Hello, and thank you for joining us for the Ardent Health presentation. My name is Matthew Gillmor, and I cover healthcare services for KeyBanc. Joining me on screen is Ardent CEO Marty Bonick, CFO Alfred Lumsdaine, and SVP of Investor Relations Dave Styblo. Ardent is a leading provider of healthcare services, operating 30 acute care hospitals and over 280 sites of care across eight fast-growing markets. Ardent's also distinguished by its joint venture partnership model, which we will get into. This will be a fireside chat format, so I'll lead the Q&A. Feel free to submit any questions you might have through the dialogue box, and we welcome your participation. With that, Marty, Alfred, and Dave, welcome, and thank you for joining us. Thanks for having us, Matt. I'm trying to start these conversations at sort of a higher level before we get into financials and some of the policy discussions that are top of mind today. I thought we might just sort of start off with areas where Ardent's really distinguished in its strategy and in terms of the market that you're in. I thought we could start off by sort of giving a brief overview of the company and sort of the flavor for the markets that you're in, and then if you could also touch on the joint venture growth strategy and the problem that you're solving for some of these nonprofit health systems that you've partnered with. Yeah, thanks, Matt. Appreciate the opportunity to talk with you today. Ardent, if we look at the industry, healthcare has been in a state of flux since COVID, and while I think we've returned back to what the new normal looks like, I think patients have experienced opportunities to access care in different ways. At Ardent, we are grounded in our traditional acute care roots of hospitals, clinics, but growing into the outpatient as well, really putting the patient at the center, the consumer at the center of everything we do. Inside of our eight markets that are growing faster than the U.S. We are focused around how do we acquire new patients into the system through a multitude of access points, whether that be the hospital, outpatient clinics, ambulatory centers, urgent cares, freestanding ERs, and the like, to make sure that we're creating an ecosystem of care around them. With our joint venture partnership strategy, we're really focused on how do we, as a growth strategy, partner with leading academic systems, nonprofit systems to expand our footprint and continue to grow. A lot of times when we're working with an academic partner, they've got a great brand, a great reputation, they have access to specialists, teaching doctors, research programs. As they want to expand their footprint, running a community hospital system is different than running an academic center. We can come in and bring best practices in terms of operating abilities, back-end services, and help expand that footprint across a state, across new markets, while benefiting from the relationship, the brand, the access to enhanced specialists and enhanced care that we can bring from that partnership. As we've done this a number of times, we're really seeing the ability to expand the services that we offer in a new community that we enter into, grow the medical staff programs, grow medical school, which we're doing right now with UT in East Texas, and really have a symbiotic relationship where they can continue to build and expand, and we can continue to grow and operate and provide great quality care to our patients. Great. Why do we kind of do a quick State of the Union in terms of sort of recent performance and sort of what you're focused on as we turn to 2025. As we looked at 2024 as a really pretty outstanding year for Ardent in terms of revenue growth and EBITDA growth and margin expansion, I know there was a little bit of noise in the comp because of the cybersecurity issue in late 2023, but still very strong no matter where you put it. Can you maybe just talk about some of the performance drivers from last year? As we're sitting here in March of 2025, what are some of the key operational items that you're focused on today? Yeah, maybe I'll start and then turn it over to Alfred. 2024 was a great year for us, and again, I think gave us a lot of confidence that we have returned back to a steady state. As I mentioned before, we're in strong leading positions, number one or number two positions in the majority of the markets that we operate in. Those markets are growing, again, faster than the U.S. average, on average about three times faster. We have seen good demand for services before the pandemic. We had a few rocky years during the pandemic, but 2023, 2024, and as we're entering 2025, seems to be back to that strong demand for services, punctuated by our focus on growing the types of services that we offer not only in the hospital, but also in the outpatient. While we did a lot of internal restructuring over 2022, 2023 to really turn this into an operating company, we were able to see the fruits of that labor pay off in 2024 as we were focusing on the services that we grew inside of our hospitals, the growing outpatient footprint that we have been focusing on, making sure our clinics are open to access new patients. We saw that volume pull through. We saw the operating results pull through and expanded our margins through operating excellence initiatives, service line rationalization, and the like, which sets us up for a really great 2025. Maybe I will turn it over to Alfred to give a few comments. Yeah, as you mentioned, Marty, the end of the year was strong for us. We were very pleased with the approval of the New Mexico DPP program retroactively with the last half of 2024, and that clearly had a significant margin impact on our year and on our quarter. Marty's touched on the volume growth, which has continued. Demand for service has been strong, adjusted admits growth of almost 5%. That was aided by the Two-Mi dnight Rule, which for the year we put at about 140 basis points of the lift. Even stripping that out, we saw very significant demand for volume. On the expense side, Marty touched on a lot of the margin improvement initiatives. Clearly, contract labor has come significantly back into line, not down below where we were pre-pandemic from a percent of salaries, wages, and benefits, but under 4% at a level which we think is very sustainable and rates are on an inflation basis back at pre-pandemic levels. On our supplies initiatives, we saw a significant decrease in supplies as a percent of revenues, and we continue to make headwind in terms of just creating that integrated operating platform and achieving a margin profile of towards the mid-teens. We were at 12.5% for the year. As we look at 2025 guidance, we're expecting incremental margin accretion at the midpoint of our guidance. We're looking at mid-13% range, and we still see another 100 to 200 basis points of lift through core margin enhancement opportunities over the next three to four years. That moves us solidly into that mid-teens adjusted EBITDA margin area. Got it. Before we sort of double-click on some of the margin drivers, I did want to come back to some of the operational enhancements that Marty had mentioned that your team has put through and strengthened the business. One of the areas that struck us has been the EMR, and I think you're the only public hospital with Epic. I wanted to just get a couple of comments in terms of what that meant for Ardent having that Epic EMR and more broadly on technology. It's an area where you seem to me, at least in our view, to have some areas of differentiation in terms of what you're focused on, but just give us a flavor for some of the technology initiatives and what that means for patients and also Ardent shareholders. Yeah, I appreciate you recognizing that, Matt. I think it's really key to the industry as we think about how do we transform the way in which we deliver care to still provide great outcomes and do it at an efficient cost structure. Epic has been the backbone of our clinical operating system. They may be known as an electronic health record system, but it really is that clinical operating backbone for everything that we do. The R&D that they're putting into their platform, I don't think is rivaled by any other vendor out there at the moment. That allows us not only to provide good care inside the hospitals, but it covers our entire ecosystem, our clinics, our urgent care systems, our outpatient centers, and it gives us one comprehensive view of the operating platform. There are operating synergies that come from that and just the interoperability and the view that we have between the various access points in the system, but it also is helping our clinicians close care gaps for patients, make sure that we're able to document and code appropriately, making sure that we're able to see longitudinally how a patient is progressing with the treatment regimen that they've been given. That is the operating platform that we build from. Beyond that, we're really leaning into technology. We're not immune to the pressures that the industry is seeing with the challenged workforce, physician burnout issues, nursing turnover issues, and we see technology as an opportunity for us to make it easier for our caregivers to deliver care and safer and more effective for our patients to receive care. We have undertaken a number of initiatives such as virtual nursing and virtual attending services so we can have additional nurses check in on patients on a very real-time manner and take some of those more cumbersome and tedious time-consuming tasks off of the bedside nurses so that they can be in the moment for the patient where and when they need to be most appropriately suited inside the hospital units, but have that continuity of care for the patient that they can have their questions answered. We can get a good history when they come in. We can do the medication reconciliation and provide good discharge and follow-up instructions when a patient leaves. That really is creating a team environment that's making it safer for our nurses to do what they do. On top of that, we've expanded that into the physician side. We have a hub-and-spoke model in many of our markets where we have tertiary hubs and we have secondary and primary hospitals across the region. A lot of times when patients need to be transferred, and this gets into managing capacity efficiently and effectively, the patient will be transferred to a higher-level center because there is not a specialist available in that local small community. Instead of bringing the patient to the hospital, we are able to bring the doctor and specialist to the patient if it is a medical condition and help load balance. We are able to keep the occupancy up in some of our smaller hospitals and reserve those beds for the more higher acute patients that really need to be there. That's an example, but as we get excited about some of the things that are out there, and it's not innovation for innovation's sake, it's innovation to make an impact. The ambient listening technology that we've started rolling out with our physicians is really just letting doctors be doctors again. When you think about when you go see your primary care doctor, they're sitting behind a computer typing the whole time, and it's like, are they listening to you as a patient? And they're trying to capture the note and fill out all the forms. Now a doctor can just have a conversation. The AI is listening to the conversation. It's documenting, and it's providing a better documentation and more complete history of the patient, capturing social determinants of health, capturing the things that we need to do to execute on our value-based contracts, and make sure that we get recognized for the quality of care that we're delivering and for making sure that the treatment regimen is yielding the outcomes a doctor wants. As we look forward, we're excited to ultimately bring that into the hospitals, into our emergency rooms, and have technology that's working for our caregivers versus the other way around. We've put a lot of technology into hospitals over the years and EHRs, what have you, but it's been the caregivers, the doctors, the nurses are working for the computers, and now the computers are starting to help them. We're just getting really great feedback. Our nurses love it. Where we've rolled out the virtual nursing, we've seen about a 600 basis point reduction in turnover. I've never seen anything like that in my career. As we continue to scale that, we're looking forward to similar results and really, again, just addressing the challenges that we have with the labor workforce and coming up with a better way of providing care. Matt, I know you talked about Epic. I was going to say, Marty, it's probably also opportunistic to talk about revenue cycle because some of the things that Marty and Alfred did when they joined was create a platform that could be scalable. You might want to round out the conversation with that as well, Marty. Yeah, that's a great point, Dave. We partnered with Ensemble Health Partners, which is our revenue cycle partner. They are part and parcel of what we do in terms of making sure we've got efficient and effective billing processes. They also have leaned into technology very heavily to make sure that we can take some of the friction out of the revenue cycle. We've seen great lift. We're a little over about two and a half years into that relationship where we've got an end-to-end system with Epic, one instance that allows us to be very efficient, and then they're partnered with that using that system to make sure we're maximizing the utility of that function and helping to drive down denials, which is a big issue across the industry. It's still a big issue, but because of the technology we've invested in and they've invested in, we believe that we're doing better than average to deal with those challenges and pressures that we have. That's great. I really appreciated that. The comment around the nurse turnover was really interesting too. Before we kind of get into financials and policy, I did want to ask sort of one more higher-level question just on the joint venture pipeline and strategy, just to double-click on that. I know these are kind of big binary decisions, so they happen or they do not. I was hoping you could give us sort of a flavor for the joint venture partnerships that would be attractive, either single facility or multi-facility. And then if you had any comments on the sort of financial parameters you would put around potential transactions or the filter that you all use. Yeah, I'll start and then let Alfred finish that comment. We see the joint venture strategy as a lever to grow. We're obviously going to continue to grow inside of our markets and expand services both in and outside the hospital. The joint venture platform is another node for us to grow into. We've got great examples and great partners with the relationships we have with the University of Texas or Hackensack or Ascension and several others. We think that those academic partnerships make a lot of sense. You've got, again, as I mentioned before, running a community system is different than an academic. We look at those partnerships as an opportunity for both the academic and us to enter into a new territory or expand upon an existing one. You asked about the type of transaction. We would prefer to go into a new market where we can get a multi-hospital system, land, and then expand and expand the outpatient, expand the clinic infrastructure, but do that in concert with that academic partner if the opportunity was there and mutually made sense. We will look for outright acquisitions as well, but we do think, given the current climate and the state of healthcare systems like ours are doing well, and we've got an operating model that has proven and produced great results. There are a lot of systems out there that are still struggling. The latest Kaufman Hall report, I believe, is suggesting that still about 40% of hospitals are losing money. With some of the impending potential changes in regulatory policy, that could exacerbate that situation for a lot of nonprofit hospitals. We think that the proven track record that we have working with academics and the needs that they may have, there's already been some cuts to NIH funding. They're going to have to reprioritize where they spend their capital. We think that we're going to be a great opportunity for systems that have that like-minded partnership mentality to continue to grow, provide great care and services across their states, and provide a mutually beneficial growth platform for both of us. In terms of financial parameters that you asked about, we're going to remain very disciplined as we look at potential M&A opportunities. We've had opportunities that we've had to pass because they didn't meet our financial criteria, and we couldn't come to a view on value as a consequence. When we think about the leverage profile of our business, we ended the year on a lease-adjusted net basis at 2.9 times leverage. We want to operate the business at that three times or below sustainably. Now, that's not to say we wouldn't go up. I would view four times as sort of a ceiling for us, and we would need to see a path towards delevering on any transaction we do within the first, call it 18 months-24 months where we could show a significant that, okay, we've done the deal. Now we're yielding the integrated benefits and bringing leverage down. That is how we think about it. I would think the sweet spot from a deal size perspective would be somewhere top line, call it $500 million to $1.5 billion. In the types of geographies that we're in, there is mid-market, growing population, growing economic engine of those communities, which creates a significant rising tide. Got it. That's great. I'm certainly of the mindset that there's a lot of need for that for a partner in terms of both operating partner and capital partner. I'm confident those deals will come over time, but I know they either happen or they don't. We are as well. Yeah. Why don't we shift over into sort of financials and growth? I did want to come back to the margin expansion expectations. I think Alfred had mentioned 100 to 200 basis points. I was curious if you could just kind of characterize what do you think sort of under your control versus not and kind of visibility around the 100 to 200 basis points that you had referenced. Gotcha. Yes, we think we have good visibility. A lot of these efforts take time. We've moved a lot of the big rocks already and seen significant yield improvement in our margin profile. That's not to say we haven't experienced headwinds through these times. We'll touch on the outlook for professional fees, which has been over the last several years, a headwind as well as the denial activity that Marty mentioned. At the same time, again, we've been able to yield significant lift in our margins through core operating activities, creating scale, creating integration, elimination of redundancies and overlap. We've seen that in our revenue cycle, which created over 100 basis points of margin lift. We've seen it in our supply chain management. We still have more yield to go after in both of those areas. Now, I'd say it's a declining rate of increase, which is why we're looking at 100-200 basis points in three to four years. We believe we have good visibility through that, through initiatives such as supply chain, continued service line rationalization, focus on our labor management, implementation of technology where it makes sense, as well as overhead rationalization, scale, and continued refinement of the platform. Got it. Maybe asking about growth. I think you've made some comments about feeling pretty confident in the durability of the volume growth, which is great to hear. I did also want to come back to comment on sort of the outpatient growth strategy and the opportunity you see there. Maybe just to frame it in terms of what are your expectations in terms of, and we've seen you do a couple of urgent care deals, just what should be the kind of expectation you'd want to set in terms of the broader outpatient opportunity and then your expectations for either de novos or potential M&A opportunity for urgent care and I think surgery center is the other area of focus. Yeah, Matt, that's again a huge opportunity. That was a big part of our thesis in taking the company public last summer is that we just see that opportunity for growth. Again, we've got strong positions in our markets, and we see going to that durability question. We're back to where we were pre-pandemic. We had strong organic growth because of the position and the market position we have and the types of communities we're in before the pandemic. We see us back to that normal thing, except for the fact that we've gotten stronger. We've expanded our inpatient services, some of the intensity of services and the types of services we're able to offer that we've grown over the last several years. On the outpatient side, we know that as healthcare continues to evolve, there's more and more procedures that can be done outside the hospital. The good news is we've got demand for that inpatient to backfill those services that are moving out. Historically, Ardent was much more of a hospital-centric company, and we're expanding to be much more of a comprehensive healthcare system that has a complement of the inpatient and outpatient clinic services that we need. You referenced the urgent care centers as a strategy. That was the first thing that we said we were going to do, and we've executed on that. We added 18 centers in Oklahoma and New Mexico the first of this year and nine additional ones last year. We're making good on that promise, and we're seeing the pull-through of those patients as we get those clinics that we bought on Epic, and we have visibility into the operating system. We can see those first six centers we bought in Texas last year are producing about 45% new patients that we had not seen inside of Ardent before. It goes to that consumer strategy of patient access, getting more people into the funnel, and then having the connectivity that a lot of people that come into those urgent care centers, about 15% of them within 30 days are needing follow-up services. They need a specialist appointment. They need a scan. They need a procedure done. We are seeing that pull-through come. That is proving out our thesis of what we expect on the outpatient side. Now we want to continue to go into the ASCs. We see that probably more likely to be more heavily tilted towards the de novo, not that acquisitions would not be an opportunity, but given the trading multiples of those centers, we think that we are going to be able to build those more efficiently and then partner with our physicians to make sure that we can operate them. We know that the patients are there through our clinic structure. We will be building into other things that will help our value-based care strategies like imaging centers, physical therapy, freestanding emergency rooms where we have these growing markets and growing parts of the community that may not be ready for a new hospital yet, but need that access point, need those emergency services. Those are the things that are on the menu for this year and in the coming years. That's great. Why don't we sort of ask about the policy questions? I know it's really top of mind for investors right now, but I thought maybe we could just start off with the, in my mind, at least two areas of intense focus are on Medicaid provider taxes or supplemental payments, and then what will be the fate of the enhanced subsidies with the insurance exchanges? I thought I might ask you just to frame up sort of your exposure to those areas and then how you expect or think the policy discussion may evolve across those domains. Yeah, I'll start, and Alfred can certainly chime in here as well. Overall, we continue to reiterate that as we look at this administration, this is version 2.0, but we've worked with this administration before. There was a lot of things that started under the first administration that we fully expect will continue in the state-directed payment programs being a principal one. Alfred talked about how we benefited by that and really sort of caught up for the cost of care that we're providing in our communities and that many of our peers had already received recognition based upon the state footprint that they had. These DPP programs started back in the first Trump 1.0 administration and have expanded now to cover over 44 states across the country. This has become part and parcel to the state's budget to care for this low-income population. We do see these programs being durable just as every other sort of Medicaid entitlement program over the decades has continued to build upon each other. Now, we know that there will be some amount of change that the government is trying to push through. We think that work requirements are probably far more likely to happen than any major restructuring to the DPP programs per se. The New Mexico one obviously means a lot to us. New Mexico has a high preponderance of Medicaid population, and we've been servicing that population largely at a loss compared to, again, our peer group. These DPP programs finally start to compensate us for the care that we've been providing and help us provide the recruitment for new physicians and specialists to be able to care for these populations. I do not see those programs changing wildly as we go forward. The health exchanges, there is less talk that we are hearing about that inside the government. No action is an action that they could just sunset and expire. We still believe that there will be some Republican-friendly surrogate of making sure that Americans still have access to healthcare. Trump is much more of a populist-type president, and a lot of his voter base are benefiting by these programs, whether Medicaid or health exchanges. At the end of the day, we think there will be something that comes of that. Now, our exposure on the health exchange volumes is less than a lot of our peer groups. Last year, about 3.6% of our revenues came from health exchanges, and I think that it was a multiple of that for some of our peer group. Some of that is, I think, due to the size markets we're in. These mid-sized markets have still a lot of strong commercial employer-sponsored insurance programs. We're less exposed if something were to happen there. Like the Medicaid redeterminations that a lot of people had a lot of fear of what was going to happen, that turned out to be slight tailwind for us. Not saying it would be exactly the same at health exchanges, but people want access to insurance. The subsidies have helped them obtain that insurance, but they may change to a different plan. They may find commercial insurance. They may go to Medicaid with the DPP programs. That's not a terrible thing. At the end of the day, we think that, well, there will likely be some amount of change. We don't think that the impact is going to be monumental. It's probably more incremental. Anything you'd add there, Alfred? No, I think you've covered it extremely well. I think a large part of our confidence in the durability, the largest exposure from an Ardent perspective, as is the whole industry, now that the vast majority of states have an SDP program, is some massive change to those programs. That is an exposure, again, that every hospital and health system would have. Ardent is going to be okay. Major change in those programs would make us less okay, I suppose. Given the fragility of the entire system, I mean, to Marty's point, you change anything, you've got something on the magnitude of 40% of hospitals already losing money. We believe massive change would be untenable, that it is how we are funding healthcare broadly, and that to Marty's point, our expectation is that changes will be very evolutionary and not revolutionary. Got it. I want to come back to that comment in just a second, but I did want to ask about one follow-up on the New Mexico DPP. I guess at this point, it would not be an approval, but it would be sort of a reauthorization or renewal. We heard some kind of encouraging comments from one of your peers yesterday that CMS had told the state of Nevada to continue to operate the program and make payments, giving Nevada at least assurances that the renewals would come through normal course once the political appointees get in place at CMS. I was curious if you had anything kind of new to share in terms of just the reauthorization or the renewal process for New Mexico and just are we waiting for a CMS administrator to get confirmed? Just curious if you had any sort of updated thoughts on just the process there. We're all obviously watching it closely. Yeah, we do not operate in Nevada, but that is encouraging news to hear and sort of confirmatory to what we believe and what we are seeing and hearing as well. The New Mexico plan that was approved that Alfred talked about for the back half of 2024, retroactively approved last November, the New Mexico State Health Care Authority submitted the 2025 application or the renewal application, as you said, a couple of weeks later in mid-December. The renewals, once these programs have been approved, there has not been a state that has not been reapproved or renewed. That gives us confidence. Now you have a new administration, of course, but we know that there has been positive correspondence going back and forth between CMS and the state of New Mexico as well about the 2025 application. It is continuing to move forward. We do believe that once the CMS administrators confirmed that we will see movement there. Now, we do not likely expect anything to happen until that is there and they have the chance to put their seal on things, but we do think that these programs will continue. The positive correspondence and the work between CMS still going on, working on these renewal applications, I think is encouraging. Now we are hearing it from multiple states, so that is good. The last question I had for you all is, to me, it seemed like Ardent is potentially uniquely positioned from there could be sort of a silver lining if there are areas of funding pressure, whether that's NIH funding on the academics or work requirements that could pressure mostly the nonprofit capacity that's out there, which represents most of the hospital industry. I was curious if that is yet permeating some of your joint venture discussions. I would think over time it just creates more need for that element of your growth strategy. If you had any thoughts along that thesis, I'd love to hear it. No, we totally agree. The change presents opportunity. We know that our pipeline and development pipeline is continuing. We've got a number of conversations of academics that we're in conversations with, whether it's about a proposed transaction or just exploratory, looking for opportunities as they arise. I think people are taking note of the model, taking note of the track record and performance that we've had. As Alfred said, we put ourselves in a position where we've got a healthy balance sheet. We've got capacity to do deals. We do think that just given the state of the industry, that any incremental changes could hurt those 40% of hospitals that are losing money even further and could benefit by our operating model. We are encouraged by the opportunity for that growth platform to continue to mature. The good news is people are taking note, and we see that those opportunities, like you said, could become those challenges for others could become opportunities for us. I think we've got to leave it there. I really appreciate the update and you spending some time with us. Marty, Alfred, Dave, thanks, and have a great rest of the day. Thank you, Matt. Thanks.