Ardent Health Partners (ARDT) 10-Q 2024 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________

FORM 10-Q

_______________________________________________________

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2024
	or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                   to
	Commission File Number: 001-42180
	Ardent Health Partners, Inc.
	(Exact name of registrant as specified in its charter)

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

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

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

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

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

days. Yes ☒ No ☐

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

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

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

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

Exchange Act.

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

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

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

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

As of November 7, 2024, the registrant had 142,732,815 shares of common stock outstanding.

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		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Income Statements for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	1
	Condensed Consolidated Comprehensive Income Statements for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	2
	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	47
Item 6.	Exhibits	47
Signatures		49

1

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 ARDENT HEALTH PARTNERS, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS

Unaudited

(Dollars in thousands, except per share amounts)

	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Total revenue	$1,449,817	$1,377,727	$4,359,783	$4,063,449
Expenses:
Salaries and benefits	635,223	595,580	1,880,790	1,785,939
Professional fees	274,223	246,540	810,820	715,111
Supplies	251,862	249,548	769,034	743,713
Rents and leases	26,410	24,506	76,251	73,230
Rents and leases, related party	37,249	36,413	111,413	108,914
Other operating expenses	117,700	124,642	354,851	342,026
Government stimulus income	—	—	—	(8,463)
Interest expense	14,629	19,041	52,050	55,854
Depreciation and amortization	36,771	35,488	108,434	104,860
Loss on extinguishment and modification of debt	1,490	—	3,388	—
Other non-operating gains	(2,807)	—	(3,062)	(522)
Total operating expenses	1,392,750	1,331,758	4,163,969	3,920,662
Income before income taxes	57,067	45,969	195,814	142,787
Income tax expense	11,062	7,261	36,997	24,591
Net income	46,005	38,708	158,817	118,196
Net income attributable to noncontrolling interests	19,683	17,870	62,678	60,139
Net income attributable to Ardent Health Partners, Inc.	$26,322	$20,838	$96,139	$58,057
Net income per share:
Basic	$0.19	$0.17	$0.74	$0.46
Diluted	$0.19	$0.17	$0.74	$0.46
Weighted-average common shares outstanding:
Basic	137,107,595	126,115,301	129,877,510	126,115,301
Diluted	137,542,995	126,115,301	130,022,643	126,115,301

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

2

 ARDENT HEALTH PARTNERS, INC.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

Unaudited

(Dollars in thousands)

	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Net income	$46,005	$38,708	$158,817	$118,196
Other comprehensive (loss) income
Change in fair value of interest rate swap	(10,180)	43	(12,280)	76
Other comprehensive (loss) income before income taxes	(10,180)	43	(12,280)	76
Income tax (benefit) expense related to other comprehensive (loss) income items	(2,657)	12	(3,205)	20
Other comprehensive (loss) income, net of income taxes	(7,523)	31	(9,075)	56
Comprehensive income	38,482	38,739	149,742	118,252
Comprehensive income attributable to noncontrolling interests	19,683	17,870	62,678	60,139
Comprehensive income attributable to Ardent Health Partners, Inc.	$18,799	$20,869	$87,064	$58,113

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

3

ARDENT HEALTH PARTNERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(Dollars in thousands)

	September 30, 2024 (1)	December 31, 2023 (1)
Assets
Current assets:
Cash and cash equivalents	$563,142	$437,577
Accounts receivable	705,747	775,452
Inventories	108,231	105,485
Prepaid expenses	119,956	77,281
Other current assets	193,616	222,290
Total current assets	1,690,692	1,618,085
Property and equipment, net	814,860	811,089
Operating lease right of use assets	261,214	260,003
Operating lease right of use assets, related party	932,246	941,150
Goodwill	852,001	844,704
Other intangible assets, net	76,930	76,930
Deferred income taxes	34,764	32,491
Other assets	137,307	147,106
Total assets	$4,800,014	$4,731,558
Liabilities and Equity
Current liabilities:
Current installments of long-term debt	$12,167	$18,605
Accounts payable	368,850	474,543
Accrued salaries and benefits	255,370	267,685
Other accrued expenses and liabilities	250,945	233,271
Total current liabilities	887,332	994,104
Long-term debt, less current installments	1,083,725	1,168,253
Long-term operating lease liability	233,786	235,241
Long-term operating lease liability, related party	922,665	932,090
Self-insured liabilities	231,951	243,552
Other long-term liabilities	53,686	76,002
Total liabilities	3,413,145	3,649,242
Commitments and contingencies (see Note 9)
Redeemable noncontrolling interests	2,391	7,302
Equity:
Common units, no and unlimited units authorized as of September 30, 2024 and December 31, 2023, respectively; no and 484,922,828 units issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	—	496,882
Preferred stock, par value $0.01 per share; 50,000,000 and no shares authorized as of September 30, 2024 and December 31, 2023, respectively; no shares issued and outstanding as of September 30, 2024 and December 31, 2023	—	—
Common stock, par value $0.01 per share; 750,000,000 and no shares authorized as of September 30, 2024 and December 31, 2023, respectively; 142,735,842 and no shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	1,428	—
Additional paid-in capital	743,364	—
Accumulated other comprehensive income	9,486	18,561
Retained earnings	251,592	155,453
Equity attributable to Ardent Health Partners, Inc.	1,005,870	670,896
Noncontrolling interests	378,608	404,118
Total equity	1,384,478	1,075,014
Total liabilities and equity	$4,800,014	$4,731,558

(1)  As of September 30, 2024 and December 31, 2023, the unaudited condensed consolidated balance sheets included total liabilities of consolidated variable interest entities of

$303.2 million and $337.8 million, respectively. Refer to Note 2, Summary of Significant Accounting Policies, for further discussion.

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

4

ARDENT HEALTH PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(Dollars in thousands)

	Nine Months Ended September 30,
	2024	2023
Cash flows from operating activities:
Net income	$158,817	$118,196
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	108,434	104,860
Other non-operating gains	—	(45)
Loss on extinguishment and modification of debt	2,158	—
Amortization of deferred financing costs and debt discounts	4,235	4,266
Deferred income taxes	1,690	5,346
Equity-based compensation	8,873	723
Loss from non-consolidated affiliates	2,160	3,622
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Accounts receivable	77,284	(54,896)
Inventories	(2,545)	(556)
Prepaid expenses and other current assets	(21,189)	(20,450)
Accounts payable and other accrued expenses and liabilities	(132,031)	9,996
Accrued salaries and benefits	(12,429)	(16,863)
Net cash provided by operating activities	195,457	154,199
Cash flows from investing activities:
Investment in acquisitions, net of cash acquired	(8,044)	—
Purchases of property and equipment	(106,234)	(79,959)
Other	(738)	(1,318)
Net cash used in investing activities	(115,016)	(81,277)
Cash flows from financing activities:
Proceeds from initial public offering, net of underwriting discounts and commissions	208,656	—
Proceeds from insurance financing arrangements	10,797	24,749
Proceeds from long-term debt	3,600	1,225
Payments of principal on insurance financing arrangements	(7,370)	(15,885)
Payments of principal on long-term debt	(106,335)	(10,549)
Debt issuance costs	(2,450)	—
Payments of initial public offering costs	(8,636)	—
Distributions to noncontrolling interests	(53,138)	(50,677)
Redemption of equity attributable to noncontrolling interests	—	(26,024)
Other	—	(7,209)
Net cash provided by (used in) financing activities	45,124	(84,370)
Net increase (decrease) in cash and cash equivalents	125,565	(11,448)
Cash and cash equivalents at beginning of year	437,577	456,124
Cash and cash equivalents at end of year	$563,142	$444,676
Supplemental Cash Flow Information:
Non-cash purchases of property and equipment	$5,546	$13,188
Offering costs not yet paid	$898	$—

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

5

ARDENT HEALTH PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Unaudited

(Dollars in thousands, except for unit amounts) 

		Equity Attributable to Ardent Health Partners, Inc.				Noncontrolling Interests	Total Equity
	Redeemable Noncontrolling Interests	Common Units		Accumulated Other Comprehensive Income	Retained Earnings
		Units(*)	Amount
Balance at December 31, 2022	$10,796	482,726,544	$510,968	$26,533	$101,549	$400,460	$1,039,510
Net income attributable to Ardent Health Partners, Inc.	—	—	—	—	4,143	—	4,143
Net income attributable to noncontrolling interests	—	—	—	—	—	20,427	20,427
Net loss attributable to redeemable noncontrolling interests	(788)	—	—	—	—	—	—
Other comprehensive loss	—	—	—	(4,564)	—	—	(4,564)
Distributions to noncontrolling interests	—	—	—	—	—	(12,555)	(12,555)
Vesting of Class C Units	—	587,053	360	—	—	—	360
Balance at March 31, 2023	$10,008	483,313,597	$511,328	$21,969	$105,692	$408,332	$1,047,321
Net income attributable to Ardent Health Partners, Inc.	—	—	—	—	33,076	—	33,076
Net income attributable to noncontrolling interests	—	—	—	—	—	23,600	23,600
Net loss attributable to redeemable noncontrolling interests	(970)	—	—	—	—	—	—
Other comprehensive income	—	—	—	4,589	—	—	4,589
Distributions to noncontrolling interests	—	—	—	—	—	(19,254)	(19,254)
Redemption of equity attributable to noncontrolling interests	—	—	(14,990)	—	—	(11,034)	(26,024)
Vesting of Class C Units	—	558,013	182	—	—	—	182
Balance at June 30, 2023	$9,038	483,871,610	$496,520	$26,558	$138,768	$401,644	$1,063,490
Net income attributable to Ardent Health Partners, Inc. ..	—	—	—	—	20,838	—	20,838
Net income attributable to noncontrolling interests .........	—	—	—	—	—	17,837	17,837
Net income attributable to redeemable noncontrolling interests ..................................	33	—	—	—	—	—	—
Other comprehensive income	—	—	—	31	—	—	31
Distributions to noncontrolling interests .........	—	—	—	—	—	(18,868)	(18,868)
Vesting of Class C Units .......	—	543,589	181	—	—	—	181
Balance at September 30, 2023 ..	$9,071	484,415,199	$496,701	$26,589	$159,606	$400,613	$1,083,509

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

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

6

ARDENT HEALTH PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Unaudited

(Dollars in thousands, except for unit amounts) 

		Equity Attributable to Ardent Health Partners, Inc.							Non- controlling Interests	Total Equity
	Redeemable Noncontrolling Interests	Common Units		Common Stock		Additional Paid-in Capital	Accumulated Other Comprehensive Income	Retained Earnings
		Units(*)	Amount	Shares	Amount
Balance at December 31, 2023	$7,302	484,922,828	$496,882	—	$—	$—	$18,561	$155,453	$404,118	$1,075,014
Net income attributable to Ardent Health Partners, Inc.	—	—	—	—	—	—	—	27,047	—	27,047
Net income attributable to noncontrolling interests	—	—	—	—	—	—	—	—	21,089	21,089
Net loss attributable to redeemable noncontrolling interests	(2,285)	—	—	—	—	—	—	—	—	—
Other comprehensive income	—	—	—	—	—	—	703	—	—	703
Distributions to noncontrolling interests	—	—	—	—	—	—	—	—	(14,256)	(14,256)
Vesting of Class C Units	—	464,853	512	—	—	—	—	—	—	512
Balance at March 31, 2024	$5,017	485,387,681	$497,394	—	$—	$—	$19,264	$182,500	$410,951	$1,110,109
Net income attributable to Ardent Health Partners, Inc.	—	—	—	—	—	—	—	42,770	—	42,770
Net income attributable to noncontrolling interests	—	—	—	—	—	—	—	—	25,540	25,540
Net loss attributable to redeemable noncontrolling interests	(1,349)	—	—	—	—	—	—	—	—	—
Other comprehensive loss	—	—	—	—	—	—	(2,255)	—	—	(2,255)
Distributions to noncontrolling interests	—	—	—	—	—	—	—	—	(17,401)	(17,401)
Vesting of Class C Units	—	522,002	226	—	—	—	—	—	—	226
Balance at June 30, 2024	$3,668	485,909,683	$497,620	—	$—	$—	$17,009	$225,270	$419,090	$1,158,989
Net income attributable to Ardent Health Partners, Inc.	—	—	—	—	—	—	—	26,322	—	26,322
Net income attributable to noncontrolling interests	—	—	—	—	—	—	—	—	20,960	20,960
Net loss attributable to redeemable noncontrolling interests	(1,277)	—	—	—	—	—	—	—	—	—
Other comprehensive loss	—	—	—	—	—	—	(7,523)	—	—	(7,523)
Issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions and other offering costs	—	—	—	13,800,000	138	198,984	—	—	—	199,122
Conversion of member units to common stock	—	(485,909,683)	(497,620)	128,963,328	1,290	536,291	—	—	(39,961)	—
Distributions to noncontrolling interests	—	—	—	—	—	—	—	—	(21,481)	(21,481)
Vesting of restricted stock unit awards	—	—	—	9,441	—	—	—	—	—	—
Tax withholding on vesting of restricted stock unit awards	—	—	—	(2,396)	—	(46)	—	—	—	(46)
Forfeiture of restricted stock awards	—	—	—	(34,531)	—	—	—	—	—	—
Equity-based compensation	—	—	—	—	—	8,135	—	—	—	8,135
Balance at September 30, 2024	$2,391	—	$—	142,735,842	$1,428	$743,364	$9,486	$251,592	$378,608	$1,384,478

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

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

7

ARDENT HEALTH PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

1.  Description of the Business and Basis of Presentation

Reporting Entity

Ardent Health Partners, Inc. was initially formed in Delaware in 2015 as Ardent Health Partners, LLC. 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. Ardent Health Partners, 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 Partners, LLC and its affiliates and, subsequent to July 16, 2024, Ardent Health Partners,

Inc. 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 September 30,

2024, the Company operated 30 acute care hospitals in six states, including two rehabilitation hospitals and two surgical

hospitals.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of

the information and notes required by GAAP for complete financial statements. In the opinion of management, all

adjustments, which consist of normal recurring adjustments, and disclosures considered necessary for a fair presentation have

been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and

assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements. Actual results

could differ from these estimates under different assumptions or conditions.

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.

Certain information and disclosures normally included in annual financial statements presented in accordance with GAAP

have been omitted 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 as of and for the year ended December 31, 2023

included in the Company's final prospectus, dated July 17, 2024, filed with the SEC pursuant to Rule 424(b) under the

Securities Act of 1933, as amended, on July 18, 2024 in connection with the Company's initial public offering.

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

8

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 is 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.

Cybersecurity Incident

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

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

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

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

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

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

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

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

While the Company’s hospitals continued to deliver patient care at varying levels during the disruption and remediation

periods and the Company’s business is no longer materially disrupted, the Company has incurred, and will continue to incur,

certain expenses related to the Cybersecurity Incident, including expenses related to the settlement of the consolidated class

action lawsuit related to the Cybersecurity Incident. The Company continues to work with its various insurance carriers to

obtain reimbursement for its costs and liabilities incurred due to the Cybersecurity Incident.

Pure Health Equity Investment

On May 1, 2023, an affiliate of Pure Health Holding PJSC (“Pure Health”) purchased a minority interest in the Company

from the unit holders at the time. In connection with Pure Health’s investment, unit holders were eligible to exercise tag-

along rights to sell a proportionate share of their individual equity ownership interest in Ardent Health Partners, LLC and

AHP Health Partners, the Company's direct subsidiary. Ventas exercised its tag-along right to sell its proportionate share of

ownership interest in both Ardent Health Partners, LLC and AHP Health Partners. To fulfill Ventas’ right to sell its

proportionate share of noncontrolling ownership interest in AHP Health Partners, the Company exercised its right to

repurchase those shares from Ventas for $26.0 million concurrent with Pure Health’s purchase of a minority interest in the

Company. The carrying value of the noncontrolling interest was adjusted proportionate to the shares repurchased to reflect

the change in ownership of AHP Health Partners, with the difference between the fair value of the consideration paid and the

amount by which the noncontrolling interest was adjusted recognized in equity attributable to Ardent Health Partners, LLC.

As of September 30, 2024, Pure Health and Ventas beneficially owned approximately 21.2% and 6.5%, respectively, of the

Company’s outstanding common stock.

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 would include its corporate office costs, which were $33.7 million and $29.0 million for the

9

three months ended September 30, 2024 and 2023, respectively, and $95.7 million and $82.2 million for the nine months

ended September 30, 2024 and 2023, respectively.

2.  Summary of Significant Accounting Policies

COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of Coronavirus Disease 2019 (“COVID-19”), a disease

caused by a novel strain of coronavirus, a global pandemic. On March 27, 2020, the Coronavirus Aid, Relief and Economic

Security Act (“CARES Act”) was enacted by the federal government.  Among other provisions, the CARES Act authorized

relief funding to healthcare providers through the Public Health and Social Services Emergency Fund (“Provider Relief

Fund”).  The CARES Act also expanded the Medicare Accelerated and Advance Payment Program through which eligible

providers could request accelerated Medicare payments to be repaid through withholdings against future Medicare fee-for-

service payments.  Distributions from the Provider Relief Fund were intended to reimburse healthcare providers for lost

revenue and increased expenses related to the pandemic and were not subject to repayment, provided recipients attested to

and complied with applicable terms and conditions set forth by legislation.  Distributions provided by the Provider Relief

Fund were accounted for as government grants and were recognized in the unaudited condensed consolidated income

statements once the grant was received and there was reasonable assurance that the applicable terms and conditions required

to retain the distributions were met.

During the three and nine months ended September 30, 2024, the Company did not receive or recognize any cash

distributions from the Provider Relief Fund and other state and local programs. During the three and nine months ended

September 30, 2023, the Company received $0.0 million and $8.5 million, respectively, in cash distributions from the

Provider Relief Fund and other state and local programs and recognized the distributions as government stimulus income, a

reduction of operating expenses, on its unaudited condensed consolidated income statements. Government compliance audits

may result in derecognition of amounts previously recognized and repayment of such amounts. Since 2020, the Company has

received and recognized $366.4 million of government stimulus income. Pursuant to Accounting Standards Update (“ASU”)

2021-10, Disclosures by Business Entities about Government Assistance, as an accounting policy election, the Company has

utilized International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosure of Government

Assistance, by analogy to recognize funds received under the CARES Act from the Provider Relief Fund as revenue, given no

direct authoritative guidance is available to for-profit organizations to recognize revenue for government contributions and

grants. CARES Act revenue may be subject to future adjustments based on compliance audits.

Adoption of Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued ASU 2020-04, Reference Rate Reform (Topic

848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).  ASU 2020-04 provides

optional guidance for a limited period of time to ease the potential burden in accounting for or recognizing the effects of

reference rate reform on financial reporting and applies only to contracts, hedging relationships, and other transactions that

reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued because of

reference rate reform. ASU 2020-04 became effective as of March 12, 2020 and continues through December 31, 2024.

Entities may adopt ASU 2020-04 as of any date from the beginning of an interim period that includes or is subsequent to

March 12, 2020 or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to

the date that the financial statements are available to be issued. The Company adopted the standard as of January 1, 2023. The

adoption of this standard had no material impact on the Company’s unaudited condensed consolidated financial statements

and notes.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment

Disclosures ("ASU 2023-07"), which expands disclosures about reportable segments and provides requirements for more

detailed reporting of a segment’s expenses that are regularly provided to the Chief Operating Decision Maker ("CODM") and

included within each reported measure of a segment’s profit or loss. Additionally, ASU 2023-07 requires all segment profit or

loss and assets disclosures to be provided on an annual and interim basis. ASU 2023-07 is effective for fiscal years beginning

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after December 15, 2023 and interim periods within fiscal years beginning one year later. Early adoption is permitted, and

amendments must be applied retrospectively to all prior periods presented. The adoption of this guidance will not impact 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 December 2023, the FASB issued 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.

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 ASC 810, Consolidation. 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.

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.

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

interest. 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.

As of September 30, 2024 and December 31, 2023, 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 September 30, 2024 and

December 31, 2023 included total assets of VIEs equal to $1.2 billion. The Company’s VIEs do not have creditors that have

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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):

	September 30, 2024	December 31, 2023
Current liabilities
Current installments of long-term debt	$2,222	$2,386
Accounts payable	86,521	103,274
Accrued salaries and benefits	32,480	34,730
Other accrued expenses and liabilities	48,116	53,684
Total current liabilities	169,339	194,074
Long-term debt, less current installments	7,679	8,044
Long-term operating lease liability	111,449	120,056
Long-term operating lease liability, related party	9,449	9,520
Self-insured liabilities	659	651
Other long-term liabilities	4,606	5,437
Total liabilities	$303,181	$337,782

Income from operations before income taxes attributable to VIEs was $68.6 million and $60.3 million for the three months

ended September 30, 2024 and 2023, respectively. Income from operations before income taxes attributable to VIEs was

$207.0 million and $198.4 million for the nine months ended September 30, 2024 and 2023, 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.

Deferred Offering Costs

Deferred offering costs consist primarily of legal and accounting fees, which are direct and incremental fees related to equity

financings. The Company capitalizes these costs until equity financings are consummated, at which time the costs are

recorded against the gross proceeds of the offering. Upon receipt of the IPO proceeds during the current period, deferred

offering costs were recorded against the IPO proceeds within additional paid-in capital on the Company's condensed

consolidated balance sheet as of September 30, 2024.

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

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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. 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. These

adjustments resulted in changes to net patient service revenue of an increase of $4.9 million and $1.1 million for the three

months ended September 30, 2024 and 2023, respectively, and an increase to net patient service revenue of $4.9 million and

$6.1 million for the nine months ended September 30, 2024 and 2023, respectively.

At September 30, 2024 and December 31, 2023, the Company’s settlements under reimbursement agreements with third-

party payors were a net payable of $2.9 million and $10.3 million, respectively, of which a receivable of $39.2 million and

$34.4 million, respectively, was included in other current assets and a payable of $42.1 million and $44.7 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 nine months ended September 30, 2024 and 2023 was

not material to the Company.

Currently, several states utilize supplemental reimbursement programs for the purpose of providing reimbursement to

providers to offset a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed

with input from the Center for Medicare & Medicaid Services (“CMS”) and are funded with a combination of state and

federal resources, including, in certain instances, fees or taxes levied on the providers. Under these supplemental programs,

the Company recognizes revenue and related expenses in the period in which amounts are estimable and collection is

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reasonably assured. Reimbursement under these programs is reflected in total revenue. Taxes or other program-related costs

are reflected in other operating expenses.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	Amount	% of Revenue	Amount	% of Revenue	Amount	% of Revenue	Amount	% of Revenue
Medicare	$561,491	38.7%	$537,884	39.0%	$1,709,137	39.3%	$1,608,041	39.6%
Medicaid	148,448	10.2%	151,401	11.0%	460,060	10.6%	459,244	11.3%
Other managed care	627,112	43.3%	587,802	42.7%	1,874,705	43.0%	1,713,964	42.2%
Self-pay and other	79,390	5.5%	75,761	5.5%	234,522	5.2%	210,338	5.1%
Net patient service revenue	$1,416,441	97.7%	$1,352,848	98.2%	$4,278,424	98.1%	$3,991,587	98.2%
Other revenue	33,376	2.3%	24,879	1.8%	81,359	1.9%	71,862	1.8%
Total revenue	$1,449,817	100.0%	$1,377,727	100.0%	$4,359,783	100.0%	$4,063,449	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 $8.2 million and $8.4 million for the three months ended September 30, 2024 and 2023, respectively. The

Company estimates that its costs of care provided under its charity care programs approximated $41.8 million and $34.0

million for the nine months ended September 30, 2024 and 2023, 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 September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Oklahoma	24.7%	24.7%	24.8%		24.3%
New Mexico	13.7%	15.2%	14.6%		15.7%
Texas	37.4%	37.2%	36.4%		35.9%
New Jersey	10.1%	10.1%	10.2%		10.4%
Other	14.1%	12.8%	14.0%		13.7%
Total	100.0%	100.0%	100.0%		100.0%

Texas Waiver Program

Certain of the Company’s facilities receive supplemental Medicaid reimbursement, including reimbursement from programs

supported by broad-based provider taxes to fund the non-federal share of Medicaid programs or fund indigent care within a

state. The State of Texas operates the Texas Health Care Transformation and Quality Improvement Program pursuant to a

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Medicaid waiver, the Texas Waiver Program (the “Program”), granted by Section 1115 of the Social Security Act. The

Program expands managed care programs in the state, provides funding for uncompensated care and supports various

delivery system reform initiatives. On March 25, 2022, the Program was extended through September 2030; however, certain

delivery system reform initiatives within the Program operate under separate approval periods.

The timing, determination and basis of funding is specific to the Program’s various components. For example,

reimbursements associated with the Program’s uncompensated care component are determined based on a participating

provider’s costs incurred with providing unreimbursed care to Medicaid and uninsured patients. The Company accrues for

estimated payments associated with the Program’s uncompensated care component to be received in the period in which the

associated unreimbursed care is provided constrained to an amount such that a significant reversal of cumulative revenue is

not probable in the future. Payments associated with certain directed payment programs are contingent on a provider

reporting and meeting certain pre-determined metrics and clinical outcomes and contributing to the non-federal share of the

Program component via provider assessments. The Company accrues directed payment program funding in the period in

which metrics are expected to be achieved and collection is reasonably assured. Management routinely monitors

communications regarding the Program from the State of Texas and CMS to ensure there is no uncertainty about entitlement

or collectability, such as disruption in state and federal funding.

Payments from the Program are received at different points of time during a funding year. Differences between original

estimates and subsequent revisions to the payments, including final settlements, represent changes in the estimate and are

recognized in the period in which the revisions are made. Subsequent adjustments to the payments received and the

Company’s related estimates have historically been insignificant. The Company recognized revenue of $54.0 million and

$68.6 million for the three months ended September 30, 2024 and 2023, respectively, and $165.9 million and $147.3 million

for the nine months ended September 30, 2024 and 2023, respectively. Additionally, the Company incurred costs related to

provider assessments for the Program in the amounts of $15.1 million and $28.7 million for the three months ended

September 30, 2024 and 2023, respectively, and $56.8 million and $58.8 million for the nine months ended September 30,

2024 and 2023, respectively, which were included in other operating expenses on the unaudited condensed consolidated

income statements.

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
	September 30, 2024	December 31, 2023	September 30, 2024	December 31, 2023
Senior Secured Term Loan Facility	$773,515	$874,262	$773,515	$876,448
5.75% Senior Notes	$299,574	$299,506	$293,582	$259,822

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.

15

In accordance with ASC 810, Consolidation, 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 September 30, 2024 and December 31, 2023 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 stock options and 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.

Segment Reporting

The Company has one reportable segment: healthcare services. The healthcare services segment provides healthcare services

primarily through its ownership and operation of hospitals, certain of which provide related healthcare services through

physician practices, outpatient centers, and post-acute facilities. The CODM is its President and Chief Executive Officer, who

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

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

overall company resource allocation and to assess overall company performance.

As of September 30, 2024 and December 31, 2023, all of the Company’s long-lived assets were located in the United States,

and for the three and nine months ended September 30, 2024 and 2023, all revenue was earned in the United States.

3.  Related Party Transactions

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

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

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

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

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

with ASC 842, Leases (“ASC 842”), variable lease payments are excluded from the Company’s minimum rental payments

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

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

compliance with all financial covenants as of September 30, 2024 and December 31, 2023.

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

medical office buildings of $37.2 million and $36.4 million for the three months ended September 30, 2024 and 2023,

respectively, and $111.4 million and $108.9 million for the nine months ended September 30, 2024 and 2023, respectively.

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4.  Long-Term Debt and Financing Matters

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

	September 30, 2024	December 31, 2023
Senior secured term loan facility	$773,515	$874,262
5.75% Senior Notes	299,574	299,506
Finance leases	19,848	21,706
Other debt	18,796	12,322
Deferred financing costs	(15,841)	(20,938)
Total debt	1,095,892	1,186,858
Less current maturities	(12,167)	(18,605)
Long-term debt, less current maturities	$1,083,725	$1,168,253

As of September 30, 2024 and December 31, 2023, the senior secured term loan facility reflected an original issue discount

(“OID”) of $4.0 million and $5.5 million, respectively. As of September 30, 2024 and December 31, 2023, the 5.75% Senior

Notes balance reflected an OID of $0.4 million and $0.5 million, respectively.

Senior Secured Credit Facilities  

On August 24, 2021, the Company entered into a credit agreement for its senior secured term loan facility (the "Term Loan B

Facility"), which provides funding up to a principal amount of $900.0 million.  The Term Loan B Facility has a seven year

maturity with principal due in consecutive equal quarterly installments of 0.25% of the initial $900.0 million principal

amount (subject to certain reductions from time to time as a result of the application of prepayments), with the remaining

balance due upon maturity of the Term Loan B Facility.  The proceeds from the Term Loan B Facility were used to prepay in

full the Company's $825.0 million senior secured term loan facility (the "2018 Term Loan B Facility"), including any accrued

and unpaid interest, fees and other expenses related to the transaction. On June 8, 2023, the Company further amended and

restated the Term Loan B Facility credit agreement (the "Term Loan B Credit Agreement") to replace LIBOR with the Term

Secured Overnight Financing Rate ("SOFR") and Daily Simple SOFR (each as defined in the amended Term Loan B Credit

Agreement) as the reference interest rate effective June 30, 2023. On June 26, 2024, the Company used cash on hand to

prepay $100.0 million of the $877.5 million outstanding principal on the Term Loan B Facility; no modification was made to

the Term Loan B Credit Agreement as a result of this prepayment. On September 18, 2024, the Company executed an

amendment to reprice its Term Loan B Credit Agreement. The repricing reduced the applicable interest rate by 50 basis

points from Term SOFR plus 3.25% to Term SOFR plus 2.75% and eliminated the credit spread adjustment. No

modifications were made to the maturity of the loans as a result of the repricing and all other terms were substantially

unchanged.

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

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

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

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

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

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

date to June 26, 2029.

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

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

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

Agreement):

•incur additional indebtedness (including guarantee obligations);

•incur liens;

•make certain investments;

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

•make certain payments or other distributions; and

17

•engage in certain transactions with affiliates.

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

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

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

believes that, as of September 30, 2024 and December 31, 2023, the Company maintained more than the minimum amount of

availability under the senior secured asset-based revolving credit facility and, therefore, the minimum fixed charge ratio

described herein was not applicable.

5.  Interest Rate Swap Agreements

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

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

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

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

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

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

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

from the designated cash flow hedges are deferred in accumulated other comprehensive income (“AOCI”) and recognized as

interest expense as the interest payments occur. Hedges and derivative financial instruments may continue to be used in the

future in order to manage interest rate exposure. 

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

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

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

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

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

hierarchy.

On August 26, 2021, the Company amended its existing interest rate swap agreements with Barclays Bank PLC and Bank of

America, N.A. as counterparties, with original notional amounts totaling $558.0 million and expiring August 31, 2023. Under

the amended agreements, the Company was required to make monthly fixed rate payments at annual rates ranging from

2.50% to 2.51%, and the counterparties were obligated to make monthly floating rate payments to the Company based on

one-month LIBOR, each subject to a floor of 0.50%.

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

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

effective date of August 31, 2023 and expiring June 30, 2026. Under the October 2021 Agreements, the Company was

required to make monthly fixed rate payments at annual rates ranging from 1.53% to 1.55%, and the counterparties were

obligated to make monthly floating rate payments to the Company based on one-month LIBOR, each subject to a floor of

0.50%. Effective August 31, 2023, the Company amended the October 2021 Agreements to adjust the fixed rates and replace

the LIBOR floating interest rate options with Term SOFR floating rate options. Under the amended October 2021

Agreements, the Company is required to make monthly fixed rate payments at annual rates ranging from 1.47% to 1.48%,

and the counterparties are obligated to make monthly floating rate payments to the Company based on one-month Term

SOFR, each subject to a floor of 0.39%.

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

the interest rate swap agreements amended on August 26, 2021 did not meet the definition of derivatives in their entirety due

to the financing element of the agreements, the Company accounted for these as hybrid instruments that consisted of a debt

instrument (debt host) and an embedded at-market derivative. At August 26, 2021, the debt portion of the hybrid instruments

was equal to the fair value of the existing interest rate swap agreements, and the balance within AOCI associated with the

debt portion was amortized on a straight-line basis to interest expense over the remaining effective period of the amended

agreements, which expired August 31, 2023. The at-market derivative portion of each hybrid instrument was designated as a

cash flow hedge with changes in fair value included in AOCI as a component of equity. Amounts were subsequently

reclassified from AOCI into interest expense in the same periods during which the hedged transactions affected earnings.

Cash interest payments associated with the at-market derivative portion of the hybrid instruments were classified as operating

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activities in the Company’s unaudited condensed consolidated statements of cash flows; whereas cash interest payments for

the debt portion of the hybrid instruments were classified as financing activities.

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

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

months ended September 30, 2024 and the year ended December 31, 2023, these hedges were highly effective. Accordingly,

no unrealized gain or loss related to these hedges was reflected in the accompanying unaudited condensed consolidated

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

during the period have been reclassified from AOCI to interest expense.

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

earnings (in thousands):

		Three Months Ended September 30,		Nine Months Ended September 30,
	Classification	2024	2023	2024	2023
Unrealized (loss) income recognized	AOCI	$(5,062)	$4,490	$3,077	$11,082
Loss reclassified from AOCI into earnings	Interest expense, net	(5,118)	(4,447)	(15,357)	(11,006)
Net change in AOCI		$(10,180)	$43	$(12,280)	$76

In the 12 months following September 30, 2024, the Company estimates that an additional $9.5 million will be reclassified as

a reduction to interest expense.

As of September 30, 2024 and December 31, 2023, the fair value of the Company’s interest rate swap agreements reflected

an asset balance of $12.8 million and $25.1 million, respectively. The following table presents the fair value of the

Company’s interest rate swap agreements as recorded in the unaudited condensed consolidated balance sheets (in thousands):

Classification	September 30, 2024	December 31, 2023
Other current assets	$9,530	$15,966
Other assets	3,310	9,100
Fair value	$12,840	$25,066

6. Income Taxes

The Company’s tax provisions for the three months ended September 30, 2024 and 2023 were income tax expense of $11.1

million, which equates to an effective tax rate of 19.4%, and $7.3 million, which equates to an effective tax rate of 15.8%,

respectively. The Company’s tax provisions for the nine months ended September 30, 2024 and 2023 were income tax

expense of $37.0 million, which equates to an effective tax rate of 18.9%, and $24.6 million, which equates to an effective

tax rate of 17.2%, respectively.

The Company follows the provisions of ASC 740, Income Taxes, regarding uncertain tax positions. At September 30, 2024

and December 31, 2023, the Company had a liability for uncertain tax positions of $12.1 million. The Company believes that

it is reasonably possible that the reserve for uncertain tax positions will change in the coming 12 months as a result of being

within the applicable statute of limitations with respect to uncertain tax positions.

As of September 30, 2024, the Company had no ongoing or pending federal examinations for prior years. The Company has

outstanding federal income tax refund claims for the 2016 and 2018 tax years. Since the total amount of refund claims is

equal to $10.0 million, which was classified within other current assets on the Company’s unaudited condensed consolidated

balance sheet at September 30, 2024, the refund claims are subject to ongoing Joint Committee on Taxation reviews. The

Company’s tax years from 2021 through 2023 remain open to examination by federal and state taxing authorities.

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7.  Self-Insured Liabilities

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

determined estimates. Such liabilities represent the estimated ultimate cost of all reported and unreported losses incurred

through the respective balance sheet dates. The Company provides an accrual for actuarially determined claims reported but

not paid and estimates of claims incurred but not reported.

Professional and General Liability

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

were $15.6 million and $13.7 million for the three months ended September 30, 2024 and 2023, respectively, and were $50.5

million and $40.9 million for the nine months ended September 30, 2024 and 2023, respectively.

Workers' Compensation and Occupational Injury Liability

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

were $2.4 million and $2.5 million for the three months ended September 30, 2024 and 2023, respectively, and were $5.7

million and $7.6 million for the nine months ended September 30, 2024 and 2023, respectively.

8.  Employee Benefit Plans

Defined Contribution Plan

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

costs related to the retirement plans of $11.2 million and $10.3 million for the three months ended September 30, 2024 and

2023, respectively, and $36.2 million and $33.5 million for the nine months ended September 30, 2024 and 2023,

respectively.

Employee Health Plan

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

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

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

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

The total costs of employee health coverage were $47.2 million and $40.7 million for the three months ended September 30,

2024 and 2023, respectively, and $133.9 million and $122.9 million for the nine months ended September 30, 2024 and 2023,

respectively.

9.  Commitments and Contingencies

Litigation and Regulatory Matters

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

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

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

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

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

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

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

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

has been incurred and the amount of the loss can be reasonably estimated. The Company does not believe that it is party to

any proceeding that, either individually or in the aggregate, in the opinion of management, could have a material adverse

effect on the business, financial condition, results of operations or liquidity.

As a result of the Cybersecurity Incident that occurred in November 2023, three putative class actions were filed against the

Company in the U.S. District Court for the Middle District of Tennessee: Burke v. AHS Medical Holdings LLC, No. 3:23-

cv-01308; Redd v. AHS Medical Holdings, LLC, No. 3:23-cv-01342; and Epperson v. AHS Management Company, Inc.,

No. 3:24-cv-00396. These cases were consolidated by the District Court on April 24, 2024, under the caption Hodge v. AHS

Management Company, Inc., No. 3:23-cv-01308 (M.D. Tenn.). The complaint for the consolidated class action, filed on

behalf of approximately 38,000 individuals who allege their personal information and protected health information were

affected by the Cybersecurity Incident, generally asserts state common law claims of negligence, breach of implied contract,

unjust enrichment, breach of fiduciary duty, and invasion of privacy with respect to how the Company managed sensitive

data. On October 4, 2024, the Company executed a settlement agreement to resolve the consolidated class action litigation.

On October 9, 2024, the District Court preliminarily approved the settlement and set the hearing for the District Court’s final

approval of the settlement for August 1, 2025. Settlement of the consolidated case on the agreed terms will require the

Company to make cash settlement payments that will not have a material impact on the Company’s results of operations,

financial position or liquidity.

Acquisitions

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

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

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

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

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

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

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

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

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

10.  Earnings Per Share

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

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

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

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

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

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

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

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

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

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

presented.

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

share amounts):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Basic:
Net income attributable to common stockholders	$26,322	$20,838	$96,139	$58,057
Weighted-average number of common shares	137,107,595	126,115,301	129,877,510	126,115,301
Net income per common share	$0.19	$0.17	$0.74	$0.46
Diluted:
Net income attributable to common stockholders	$26,322	$20,838	$96,139	$58,057
Weighted-average number of common shares	137,542,995	126,115,301	130,022,643	126,115,301
Net income per common share	$0.19	$0.17	$0.74	$0.46

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

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

	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Weighted-average number of common shares - basic	137,107,595	126,115,301	129,877,510	126,115,301
Effect of dilutive securities(1)	435,400	—	145,133	—
Weighted-average number of common shares - diluted	137,542,995	126,115,301	130,022,643	126,115,301

(1) The effect of dilutive securities does not reflect 370,579 and 123,526 weighted-average potential common shares from restricted stock awards and

restricted stock units for the three and nine months ended September 30, 2024, respectively, because their effect was antidilutive as calculated under

the treasury stock method.

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

RESULTS OF OPERATIONS

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

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

Report on Form 10-Q for the quarter ended September 30, 2024 (this "Quarterly Report") and our annual financial

statements for the year ended December 31, 2023 included in our final prospectus dated July 17, 2024, filed with the

Securities and Exchange Commission (the "SEC") on July 18, 2024 pursuant to Rule 424(b) (the "Final Prospectus") under

the Securities Act of 1933, as amended (the "Securities Act"). The following discussion includes forward-looking statements

that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our

results to differ materially from those expressed or implied by such forward-looking statements.  When reviewing the

discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In

particular, we encourage you to review the risks and uncertainties described in the section titled “Risk Factors” included

elsewhere in this Quarterly Report and our Final Prospectus. These risks and uncertainties could cause actual results to

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

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

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

period.

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

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

in this section as “we,” “our,” or “us.”

Forward-Looking Statements

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

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

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

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

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

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

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

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

forward-looking statements, including the risk factors and other cautionary statements described under the heading “Risk

Factors” included in this Quarterly Report and those included within our Final Prospectus. Factors, risks, and uncertainties

that could cause actual outcomes and results to be materially different from those contemplated include, among others: (1)

changes in government healthcare programs, including Medicare and Medicaid and supplemental payment programs and

state directed payment arrangements; (2) reduction in the reimbursement rates paid by commercial payors, our inability to

retain and negotiate favorable contracts with private third-party payors, or an increasing volume of uninsured or underinsured

patients; (3) the highly competitive nature of the healthcare industry; (4) inability to recruit and retain quality physicians, as

well as increasing cost to contract with hospital-based physicians; (5) increased labor costs resulting from increased

competition for staffing or a continued or increased shortage of experienced nurses; (6) changes to physician utilization

practices and treatment methodologies and third-party payor controls designed to reduce inpatient services or surgical

procedures that impact demand for medical services; (7) continued industry trends toward value-based purchasing, third party

payor consolidation and care coordination among healthcare providers; (8) loss of key personnel, including key members of

our senior management team; (9) our failure to comply with complex laws and regulations applicable to the healthcare

industry or to adjust our operations in response to changing laws and regulations; (10) inability to successfully complete

acquisitions or strategic joint ventures ("JVs") or inability to realize all of the anticipated benefits, including anticipated

synergies, of past acquisitions and the risk that transactions may not receive necessary government clearances; (11) failure to

maintain existing relationships with JV partners or enter into relationships with additional healthcare system partners; (12) the

impact of known and unknown claims brought against our hospitals, physician practices, outpatient facilities or other

business operations or against healthcare providers who provide services at our facilities; (13) the impact of government

investigations, claims, audits, whistleblower and other litigation; (14) the impact of any security incidents affecting us or any

third-party vendor upon which we rely; (15) inability or delay in our efforts to construct, acquire, sell, renovate or expand our

healthcare facilities; (16) our failure to comply with federal and state laws relating to Medicare and Medicaid enrollment,

permit, licensing and accreditation requirements, or the expansion of existing or the enactment of new laws or regulation

relating to permit, licensing and accreditation requirements; (17) failure to obtain drugs and medical supplies at favorable

prices or sufficient volumes; (18) operational, legal and financial risks associated with outsourcing functions to third parties;

(19) sensitivity to regulatory, economic and competitive conditions in the states in which our operations are heavily

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concentrated; (20) decreased demand for our services provided due to factors beyond our control, such as seasonal

fluctuations in the severity of critical illnesses, pandemic, epidemic or widespread health crisis; (21) inability to accurately

estimate market opportunity and forecasts of market growth; (22) general economic and business conditions, both nationally

and in the regions in which we operate; (23) the impact of seasonal or severe weather conditions and climate change; (24)

inability to demonstrate meaningful use of Electronic Health Record ("EHR") technology; (25) inability to continually

enhance our hospitals with the most recent technological advances in diagnostic and surgical equipment; (26) effects of

current and future health reform initiatives, including the Affordable Care Act, and the potential for changes to the Affordable

Care Act, its implementation or its interpretation (including through executive orders and court challenges); (27) legal and

regulatory restrictions on certain of our hospitals that have physician owners; (28) risks related to the Ventas Master Lease

and its restrictions and limitations on our business; (29) the impact of our significant indebtedness, including our ability to

comply with certain debt covenants and other significant operating and financial restrictions imposed on us by the agreements

governing our indebtedness, and the effects that variable interest rates, and general economic factors could have on our

operations, including our potential inability to service our indebtedness; (30) conflicts of interest with certain of our existing

large stockholders; (31) effects of changes in federal tax laws; (32) increased costs as a result of operating as a public

company; (33) risks related to maintaining an effective system of internal controls; (34) volatility of our share price and size

of the public market for our common stock; (35) our guidance differing from actual operating and financial performance; (36)

the results of our efforts to use technology, including artificial intelligence, to drive efficiencies and quality initiatives and

enhance patient experience; (37) the impact of recent decisions of the U.S. Supreme Court regarding the actions of federal

agencies; and (38) other risk factors described in our filings with the SEC.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report.

You should not rely upon forward-looking statements as predictions of future events. 

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

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

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

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

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

may differ materially from those described. The forward-looking statements pertain only to the date they are made, and we do

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

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

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

8-K.

Overview

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

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

acute care hospitals and more than 200 sites of care with 1,808 employed and affiliated providers as of September 30, 2024,

an increase of 3.3% compared to September 30, 2023. Affiliated providers are physicians and advanced practice providers

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

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

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

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

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

as a unified organization with a consumer-centric approach to caring for our patients and our communities. Our strategic JV

partners offer us significant advantages, including expanded access points, clinical talent availability, local brand recognition,

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

regional presence through our operational acumen. We strive to strengthen clinical services, drive operating improvements,

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

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

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Recent Developments

Term Loan B Facility Repricing

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

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

Term SOFR plus 2.75% and eliminated the credit spread adjustment. No modifications were made to the maturity of the

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

Initial Public Offering and Corporate Conversion

On July 19, 2024, we completed an initial public offering of 12,000,000 shares of our common stock (the "IPO"), at a public

offering price of $16.00 per share for aggregate gross proceeds of $192.0 million and net proceeds of approximately

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

the underwriters with an option to purchase up to an additional 1,800,000 shares of our common stock, which was fully

exercised by the underwriters, and, on July 30, 2024, we issued 1,800,000 additional shares of common stock at $16.00 per

share for additional net proceeds of approximately $27.2 million, after deducting underwriting discounts and commissions of

approximately $1.6 million. Our common stock is listed on the New York Stock Exchange under the symbol “ARDT”.

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

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

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

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

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

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

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

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

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

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

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

share.

ABL Credit Agreement Amendment and Term Loan B Facility Prepayment

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

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

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

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

Term Loan B Facility as a result of this prepayment.

2024 Supplemental Payment Program Updates

A new Oklahoma directed payment program (the “Oklahoma DPP”) became effective on April 1, 2024. Under the Oklahoma

DPP, hospitals receive directed payments in accordance with Oklahoma’s new Medicaid managed care delivery system,

resulting in reimbursement near the average commercial rate. The existing upper payment limit component of Oklahoma’s

Supplemental Hospital Offset Payment Program will remain in place for certain categories of Medicaid patients that continue

to be enrolled in Oklahoma’s traditional Medicaid Fee for Service program. We have recognized total revenue of $48.6

million under the Oklahoma DPP from the April 1, 2024 effective date through September 30, 2024.

In March 2024, New Mexico’s Healthcare Delivery and Access Act (the “New Mexico HDA Act”) was signed into law.

Subject to approval by the Center for Medicare & Medicaid Services (“CMS”), the New Mexico HDA Act would provide

directed payments for hospitals that serve patients in New Mexico’s Medicaid managed care delivery system, resulting in

reimbursement near the average commercial rate, and once approved, is expected to represent a material rate uplift for us.

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The directed payment program under the New Mexico HDA Act was submitted to CMS for approval on August 5, 2024, with

a requested effective date of July 1, 2024. The program is still under CMS review.

We believe the preliminary estimate of our net benefit under the Oklahoma DPP and the New Mexico HDA Act to be in

excess of $150 million on an annualized basis, subject to change, non-recurrence, and adjustment for potential quality

performance requirements.

Cybersecurity Incident

In November 2023, we determined that a ransomware cybersecurity incident had impacted and disrupted a number of our

operational and information technology systems (the “Cybersecurity Incident”).  Upon detecting the ransomware, we quickly

activated our incident response protocols and implemented a series of containment and remediation measures, including

engaging the services of cybersecurity experts and incident response professionals. We also promptly launched an

investigation, engaged external counsel to support the investigation and involved federal and state law enforcement. During

this time, our hospitals remained operational and continued to deliver patient care utilizing established downtime procedures;

however, we advised local EMS systems and other providers to divert emergency ambulance transports to other facilities for

a few days until the Cybersecurity Incident had been contained. As a result of our investigation, we determined that the

unauthorized actor acquired a copy of certain personal information and protected health information of a limited number of

our patients and personal information of certain of our employees, but did not gain access to our EHR platform. We have

cooperated with law enforcement authorities that have made inquiries into the Cybersecurity Incident, and we have been in

contact with, and complied with, the requirements of various governmental authorities that require notification of such

incidents. Additionally, because of the time taken to contain and remediate the Cybersecurity Incident, our online electronic

billing systems were not functioning at their full capacities and certain billing, reimbursement and payment functions were

delayed.

We estimate the Cybersecurity Incident had an adverse pre-tax impact of approximately $74 million during the year ended

December 31, 2023. This estimate includes lost revenue from the associated business interruption and costs to remediate the

issue, net of insurance proceeds. For the three months ended December 31, 2023, we also experienced decreases in

admissions, surgeries (both inpatient and outpatient) and emergency room visits of 2.5%, 2.1% and 5.7%, respectively,

compared to the three months ended December 31, 2022, which, prior to the Cybersecurity Incident, were estimated to have

increased by 4.1%, 5.5% and 3.3%, respectively, compared to the same period in 2022. While our operations were no longer

materially disrupted as of September 30, 2024, we continued to experience delays in billing claims and obtaining

reimbursements and payments through the first quarter of 2024, and will incur certain expenses related to the Cybersecurity

Incident, including expenses to defend claims brought by individuals and other expenses related to the Cybersecurity

Incident. On October 4, 2024, we executed a settlement agreement to resolve the consolidated class action litigation. On

October 9, 2024, the Court preliminarily approved the settlement and set the hearing for the Court’s final approval of the

settlement for August 1, 2025. Settlement of the consolidated case on the agreed terms will require us to make cash

settlement payments that will not have a material impact on our results of operations, financial position or liquidity.

Pure Health Equity Investment

On May 1, 2023, an affiliate of Pure Health Holding PJSC (“Pure Health”) purchased an equity interest representing 25.0%

of the total combined voting power of Ardent Health Partners, LLC from the unit holders at the time for approximately $500

million. In connection with Pure Health’s investment, unit holders were eligible to exercise tag-along rights to sell a

proportionate share of their individual equity ownership interest in Ardent Health Partners, LLC and AHP Health Partners,

our direct subsidiary. Ventas, a common unit holder that beneficially owned a percentage of our outstanding membership

interests and maintained a seat on our board of managers, making Ventas a related party, exercised its tag-along right to sell

its proportionate share of interest in both Ardent Health Partners, LLC and AHP Health Partners. Ventas sold approximately

24% of its ownership interest in Ardent Health Partners, LLC for $24.2 million in total cash proceeds. Additionally, to fulfill

Ventas’ right to sell its proportionate share of noncontrolling ownership interest in AHP Health Partners, we exercised our

right to repurchase those shares from Ventas for $26.0 million concurrent with Pure Health’s purchase of a minority interest

in Ardent Health Partners, LLC. The carrying value of Ventas’ noncontrolling interest was adjusted proportionate to the

shares repurchased to reflect the change in ownership of AHP Health Partners, with the difference between the fair value of

the consideration paid and the amount by which noncontrolling interest was adjusted recognized in equity attributable to

Ardent Health Partners, LLC. As of September 30, 2024, following the consummation of the IPO and the underwriters'

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exercise of their option to purchase additional shares, Pure Health and Ventas beneficially owned approximately 21.2% and

6.5%, respectively, of our outstanding common stock.

Key Factors Impacting Our Results of Operations

Staffing and Labor Trends

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seasonality

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

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

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

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

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

Inflation

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

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

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

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

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

providing health insurance benefits to our employees.

27

Geographic Data

The information below provides an overview of our operations in certain markets as of September 30, 2024.

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

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

areas of Tyler, Amarillo and Killeen, Texas. For the nine months ended September 30, 2024, we generated 36.4% of our total

revenue in the Texas market.

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

For the nine months ended September 30, 2024, we generated 24.8% of our total revenue in the Oklahoma market.

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

Roswell, New Mexico. For the nine months ended September 30, 2024, we generated 14.6% of our total revenue in the New

Mexico market.

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

Westwood, New Jersey. For the nine months ended September 30, 2024, we generated 10.2% of our total revenue in the New

Jersey market.

Other Industry Trends

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

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

care solutions;

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

care that is more convenient, affordable and accessible;

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

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

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

uncertainty. Changes in federal or state healthcare laws, regulations, funding policies or reimbursement practices, especially

those involving reductions to government payment rates or limitations on what providers may charge, could significantly

impact future revenue and operations. For example, the No Surprises Act prohibits providers from charging patients an

amount beyond the in-network cost sharing amount for services rendered by out-of-network providers, subject to limited

exceptions. For services for which balance billing is prohibited, the No Surprises Act includes provisions that may limit the

amounts received by out-of-network providers from health plans. Any reduction in the rates that we can charge or amounts

we can receive for our services will reduce our total revenue and our operating margins.

Results of Operations

Revenue and Volume Trends

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

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

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

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

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

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

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

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

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

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

be collected.

Total revenue for the three months ended September 30, 2024 increased $72.1 million, or 5.2%, compared to the same prior

year period. The increase in total revenue for the three months ended September 30, 2024 consisted of an increase in adjusted

admissions of 3.8% and an increase in net patient service revenue per adjusted admission of 0.9%. The increase in adjusted

admissions was primarily driven by growth in admissions of 6.4% compared to the same prior year period.  Outpatient

surgeries increased 0.2% compared to the same prior year period. Outpatient surgery growth was limited, in part, by ongoing

service line optimization efforts that resulted in strategic reallocation of resources from high volume, low margin procedures,

such as certain dental, otolaryngology and ophthalmology procedures, to alternate higher margin service lines. The increase

in net patient service revenue per adjusted admission was attributable to a combination of a favorable payor mix and

improved service mix as a result of ongoing service line optimization efforts, partially offset by a decrease in supplemental

funding as compared to the same prior year period.

Total revenue for the nine months ended September 30, 2024 increased $296.3 million, or 7.3%, compared to the same prior

year period. The increase in total revenue for the nine months ended September 30, 2024 consisted of an increase in adjusted

admissions of 3.5% and an increase in net patient service revenue per adjusted admission of 3.6%.  The increase in adjusted

admissions reflected growth in admissions of 5.6%, partially offset by a decrease in outpatient surgeries of 1.7% compared to

the same prior year period, driven, in part, by ongoing service line optimization efforts that resulted in strategic reallocation

of resources from high volume, low margin procedures, such as certain dental, otolaryngology and ophthalmology

procedures, to alternate higher margin service lines. The increase in net patient service revenue per adjusted admission was

attributable to a combination of a favorable payor mix, improved service mix as a result of ongoing service line optimization

efforts, and an increase in supplemental funding as compared to the same prior year period.

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

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

hospital systems, community physicians, and a community foundation. During the three months ended September 30, 2024

and 2023, total revenue related to these JVs was $429.9 million and $394.8 million, respectively, which represented 29.7%

and 28.7%, respectively, of our total revenue for such periods. During the nine months ended September 30, 2024 and 2023,

total revenue related to these entities was $1,281.0 million and $1,203.4 million, respectively, which represented 29.4% and

29.6%, respectively, of our total revenue for such periods.

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

	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Medicare	38.7%	39.0%	39.3%	39.6%
Medicaid	10.2%	11.0%	10.6%	11.3%
Other managed care	43.3%	42.7%	43.0%	42.2%
Self-pay and other	5.5%	5.5%	5.2%	5.1%
Net patient service revenue	97.7%	98.2%	98.1%	98.2%
Other revenue	2.3%	1.8%	1.9%	1.8%
Total revenue	100.0%	100.0%	100.0%	100.0%

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Operating Results Summary for the Three Months Ended September 30, 2024

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

revenue for the periods presented.

	Three Months Ended September 30,
(Unaudited, dollars in thousands)	2024		2023
	Amount	%	Amount	%
Total revenue	$1,449,817	100.0%	$1,377,727	100.0%
Expenses:
Salaries and benefits	635,223	43.8%	595,580	43.2%
Professional fees	274,223	18.9%	246,540	17.9%
Supplies	251,862	17.4%	249,548	18.1%
Rents and leases	26,410	1.8%	24,506	1.8%
Rents and leases, related party	37,249	2.6%	36,413	2.6%
Other operating expenses	117,700	8.2%	124,642	9.1%
Interest expense	14,629	1.0%	19,041	1.4%
Depreciation and amortization	36,771	2.5%	35,488	2.6%
Loss on extinguishment and modification of debt	1,490	0.1%	—	0.0%
Other non-operating gains	(2,807)	(0.2)%	—	0.0%
Total operating expenses	1,392,750	96.1%	1,331,758	96.7%
Income before income taxes	57,067	3.9%	45,969	3.3%
Income tax expense	11,062	0.7%	7,261	0.5%
Net income	46,005	3.2%	38,708	2.8%
Net income attributable to noncontrolling interests	19,683	1.4%	17,870	1.3%
Net income attributable to Ardent Health Partners, Inc.	$26,322	1.8%	$20,838	1.5%

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Operating Results Summary for the Nine Months Ended September 30, 2024

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

a percentage of total revenue for the periods presented.

	Nine Months Ended September 30,
(Unaudited, dollars in thousands)	2024		2023
	Amount	%	Amount	%
Total revenue	$4,359,783	100.0%	$4,063,449	100.0%
Expenses:
Salaries and benefits	1,880,790	43.1%	1,785,939	44.0%
Professional fees	810,820	18.6%	715,111	17.6%
Supplies	769,034	17.6%	743,713	18.3%
Rents and leases	76,251	1.7%	73,230	1.8%
Rents and leases, related party	111,413	2.6%	108,914	2.7%
Other operating expenses	354,851	8.2%	342,026	8.3%
Government stimulus income	—	0.0%	(8,463)	(0.2)%
Interest expense	52,050	1.2%	55,854	1.4%
Depreciation and amortization	108,434	2.5%	104,860	2.6%
Loss on extinguishment and modification of debt	3,388	0.1%	—	0.0%
Other non-operating gains	(3,062)	(0.1)%	(522)	0.0%
Total operating expenses	4,163,969	95.5%	3,920,662	96.5%
Income before income taxes	195,814	4.5%	142,787	3.5%
Income tax expense	36,997	0.9%	24,591	0.6%
Net income	158,817	3.6%	118,196	2.9%
Net income attributable to noncontrolling interests	62,678	1.4%	60,139	1.5%
Net income attributable to Ardent Health Partners, Inc.	$96,139	2.2%	$58,057	1.4%

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

	Three Months Ended September 30,			Nine Months Ended September 30,
	2024	% Change	2023	2024	% Change	2023
Operating Statistics
Total revenue (in thousands)	$1,449,817	5.2%	$1,377,727	$4,359,783	7.3%	$4,063,449
Hospitals operated (at period end) (1)	30	(3.2)%	31	30	(3.2)%	31
Licensed beds (at period end) (2)	4,287	(0.8)%	4,323	4,287	(0.8)%	4,323
Utilization of licensed beds (3)	46%	4.5%	44%	46%	2.2%	45%
Admissions (4)	39,568	6.4%	37,191	116,995	5.6%	110,754
Adjusted admissions (5)	86,833	3.8%	83,643	254,909	3.5%	246,298
Inpatient surgeries (6)	8,871	0.5%	8,826	26,829	0.3%	26,751
Outpatient surgeries (7)	23,220	0.2%	23,164	69,201	(1.7)%	70,417
Emergency room visits (8)	161,343	2.6%	157,182	475,212	3.7%	458,160
Patient days (9)	182,023	4.8%	173,687	540,196	2.6%	526,634
Total encounters (10)	1,482,655	7.5%	1,378,599	4,304,097	4.7%	4,109,144
Average length of stay (11)	4.60	(1.5)%	4.67	4.62	(2.7)%	4.75
Net patient service revenue per adjusted admission (12)	$16,312	0.9%	$16,174	$16,784	3.6%	$16,206

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

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

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

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

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

On April 30, 2024, we closed UT Health East Texas Specialty Hospital, a long-term acute care hospital (the “LTAC Hospital”) in Tyler, Texas. The LTAC

Hospital's inventory and fixed assets were transferred or repurposed to be used by our other hospitals. The LTAC Hospital had 36 licensed patient beds and

accounted for approximately $0.0 million and $2.2 million of total revenue and a pre-tax loss of $0.2 million and $0.5 million for the three months ended

September 30, 2024 and 2023, respectively, and approximately $2.4 million and $8.0 million of total revenue and a pre-tax loss of $0.8 million and $0.5 million

for the nine months ended September 30, 2024 and 2023, respectively.

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

the beds are actually available for patient use.

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

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

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

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

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

management with a key performance indicator that considers both inpatient and outpatient volumes by applying an inpatient volume measure (admissions) to a

ratio of gross inpatient and outpatient revenue to gross inpatient revenue. Gross inpatient and outpatient revenue reflect gross inpatient and outpatient charges

prior to estimated contractual adjustments, uninsured discounts, implicit price concessions, and other discounts. The calculation of adjusted admissions is

summarized as follows:

Adjusted Admissions  =  Admissions  x  (Gross Inpatient Revenue + Gross Outpatient Revenue)

Gross Inpatient Revenue

(6)“Inpatient surgeries.” This metric represents the number of surgeries performed on patients who have been admitted to our hospitals. Pain management, c-

sections, and certain diagnostic procedures are excluded from inpatient surgeries.

(7)“Outpatient surgeries.” This metric represents the number of surgeries performed on patients who have not been admitted to our hospitals. Pain management, c-

sections, and certain diagnostic procedures are excluded from outpatient surgeries.

(8)“Emergency room visits.” This metric represents the total number of patients provided with emergency room treatment during the applicable period.

(9)“Patient days.” This metric represents the total number of days of care provided to patients admitted to our hospitals during the applicable period.

(10)“Total encounters.” This metric represents the total number of events where healthcare services are rendered resulting in a billable event during the applicable

period. This includes both hospital and ambulatory patient interactions.

(11)“Average length of stay.” This metric represents the average number of days admitted patients stay in our hospitals.

(12)“Net patient service revenue per adjusted admission.” This metric represents net patient service revenue divided by adjusted admissions for the applicable

period. Net patient service revenue reflects gross inpatient and outpatient charges less estimated contractual adjustments, uninsured discounts, implicit price

concessions, and other discounts.

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Overview of the Three Months Ended September 30, 2024

Total revenue for the three months ended September 30, 2024 increased $72.1 million, or 5.2%, compared to the same prior

year period. The increase in total revenue for the three months ended September 30, 2024 consisted of an increase in adjusted

admissions of 3.8% and an increase in net patient service revenue per adjusted admission of 0.9%. The increase in adjusted

admissions was primarily driven by growth in admissions of 6.4% compared to the same prior year period.  Outpatient

surgeries increased 0.2% compared to the same prior year period.  Outpatient surgery growth was limited, in part, by ongoing

service line optimization efforts that resulted in strategic reallocation of resources from high volume, low margin procedures,

such as certain dental, otolaryngology and ophthalmology procedures, to alternate higher margin service lines. The increase

in net patient service revenue per adjusted admission was attributable to a combination of a favorable payor mix and

improved service mix as a result of ongoing service line optimization efforts, partially offset by a decrease in supplemental

funding as compared to the same prior year period.

Total operating expenses increased $61.0 million for the three months ended September 30, 2024 compared to the same prior

year period due to higher patient volumes but decreased 0.6% as a percentage of total revenue. The decrease in total operating

expenses, as a percentage of total revenue, was driven by decreases in other operating expenses and supplies, as percentages

of total revenue, compared to the same prior year period. The decrease in other operating expenses, as a percentage of total

revenue, was primarily attributable to reduced provider assessments associated with various governmental supplemental

revenue programs during the three months ended September 30, 2024 compared to the same prior year period. The decrease

in supplies expense, as a percentage of net revenue, was driven by ongoing service line optimization efforts. The decrease in

total operating expense, as a percentage of total revenue, was partially offset by an increase in professional fees, as a

percentage of total revenue, due to higher costs for hospital-based providers as well as increased costs for revenue cycle

management services due to increased cash collections during the three months ended September 30, 2024, compared to the

same prior year period. 

Overview of the Nine Months Ended September 30, 2024

Total revenue for the nine months ended September 30, 2024 increased $296.3 million, or 7.3%, compared to the same prior

year period. The increase in total revenue for the nine months ended September 30, 2024 consisted of an increase in adjusted

admissions of 3.5% and an increase in net patient service revenue per adjusted admission of 3.6%.  The increase in adjusted

admissions reflected growth in admissions of 5.6% compared to the same prior year period, partially offset by a decrease in

outpatient surgeries of 1.7% compared to the same prior year period, driven, in part, by ongoing service line optimization

efforts that resulted in strategic reallocation of resources from high volume, low margin procedures, such as certain dental,

otolaryngology and ophthalmology procedures, to alternate higher margin service lines. The increase in net patient service

revenue per adjusted admission was attributable to a combination of a favorable payor mix, improved service mix as a result

of ongoing service line optimization efforts, and an increase in supplemental funding as compared to the same prior year

period.

Total operating expenses increased $243.3 million for the nine months ended September 30, 2024 compared to the same prior

year period due to higher patient volumes but decreased 1.0% as a percentage of total revenue. The decrease in total operating

expenses, as a percentage of total revenue, was driven by decreases in salaries and benefits and supplies, as percentages of

total revenue, compared to the same prior year period. The decrease in salaries and benefits, as a percentage of total revenue,

was primarily due to a decrease in contract labor expense of $26.0 million during the nine months ended September 30, 2024

compared to the same prior year period.  The decrease in supplies expense, as a percentage of total revenue, was driven by

ongoing service line optimization efforts during the nine months ended September 30, 2024 compared to the same prior year

period. The decrease in total operating expense, as a percentage of total revenue, was partially offset by an increase in

professional fees, as a percentage of total revenue, driven by higher costs for hospital-based providers and an increase in costs

for revenue cycle management services due to increased cash collections during the nine months ended September 30, 2024,

compared to the same prior year period.

Comparison of the Three Months Ended September 30, 2024 and 2023

Total revenue — Total revenue for the three months ended September 30, 2024 increased $72.1 million, or 5.2%, compared

to the same prior year period. The increase in total revenue for the three months ended September 30, 2024 consisted of an

increase in adjusted admissions of 3.8% and an increase in net patient service revenue per adjusted admission of 0.9%. The

increase in adjusted admissions was primarily driven by growth in admissions of 6.4% compared to the same prior year

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period.  Outpatient surgeries increased 0.2% compared to the same prior year period.  Outpatient surgery growth was limited,

in part, by ongoing service line optimization efforts that resulted in strategic reallocation of resources from high volume, low

margin procedures, such as certain dental, otolaryngology and ophthalmology procedures, to alternate higher margin service

lines. The increase in net patient service revenue per adjusted admission was attributable to a combination of a favorable

payor mix and improved service mix as a result of ongoing service line optimization efforts, partially offset by a decrease in

supplemental funding as compared to the same prior year period.

Salaries and benefits — Salaries and benefits, as a percentage of total revenue, were 43.8% for the three months ended

September 30, 2024 compared to 43.2% for the same prior year period. The increase in salaries and benefits, as a percentage

of total revenue, was driven by an increase in equity-based compensation of $8.0 million.

Professional fees — Professional fees, as a percentage of total revenue, were 18.9% for the three months ended September

30, 2024 compared to 17.9% for the same prior year period.  The increase in professional fees, as a percentage of total

revenue, reflected higher costs for hospital-based providers as well as increased expenses for revenue cycle management

services due to increased cash collections during the three months ended September 30, 2024.

Supplies — Supplies, as a percentage of total revenue, were 17.4% for the three months ended September 30, 2024 compared

to 18.1% for the same prior year period.  The decrease in supplies, as a percentage of total revenue, was attributable to

ongoing service line optimization efforts and execution on various supply chain cost reduction initiatives, including improved

inventory management, standardized surgical supply procurement and strategic sourcing.

Rents and leases — Rents and leases were $26.4 million and $24.5 million for the three months ended September 30, 2024

and 2023, respectively.

Rents and leases, related party — Rents and leases, related party, consists of lease expense related to the Master Lease with

Ventas ("Ventas Master Lease"), under which we lease 10 of our facilities, and other lease agreements with Ventas for certain

medical office buildings. Rents and leases, related party were $37.2 million and $36.4 million for the three months ended

September 30, 2024 and 2023, respectively.

Other operating expenses — Other operating expenses, as a percentage of total revenue, were 8.2% for the three months

ended September 30, 2024 compared to 9.1% for the same prior year period.  Other operating expenses are comprised

primarily of repairs and maintenance, utility, insurance (including professional liability insurance) and provider assessments.

The change in other operating expenses, as a percentage of total revenue, was primarily driven by a decrease in provider

assessments associated with various governmental supplemental revenue programs during the three months ended September

30, 2024, compared to the same prior year period.

Interest expense — Interest expense was $14.6 million and $19.0 million for the three months ended September 30, 2024 and

2023, respectively.

Loss on extinguishment and modification of debt — On September 18, 2024, we executed an amendment to our Term Loan B

Credit Agreement. In connection with this transaction, we incurred a loss on the debt extinguishment of $0.3 million related

to the write-off of existing deferred financing costs and original issue discounts and transaction costs of $1.2 million related

to the modification of debt during the three months ended September 30, 2024.

Other non-operating gains — Other non-operating gains were $2.8 million and $0.0 million for the three months ended

September 30, 2024 and 2023, respectively. The increase in other non-operating gains was primarily due to the recognition of

insurance recovery proceeds of $2.9 million during the three months ended September 30, 2024 related to the Cybersecurity

Incident.

Income tax expense — We recorded income tax expense of $11.1 million, which equates to an effective tax rate of 19.4%, for

the three months ended September 30, 2024 compared to income tax expense of $7.3 million, which equates to an effective

tax rate of 15.8%, for the same prior year period. The increase in income tax expense was primarily driven by an increase in

income before income taxes attributable to Ardent Health Partners, Inc., which resulted in an increase in taxes at the federal

statutory rate during the three months ended September 30, 2024 compared to the same prior year period.  Additionally, the

effective tax rate was further impacted by permanent differences resulting from the disallowance of certain equity-based

compensation incurred during the during the three months ended September 30, 2024.

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Net income attributable to noncontrolling interests — Net income attributable to noncontrolling interests of $19.7 million for

the three months ended September 30, 2024 compared to $17.9 million for the same prior year period consisted primarily of

$19.7 million and $17.0 million of net income attributable to minority partners’ interests in hospitals and ambulatory services

that are owned and operated though limited liability companies and consolidated by us for the three months ended September

30, 2024 and 2023, respectively. Income from operations before income taxes related to these limited liability companies was

$68.6 million and $60.3 million for the three months ended September 30, 2024 and 2023, respectively. The remaining

portion of net income attributable to noncontrolling interests for the three months ended September 30, 2023 consisted of net

income attributable to ALH Holdings, LLC’s (a subsidiary of Ventas, a related party) minority interest in AHP Health

Partners, our direct subsidiary. 

Comparison of the Nine Months Ended September 30, 2024 and 2023

Total revenue — Total revenue for the nine months ended September 30, 2024 increased $296.3 million, or 7.3%, compared

to the same prior year period. The increase in total revenue for the nine months ended September 30, 2024 consisted of an

increase in adjusted admissions of 3.5% and an increase in net patient service revenue per adjusted admission of 3.6%. The

increase in adjusted admissions reflected growth in admissions of 5.6% compared to the same prior year period. The growth

in admissions was partially offset by a decrease in outpatient surgeries of 1.7% compared to the same prior year period

driven, in part, by ongoing service line optimization efforts that resulted in strategic reallocation of resources from high

volume, low margin procedures, such as certain dental, otolaryngology and ophthalmology procedures, to alternate higher

margin service lines. The increase in net patient service revenue per adjusted admission was attributable to a combination of a

favorable payor mix, improved service mix as a result of ongoing service line optimization efforts, and an increase in

supplemental funding as compared to the same prior year period.

Salaries and benefits — Salaries and benefits, as a percentage of total revenue, were 43.1% for the nine months ended

September 30, 2024 compared to 44.0% for the same prior year period.  The decrease in salaries and benefits, as a percentage

of total revenue, was primarily attributable to a decrease in contract labor expense of $26.0 million due to a combination of

reduced contract labor rates and lower utilization, driven by ongoing recruiting and retention initiatives. Total contract labor

expenses, as a percentage of total salaries and benefits, were 4.2% and 5.9% for the nine months ended September 30, 2024

and 2023, respectively.

Professional fees — Professional fees, as a percentage of total revenue, were 18.6% for the nine months ended September 30,

2024 compared to 17.6% for the same prior year period. The increase in professional fees, as a percentage of total revenue,

reflected higher costs for hospital-based providers as well as increased expenses for revenue cycle management services due

to increased cash collections during the nine months ended September 30, 2024.

Supplies — Supplies, as a percentage of total revenue, were 17.6% for the nine months ended September 30, 2024 compared

to 18.3% for the same prior year period. The decrease in supplies expense, as a percentage of total revenue, was attributable

to ongoing service line optimization efforts and execution on various supply chain cost reduction initiatives, including

improved inventory management, standardized surgical supply procurement and strategic sourcing.

Rents and leases — Rents and leases were $76.3 million and $73.2 million for the nine months ended September 30, 2024

and 2023, respectively.

Rents and leases, related party — Rents and leases, related party, consists lease expense related to the Ventas Master Lease,

under which we lease 10 of our hospitals, and other lease agreements with Ventas for certain medical office buildings. Rents

and leases, related party were $111.4 million and $108.9 million for the nine months ended September 30, 2024 and 2023,

respectively.

Other operating expenses — Other operating expenses, as a percentage of total revenue, were 8.2% for the nine months ended

September 30, 2024 compared to 8.3% for the same prior year period.

Government stimulus income — Government stimulus income was $0.0 million and $8.5 million for the nine months ended

September 30, 2024 and 2023, respectively.

Interest expense — Interest expense was $52.1 million and $55.9 million for the nine months ended September 30, 2024 and

2023, respectively.

35

Loss on extinguishment and modification of debt — On June 26, 2024, we executed an amendment to our ABL Credit

Agreement and prepaid $100.0 million of the outstanding principal on our Term Loan B Facility. Additionally, on September

18, 2024, we executed an amendment to our Term Loan B Credit Agreement. In connection with these transactions, we

incurred a loss on the debt extinguishment of $1.8 million related to the write-off of existing deferred financing costs and

original issue discounts and transaction costs of $1.2 million related to the modification of debt during the nine months ended

September 30, 2024.

Other non-operating gains — Other non-operating gains were $3.1 million and $0.5 million for the nine months ended

September 30, 2024 and 2023, respectively. The increase in other non-operating gains was primarily due to the recognition of

a gain on insurance recovery proceeds of $2.9 million during the nine months ended September 30, 2024 related to the

Cybersecurity Incident.

Income tax expense — We recorded income tax expense of $37.0 million, which equates to an effective tax rate of 18.9%, for

the nine months ended September 30, 2024 compared to income tax expense of $24.6 million, which equates to an effective

tax rate of 17.2%, for the same prior year period. The increase in income tax expense was primarily driven by an increase in

income before income taxes attributable to Ardent Health Partners, Inc., which resulted in an increase in taxes at the federal

statutory rate during the nine months ended September 30, 2024 compared to the same prior year period. Additionally, the

effective tax rate was further impacted by permanent differences resulting from the disallowance of certain equity-based

compensation incurred during the nine months ended September 30, 2024

Net income attributable to noncontrolling interests — Net income attributable to noncontrolling interests of $62.7 million for

the nine months ended September 30, 2024 compared to $60.1 million for the same prior year period consisted primarily of

$59.8 million and $57.5 million of net income attributable to minority partners’ interests in hospitals and ambulatory services

that are owned and operated though limited liability companies and consolidated by us for the nine months ended September

30, 2024 and 2023, respectively. Income from operations before income taxes related to these limited liability companies was

$207.0 million and $198.4 million for the nine months ended September 30, 2024 and 2023, respectively. The remaining

portion of net income attributable to noncontrolling interests consists of net income attributable to ALH Holdings, LLC’s (a

subsidiary of Ventas, a related party) minority interest in AHP Health Partners, our direct subsidiary, prior to the ALH

Contribution in July 2024. 

36

Supplemental Non-GAAP Information

We have included certain financial measures that have not been prepared in a manner that complies with U.S. generally

accepted accounting principles (“GAAP”), including Adjusted EBITDA and Adjusted EBITDAR. We define these terms as

follows:

Performance Measure

•“Adjusted EBITDA” is defined as net income plus (i) provision for income taxes, (ii) interest expense and (iii)

depreciation and amortization expense (or EBITDA), as adjusted to deduct noncontrolling interest earnings, and

excludes the effects of losses on the extinguishment and modification of debt; other non-operating losses (gains);

Cybersecurity Incident recoveries, net of incremental information technology and litigation costs; restructuring, exit

and acquisition-related costs; expenses incurred in connection with the implementation of Epic Systems (“Epic”),

our integrated health information technology system, equity-based compensation expense, and loss (income) from

disposed operations. See “Supplemental Non-GAAP  Performance Measure.”

Valuation Measure

•“Adjusted EBITDAR” is defined as Adjusted EBITDA further adjusted to add back rent expense payable to real

estate investment trusts ("REITs"), which consists of rent expense pursuant to the Ventas Master Lease, lease

agreements associated with the MOB Transactions (as defined below) and a lease arrangement with Medical

Properties Trust, Inc. ("MPT") for Hackensack Meridian Mountainside Medical Center. See “Supplemental Non-

GAAP Valuation Measure.”

Supplemental Non-GAAP Performance Measure

Adjusted EBITDA is a non-GAAP performance measure used by our management and external users of our financial

statements, such as investors, analysts, lenders, rating agencies and other interested parties, to evaluate companies in our

industry.

Adjusted EBITDA is a performance measure that is not defined under GAAP and is presented in this Quarterly Report

because our management considers it an important analytical indicator that is commonly used within the healthcare industry

to evaluate financial performance and allocate resources. Further, our management believes that Adjusted EBITDA is a

useful financial metric to assess our operating performance from period to period by excluding certain material non-cash

items and unusual or non-recurring items that we do not expect to continue in the future and certain other adjustments we

believe are not reflective of our ongoing operations and our performance.

Because not all companies use identical calculations, our presentation of the non-GAAP measure may not be comparable to

other similarly titled measures of other companies.

While we believe this is a useful supplemental performance measure for investors and other users of our financial

information, you should not consider the non-GAAP measure in isolation or as a substitute for net income or any other items

calculated in accordance with GAAP. Adjusted EBITDA has inherent material limitations as a performance measure, because

it adds back certain expenses to net income, resulting in those expenses not being taken into account in the performance

measure. We have borrowed money, so interest expense is a necessary element of our costs. Because we have material capital

and intangible assets, depreciation and amortization expense are necessary elements of our costs. Likewise, the payment of

taxes is a necessary element of our operations. Because Adjusted EBITDA excludes these and other items, it has material

limitations as a measure of our performance.

37

The following table presents a reconciliation of Adjusted EBITDA, a performance measure, to net income, determined in

accordance with GAAP:

	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)	2024	2023	2024	2023
Net income	$46,005	$38,708	$158,817	$118,196
Adjusted EBITDA Addbacks:
Income tax expense	11,062	7,261	36,997	24,591
Interest expense, net	14,629	19,041	52,050	55,854
Depreciation and amortization	36,771	35,488	108,434	104,860
Noncontrolling interest earnings	(19,683)	(17,870)	(62,678)	(60,139)
Loss on extinguishment and modification of debt	1,490	—	3,388	—
Other non-operating losses (gains) (a)	47	—	(208)	(522)
Cybersecurity Incident recoveries, net (b)	(4,976)	—	(4,976)	—
Restructuring, exit and acquisition-related costs (c)	3,796	1,511	11,694	11,473
Epic expenses (d)	485	437	1,500	1,415
Equity-based compensation	8,135	181	8,873	723
Loss (income) from disposed operations	3	3	1,989	(65)
Adjusted EBITDA	$97,764	$84,760	$315,880	$256,386

(a)Other non-operating losses (gains) include gains and losses realized on certain non-recurring events or events that are non-operational in

nature, including gains realized on certain asset divestitures.

(b)Cybersecurity Incident recoveries, net represents insurance recovery proceeds associated with the Cybersecurity Incident, net of

incremental information technology and litigation costs.

(c)Restructuring, exit and acquisition-related costs represent (i) enterprise restructuring costs, including severance costs related to work

force reductions of $3.2 million and $1.3 million for the three months ended September 30, 2024 and 2023, respectively, and

$10.1 million and $10.6 million for the nine months ended September 30, 2024 and 2023, respectively, (ii) penalties and costs incurred

for terminating pre-existing contracts at acquired facilities of $0.2 million and $0.1 million for the three months ended September 30,

2024 and 2023, respectively, and $0.6 million and $0.6 million for the nine months ended September 30, 2024 and 2023, respectively,

and (iii) third-party professional fees and expenses, salaries and benefits, and other internal expenses incurred in connection with

potential and completed acquisitions of $0.4 million and $0.1 million for the three months ended September 30, 2024 and 2023,

respectively, and $1.0 million and $0.3 million for the nine months ended September 30, 2024 and 2023, respectively.

(d)Epic expenses consist of various costs incurred in connection with the implementation of Epic, our health information technology

system. These costs included professional fees of $0.5 million and $0.4 million for the three months ended September 30, 2024 and 2023,

respectively, and $1.5 million and $1.4 million for the nine months ended September 30, 2024 and 2023, respectively.  Epic expenses do

not include the ongoing costs of the Epic system.

38

Liquidity and Capital Resources

Liquidity

Our primary sources of liquidity are available cash and cash equivalents, cash flows from our operations and available

borrowings under our ABL Facilities (as defined below). Our primary cash requirements are our operating expenses, the

service of our debt, capital expenditures on our existing properties, acquisitions of hospitals and other healthcare facilities,

and distributions to noncontrolling interests. We believe the combination of cash flow from operations and available cash and

borrowings will be adequate to meet our short-term liquidity needs. Our ability to make scheduled payments of principal, pay

interest on, or refinance, our indebtedness, pay distributions or fund planned capital expenditures will depend on our ability to

generate cash in the future. This ability is, to a certain extent, subject to general economic, financial, competitive, legislative,

regulatory and other factors that are beyond our control.

At September 30, 2024, we had total cash and cash equivalents of $563.1 million and available liquidity of $851.2 million. 

Our available liquidity was comprised of $563.1 million of total cash and cash equivalents plus $288.1 million in available

capacity under the ABL Credit Agreement, which is reduced by outstanding borrowings and outstanding letters of credit. In

June 2024, we amended the ABL Credit Agreement to increase commitments available thereunder by $100.0 million and

extended its maturity date to June 26, 2029.  See "Senior Secured Credit Facilities" for additional information.  At September

30, 2024, our net leverage ratio, as calculated under our ABL Credit Agreement and Term Loan B Credit Agreement, was

1.6x, and our lease-adjusted net leverage ratio was 3.5x. Our lease adjusted net leverage is calculated as net debt as of

September 30, 2024, plus 8.0x trailing twelve month REIT rent expense as of the end of the third quarter of 2024, divided by

the trailing twelve month Adjusted EBITDAR as of September 30, 2024.

During the nine months ended September 30, 2024 and 2023, we received and recognized $0.0 million and $8.5 million,

respectively, of cash distributions from the Public Health and Social Services Emergency Fund (“Provider Relief Fund”), a

provision of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), and other state and local programs. 

For additional information regarding distributions from the Provider Relief Fund and the CARES Act, refer to Note 2 to our

unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024.

Cash Flows

The following table summarizes certain elements of the statements of cash flows (in thousands):

	Nine Months Ended September 30,
	2024	2023
Net cash provided by operating activities	$195,457	$154,199
Net cash used in investing activities	(115,016)	(81,277)
Net cash provided by (used in) financing activities	45,124	(84,370)

Operating Activities  

Cash flows provided by operating activities for the nine months ended September 30, 2024 totaled $195.5 million compared

to $154.2 million for the same prior year period. The increase in operating cash flows during the nine months ended

September 30, 2024 was primarily attributable to an increase in net income of $40.6 million.

Investing Activities

Cash flows used in investing activities for the nine months ended September 30, 2024 totaled $115.0 million compared to

$81.3 million for the same prior year period.  Capital expenditures for non-acquisitions were $106.2 million and $80.0

million for the nine months ended September 30, 2024 and 2023, respectively.

Financing Activities

Cash flows provided by financing activities for the nine months ended September 30, 2024 totaled $45.1 million compared to

cash flows used in financing activities of $84.4 million for the same prior year period.  Cash flows provided by financing

activities for the nine months ended September 30, 2024 included IPO proceeds, net of underwriting discounts and

39

commissions, of $208.7 million, proceeds from insurance financing arrangements of $10.8 million, and proceeds from long-

term debt of $3.6 million.  Cash flows provided by financing activities were partially offset by payments of principal on long-

term debt of $106.3 million, which included a prepayment of $100.0 million on the $877.5 million outstanding borrowings

under our Term Loan B Facility, and payments of principal on insurance financing arrangements of $7.4 million. Cash flows

provided by financing activities for the nine months ended September 30, 2024 were partially offset by distributions paid to

noncontrolling interests of $53.1 million.

Cash flows used in financing activities for the nine months ended September 30, 2023 totaled $84.4 million and included

distributions paid to noncontrolling interests of $50.7 million, redemption of equity attributable to non-controlling interest of

$26.0 million, payments of principal on long-term debt of $10.5 million, and payments of principal on insurance financing

arrangements of $15.9 million, which were partially offset by proceeds from insurance financing arrangements of $24.7

million.

Capital Expenditures

We make significant, targeted investments to maintain and modernize our facilities, introduce new technologies, and expand

our service offerings. We expect to finance future capital expenditures with internally generated and borrowed funds. Capital

expenditures for property and equipment were $106.2 million and $80.0 million for the nine months ended September 30,

2024 and 2023, respectively.

Ventas Master Lease

Effective August 4, 2015, we sold the real property for ten of our hospitals to Ventas, which is a related party as, prior to our

IPO, it was a common unit holder of Ardent Health Partners, LLC and owned shares of common stock of AHP Health

Partners and had a representative serving on our board of managers. Concurrent with this transaction, we entered into a 20-

year master lease agreement that expires in August 2035 (with a renewal option for an additional ten years) to lease back the

real estate. We lease ten of our hospitals pursuant to the Ventas Master Lease. As of September 30, 2024, following the

consummation of the IPO and the underwriters’ exercise of their option to purchase additional shares, Ventas beneficially

owned approximately 6.5% of our outstanding common stock.

The Ventas Master Lease includes a number of significant operating and financial restrictions, including requirements that we

maintain a minimum portfolio coverage ratio of 2.2x and a guarantor fixed charge coverage ratio of 1.2x and do not exceed a

guarantor net leverage ratio of 6.75x. In addition, the Relative Rights Agreement entered into by and among Ventas, the

5.75% Senior Notes trustee and the administrative agents under our Senior Secured Credit Facilities (as defined below) in

connection with the series of debt transactions completed during the year ended 2021 to refinance our then-existing debt,

among other things, (i) sets forth the relative rights of Ventas and the administrative agents with respect to the properties and

collateral related to the Ventas Master Lease and securing our Senior Secured Credit Facilities, (ii) caps the amount of

indebtedness incurred or guaranteed by our subsidiaries that are tenants under the Ventas Master Lease ("Tenants") (together

with such Tenants’ guarantees of the notes and the Senior Secured Credit Facilities and all other indebtedness incurred or

guaranteed by such Tenants) at $375.0 million and (iii) imposes certain incurrence tests on the incurrence of additional

indebtedness by such Tenants and by us.

We recorded rent expense of $37.2 million and $36.4 million for the three months ended September 30, 2024 and 2023,

respectively, and $111.4 million and $108.9 million for the nine months ended September 30, 2024 and 2023, respectively,

related to the Ventas Master Lease and other lease agreements with Ventas for certain medical office buildings.

Senior Secured Credit Facilities

Effective July 8, 2021, we entered into the ABL Credit Agreement, which was amended most recently on June 26, 2024. The

ABL Credit Agreement (as so amended) consists of a $325.0 million senior secured asset-based revolving credit facility with

a five year maturity, comprised of (i) a $275.0 million non-UT Health East Texas borrowers tranche (the “non-UT Health

East Texas ABL Facility”) and (ii) a $50.0 million UT Health East Texas borrowers tranche available to our AHS East Texas

Health System, LLC subsidiary and certain of its subsidiaries (the “UT Health East Texas ABL Facility” and, together with

the non-UT Health East Texas ABL Facility, the “ABL Facilities”), each subject to a borrowing base. Effective as of June 26,

40

2024, we amended the ABL Credit Agreement to increase the commitments available under the non-UT Health East Texas

ABL Facility from $175.0 million to $275.0 million and to extend the maturity of the ABL Facilities to June 26, 2029.

Effective August 24, 2021, we entered into the Term Loan B Facility. The credit agreement governing the Term Loan B

Facility provided funding up to a principal amount of $900.0 million. The Term Loan B Facility has a seven year maturity

with principal due in quarterly installments of 0.25% of the initial $900.0 million principal amount (subject to certain

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

the Term Loan B Facility. Effective June 8, 2023, we amended the Term Loan B Credit Agreement to replace LIBOR with

Term SOFR (each as defined in the amended Term Loan B Credit Agreement) as the reference interest rate and establish

further successor rates. On June 26, 2024, we prepaid $100.0 million of the $877.5 million outstanding borrowings under the

Term Loan B Facility using cash on hand. Additionally, on September 18, 2024, we executed an amendment to reprice our

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

3.25% to Term SOFR plus 2.75% and eliminated the credit spread adjustment. No modifications were made to the maturity

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

We refer to the ABL Facilities and the Term Loan B Facility collectively herein as the “Senior Secured Credit Facilities.”

Subject to certain exceptions, the ABL Facilities are secured by first priority liens over substantially all of our and each

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

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

records and documents, and proceeds thereof (the “ABL Priority Collateral”), and a second priority lien over substantially all

of our and each guarantor’s other assets (including all of the capital stock of the domestic guarantors and first priority

mortgage liens on any fee-owned real property valued in excess of $5,000,000) (the “Term Priority Collateral”). The

obligations of the UT Health East Texas ABL Facility are not secured by the assets of the subsidiaries that are also Tenants

and certain other subsidiaries related to the Tenants. The obligations under the Term Loan B Facility and the ABL Facilities

in excess of the maximum aggregate dollar cap amount permitted to be guaranteed by the Tenants are not secured by the

assets of the Tenants.

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

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

Collateral. The obligations under the Term Loan B Facility and the ABL Facilities in excess of the maximum aggregate dollar

cap amount permitted to be guaranteed by the Tenants are not secured by the assets of the Tenants.

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

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

States for U.S. dollar loans as publicly announced by Bank of America from time to time, and (c) Term SOFR plus 1.00% per

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

period selected, plus an applicable margin. Under the Term Loan B Facility, the applicable margin is 2.50% for base rate

borrowings and 3.50% for Term SOFR borrowings.  Following the completion of the IPO, the applicable margin for the

remaining outstanding borrowings under the Term Loan B Facility was automatically reduced by 0.25% per annum.

Principal under the Term Loan B Facility is due in quarterly installments of 0.25% of the $900.0 million initial principal

amount (subject to certain reductions from time to time as a result of the application of prepayments), with the remaining

balance due upon maturity. The ABL Facilities do not require installment payments.

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

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

applicable margin or (ii) Term SOFR (not to be lower than 0.00% per annum) for the interest period selected, plus an

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

applicable ABL Facility. For the non-UT Health East Texas ABL Facility loan, the applicable margin ranges from 0.5% to

1.0% for base rate borrowings and 1.5% to 2.0% for Term SOFR borrowings. The applicable margin for the UT Health East

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

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

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

41

•100% of net cash proceeds of issuances of debt by AHP Health Partners or any of its restricted subsidiaries that are

not permitted by the Term Loan B Facility;

•100% (with step-downs to 50% and 0%, based upon achievement of specified senior secured net leverage ratio

levels) of net cash proceeds of certain asset sales;

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

levels), net of certain voluntary prepayments and secured indebtedness, of annual excess cash flow of AHP Health

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

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

Relative Rights Agreement.

5.750% Senior Notes due 2029

AHP Health Partners, our direct wholly-owned subsidiary, issued the 5.75% Senior Notes in an exempt offering pursuant to

Rule 144A and Regulation S under the Securities Act that was completed on July 8, 2021. The terms of the 5.75% Senior

Notes are governed by an indenture, dated as of July 8, 2021 (the “Indenture”), among AHP Health Partners, us and certain of

AHP Health Partners' wholly-owned domestic subsidiaries, as guarantors, and U.S. Bank Trust Company, National

Association, as trustee. The Indenture provides that the 5.75% Senior Notes are general senior unsecured obligations of AHP

Health Partners, which are unconditionally guaranteed on a senior unsecured basis by us and certain subsidiaries of AHP

Health Partners.

The 5.75% Senior Notes mature on July 15, 2029 and bear interest at a rate of 5.750% per annum, payable semi-annually, in

cash in arrears, on January 15 and July 15 of each year, commencing on January 15, 2022. 

AHP Health Partners may redeem the 5.75% Senior Notes, in whole or in part, at any time and from time to time, (1) prior to

July 15, 2024, at a redemption price equal to 100% of the principal amount of the 5.75% Senior Notes, plus accrued and

unpaid interest, if any, to the redemption date, plus a “make-whole” premium as set forth in the Indenture and the 5.75%

Senior Notes; and (2) on and after July 15, 2024, at the redemption prices set forth below, plus accrued and unpaid interest, if

any, to the redemption date, subject to compliance with certain conditions:

Date (if redeemed during the 12 month period beginning on July 15 of the years indicated below)	Percentage
2024	102.875%
2025	101.438%
2026 and thereafter	100.000%

In addition, prior to July 15, 2024, AHP Health Partners could have redeemed on one or more occasions up to 40% of the

original aggregate principal amount of the 5.75% Senior Notes with the net proceeds of one or more equity offerings, as

described in the Indenture, at a redemption price equal to 105.750% of the principal amount thereof, plus accrued and unpaid

interest, if any, to the redemption date, provided that at least 50% of the aggregate original principal amount of the 5.75%

Senior Notes issued under the Indenture remained outstanding after each such redemption and the redemption occurred

within 180 days after the closing of such equity offering.

42

Contractual Obligations and Contingencies

The following table provides a summary of our commitments and contractual obligations for debt, minimum lease payment

obligations under non-cancelable leases and other obligations as of September 30, 2024 (in thousands):

	Payments Due by Period
	Total	Less than 1 Year	1-3 Years	3-5 Years	After 5 Years
Long-term debt obligations, with interest	$1,464,532	$25,332	$179,197	$933,820	$326,183
Deferred financing obligations, with interest	15,449	2,601	11,456	1,392	—
Operating leases	3,014,528	49,452	384,184	361,894	2,218,998
Estimated self-insurance liabilities	185,073	40,976	39,439	61,618	43,040
Total	$4,679,582	$118,361	$614,276	$1,358,724	$2,588,221

Outstanding letters of credit are required principally by certain insurers and states to collateralize our workers' compensation

programs and self-insured retentions associated with our professional and general liability insurance programs. As of

September 30, 2024, we maintained outstanding letters of credit of approximately $40.1 million, which included interest of 

$3.2 million.

Supplemental Non-GAAP Valuation Measure

Adjusted EBITDAR is a commonly used non-GAAP valuation measure used by our management, research analysts,

investors and other interested parties to evaluate and compare the enterprise value of different companies in our industry.

Adjusted EBITDAR excludes: (1) certain material noncash items and unusual or non-recurring items that we do not expect to

continue in the future; (2) certain other adjustments that do not impact our enterprise value; and (3) rent expense payable to

our REITs. We operate 30 acute care hospitals, 12 of which we lease from two REITs, Ventas and MPT, pursuant to long-

term lease agreements. Additionally, during 2022, we completed the sale of 18 medical office buildings to Ventas in

exchange for $204.0 million and concurrently entered into agreements to lease the real estate back from Ventas over a 12-

year initial term with eight options to renew for additional five-year terms (the "MOB Transactions"). Our management views

the long-term lease agreements with Ventas and MPT, as well as the MOB Transactions, as more like financing arrangements

than true operating leases, with the rent payable to such REITs being similar to interest expense. As a result, our capital

structure is different than many of our competitors, especially those whose real estate portfolio is predominately owned and

not leased. Excluding the rent payable to such REITs allows investors to compare our enterprise value to those of other

healthcare companies without regard to differences in capital structures, leasing arrangements and geographic markets, which

can vary significantly among companies. Our management also uses Adjusted EBITDAR as one measure in determining the

value of prospective acquisitions or divestitures. Finally, financial covenants in certain of our lease agreements, including the

Ventas Master Lease, use Adjusted EBITDAR as a measure of compliance.  Adjusted EBITDAR does not reflect our cash

requirements for leasing commitments. As such, our presentation of Adjusted EBITDAR should not be construed as a

performance or liquidity measure.

Because not all companies use identical calculations, our presentation of the non-GAAP measure may not be comparable to

other similarly titled measures of other companies.

While we believe this is a useful supplemental valuation measure for investors and other users of our financial information,

you should not consider the non-GAAP measure in isolation or as a substitute for net income or any other items calculated in

accordance with GAAP. Adjusted EBITDAR has inherent material limitations as a valuation measure, because it adds back

certain expenses to net income, resulting in those expenses not being taken into account in the valuation measure. The

payment of taxes and rent is a necessary element of our valuation. Because Adjusted EBITDAR excludes these and other

items, it has material limitations as a measure of our valuation.

43

The following table presents a reconciliation of Adjusted EBITDAR, a valuation measure, to net income, determined in

accordance with GAAP:

	Three Months Ended September 30,	Nine Months Ended September 30,
(in thousands)	2024	2024
Net income	$46,005	$158,817
Adjusted EBITDAR Addbacks:
Income tax expense	11,062	36,997
Interest expense, net	14,629	52,050
Depreciation and amortization	36,771	108,434
Noncontrolling interest earnings	(19,683)	(62,678)
Loss on extinguishment and modification of debt	1,490	3,388
Other non-operating losses (gains) (a)	47	(208)
Cybersecurity Incident recoveries, net (b)	(4,976)	(4,976)
Restructuring, exit and acquisition-related costs (c)	3,796	11,694
Epic expenses (d)	485	1,500
Equity-based compensation	8,135	8,873
Loss from disposed operations	3	1,989
Rent expense payable to REITs (e)	40,056	119,826
Adjusted EBITDAR	$137,820	$435,706

(a)Other non-operating losses (gains) include gains and losses realized on certain non-recurring events or events that are non-operational in

nature, including gains realized on certain asset divestitures.

(b)Cybersecurity Incident recoveries, net represents insurance recovery proceeds associated with the Cybersecurity Incident, net of

incremental information technology and litigation costs.

(c)Restructuring, exit and acquisition-related costs represent (i) enterprise restructuring costs, including severance costs related to work

force reductions of $3.2 million and $10.1 million for the three and nine months ended September 30, 2024, respectively, (ii) penalties

and costs incurred for terminating pre-existing contracts at acquired facilities of $0.2 million and $0.6 million for the three and nine

months ended September 30, 2024, respectively, and (iii) third-party professional fees and expenses, salaries and benefits, and other

internal expenses incurred in connection with potential and completed acquisitions of $0.4 million and $1.0 million for the three and nine

months ended September 30, 2024, respectively.

(d)Epic expenses consist of various costs incurred in connection with the implementation of Epic, our health information technology

system. These costs included professional fees of $0.5 million and $1.5 million for the three and nine months ended September 30, 2024,

respectively.  Epic expenses do not include the ongoing costs of the Epic system.

(e)Rent expense payable to REITs consists of rent expense of $37.2 million and $111.4 million related to the Ventas Master Lease and lease

agreements associated with the MOB Transactions with Ventas for the three and nine months ended September 30, 2024, respectively,

and rent expense of  $2.8 million and $8.4 million related to a lease arrangement with MPT for the lease of Hackensack Meridian

Mountainside Medical Center for the three and nine months ended September 30, 2024, respectively.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect

reported amounts and related disclosures. We regularly evaluate the accounting policies and estimates we use. In general, we

base the estimates on historical experience and on assumptions that we believe to be reasonable, given the particular

circumstances in which we operate. Actual results may vary from those estimates.  We consider our critical accounting

estimates to be those that (i) involve significant judgments and uncertainties, (ii) require estimates that are more difficult for

management to determine, and (iii) may produce materially different outcomes under different conditions or when using

different assumptions.

Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting

Policies and Estimates and our audited consolidated financial statements and notes thereto as of and for the year ended

December 31, 2023 included in our Final Prospectus for a complete and comprehensive discussion of the accounting policies

and related estimates we believe are most critical to understanding our consolidated financial statements, financial condition

and results of operations and that require complex management judgment and assumptions or involve uncertainties. These

critical accounting estimates include revenue recognition, risk management and self-insured liabilities, income taxes, and

44

unit-based compensation. There have been no changes to our critical accounting policies or their application since the date of

our Final Prospectus.

45

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to market risk from exposure to changes in interest rates based on our financing, investing and cash

management activities. We do not, however, hold or issue financial instruments or derivatives for trading or speculative

purposes. At September 30, 2024, the following components of our Senior Secured Credit Facilities bore interest at variable

rates at specified margins above either the agent bank’s alternate base rate or Term SOFR: (i) a $900.0 million, seven-year

term loan; and (ii) a $325.0 million, five-year asset-based revolving credit facility. As of September 30, 2024, we had

outstanding variable rate debt of $774.0 million.

At September 30, 2024, we had interest rate swap agreements with notional amounts totaling $521.1 million, expiring June

30, 2026. Under these swap agreements, we are required to make monthly fixed rate payments at annual rates ranging from

1.47% to 1.48% and the counterparties are obligated to make monthly floating rate payments to us based on one-month Term

SOFR, each subject to a floor of 0.39%.

Although changes in the alternate base rate or Term SOFR would affect the cost of funds borrowed in the future, we believe

the effect, if any, of reasonably possible near-term changes in interest rates on our variable rate debt on our consolidated

financial position, results of operations or cash flows would not be material. Based on the outstanding borrowings and impact

of the interest rate swaps in place at September 30, 2024, a one percent change in the interest rate would result in a $2.5

million increase or decrease in our annual interest expense.

We currently believe we have adequate liquidity to fund operations during the near term through the generation of operating

cash flows, cash on hand and access to our Senior Secured Credit Facilities. Our ability to borrow funds under our ABL

Facilities is subject to, among other things, the financial viability of the participating financial institutions. While we do not

anticipate any of our current lenders defaulting on their obligations, we are unable to provide assurance that any particular

lender will not default at a future date.

ITEM 4.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of

the end of the period covered by this Quarterly Report, the effectiveness of our disclosure controls and procedures. Based on

this evaluation of our disclosure controls and procedures as of September 30, 2024, our principal executive officer and

principal financial officer concluded that our disclosure controls and procedures as of such date were effective at the

reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under

the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company

that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under

the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and

forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide

only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the

cost-benefit relationship of possible controls and procedures.

(b) Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2024, there have been no changes in our internal control over financial reporting, as

such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

46

PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The information set forth in the “Litigation and Regulatory Matters” section of Note 9 “Commitments and Contingencies” in

the notes to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report is incorporated by

reference herein.

ITEM 1A.  RISK FACTORS

There have been no material changes to our risk factors that we believe are material to our business, results of operations and

financial condition from the risk factors previously disclosed in the section entitled “Risk factors” included in the Final

Prospectus.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Recent Sales of Unregistered Securities

On July 17, 2024, in connection with the IPO, ALH Holdings, LLC (a subsidiary of Ventas, Inc.) contributed all of its

outstanding common stock in AHP Health Partners (our direct subsidiary) to Ardent Health Partners, Inc. in exchange for

5,178,202 shares of common stock of Ardent Health Partners, Inc. (the “ALH Contribution”). The issuance of securities in

the ALH Contribution was deemed to be exempt from registration under the Securities Act of 1933, as amended, pursuant to

Section 4(a)(2) thereof, as a transaction by an issuer not involving any public offering.

(b) Use of Proceeds from Initial Public Offering of Common Stock

On July 17, 2024, our registration statement on Form S-1 (File No. 333-280425) related to the IPO was declared effective by

the SEC. Pursuant to such registration statement, we issued and sold 12,000,000 shares of common stock at a public offering

price of $16.00 per share on July 19, 2024. We received net proceeds of approximately $181.4 million, after deducting

underwriting discounts and commissions of approximately $10.6 million. On July 30, 2024, in conjunction with the

underwriters exercising their option to purchase additional shares, we issued an additional 1,800,000 shares of common stock

at the initial public offering price of $16.00 per share for additional net proceeds of approximately $27.2 million, after

deducting underwriting discounts and commissions of approximately $1.6 million. None of the expenses associated with the

IPO were paid to directors, officers, or persons owning 10% or more of any class of equity securities, or to our affiliates.

There has been no material change in the planned use of proceeds from the IPO from those described in the Final Prospectus,

dated July 17, 2024, filed with the SEC on July 18, 2024, pursuant to Rule 424(b) of the Securities Act. J.P. Morgan

Securities LLC, BofA Securities, Inc. and Morgan Stanley & Co. LLC acted as joint book-running managers for the IPO. For

additional details on the IPO, refer to Note 1 “Description of the Business and Basis of Presentation—Initial Public Offering

and Corporate Conversion” in the notes to the unaudited condensed consolidated financial statements included elsewhere in

this Quarterly Report.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

47

ITEM 5.  OTHER INFORMATION

During the three months ended September 30, 2024, none of our directors or executive officers adopted, modified, or

terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item

408(a) of Regulation S-K.

ITEM 6.  EXHIBITS

Exhibit Number	Description
2.1	Plan of Conversion (incorporated by reference to Exhibit 2.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2024)
3.1	Certificate of Incorporation of Ardent Health Partners, Inc. (incorporated by reference to Exhibit 4.1 to the Registrant’s Form S-8 filed on July 17, 2024)
3.2	Bylaws of Ardent Health Partners, Inc. (incorporated by reference to Exhibit 4.2 to the Registrant’s Form S-8 filed on July 17, 2024)
4.1	Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant's Form S-1/A filed on July 8, 2024)
10.1†	Form of Indemnification Agreement between the registrant and its directors and certain officers (incorporated by reference to Exhibit 10.36 to the Registrant’s Form S-1/A filed on July 8, 2024)
10.2†	Ardent Health Partners, Inc. 2024 Omnibus Incentive Award Plan (incorporated by reference to Exhibit 10.37 to the Registrant’s Form S-1/A filed on July 8, 2024)
10.3†	Form of Restricted Stock Award Agreement (Replacement Unvested C-1 Units) under the 2024 Omnibus Incentive Award Plan (incorporated by reference to Exhibit 10.9 to the Registrant's Quarterly Report on Form 10-Q filed on August 14, 2024)
10.4†	Form of Restricted Stock Award Agreement (Replacement Unvested C-2 Units) under the 2024 Omnibus Incentive Award Plan (incorporated by reference to Exhibit 10.10 to the Registrant's Quarterly Report on Form 10-Q filed on August 14, 2024)
10.5†	Form of Restricted Stock Unit Award Agreement (Employees) under the 2024 Omnibus Incentive Award Plan (incorporated by reference to Exhibit 10.11 to the Registrant's Quarterly Report on Form 10-Q filed on August 14, 2024)
10.6†	Form of Restricted Stock Unit Award Agreement (Non-Employee Directors) under the 2024 Omnibus Incentive Award Plan (incorporated by reference to Exhibit 10.12 to the Registrant's Quarterly Report on Form 10-Q filed on August 14, 2024)
10.7†#	Form of Performance Based Restricted Stock Unit Award Agreement under the 2024 Omnibus Incentive Award Plan  (incorporated by reference to Exhibit 10.13 to the Registrant's Quarterly Report on Form 10-Q filed on August 14, 2024)
10.8	Stock Ownership Guidelines (incorporated by reference to Exhibit 10.14 to the Registrant's Quarterly Report on Form 10- Q filed on August 14, 2024)
10.9†	Executive Severance Plan  (incorporated by reference to Exhibit 10.15 to the Registrant's Quarterly Report on Form 10-Q filed on August 14, 2024)
10.10†	Non-Employee Director Compensation Program (incorporated by reference to Exhibit 10.40 to the Registrant’s Form S-1/ A filed on July 8, 2024)
10.11	Strategic Advisory Services Letter Agreement, dated as of July 19, 2024, between EGI-AM Investments, L.L.C. and Ardent Health Partners, Inc. (incorporated by reference to Exhibit 10.17 to the Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2024)
10.12	Nomination Agreement, dated as of July 19, 2024, among Ardent Health Partners, Inc., EGI-AM Investments, L.L.C. and ALH Holdings, LLC (incorporated by reference to Exhibit 10.18 to the Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2024)
10.13	REIT Savings Letter Agreement, dated as of July 19, 2024, by and between Ardent Health Partners, Inc. and ALH Holdings, LLC (incorporated by reference to Exhibit 10.19 to the Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2024)
10.14*	Amendment No. 2 to Amended and Restated Term Loan Credit Agreement, dated as of September 18, 2024, among AHP Health Partners, Inc., as Borrower, Ardent Health Partners, Inc., the Guarantors party thereto, the Lenders party thereto, and Bank of America, N.A., as the Additional 2024 Term B Lender and as Administrative Agent
31.1*	Certification of Principal Executive Officer pursuant to SEC Rule 13a 14(a)/15d 14(a)
31.2*	Certification of Principal Financial Officer pursuant to SEC Rule 13a 14(a)/15d 14(a)
32.1**	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

48

Exhibit Number	Description
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

#  Portions of this exhibit (indicated by “[***]”) have been omitted as the registrant has determined that (i) the omitted information is not material and

(ii) the omitted information is the type that the registrant treats as private or confidential.

†  Indicates a management contract or compensatory plan, contract or arrangement

* Filed herewith

** This certification will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such

certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act,

except to the extent specifically incorporated by reference into such filing.

49

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on

its behalf by the undersigned thereunto duly authorized.

ARDENT HEALTH PARTNERS, INC.

Date: November 7, 2024	By:	/s/ Alfred Lumsdaine
		Alfred Lumsdaine
		Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)