Ardent Health Raises 2026 EBITDA Midpoint as Q3 Margin Expands

Ardent Health Inc. reported sharply higher third-quarter profitability and increased the midpoint of its full-year adjusted EBITDA guidance, citing stronger execution, improvement in its core business and better visibility for the remainder of 2026. The hospital operator maintained its revenue outlook but said it continues to expect results toward the lower end of that range.

Revenue for the quarter ended September 30 rose 3.1% year over year to $1.625 billion. Net income increased to $63.4 million from $1.2 million, while adjusted EBITDA climbed 204.4% to $137.7 million. Adjusted EBITDA margin expanded to 8.5% from 2.9% a year earlier.

The year-over-year comparison was affected by two items recorded in the third quarter of 2025. Ardent said a change in accounting estimate reduced prior-year revenue and adjusted EBITDA by $43 million, while an increase in professional liability reserves tied mainly to adverse claims developments in New Mexico reduced prior-year adjusted EBITDA by another $54 million.

For the first nine months of 2026, revenue increased 2.7% to $4.849 billion and adjusted EBITDA rose 20.2% to $376.7 million. The year-to-date adjusted EBITDA margin improved by 120 basis points to 7.8%. Net income was $156.6 million, compared with $155.9 million in the prior-year period.

Labor Costs and Patient Volumes

Cost control contributed to the quarterly margin improvement. Salary, wage and benefit expense declined 4% from a year earlier and improved by 300 basis points as a percentage of revenue. Contract labor expense fell 45% and represented 2.0% of salary, wage and benefit expense, down from 3.5% in the prior-year quarter. Growth in professional fee expense moderated to 7.4% from 10.4% in the second quarter.

Ardent said its multi-year IMPACT operating program remains on track to deliver at least $70 million of benefit in 2026. The initiative is intended to improve margins, operating agility and care delivery through measures including staffing optimization, greater standardization, commercial execution and improved patient flow and capacity use.

Adjusted admissions increased 2.9% in the quarter to 91,933, while net patient service revenue per adjusted admission rose 0.7% to $17,370. Admissions grew 0.1%, improving from a 1.0% decline in the second quarter.

Surgical volumes remained lower. Total surgeries declined 1.9%, including a 5.0% decrease in inpatient surgeries and a 0.6% decline in outpatient procedures. Ardent said roughly half of the surgical-volume declines in both the second and third quarters reflected intentional service-line rationalization. The third-quarter decrease in total surgeries was narrower than the 2.9% decline recorded in the preceding quarter.

Managed care accounted for 44.8% of third-quarter net patient service revenue, down from 45.5% a year earlier. Medicare increased to 40.2% from 38.9%, while Medicaid declined to 9.5% from 10.0%. Self-pay and other revenue represented 5.5%, compared with 5.6% in the prior-year quarter.

Cash Flow and 2026 Outlook

Operating cash flow declined 21.0% to $121.9 million in the quarter. Ardent said the result included the effect of a delayed $37 million quarterly state-directed payment that it expects to receive in the fourth quarter. Year-to-date operating cash flow increased 4.6% to $258.4 million.

Third-quarter free cash flow was $73.1 million, compared with $95.6 million a year earlier. After distributions to noncontrolling interests, the non-GAAP measure was $48.9 million, down from $72.7 million. For the first nine months, free cash flow net of noncontrolling interest distributions increased to $74.5 million from $56.8 million.

Ardent revised its full-year adjusted EBITDA range to $500 million to $535 million from $485 million to $535 million, lifting the midpoint by 1.5% to $518 million. The company maintained its revenue forecast of $6.4 billion to $6.7 billion and adjusted-admissions growth guidance of 1.5% to 2.5%.

The company now expects net income attributable to Ardent Health of $132 million to $167 million, compared with its previous range of $110 million to $163 million. Diluted earnings per share are projected at $0.93 to $1.18, revised from $0.78 to $1.15. Planned capital expenditures were reduced to a range of $210 million to $250 million from $225 million to $265 million.

Ardent’s longer-term strategy remains focused on organic growth in its core markets, operating improvements and selective capital deployment. Management said investments will target higher-value service lines and digital capabilities, while potential acquisitions will be evaluated with an emphasis on markets with unmet healthcare needs.

The company identified reimbursement changes, healthcare legislation, inflation, tariffs, labor availability and costs, cybersecurity threats, execution of its operating targets and significant indebtedness among its principal uncertainties. Ardent also highlighted its concentration in Texas and Oklahoma, exposure to joint ventures and long-term real estate lease commitments, as well as the potential effects of the One Big Beautiful Bill Act and the expiration of enhanced health-insurance marketplace subsidies.