Ardent Health's Earnings Masked by Unusual Items, Statutory Profit Distortion.

Ardent Health's (ARDT) stock price surged following its earnings report, but our analysis suggests that shareholders may be overlooking factors that indicate the earnings result was not as good as it looked. We found that Ardent Health's profit received a US$40m boost from unusual items over the last year, which may not recur in the current year, potentially weakening profit next year. Statutory earnings have been distorted by these unusual items, but EPS is still growing at a high rate.

Ardent Health Partners, Inc. (NYSE: ARDT) recently reported its second-quarter 2025 earnings, which saw the stock price surge. However, a closer analysis of the financials reveals that the earnings result may not be as robust as initially perceived. The company's earnings per share (EPS) grew significantly, but a substantial portion of this growth was attributed to unusual items that may not recur in the current year.

According to the earnings report, Ardent Health's EPS surged by 52.9% to $0.52, driven by an 11.9% revenue growth and a 42.9% increase in net income. However, over the last year, the company received a US$40 million boost from unusual items, which may not recur in the current year. This distortion in statutory earnings could weaken profit margins in the coming year.

While EPS is still growing at a high rate, the company's core revenue growth remained in line with expectations at approximately mid-single-digit percentage year-over-year. The earnings boost was largely attributed to the New Mexico Directed Payment Program (DPP) approval, which provided a significant EBITDA benefit. Excluding this benefit, Ardent’s core revenue growth remained in line with expectations [1].

Analysts have mixed opinions on Ardent Health Partners' stock. JPMorgan lowered its price target to $15.00 from $18.00, citing the impact of Medicaid taxes and regulatory risks. The firm maintained its 2025 revenue estimate of $6,315 million but reduced its adjusted EBITDA forecast to $593 million from $597 million due to higher Medicaid supplemental taxes [1].

Ardent Health's strategic focus on expanding its presence in urban markets, launching urgent care and imaging centers, and building joint ventures with academic medical partners has shown promise. The company successfully integrated 18 urgent care clinics earlier in 2025 and plans to open five more before year-end [2]. However, ongoing challenges in payor (insurance) claim approvals and outpatient surgery volumes remain areas of concern.

Looking ahead, Ardent Health Partners expects total revenue between $6.20 billion and $6.45 billion, adjusted EBITDA (non-GAAP) in the $575 million to $615 million range, and net income of $245 million to $285 million for FY2025 [2]. Investors will continue to monitor outpatient surgery trends, operating cost controls, and insurance claim denials, as well as the expansion of urgent care and imaging centers and the rollout of new technology tools.

References:
[1] https://www.ainvest.com/news/jp-morgan-lowers-ardent-health-price-target-15-neutral-rating-2508/
[2] https://www.ainvest.com/news/ardent-health-2025-q2-earnings-strong-performance-net-income-surges-42-9-2508/