that. We just had a new electronic prior authorization module go live with one of the large payers in the country just recently.

Speaker #13: And then, do you factor this into your embedded assumptions for denial rates in 2026? Sounds like you aren't assuming a meaningful shift in denial trends during the year.

Speaker #13: So just curious on any color there.

Speaker #1: Yeah . As Alfred outlined , we're taking a very prudent look at denials and not making any any dramatic assumptions from it . Changing .

Speaker #1: That being said , you know , to the wiser question , you know , it does overlap in a couple of our smaller markets .

Speaker #1: You know , our work with epic and , you know , that is an advantage . We have epic has been working collaboratively with with both payers and providers .

Marty Bonick: While CMS is focusing on this, I think it's an opportunity for us to work with our partners, with both Ensemble and Epic, to drive better performance in this area. We think that, you know, these technological advances will help address the governmental intentions behind these laws that are coming out. They're experimenting with a lot of these different programs, but we feel like we're well-positioned given the technology partner vendors we have to stay on top of that.

Speaker #1: And we're a part of that work group to advance ways in which we can streamline that. We just had a new electronic prior authorization module go live with one of the large payers in the country.

Speaker #1: Just recently . And so while CMS is focusing on this , I think it's an opportunity for us to work with our partners with ensemble and epic , to drive better performance in this area .

Speaker #1: And so we think that these technological advances will help address the governmental intentions behind these , these laws that are coming out and they're experimenting with a lot of these different programs .

Benjamin Rossi: Thanks for the additional color.

Operator: Once again, if you would like to ask a question, please press Star followed by the number 1 on your telephone keypad. Our next question comes from the line of Timothy Greaves with Loop Capital. Please go ahead.

Speaker #1: But but we feel like we're well given the technology partner vendors . We have to stay on top of that

Speaker #13: Thanks for the additional color

Benjamin Rossi: Hi. Thanks for taking the question. I guess I wanna ask around the existing markets and the growth there. I believe you listed a bunch of initiatives that you guys are working on when answering Whit's question. I guess, around that, I guess I wanna know from a broader sense how, you know, what you're seeing in the current environment impacted your plan around these initiatives. Are you guys maybe leaning into more assessing the physical versus digital opportunities or anything around that in the near term? Anything that you could point out that's notable.

Timothy Greaves: Hi. Thanks for taking the question. I guess I wanna ask around the existing markets and the growth there. I believe you listed a bunch of initiatives that you guys are working on when answering Whit's question. I guess, around that, I guess I wanna know from a broader sense how, you know, what you're seeing in the current environment impacted your plan around these initiatives. Are you guys maybe leaning into more assessing the physical versus digital opportunities or anything around that in the near term? Anything that you could point out that's notable.

Speaker #4: Once again , if you would like to ask a question , please press star followed by the number one on your telephone keypad .

Speaker #4: Our next question comes from the line of Timothy Greaves with Loop Capital . Please go ahead .

Speaker #14: Hi . Thanks for taking the question . I guess I want to ask around the existing markets and the growth there , I believe you , you listed a a bunch of initiatives that you that you guys are working on when answering , which .

Speaker #14: But I guess around that , I guess I want to know from a broader sense how , you know , what you're seeing in the current environment impacted your plan around these initiatives , like , are you guys like maybe leaning into more accessing accessing physical versus digital opportunities or , or anything around in the near term ?

Marty Bonick: Apologize. It came across a little bit distorted, the question. Can you reframe just the core question?

Benjamin Rossi: Sorry. Yeah. I'll reframe it a bit. I guess what I'm trying to see is how you guys are interacting with the market in the broadest sense of, like, you know, growing in existing markets. You know, as far as versus physical expansion versus digital opportunities, you listed, like, the Hello Care-

Timothy Greaves: Sorry. Yeah. I'll reframe it a bit. I guess what I'm trying to see is how you guys are interacting with the market in the broadest sense of, like, you know, growing in existing markets. You know, as far as versus physical expansion versus digital opportunities, you listed, like, the Hello Care-

Speaker #14: Anything that you could point out that's notable?

Speaker #1: Apologize that it came across a little bit distorted . The question , can you can you reframe just quick question .

Speaker #14: Sorry . Yeah , I'll reframe it a bit . I guess what I'm trying to see is how you guys are interacting with the market in the broader sense of like , you know , growing in existing markets .

Marty Bonick: Yeah.

Benjamin Rossi: You know, just in the current environment, how you guys are prioritizing this expansion of your footprint.

Speaker #14: So , you know , as far as versus physical expansion versus digital opportunities , you listed like the hello care , virtual care opportunities .

Marty Bonick: Thank you. That came across a little bit more clear. Yeah. We are focused on growth in a number of different ways. You know, we always said from the onset, you know, we're gonna prioritize growth in our core markets, both the high acuity service lines in our inpatient environment, as well as growing the outpatient. Our focus the last couple years of growing urgent care as access points has paid off for us. We are expanding that funnel, so to speak. Our consumer team is really helping to drive that continued engagement. Last year, we saw about a 5.5% improvement in our total encounters, and we grew a total unique number of individuals that we serve, consumers in our markets.

Speaker #14: But , you know , just in the current environment , how you guys are prioritizing this , this expansion of your footprint .

Speaker #1: Thank you . That that came across a little bit more clear . Yeah . We are focused on growth in a number of different ways .

Speaker #1: You know , we always said from the from the onset you were going to prioritize growth in our core markets . Both high acuity service lines and our inpatient environment , as well as growing the outpatient , our focus over the last couple of years of growing urgent care as as access points , is paid off for us .

Speaker #1: We are expanding that funnel , so to speak . But our consumer team has really helping to drive that continued engagement . So last year we saw about a 5.5% improvement in our total encounters , and we grew our total unique number of of of individuals that we serve consumers in our markets .

Marty Bonick: Our digital outreach strategies are very much focused on not only attracting those initial patients, but retaining them in our system. Again, our technology vendors with Epic really help play into that because we can have a longitudinal relationship with our patients and make sure that we can be their one-stop-shop for care when they need it, and they're not going out and searching in the market for point solutions. We've got a strong virtual care offering in all of our markets and all of our clinics, and so patients can get the care where and when they need it most. It doesn't have to be inside of a hospital or a clinic setting. It can be virtual and in the home.

Speaker #1: And so our digital outreach strategies are very much focused on not only attracting those initial patients , but retaining them in our system .

Speaker #1: And again , our technology vendors with epic really help play into that because we can have a longitudinal relationship with our patients and make sure that we can be their one stop shop for care when they need it and they're not going out and searching in the market for point solutions .

Marty Bonick: We're very much focused on using those lower cost, capital, digital solutions to attract, retain, and grow our patient base.

Speaker #1: We've got a strong virtual care offering in all of our markets and all of our clinics , and so patients can get the care where and when they need it most .

Speaker #1: It doesn't have to be inside of a hospital or clinic setting . It can be virtual and in the home . So yeah , we're very much focused on using those those lower cost of capital solutions , digital solutions to attract , retain and grow our patient base

Benjamin Rossi: Okay. Thank you for the clarity. I think the one question is good for me. Thank you.

Timothy Greaves: Okay. Thank you for the clarity. I think the one question is good for me. Thank you.

Marty Bonick: Thank you.

Operator: At this time, we have no further questions. I would like to turn the call back over to Marty Bonick for closing remarks.

Speaker #14: Okay . Thank you for the clarity . I think the the one question is good for me . Thank you .

Marty Bonick: Thank you all for your participation in our Q4 call. We're entering 2026 with operational momentum, financial strength, and strategic clarity, we are confident in our ability to execute. We appreciate everybody's support, thank you.

Speaker #15: Thank you .

Speaker #4: At this time we have no further questions . I would like to turn the call back over to Martin Bonick for closing remarks

Operator: This concludes today's conference call. You may now disconnect your lines. Have a pleasant day.

Speaker #1: Thank you all for your participation in our Q4 call . We're entering 2026 with operational momentum , financial strength and strategic clarity . And we are confident in our ability to execute .

Speaker #1: We appreciate everybody's support and thank you .

Q4 2025 Ardent Health Inc Earnings Call

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