Bank of America analyst Joanna Gajuk has reduced her rating for Ardent Health (ARDT, Financial) from Neutral to Underperform, adjusting the price target from $15.50 to $14.60. This downgrade comes as part of a broader reassessment of healthcare facility and managed care stocks, which the firm believes are particularly vulnerable to the legislative changes encompassed in the One Big Beautiful Bill. This bill is seen as posing significant risks to the sector's growth predictions. According to Gajuk, cuts to subsidies under Medicaid and the Affordable Care Act exchanges have not been adequately factored into current consensus estimates or reflected in the stock valuations of many companies within the industry.
ARDT Key Business Developments
Release Date: May 07, 2025
- Revenue: Increased 4% to $1.5 billion compared to the prior year.
- Adjusted EBITDA: Grew 2.5% to $98 million in the first quarter.
- Admissions Growth: Increased 7.6% year over year.
- Adjusted Admissions Growth: Increased 2.7% year over year.
- Net Patient Service Revenue per Adjusted Admission: Grew 1.2%.
- Inpatient Surgery Growth: Increased 3.4% in the first quarter.
- Outpatient Surgeries: Declined 2.3% in the first quarter.
- Supply Cost as a Percent of Revenue: Declined 60 basis points year over year.
- Physician Professional Fees Growth: 6% in the first quarter, down from 13% growth in the prior year.
- Cash and Total Debt: Ended the first quarter with $495 million in cash and $1.1 billion in total debt.
- Total Available Liquidity: $790 million at the end of the first quarter.
- Cash Used in Operating Activities: $25 million in the first quarter.
- Capital Expenditures: $23 million in the first quarter.
- Net Leverage: 1.4 times as calculated under credit agreements.
- Lease Adjusted Net Leverage: Three times.
- S&P Credit Rating: Upgraded to B plus from B.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ardent Health Partners Inc (ARDT, Financial) reported a solid quarter with a 7.6% increase in admissions, driven by strong underlying growth and a heightened flu season.
- The company is well-positioned for long-term growth, focusing on market share expansion, outpatient and acute care hospital footprint growth, and operational initiatives.
- First quarter revenue increased by 4% to $1.5 billion, with adjusted EBITDA growing by 2.5% to $98 million.
- Ardent Health Partners Inc (ARDT) successfully integrated 18 Nextcare urgent care clinics, which is expected to generate additional downstream volumes in key markets.
- The company has a strong liquidity position with $495 million in cash and a favorable least adjusted net leverage ratio of three times.
Negative Points
- The growth rate of physician professional fees remains a headwind, although there are signs of moderation.
- There was a notable increase in payer claim denials compared to the first quarter of 2024, impacting year-over-year comparisons.
- Outpatient surgeries declined by 2.3% in the first quarter, partially due to the timing of leap year.
- The strategic transfer of certain oncology and infusion services to a health system partner tempered revenue growth by approximately 70 basis points.
- The company is awaiting final CMS approval for the 2025 New Mexico DPP program, which could impact financial results if delayed.
