Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2025

Summary of Significant Accounting Policies

Summary of Significant Accounting PoliciesRecent 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

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

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.

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

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

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.

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

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.