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Ardent Health Partners, Inc. (ARDT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong top-line and profitability with total revenue of $1.606B (+19.3% y/y) and adjusted EBITDA of $182.6M (+213% y/y), aided by a retroactive New Mexico DPP benefit ($94M revenue; $65M adj. EBITDA) and easy comps vs. a cybersecurity impact in Q4’23 .
  • Diluted EPS was $0.81 vs. $(0.03) in Q4’23; net income attributable was $114.2M, reflecting better rates, volumes, and supplemental payments; FY2024 revenue and adjusted EBITDA finished “well above” prior guidance ranges (ex-DPP, both near or above guidance midpoints) .
  • 2025 guidance introduced: revenue $6.20–$6.45B, adjusted EBITDA $575–$615M, diluted EPS $1.73–$2.01, with an expected ~$75M y/y EBITDA uplift from DPP programs and 110 bps EBITDAR margin expansion to 13.6% at the midpoint .
  • Catalysts: durable volume growth, ambulatory expansion (18 urgent care clinics acquired Jan 2025), normalized labor costs, and continued DPP contributions; watch for CMS timing on 2025 New Mexico renewal, which may shift quarterly revenue recognition .

What Went Well and What Went Wrong

What Went Well

  • Strong quarterly growth: revenue +19.3% y/y to $1.606B; adjusted EBITDA +213% y/y to $182.6M; adjusted admissions +9.0%; NPSR per adjusted admit +9.5% y/y .
  • Management execution and momentum: “We had a strong finish to 2024… Adjusted EBITDA growth of well over 200% in the fourth quarter,” and at FY, revenue +10%, adjusted EBITDA +58%, margins +260 bps; lease-adjusted net leverage improved to 2.9x .
  • Strategic progress: AI-enabled clinical and operational improvements (virtual nursing, bedside monitoring, OR optimization), supply chain efficiencies, and ambulatory footprint expansion (18 urgent cares in NM/OK), expected to drive downstream volumes and mid-teens margins over time .

What Went Wrong

  • Professional fees/subsidies remain a headwind, growing as a percent of revenue in 2025 similar to 2024; hospital-based physician subsidies still above inflation, despite moderation from 2023 peaks .
  • Elevated payer denials persisted (though not accelerating in Q3/Q4), creating operational friction; MA contracting environment more contentious into 2025 .
  • Quarterly timing risk on New Mexico DPP renewal could depress Q1’25 results if approval lags; cumulative recognition would then shift to a later quarter .

Financial Results

Headline P&L vs. Prior Quarters (USD Millions unless noted)

MetricQ2 2024Q3 2024Q4 2024
Total Revenue$1,470.9 $1,449.8 $1,606.3
Net Income Attributable to ARDT$42.8 $26.3 $114.2
Diluted EPS$0.34 $0.19 $0.81
Adjusted EBITDA$122.3 $97.8 $182.6
Net Income Margin % (Attributable)2.9% 1.8% 7.1%

Notes:

  • Q4’24 results include a retroactive New Mexico DPP benefit ($94M revenue; $65M adjusted EBITDA) .
  • Q4’23 was negatively impacted by a cybersecurity incident, creating easier comps .

Year-over-Year: Q4 2023 vs. Q4 2024

MetricQ4 2023Q4 2024
Total Revenue$1,346.0 $1,606.3
Net Income Attributable to ARDT$(4.2) $114.2
Diluted EPS$(0.03) $0.81
Adjusted EBITDA$58.4 $182.6
Adjusted Admissions79,731 86,872
NPSR per Adjusted Admission$16,616 $18,200

Operating KPIs

KPIQ2 2024Q3 2024Q4 2024
Admissions38,958 39,568 40,300
Adjusted Admissions85,763 86,833 86,872
Inpatient Surgeries9,012 8,871 9,108
Outpatient Surgeries23,758 23,220 24,296
Total Surgeries32,770 32,091 33,404
ER Visits156,287 161,343 161,010
NPSR per Adjusted Admit$16,859 $16,312 $18,200

Balance Sheet and Cash Flow (Selected)

MetricQ3 2024Q4 2024
Cash & Equivalents$563.1 $556.8
Total Debt~$1.10B $1.10B
Net Cash from Ops (Quarter)$90 $120
Lease-Adjusted Net Leverage3.5x 2.9x
Available Liquidity$851 $845

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY2024$5,800–$5,875 Actual: $5,966 Above prior guidance
Adjusted EBITDAFY2024$425–$440 Actual: $498 Above prior guidance
Adjusted Admissions GrowthFY20244.5%–5.0% Actual: 4.8% Near midpoint
NPSR per Adjusted Admit GrowthFY20242.6%–3.3% Actual: 5.1% (FY) Above prior guidance
Total RevenueFY2025n/a$6,200–$6,450 New
Net Income AttributableFY2025n/a$245–$285 New
Diluted EPSFY2025n/a$1.73–$2.01 New
Adjusted EBITDAFY2025n/a$575–$615 New
Adjusted Admissions GrowthFY2025n/a2.0%–3.0% New
NPSR per Adjusted Admit GrowthFY2025n/a2.1%–4.4% New
CapexFY2025n/a$215–$235 New
Rent Expense Payable to REITsFY2025n/a$164 New

Additional context: Management expects ~$75M y/y EBITDA increase from DPP programs in 2025 (reflecting full-year impact of NM and OK) and cautions quarterly recognition may be delayed until CMS approval is received, with cumulative catch-up in the approval quarter .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
AI/Technology initiativesEarly innings; AI optimizing OR scheduling (+500 cases; ~$2.3M revenue); call center NLP pilots improving access Virtual nursing and advanced bedside monitoring (BioButton) improving mortality and LOS; continued OR optimization scaling Broadening deployment; tangible operational/clinical wins
Supply chain efficienciesSupply expense as % revenue improved (Q2 −90 bps); continued initiatives across sourcing and inventory Ongoing efficiency enhancements cited as margin driver Sustained margin tailwind
Tariffs/Macro/RegulatoryDurable DPP programs; NM submitted to CMS Aug 5; 44 states with programs Legislative uncertainty discussed; site-neutral risk estimated < $10M; confident DPP durability; watch CMS timing Manageable risk; monitoring; supportive outlook
Volumes & acuityAdmissions/adjusted admissions growth; Two-Midnight rule contributed; service line optimization headwind to low-margin cases Broad-based volume strength; respiratory season adds low-acuity admits; guidance assumes 2%–3% adjusted admissions growth Durable demand; normalized growth assumptions
Payer denials & MA contractingElevated denials but managed; MA 2025 contracting mid-single-digit rate increases; environment contentious Denials remain high; no acceleration; similar contracting dynamics Persistent operational headwind
Labor & physician subsidiesContract labor down (Q2: 4.3% of SWB); subsidies pressured in 2023, moderating in 2024 Professional fees/subsidies still a headwind in 2025; moderating from 2023 peaks Gradual normalization; headwind persists
Ambulatory growthAdded 8 urgent cares (1H’24); pipeline active (ASCs, imaging, freestanding EDs) Acquired 18 urgent cares (Jan 2025); evidence of downstream volume uplift (East Texas: 45% new to system; ~15% converted within 30 days) Scaling footprint; incremental downstream volumes
JV pipelineActive; JV with academic partners provides strategic advantages Pipeline building; potential modest tailwind from academic funding pressures Constructive backdrop

Management Commentary

  • “We had a strong finish to 2024, highlighted by reported revenue growth of 19% and Adjusted EBITDA growth of well over 200% in the fourth quarter… we grew revenue 10%, increased Adjusted EBITDA 58%, and expanded Adjusted EBITDA margins 260 basis points” — CEO Marty Bonick .
  • “We recorded revenue of $94 million and Adjusted EBITDA of $65 million in the fourth quarter [from NM DPP]… Combined with our solid operational performance for the quarter, this resulted in 2024 revenue and Adjusted EBITDA well above our guidance ranges” — CEO Marty Bonick .
  • “Embedded in our 2025 outlook is an adjusted EBITDAR midpoint of 13.6%, which implies 110 basis points of margin expansion” — CEO Marty Bonick .
  • “We have over $550 million of cash on hand and available liquidity of $845 million… operating from a position of strength” — CEO Marty Bonick .
  • “Contract labor utilization and rates normalize… nursing retention rates improving” — CFO Alfred Lumsdaine .

Q&A Highlights

  • New Mexico DPP timing: If CMS renewal approval comes after Q1, NM DPP revenue will not be recognized in Q1, with cumulative catch-up in approval quarter; ~$75M 2025 EBITDA increase expected from DPP programs .
  • Volume breadth and guidance conservatism: Strength seen across markets; guidance assumes 2%–3% adjusted admissions growth; Two-Midnight Rule added ~140–150 bps to FY2024 adjusted admissions growth .
  • Professional fee/subsidy headwinds: Growth in 2025 expected similar to 2024 (far less than 2023 spike); ER/anesthesia renegotiations substantially completed; some pressure from radiology persists .
  • Site-neutral reform: Even a broad proposal could be < $10M impact to ARDT given smaller ambulatory footprint today .
  • Operating cash flow: Broad estimate for FY2025 in the “upper $400M” range; CapEx expected to be somewhat back-half weighted (though less skewed than 2024) .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS, revenue, and EBITDA was unavailable due to data access constraints at the time of this analysis. Default source is S&P Global; unable to confirm beat/miss vs. consensus for Q4 2024 at this time. Values retrieved from S&P Global (consensus unavailable).

Key Takeaways for Investors

  • Q4 strength reflects both underlying operations and retroactive NM DPP; ex-DPP, FY2024 results were near or above guidance midpoints, underscoring execution credibility .
  • 2025 outlook targets 6% revenue and 19% adjusted EBITDA growth with 110 bps margin expansion (EBITDAR), driven by DPP annualization, volumes, and operating initiatives; seasonality and CMS timing may shift quarterly recognition .
  • Ambulatory expansion (18 urgent cares) is a multi-year volume flywheel, producing stand-alone mid-teens margins and downstream hospital volumes; watch for ASCs and imaging tuck-ins .
  • Labor normalization and supply chain efficiencies continue to aid margins; physician subsidies remain a manageable headwind vs. 2023 peaks .
  • Elevated payer denials/MA contracting headwinds persist; ARDT still sees mid-single-digit rate renewals and effective RCM mitigation .
  • Balance sheet strength (lease-adjusted net leverage 2.9x, liquidity $845M) enables disciplined M&A/JV growth while maintaining financial flexibility .
  • Near-term trading focus: CMS NM DPP renewal timing (quarterly earnings cadence), respiratory season volumes, and pacing of ambulatory integration; medium-term thesis: durable demand in faster-growing urban markets, scalable ambulatory network, and DPP-backed margin trajectory to mid-teens .