Ardent Health bumped up its 2026 earnings guidance as expense and efficiency improvements met solid “top of the funnel” demand for care during the third quarter, the for-profit shared this week.
The performance comes after a soft second quarter, with executives on Thursday’s earnings call noting that pain points like surgical volumes improved sequentially while broader challenges like Affordable Care Act marketplace dropoffs remain within projections.
Ardent’s shares were trading 20% above open as of Thursday afternoon in spite of Wall Street’s economy-wide selloff.
Leaders said that the company’s Project IMPACT (Improve Margins, Performance, Agility and Care Transformation) initiative is on track to hit “at least” its expected $70 million benefit for 2026, and highlighted a 4% year-over-year reduction in the quarter’s salaries, wages and benefits (SWB) expenses during the quarter driven in part by contract labor expense reduction.
Meanwhile, Ardent is reviewing its portfolio to determine which assets are a long-term strategic fit—leading to decisions like September’s divestiture from a joint venture with the University of Kansas Health System—and plans to deploy its capital toward organic growth in its mid-sized urban markets while maintaining a “disciplined approach” to acquisition or joint venture opportunities that prioritizes above-average potential market growth, CEO Dave Caspar told analysts Thursday.
“When we spoke with you last quarter, I outlined a clear set of priorities: deliver more consistent financial results, grow EBITDA, deploy capital effectively and execute against our commitments in a way that creates long-term shareholder value,” Caspar said during the earnings call. “… Taken together, our third-quarter performance and recent strategic portfolio optimization demonstrate meaningful progress against the priorities I outlined.”
For the third quarter, Ardent reported $1.62 billion in total revenue (3.1% year-over-year growth), $45 million of net income and $130 million in adjusted EBITDA.
The health system’s admissions grew by 0.1% and its adjusted admissions by 2.9%, year-over-year improvements over the second quarter, with net patient service revenue per adjusted admission increasing 0.7% since Q3 2025. Inpatient surgeries dropped by 5% and outpatient surgeries by 0.6% compared to the prior-year period, with Chief Financial Officer Alfred Lumsdaine noting that about half of those drops were tied to the health system’s “intentional rationalization of certain lower-margin service lines in targeted locations.”
Executives said they were happy with the volumes, noting that a 7% drop in exchange admissions and corresponding self-pay increase, similar to Q2’s 8%, was “manageable and largely contemplated in our guidance.” They particularly pointed to strong showings at the top of their “demand funnel,” or areas like urgent care or physician visits that can lead to downstream utilization. Part of the company’s ongoing improvement efforts are focused on boosting access to these offerings while reducing “friction as we move patients through the journey” to capture more care.
“For us, there’s a lot of we’ll call it embedded growth or backed-up growth that we just need to unlock by reducing friction and ensuring that we’re making the process of converting the top of the funnel to the bottom of the funnel easier,” Lumsdaine said.
On the expense side, executives said Project IMPACT helped pull SWB spending down to 39.9% of revenue during the quarter, a 300-basis-point improvement from last year, and slash contract labor from 3.5% of total SWB to 2%. Professional fee expense growth also declined from Q1 2026’s 12.9% to Q3’s 7.4%, with that slowdown expected to slow further in Q4. Supply growth was “a modest 2.6%,” per Lumsdaine.
The performance and expected efficiency gains led Ardent to adjust its full-year 2026 guidance. While revenues are still anticipated to land on “the lower end of our $6.4 billion to $6.7 billion range,” the target for adjusted EBIDTA rose 1.5% at the midpoint.
On expectations for 2027, they declined to outline any specific number targets but noted well-recognized industry headwinds like Medicaid work requirements, marketplace plan attrition, as well as tailwinds like the Project IMPACT performance improvements and the recently finalized outpatient payment rule.
“I’m extremely proud of the progress our team has made this year, despite very fluid industry and macroeconomic dynamics,” Lumsdaine said. “We continue to strengthen our operating model, and we remain focused on building on our performance, generating strong cash flow and creating long-term shareholder value by aligning our people, capital and assets with the highest value opportunities.”
Ardent Health’s operations include 30 acute care hospitals and over 280 care sites, several of which are run as part of a joint venture structure with other health system partners. In 2025, the company increased its revenues by 6% to $6.3 billion and grew its adjusted EBITDA to $545 million.