All right. Great. Good morning, everyone. I'm Craig Heddenbach. I cover the provider and health tech space for Morgan Stanley. Very pleased to have with us Ardent Health, CEO Marty Bonick, and CFO Alfred Lumsdaine. I thought we'd just kick it off with just start with a brief overview of the company, if that's okay. Yeah. Great to be here this morning, Craig. Ardent Health is a leading provider of healthcare services. We operate in eight mid-sized markets across the United States, in six different states. We've got 30 hospitals and over 280 facilities, coupled with our joint venture model in which we partner with academics and nonprofits. That's been the footprint of the company. We're very focused on continuing to grow, not only in our hospitals and in our core markets, but outside the core walls of the hospital into the outpatient environment, and continue to expand in the territories that we're in, as well as look for new opportunities for M&A. Great. You think about just maybe comparing, contrasting kind of how Ardent Health sits relative to some of the public for-profit comps as well as nonprofit? Yeah. The eight markets that we operate in are mid-size urban markets. Still, you know, sizable cities, but not necessarily the major metros. We go really deep inside of those markets. We're staying core in hospitals, clinics, ambulatory settings, and maybe unlike some of our peers, we have not differentiated outside of those core markets. All of the facilities that we own are inside of those markets, and we are staying, you know, on the pure-play acute care side, and, you know, the ancillary outpatient services. Great. How do you think about just some of the demographic and employee trends in your markets? How is that shaping the growth profile for the company? Our markets are very strong, again, growing about three times faster than the U.S. average. That's really been a built-in tailwind. I know that there's a little bit of a discussion in terms of what the durability of volumes look like. Pre-COVID, our markets were growing, and we've got strong positions in those markets. We're number one or two in the majority of the markets that we operate in. We were seeing positive organic growth trends, pre-COVID. For the last couple of years, we've returned back to normal seasonal patterns and shifts or patterns and trends, and we've seen really robust growth. Right now, five years later, the population is a little bit older, a little bit sicker, but we've also really deployed our strategies over the last five years and continue to do that as we grow outside the four walls of the hospital. We expect that demand to be very stable, very durable. The first half of the year, our admissions were up about 6.6%, and we're continuing to expect to see similar momentum as we go with the back half of the year. Great. It does feel like we're kind of settling back into kind of a normal post-COVID, in terms of that comment just now, in terms of the back half of the year, anything you're watching from the utilization perspective? I think it just goes back, again, to the strength of our markets. You know, the trends that we saw in the first half of the year, and we put a lot of work into our transfer centers and our operational efficiencies that allowed us to take in more patients and capitalize on the key growth in our markets, coupled with the pull-through from some of the outpatient areas that we've grown into, our urgent cares. For example, as we bring them on to Epic, we get a lot more visibility in terms of what happens, not only how many patients are coming in, but what happens when they leave our facilities. Last year, we purchased six urgent cares in East Texas. About 45% of those patients that came into our facilities were new to us, never been seen in our system before. What we've learned is those patients, after they come into an urgent care, about 20% of them need follow-up services within 30 days after. We're able to schedule them into our specialty clinics or diagnostics, or in some cases, there's admissions that come out of those. We've got a lot better visibility in terms of what's happening after we make those purchases and we bring them onto our core operating system with Epic. That's great. Could we touch maybe even just high level of just how you think about the long-term kind of growth algorithm of the company and potential for margin expansion? Sure. I'll start it off, or you can chime in here as well. You know, our top-line algorithm for revenue growth has been predicated 2.5%, 3% volume growth, which is, you know, very consistent with what we've seen historically and doing slightly better this year, obviously, post-COVID, on the volume side. And then about a similar, you know, growth profile on the rate side. The, you know, government payers generally a little bit lighter, and the commercial payers a little bit heavier. That sort of mid-single-digit, top-line growth algorithm is where we've been focused. From a bottom-line conversion standpoint, we think we can grow our EBITDA faster than the top-line growth, primarily focused on what we have labeled our impact programs, which are efforts for margin expansion. Ardent Health has gone through a period really since Marty's arrival where we focused on creating scale, moving from really a holding company to an operating company, consolidating essentially five disparate systems and back offices into one. We still have opportunities to create additional efficiencies and optimization of that platform that we're focused on. We've said, we have historically said over the next three to four years, seeing a margin expansion of 100 to 200 basis points off these initiatives. This year, we brought in a new Chief Operating Officer, somebody who's worked in the retail healthcare space at scale, and are focused on really accelerating the effect or the impact of these programs in order to see that realization, really by the end of 2026 or 2027, I should say. Great. Maybe just staying on a minute for the impact program, are there any particular initiatives that you're seeing really take hold today? How do you think of that kind of as it evolves through 2027? What are some key either milestones or initiatives? Yeah. We've seen good uptake on our supply chain initiatives this year. If you look at supplies as a% of net, you know, obviously seeing improvement there. We know that there's more opportunities to go after as we continue to standardize operational and clinical protocols across our eight different markets. On top of that, as we look to technology and AI, we really expect to see improvement off of the initiatives that we've started. We've got a virtual nursing, a virtual attending program, our patient wearables, our focus on ambient listening that's helping providers with dictation or transcription of their records sort of, you know, autonomously. All of those things, we expect us to provide, you know, longer-term clinical benefit as we, you know, look at those impact initiatives. The early results have been promising, you know, about a $13 reduction in patient day on our virtual nursing program, which is not only good from a financial perspective, but good from a quality and a satisfaction perspective. It's helping us to reduce our dependence on contract labor as we focused on recruitment and retention efforts with our bedside nursing initiatives. It's, you know, reducing that contract labor component. Great. I wanted to come back to just David Styblo in terms of really just bringing someone from outside the organization. Any new perspectives or things that kind of he's been helpful for in terms of driving some of these programs? Yeah. Dave's been a great addition to our team. He's got traditional healthcare system experience, but he's also got that retail health experience with Target, Walmart, as Alfred said. He's just operated at a level of scale that's far bigger than really any health system in the country. His perspective in terms of the art of the possible has been really invigorating to our teams in terms of thinking about how we can operate the business leaner and with greater standardization across the company. He's brought a sense of energy, a sense of direction and focus that's been very helpful, just to guiding our operational teams take us to the next level. We're excited about what he's brought and how he's going to help us to convert that impact program into margin. That's great. I did want to touch on thoughts around your largest shareholder and on a near-term basis as you think about stock liquidity. On a longer-term basis, their thought process. Yeah. Equity Group Investments is the largest shareholder, a controlling shareholder today. They've been very constructive. They've been with us since 2015 when Ardent Health was purchased from Wells Fargo and have been a, you know, just a great, great partner in terms of helping these companies grow and scale. The company from a revenue perspective has tripled over the last decade, and we expect them to continue to be long-term constructive shareholders. We're obviously past a lockup period, and they've not sold any shares in the open market. We expect when they do that, that will be something that they'll do in structured secondaries or block trades, whichever is appropriate. Doing things that are going to be constructive for all shareholders because we expect they'll be long-term. At the same time, we realize that the lack of liquidity or float is something that's been a concern for some investors. As they do sell down in a structured way, that will help the liquidity issue on the other side. Makes sense. All right. Maybe we can segue to some of the policy things happening at the moment. I thought it was helpful in the earnings call you guys gave some context on the kind of one big beautiful bill in terms of potential impacts and kind of frame the worst case. How do you go about that in terms of looking at what's going on with potential funding cuts and provider taxes? Yeah. We really did look at what we articulated on the call as kind of the worst-case scenario. It's, you know, there are no offsets. We didn't factor in any of the rural fund potential proceeds when we quantified it. We wanted to put out what is, you know, just if we quantify the impact today from the big beautiful bill, what would be the impact, which was, you know, over the next decade, reaching the $150 to $175 million impact. Now, we do, we would expect that there would be offsets. There are programs that are available today that we would expect states to apply for to offset some of the impact of the loss of funding. We also would expect, obviously, that a number of hospitals would qualify for the rural fund. Can't quantify what that looks like today. There's still, you know, the rules haven't been set by this at the state level or through CMS. We would expect that those offsets would be not insignificant. As we look at the rural fund as an example, that will go into place next year. While each state's going to have to deal with how to divvy those funds up, just looking at our footprint, we've got a mix of primary, secondary, and tertiary-level hospitals. We think that perhaps a third of our hospitals could be hospitals that would likely qualify for those funds as they finish their rulings on that. CMS is going to divvy up about 50% of that. What we've heard from CMS in talking with their ranking officials is that they're going to be focusing on helping hospitals to provide innovation technology that's going to drive improved outcomes for Medicare and Medicaid beneficiaries. Things like patient wearables, this has been publicly talked about by CMS. Our BioButton program that we have would qualify today for the criteria that's been outlined for CMS on that regard. We think that we're well positioned for those funds as an example. We do know that our states are having conversations, talking with ranking members of CMS. They said that the Medicaid program was always meant to be a federal and state partnership. I think that the one big beautiful bill has talked about trying to move more of that responsibility back towards the states. As Alfred said, the $150 million to $175 million, we consider kind of a worst case, and that's without any other programs that he talked about. We expect that the states are going to have to have some contribution, you know, of dollars going back into their Medicaid programs at a state level. We expect that number to come down. Last thing I would say is, you know, two years is a long time before the cuts really start in earnest. It's difficult to expect that there wouldn't be some change between now and then. Obviously, I'd be loath to predict what that might be, but, you know, as we have seen many times over, when you have forward starting reductions, often those actually don't happen or continue to get deferred indefinitely. Yeah. For sure. How do you think about just the state of rural health systems in particular? I feel like the public for-profit hospitals, and whether this, if you will, and manage through, there's a lot of health systems operating with negative margins. Any thoughts in terms of an understanding there's things that can change here over time, too, but what it could mean if there's just consolidation and M&A across health systems longer term? Yeah. That's a great point. I mean, you know, I've been saying this that the public companies are not a great comp for healthcare. If you look at the Kaufman Hall data, for example, they track on a monthly basis hospital operating margins across the country. You know, still, the great, great majority of the hospitals are in nonprofit systems. You've got about a third of hospitals losing money. You think about adding on to that impact, and it really becomes hard to sustain for a lot of systems. We do expect that that's going to drive the M&A process, you know, whether that's rural systems or mid-size or large major metros. I think that it's not unique to rural healthcare. I think that this is going to broadly impact the health system across the country, particularly as the nonprofits have some other issues that are currently under debate as well with 340B programs and some pilots that are rolling out. Healthcare is going to be a challenge for those organizations if they've already been struggling. We brought in a new Chief Development Officer this summer, Chris Schefflein, and Chris came from the sell-side advisory services, spent 17 years working with nonprofits. He's been a great addition to our team as well. Since we went public last summer, our visibility in terms of that joint venture model that we provide has gotten more visibility, which is a good thing. Our phones were ringing from different systems wanting to talk and understand that model better. Now that Chris is here, we're really harvesting those conversations and taking advantage of looking for other mid-size markets that we could potentially partner into with an academic or a nonprofit that could help us accelerate that joint venture model that we've historically grown and had great success with. That's great. Maybe just more broadly, just a pull from Washington. The sentiment around hand subsidies has improved in recent weeks. What are you maybe hearing on the ground in terms of D.C. on the policy front? Yeah. We've obviously advanced both the listening and the advocacy side of our government relations efforts this year. Consistent with what you've heard, we're hearing the same things. It turns out that Americans like coverage, and that's not a partisan issue. America is the most covered as it's been today, as it's been in modern history, between Medicare, Medicaid, and the managed programs, and then the health exchanges. We have sort of government healthcare for all who need it. I don't know that we'll see government healthcare universal anytime, in my lifetime, but we certainly have the avenues to cover Americans. That's a good thing. The enhanced premium tax credits, particularly as you see some of these Medicaid cuts coming, if we don't have an answer to that, that just leaves a bigger hole in that middle, lower-income bucket for patients to struggle to access insurance. As we talk to legislators, I think that there's a growing recognition and appreciation that these programs are popular, that they're necessary. What we're hearing is growing sentiment that something will be done there now, whether that's just an extension of the programs for a year or two or whether there's some type of change to that. I've always thought that the Republicans will come up with a way in which they can accomplish a similar goal to the enhanced premium tax credits, but do it in a Republican-friendly way that they can claim some type of credit of how they've made it better. I don't think that you can say you've made it better if you're taking access from care away from people. I think that that's what they're hearing as they go back in their districts and town halls. There's been a growing rise from at least the folks that we're talking to in our GR channels that are suggesting that there's a growing appetite and appreciation and a need for doing something around tax credits. What I would add about the exchanges, however, is that, you know, for us, we're a little bit under-indexed relative to our peers from a volume standpoint. For us, the exchanges represent about 7% of revenue or about 6% of admissions. The economics, the underlying economics of exchange volume, while it gets categorized into the commercial bucket, are actually very different from traditional commercial. The economics are much closer to Medicare than they are to traditional commercial. We've tried to make it clear the underlying profitability of these volumes are actually, you know, not nearly as strong as traditional commercial. Yeah, I think you mentioned on the call recently around that, too, in terms of how you're approaching. Right. We're even on some of the very, where we're getting plans that are having a significant amount of denials. We're actually looking at terminating some of those plans. Got it. Maybe just shifting gears to supplemental payments. I think Texas was recently approved. How are you feeling about kind of those programs? I know for some time, the big question has just been durability of these programs. Anything changing in your view? On the durability side, no. I mean, we were saying that, even going into the legislative season, these programs started under the first administration of Trump and obviously have grown as you've got 44-plus states now that are covered by these programs. You don't typically see these things go backwards, and we've always had strong conviction around the durability. Our New Mexico program was approved as anticipated earlier this year, and we don't see any major changes happening, particularly now that the OBBB has been passed and set the future for these programs in terms of what they're going to look like in terms of harmonizing the output. We see them very, very durable. On Texas, yeah, Alfred, do you want to talk? Yeah. Texas, you know, the plan actually had a couple of different provisions that were new. However, you know, for us, we expect our economics to be very consistent with historical. Some of the distribution of funds moved, increased funding for some of the children hospitals and a little bit on the urban side, but we think our economics will largely be the same. Got it. I wanted to shift back to just technology. You mentioned kind of AI before, a big focus for the market. Maybe we start, I guess on two fronts. You have kind of Epic in terms of how you're utilizing that across the health system. You also have partners like Ensemble. There might be some direct things you're doing in AI, but there might also be some indirect in terms of some of your partners and really what that means for the business. Yeah. That's a great call out. We're fortunate to have chosen some really great partners that are leading in this area. Epic is the KLAS leading electronic health record, but it's really much more than that. It's our clinical operating system for the company. Everything from the bedside care that we deliver at the hospitals or the clinics, to our transfer centers, to the revenue cycle, to consumer outreach platforms that they have, CRM modules that they have built in. Epic is really leading in terms of spreading out their services. At their most recent annual user group meeting, they showcased some of the things that they're already doing in flight and some of the things on the build, and AI is central to all of that. I've said this before publicly, and I think it only becomes more true that historically, our EHRs have been something that our clinicians are working for the technology. Now the technology is going to start working for our clinicians, and we can really see that already. We're benefiting by that as a system. Similarly, Ensemble, our partner with revenue cycle, they work inside of Epic. They de-risk their revenue cycle operations because they're not lifting and shipping that data and then pumping it back in; they're working in their native system. They also are spending tens of millions of dollars on capital infusion into AI. They recently made an acquisition of a company that's going to help accelerate that. We're seeing the benefits of that, everything from the pre-auth process to the denial adjudication process and just making sure we've got clean claims going out the door, more accurate and better coding. All of those things are helpful in continuing to deal in this challenged payer landscape that we work in. We're fortunate to have both of those partners as drivers of technology and helping us to improve the business. As you said, we talked about some of the things that we're doing clinically at the bedside and on the business side that we're going to be continuing to advance as we work our impact programs over the coming years. We just really see a big opportunity for making our labor pool stronger, more effective, and reducing the dependence upon contract labor. Got it. Maybe we can just touch on that since you mentioned it. I think labor has been pretty stable. Any flip there in terms of just the labor backdrop more broadly, and then just on a longer-term basis, whether it's efficiencies with AI and how that can help? We're fortunate to be in growing markets, desirable markets where people want to work. The nursing shortage has always been something that's been persistent throughout my career, just how acute is it at any given moment. That being said, we've seen our turnover rates come down, our attrition rates come down, back to pre-pandemic levels. Where we've deployed technology, it's really being seen as a benefit to our nurses as well as our patients. We really focus on our culture and having organizations where people want to work. We've been proud to be recognized by Modern Healthcare. It picked the 75 best places to work across the country and the 75 best hospitals. Nine of our hospitals this year won that award. We've got over 10% of the award winners, almost a third of our hospitals winning that award. It says a lot about the culture and our people aspects, but providing technology that's going to allow our caregivers to work at the top of their license and make it easier to deliver care and safer, more effective for patients to receive care. We're seeing that with our virtual nursing program. The bedside task of being a nurse is very challenging. It's a very demanding job, and you've got multiple patients that want your attention at the same time. Things like admitting orders and discharge notes and medication reconciliation, all of those things take time. The patient comes in with a bag of prescriptions, and you've got to transcribe that, make sure it's entered in the system correctly so that you can give the appropriate medications for that care. All those things take time. Now, with virtual nursing, we're able to bring in additional nurses into the room to help with those initial orders or discharge instructions, answer patient questions, and give the dedicated time that a patient needs and deserves while also letting that bedside nurse care for the other five patients that they might have at any given moment to take care of. We're seeing the benefits of that. The patient wearables that we have are helping us with providing better care. The BioButton, it's something about the size of your smartwatch that sits on your chest. Instead of having a little blood pressure cuff and a pulse ox machine and, you know, EKG leads and all these different things that we normally hook patients up to, that little button will do that and monitor all of the key core vitals. We're getting minute-by-minute vital sign capture in a med-surg environment versus four to six data points a day. The result of that is less unplanned admissions to the ICU and patients deteriorate because we can intervene quicker. The other result is we're freeing up about eight hours a day of care with that patient going home sooner. It's opening up that bed for us to take that next patient coming from the transfer center to help boost our admissions. We're seeing the benefits of those. Our virtual attending program is where we're bringing specialists to the patient versus transferring the patient to the hospital. In our East Texas region where we've done this, our outlying hospitals have seen about an 11% increase in their admission because we're no longer dependent upon taking that patient and transferring them to a higher level of care. We're just bringing that nephrologist, that neurologist, that specialist to the patient where they need. We're really encouraged by the early rollouts that we're seeing. We'll be continuing to scale this as we go into next year across the company. That's great. Could we touch on just the outpatient strategy? You gave an interesting nugget before in terms of people coming into the system now, but just how it's been going in terms of some of the urgent care acquisitions to date? Yeah. The urgent cares have been, you know, a good addition. What we, if you've been around the hospital industry, you've always heard that the emergency room is the front door to the hospital. Our clinics and our urgent cares are the front door to our health system. As we look at the unique patients that we cared for last year, over 1.2 million unique individuals, only about 157,000 of them ended up being admitted into our hospitals. The other million-plus people we're seeing in our outpatient environment, it's, as I mentioned before, 45% of those patients that came into those East Texas centers were brand new to our system. That's an opportunity for us to then say, do you have a primary care that you can follow up with? You can schedule them. Do you have other comorbid conditions? Can we get you into that specialist? Do you need a diagnostic test or exam? Follow up from that urgent care that couldn't be done on site. We're going to make sure we're scheduling you into those procedures, as those things are happening. That's been a great way of just increasing the top of the funnel. Once we have you in the system, you know, there's, you know, actuarial data will suggest you there's X hundred admissions per, you know, or X hundred admissions per thousand population on, you know, Medicare or commercial patients that are going to need hospital-based care or ASCs or other things. We started, as we said, with the urgent cares because that was the front door to get more patients into the system. Right now, we're continuing to build out that outpatient strategy, adding more urgent cares, but also imaging centers. We've got two ambulatory surgery centers in construction, working on a joint venture on a micro hospital. We've got a number of different projects and plans just to continue to build out that base across our eight markets that we operate in and make sure that we can provide a full continuum of services. Again, most people don't need inpatient care in the given course of a year, but everybody needs healthcare services. The more we can integrate you into that system, the more likely it is when you do need that facility-based care that you're going to choose us. Got it. If you look out the next kind of three or four years, how do you think about just the cadence of some of these investments mixed between kind of urgent care versus ASCs, imaging centers? How does it look like potentially? Yeah. We've really increased our market share of the urgent cares with the acquisitions that we did last year and earlier this year. We've gotten significant market share penetration now with those acquisitions, and they're still ramping up, but the early indications are all very positive and consistent with our expectations. As we continue on, I expect that those urgent cares, micro hospitals, imaging centers are going to be the next wave, and those will be phased in over the next several years. All of this has been part of our capital budget planning. We increased our capital about 1% with a majority of that additional capital contribution going to fund these ambulatory surgery or ambulatory investments across the footprint. The urgent cares, we were fortunate to be able to find attractive purchase prices to enter into those markets and get speed to value through an acquisition. For a lot of these others, we'll be focusing principally on de novos. The trading multiples for some of those business lines are far north of where the hospital industry is trading. It's a little bit of a build strategy on that end, but we think that we can do that more effectively. We're going to be partnering with physicians on our ASCs. We want to make sure that we've got good partnerships so that when we open those, we know that there's going to be demand and surgical volume growth as soon as we open those doors. It's a little bit of a build strategy over the next several years, but contemplated in our capital plan. Great. Good segue just to M&A more broadly, just how you think about the pipeline, how you think about kind of the joint venture model, which is kind of unique to you guys. Yeah. The joint venture model, again, has taken a lot of attraction. You've got academics that are struggling not only with some of the contemplated cuts of the OBBB, but also NIH cuts and things that have already started to happen. We see great opportunity for M&A. We've said we're also going to be very disciplined in pursuing that. We are continuing to look forward to talking opportunities as to that next phase of growth inside of our core regions. We think that there's going to be some opportunities in our larger markets for that. We know that there's opportunities for our next, next true market entryway. We had one that we had looked at last year, shortly after the IPO. It was a great story in terms of a mid-sized market. We had an academic partner that was interested, could bring some of the needed services that were going to be needed to make that work. Upon diligence, found some things that were concerning. As a new public company, the last thing we want to do is something that's not going to be accretive to shareholders and something that we can make good for the company. We ended up backing away from that. It's only opened up other doors for us. We're excited. That's why we brought Chris on, to help fuel that. We're very confident that the opportunities around M&A are going to be there, particularly with some of the legislative changes. Got it. No, it's good to hear the discipline. Like you said, you want to make sure you do the right deal. I'm sure it has to be frustrating too, right, in terms of you feel like you're close to something. You know, I mean, it's always, we want to make sure we can make an impact in the communities that we go into, a positive impact. You know, it's something that, M&A is not inexpensive. We've told investors that whatever we do, we want to make sure we can see a path to delivering that transaction over the near term, of course, in the next, call it, next couple of years. That's something that we're going to be very focused on, as we look through that. Now with the changes of the legislation, you know, that will be part of our calculus in terms of which states might we go into, based upon what some of the projected changes to the legislation might incur. I would just add, you know, when we think about M&A, to Marty's point, we're going to continue to be very disciplined. We clearly plan to do M&A. It is key to our growth, one of the key pillars. However, given our opportunities on the ambulatory side and given the opportunities to expand margins that we already talked about, we've got other levers for growth. We don't have to be super aggressive, and we can be very disciplined on the M&A front. Good point. It's not like you're sitting still. You're still doing some things that drive the business. Just going back for a minute to the joint venture model, particularly around NIH funding, it's been a very noisy backdrop. Any considerations there in terms of impact, plus, you know, positives or negatives there? Not to us. You know, we partner with academics, but most of our centers are still, you know, sort of tertiary-level community hospitals. We're not seeing impacts because we're not doing that primary research ourselves, but more so through our partners. I think as you look across the country, that certainly is having an impact. The academic systems still have a desire to grow, but that's going to become more challenging for them from a balance sheet perspective on the one hand. Many of them have not had that integrating or operating experience to go into new markets in their state outside of their core area. We think that our model is going to be attractive to them as an opportunity for them to still show positive growth, de-risk that growth, and be less capital dependent upon from their own personal balance sheet. Great. All right. I think we're coming down on time here. Marty and Alfred, thank you so much for your time this morning. Great to be here. Thank you. Thank you. All right. Thank you. Take care.