Ardent Health, Inc.

and thank you for standing by and welcome to the Arden Health Partners first quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, press star followed by the number one on your telephone keypad. If you'd like to draw your question, press star followed by the number one. As a reminder, today's call is being recorded. I will now hand today's call over to David Stiblo, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and welcome to Arden Health's first quarter 2025 earnings conference call. Joining me today is Arden President and Chief Executive Officer, Marty Bonick, and Chief Financial Officer, Alfred Lundstein. 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. 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 and adjusted EBITDAR. Reconciliation of these measures to the closest GAAP financial measure is included in our quarterly earnings press release, which we issued yesterday evening after the market closed and is available at ardenthealth.com. With that, I'll turn the call over to Marty.

Thank you, Dave, and good morning. We appreciate everyone joining on the call and the webcast. We are pleased to report another solid quarter of financial and operating performance results as we build a track record of disciplined execution in support of our strategic growth initiatives. Before diving into the details, I want to step back to focus on the big picture and underscore that Ardent is well positioned for multifaceted long-term growth with an emphasis on three key areas. First, we have ample opportunities to drive strong market share growth within our existing footprint, leveraging our strong position platform and consumer-first strategy. Second, we are focused on expanding our outpatient and acute care hospital footprint and are well positioned to support this expansion with approximately $500 million of cash and a favorable lease-adjusted net leverage ratio of three times. Finally, we continue to drive margin expansion through operational initiatives, leveraging our scale, supply chain efficiencies, and other cost-saving strategies. In support of our focus on execution, I'm pleased to welcome Dave Kaspers as our Chief Operating Officer, effective March 31st. Dave's experience driving strategic growth at Walmart Health, Banner Health, and Target Corporation's retail healthcare business will significantly complement our executive management team. Additionally, we are in the final stages of recruiting a chief development officer to support our focus on M&A activities. Turning to first quarter results, we continued to deliver against our strategic objectives. Volume growth was once again solid. Admissions grew 7.6% driven by strong underlying growth and heightened flu season. Inpatient surgery growth of 3.4% was strong and benefited from our efforts to optimize transfer center operations to capture additional demand. Adjusted admissions increased 2.7%, which is on the upper end of our full year 2025 outlook of 2 to 3%. First quarter revenue increased 4%, and net patient service revenue per adjusted admission grew 1.2%. Those growth rates were tempered by approximately 70 basis points due to the strategic transfer of certain oncology and infusion services to a health system partner in the middle of last year. Recall we discussed this mechanical headwind during the third quarter 2024 earnings call, and we will lap that event after second quarter 2025 results. These services produced roughly $10 million of revenue, but were breakeven EBITDA. Additionally, I would note that our first quarter results exclude any benefit from the 2025 New Mexico DPP program that is awaiting final CMS approval. First quarter 2025 adjusted EBITDA grew 2.5% to $98 million. In pursuit of our strategic operational excellence initiatives, we made additional progress on our supply chain during the first quarter. Supply cost as a percent of revenue declined 60 basis points year over year. We have a number of projects in the pipeline that we expect will create additional efficiencies over the next several years and continue to see an opportunity to improve margins by 100 to 200 basis points over the next three to four years through scale, supply chain optimization, and other operating cost initiatives. Also on the cost side, the growth rate of physician professional fees was 6% in the first quarter of 2025, down from 13% growth during the same period last year. While hospital-based physician subsidies remain a headwind, We are beginning to see hopeful signs that the growth rates are moderating. On the ambulatory front, we are pleased with the integration of the 18 next care urgent care clinics that we acquired on January 1st, 2025. As the year progresses, we expect this transaction to generate additional downstream volumes in our Tulsa and Albuquerque markets. Consistent with our focus on high growth, midsize urban markets, we expect to continue to strategically expand ambulatory access points to meet consumer demand and drive growth. In terms of M&A, we are seeing more potential acquisition candidates as providers assess optionality in the marketplace in a more uncertain regulatory environment. We are seeing increased interest in our unique joint venture model from potential academic and non-for-profit partners that are in this exploratory phase. We will continue to evaluate these potential opportunities in a disciplined manner and have the balance sheet to move forward when a stockholder value enhancing opportunity presents itself. In summary, we continue to successfully execute on our strategic growth priorities during the first quarter of 2025, creating strong momentum to start the year. This puts us firmly on track to meet our full year 2025 financial guidance, which we are reaffirming today. With that, I will turn over the call to Alfred.