Ardent Health Lifts EBITDA Floor to $500M on Labor Savings

Ardent Health (NYSE:ARDT) raised the lower end of its full-year adjusted EBITDA forecast to $500 million from $485 million, after reporting $138 million in third-quarter adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) on revenue of $1.62 billion. The new range runs to $535 million, putting the revised midpoint about 1.5% higher than before. Lower labor costs and recovering patient volumes carried the quarter.

CFO Alfred Lumsdaine said the company remained biased toward the lower end of its $6.4 billion to $6.7 billion revenue outlook. "We are seeing the benefits of the actions we have taken," he noted on the call, pointing to sustained cost discipline into the fourth quarter. For 2027, he expects professional fee growth to run above inflation but below 2026 levels.

What changed in the guidance?

The floor of the adjusted EBITDA range moved up $15 million, and the labor line explains most of the story. Salaries, wages and benefits fell 4.3% year over year and dropped to 39.9% of revenue — 300 basis points lower than a year earlier. Contract labor spending collapsed 45%, leaving agency staff at just 2% of total labor expense versus 3.5% a year ago.

Professional fee expense growth also moderated to 7.4%, from 10.4% in the second quarter and 12.9% in the first. Ardent reiterated its target of at least $70 million in savings this year from its multiyear IMPACT program, with a carryover benefit of $20 million to $25 million into 2027 before any new initiatives.

Are volumes actually recovering?

Adjusted admissions rose 2.9% year over year in the quarter, accelerating from 2.3% growth in the first half. Emergency room visits climbed 1.7%, reversing a 1.5% first-half decline, and admissions turned slightly positive after falling 1% in the second quarter.

Surgical volumes fell 1.9%, though that marks a 100-basis-point improvement from the prior quarter. Lumsdaine attributed about half of the decline to deliberate exits from lower-margin service lines, an effect he expects to fade over the next several quarters.

CEO Dave Caspers highlighted the demand pipeline: urgent care visits up 9%, imaging up 4%, physician visits up 1%. Physician referral leakage (patients sent out of network) declined 400 basis points, and self-scheduled appointments grew 15% versus 5% in the second quarter. "We are focused on making it easier for patients to move from initial visits to procedures," Caspers said, citing better specialist availability and faster referrals.

What does the Kansas sale signal?

The portfolio review concluded that Kansas hospital ownership was not the right long-term fit. Ardent agreed to sell the stake to its joint venture partner at 11 times EBITDA and expects the deal, closing in the fourth quarter, to improve its margin profile by 40 basis points.

Capital plans tightened alongside. Ardent cut 2026 capital expenditure guidance to $210 million–$250 million from $225 million–$265 million; Lumsdaine said maintenance spending and committed growth projects remain untouched. The company generated $122 million in quarterly operating cash flow and $258 million year to date, up from $247 million, despite a $37 million New Mexico supplemental payment slipping into early October. It ended with $766 million in cash against $1.1 billion in debt, and repurchased $11 million of stock in the quarter ($24 million year to date), leaving $48 million available after a fresh $25 million authorization.

What are the payer headwinds?

Exchange admissions fell 7% year over year, with self-pay admissions up similarly — trends Lumsdaine called manageable and largely contemplated in guidance, in line with the estimated $35 million exchange-related impact for the year. He flagged Medicaid work requirements and rising premiums, deductibles and copays as industry risks, noting that many exchange patients who returned in 2026 had found commercial or Medicaid coverage elsewhere.

On contracting, Ardent is 85% locked for 2027 and 75% for 2028. Negotiations have grown more contentious as the company uses transparency data to push for what Lumsdaine called appropriate reimbursement, but renewal results so far track the previously cited New Mexico agreement.