Craig Hettenbach

Craig Hettenbach asked about Universal Health Services' confidence in achieving a steady cadence of behavioral volume growth as pricing normalizes, and for highlights regarding capital investment areas for the current year.

Answer

Steve Filton, Executive Vice President and Chief Financial Officer, expressed confidence in achieving the 2%-3% behavioral patient day volume growth target for 2026, citing sequential improvements throughout 2025 and strategic investments in staffing. For capital investments, Mr. Filton highlighted several large projects coming online, including a new de novo hospital in Florida, major expansions, replacement facilities, new behavioral joint ventures, and continued investment in outpatient footprint, emergency room, and surgical capacity.

Craig Hettenbach asked about the company's confidence in achieving a steady cadence of behavioral volume growth as pricing normalizes, given recent hiring efforts, and inquired about key highlights or areas for capital investment in the current year.

Answer

CFO Steve Filton expressed encouragement from sequential improvements in behavioral patient day volume growth throughout 2025, exiting the year close to the 2-3% target. Combined with staff investments, this provides confidence for 2026. For capital investments, Steve Filton highlighted several major projects opening this year, including a new de novo hospital in Florida, a large tower expansion, a replacement facility in Southern California, and new behavioral joint venture hospitals. He also mentioned continued investment in expanding the outpatient footprint and core acute inpatient areas like emergency room and surgical capacity.

Craig Hettenbach asked about the behavioral health segment's capacity versus demand, the implications for volume growth, and the observed improvement in hiring. In a follow-up, he inquired about capital allocation, the declining leverage ratios despite share repurchase activity, and whether the company is comfortable letting those ratios decline further.

Answer

CFO Steve Filton reiterated the target of 2%-3% adjusted patient day growth for behavioral health, noting they are slightly below this but aim to reach it by year-end or next year, emphasizing the need to fill vacancies and reduce turnover. CEO Marc Miller added that staffing stabilization will unlock growth opportunities. Regarding capital allocation, Filton stated that UHS views share repurchases as a compelling use of capital and expects to devote most free cash flow to buybacks. He noted current leverage ratios are intentionally low due to policy uncertainty and may increase if certainty improves.

Craig Hettenbach asked about the slight improvement in behavioral health hiring, how management views capacity versus demand, and its implications for volume growth. He also inquired about capital allocation, specifically the declining leverage ratios despite share repurchases, and any targets or influences on future capital deployment.

Answer

CFO Steve Filton stated that a reasonable volume growth for behavioral health in the intermediate and long term is 2-3% in adjusted patient days, which is a target for next year, contingent on filling vacancies and reducing turnover. Regarding capital allocation, he noted UHS has actively repurchased shares, viewing it as a compelling use of capital, and expects to devote most free cash flow to buybacks. He added that leverage ratios have been kept low due to policy uncertainty, and they may increase leverage with more certainty.

Craig Hettenbach of Morgan Stanley asked about the long-term normalization of the volume and price contribution mix in the behavioral segment. He also inquired about the potential for leveraging technology and AI to offset future legislative headwinds.

Answer

Executive VP & CFO Steve Filton reiterated the long-term behavioral growth model of 7% revenue growth, comprised of 4-5% price and 2.5-3% volume, noting the company has been hitting price targets but lagging on volume. He also discussed using AI for efficiency gains in areas like revenue cycle management and clinical post-discharge follow-ups, viewing technology as a key tool for improving productivity over the next several years.

Asked about acuity trends in the acute care business, other potential margin improvement levers beyond volume, and the company's updated plans for capital deployment between CapEx and share buybacks.

Answer

Q1 acuity was slightly muted by the flu season but is expected to normalize and grow. The company is on track with its $800M-$1B CapEx guidance and is running slightly ahead of its share repurchase guidance, expecting to remain an active buyer of its stock given market conditions.

Craig Hettenbach asked about the durability and impact of the inflection in clinician productivity observed in the second half of 2025 on the business, and the ROI and payback period for technology investments supporting the path to 15% EBITDA margin.

Answer

CEO Dave Bourdon confirmed the durability of productivity improvements from initiatives like phone scheduling and cash incentives, noting consistent build from Q3 to Q4 2025 and into 2026. He reiterated the 2026 revenue growth algorithm, primarily driven by net clinician adds and payer rate increases. CFO Ryan McGroarty emphasized a disciplined approach to technology investments, ensuring a clear return profile to drive operating leverage.

Craig Hettenbach asked about the durability of the productivity inflection observed in the second half of 2025 and its projected impact on the business in 2026 and beyond, as well as the ROI and payback period for technology investments supporting the path to 15% EBITDA margin.

Answer

CEO Dave Bourdon highlighted the durability of productivity improvements, including phone scheduling enhancements and the clinician cash incentive program, which built into Q4 2025 and continued into 2026. He reiterated the 2026 guidance of 15% revenue growth, driven primarily by net clinician adds with complementary productivity benefits, and low to mid-single digit total revenue per visit growth from payer rate increases. CFO Ryan McGroarty emphasized a disciplined approach to evaluating the return profile of AI and other technological investments to ensure they drive operating leverage.

Craig Hettenbach of Morgan Stanley inquired about the confidence in the guided Q4 revenue ramp, the key drivers behind it, and the current market dynamics for clinician recruitment and retention.

Answer

CFO Ryan McGroarty detailed the expected H2 revenue growth, attributing it primarily to visit volume from new clinicians and productivity gains, with a smaller contribution from rate improvements. CEO David Bourdon added that clinician net adds are on track, validating Lifestance's value proposition in a competitive hiring environment.

Craig Hettenbach inquired about the current environment for clinician recruitment and retention, and the outlook for total revenue per visit (TRPV) after the company cycles through a significant payer rate reduction.

Answer

CEO Dave Bourdon described the clinician market as competitive but noted that LifeStance's value proposition continues to resonate, leading to stable retention and continued growth. CFO Ryan McGroarty added that while TRPV will be sequentially lower in Q2 due to the final payer rate cut, it is expected to grow in the second half, resulting in a roughly flat year-over-year figure for 2025 before returning to low- to mid-single-digit growth in 2026.

Craig Hettenbach asked about LifeStance's long-term margin profile after achieving 10% adjusted EBITDA margin ahead of schedule, and inquired about the competitive backdrop for clinician recruiting.

Answer

Incoming CEO Dave Bourdon explained that while 2025 margins will be flat due to a specific payer rate headwind, margin expansion is expected to resume in 2026, with a long-term path to mid-to-high teens or 20% EBITDA margins. On recruiting, Bourdon noted the market remains competitive but LifeStance expects continued growth. Outgoing CEO Ken Burdick added that the Change Healthcare disruption highlighted their value proposition to clinicians, who continued to be paid reliably.

Craig Hettenbach asked for context on LifeStance's total revenue per visit outperforming expectations despite a major payer headwind, and inquired about the company's strategy for growing its clinician base, particularly the mix of full-time versus part-time practitioners.

Answer

CEO Ken Burdick credited the company's new payer engagement team for securing meaningful rate increases that offset the headwind from the single outlier payer. He noted the payer environment is constructive but challenging. Regarding clinicians, he explained that shifting to more full-time staff is a multi-year effort with modest progress so far, and highlighted the company's success in hiring and training recent graduates, which expands the overall talent pool.

Craig Hettenbach asked which legacy core offerings are expected to drive growth in 2026 and the range embedded for weight loss in the guidance. He also followed up on the path to a 20% margin by 2030, specifically if U.S. business efficiencies would offset the margin drag from international investments.

Answer

CFO Yemi Okupe clarified that the distinction between 'core' and 'non-core' is becoming less relevant, focusing instead on domestic and international operations. He sees continued growth potential in both Hims (testosterone, daily health, hair) and Hers (labs, menopausal support, Hers care) specialties. Regarding margins, he explained that the international 'drag' is not permanent, with a growth orientation in most markets and expected margin expansion over 2-3 years as markets season, similar to the U.S. transition to profitability. He also noted that domestic investments in newer specialties would see margin profiles converge with tenured offerings.

Craig Hettenbach inquired about the expected growth drivers for Hims & Hers' legacy core offerings in 2026 and the embedded range for weight loss contribution within the fiscal 2026 guidance. He also asked about potential U.S. business efficiencies offsetting international margin drag towards the 2030 target.

Answer

CFO Yemi Okupe stated that the distinction between core and non-core is blurring, with both Hims and Hers specialties showing potential for continued growth, driven by new offerings like testosterone support and stronger retention. He also explained that international markets are expected to become margin accretive over time, similar to the U.S. business's historical ramp.

Craig Hettenbach from Morgan Stanley inquired about the performance of the HERS business, including its approximate revenue or subscriber share and key growth drivers. He also asked about the company's approach to AI investment, expected returns, and the timeline for its impact.

Answer

CFO Yemi Okupe stated that the HERS business continues to grow robustly, driven by dermatology, weight loss, and mental health, with hormonal support for menopause launching soon. CEO Andrew Dudum explained the AI strategy focuses on tangible, near-term improvements, aiming to deploy agent-centric models within three to six months to enhance efficiency and engagement for patients, providers, and pharmacists.

Craig Hettenbach inquired about the key drivers for the 2025 weight loss revenue target and the long-term growth runway for both core and new categories toward the 2030 financial targets.

Answer

CFO Yemi Okupe confirmed that the company's breadth of weight loss options, including liraglutide and the new branded Wegovy offering, provides confidence in meeting the $725 million target. CEO Andrew Dudum added that long-term growth will be driven by both new categories like obesity care and robust growth in legacy businesses like dermatology, which has seen a 20-point retention gain from personalization.

Craig Hettenbach asked for expectations on the timing of the liraglutide launch, the momentum of oral weight loss drugs, and the key categories driving growth for the Hers platform.

Answer

CFO Yemi Okupe confirmed the oral weight loss business remains strong and is foundational to the 2025 guidance of at least $725 million in weight loss revenue, with liraglutide expected later in the year. He noted that the Hers platform's growth is driven by applying marketing learnings from Hims, strong performance in visible categories like dermatology and hair loss, a successful mental health business, and traction in the weight loss category.

Craig Hettenbach asked about Amwell's 2026 revenue as a baseline for resuming growth, inquiring about the long-term growth profile and the type of growth the business can generate given its shift to a smaller, higher-quality, and stickier top line.

Answer

Chairman and CEO Ido Schoenberg explained that Amwell has centralized its offering around one 'technology-enabled care Amwell platform.' He anticipates strong secular trends will drive increased platform usage by members, leading to significant 'same-store growth' from more programs and efficient use. He also highlighted the government sector as an 'incredible growth opportunity' due to high barriers to entry and Amwell's established presence.

Craig Hettenbach asked about Amwell's 2026 revenue as a baseline for future growth and the long-term growth profile expected from the current business model, emphasizing higher quality and stickier revenue.

Answer

Chairman and CEO Ido Schoenberg explained that Amwell has centralized its offering around one platform, the Amwell platform, which is a strong match for payer and government segments. He anticipates significant same-store growth from increased program adoption and utilization, driven by secular trends and the platform's ability to integrate AI-driven clinical programs. He also highlighted the government sector as a major growth opportunity due to high barriers to entry.

Craig Hettenbach inquired about the booking trends for Amwell's Converge platform outside of the DHA contract and the key strategic priorities for the newly appointed Chief Product and Technology Officer, Dan Zamansky.

Answer

CEO Ido Schoenberg reported strong market receptivity for the Amwell platform beyond the DHA, noting a growing consensus on the need for a unified digital health experience. He outlined that new CPO Dan Zamansky will focus on streamlining the consumer experience, improving the matching of patients to clinical programs, and enhancing the data infrastructure for analytics.

Craig Hettenbach inquired about the progress of the Defense Health Agency (DHA) contract deployment versus initial expectations, key milestones for 2025, and the growth outlook for the software subscription business outside of the DHA.

Answer

CEO Dr. Ido Schoenberg responded that the DHA deployment is progressing as well as or better than expected, with the majority of components implemented and full enterprise deployment expected to be completed in 2025. He highlighted positive feedback from partners and noted a significant increase in the quality and size of the overall sales pipeline, which favors higher-margin software contracts.

Craig Hettenbach inquired about Amwell's strategic focus on high-quality, profitable growth for 2025, asking whether it's driven by the competitive landscape or an internal strategy shift.

Answer

CEO Ido Schoenberg clarified that this is a deliberate internal strategy. He stated Amwell has strong visibility into 2025 growth, which will be dominated by higher-margin subscription revenue and less dependent on visit volume fluctuations, marking a multiyear strategic shift.

Craig Hettenbach asked how Tenet Healthcare and its board are approaching the cadence of share buybacks, given the significantly stronger balance sheet, free cash flow generation, and proceeds from the CommonSpirit transaction, especially with an active approach at current valuation multiples.

Answer

CEO Saum Sutaria explained that all these factors are interlinked: significant cash, value generated from the Conifer transaction (partially akin to debt retirement), and proceeds allocated to investing in USPI and share buybacks. He stated that Tenet Healthcare aims to operate and behave like a company that trades at a higher multiple, deploying its balance sheet in a way that recognizes the attractive valuation for buying back shares, demonstrating confidence in its operational capabilities.

Craig Hettenbach inquired about Tenet's and the board's strategy for share buybacks, given the active approach, current valuation multiple, stronger balance sheet, free cash flow generation, and CommonSpirit proceeds.

Answer

Saum Sutaria, Chairman and Chief Executive Officer, explained that share buybacks are linked to the company's strong balance sheet and the value generated from the Conifer transaction, which included debt retirement and proceeds for business investment. He stated that Tenet aims to operate and deploy its balance sheet like a company that trades at a higher multiple, demonstrating confidence in its operational ability.

Craig Hettenbach inquired about the drivers behind Tenet Healthcare's increased free cash flow guidance, particularly improved cash collections at Conifer and rising margins, and the sustainability of these trends.

Answer

CFO Sun Park highlighted that the increased free cash flow is a result of long-term focus on EBITDA growth, strong operational performance, fantastic cash collections by Conifer, and optimized working capital management. She also noted that deleveraging has improved interest expenses, contributing to free cash flow, and expressed confidence in the sustainability of these operational efficiencies.

Craig Hettenbach asked for additional context regarding the increase in free cash flow guidance, specifically highlighting improved cash collections at Conifer and the sustainability of these positive trends.

Answer

Executive Vice President and CFO Sun Park emphasized that the free cash flow increase stems from strong operational performance, outstanding cash collections by Conifer Health Solutions, and optimized working capital management. She also noted that ongoing deleveraging contributes to lower interest expenses, thereby boosting free cash flow generation, and expressed confidence in the long-term sustainability of these operational efficiencies.

Craig Hettenbach inquired about the health of the M&A pipeline for the USPI segment and Tenet's confidence in deploying its targeted $250 million in annual investment.

Answer

Saumya Sutaria, Chairman and CEO, confirmed the M&A pipeline looks healthy and that the $250 million target remains the goal, noting that historical spending has often been higher. He mentioned that acquisition multiples are stable and the focus is on centers where USPI can add value by diversifying service lines like orthopedics. He also highlighted USPI's lower exposure to Medicaid and exchange uncertainty.

Craig Hettenbach asked about the factors contributing to Hinge Health's displacement of a large enterprise client and the growth drivers in the fully insured, Medicare Advantage, and Federal Employee Programs (FEP) markets.

Answer

Jim Pursley, President, and Dan Perez, Co-founder and CEO, explained that competitive wins are driven by Hinge Select's unified care model, superior product experience (e.g., Enso), and strong clinical outcomes/ROI, noting that client trials often lead to wins. Jim Pursley highlighted that non-ASO growth (over 100% last year) is fueled by robust health plan relationships and consistent delivery of positive outcomes and cost savings, which strongly resonate with actuaries and underwriters.

Craig Hettenbach with Morgan Stanley asked for more details on Hinge Health's competitive displacement of a large enterprise client, specifically what factors led to winning that business. He also inquired about the growth drivers and go-to-market strategy for the fully insured, Medicare Advantage (MA), and Federal Employee Program (FEP) markets.

Answer

Jim Pursley, President, highlighted Hinge Select's unified care approach, superior product experience (including Enso), and proven clinical outcomes and ROI as key differentiators. Daniel Perez, Co-founder and CEO, added that Hinge Health's win rate improves significantly when clients trial their product. For non-Self-Insured markets, Jim Pursley noted over 100% growth in 2025, driven by strong health plan partnerships and delivering measurable cost savings that resonate with actuaries.

Craig Hettenbach asked for feedback on the Hinge Select provider network partnership and the Progyny partnership for women's health. He also followed up on the progress being made in the fully insured and Medicare Advantage markets.

Answer

Co-Founder & CEO Daniel Perez described Hinge Select as complementary to existing health plans, creating a blended network that offers lower costs and greater convenience, which has been received positively by partners. President Jim Pursley characterized the Progyny partnership as accretive, providing another channel for lead generation and member engagement. Regarding new markets, Jim Pursley confirmed the company is seeing great progress and strong signals in government, federal, labor, fully insured, and Medicare Advantage segments.

Craig Hettenbach questioned the future growth potential of health systems adopting Doximity's AI, currently at 20%, and how existing reference cases might influence further adoption. He also asked about any surprises or evolving opportunities observed since the Pathway AI acquisition.

Answer

Jeff Tangney, CEO and Co-Founder, noted that 45% of US physicians use Doximity's telehealth through health systems, suggesting a significant growth opportunity for AI. He highlighted the rapid adoption of AI by 100 major health systems in one quarter, emphasizing Doximity's trusted partner status and platform approach over point solutions. Regarding Pathway AI, Jeff expressed satisfaction with its rapid adoption, team integration, and the value of its semantic datasets, 2,000 journal access, and deterministic drug reference, which addresses LLMs' struggles with drug information accuracy.

Craig Hettenbach followed up by asking if anything had surprised Doximity since the Pathway AI acquisition, particularly regarding the momentum and feedback on Pathway's business and evolving opportunities.

Answer

Jeff Tangney, Co-founder and CEO, expressed satisfaction with the Pathway acquisition, noting that its speed of adoption and growth was the best surprise. He highlighted the value of Pathway's semantic datasets, its understanding of 2,000 medical journals, and its built-in deterministic drug reference as key intellectual property, especially given the challenges LLMs face with accurate drug information. He also praised the integration of the Pathway team.

Craig Hettenbach asked Jeff Tangney about Doximity's strategy for organic investment in AI versus potential tuck-in acquisitions to expand platform capabilities, given the rapid evolution of AI. He also inquired about Doximity's outlook for additional video content and the growth runway for video-related products.

Answer

Jeff Tangney, Co-founder and CEO, stated Doximity would continue to pursue both organic investment and tuck-in acquisitions, with the ultimate goal of delivering the best product for physicians, as evidenced by 50% growth in AI quarterly active users. He noted that video content performs very well and is a faster, easier way to learn. He expressed excitement about the potential for AI to unlock more short-form video creation for clients, leveraging existing video inventory in News Feed and telehealth.

Craig Hettenbach asked about Doximity's strategy for organic investment and potential tuck-in acquisitions to expand AI capabilities, and also inquired about the runway for growth and additional video content in the video module front.

Answer

CEO Jeff Tangney stated Doximity will continue to look at both organic investment and tuck-in acquisitions to deliver the best product for physicians, evidenced by 50% growth in quarterly active AI users. Regarding video, he noted that AI short-form videos could be a "real unlock" for clients, as video content performs very well in the Newsfeed and telehealth workflow, and Doximity is excited to get more video content on the platform.

Craig Hettenbach of Morgan Stanley asked about the performance of the newsfeed and any new developments, particularly in light of the growing momentum of video modules.

Answer

CEO Jeff Tangney confirmed that video is an important and growing part of the newsfeed, with AI helping clients create more engaging short-form content. He underscored the newsfeed's overall strength by reiterating that it hit a record high for quarterly active prescribers and saw strong double-digit growth in the number of articles tapped or watched.

Craig Hettenbach asked about the sales strategy to drive further adoption of point-of-care solutions, given its current low double-digit penetration. He also inquired about capital allocation plans for the company's cash balance, which is approaching $1 billion.

Answer

CEO Jeff Tangney credited Chief Commercial Officer Lisa Greenbaum for implementing rigorous sales training to ensure the team is 'credentialed' to sell the N+1 product. CSO Dr. Nate Gross addressed capital allocation, stating that while M&A valuations are looking more interesting, the company remains highly disciplined, value-sensitive, and focused on true platform fit, often preferring to build technology in-house with its large R&D team.

Craig Hettenbach noted that the video module appears to be accelerating after a slow start and asked what refinements have been made to drive its current momentum.

Answer

CEO Jeff Tangney attributed the acceleration to a classic 'S-shaped adoption curve' common in regulated industries. He explained that after initial clients trialed the product and proved its ROI, broader adoption followed. He highlighted the product's value in delivering timely information, such as formulary coverage, and stated that vertical video is 'having its moment' and could become as significant as the core news feed business.

Craig Hettenbach asked if Crossix's accelerated growth this year is sustainable or if it will revert to its previous low to mid-teens growth rate in the next few years.

Answer

Brian Van Wagener (CFO) expressed satisfaction with Crossix's healthy growth year-to-date, highlighting its large market and long runway for growth in both measurement and audiences. He indicated that while Veeva doesn't provide specific long-range growth rates for individual products, there's plenty of room for the business to continue growing strongly.

Craig Hettenbach asked about the future growth trajectory of Crossix, specifically whether it would revert to mid-teens growth or sustain stronger growth in the coming years.

Answer

Brian Van Wagener (CFO) expressed satisfaction with Crossix's healthy growth and long runway in a large market, declining to provide specific long-range growth rates but indicating continued strong performance.

Craig Hettenbach of Morgan Stanley asked for an update on the macro backdrop and which business segments, other than the highlighted Crossix, are performing particularly well despite the uncertainty.

Answer

CFO Brian Van Wagener characterized the macro environment as stable in its level of uncertainty, with no significant changes. He noted that customers are working effectively within this environment and did not single out any specific segment, instead emphasizing good execution across the entire business and a firming pipeline for the second half of the year.

Craig Hettenbach of Morgan Stanley asked which parts of Veeva's business would be most insulated versus most impacted if the macro environment deteriorates. He also inquired about initial customer feedback on Veeva.ai and its potential business impact.

Answer

CEO Peter Gassner explained that long-term subscription contracts are the most durable part of the business, while consulting and services are quicker to be impacted. He noted that customer reception to Veeva.ai is very positive because the tangible use cases make sense without hype. He expects AI to be a net positive for revenue over time, priced for broad adoption.

Craig Hettenbach asked for key milestones to watch for Veeva's AI business this year and for an update on whether customers are still distracted by evaluating new AI technologies.

Answer

CEO Peter Gassner identified the key milestones as the releases and customer success of CRM Bot and MLR Bot, along with potential new AI product announcements. He stated that the period of 'AI distraction' is now largely over, as customers have settled into a more focused approach on core work and specific AI projects.

Craig Hettenbach asked how the core business's strong margin profile provides leverage for investing in the new horizontal strategy. He also inquired about the multiyear growth outlook for the stabilizing services business.

Answer

CEO Peter Gassner explained that the horizontal initiative requires a small, focused team, not large capital investment, and that strong cash flows will be reinvested primarily back into the core life sciences business. CFO Brian Van Wagener declined to provide a multiyear services growth outlook, stating it would be part of future guidance, but noted satisfaction with current momentum.

Craig Hettenbach asked for an update on Veeva's capital allocation strategy given its growing cash balance and inquired about the outlook for headcount growth.

Answer

Interim CFO Tim Cabral reiterated that there is no change to the capital allocation strategy, with the primary focus remaining on maintaining 'dry powder for potential M&A.' He added that while Veeva will invest in headcount to pursue its large opportunity, it will continue to drive for efficiency and remain 'appropriately lean.'

Craig Hettenbach asked about the tracking of HCA's $600M-$800M resiliency program and additional levers to extend it further, such as technology and increased AI adoption.

Answer

CFO Mike Marks stated that HCA is actively enhancing and accelerating its resiliency program, viewing it as an ongoing process with a pipeline of new ideas, piloting, and scaling. He highlighted benchmarking, digital technology (AI, machine learning, automation), and expanding shared service platforms as key levers. CEO Sam Hazen added that the program's impact is reflected in improved core operating margins.

Craig Hettenbach asked about the durability of the strong demand environment, particularly in the context of HCA's full-year equivalent admissions growth target of 3% to 4%.

Answer

CEO Sam Hazen expressed confidence in the durability of demand, stating that HCA is not currently seeing any factors that would suggest its underlying assumptions are incorrect. He highlighted that after adjusting for the leap year, Q1 adjusted admissions grew nearly 3.8%, which is at the high end of the guidance range. He believes the company's volume assumptions for the year should materialize barring any unforeseen dramatic events.

Craig Hettenbach of Morgan Stanley inquired about the timing and impact of the company's resiliency program savings and asked if the recent leveling-off of professional fees was expected to continue into 2025.

Answer

CFO Mike Marks confirmed the resiliency program is on track, with benefits seen in length-of-stay reduction and labor management. He noted the program will fund tech investments before supporting margins later in the decade. Regarding professional fees, he was encouraged by the moderating growth trend (from 20% in Q1 to 10% in Q3) and indicated this is part of the expected 'stable operating environment' for 2025.

Asked about the use of AI for platform scaling and care team efficiency, and for an update on the growth and traction of the GLP-1 CareTrack program.

Answer

The company detailed its AI initiatives, including the "Omada Spark" agent for members and internal tools that have improved care team efficiency, noting the financial upside is not yet fully factored into long-term targets. They confirmed strong momentum in the GLP-1 CareTrack, which is a key growth driver but still a minority of total new members, with the core cardiometabolic platform being the primary source of growth.

Jay, on behalf of Craig Hottenbach of Morgan Stanley, asked for details on the cost controls and margin levers being used to maintain EBITDA guidance despite a lower revenue outlook, and also inquired about any shifts in consumer behavior.

Answer

CFO Chris McGinnis explained that margins are being maintained through a combination of favorable mix shift (as lost ISP revenue was lower margin) and disciplined cost controls, including a workforce reduction and resource reallocation. CEO Wendy Barnes added this reflects a focus on core strategic initiatives. McGinnis noted a short-term consumer shift to funded benefits due to higher cash prices but expects tailwinds to reverse this trend in 2026.

Craig Hettenbach asked about the company's capital allocation priorities, particularly the balance between stock buybacks and potential M&A, and sought more detail on the drivers behind the 20% growth target for the pharma solutions business.

Answer

CFO Chris McGinnis stated that capital allocation priorities are, first, investing in the business organically and, second, executing stock repurchases, which are viewed as highly accretive at the current valuation. CEO Wendy Barnes elaborated on the pharma solutions growth, attributing it to a robust pipeline, acquiring new brands, and deepening relationships with existing partners by demonstrating strong ROI, which leads to portfolio expansion and larger deal sizes.

Craig Hettenbach asked about capital allocation priorities, specifically the balance between stock buybacks and investments for growth, and inquired about the drivers behind the 20% growth target for the pharma solutions business.

Answer

CFO Chris McGinnis outlined capital allocation priorities as, first, investing in the business itself, followed by stock repurchases, which he views as highly accretive given the current stock price. CEO Wendy Barnes added that the confidence in 20%+ growth for pharma solutions is driven by a robust pipeline, expanding the number of brand partners, and deepening relationships with existing manufacturers who are seeing strong ROI and broadening their portfolios with GoodRx.

An analyst for Craig Hettenbach of Morgan Stanley asked for an update on the GLP-1 market opportunity, the company's stance on compounded GLP-1s, and how that affects conversations with branded pharma partners.

Answer

Interim CEO Scott Wagner noted that GoodRx received nearly 2 million unique price page views for GLP-1s in Q3. He stated that GoodRx is working with Lilly and Novo on affordability solutions and has deliberately chosen not to work with compounders in order to build long-term, strategic relationships with the branded manufacturers.

Craig Hettenbach of Morgan Stanley asked for specifics on the most significant levers within the IMPACT program—like AI, technology, and supply chain—that Ardent will use to mitigate future regulatory pressures. He also sought an update on demographic and job growth trends in the company's core markets.

Answer

President & CEO Marty Bonick highlighted that the IMPACT program will accelerate margin improvement efforts, focusing on labor productivity, supply chain efficiencies, and technology like virtual nursing and AI-enabled scribes to improve throughput and load balancing. Regarding market trends, Bonick and CFO Alfred Lumsdaine confirmed their markets continue to grow faster than the U.S. average, which is evidenced by their strong volume growth.

Craig Hettenbach from Morgan Stanley asked for commentary on the durability of patient demand, its breadth across markets, and the strategic focus for the newly appointed COO, Dave Casper.

Answer

CEO Martin Bonick expressed strong conviction in demand durability, attributing it to fundamental market growth rather than temporary factors. He stated the new COO will leverage his consumer health background to drive growth strategies, integration, and optimization to achieve the company's 100-200 basis point margin expansion goal, with a key focus on integrating future acquisitions.

Craig Hettenbach asked about the long-term visibility and durability of state Directed Payment Programs (DPPs) and inquired about underlying patient acuity trends, excluding the effects of the flu season.

Answer

CEO Marty Bonick expressed high confidence in the durability of DPPs, stating that once approved, they are historically reapproved due to their importance as a state healthcare safety net. He and CFO Alfred Lumsdaine noted that underlying acuity remains strong, driven by strategic initiatives, and should be consistent with 2024 levels after lapping the Two-Midnight Rule impact.

Craig Hettenbach of Morgan Stanley asked for an outlook on volume trends for the remainder of the year and into 2025, and also inquired if the operational leverage driving margin expansion would continue at a similar pace.

Answer

CEO Marty Bonick expressed confidence in continued strong volume demand into 2025, driven by favorable demographics in Ardent's fast-growing markets and operational efficiencies. CFO Alfred Lumsdaine noted that while the New Mexico DPP program will be a major margin driver next year, the company is still in the 'middle innings' of harvesting further operational improvements.

Craig Hettenbach inquired about the expected timeframe for the company's strategic changes to translate into an inflection in revenue growth. He also asked for more detail on customer win-backs, questioning whether they or new logo acquisition would be the primary driver of future growth.

Answer

CEO Kevin Coop projected that the positive impacts of their operational changes would begin to appear within the current year. He highlighted the evolution of their vertical go-to-market strategy and noted early positive signs in Life Sciences bookings. On growth drivers, Coop stated that their focus on superior data quality creates a durable competitive advantage. This will enable them to both win back customers who may have left for lower-cost alternatives and continue to acquire new logos, citing positive 'green shoots' of both activities year-to-date.

Craig Hettenbach asked for an update on the provider market and the Populi acquisition, inquiring about the current opportunity set and whether Populi's technology could be leveraged more broadly across other segments like life sciences.

Answer

CEO Kevin Coop explained that Populi provides the core UI/UX for the platform's direct interface. He clarified that the company's strategy has become more sophisticated, also enabling customers to integrate data via APIs and master data solutions within their own systems, offering a more configurable approach beyond just the Populi front-end.

Inquired about the company's visibility into usage-based revenue drivers under the new guidance and the growth expectations for the core advocacy business for the current year and beyond.

Answer

The company has good visibility into usage-based revenues, especially with a slightly dialed-back growth rate, and can predict uptake for new customers with relative certainty. The B2B business, which includes advocacy sold with other capabilities, has seen ARR grow 20-30% in recent years, and its growth this year is expected to be consistent with the overall business growth rate outlined in the new guidance.