Ardent Health, Inc.

Thank you for standing by and welcome to Ardent Health first quarter 2026 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 would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to reply to a question, please press the star one again. Thank you. I would now like to turn the conference over to Dave Stiebel, Senior Vice President of Investor Relations. You may begin.

Thank you, Operator, and welcome to Ardent Health's first quarter 2026 earnings conference call. Joining me today is Ardent President and Chief Executive Officer, Marty Thonick, and Chief Financial Officer, Alfred Lumsdain. 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 a discussion of certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDAR. Dave Kuntz, Reconciliation of these measures to the closest gap 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 artist health COM with that i'll turn the call over to Marty.

Marty Baron, Thank you Dave and good morning, we appreciate everyone joining the call and webcast. During the first quarter, we built on the positive momentum exiting 2025 to deliver strong financial results. Revenue increased 7% and adjusted EBITDA grew 26%. Both adjusted admissions and higher acuity surgical activity showed positive growth, even with the transient impacts related to weather and a light flu season, which reflects the underlying demand in our markets. Importantly, our strong first quarter results underscore the resiliency of our operating model, and disciplined execution amidst a challenging backdrop. Further, this performance reflects effective cost management across the organization and prudent investment decisions. Our first quarter performance is a solid start to the year and provides increased visibility and confidence as we track towards our 2026 financial targets. To frame today's conversation, I'm going to focus my comments on three key areas. First, I will cover first quarter results. Second, I will provide an update on the impact program our work to improve margins, performance, agility, and care transformation. And third, I will share updates on key 2026 focus areas. Let's start with first quarter results. We had a good quarter that included strong cost management, particularly in SWB and supplies, that drove 110 basis points of adjusted EBITDA margin expansion. I'm pleased with how we navigated transient challenges in the quarter. Like many of our peers, we experienced severe winter storms in certain markets and lighter respiratory season. This resulted in fewer admissions and some disruption to our typical seasonal pattern. As conditions evolved, we acted swiftly to reschedule surgeries and adjust labor to align with volume, mitigating the impact on performance. We also have been strategically focused on surgeon recruitment and productivity as a part of our capacity IQ strategy. Capacity IQ is our system-wide approach to managing capacity and demand strategically, aligning where we invest, how we deploy clinical talent, and how we utilize assets to drive volume, mix, and throughput across the enterprise with a focus on key service lines. Collectively, these actions help drive first quarter total surgery growth of 1.2% year over year, which is 100 basis point improvement over full year 2025 growth. Adjusted admissions increased 2%, which is in the middle of our 2026 guidance range. At the same time, labor management was strong again, and the significant improvement that began in the fourth quarter persisted into the first quarter. Specifically, we reduced salaries, wages, and benefits expense per AA by 1.4% in the first quarter. Supply expense per AA growth was a modest 1.7%. Taken together, these results reflect improving execution across labor and supply costs, reinforcing our focus on consistently delivering results through the controllable aspects of our business. I now would like to shift to the two industry headwinds we've previously discussed. First, payer denial trends were stable in the first quarter compared to fourth quarter, and we continue to work with Ensemble to drive improved denial management and recovery efforts. Secondly, professional fees were consistent with expectations in the first quarter and are tracking in line with our 2026 target. While it's early in the year, we are encouraged these headwinds are stabilizing consistent with our expectations. Turning to our impact program. We continue to be pleased with our progress against our initiatives to further optimize cost and strengthen margins. Importantly, we remain on track to deliver $55 million in savings this year. The improvements we began delivering in the fourth quarter of last year continued to manifest on the P&L in the first quarter, reflecting consistent execution and durability. Precision staffing initiatives resulted in first quarter salaries, wages, and benefits expense growth of only 0.6%. Additionally, we reduced contract labor expenses by over 40% to $15 million in the first quarter, driving 160 basis point year-over-year improvement in contract labor as a percent of salaries, wages, and benefits expense. In addition to labor discipline, we are driving incremental supply cost efficiencies under the IMPACT program. First quarter results reflect a broader set of strategic initiatives to leverage our scale and purchasing power with vendors, including improved rebates on physician preference items by moving to a single or dual source vendor model. We also renegotiated key cardiovascular and med-surg distribution contracts, which are beginning to yield savings. What's also important is that these margin improvement activities are not episodic. They represent repeatable operating improvements across staffing, supply chain, and throughput embedded into how we run the business. Lastly, I'll shift to an update on some key 2026 focus areas, starting with outpatient growth. We continue to advance our ambulatory strategy, expanding capacity in markets where we see strong demand and attractive returns. During the first quarter, we opened four urgent care centers across our Texas, New Mexico, and Idaho markets. For the remainder of the year, we expect to open two ASCs, one freestanding ED, and one urgent care facility. Once fully ramped, these assets should drive incremental volumes. We're also focused on using AI and digital tools in a disciplined way to support consistent execution and improve operating efficiency across the enterprise. Our approach is practical and operational. Deploying technology where it helps us to transform care delivery, enabling us to better manage staffing, enhance patient safety, and use resources more effectively. For example, in February, we announced a partnership with HelloCare AI to implement an enterprise-wide AI-assisted virtual care platform across more than 2,000 patient rooms. Deployment is underway, and we expect all markets to be completed by year-end. Within this initiative, virtual patient monitoring, including virtual sitting, is already live across our markets. The centralized technology-enabled model strengthens patient safety while allowing us to deploy clinical resources more efficiently at scale. It has already demonstrated the ability to prevent harm in its early use. While our initial focus is on patient safety and care quality, these tools also support our broader labor efficiency and cost discipline objectives as we scale the platform. So to summarize, the first quarter represents a strong start to the year and managing through transient admission volume softness. Our model continues to demonstrate durability and resiliency, and execution against our impact initiatives is translating into stronger operating efficiency and margin improvement. While we recognize the healthcare environment remains dynamic and certain external factors are outside our control, our focus remains squarely on the elements that we can control, cost discipline, operational execution, and capital allocation. That discipline gives us confidence that we are on track to deliver on full-year financial targets we established on our fourth quarter's earning call. With that, I will turn the call over to Alfred.