ardt-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________

FORM 10-Q

_______________________________________________________

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2025

	or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

	Commission File Number: 001-42180

	Ardent Health, Inc.
	(Exact name of Registrant as specified in its charter)


Delaware		61-1764793
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
340 Seven Springs Way, Suite 100, Brentwood, Tennessee		37027
(Address of principal executive offices)		(Zip Code)
	(615) 296-3000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	ARDT	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the

preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90

days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging

growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the

Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐	Smaller reporting company	☐
Non-accelerated filer	☒			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or

revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 4, 2025, the Registrant had 143,106,447 shares of common stock outstanding.

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ARDENT HEALTH, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS

Unaudited

(Dollars in thousands, except per share amounts)


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024
Total revenue	$1,645,280	$1,470,920	$3,142,514	$2,909,966
Expenses:
Salaries and benefits	671,697	624,058	1,329,349	1,245,567
Professional fees	297,012	271,903	577,869	536,597
Supplies	270,639	259,391	529,494	517,172
Rents and leases	27,825	24,986	55,586	49,841
Rents and leases, related party	37,819	36,965	75,869	74,164
Other operating expenses	163,698	115,319	294,465	237,151
Interest expense	14,729	18,160	28,905	37,421
Depreciation and amortization	39,309	36,312	75,510	71,663
Loss on extinguishment and modification of debt	—	1,898	—	1,898
Other non-operating losses (gains)	560	(255)	(20,723)	(255)
Total operating expenses	1,523,288	1,388,737	2,946,324	2,771,219
Income before income taxes	121,992	82,183	196,190	138,747
Income tax expense	26,291	15,222	41,524	25,935
Net income	95,701	66,961	154,666	112,812
Net income attributable to noncontrolling interests	22,751	24,191	40,333	42,995
Net income attributable to Ardent Health, Inc.	$72,950	$42,770	$114,333	$69,817

Net income per share:
Basic	$0.52	$0.34	$0.82	$0.55
Diluted	$0.52	$0.34	$0.81	$0.55
Weighted-average common shares outstanding:
Basic	140,374,892	126,115,301	140,219,452	126,115,301
Diluted	141,517,661	126,115,301	141,111,732	126,115,301

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ARDENT HEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(Dollars in thousands, except per share amounts)


	June 30, 2025 (1)	December 31, 2024 (1)
Assets
Current assets:
Cash and cash equivalents	$540,629	$556,785
Accounts receivable	758,641	743,031
Inventories	118,403	115,093
Prepaid expenses	127,883	113,749
Other current assets	331,558	304,093
Total current assets	1,877,114	1,832,751
Property and equipment, net	870,377	861,899
Operating lease right of use assets	274,338	248,040
Operating lease right of use assets, related party	922,548	929,106
Goodwill	877,681	852,084
Other intangible assets	76,930	76,930
Deferred income taxes	17,072	12,321
Other assets	111,194	142,969
Total assets	$5,027,254	$4,956,100

Liabilities and Equity
Current liabilities:
Current installments of long-term debt	$19,333	$9,234
Accounts payable	364,450	401,249
Accrued salaries and benefits	259,160	295,117
Other accrued expenses and liabilities	237,930	239,824
Total current liabilities	880,873	945,424
Long-term debt, less current installments	1,090,390	1,085,818
Long-term operating lease liability	244,741	221,443
Long-term operating lease liability, related party	912,216	919,313
Self-insured liabilities	220,839	227,048
Other long-term liabilities	31,820	34,697
Total liabilities	3,380,879	3,433,743
Commitments and contingencies (see Note 9)
Redeemable noncontrolling interests	(1,751)	1,158
Equity:
Preferred stock, par value $0.01 per share; 50,000,000 shares authorized; no shares issued and outstanding	—	—
Common stock, par value $0.01 per share; 750,000,000 shares authorized; 143,098,506 shares issued and outstanding as of June 30, 2025, and 142,747,818 shares issued and outstanding as of December 31, 2024	1,431	1,428
Additional paid-in capital	773,422	754,415
Accumulated other comprehensive income (loss)	(396)	9,737
Retained earnings	480,129	365,796
Equity attributable to Ardent Health, Inc.	1,254,586	1,131,376
Noncontrolling interests	393,540	389,823
Total equity	1,648,126	1,521,199
Total liabilities and equity	$5,027,254	$4,956,100

(1) As of June 30, 2025 and December 31, 2024, the unaudited condensed consolidated balance sheets included total liabilities of consolidated variable interest entities of $315.7

million and $306.4 million, respectively. Refer to Note 2, Summary of Significant Accounting Policies, for further discussion.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ARDENT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In thousands)


	Six Months Ended June 30,
	2025	2024
Cash flows from operating activities:
Net income	$154,666	$112,812
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	75,510	71,663
Other non-operating losses	777	—
Loss on extinguishment and modification of debt	—	1,898
Amortization of deferred financing costs and debt discounts	2,474	2,857
Deferred income taxes	(2,733)	(923)
Equity-based compensation	20,509	738
(Income) loss from non-consolidated affiliates	(2,956)	2,139
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Accounts receivable	(14,251)	62,021
Inventories	(3,118)	540
Prepaid expenses and other current assets	(51,449)	(42,791)
Accounts payable and other accrued expenses and liabilities	(50,590)	(85,810)
Accrued salaries and benefits	(36,136)	(19,395)
Net cash provided by operating activities	92,703	105,749
Cash flows from investing activities:
Investment in acquisitions, net of cash acquired	—	(7,800)
Purchases of property and equipment	(69,105)	(62,765)
Other	(264)	58
Net cash used in investing activities	(69,369)	(70,507)
Cash flows from financing activities:
Proceeds from insurance financing arrangements	10,959	6,026
Proceeds from long-term debt	—	1,798
Payments of principal on insurance financing arrangements	(6,529)	(4,337)
Payments of principal on long-term debt	(2,896)	(104,843)
Debt issuance costs	—	(2,444)
Payments of initial public offering costs	—	(2,824)
Distributions to noncontrolling interests	(39,525)	(31,657)
Other	(1,499)	—
Net cash used in financing activities	(39,490)	(138,281)
Net decrease in cash and cash equivalents	(16,156)	(103,039)
Cash and cash equivalents at beginning of period	556,785	437,577
Cash and cash equivalents at end of period	$540,629	$334,538

Supplemental Cash Flow Information:
Non-cash purchases of property and equipment	$13,272	$4,929
Offering costs not yet paid	$—	$4,825

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ARDENT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Unaudited

(Dollars in thousands, except for unit and share amounts)


		Equity Attributable to Ardent Health, Inc.				Non- controlling Interests	Total Equity
	Redeemable Noncontrolling Interests	Common Units		Accumulated Other Comprehensive Income (Loss)	Retained Earnings
	Redeemable Noncontrolling Interests	Units(*)	Amount	Accumulated Other Comprehensive Income (Loss)	Retained Earnings
Balance at December 31, 2023	$7,302	484,922,828	$496,882	$18,561	$155,453	$404,118	$1,075,014
Net income attributable to Ardent Health, Inc.	—	—	—	—	27,047	—	27,047
Net income attributable to noncontrolling interests	—	—	—	—	—	21,089	21,089
Net loss attributable to redeemable noncontrolling interests	(2,285)	—	—	—	—	—	—
Other comprehensive income	—	—	—	703	—	—	703
Distributions to noncontrolling interests	—	—	—	—	—	(14,256)	(14,256)
Vesting of Class C Units	—	464,853	512	—	—	—	512
Balance at March 31, 2024	$5,017	485,387,681	$497,394	$19,264	$182,500	$410,951	$1,110,109
Net income attributable to Ardent Health, Inc.	—	—	—	—	42,770	—	42,770
Net income attributable to noncontrolling interests	—	—	—	—	—	25,540	25,540
Net loss attributable to redeemable noncontrolling interests	(1,349)	—	—	—	—	—	—
Other comprehensive loss	—	—	—	(2,255)	—	—	(2,255)
Distributions to noncontrolling interests	—	—	—	—	—	(17,401)	(17,401)
Vesting of Class C Units	—	522,002	226	—	—	—	226
Balance at June 30, 2024	$3,668	485,909,683	$497,620	$17,009	$225,270	$419,090	$1,158,989

(*) See Note 1, Description of the Business and Basis of Presentation - Initial Public Offering and Corporate Conversion, for further discussion.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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		Equity Attributable to Ardent Health, Inc.					Non- controlling Interests	Total Equity
	Redeemable Noncontrolling Interests	Common Stock		Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings
	Redeemable Noncontrolling Interests	Shares	Amount	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings
Balance at December 31, 2024	$1,158	142,747,818	$1,428	$754,415	$9,737	$365,796	$389,823	$1,521,199
Net income attributable to Ardent Health, Inc.	—	—	—	—	—	41,383	—	41,383
Net income attributable to noncontrolling interests	—	—	—	—	—	—	18,932	18,932
Net loss attributable to redeemable noncontrolling interests	(1,350)	—	—	—	—	—	—	—
Other comprehensive loss	—	—	—	—	(5,809)	—	—	(5,809)
Distributions to noncontrolling interests	—	—	—	—	—	—	(19,239)	(19,239)
Vesting of restricted stock unit awards	—	289,946	2	(1,063)	—	—	—	(1,061)
Equity-based compensation	—	—	—	9,263	—	—	—	9,263
Balance at March 31, 2025	$(192)	143,037,764	$1,430	$762,615	$3,928	$407,179	$389,516	$1,564,668
Net income attributable to Ardent Health, Inc.	—	—	—	—	—	72,950	—	72,950
Net income attributable to noncontrolling interests	—	—	—	—	—	—	24,310	24,310
Net loss attributable to redeemable noncontrolling interests	(1,559)	—	—	—	—	—	—	—
Other comprehensive loss	—	—	—	—	(4,324)	—	—	(4,324)
Distributions to noncontrolling interests	—	—	—	—	—	—	(20,286)	(20,286)
Issuance of common stock	—	7,553	—	—	—	—	—	—
Vesting of restricted stock unit awards	—	66,306	1	(439)	—	—	—	(438)
Forfeitures of restricted stock awards	—	(13,117)	—	—	—	—	—	—
Equity-based compensation	—	—	—	11,246	—	—	—	11,246
Balance at June 30, 2025	$(1,751)	143,098,506	$1,431	$773,422	$(396)	$480,129	$393,540	$1,648,126

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ARDENT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

1. Description of the Business and Basis of Presentation

Reporting Entity

Ardent Health, Inc. was initially formed in 2015 as a Delaware limited liability company. On July 17, 2024, Ardent Health

Partners, LLC converted from a Delaware limited liability company into a Delaware corporation in connection with its initial

public offering and changed its name to Ardent Health Partners, Inc. Effective June 3, 2025, Ardent Health Partners, Inc.

changed its name to Ardent Health, Inc. Ardent Health, Inc. is a holding company that has affiliates that operate acute care

hospitals and other healthcare facilities and employ physicians. The terms “Ardent,” the “Company,” “we,” “our” and “us,”

as used in these notes to the unaudited condensed consolidated financial statements, refer to Ardent Health, Inc. and its

affiliates and on or prior to July 16, 2024, Ardent Health Partners, LLC and its affiliates, unless stated otherwise or indicated

by context. The term “affiliates” includes direct and indirect subsidiaries of Ardent and partnerships and joint ventures in

which such subsidiaries are equity owners. At June 30, 2025, the Company operated 30 acute care hospitals in six states,

including two rehabilitation hospitals and two surgical hospitals.

Basis of Presentation

The financial statements include the unaudited condensed consolidated balance sheets, income statements, comprehensive

income statements, statements of cash flows and statements of changes in equity of the Company and its affiliates, which are

controlled by the Company through the Company’s direct or indirect ownership of a majority equity interest and rights

granted to the Company through certain variable interests. All intercompany balances and transactions have been eliminated

in consolidation. In the opinion of management, all adjustments, which consist of normal recurring adjustments, and

disclosures considered necessary for a fair presentation have been included.

Certain information and disclosures normally included in annual financial statements presented in accordance with U.S.

generally accepted accounting principles (“GAAP”) have been omitted in these interim financial statements pursuant to rules

and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, these unaudited condensed consolidated

financial statements and related notes should be read in conjunction with the Company's audited consolidated financial

statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2024

(the “Annual Report”).

Initial Public Offering and Corporate Conversion

On July 19, 2024, the Company completed an initial public offering of 12,000,000 shares of its common stock at a public

offering price of $16.00 per share (the "IPO") for aggregate gross proceeds of $192.0 million and net proceeds of

approximately $181.4 million, after deducting underwriting discounts and commissions of approximately $10.6 million. The

Company provided the underwriters with an option to purchase up to an additional 1,800,000 shares of common stock of the

Company, which was fully exercised by the underwriters, and, on July 30, 2024, the Company issued 1,800,000 additional

shares of common stock at $16.00 per share for additional net proceeds of approximately $27.2 million, after deducting

underwriting discounts and commissions of approximately $1.6 million. The Company’s common stock is listed on the New

York Stock Exchange under the symbol “ARDT”.

On July 17, 2024, in connection with the IPO and immediately prior to the effectiveness of the Company's registration

statement on Form S-1, the Company converted from a Delaware limited liability company into a Delaware corporation by

means of a statutory conversion (the “Corporate Conversion”) and changed its name to Ardent Health Partners, Inc. As a

result of the Corporate Conversion, the outstanding limited liability company membership units and vested profits interest

units were converted into 120,937,099 shares of common stock and outstanding unvested profits interest units were converted

into 2,848,027 shares of restricted common stock. Immediately following the Corporate Conversion, ALH Holdings, LLC, a

subsidiary of Ventas, Inc. ("Ventas"), a common unit holder that beneficially owned a percentage of the Company’s

outstanding membership interests and maintained a seat on the Company’s board of managers, making Ventas a related party,

contributed all of its outstanding common stock in AHP Health Partners, Inc. ("AHP Health Partners"), a direct subsidiary of

the Company, to Ardent Health Partners, Inc. in exchange for 5,178,202 shares of common stock of Ardent Health Partners,

Inc. (the "ALH Contribution"). As a result of the ALH Contribution, AHP Health Partners became a wholly-owned

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subsidiary of Ardent Health Partners, Inc. The Corporate Conversion and the ALH Contribution have been retrospectively

applied to prior periods herein for the purposes of calculating basic and diluted net income per share. The Company’s

certificate of incorporation authorizes 750,000,000 shares of common stock and 50,000,000 shares of preferred stock, each

with a $0.01 par value per share.

General and Administrative Costs

The majority of the Company’s expenses are “cost of revenue” items. Costs that could be classified as general and

administrative by the Company include its corporate office costs and centralized corporate services such as human resources,

information technology, and finance, which were $32.6 million and $29.1 million for the three months ended June 30, 2025

and 2024, respectively, and $67.5 million and $62.0 million for the six months ended June 30, 2025 and 2024, respectively.

2. Summary of Significant Accounting Policies

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires a public business entity to disclose specific

categories in its annual effective tax rate reconciliation and provide disaggregated information about significant reconciling

items by jurisdiction and by nature. ASU 2023-09 also requires entities to disclose their income tax payments (net of refunds)

to international, federal, and state and local jurisdictions and includes several other changes to income tax disclosure

requirements. This standard is effective for annual periods beginning after December 15, 2024, and requires prospective

application with the option to apply it retrospectively. The adoption of this guidance will not affect the Company’s

consolidated results of operations, financial position or cash flows. The Company is currently evaluating the standard to

determine its impact on the Company’s disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”), which

requires the disclosure of certain disaggregated expenses within the notes to the financial statements. ASU 2024-03 is

effective for annual periods beginning after December 15, 2026, and interim reporting periods within fiscal years beginning

after December 15, 2027. Adoption of ASU 2024-03 can either be applied prospectively to consolidated financial statements

issued for reporting periods after the effective date of this standard or retrospectively to any or all prior periods presented in

the consolidated financial statements. Early adoption is also permitted. The Company is currently evaluating the standard to

determine its impact on the Company’s disclosures.

Variable Interest Entities

GAAP requires variable interest entities (“VIEs”) to be consolidated if an entity’s interest in the VIE is a controlling financial

interest in accordance with Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”). Under the variable

interest model, a controlling financial interest is determined based on which entity, if any, has (i) the power to direct the

activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb the

losses, or the right to receive benefits, from the VIE that could potentially be significant to the VIE.

The Company performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s

involvement with a VIE could cause the Company’s consolidation conclusion to change. The consolidation status of the VIEs

with which the Company is involved may change as a result of such reassessments. Changes in consolidation status are

applied prospectively.

The Company, through its wholly-owned subsidiaries, owns majority interests in certain limited liability companies

(“LLCs”), with each LLC owning and operating one or more hospitals. The noncontrolling interest is typically owned by a

not-for-profit medical system, university, academic medical center or foundation or combination thereof (individually or

collectively referred to as “minority member”). The employees that work for the LLC and the related hospital(s) are

employees of the Company, and the Company manages the day-to-day operations of the LLC and the hospital(s) pursuant to

a management services agreement (“MSA”).

The LLCs are VIEs due to their structure as LLCs and the control that resides with the Company through the MSA. The

Company consolidates each of these LLCs as it is considered the primary beneficiary due to the MSA providing the

Company the right to direct the day-to-day operating and capital activities of the LLC and the respective hospital(s) that most

significantly impact the LLC’s economic performance. Additionally, the Company would absorb a majority of the entity’s

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expected losses, receive a majority of the entity’s expected residual returns, or both, as a result of its majority ownership,

contractual or other financial interests in the entity. The MSAs are subject to termination only by mutual agreement of the

Company and minority member, except in the case of gross negligence, fraud or bankruptcy of the Company, in which case

the minority member can force termination of the MSA.

All of the Company’s VIEs meet the definition of a business, and the Company holds a majority of their issued voting equity

interests. Their assets are not required to be used only for the settlement of VIE obligations as the Company has the ability to

direct the use of the VIE assets through its joint venture and cash management agreements.

The governance rights of the minority members are restricted to those that protect their financial interests and do not preclude

consolidation of the LLCs. The rights of minority members generally are limited to such items as the right to approve the

issuance of new ownership interests, calls for additional cash contributions, the acquisition or divestiture of significant assets

and the incurrence of debt in excess of levels not expected to be incurred in the normal course of business.

As of June 30, 2025 and December 31, 2024, nine of the Company’s hospitals were owned and operated through LLCs that

have been determined to be VIEs and were consolidated by the Company. Consolidated assets at June 30, 2025 and

December 31, 2024 included total assets of VIEs equal to $1.3 billion. The Company’s VIEs do not have creditors that have

recourse to the Company. As the structure and nature of business are very similar for each of the LLCs, they are discussed

and presented herein on a combined basis.

The total liabilities of VIEs included in the Company’s unaudited condensed consolidated balance sheets are shown below (in

thousands):


	June 30, 2025	December 31, 2024
Current liabilities:
Current installments of long-term debt	$2,883	$2,266
Accounts payable	88,973	89,428
Accrued salaries and benefits	38,858	37,713
Other accrued expenses and liabilities	52,688	45,250
Total current liabilities	183,402	174,657
Long-term debt, less current installments	11,591	8,192
Long-term operating lease liability	105,917	108,897
Long-term operating lease liability, related party	9,370	9,423
Self-insured liabilities	680	676
Other long-term liabilities	4,750	4,595
Total liabilities	$315,710	$306,440

Income from operations before income taxes attributable to VIEs was $68.0 million and $76.7 million for the three months

ended June 30, 2025 and 2024, respectively, and $130.6 million and $138.4 million for the six months ended June 30, 2025

and 2024, respectively.

Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments

that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. On

an ongoing basis, the Company evaluates its estimates. The Company bases its estimates on historical experience and on

various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for

making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual

results may differ from these estimates.

Revenue Recognition

The Company’s revenue generally relates to contracts with patients in which its performance obligations are to provide

healthcare services to the patients. Revenue is recorded during the period the Company’s obligations to provide healthcare

services are satisfied. Revenue for performance obligations satisfied over time is recognized based on charges incurred in

relation to total expected charges. The Company’s performance obligations for inpatient services are generally satisfied over

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periods that average approximately five days. The Company’s performance obligations for outpatient services are generally

satisfied over a period of less than one day. As the Company’s performance obligations relate to contracts with a duration of

one year or less, the Company elected the optional exemption under ASC Topic 606, Revenue from Contracts with

Customers, and, therefore, is not required to disclose the transaction price for the remaining performance obligations at the

end of the reporting period or when the Company expects to recognize revenue. Additionally, the Company is not required to

adjust the consideration for the existence of a significant financing component when the period between the transfer of the

services and the payment for such services is one year or less.

Contractual relationships with patients, in most cases, involve a third party payor (Medicare, Medicaid and managed care

health plans), and the transaction prices for services provided are dependent upon the terms provided by (Medicare and

Medicaid) or negotiated with (managed care health plans) the third party payors. The payment arrangements with third party

payors for the services provided to the related patients typically specify payments at amounts less than the Company’s

standard charges.

The Company’s revenue is based upon the estimated amounts the Company expects to be entitled to receive from patients

and third party payors. Estimates of contractual adjustments under managed care insurance plans are based upon the payment

terms specified in the related contractual agreements. Revenue related to uninsured patients and copayment and deductible

amounts for patients who have healthcare coverage may have discounts applied (uninsured discounts and other discounts).

The Company also records estimated implicit price concessions (based primarily on historical collection experience) related

to uninsured accounts to record self-pay revenue at the estimated amounts expected to be collected.

Medicare and Medicaid regulations and various managed care contracts, under which the discounts from the Company’s

standard charges must be calculated, are complex and are subject to interpretation and adjustment. The Company estimates

contractual adjustments on a payor-specific basis based on its interpretation of the applicable regulations or contract terms.

However, the necessity of the services authorized and provided, and resulting reimbursements, are often subject to

interpretation. These interpretations may result in payments that differ from the Company’s estimates. Additionally, updated

regulations and contract renegotiations occur frequently, necessitating continual review and assessment of the estimates by

management.

Laws and regulations governing Medicare and Medicaid programs are complex and subject to interpretation and change.

Estimated reimbursement amounts are adjusted in subsequent periods as cost reports are prepared and filed and as final

settlements are determined (in relation to certain government programs, primarily Medicare, this is generally referred to as

the “cost report” filing and settlement process). Settlements under reimbursement agreements with third party payors are

estimated and recorded in the period in which the related services are rendered and are adjusted in future periods as final

settlements are determined. Final determination of amounts earned under the Medicare, Medicaid and other third party payor

programs often occurs in subsequent years because of audits by the programs, rights of appeal, and the application of

technical provisions. Settlements are considered in the recognition of net patient service revenue on an estimated basis in the

period the related services are rendered, and such amounts are subsequently adjusted in future periods as adjustments become

known or as years are no longer subject to such audits and reviews. Differences between original estimates and subsequent

revisions, including final settlements, are included in the results of operations of the period in which the revisions are made.

For the three months ended June 30, 2025 and 2024, these adjustments resulted in an increase to net patient service revenue

of $0.3 million and a decrease to net patient service revenue of $0.5 million, respectively, and for the six months ended June

30, 2025, an increase to net patient service revenue of $9.2 million. The adjustments had no net impact to net patient service

revenue for the six months ended June 30, 2024.

At June 30, 2025 and December 31, 2024, the Company’s settlements under reimbursement agreements with third party

payors were a net receivable of $34.4 million and $1.9 million, respectively, of which a receivable of $63.0 million and

$42.6 million, respectively, was included in other current assets and a payable of $28.6 million and $40.7 million,

respectively, was included in other accrued expenses and liabilities in the unaudited condensed consolidated balance sheets.

Final determination of amounts earned under prospective payment and other reimbursement activities is subject to review by

appropriate governmental authorities or their agents. In the opinion of the Company’s management, adequate provision has

been made for any adjustments that may result from such reviews.

Subsequent adjustments that are determined to be the result of an adverse change in the patient’s or the payor’s ability to pay

are recognized as bad debt expense. Bad debt expense for the three and six months ended June 30, 2025 and 2024 was not

material to the Company.

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The Company’s total revenue is presented in the following table (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	Amount	% of Total Revenue	Amount	% of Total Revenue	Amount	% of Total Revenue	Amount	% of Total Revenue
Medicare	$643,757	39.1%	$578,163	39.3%	$1,239,394	39.5%	$1,147,646	39.4%
Medicaid	159,733	9.7%	155,334	10.6%	309,076	9.9%	311,612	10.7%
Other managed care	724,053	44.0%	634,476	43.1%	1,369,205	43.6%	1,247,593	42.9%
Self-pay and other	92,104	5.6%	77,914	5.3%	173,083	5.4%	155,132	5.4%
Net patient service revenue	$1,619,647	98.4%	$1,445,887	98.3%	$3,090,758	98.4%	$2,861,983	98.4%
Other revenue	25,633	1.6%	25,033	1.7%	51,756	1.6%	47,983	1.6%
Total revenue	$1,645,280	100.0%	$1,470,920	100.0%	$3,142,514	100.0%	$2,909,966	100.0%

The Company provides care without charge to certain patients who qualify under the local charity care policy of the hospital

where the patient receives services. The Company estimates that its costs of care provided under its charity care programs

approximated $35.6 million and $13.9 million for the three months ended June 30, 2025 and 2024, respectively, and $43.8

million and $33.6 million for the six months ended June 30, 2025 and 2024, respectively. The Company does not report a

charity care patient’s charges in revenue as it is the Company’s policy not to pursue collection of amounts related to these

patients, and therefore contracts with these patients do not exist.

The Company’s management estimates its costs of care provided under its charity care programs utilizing a calculated ratio of

costs to gross charges multiplied by the Company’s gross charity care charges provided. The Company’s gross charity care

charges include only services provided to patients who are unable to pay and qualify under the Company’s local charity care

policies. To the extent the Company receives reimbursement through the various governmental assistance programs in which

it participates to subsidize its care of indigent patients, the Company does not include these patients’ charges in its cost of

care provided under its charity care program.

Market Risks

The Company’s revenue is subject to potential regulatory and economic changes in certain states where the Company

generates significant revenue. The following is an analysis by state of revenue as a percentage of the Company’s total

revenue for those states in which the Company generates significant revenue:


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024
Oklahoma	22.5%	25.4%	23.5%		24.8%
New Mexico	20.2%	14.7%	17.2%		15.1%
Texas	34.8%	35.5%	36.1%		36.0%
New Jersey	9.6%	10.1%	10.1%		10.2%
Other	12.9%	14.3%	13.1%		13.9%
Total	100.0%	100.0%	100.0%		100.0%

Supplemental Programs

Several of the Company’s facilities participate in supplemental Medicaid reimbursement programs to offset a portion of the

costs associated with providing care to Medicaid patients. These programs are funded with a combination of state and federal

resources and may be in the form of payments, such as upper payment limit payments, that are intended to address the

difference between traditional Medicaid fee-for-service payments and Medicare reimbursement rates, or payments under

other programs that vary by state under Section 1115 waivers. Additionally, many states have implemented directed payment

programs to direct certain Medicaid managed care plan expenditures. In most cases, these programs are authorized by the

Centers for Medicare & Medicaid Services ("CMS") for a specified period of time and subject to periodic extension or re-

approval. Many of states in which we receive supplemental Medicaid payments have adopted assessments or taxes levied on

healthcare providers to fund the non-federal portion of Medicaid programs. These payment programs are currently under the

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review of certain government agencies. Additionally, some states have requested modifications to their existing

supplemental payment programs during the annual renewal process with CMS. .

The Company recognizes revenue and related expenses under these programs in the period in which amounts are estimable

and payment is reasonably assured. Reimbursements under these programs are included within total revenue, and assessments

and other program-related costs are included within other operating expenses in the Company's unaudited condensed

consolidated income statements.

Acquisitions

Acquisitions are accounted for using the acquisition method of accounting prescribed by ASC 805, Business Combinations,

and the results of operations are included in the unaudited condensed consolidated income statement from the respective

dates of acquisition. The purchase price of these transactions is allocated to the assets acquired and liabilities assumed based

upon their respective fair values at the date of acquisition and can be subject to change up to 12 months subsequent to the

acquisition date due to settling amounts related to purchased working capital and final determination of fair value estimates.

The Company is required to allocate the purchase price of acquired businesses to identifiable assets acquired and liabilities

assumed and, if applicable, noncontrolling interests based on their fair values. The Company records the excess of the

purchase price allocation over those fair values as goodwill.

On January 1, 2025, the Company completed the acquisitions of certain assets and operations of 18 urgent care clinics in New

Mexico and Oklahoma for a combined purchase price of $27.5 million. The consideration transferred on December 31, 2024,

consisted solely of cash. Upon closing of the acquisitions, approximately $4.1 million was placed into escrow to cover

potential working capital adjustments and to secure certain indemnification obligations pursuant to the terms of the purchase

agreements. This escrow amount is included in the total purchase consideration of $27.5 million. Most of the combined

purchase price for assets and operations acquired was recorded as goodwill with an immaterial portion allocated to

identifiable assets acquired and liabilities assumed. The fair values of assets and liabilities recorded as of June 30, 2025

related to these acquisitions are provisional and will be finalized at the close of the measurement period.

Fair Value of Financial Instruments

Cash and cash equivalents, accounts receivable, inventories, prepaid expenses, other current assets, accounts payable, accrued

salaries and benefits, accrued interest and other accrued expenses and current liabilities (other than those pertaining to lease

liabilities) are reflected in the accompanying unaudited condensed consolidated financial statements at amounts that

approximate fair value because of the short-term nature of these instruments. The fair value of the Company’s revolving

credit facility also approximates its carrying value as it bears interest at current market rates. Refer to Note 5, Interest Rate

Swap Agreements, for discussion of the fair value measurement of the Company’s derivative instruments.

The carrying amounts and fair values of the Company’s senior secured term loan facility and its 5.75% Senior Notes due

2029 (the “5.75% Senior Notes”) were as follows (in thousands):


	Carrying Amount		Fair Value
	June 30, 2025	December 31, 2024	June 30, 2025	December 31, 2024
Senior secured term loan facility	$774,292	$773,772	$777,195	$779,575
5.75% Senior Notes	$299,641	$299,596	$287,655	$289,110

The estimated fair values of the Company’s senior secured term loan facility and the 5.75% Senior Notes were based upon

quoted market prices at that date and are categorized as Level 2 within the fair value hierarchy.

Noncontrolling Interests

The financial statements include the financial position and results of operations of hospital and healthcare operations in which

the Company owned less than 100% of the equity interests, but maintained a controlling interest during the presented periods.

Earnings or losses attributable to the noncontrolling interests are presented separately in the consolidated income statements.

In accordance with ASC 810, holders of noncontrolling interests are considered to be equity holders in the consolidated

company, pursuant to which noncontrolling interests are classified as part of equity, unless the noncontrolling interests are

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redeemable. Certain redemptive features associated with the noncontrolling interests for The University of Kansas Health

System – St. Francis Campus (“St. Francis”) could require the Company to deliver cash if the redemptive features are

exercised. These redemptive features could be exercised upon, among other things, the Company’s exclusion or suspension

from participation in any federal or state government healthcare payor program. Therefore, the noncontrolling interests

balance for St. Francis is classified outside the permanent equity section of the Company’s unaudited condensed consolidated

balance sheets.

The redeemable noncontrolling interests related to St. Francis at June 30, 2025 and December 31, 2024 have not been

subsequently measured at fair value since the acquisition date in 2017. The noncontrolling interests are not currently

redeemable and it is not probable that the noncontrolling interests will become redeemable as the possibility of the Company

being excluded or suspended from participation in any federal or state government healthcare payor program is remote.

Earnings Per Share

Basic net income per share is computed by dividing net income available to common stockholders by the weighted-average

common shares outstanding during the period. Diluted net income per share takes into account the potential dilution that

could occur if securities or other contracts to issue shares, such as unvested restricted stock units, were exercised and

converted into shares. Diluted net income per share is computed by dividing net income available to common stockholders by

the weighted-average common shares outstanding during the period, increased by the number of additional shares that would

have been outstanding if the potential shares had been issued and were dilutive.

3. Related Party Transactions

Effective August 4, 2015, Ventas acquired ownership of the Company’s real estate in exchange for a $1.4 billion payment

from Ventas and the Company’s agreement to lease the acquired real estate back from Ventas (the “Ventas Master Lease”).

The Ventas Master Lease is a 20-year master lease agreement (with a renewal option for an additional 10 years) with certain

subsidiaries of Ventas, pursuant to which the Company currently leases 10 of the Company’s hospitals. The Ventas Master

Lease includes an annual rent escalator equal to the lesser of four times the Consumer Price Index or 2.5%. In accordance

with ASC 842, Leases, variable lease payments are excluded from the Company’s minimum rental payments used to

determine the right-of-use assets and lease obligations and are recognized as expense when incurred. The Ventas Master

Lease includes a number of operating and financial restrictions on the Company. Management believes it was in compliance

with all financial covenants as of June 30, 2025.

The Company recorded rent expense related to the Ventas Master Lease and other lease agreements with Ventas for certain

medical office buildings of $37.8 million and $37.0 million for the three months ended June 30, 2025 and 2024, respectively,

and $75.9 million and $74.2 million for the six months ended June 30, 2025 and 2024, respectively.

4. Long-Term Debt and Financing Matters

Long-term debt consists of the following (in thousands):


	June 30, 2025	December 31, 2024
Senior secured term loan facility	$774,292	$773,772
5.75% Senior Notes	299,641	299,596
Finance leases	28,650	20,907
Other debt	20,140	15,672
Deferred financing costs	(13,000)	(14,895)
Total debt	1,109,723	1,095,052
Less current maturities	(19,333)	(9,234)
Long-term debt, less current maturities	$1,090,390	$1,085,818

As of June 30, 2025 and December 31, 2024, the senior secured term loan facility reflected an original issue discount

(“OID”) of $3.2 million and $3.7 million, respectively. As of June 30, 2025 and December 31, 2024, the 5.75% Senior Notes

balance reflected an OID of $0.4 million.

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Senior Secured Credit Facilities

On August 24, 2021, the Company entered into a credit agreement (the "Term Loan B Credit Agreement") for its senior

secured term loan facility (the "Term Loan B Facility"), which provided funding up to a principal amount of $900.0 million

with a seven year maturity. Principal under the Term Loan B Facility was due in consecutive equal quarterly installments of

0.25% of the initial $900.0 million principal amount as of the execution of the credit agreement (subject to certain reductions

from time to time as a result of the application of prepayments), with the remaining balance due upon maturity of the Term

Loan B Facility. The proceeds from the Term Loan B Facility were used to prepay in full the Company's then-outstanding

$825.0 million senior secured term loan facility, including any accrued and unpaid interest, fees and other expenses related to

the transaction. On June 8, 2023, the Company further amended the Term Loan B Credit Agreement to replace the London

Interbank Offered Rate ("LIBOR") with the Term Secured Overnight Financing Rate ("SOFR") and Daily Simple SOFR

(each as defined in the amended Term Loan B Credit Agreement) as the reference interest rate. On June 26, 2024, the

Company used cash on hand to prepay $100.0 million of the $877.5 million outstanding principal on the Term Loan B

Facility, which prepaid all remaining required quarterly principal payments; and no modification was made to the Term Loan

B Credit Agreement as a result of this prepayment. Effective July 19, 2024, pursuant to the terms of the Term Loan B Credit

Agreement and as a result of the IPO, the applicable margin was automatically reduced by 25 basis points to 3.25% over

Term SOFR and 2.25% over base rate. On September 18, 2024, the Company executed an amendment to reprice its Term

Loan B Credit Agreement. The repricing reduced the applicable interest rate by 50 basis points from Term SOFR plus 3.25%

to Term SOFR plus 2.75% and from the base rate plus 2.25% to the base rate plus 1.75%, and it eliminated the credit spread

adjustment. No modifications were made to the maturity of the loans as a result of the repricing and all other terms were

substantially unchanged.

Effective July 8, 2021, the Company entered into an amended and restated senior credit agreement for its $225.0 million

senior secured asset-based revolving credit facility (the “ABL Credit Agreement”). The ABL Credit Agreement consisted of

a $225.0 million senior secured asset-based revolving credit facility with a five-year maturity. On April 21, 2023, the

Company further amended and restated the ABL Credit Agreement to replace LIBOR with the Term SOFR and Daily Simple

SOFR (each as defined in the amended ABL Credit Agreement) as the reference interest rate. On June 26, 2024, the

Company further amended the ABL Credit Agreement to increase the revolving commitment to $325.0 million and extend its

maturity date to June 26, 2029.

The Term Loan B Credit Agreement and ABL Credit Agreement contain a number of customary affirmative and negative

covenants that limit or restrict the ability of the Company and its subsidiaries to (subject, in each case, to a number of

important exceptions, thresholds and qualifications as set forth in the Term Loan B Credit Agreement and ABL Credit

Agreement):

•incur additional indebtedness (including guarantee obligations);

•incur liens;

•make certain investments;

•make certain dispositions and engage in certain sale / leaseback transactions;

•make certain payments or other distributions; and

•engage in certain transactions with affiliates.

In addition, the ABL Credit Agreement contains a springing financial covenant that requires the maintenance, after failure to

maintain a specified minimum amount of availability to borrow under the senior secured asset-based revolving credit facility,

of a minimum fixed charge coverage ratio of 1.00 to 1.00, as determined at the end of each fiscal quarter. Management

believes that as of June 30, 2025 the Company maintained more than the minimum amount of availability under the senior

secured asset-based revolving credit facility and, therefore, the minimum fixed charge ratio described herein was not

applicable.

Borrowings under the Term Loan B Facility bear interest at a rate per annum equal to, at the Company’s option, either (i) a

base rate (the “base rate”) determined by reference to the highest of (a) the federal funds effective rate plus 0.50%, (b) the

rate last quoted by Bank of America as the “Prime Rate” in the United States for U.S. dollar loans, and (c) Term SOFR

applicable for an interest period of one month (not to be less than 0.50% per annum), plus 1.00% per annum, in each case,

plus an applicable margin, or (ii) Term SOFR (not to be less than 0.50% per annum) for the interest period selected, in each

case, plus an applicable margin. The applicable margins are as follows:

•under the Term Loan B Credit Agreement, the applicable margin was equal to 2.50% for base rate borrowings and

3.50% for Term SOFR borrowings;

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•effective July 19, 2024, pursuant to the terms of the Term Loan B Credit Agreement and as a result of the IPO, the

applicable margin was automatically reduced to 2.25% for base rate borrowings and 3.25% for Term SOFR

borrowings; and

•effective September 18, 2024, the Company completed a repricing of its Term Loan B Credit Agreement, upon

which the applicable margin was reduced to 1.75% for base rate borrowings and 2.75% for Term SOFR borrowings.

The $325.0 million senior secured asset-based revolving credit facility is comprised of two tranches: (1) a $275.0 million

non-UT Health East Texas borrowers’ tranche and (2) a $50.0 million UT Health East Texas borrowers’ tranche available to

the Company’s East Texas Health System, LLC subsidiary (collectively referred to as the “ABL Facilities”). At the election

of the borrowers under the applicable ABL Facility loan, the interest rate per annum applicable to loans under the ABL

Facilities is based on a fluctuating rate of interest determined by reference to either (i) the base rate determined by reference

to the highest of (A) the federal funds effective rate plus 0.50%, (B) the rate last quoted by The Wall Street Journal as the

“Prime Rate” in the United States for U.S. dollar loans from time to time, and (C) Term SOFR (as adjusted for any applicable

statutory reserve rate) applicable for an interest period of one month, plus 1.00% per annum, in each case, plus an applicable

margin, or (ii) the higher of Term SOFR or 0.00% per annum for the interest period selected, in each case, plus an applicable

margin. The applicable margin is determined based on the percentage of the average daily availability of the applicable ABL

Facility. The applicable margin for the non-UT Health East Texas ABL Facility loan ranges from 0.5% to 1.0% for base rate

borrowings and 1.5% to 2.0% for Term SOFR borrowings. The applicable margin for the UT Health East Texas ABL Facility

loan ranges from 1.5% to 2.0% for base rate borrowings and 2.5% to 3.0% for Term SOFR borrowings.

The Term Loan B Facility and ABL Facilities are collectively referred to herein as the “Senior Secured Credit Facilities.”

The Senior Secured Credit Facilities are guaranteed by the Company and certain of the Company’s subsidiaries. Guarantees

of the Company’s subsidiaries that are tenants under the Ventas Master Lease (“Tenants”) are limited to (i) the Term Loan B

Facility and (ii) the obligations of the loan parties under the ABL Facilities (excluding any obligations of the entities that

constitute the UT Health East Texas system). In addition, the guarantees of the Tenants with respect to the indebtedness

incurred under both the Term Loan B Facility and ABL Facilities are subject to an aggregate dollar cap amount.

The non-UT Health East Texas ABL Facility is secured by first priority liens over substantially all of the Company’s and

each guarantor’s accounts and other receivables, chattel paper, deposit accounts and securities accounts, general intangibles,

instruments, investment property, commercial tort claims and letters of credit relating to the foregoing, along with books,

records and documents, and proceeds thereof, subject to certain exceptions (the “ABL Priority Collateral”), and a second

priority lien over substantially all of the Company’s and each guarantor’s other assets (including all of the capital stock of the

domestic guarantors), subject to certain exceptions (the “Term Priority Collateral”). The obligations of the UT Health East

Texas ABL Facility and obligations in excess of the maximum aggregate dollar cap amount permitted to be guaranteed by the

Tenants under the Term Loan B Facility and ABL Facilities, in each case, are not secured by the assets of the subsidiaries that

are also Tenants.

The Term Loan B Facility is secured by a first priority lien on the Term Priority Collateral and a second priority lien on the

ABL Priority Collateral. Certain excluded assets are not included in the Term Priority Collateral or the ABL Priority

Collateral. The obligations in excess of the maximum aggregate dollar cap amount permitted to be guaranteed by the Tenants

under the Term Loan B Facility and ABL Facilities, in each case, are not secured by the assets of the subsidiaries that are also

Tenants.

Subject to certain exceptions (including with regard to the ABL Priority Collateral), thresholds and reinvestment rights, the

Term Loan B Facility is subject to mandatory prepayments with respect to:

•net cash proceeds of issuances of debt by AHP Health Partners or any of its restricted subsidiaries that are not

permitted by the Term Loan B Facility;

•subject to certain thresholds, reinvestment permissions and carve-outs, 100% (with step-downs to 50% and 0%,

based upon achievement of specified senior secured net leverage ratio levels) of net cash proceeds of certain asset

sales;

•subject to certain thresholds, reinvestment permissions and carve-outs, 100% (with step-downs to 50% and 0%,

based upon achievement of specified senior secured net leverage ratio levels) of net cash proceeds of certain

insurance and condemnation events;

•50% (with step-downs to 25% and 0%, based upon achievement of specified senior secured net leverage ratio levels)

of annual excess cash flow, net of certain voluntary prepayments of secured indebtedness, of AHP Health Partners

and its subsidiaries commencing with the fiscal year ending December 31, 2022; and

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•net cash proceeds received in connection with any exercise of the purchase option of the loans by Ventas under the

Relative Rights Agreement.

5.75% Senior Notes due 2029

On July 8, 2021, AHP Health Partners (the “Issuer”) issued the 5.75% Senior Notes, which mature on July 15, 2029, pursuant

to an indenture (the “2029 Notes Indenture”). The 2029 Notes Indenture provides that the 5.75% Senior Notes are general

unsecured, senior obligations of the Issuer and are unconditionally guaranteed on a senior unsecured basis by the Company

and certain subsidiaries of the Issuer. In addition, the guarantees of the Tenants are subject to an aggregate dollar cap amount.

The 5.75% Senior Notes are subordinate to the Senior Secured Credit Facilities.

The 5.75% Senior Notes bear interest at a rate of 5.75% per annum and accrue from July 8, 2021. Interest is payable semi-

annually, in cash in arrears on January 15 and July 15 of each year, commencing on January 15, 2022. The Issuer may

redeem the 5.75% Senior Notes, in whole or in part, at any time and from time to time, at the redemption prices set forth

below, plus accrued and unpaid interest, if any, to the redemption date, subject to compliance with certain conditions:


Date (if redeemed during the 12 month period beginning on July 15 of the years indicated below)	Percentage
2025	101.438%
2026 and thereafter	100.000%

If the Issuer experiences certain change of control events, the Issuer must offer to repurchase all of the 5.75% Senior Notes

(unless otherwise redeemed) at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if

any, to the repurchase date. If the Issuer sells certain assets and does not reinvest the net proceeds or repay senior debt in

compliance with the 2029 Notes Indenture, it must offer to repurchase the 5.75% Senior Notes at 100% of the principal

amount thereof, plus accrued and unpaid interest, if any, to the repurchase date.

Future Installments

Future installments of long-term debt at June 30, 2025, excluding unamortized discounts and unamortized deferred financing

costs, are as follows (in thousands):


2025 (remaining six months)	$9,444
2026	13,979
2027	7,801
2028	782,274
2029	303,790
Thereafter	9,002
Total	$1,126,290

5. Interest Rate Swap Agreements

Market risks relating to the Company’s operations result primarily from changes in interest rates. The Company’s exposure to

interest rate risk results from the entry into financial debt instruments that arose from transactions entered into during the

normal course of business. As part of an overall risk management program, the Company evaluates and manages exposure to

changes in interest rates on an ongoing basis. The Company has no intention of entering into financial derivative contracts,

other than to hedge a specific financial risk. To mitigate the Company’s exposure to fluctuations in interest rates, the

Company uses pay-fixed interest rate swaps, generally designated as cash flow hedges of interest payments on floating rate

borrowings. Pay-fixed swaps effectively convert floating-rate borrowings to fixed-rate borrowings. Unrealized gains or losses

from the designated cash flow hedges and related tax effects are deferred in accumulated other comprehensive income

(“AOCI”) and recognized in earnings as the interest payments occur. Hedges and derivative financial instruments may

continue to be used in the future in order to manage interest rate exposure.

The Company has entered into interest rate swap agreements to manage its exposure to fluctuations in interest rates. The

valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow

analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives,

including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied

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volatilities. The Company has determined the inputs used to value its derivatives fall within Level 2 of the fair value

hierarchy.

On October 8, 2021, the Company executed interest rate swap agreements (the “October 2021 Agreements”) with Barclays

Bank PLC and Bank of America, N.A. as counterparties, with initial notional amounts totaling $529.0 million and an

effective date of August 31, 2023 and expiring June 30, 2026. The notional amounts decline over time until expiration. Under

the October 2021 Agreements, the Company was required to make monthly fixed rate payments at annual rates ranging from

1.53% to 1.55%, and the counterparties were obligated to make monthly floating rate payments to the Company based on

one-month LIBOR, each subject to a floor of 0.50%. Effective August 31, 2023, the Company amended the October 2021

Agreements to adjust the fixed rates and replace the LIBOR floating interest rate options with Term SOFR floating rate

options. Under the amended October 2021 Agreements, the Company is required to make monthly fixed rate payments at

annual rates ranging from 1.47% to 1.48%, and the counterparties are obligated to make monthly floating rate payments to

the Company based on one-month Term SOFR, each subject to a floor of 0.39%. As of June 30, 2025, the notional amounts

under the October 2021 Agreements were $399.8 million.

On February 5, 2025, the Company executed new interest rate swap agreements (the "February 2025 Agreements") with

Truist Bank and Royal Bank of Canada, as counterparties, with an effective date of June 30, 2025 and expiring June 26, 2029.

As of the effective date, the notional amounts totaled $0.6 million, and will accrete up to $400.4 million by June 30, 2026,

when the October 2021 Agreements expire. Under the February 2025 Agreements, the Company is required to make monthly

fixed payments at annual rates ranging from 3.97% to 3.98% and the counterparties are required to make monthly floating

rate payments to the Company based on one-month Term SOFR, each subject to a floor of 0.50%. As of June 30, 2025, the

notional amounts under the February 2025 Agreements were $0.6 million.

The Company accounts for its interest rate swap agreements in accordance with ASC 815, Derivatives and Hedging. The

October 2021 Agreements and February 2025 Agreements are designated as cash flow hedges and recorded at fair value on

the Company’s unaudited condensed consolidated balance sheets with changes in fair value included in AOCI as a

component of equity and reclassified into interest expense in the same periods during which the hedge transactions affect

earnings.

The Company performs assessments of effectiveness for its cash flow hedges on a quarterly basis to confirm that the hedges

continue to meet the highly effective criteria required to continue applying cash flow hedge accounting. During the six

months ended June 30, 2025 and the year ended December 31, 2024, these hedges were highly effective. Accordingly, no

unrealized gain or loss related to these hedges was reflected in the accompanying unaudited condensed consolidated income

statements, and the change in fair value was included in AOCI as a component of equity. Realized gains and losses during the

periods have been reclassified from AOCI to interest expense.

The following table presents the effects of derivatives in cash flow hedging relationships on the Company’s AOCI and

earnings (in thousands):


		Three Months Ended June 30,		Six Months Ended June 30,
	Classification	2025	2024	2025	2024
Unrealized (loss) income recognized	AOCI	$(2,960)	$2,052	$(7,946)	$8,139
Reclassification from AOCI into earnings	Interest expense, net	(2,890)	(5,103)	(5,765)	(10,239)
Net change in AOCI		$(5,850)	$(3,051)	$(13,711)	$(2,100)

In the 12 months following June 30, 2025, the Company estimates that an additional $7.3 million will be reclassified as a

reduction to interest expense.

As of June 30, 2025 and December 31, 2024, the fair value of the Company’s interest rate swap agreements reflected a net

liability balance of $0.5 million and a net asset balance of $13.2 million, respectively. The following table presents the fair

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value of the Company’s interest rate swap agreements as recorded in the unaudited condensed consolidated balance sheets (in

thousands):


Classification	June 30, 2025	December 31, 2024
Assets:
Other current assets	$7,574	$9,914
Other assets	—	3,264
Total interest rate swap assets	7,574	13,178
Liabilities:
Other accrued expenses and liabilities	302	—
Other long-term liabilities	7,804	—
Total interest rate swap liabilities	8,106	—
Fair value of interest rate swap agreements	$(532)	$13,178

6. Income Taxes

The Company’s income tax provision was $26.3 million and $15.2 million, which equates to an effective tax rate of 21.6%

and 18.5%, for the three months ended June 30, 2025 and 2024, respectively. The Company’s income tax provision was

$41.5 million and $25.9 million, which equates to an effective tax rate of 21.2% and 18.7%, for the six months ended June

30, 2025 and 2024, respectively.

The Company follows the provisions of ASC 740, Income Taxes, regarding unrecognized tax benefits. At June 30, 2025 and

December 31, 2024, the Company had no accrual for unrecognized tax benefits.

As of June 30, 2025, the Company had no ongoing or pending federal examinations for prior years. The Company has

outstanding federal income tax refund claims for the 2016 and 2018 tax years. At June 30, 2025, the refund claims totaled

$10.0 million and were included in other current assets on the Company’s unaudited condensed consolidated balance sheet.

These refund claims are subject to ongoing Joint Committee on Taxation reviews, as well as a statute waiver through

December 31, 2026 that has been agreed to for the years 2016 through 2018. As of June 30, 2025, the Company has accrued

$0.5 million of interest income related to the refund claim, which was included in the Company's income tax expense for the

six months ended June 30, 2025. The Company’s tax years from 2021 through 2024 remain open to examination by federal

and state taxing authorities.

7. Self-Insured Liabilities

The liabilities for professional, general, workers’ compensation and occupational injury liability risks are based on actuarially

determined estimates. Liabilities for professional, general, workers’ compensation and occupational injury liability risks

represent the estimated ultimate cost of all reported and unreported losses incurred through the respective balance sheet dates.

The Company provides an accrual for actuarially determined claims reported but not paid and estimates of claims incurred

but not reported.

Professional and General Liability

The total costs for professional and general liability losses are based on the Company’s premiums and retention costs, and

were $24.3 million and $16.4 million for the three months ended June 30, 2025 and 2024, respectively, and $41.3 million and

$34.9 million for the six months ended June 30, 2025 and 2024, respectively.

Workers' Compensation and Occupational Injury Liability

The total amounts for workers’ compensation liability insurance are based on the Company’s premiums and retention costs,

and were a benefit of $1.8 million and an expense of $0.9 million for the three months ended June 30, 2025 and 2024,

respectively, and an expense of $0.5 million and $3.3 million for the six months ended June 30, 2025 and 2024, respectively.

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8. Employee Benefit Plans

Defined Contribution Plan

The Company maintains defined contribution retirement plans that cover its eligible employees. The Company incurred total

costs related to the retirement plans of $13.2 million and $11.8 million for the three months ended June 30, 2025 and 2024,

respectively, and $27.8 million and $25.0 million for the six months ended June 30, 2025 and 2024, respectively.

Employee Health Plan

The Company maintains a self-insured medical and dental plan for substantially all of its employees. Amounts are accrued

under the Company’s medical and dental plans as the claims that give rise to them occur, and the Company includes a

provision for incurred but not reported claims. Incurred but not reported claims are estimated based on an average lag time

and experience. Accruals are based on the estimated ultimate cost of settlement, including claim settlement expenses.

The total costs of employee health coverage were $45.5 million and $42.9 million for the three months ended June 30, 2025

and 2024, respectively, and $90.0 million and $86.7 million for the six months ended June 30, 2025 and 2024, respectively.

9. Commitments and Contingencies

Litigation and Regulatory Matters

From time to time, claims and suits arise in the ordinary course of the Company’s business. The Company has been, is

currently, and may in the future be subject to claims, lawsuits, qui tam actions, civil investigative demands, subpoenas,

investigations, audits and other inquiries related to its operations. In certain of these actions, plaintiffs request punitive or

other damages against the Company that may not be covered by insurance. These claims, lawsuits, and proceedings are in

various stages of adjudication or investigation and involve a wide variety of claims and potential outcomes. Depending on

whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution

could have a material adverse effect on the Company’s results of operations, financial position or liquidity.

The Company records accruals for such contingencies to the extent that the Company concludes it is probable that a liability

has been incurred and the amount of the loss can be reasonably estimated. Management does not believe that the Company is

party to any proceeding that, either individually or in the aggregate could have a material adverse effect on the business,

financial condition, results of operations or liquidity of the Company.

In November 2023, the Company determined that a ransomware cybersecurity incident had impacted and disrupted a number

of the Company’s operational and information technology systems (the “Cybersecurity Incident”). During this time, the

Company’s hospitals remained operational and continued to deliver patient care utilizing established downtime procedures.

The Company immediately suspended user access to impacted information technology applications, executed cybersecurity

protection protocols, and took steps to restrict further unauthorized activity. Additionally, because of the time taken to contain

and remediate the Cybersecurity Incident, online electronic billing systems were not functioning at their full capacities and

certain billing, reimbursement and payment functions were delayed, which had an adverse impact on the Company’s results

of operations and cash flows for 2023 and the first quarter of 2024.

As a result of the Cybersecurity Incident, three putative class actions were filed against the Company in the U.S. District

Court for the Middle District of Tennessee: Burke v. AHS Medical Holdings LLC, No. 3:23-cv-01308; Redd v. AHS Medical

Holdings, LLC, No. 3:23-cv-01342; and Epperson v. AHS Management Company, Inc., No. 3:24-cv-00396. These cases

were consolidated by the District Court on April 24, 2024, under the caption Hodge v. AHS Management Company, Inc., No.

3:23-cv-01308 (M.D. Tenn.). The complaint for the consolidated class action, filed on behalf of approximately 38,000

individuals who allege their personal information and protected health information were affected by the Cybersecurity

Incident, generally asserts state common law claims of negligence, breach of implied contract, unjust enrichment, breach of

fiduciary duty, and invasion of privacy with respect to how the Company managed sensitive data. On October 4, 2024, the

Company executed a settlement agreement to resolve the consolidated class action litigation. On October 9, 2024, the District

Court preliminarily approved the settlement. Plaintiffs filed a Motion for Final Approval of the Settlement (“Motion for Final

Approval”), which the Company did not oppose. Following a hearing on the Motion for Final Approval that was conducted

on August 1, 2025, the Court ordered Class Counsel, the Settlement Administrator and the Company to implement the agreed

upon settlement of the consolidated case. Pursuant to the settlement, the Company will make settlement payments, the total

of which will not have a material impact on the Company’s results of operations, financial position or liquidity. Upon entry of

the Final Order, the clerk was ordered to close the case.

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During the six months ended June 30, 2025, the Company received $21.5 million of business insurance recovery proceeds

related to the Cybersecurity Incident, all of which was included in other non-operating gains on the Company's condensed

consolidated income statement. No business insurance recovery proceeds related to the Cybersecurity Incident were received

during the three months ended June 30, 2025.

Acquisitions

The Company has acquired, and plans to continue to acquire, businesses with prior operating histories. Acquired companies

may have unknown or contingent liabilities, including liabilities for failure to comply with healthcare laws and regulations,

such as billing and reimbursement, fraud and abuse and anti-kickback laws. The Company has from time to time identified

certain past practices of acquired companies that do not conform to its standards. Although the Company institutes policies

designed to conform such practices to its standards following completion of acquisitions, there can be no assurance that the

Company will not become liable for the past activities of these acquired facilities that may later be asserted to be improper by

private plaintiffs or government agencies. Although the Company generally seeks to obtain indemnification from prospective

sellers covering such matters, there can be no assurance that any such matter will be covered by indemnification or, if

covered, that such indemnification will be adequate to cover potential losses and fines.

10. Segments

The Company has one reportable segment: healthcare services. The healthcare services segment generates revenues by

delivering care to its customers, or patients, through its integrated network of hospitals, ambulatory facilities, and physician

practices. The Company's Chief Operating Decision Maker ("CODM") is its President and Chief Executive Officer, who

regularly reviews financial operating results on a consolidated basis for purposes of allocating resources and evaluating

financial performance. The Company’s CODM manages the operations on a consolidated basis to make decisions about

overall company resource allocation and to assess overall company performance.

The CODM’s assessment of segment performance and allocation of segment resources is based on consolidated net income

attributable to Ardent Health, Inc. The CODM uses this consolidated profitability measure to monitor budget versus actual

results, compare Company profitability period-over-period and make capital investment decisions.

The following table presents the composition of consolidated net income attributable to Ardent Health, Inc. for the healthcare

services segment, including significant expenses that are regularly provided to and reviewed by the CODM (in thousands):


		Three Months Ended June 30,		Six Months Ended June 30,
		2025	2024	2025	2024
Total revenue		$1,645,280	$1,470,920	$3,142,514	$2,909,966
Less:
Employee salaries and benefits		646,401	597,135	1,279,244	1,191,330
Contract labor		25,296	26,923	50,105	54,237
Supplies		270,639	259,391	529,494	517,172
Medical professional fees		112,331	96,803	216,202	194,291
Contract services		184,681	175,100	361,667	342,306
Other segment items (1)		332,982	272,798	591,469	540,813
Net income attributable to Ardent Health, Inc.		$72,950	$42,770	$114,333	$69,817

(1)	Other segment items included in net income attributable to Ardent Health, Inc. for each of the periods presented primarily consists of rent expense, interest expense, depreciation and amortization, income tax expense, other operating expenses, other non-operating losses (gains) and net income attributable to noncontrolling interests.

The measure of segment assets is reported on the unaudited condensed consolidated balance sheets as total consolidated

assets. The accounting policies for the segment are consistent with the consolidated accounting policies provided in Note 2.

As of June 30, 2025 and December 31, 2024, all of the Company’s long-lived assets were located in the United States, and

for the three and six months ended June 30, 2025 and 2024, all revenue was earned in the United States.

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11. Earnings Per Share

Basic net income per share is computed by dividing net income attributable to common stockholders by the weighted-average

number of common shares outstanding. Diluted net income per share is computed by dividing net income attributable to

common stockholders by the weighted-average number of common shares outstanding plus the dilutive effect of outstanding

securities, and such dilutive effect is computed using the treasury stock method.

For the purposes of determining the basic and diluted weighted-average number of common shares outstanding during the

periods presented that are prior to the Corporate Conversion and ALH Contribution, the Company retrospectively reflected

the effects of the Corporate Conversion and the ALH Contribution. As such, the basic and diluted weighted-average number

of common shares outstanding for those periods reflect the conversion of the Company's membership units into common

stock on the date of the Corporate Conversion and ALH Contribution, assuming that all common stock issued in conjunction

with the Corporate Conversion and ALH Contribution was issued and outstanding as of the beginning of the earliest period

presented.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except share and per

share amounts):


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024
Basic:
Net income attributable to common stockholders	$72,950	$42,770	$114,333	$69,817
Weighted-average number of common shares	140,374,892	126,115,301	140,219,452	126,115,301
Net income per common share	$0.52	$0.34	$0.82	$0.55

Diluted:
Net income attributable to common stockholders	$72,950	$42,770	$114,333	$69,817
Weighted-average number of common shares	141,517,661	126,115,301	141,111,732	126,115,301
Net income per common share	$0.52	$0.34	$0.81	$0.55

The following table sets forth the components of the denominator for the computation of basic and diluted net income per

share for net income attributable to Ardent Health, Inc. stockholders:


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024
Weighted-average number of common shares - basic	140,374,892	126,115,301	140,219,452	126,115,301
Effect of dilutive securities(1)	1,142,769	—	892,280	—
Weighted-average number of common shares - diluted	141,517,661	126,115,301	141,111,732	126,115,301

(1)The effect of dilutive securities does not reflect 850,744 and 641,768 weighted-average potential common shares from restricted stock awards and

restricted stock units for the three and six months ended June 30, 2025, respectively, because their effect was antidilutive as calculated under the

treasury stock method.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Management's discussion and analysis of our financial condition and results of operations should be read in conjunction with

our interim unaudited condensed consolidated financial statements and related notes contained elsewhere in this Quarterly

Report on Form 10-Q for the quarter ended June 30, 2025 (this "Quarterly Report") and our audited consolidated financial

statements for the year ended December 31, 2024 and related notes contained in the Annual Report. The following discussion

includes forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never

materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-

looking statements. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties

that could impact our business. In particular, we encourage you to review the risks and uncertainties described in the section

titled “Risk Factors” included in the Annual Report. These risks and uncertainties could cause actual results to differ

materially from those projected in forward-looking statements contained in this Quarterly Report or implied by past results

and trends. Our historical results are not necessarily indicative of the results that may be expected for any period in the

future, and our interim results are not necessarily indicative of the results we expect for the full fiscal year or any other

period.

Unless otherwise indicated, all relevant financial and statistical information included herein relates to our consolidated

operations. Additionally, unless the context indicates otherwise, Ardent Health, Inc. and its affiliates are referred to in this

section as “we,” “our,” or “us.”

Forward-Looking Statements

This Quarterly Report may contain certain “forward-looking statements,” as that term is defined in the U.S. federal securities

laws. These forward-looking statements include, but are not limited to, statements other than statements of historical facts,

including, among others, statements relating to our future financial performance, our business prospects and strategy,

anticipated financial position, liquidity and capital needs, the industry in which we operate and other similar matters. Words

such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,”

“may,” “can,” “continue,” “potential,” “should” and the negative of these terms or other comparable terminology often

identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are

subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the

forward-looking statements. Factors, risks, and uncertainties that could cause actual outcomes and results to be materially

different from those contemplated include, among others: (1) general economic and business conditions, both nationally and

in the regions in which we operate, including the impact of challenging macroeconomic conditions and inflationary pressures,

current geopolitical instability, and impacts from the imposition of, or changes in, tariffs, as well as the potential impact on us

of uncertain political, financial, credit and capital conditions; (2) possible reductions or other changes in Medicare, Medicaid

and other state programs, including Medicaid supplemental payment programs, Medicaid waiver programs or state directed

payments, that could have an adverse effect on our revenues and business; (3) reduction in the reimbursement rates paid by

commercial payors, increased reimbursement denials or payment delays by commercial payors, our inability to retain and

negotiate favorable contracts with private third party payors, or an increasing volume of uninsured or underinsured patients;

(4) effects of changes in healthcare policy or legislation, including the One Big Beautiful Bill Act (the "OBBBA") and any

other reforms that have or may be undertaken by the current presidential administration, and legal and regulatory restrictions

on our hospitals that have physician owners; (5) the ability to achieve operating and financial targets, develop and execute

mitigation plans to offset to the extent possible impacts from the OBBBA, the scheduled expiration of temporary enhanced

subsidies for individuals eligible to purchase insurance coverage through health insurance marketplaces and imposition of

tariffs, attain expected levels of patient volumes and revenues, and control the costs of providing services; (6) security threats,

catastrophic events and other disruptions affecting our, our service providers’ or our joint venture (“JV”) partners’

information technology and related systems, which have adversely affected, and could in the future adversely affect, our

relationships with patients and business partners and subject us to legal claims and liabilities, reputational harm and business

disruption and adversely affect our financial condition; (7) the highly competitive nature of the healthcare industry and

continued industry trends towards clinical transparency and value-based purchasing may impact our competitive position; (8)

inability to recruit and retain quality physicians, as well as increasing cost to contract with hospital-based physicians; (9)

changes to physician utilization practices and treatment methodologies and other factors outside our control that impact

demand for medical services and may reduce our revenues and ability to grow profitability; (10) the effects related to the

sequestration spending reductions pursuant to both the Budget Control Act of 2011 and the Pay-As-You-Go Act of 2010 and

the potential for future deficit reduction legislation; (11) continued industry trends toward value-based purchasing, third party

payor consolidation and care coordination among healthcare providers; (12) inability to successfully complete acquisitions or

strategic JVs or inability to realize all of the anticipated benefits; (13) liabilities because of professional liability and other

claims brought against our hospitals, physician practices, outpatient facilities or other business operations; (14) exposure to

certain risks and uncertainties by the JVs through which we conduct a significant portion of our operations, including

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anticipated synergies, of past acquisitions and the risk that transactions may not receive necessary government clearances;

(15) failure to obtain drugs and medical supplies at favorable prices or sufficient volumes; (16) operational, legal and

financial risks associated with outsourcing functions to third parties; (17) our facilities are heavily concentrated in Texas and

Oklahoma, which makes us sensitive to regulatory, economic and competitive conditions and changes in those states; (18)

negative impact of severe weather, climate change, and other factors beyond our control, which could restrict patient access

to care or cause one or more facilities to close temporarily or permanently; (19) risks related to the Ventas Master Lease and

its restrictions and limitations on our business; (20) the impact of our significant indebtedness and the ability to refinance

such indebtedness on acceptable terms; (21) our failure to comply with complex laws and regulations applicable to the

healthcare industry or to adjust our operations in response to changing laws and regulations; (22) the impact of governmental

claims or governmental investigations, payor audits and litigation brought against our hospitals, physician practices,

outpatient facilities or other business operations; (23) actual or perceived failures to comply with applicable data protection,

privacy and security laws, regulations, standards and other requirements; (24) the impact of a deterioration of public health

conditions associated with a future pandemic, epidemic or outbreak of infectious disease; (25) inability to or delay in

building, acquiring, selling, renovating or expanding our healthcare facilities; (26) failure to comply with federal and state

laws relating to Medicare and Medicaid enrollment, permit, licensing and accreditation requirements; (27) the results of our

efforts to use technology, including artificial intelligence and machine learning, to drive efficiencies, better outcomes and an

enhanced patient experience; (28) our status as a controlled company; (29) conflicts of interest between our controlling

stockholder and other holders of our common stock; and (30) other risk factors described in our filings with the SEC,

including the Annual Report.

We caution you that the foregoing list may not contain all of the risks and uncertainties that may affect the forward-looking

statements made in this Quarterly Report. You should not rely upon forward-looking statements as predictions of future

events.

The forward-looking statements in this Quarterly Report are based on management’s current beliefs, expectations, and

projections about future events and trends affecting our business, results of operations, financial condition, and prospects.

These statements are subject to risks, uncertainties, and other factors described in the “Risk Factors” section of the Annual

Report. We operate in a competitive and rapidly changing environment where new risks and uncertainties can emerge,

making it impossible to predict all potential impacts on our forward-looking statements. Consequently, actual results may

differ materially from those described. The forward-looking statements pertain only to the date they are made, and we do not

undertake any obligation to update them to reflect new information or events unless required by law. You are advised not to

place undue reliance on these statements and to consult any additional disclosures we may provide through our other filings

with the SEC, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.

Overview

Ardent is a leading provider of healthcare services in the United States, operating in eight growing mid-sized urban markets

across six states: Texas, Oklahoma, New Mexico, New Jersey, Idaho and Kansas. We deliver care through a system of 30

acute care hospitals and approximately 280 sites of care with 1,875 employed and affiliated providers as of June 30, 2025.

Affiliated providers, which have increased 4.7% compared to June 30, 2024, are physicians and advanced practice providers

with whom we contract for services through a professional services agreement or other independent contractor agreement.

We hold a leading position in a majority of our markets, and we believe we are one of the leading healthcare systems based

on market share and our integrated network of hospitals, ambulatory facilities, and physician practices. We operate either

independently or in partnership with premier academic medical centers, large not-for-profit hospital systems, community

physicians, and a community foundation through our well-established and differentiated JV model. Collectively, we operate

with a consumer-centric approach to caring for our patients and our communities. Our strategic JV partners offer us

significant advantages, including expanded access points, clinical talent availability, local brand recognition, and scale that

enable us to accelerate market penetration. We believe that we help our partners enhance their network and regional presence

through our operational acumen. We strive to strengthen clinical services, drive operating improvements, and centrally

manage operations to optimize hospital performance and enhance patient care. In each of these partnerships, we are the

majority owner and serve as the day-to-day operator.

Recent Developments

Regulatory Update

On July 4, 2025, Congress passed the OBBBA, its budget reconciliation act for fiscal year 2025. The OBBBA includes

provisions that may impact our financial performance and may substantially modify certain state and federal statutes and

regulations to which our operations are subject. The OBBBA provisions that may impact us have varying effective dates, and

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we are working to analyze their potential impact and timing. We are unable to predict whether or how future legislation,

rulemaking, or judicial action will impact implementation of the OBBBA. Of particular relevance to us, the OBBBA may

reduce the federal government’s overall Medicaid expenditures and tighten Medicaid eligibility requirements. The law limits

eligibility for Medicaid by imposing work or community engagement requirements for adults under 65 years old in Medicaid

expansion states, including states with waiver-based expansions, subject to limited exceptions, and requires eligibility

redeterminations at least every six months for the Medicaid expansion state population. State compliance is required by

December 31, 2026.

In addition, the OBBBA includes significant changes to Medicaid funding mechanisms by restricting federal matching funds

received by state Medicaid programs. The law prohibits states from establishing new provider assessments or taxes, or

increasing the rates of existing provider assessments, for state fiscal years beginning after October 1, 2026, while also

limiting the structure and application of such assessments. The OBBBA also directs the Department of Health and Human

Services to revise regulations governing state directed payment program arrangements to cap total payment rates paid by

Medicaid managed care organizations for certain services at Medicare payment rates instead of average commercial rates and

imposed lower caps in Medicaid expansion states. The revised regulations apply to state directed payment programs

established on or after July 4, 2025 unless the program meets certain grandfathering criteria. The OBBBA provides that

payments under grandfathered programs will be reduced beginning January 1, 2028.

Because our facilities rely in part on reimbursement from federal health care programs, including Medicaid, for the

reimbursement of services rendered, these changes may have a negative impact on our financial performance. Ongoing

budgetary uncertainties and continued efforts to reduce the federal deficit may result in further payment reductions to both

Medicaid and Medicare programs.

In addition to changes made to federal healthcare programs, the OBBBA contains policy changes that are expected to

decrease the number of individuals who obtain health insurance from Affordable Care Act marketplace exchanges. For

example, the OBBBA effectively ends automatic renewals of coverage by requiring pre-enrollment verification of eligibility

and restricts subsidized marketplace coverage based on immigration status.

Urgent Care Acquisitions

On January 1, 2025, we completed the acquisitions of certain assets and operations of 18 urgent care clinics in New Mexico

and Oklahoma for a combined purchase price of $27.5 million. The consideration transferred on December 31, 2024,

consisted solely of cash. Upon closing of the acquisitions, approximately $4.1 million was placed into escrow to cover

potential working capital adjustments and to secure certain indemnification obligations pursuant to the terms of the purchase

agreements. This escrow amount is included in the total purchase consideration of $27.5 million. Most of the combined

purchase price for assets and operations acquired was recorded as goodwill with an immaterial portion allocated to

identifiable assets acquired and liabilities assumed. The fair values of assets and liabilities recorded as of June 30, 2025

related to these acquisitions are provisional and will be finalized at the close of the measurement period.

Term Loan B Facility Repricing

On September 18, 2024, we executed an amendment to reprice our Term Loan B Facility credit agreement (the "Term Loan

B Credit Agreement"). The repricing reduced the applicable interest rate by 50 basis points from Term SOFR (as defined in

the Term Loan B Credit Agreement) plus 3.25% to Term SOFR plus 2.75% and from the base rate plus 2.25% to the base

rate plus 1.75% and it eliminated the credit spread adjustment. No modifications were made to the maturity of the loans as a

result of the repricing and all other terms were substantially unchanged.

Initial Public Offering and Corporate Conversion

On July 19, 2024, we completed an IPO of 12,000,000 shares of our common stock, at a public offering price of $16.00 per

share for aggregate gross proceeds of $192.0 million and net proceeds of approximately $181.4 million after deducting

underwriting discounts and commissions of approximately $10.6 million. The IPO provided the underwriters with an option

to purchase up to an additional 1,800,000 shares of our common stock, which was fully exercised by the underwriters, and,

on July 30, 2024, we issued 1,800,000 additional shares of common stock at $16.00 per share for additional net proceeds of

approximately $27.2 million, after deducting underwriting discounts and commissions of approximately $1.6 million. Our

common stock is listed on the New York Stock Exchange under the symbol "ARDT".

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On July 17, 2024, in connection with the IPO and immediately prior to the effectiveness of our Registration Statement on

Form S-1, we converted from a Delaware limited liability company into a Delaware corporation by means of a statutory

conversion (the "Corporate Conversion") and changed our name to Ardent Health Partners, Inc. As a result of the Corporate

Conversion, the outstanding limited liability company membership units and vested profits interest units were converted into

120,937,099 shares of common stock and outstanding unvested profits interest units were converted into 2,848,027 shares of

restricted common stock. Immediately following the Corporate Conversion, ALH Holdings, LLC, a subsidiary of Ventas, Inc.

("Ventas"), contributed all of its outstanding common stock in AHP Health Partners, Inc. ("AHP Health Partners"), our direct

subsidiary, to Ardent Health Partners, Inc. in exchange for 5,178,202 shares of common stock of Ardent Health Partners, Inc.

(the "ALH Contribution"). The Corporate Conversion and the ALH Contribution have been retrospectively applied to prior

periods herein for the purposes of calculating basic and diluted net income per share. Our certificate of incorporation

authorizes 750,000,000 shares of common stock and 50,000,000 shares of preferred stock, each with a $0.01 par value per

share.

ABL Credit Agreement Amendment and Term Loan B Facility Prepayment

On June 26, 2024, we executed an amendment to our ABL Credit Agreement to increase the revolving commitment by

$100.0 million to $325.0 million and extend the maturity date to June 26, 2029. Concurrent with the execution of this

amendment on June 26, 2024, we also prepaid $100.0 million of the outstanding principal on our Term Loan B Facility. The

$100.0 million prepayment was applied in direct order of maturities of future payments, and no modification was made to the

Term Loan B Facility as a result of this prepayment.

Key Factors Impacting Our Results of Operations

Staffing and Labor Trends

Our operations are dependent on the efforts, abilities and experience of our management and medical support personnel, such

as nurses, pharmacists and lab technicians, as well as our physicians. We compete with other healthcare providers in

recruiting and retaining qualified management and support personnel responsible for the daily operations of each of our

hospitals and other facilities, including nurses and other non-physician healthcare professionals. At times, the availability of

nurses and other medical support personnel has been a significant operating issue for healthcare providers, including at

certain of our facilities. The impact of labor shortages across the healthcare industry may result in other healthcare facilities,

such as nursing homes, limiting admissions, which may constrain our ability to discharge patients to such facilities and

further exacerbate the demand on our resources, supplies and staffing.

We contract with various third parties who provide hospital-based physicians. Third party providers of hospital-based

physicians, including those with whom we contract, have experienced significant disruption in the form of regulatory

changes, including those stemming from enactment of the No Surprises Act, challenging labor market conditions resulting

from a shortage of physicians and inflationary wage-related pressures, as well as increased competition through consolidation

of physician groups. In some instances, providers of outsourced medical specialists have become insolvent and unable to

fulfill their contracts with us for providing hospital-based physicians. The success of our hospitals depends in part on the

adequacy of staffing, including through contracts with third parties. If we are unable to adequately contract with providers, or

the providers with whom we contract become unable to fulfill their contracts, our admissions may decrease, and our operating

performance, capacity and growth prospects may be adversely affected. Further, our efforts to mitigate the potential impact

on our business from third party providers who are unable to fulfill their contracts to provide hospital-based physicians,

including through acquisitions of outsourced medical specialist businesses, employment of physicians and re-negotiation or

assumption of existing contracts, may be unsuccessful. These developments with respect to providers of outsourced medical

specialists, and our inability to effectively respond to and mitigate the potential impact of such developments, may disrupt our

ability to provide healthcare services, which may adversely impact our business, financial condition and results of operations.

We also depend on the available labor pool of semi-skilled and unskilled employees in each of the markets in which we

operate. In some of our markets, employers across various industries have increased minimum wages, which has created

more competition and, in some cases, higher labor costs for this sector of employees.

Seasonality

We typically experience higher patient volumes and revenue in the fourth quarter of each year in our acute care facilities. We

typically experience such seasonal volume and revenue peaks because more people generally become ill during the winter

months, which in turn results in significant increases in the number of patients we treat during those months. In addition,

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revenue in the fourth quarter is also impacted by increased utilization of services due to annual deductibles, which are not

usually met until later in the year, and patient utilization of their healthcare benefits before they expire at year-end.

Inflation

The healthcare industry is labor intensive. Wages and other expenses increase during periods of inflation and when labor

shortages occur in the marketplace. In addition, our suppliers pass along rising costs to us in the form of higher prices. We

have implemented cost control measures in an attempt to curb increases in operating costs and expenses. We have generally

offset increases in operating costs by increasing reimbursement for services, expanding services and reducing costs in other

areas. However, we cannot predict our ability to cover or offset future cost increases, particularly any increases in our cost of

providing health insurance benefits to our employees.

Geographic Data

The information below provides an overview of our operations in certain markets as of June 30, 2025.

Texas. We operated 13 acute care hospital facilities (including one managed hospital that is owned by The University of

Texas Health Science Center at Tyler, an affiliate of The University of Texas System) with 1,436 licensed beds that serve the

areas of Tyler, Amarillo and Killeen, Texas. For the six months ended June 30, 2025, we generated 36.1% of our total

revenue in the Texas market.

Oklahoma. We operated eight acute care hospital facilities with 1,173 licensed beds that serve the Tulsa, Oklahoma area. For

the six months ended June 30, 2025, we generated 23.5% of our total revenue in the Oklahoma market.

New Mexico. We operated five acute care hospital facilities with 619 licensed beds that serve the areas of Albuquerque and

Roswell, New Mexico. For the six months ended June 30, 2025, we generated 17.2% of our total revenue in the New Mexico

market.

New Jersey. We operated two acute care hospital facilities with 476 licensed beds that serve the areas of Montclair and

Westwood, New Jersey. For the six months ended June 30, 2025, we generated 10.1% of our total revenue in the New Jersey

market.

Other Industry Trends

The demand for healthcare services continues to be impacted by the following trends:

•A growing focus on healthcare spending by consumers, employers and insurers, who are actively seeking lower-cost

care solutions;

•A shift in patient volumes from inpatient to outpatient settings due to technological advancements and demand for

care that is more convenient, affordable and accessible;

•The growing aged population, which requires greater chronic disease management and higher-acuity treatment; and

•Ongoing consolidation of providers and insurers across the healthcare industry.

Additionally, the healthcare industry, particularly acute care hospitals, continues to be subject to ongoing regulatory

uncertainty. Changes in federal or state healthcare laws, regulations, including the imposition of, or changes in, tariffs,

funding policies or reimbursement practices, especially those involving reductions to government payment rates or

limitations on what providers may charge, could significantly impact future revenue and operations. For example, the No

Surprises Act prohibits providers from charging patients an amount beyond the in-network cost sharing amount for services

rendered by out-of-network providers, subject to limited exceptions. For services for which balance billing is prohibited, the

No Surprises Act includes provisions that may limit the amounts received by out-of-network providers from health plans.

Any reduction in the rates that we can charge or amounts we can receive for our services will reduce our total revenue and

our operating margins.

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Results of Operations

Revenue and Volume Trends

Our revenue depends upon inpatient occupancy levels, ancillary services and therapy programs ordered by physicians and

provided to patients, the volume of outpatient procedures and the charges and negotiated payment rates for such services.

Total revenue is comprised of net patient service revenue and other revenue. We recognize patient service revenue in the

period in which we provide services. Patient service revenue includes amounts we estimate to be reimbursable by Medicare,

Medicaid and other payors under provisions of cost or prospective reimbursement formulas in effect. The amounts we receive

from these payors are generally less than the established billing rates, and we report patient service revenue net of these

differences (contractual adjustments) at the time we render the services. We also report patient service revenue net of the

effects of other arrangements where we are reimbursed for services at less than established rates, including certain self-pay

adjustments provided to uninsured patients. We also record estimated implicit price concessions (based primarily on

historical collection experience) related to uninsured accounts to record self-pay revenue at the estimated amount expected to

be collected.

Total revenue — Total revenue for the three months ended June 30, 2025 increased $174.4 million, or 11.9%, compared to

the same prior year period. The increase in total revenue for the three months ended June 30, 2025 consisted of an increase in

net patient service revenue per adjusted admission of 10.2% and an increase in adjusted admissions of 1.6%, which reflected

growth in admissions and emergency room visits of 6.6% and 0.2%, respectively, partially offset by a decrease in total

surgeries of 0.2%. The increase in net patient service revenue per adjusted admission was primarily attributable to an increase

in supplemental program revenue and reimbursement rates compared to the same prior year period.

Total revenue for the six months ended June 30, 2025 increased $232.5 million, or 8.0%, compared to the same prior year

period. The increase in total revenue for the six months ended June 30, 2025 consisted of an increase in net patient service

revenue per adjusted admission of 5.7% and an increase in adjusted admissions of 2.2%, which reflected growth in

admissions and emergency room visits of 7.1% and 1.3%, respectively, partially offset by a decrease in total surgeries of

0.4%. The increase in net patient service revenue per adjusted admission was primarily attributable to increased supplemental

program revenue and reimbursement rates compared to the same prior year period.

A key competitive strength and a significant component of our growth strategy has been our well-established and

differentiated JV model, which has resulted in partnerships with premier academic medical centers, large not-for-profit

hospital systems, community physicians, and a community foundation. During the three months ended June 30, 2025 and

2024, total revenue related to these entities was $460.0 million and $435.2 million, respectively, which represented 28.0%

and 29.6%, respectively, of our total revenue for such periods. During the six months ended June 30, 2025 and 2024, total

revenue related to these entities was $888.6 million and $851.1 million, respectively, which represented 28.3% and 29.2%,

respectively, of our total revenue for such periods.

The following table provides the sources of our total revenue by payor:


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024
Medicare	39.1%	39.3%	39.5%	39.4%
Medicaid	9.7%	10.6%	9.9%	10.7%
Other managed care	44.0%	43.1%	43.6%	42.9%
Self-pay and other	5.6%	5.3%	5.4%	5.4%
Net patient service revenue	98.4%	98.3%	98.4%	98.4%
Other revenue	1.6%	1.7%	1.6%	1.6%
Total revenue	100.0%	100.0%	100.0%	100.0%

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Operating Results Summary for the Three Months Ended June 30, 2025

The following table sets forth the consolidated results of our operations expressed in dollars and as a percentage of total

revenue for the periods presented.


	Three Months Ended June 30,
(Unaudited, dollars in thousands)	2025		2024
	Amount	%	Amount	%
Total revenue	$1,645,280	100.0%	$1,470,920	100.0%
Expenses:
Salaries and benefits	671,697	40.8%	624,058	42.4%
Professional fees	297,012	18.1%	271,903	18.5%
Supplies	270,639	16.4%	259,391	17.6%
Rents and leases	27,825	1.7%	24,986	1.7%
Rents and leases, related party	37,819	2.3%	36,965	2.5%
Other operating expenses	163,698	10.0%	115,319	7.9%
Interest expense	14,729	0.9%	18,160	1.2%
Depreciation and amortization	39,309	2.4%	36,312	2.5%
Loss on extinguishment and modification of debt	—	0.0%	1,898	0.1%
Other non-operating losses (gains)	560	0.0%	(255)	0.0%
Total operating expenses	1,523,288	92.6%	1,388,737	94.4%
Income before income taxes	121,992	7.4%	82,183	5.6%
Income tax expense	26,291	1.6%	15,222	1.0%
Net income	95,701	5.8%	66,961	4.6%
Net income attributable to noncontrolling interests	22,751	1.4%	24,191	1.7%
Net income attributable to Ardent Health, Inc.	$72,950	4.4%	$42,770	2.9%

Operating Results Summary for the Six Months Ended June 30, 2025

The following table sets forth, for the periods indicated, the consolidated results of our operations expressed in dollars and as

a percentage of total revenue.


	Six Months Ended June 30,
(Unaudited, dollars in thousands)	2025		2024
	Amount	%	Amount	%
Total revenue	$3,142,514	100.0%	$2,909,966	100.0%
Expenses:
Salaries and benefits	1,329,349	42.3%	1,245,567	42.8%
Professional fees	577,869	18.4%	536,597	18.4%
Supplies	529,494	16.8%	517,172	17.8%
Rents and leases	55,586	1.8%	49,841	1.7%
Rents and leases, related party	75,869	2.4%	74,164	2.5%
Other operating expenses	294,465	9.5%	237,151	8.1%
Interest expense	28,905	0.9%	37,421	1.3%
Depreciation and amortization	75,510	2.4%	71,663	2.5%
Loss on extinguishment and modification of debt	—	0.0%	1,898	0.1%
Other non-operating gains	(20,723)	(0.7)%	(255)	0.0%
Total operating expenses	2,946,324	93.8%	2,771,219	95.2%
Income before income taxes	196,190	6.2%	138,747	4.8%
Income tax expense	41,524	1.3%	25,935	0.9%
Net income	154,666	4.9%	112,812	3.9%
Net income attributable to noncontrolling interests	40,333	1.3%	42,995	1.5%
Net income attributable to Ardent Health, Inc.	$114,333	3.6%	$69,817	2.4%

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The following table provides information on certain drivers of our total revenue:


	Three Months Ended June 30,			Six Months Ended June 30,
	2025	% Change	2024	2025	% Change	2024
Operating Statistics
Total revenue (in thousands)	$1,645,280	11.9%	$1,470,920	$3,142,514	8.0%	$2,909,966
Hospitals operated (at period end) (1)	30	0.0%	30	30	0.0%	30
Licensed beds (at period end) (2)	4,281	(0.1)%	4,287	4,281	(0.1)%	4,287
Utilization of licensed beds (3)	50%	8.7%	46%	50%	8.7%	46%
Admissions (4)	41,535	6.6%	38,958	82,924	7.1%	77,427
Adjusted admissions (5)	87,167	1.6%	85,763	171,703	2.2%	168,076
Inpatient surgeries (6)	9,840	9.2%	9,012	19,090	6.3%	17,958
Outpatient surgeries (7)	22,860	(3.8)%	23,758	44,572	(3.1)%	45,981
Emergency room visits (8)	156,622	0.2%	156,287	317,871	1.3%	313,869
Patient days (9)	194,738	8.8%	179,047	390,952	9.2%	358,173
Total encounters (10)	1,491,905	5.9%	1,408,970	2,942,534	4.3%	2,821,442
Average length of stay (11)	4.68	1.7%	4.60	4.71	1.7%	4.63
Net patient service revenue per adjusted admission (12)	$18,581	10.2%	$16,859	$18,001	5.7%	$17,028

(1)“Hospitals operated (at period end).” This metric represents the total number of hospitals operated by us at the end of the applicable period, irrespective of

whether the hospital real estate is (i) owned by us, (ii) leased by us or (iii) held through a controlling interest in a JV. This metric includes the managed clinical

operations of the hospital at UT Health North Campus in Tyler, Texas (“UT Health North Campus Tyler”), a hospital owned by The University of Texas Health

Science Center at Tyler (“UTHSCT”), an affiliate of The University of Texas System. Since we only manage the clinical operations of UT Health North

Campus Tyler, the financial results of such entity are not consolidated under Ardent Health, Inc.

On April 30, 2024, we closed UT Health East Texas Specialty Hospital, a long-term acute care hospital with 36 licensed patient beds (the “LTAC Hospital”) in

Tyler, Texas. The LTAC Hospital's inventory and fixed assets were transferred or repurposed to be used by our other hospitals.

(2)“Licensed beds (at period end).” This metric represents the total number of beds for which the appropriate state agency licenses a facility, regardless of whether

the beds are actually available for patient use.

(3)“Utilization of licensed beds.” This metric represents a measure of the actual utilization of our inpatient facilities, computed by (i) dividing patient days by the

number of days in each period, and (ii) further dividing that number by average licensed beds, which is calculated by dividing total licensed beds (at period end)

by the number of days in the period, multiplied by the number of days in the period the licensed beds were in existence.

(4)“Admissions.” This metric represents the number of patients admitted for inpatient treatment during the applicable period.

(5)“Adjusted admissions.” This metric is used by management as a general measure of combined inpatient and outpatient volume. Adjusted admissions provides

management with a key performance indicator that considers both inpatient and outpatient volumes by applying an inpatient volume measure (admissions) to a

ratio of gross inpatient and outpatient revenue to gross inpatient revenue. Gross inpatient and outpatient revenue reflect gross inpatient and outpatient charges

prior to estimated contractual adjustments, uninsured discounts, implicit price concessions, and other discounts. The calculation of adjusted admissions is

summarized as follows:

Adjusted Admissions = Admissions x (Gross Inpatient Revenue + Gross Outpatient Revenue)

Gross Inpatient Revenue

(6)“Inpatient surgeries.” This metric represents the number of surgeries performed on patients who have been admitted to our hospitals. Pain management, c-

sections, and certain diagnostic procedures are excluded from inpatient surgeries.

(7)“Outpatient surgeries.” This metric represents the number of surgeries performed on patients who have not been admitted to our hospitals. Pain management, c-

sections, and certain diagnostic procedures are excluded from outpatient surgeries.

(8)“Emergency room visits.” This metric represents the total number of patients provided with emergency room treatment during the applicable period.

(9)“Patient days.” This metric represents the total number of days of care provided to patients admitted to our hospitals during the applicable period.

(10)“Total encounters.” This metric represents the total number of events where healthcare services are rendered resulting in a billable event during the applicable

period. This includes both hospital and ambulatory patient interactions.

(11)“Average length of stay.” This metric represents the average number of days admitted patients stay in our hospitals.

(12)“Net patient service revenue per adjusted admission.” This metric represents net patient service revenue divided by adjusted admissions for the applicable

period. Net patient service revenue reflects gross inpatient and outpatient charges less estimated contractual adjustments, uninsured discounts, implicit price

concessions, and other discounts.

Overview of the Three Months Ended June 30, 2025

Total revenue for the three months ended June 30, 2025 increased $174.4 million, or 11.9%, compared to the same prior year

period. The increase in total revenue for the three months ended June 30, 2025 consisted of an increase in net patient service

revenue per adjusted admission of 10.2% and an increase in adjusted admissions of 1.6%, which reflected growth in

admissions and emergency room visits of 6.6% and 0.2%, respectively, partially offset by a decrease in total surgeries of

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0.2%. The increase in net patient service revenue per adjusted admission was primarily attributable to increased supplemental

program revenue and reimbursement rates compared to the same prior year period.

Total operating expenses increased $134.6 million, but decreased 1.8% as a percentage of total revenue for the three months

ended June 30, 2025 compared to the same prior year period. The decrease in total operating expenses as a percentage of total

revenue was driven primarily by an increase in supplemental program revenue compared to the same prior year period. The

decrease in total operating expense, as a percentage of total revenue, was partially offset by increases in provider assessments

associated with supplemental government programs, equity-based compensation, and professional fees due to higher costs for

hospital-based providers during the three months ended June 30, 2025, compared to the same prior year period.

Comparison of the Three Months Ended June 30, 2025 and 2024

Total revenue — Total revenue for the three months ended June 30, 2025 increased $174.4 million, or 11.9%, compared to

the same prior year period. The increase in total revenue for the three months ended June 30, 2025 consisted of an increase in

net patient service revenue per adjusted admission of 10.2% and an increase in adjusted admissions of 1.6%, which reflected

growth in admissions and emergency room visits of 6.6% and 0.2%, respectively, partially offset by a decrease in total

surgeries of 0.2%. The increase in net patient service revenue per adjusted admission was primarily attributable to increased

supplemental program revenue and reimbursement rates compared to the same prior year period.

Salaries and benefits — Salaries and benefits, as a percentage of total revenue, were 40.8% for the three months ended June

30, 2025 compared to 42.4% for the same prior year period. The decrease in salaries and benefits, as a percentage of total

revenue, was primarily attributable to an increase in supplemental program revenue compared to the same prior year period

partially offset by an increase in equity-based compensation of $11.0 million.

Professional fees — Professional fees, as a percentage of total revenue, were 18.1% for the three months ended June 30, 2025

compared to 18.5% for the same prior year period.

Supplies — Supplies, as a percentage of total revenue, were 16.4% for the three months ended June 30, 2025 compared to

17.6% for the same prior year period. The decrease in supplies, as a percentage of total revenue, was primarily attributable to

an increase in supplemental program revenue compared to the same prior year period.

Rents and leases — Rents and leases were $27.8 million and $25.0 million for the three months ended June 30, 2025 and

2024, respectively.

Rents and leases, related party — Rents and leases, related party, consisted of lease expense related to the Master Lease with

Ventas ("Ventas Master Lease"), under which we lease 10 of our facilities, and other lease agreements with Ventas for certain

medical office buildings. Rents and leases, related party, were $37.8 million and $37.0 million for the three months ended

June 30, 2025 and 2024, respectively.

Other operating expenses — Other operating expenses, as a percentage of total revenue, were 10.0% for the three months

ended June 30, 2025 compared to 7.9% for the same prior year period. Other operating expenses are comprised primarily of

repairs and maintenance, utility, insurance (including professional liability insurance) and provider assessments. The change

in other operating expenses, as a percentage of total revenue, was primarily due to an increase in provider assessments

associated with supplemental government programs during the three months ended June 30, 2025, compared to the same

prior year period.

Interest expense — Interest expense was $14.7 million and $18.2 million for the three months ended June 30, 2025 and 2024,

respectively. On June 26, 2024, we executed an amendment to our ABL Credit Agreement and paid $100.0 million of the

outstanding principal on our Term Loan B Facility. The decrease in interest expense was attributable to the reduction in

average outstanding principal of our Term Loan B Facility during the three months ended June 30, 2025 compared to the

same prior year period.

Loss on extinguishment and modification of debt — In connection with the amendment to our ABL Credit Agreement and

$100.0 million payment on our Term Loan B Facility on June 26, 2024, we incurred a loss on the debt extinguishment of $1.9

million related to the write-off of existing deferred financing costs and original issue discounts for the three months ended

June 30, 2024.

Other non-operating losses (gains) — Other non-operating losses (gains) were a loss of $0.6 million and a gain of $0.3

million for the three months ended June 30, 2025 and 2024, respectively.

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Income tax expense — We recorded income tax expense of $26.3 million, which equates to an effective tax rate of 21.6%, for

the three months ended June 30, 2025 compared to income tax expense of $15.2 million, which equates to an effective tax

rate of 18.5%, for the same prior year period. The increase in income tax expense was primarily driven by an increase in

income before income taxes attributable to Ardent Health, Inc., which resulted in an increase in taxes at the federal statutory

rate during the three months ended June 30, 2025 compared to the same prior year period. Additionally, the effective tax rate

was further impacted by permanent differences resulting from the disallowance of certain equity-based compensation

incurred during the three months ended June 30, 2025.

Net income attributable to noncontrolling interests — During the three months ended June 30, 2025 and 2024, net income

attributable to noncontrolling interests was $22.8 million and $24.2 million, respectively, and consisted primarily of $22.8

million and $22.4 million, respectively, of net income attributable to minority partners’ interests in hospitals and ambulatory

services that are owned and operated though limited liability companies and consolidated by us. Income from operations

before income taxes related to these limited liability companies ("LLCs") was $68.0 million and $76.7 million for the three

months ended June 30, 2025 and 2024, respectively. For the three months ended June 30, 2024, the remaining portion of net

income attributable to noncontrolling interests consisted of net income attributable to ALH Holdings, LLC’s (a subsidiary of

Ventas, a related party) minority interest in AHP Health Partners, our direct subsidiary, prior to the ALH Contribution in July

2024.

Overview of the Six Months Ended June 30, 2025

Total revenue for the six months ended June 30, 2025 increased $232.5 million, or 8.0%, compared to the same prior year

period. The increase in total revenue for the six months ended June 30, 2025 consisted of an increase in net patient service

revenue per adjusted admission of 5.7% and an increase in adjusted admissions of 2.2%, which reflected growth in

admissions and emergency room visits of 7.1% and 1.3%, respectively, partially offset by a decrease in total surgeries of

0.4%. The increase in net patient service revenue per adjusted admission was primarily attributable to increased supplemental

program revenue and reimbursement rates compared to the same prior year period.

Total operating expenses increased $175.1 million, but decreased 1.4% as a percentage of total revenue for the six months

ended June 30, 2025 compared to the same prior year period. The decrease in total operating expenses, as a percentage of

total revenue, was primarily driven by an increase in supplemental program revenue compared to the same prior year period.

The decrease in total operating expense, as a percentage of total revenue, was partially offset by increases in provider

assessments associated with supplemental government programs, equity-based compensation, and professional fees due to

higher costs for hospital-based providers during the six months ended June 30, 2025, compared to the same prior year period.

Comparison of the Six Months Ended June 30, 2025 and 2024

Total revenue — Total revenue for the six months ended June 30, 2025 increased $232.5 million, or 8.0%, compared to the

same prior year period. The increase in total revenue for the six months ended June 30, 2025 consisted of an increase in net

patient service revenue per adjusted admission of 5.7% and an increase in adjusted admissions of 2.2%, which reflected

growth in admissions and emergency room visits of 7.1% and 1.3%, respectively, partially offset by a decrease in total

surgeries of 0.4%. The increase in net patient service revenue per adjusted admission was primarily attributable to increased

supplemental program revenue and reimbursement rates compared to the same prior year period.

Salaries and benefits — Salaries and benefits, as a percentage of total revenue, were 42.3% for the six months ended June 30,

2025 compared to 42.8% for the same prior year period.

Professional fees — Professional fees, as a percentage of total revenue, were 18.4% for the six months ended June 30, 2025

compared to 18.4% for the same prior year period.

Supplies — Supplies, as a percentage of total revenue, were 16.8% for the six months ended June 30, 2025 compared to

17.8% for the same prior year period. The decrease in supplies expense, as a percentage of total revenue, was attributable to

ongoing service line optimization efforts and execution on various supply chain cost reduction initiatives, including improved

inventory management, standardized surgical supply procurement and strategic sourcing. The decrease in supplies, as a

percentage of total revenue, was also attributable to an increase in supplemental program revenue compared to the same prior

year period.

Rents and leases — Rents and leases were $55.6 million and $49.8 million for the six months ended June 30, 2025 and 2024,

respectively.

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Rents and leases, related party — Rents and leases, related party, consisted of lease expense related to the Ventas Master

Lease and other lease agreements with Ventas for certain medical office buildings. Rents and leases, related party, were $75.9

million and $74.2 million for the six months ended June 30, 2025 and 2024, respectively.

Other operating expenses — Other operating expenses, as a percentage of total revenue, were 9.5% for the six months ended

June 30, 2025 compared to 8.1% for the same prior year period. The increase in other operating expenses, as a percentage of

total revenue, was primarily due to an increase in provider assessments associated with supplemental government programs

during the six months ended June 30, 2025 compared to the same prior year period.

Interest expense — Interest expense was $28.9 million and $37.4 million for the six months ended June 30, 2025 and 2024,

respectively. On June 26, 2024, we executed an amendment to our ABL Credit Agreement and paid $100.0 million of the

outstanding principal on our Term Loan B Facility. The decrease in interest expense was attributable to the reduction in

average outstanding principal of our Term Loan B Facility during the six months ended June 30, 2025 compared to the same

prior year period.

Loss on extinguishment and modification of debt — In connection with the amendment to our ABL Credit Agreement and

$100.0 million payment on our Term Loan B Facility on June 26, 2024, we incurred a loss on the debt extinguishment of $1.9

million related to the write-off of existing deferred financing costs and original issue discounts for the six months ended June

30, 2024.

Other non-operating gains — Other non-operating gains were $20.7 million and $0.3 million for the six months ended June

30, 2025 and 2024, respectively. During the six months ended June 30, 2025, other non-operating gains included a gain on

business interruption insurance proceeds of $21.5 million related to a cybersecurity incident that impacted our operations and

information technology systems in November 2023 (the "Cybersecurity Incident").

Income tax expense — We recorded income tax expense of $41.5 million, which equates to an effective tax rate of 21.2%, for

the six months ended June 30, 2025 compared to income tax expense of $25.9 million, which equates to an effective tax rate

of 18.7%, for the same prior year period. The increase in income tax expense was primarily driven by an increase in income

before income taxes attributable to Ardent Health, Inc., which resulted in an increase in taxes at the federal statutory rate

during the six months ended June 30, 2025 compared to the same prior year period. Additionally, the effective tax rate was

further impacted by permanent differences resulting from the disallowance of certain equity-based compensation incurred

during the six months ended June 30, 2025 compared to same prior year period.

Net income attributable to noncontrolling interests — During six months ended June 30, 2025 and 2024, net income

attributable to noncontrolling interests was $40.3 million and $43.0 million, respectively, and consisted primarily of $40.3

million and $40.1 million, respectively, of net income attributable to minority partners’ interests in hospitals and ambulatory

services that are owned and operated though LLCs and consolidated by us. Income from operations before income taxes

related to these LLCs was $130.6 million and $138.4 million for the six months ended June 30, 2025 and 2024, respectively.

For the six months ended June 30, 2024, the remaining portion of net income attributable to noncontrolling interests consisted

of net income attributable to ALH Holdings, LLC’s (a subsidiary of Ventas, a related party) minority interest in AHP Health

Partners, our direct subsidiary, prior to the ALH Contribution in July 2024.

Supplemental Non-GAAP Information

We have included certain financial measures that have not been prepared in a manner that complies with U.S. generally

accepted accounting principles (“GAAP”), including Adjusted EBITDA and Adjusted EBITDAR. We define these terms as

follows:

Performance Measure

•“Adjusted EBITDA” is defined as net income plus (i) provision for income taxes, (ii) interest expense and (iii)

depreciation and amortization expense (or EBITDA), as adjusted to deduct noncontrolling interest earnings, and

excludes the effects of loss on extinguishment and modification of debt; other non-operating losses (gains);

Cybersecurity Incident recoveries, net of incremental information technology and litigation costs; restructuring, exit

and acquisition-related costs; expenses incurred in connection with the implementation of Epic Systems, our

integrated health information technology system; equity-based compensation expense; and loss from disposed

operations. See “Supplemental Non-GAAP Performance Measure.”

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Valuation Measure

•“Adjusted EBITDAR” is defined as Adjusted EBITDA further adjusted to add back rent expense payable to real

estate investment trusts ("REITs"), which consists of rent expense pursuant to the Ventas Master Lease, lease

agreements associated with the MOB Transactions (as defined below) and a lease arrangement with Medical

Properties Trust, Inc. ("MPT") for Hackensack Meridian Mountainside Medical Center. See “Supplemental Non-

GAAP Valuation Measure.”

Supplemental Non-GAAP Performance Measure

Adjusted EBITDA is a non-GAAP performance measure used by our management and external users of our financial

statements, such as investors, analysts, lenders, rating agencies and other interested parties, to evaluate companies in our

industry.

Adjusted EBITDA is a performance measure that is not prepared in accordance with GAAP and is presented in this Quarterly

Report because our management considers it an important analytical indicator that is commonly used within the healthcare

industry to evaluate financial performance and allocate resources. Further, our management believes that Adjusted EBITDA

is a useful financial metric to assess our operating performance from period to period by excluding certain material non-cash

items and unusual or non-recurring items that we do not expect to continue in the future and certain other adjustments we

believe are not reflective of our ongoing operations and our performance.

Because not all companies use identical calculations, our presentation of the non-GAAP measure may not be comparable to

other similarly titled measures of other companies.

While we believe this is a useful supplemental performance measure for investors and other users of our financial

information, you should not consider the non-GAAP measure in isolation or as a substitute for net income or any other items

calculated in accordance with GAAP. Adjusted EBITDA has inherent material limitations as a performance measure, because

it adds back certain expenses to net income, resulting in those expenses not being taken into account in the performance

measure. We have borrowed money, so interest expense is a necessary element of our costs. Because we have material capital

and intangible assets, depreciation and amortization expense are necessary elements of our costs. Likewise, the payment of

taxes is a necessary element of our operations. Because Adjusted EBITDA excludes these and other items, it has material

limitations as a measure of our performance.

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The following table presents a reconciliation of Adjusted EBITDA, a performance measure, to net income, determined in

accordance with GAAP:


	Three Months Ended June 30,		Six Months Ended June 30,
(in thousands)	2025	2024	2025	2024
Net income	$95,701	$66,961	$154,666	$112,812
Adjusted EBITDA Addbacks:
Income tax expense	26,291	15,222	41,524	25,935
Interest expense	14,729	18,160	28,905	37,421
Depreciation and amortization	39,309	36,312	75,510	71,663
Noncontrolling interest earnings	(22,751)	(24,191)	(40,333)	(42,995)
Loss on extinguishment and modification of debt	—	1,898	—	1,898
Other non-operating losses (gains) (a)	560	(255)	777	(255)
Cybersecurity Incident recoveries, net (b)	—	—	(19,705)	—
Restructuring, exit and acquisition-related costs (c)	3,985	5,561	4,904	7,898
Epic expenses (d)	796	426	1,284	1,015
Equity-based compensation	11,246	226	20,509	738
Loss from disposed operations	7	1,982	33	1,986
Adjusted EBITDA	$169,873	$122,302	$268,074	$218,116

(a)Other non-operating losses (gains) include losses and gains realized on certain non-recurring events or events that are non-operational in

nature.

(b)Cybersecurity Incident recoveries, net represent insurance recovery proceeds associated with the Cybersecurity Incident, net of

incremental information technology and litigation costs.

(c)Restructuring, exit and acquisition-related costs represent (i) enterprise restructuring costs, including severance costs related to work

force reductions of $3.3 million and $5.0 million for the three months ended June 30, 2025 and 2024, respectively, and $3.3 million and

$6.9 million for the six months ended June 30, 2025 and 2024, respectively, (ii) penalties and costs incurred for terminating pre-existing

contracts at acquired facilities of $0.2 million for each of the three months ended June 30, 2025 and 2024, and $0.4 million for each of

the six months ended June 30, 2025 and 2024, and (iii) third-party professional fees and expenses, salaries and benefits, and other

internal expenses incurred in connection with potential and completed acquisitions of $0.5 million and $0.4 million for the three months

ended June 30, 2025 and 2024, respectively, and $1.2 million and $0.6 million for the six months ended June 30, 2025 and 2024,

respectively.

(d)Epic expenses consist of various costs incurred in connection with the implementation of Epic, our health information technology

system. These costs included professional fees of $0.8 million and $0.4 million for the three months ended June 30, 2025 and 2024,

respectively, and $1.3 million and $1.0 million for the six months ended June 30, 2025 and 2024, respectively. Epic expenses do not

include ongoing operating costs of the Epic system.

Liquidity and Capital Resources

Liquidity

Our primary sources of liquidity are available cash and cash equivalents, cash flows from our operations and available

borrowings under our ABL Facilities (as defined below). Our primary cash requirements are our operating expenses, the

service of our debt, capital expenditures on our existing properties, acquisitions of hospitals and other healthcare facilities,

and distributions to noncontrolling interests. We believe the combination of cash flow from operations and available cash and

borrowings will be adequate to meet our short-term liquidity needs. Our ability to make scheduled payments of principal, pay

interest on, or refinance, our indebtedness, pay distributions or fund planned capital expenditures will depend on our ability to

generate cash in the future. This ability is, to a certain extent, subject to general economic, financial, competitive, legislative,

regulatory and other factors that are beyond our control.

At June 30, 2025, we had total cash and cash equivalents of $540.6 million and available liquidity of $835.0 million. Our

available liquidity was comprised of $540.6 million of total cash and cash equivalents plus $294.4 million in available

capacity under the ABL Credit Agreement, which is reduced by outstanding borrowings and outstanding letters of credit. In

June 2024, we amended the ABL Credit Agreement to increase commitments available thereunder by $100.0 million and

extended its maturity date to June 26, 2029. See "Senior Secured Credit Facilities" for additional information. At June 30,

2025, our net leverage ratio, as calculated under our ABL Credit Agreement and Term Loan B Credit Agreement, was 1.2x,

and our lease-adjusted net leverage ratio was 2.7x. Our lease adjusted net leverage is calculated as net debt as of June 30,

2025, plus 8.0x trailing twelve month REIT rent expense as of the end of the second quarter of 2025, divided by the trailing

twelve month Adjusted EBITDAR as of June 30, 2025.

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Cash Flows

The following table summarizes certain elements of the statements of cash flows (in thousands):


	Six Months Ended June 30,
	2025	2024
Net cash provided by operating activities	$92,703	$105,749
Net cash used in investing activities	(69,369)	(70,507)
Net cash used in financing activities	(39,490)	(138,281)

Operating Activities

Cash flows provided by operating activities for the six months ended June 30, 2025 totaled $92.7 million compared to $105.7

million for the same prior year period. The decrease in operating cash flows during the six months ended June 30, 2025 was

impacted by changes in net working capital of $70.1 million. The change in working capital was primarily driven by elevated

cash collections during the same prior year period due to a return to standard billing and collections processing following the

Cybersecurity Incident in November 2023. Working capital was further impacted by an increase in receivables attributable to

supplemental reimbursement programs.

Investing Activities

Cash flows used in investing activities for the six months ended June 30, 2025 totaled $69.4 million compared to $70.5

million for the same prior year period. Capital expenditures for non-acquisitions were $69.1 million and $62.8 million for the

six months ended June 30, 2025 and 2024, respectively.

Financing Activities

Cash flows used in financing activities for the six months ended June 30, 2025 totaled $39.5 million compared to cash flows

used in financing activities of $138.3 million for the same prior year period. Cash flows used in financing activities for the

six months ended June 30, 2025 included distributions paid to noncontrolling interests of $39.5 million, payments of

principal on long-term debt of $2.9 million, and payments of principal on insurance financing arrangements $6.5 million,

which were partially offset by proceeds from insurance financing arrangements of $11.0 million.

Cash flows used in financing activities for the six months ended June 30, 2024 totaled $138.3 million and included payments

of principal on long-term debt of $104.8 million, which includes a prepayment of $100.0 million on the $877.5 million

outstanding borrowings under the Term Loan B Facility. Additionally, cash flows used in financing activities included

distributions paid to noncontrolling interests of $31.7 million, and payments of principal on insurance financing arrangements

of $4.3 million, and debt issuance cost of $2.4 million associated with the amended ABL Credit Agreement which increased

commitments available under the ABL Facilities by $100.0 million. The cash flows used in financing activities were partially

offset by proceeds from insurance financing arrangements of $6.0 million and by proceeds from long-term debt of $1.8

million.

Capital Expenditures

We make significant, targeted investments to maintain and modernize our facilities, introduce new technologies, and expand

our service offerings. We expect to finance future capital expenditures with internally generated and borrowed funds. Capital

expenditures for property and equipment were $69.1 million and $62.8 million for the six months ended June 30, 2025 and

2024, respectively.

Ventas Master Lease

Effective August 4, 2015, we sold the real property for ten of our hospitals to Ventas, which is a related party as, prior to our

IPO, it was a common unit holder of Ardent Health Partners, LLC and owned shares of common stock of AHP Health

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Partners and had a representative serving on our board of managers. Concurrent with this transaction, we entered into a 20-

year master lease agreement that expires in August 2035 (with a renewal option for an additional ten years) to lease back the

real estate. We lease ten of our hospitals pursuant to the Ventas Master Lease. As of June 30, 2025, following the

consummation of the IPO and the underwriters’ exercise of their option to purchase additional shares, Ventas beneficially

owned approximately 6.5% of our outstanding common stock.

The Ventas Master Lease includes a number of significant operating and financial restrictions, including requirements that we

maintain a minimum portfolio coverage ratio of 2.2x and a guarantor fixed charge coverage ratio of 1.2x and do not exceed a

guarantor net leverage ratio of 6.75x. In addition, the Relative Rights Agreement entered into by and among Ventas, the

5.75% Senior Notes trustee and the administrative agents under our Senior Secured Credit Facilities (as defined below) in

connection with the series of debt transactions completed during 2021 to refinance our then-existing debt, among other

things, (i) sets forth the relative rights of Ventas and the administrative agents with respect to the properties and collateral

related to the Ventas Master Lease and securing our Senior Secured Credit Facilities, (ii) caps the amount of indebtedness

incurred or guaranteed by our subsidiaries that are tenants under the Ventas Master Lease ("Tenants") (together with such

Tenants’ guarantees of the notes and the Senior Secured Credit Facilities and all other indebtedness incurred or guaranteed by

such Tenants) at $375.0 million and (iii) imposes certain incurrence tests on the incurrence of additional indebtedness by such

Tenants and by us.

We recorded rent expense of $37.8 million and $37.0 million for the three months ended June 30, 2025 and 2024,

respectively, and $75.9 million and $74.2 million for the six months ended June 30, 2025 and 2024, respectively, related to

the Ventas Master Lease and other lease agreements for certain medical office buildings with Ventas.

Senior Secured Credit Facilities

Effective July 8, 2021, we entered into the ABL Credit Agreement, which was amended most recently on June 26, 2024. The

ABL Credit Agreement (as so amended) consists of a $325.0 million senior secured asset-based revolving credit facility with

a five year maturity, comprised of (i) a $275.0 million non-UT Health East Texas borrowers tranche (the “non-UT Health

East Texas ABL Facility”) and (ii) a $50.0 million UT Health East Texas borrowers tranche available to our AHS East Texas

Health System, LLC subsidiary and certain of its subsidiaries (the “UT Health East Texas ABL Facility” and, together with

the non-UT Health East Texas ABL Facility, the “ABL Facilities”), each subject to a borrowing base. The ABL Facilities

mature on June 26, 2029.

Effective August 24, 2021, we entered into the Term Loan B Facility. The credit agreement governing the Term Loan B

Facility provided funding up to a principal amount of $900.0 million with a seven-year maturity. Principal under the Term

Loan B Facility was due in quarterly installments of 0.25% of the initial $900.0 million principal amount as of the execution

of the credit agreement (subject to certain reductions from time to time as a result of the application of prepayments), with the

remaining balance due upon maturity of the Term Loan B Facility. Effective June 8, 2023, we amended the Term Loan B

Credit Agreement to replace LIBOR with the Term SOFR and Daily Simple SOFR (each as defined in the amended Term

Loan B Credit Agreement) as the reference interest rate. On June 26, 2024, we prepaid $100.0 million of the $877.5 million

outstanding borrowings under the Term Loan B Facility using cash on hand, which prepaid all remaining required quarterly

principal payments; and no modification was made to the Term Loan B Credit Agreement as a result of this prepayment.

Effective July 19, 2024, pursuant to the terms of the Term Loan B Credit Agreement and as a result of the IPO, the applicable

margin was automatically reduced by 25 basis points to 3.25% over Term SOFR and 2.25% over base rate. On September 18,

2024, we executed an amendment to reprice our Term Loan B Credit Agreement. The repricing reduced the applicable

interest rate by 50 basis points from Term SOFR plus 3.25% to Term SOFR plus 2.75% and from the base rate plus 2.25% to

the base rate plus 1.75%, and it eliminated the credit spread adjustment. No modifications were made to the maturity of the

loans as a result of the repricing and all other terms were substantially unchanged.

We refer to the Term Loan B Facility and the ABL Facilities collectively herein as the “Senior Secured Credit Facilities.”

Subject to certain exceptions, the ABL Facilities are secured by first priority liens over substantially all of our and each

guarantor’s accounts and other receivables, chattel paper, deposit accounts and securities accounts, general intangibles,

instruments, investment property, commercial tort claims and letters of credit relating to the foregoing, along with books,

records and documents, and proceeds thereof (the “ABL Priority Collateral”), and a second priority lien over substantially all

of our and each guarantor’s other assets (including all of the capital stock of the domestic guarantors and first priority

mortgage liens on any fee-owned real property valued in excess of $5,000,000) (the “Term Priority Collateral”). The

obligations of the UT Health East Texas ABL Facility are not secured by the assets of the subsidiaries that are also Tenants

and certain other subsidiaries related to the Tenants. The obligations under the Term Loan B Facility and the ABL Facilities

in excess of the maximum aggregate dollar cap amount permitted to be guaranteed by the Tenants are not secured by the

assets of the Tenants.

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The Term Loan B Facility is secured by a first priority lien on the Term Priority Collateral and a second priority lien on the

ABL Priority Collateral. Certain excluded assets are not included in the Term Priority Collateral or the ABL Priority

Collateral. The obligations under the Term Loan B Facility and the ABL Facilities in excess of the maximum aggregate dollar

cap amount permitted to be guaranteed by the Tenants are not secured by the assets of the Tenants.

Borrowings under the Term Loan B Facility bear interest at a rate per annum equal to, at our option, either (i) a base rate

determined by reference to the highest of (a) the federal funds effective rate plus 0.50%, (b) the rate last quoted by Bank of

America as the “Prime Rate” in the United States for U.S. dollar loans, and (c) Term SOFR applicable for an interest period

of one month (not to be less than 0.50% per annum), plus 1.00% per annum, in each case, plus an applicable margin, or (ii)

Term SOFR (not to be less than 0.50% per annum) for the interest period selected, in each case, plus an applicable margin.

The applicable margins are as follows:

•under the Term Loan B Credit Agreement, the applicable margin was equal to 2.50% for base rate borrowings and

3.50% for Term SOFR borrowings;

•effective July 19, 2024, pursuant to the terms of the Term Loan B Credit Agreement and as a result of the IPO, the

applicable margin was automatically reduced to 2.25% for base rate borrowings and 3.25% for Term SOFR

borrowings; and

•effective September 18, 2024, we completed a repricing of our Term Loan B Credit Agreement, upon which the

applicable margin was reduced to 1.75% for base rate borrowings and 2.75% for Term SOFR borrowings.

Quarterly installment payments under the Term Loan B Facility are no longer required as a result of our $100.0 million

payment of principal on June 26, 2024, and the remaining principal balance is due upon maturity. The ABL Facilities do not

require installment payments.

At the election of the borrowers under the applicable ABL Facility loan, the interest rate per annum applicable to loans under

the ABL Facilities is based on a fluctuating rate of interest determined by reference to either (i) the base rate plus an

applicable margin or (ii) Term SOFR (not to be lower than 0.00% per annum) for the interest period selected, plus an

applicable margin. The applicable margin is determined based on the percentage of the average daily availability of the

applicable ABL Facility. For the non-UT Health East Texas ABL Facility loan, the applicable margin ranges from 0.5% to

1.0% for base rate borrowings and 1.5% to 2.0% for Term SOFR borrowings. The applicable margin for the UT Health East

Texas ABL Facility loan ranges from 1.5% to 2.0% for base rate borrowings and 2.5% to 3.0% for Term SOFR borrowings.

Subject to certain exceptions (including with regard to the ABL Priority Collateral), thresholds and reinvestment rights, the

Term Loan B Facility is subject to mandatory prepayments with respect to:

•net cash proceeds of issuances of debt by AHP Health Partners or any of its restricted subsidiaries that are not

permitted by the Term Loan B Facility;

•subject to certain thresholds, reinvestment permissions and carve-outs, 100% (with step-downs to 50% and 0%,

based upon achievement of specified senior secured net leverage ratio levels) of net cash proceeds of certain asset

sales;

•subject to certain thresholds, reinvestment permissions and carve-outs, 100% (with step-downs to 50% and 0%,

based upon achievement of specified senior secured net leverage ratio levels) of net cash proceeds of certain

insurance and condemnation events;

•50% (with step-downs to 25% and 0%, based upon achievement of specified senior secured net leverage ratio levels)

of annual excess cash flow, net of certain voluntary prepayments of secured indebtedness, of AHP Health Partners

and its subsidiaries commencing with the fiscal year ending December 31, 2022; and

•net cash proceeds received in connection with any exercise of the purchase option of the loans by Ventas under the

Relative Rights Agreement.

5.75% Senior Notes due 2029

AHP Health Partners (the "Issuer") issued the 5.75% Senior Notes in an exempt offering pursuant to Rule 144A and

Regulation S under the Securities Act that was completed on July 8, 2021. The terms of the 5.75% Senior Notes, which

mature on July 15, 2029, are governed by an indenture, dated as of July 8, 2021 (the “2029 Notes Indenture”), among the

Issuer, us and certain of the Issuer's wholly-owned domestic subsidiaries, as guarantors, and U.S. Bank, National Association,

as trustee. The 2029 Notes Indenture provides that the 5.75% Senior Notes are general senior unsecured obligations of the

Issuer, which are unconditionally guaranteed on a senior unsecured basis by us and certain subsidiaries of the Issuer.

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The 5.75% Senior Notes bear interest at a rate of 5.75% per annum, payable semi-annually, in cash in arrears, on January 15

and July 15 of each year, commencing on January 15, 2022.

The Issuer may redeem the 5.75% Senior Notes, in whole or in part, at any time and from time to time, at the redemption

prices set forth below, plus accrued and unpaid interest, if any, to the redemption date, subject to compliance with certain

conditions:


Date (if redeemed during the 12 month period beginning on July 15 of the years indicated below)	Percentage
2025	101.438%
2026 and thereafter	100.000%

If the Issuer experiences certain change of control events, the Issuer must offer to repurchase all of the 5.75% Senior Notes

(unless otherwise redeemed) at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if

any, to the repurchase date. If the Issuer sells certain assets and does not reinvest the net proceeds or repay senior debt in

compliance with the 2029 Notes Indenture, it must offer to repurchase the 5.75% Senior Notes at 100% of the principal

amount thereof, plus accrued and unpaid interest, if any, to the repurchase date.

Contractual Obligations and Contingencies

The following table provides a summary of our commitments and contractual obligations for debt, minimum lease payment

obligations under non-cancelable leases and other obligations as of June 30, 2025 (in thousands):


	Payments Due by Period
	Total	Less than 1 Year	1-3 Years	3-5 Years	After 5 Years

Long-term debt obligations, with interest	$1,393,523	$47,777	$173,485	$1,156,863	$15,398
Deferred financing obligations, with interest	7,295	3,642	3,189	464	—
Operating leases	2,925,337	99,331	384,494	354,275	2,087,237
Estimated self-insurance liabilities	189,608	34,845	17,953	90,060	46,750
Total	$4,515,763	$185,595	$579,121	$1,601,662	$2,149,385

Outstanding letters of credit are required principally by certain insurers and states to collateralize our workers' compensation

programs and self-insured retentions associated with our professional and general liability insurance programs. As of June 30,

2025, we maintained outstanding letters of credit of approximately $33.4 million, which included interest of $2.8 million.

Supplemental Non-GAAP Valuation Measure

Adjusted EBITDAR is a commonly used non-GAAP valuation measure used by our management, research analysts,

investors and other interested parties to evaluate and compare the enterprise value of different companies in our industry.

Adjusted EBITDAR excludes: (1) certain material non-cash items and unusual or non-recurring items that we do not expect

to continue in the future; (2) certain other adjustments that do not impact our enterprise value; and (3) rent expense payable to

our REITs. We operate 30 acute care hospitals, 12 of which we lease from two REITs, Ventas and MPT, pursuant to long-

term lease agreements. Additionally, during 2022, we completed the sale of 18 medical office buildings to Ventas in

exchange for $204.0 million and concurrently entered into agreements to lease the real estate back from Ventas over a 12-

year initial term with eight options to renew for additional five-year terms (the "MOB Transactions"). Our management views

the long-term lease agreements with Ventas and MPT, as well as the MOB Transactions, as more like financing arrangements

than true operating leases, with the rent payable to such REITs being similar to interest expense. As a result, our capital

structure is different than many of our competitors, especially those whose real estate portfolio is predominately owned and

not leased. Excluding the rent payable to such REITs allows investors to compare our enterprise value to those of other

healthcare companies without regard to differences in capital structures, leasing arrangements and geographic markets, which

can vary significantly among companies. Our management also uses Adjusted EBITDAR as one measure in determining the

value of prospective acquisitions or divestitures. Finally, financial covenants in certain of our lease agreements, including the

Ventas Master Lease, use Adjusted EBITDAR as a measure of compliance. Adjusted EBITDAR does not reflect our cash

requirements for leasing commitments. As such, our presentation of Adjusted EBITDAR should not be construed as a

performance or liquidity measure.

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Because not all companies use identical calculations, our presentation of the non-GAAP measure may not be comparable to

other similarly titled measures of other companies.

While we believe this is a useful supplemental valuation measure for investors and other users of our financial information,

you should not consider the non-GAAP measure in isolation or as a substitute for net income or any other items calculated in

accordance with GAAP. Adjusted EBITDAR has inherent material limitations as a valuation measure, because it adds back

certain expenses to net income, resulting in those expenses not being taken into account in the valuation measure. The

payment of taxes and rent is a necessary element of our valuation. Because Adjusted EBITDAR excludes these and other

items, it has material limitations as a measure of our valuation.

The following table presents a reconciliation of Adjusted EBITDAR, a valuation measure, to net income, determined in

accordance with GAAP:


	Three Months Ended June 30,	Six Months Ended June 30,
(in thousands)	2025	2025
Net income	$95,701	$154,666
Adjusted EBITDAR Addbacks:
Income tax expense	26,291	41,524
Interest expense	14,729	28,905
Depreciation and amortization	39,309	75,510
Noncontrolling interest earnings	(22,751)	(40,333)
Loss on extinguishment and modification of debt	—	—
Other non-operating losses (a)	560	777
Cybersecurity Incident recoveries, net (b)	—	(19,705)
Restructuring, exit and acquisition-related costs (c)	3,985	4,904
Epic expenses (d)	796	1,284
Equity-based compensation	11,246	20,509
Loss from disposed operations	7	33
Rent expense payable to REITs (e)	40,674	81,561
Adjusted EBITDAR	$210,547	$349,635

(a)Other non-operating losses include losses realized on certain non-recurring events or events that are non-operational in nature.

(b)Cybersecurity Incident recoveries, net represent insurance recovery proceeds associated with the Cybersecurity Incident, net of

incremental information technology and litigation costs.

(c)Restructuring, exit and acquisition-related costs for the three and six months ended June 30, 2025 represent (i) enterprise restructuring

costs, including severance costs related to work force reductions of $3.3 million and $3.3 million, respectively, (ii) penalties and costs

incurred for terminating pre-existing contracts at acquired facilities of $0.2 million and $0.4 million, respectively, and (iii) third-party

professional fees and expenses, salaries and benefits, and other internal expenses incurred in connection with potential and completed

acquisitions of $0.5 million and $1.2 million, respectively.

(d)Epic expenses consist of various costs incurred in connection with the implementation of Epic, our health information technology

system. These costs included professional fees of $0.8 million and $1.3 million for the three and six months ended June 30, 2025,

respectively. Epic expenses do not include ongoing operating costs of the Epic system.

(e)Rent expense payable to REITs for the three and six months ended June 30, 2025 consists of rent expense of $37.8 million and $75.9

million, respectively, related to the Ventas Master Lease and other lease agreements with Ventas for medical office buildings and rent

expense of $2.9 million and $5.7 million, respectively, related to a lease arrangement with MPT for the lease of Hackensack Meridian

Mountainside Medical Center.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect

reported amounts and related disclosures. We regularly evaluate the accounting policies and estimates we use. In general, we

base the estimates on historical experience and on assumptions that we believe to be reasonable, given the particular

circumstances in which we operate. Actual results may vary from those estimates. We consider our critical accounting

estimates to be those that (i) involve significant judgments and uncertainties, (ii) require estimates that are more difficult for

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management to determine, and (iii) may produce materially different outcomes under different conditions or when using

different assumptions.

Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting

Policies and Estimates and our audited consolidated financial statements and notes thereto as of and for the year ended

December 31, 2024 included in the Annual Report for a complete and comprehensive discussion of the accounting policies

and related estimates we believe are most critical to understanding our consolidated financial statements, financial condition

and results of operations and that require complex management judgment and assumptions or involve uncertainties. These

critical accounting estimates include revenue recognition, risk management and self-insured liabilities, and income taxes.

There have been no changes to our critical accounting policies or their application since the date of the Annual Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to market risk from exposure to changes in interest rates based on our financing, investing and cash

management activities. We do not, however, hold or issue financial instruments or derivatives for trading or speculative

purposes. At June 30, 2025, the following components of our Senior Secured Credit Facilities bore interest at variable rates at

specified margins above either the agent bank’s alternate base rate or Term SOFR: (i) a $900.0 million, seven-year term loan;

and (ii) a $325.0 million, five-year asset-based revolving credit facility. As of June 30, 2025, we had outstanding variable rate

debt of $767.0 million.

At June 30, 2025, we had interest rate swap agreements with notional amounts totaling $399.8 million and $0.6 million,

expiring June 30, 2026 and June 26, 2029, respectively. Please refer to Note 5 to the Notes to Condensed Consolidated

Financial Statements included within this Quarterly Report for more information on the interest rate swap agreements. Under

the October 2021 Agreements, expiring June 30, 2026, we are required to make monthly fixed rate payments at annual rates

ranging from 1.47% to 1.48% and the counterparties are obligated to make monthly floating rate payments to us based on

one-month Term SOFR, each subject to a floor of 0.39%. On February 5, 2025, we executed new interest rate swap

agreements with an effective date of June 30, 2025 and expiring June 26, 2029. As of the effective date, the notional amounts

totaled $0.6 million, and will accrete up to $400.4 million by June 30, 2026. We are required to make monthly fixed

payments at annual rates ranging from 3.97% to 3.98% and the counterparties are required to make monthly floating rate

payments to the Company based on one-month Term SOFR, each subject to a floor of 0.50%.

Although changes in the alternate base rate or Term SOFR would affect the cost of funds borrowed in the future, we believe

the effect, if any, of reasonably possible near-term changes in interest rates on our variable rate debt on our consolidated

financial position, results of operations or cash flows would not be material. Based on the outstanding borrowings and impact

of the interest rate swaps in place at June 30, 2025, a one percent change in the interest rate would result in a $3.8 million

increase or decrease in our annual interest expense.

We currently believe we have adequate liquidity to fund operations during the near term through the generation of operating

cash flows, cash on hand and access to our Senior Secured Credit Facilities. Our ability to borrow funds under our ABL

Facilities is subject to, among other things, the financial viability of the participating financial institutions. While we do not

anticipate any of our current lenders defaulting on their obligations, we are unable to provide assurance that any particular

lender will not default at a future date.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of

the end of the period covered by this Quarterly Report, the effectiveness of our disclosure controls and procedures. Based on

this evaluation of our disclosure controls and procedures as of June 30, 2025, our principal executive officer and principal

financial officer concluded that our disclosure controls and procedures as of such date were effective at the reasonable

assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the

Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that

are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the

Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and

forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide

only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the

cost-benefit relationship of possible controls and procedures.

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Changes in Internal Control over Financial Reporting

During the three months ended June 30, 2025, there have been no changes in our internal control over financial reporting, as

such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in the “Litigation and Regulatory Matters” section of Note 9, Commitments and Contingencies, in

the notes to the unaudited condensed consolidated financial statements contained elsewhere in this Quarterly Report is

incorporated by reference herein.

ITEM 1A. RISK FACTORS

There have been no material changes to our risk factors that we believe are material to our business, results of operations and

financial condition from the risk factors previously disclosed in the section entitled “Risk Factors” included in the Annual

Report, which are incorporated by reference herein.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended June 30, 2025, we made the following purchases of our equity securities that are registered

pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Period		Total Number of Shares Purchased(1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs(2)
April 1, 2025 - April 30, 2025		—	$—	—	—
May 1, 2025 - May 31, 2025		2,920	13.70	—	—
June 1, 2025 - June 30, 2025		22,895	12.94	—	—
Total		25,815	$13.03	—	—

(1)	Represents 25,815 shares withheld by us to satisfy the payment of tax obligations related to the vesting of restricted stock unit awards.
(2)	We had no publicly announced plans or open market repurchase programs for shares of our common stock during the three months ended June 30, 2025.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the three months ended June 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) under the

Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as

each term is defined in Item 408(a) of Regulation S-K.

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ITEM 6. EXHIBITS


Exhibit Number		Description

2.1		Plan of Conversion (incorporated by reference to Exhibit 2.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2024)
3.1*		Certificate of Incorporation of the Company, as amended
3.2		Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report Form 8-K filed on May 23, 2025)
31.1*		Certification of Principal Executive Officer pursuant to SEC Rule 13a 14(a)/15d 14(a)
31.2*		Certification of Principal Financial Officer pursuant to SEC Rule 13a 14(a)/15d 14(a)
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

** This certification will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such

certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act,

except to the extent specifically incorporated by reference into such filing.


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	ii
	Condensed Consolidated Income Statements for the three and six months ended June 30, 2025 and 2024 (Unaudited)	ii
	Condensed Consolidated Comprehensive Income Statements for the three and six months ended June 30, 2025 and 2024 (Unaudited)	2
	Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited)	4
	Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2025 and 2024 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40


PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
Signatures		43


Date: August 6, 2025	By:	/s/ Alfred Lumsdaine
		Alfred Lumsdaine
		Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)