What changed in this filing

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Item 1. Business

2026-03-16 compared with 2025-02-27 · 134 added, 154 removed, 843 unchanged (25% of the section changed)

Ardent Health Partners, Inc.

Ardent Health, Inc.

was initially formed in Delaware in 2015 as Ardent Health Partners, LLC.

On July 17, 2024, Ardent Health Partners, LLC converted from a Delaware limited liability company into a Delaware corporation in connection with its initial public offering and changed its name to Ardent Health Partners, Inc.

Ardent Health Partners, Inc.

On June 3, 2025, Ardent Health Partners, Inc.

changed its name to Ardent Health, Inc.

Ardent Health, Inc.

is a holding company that has affiliates that operate acute care hospitals and other healthcare facilities and employ physicians.

The terms “Ardent,” the “Company,” “we,” “our” and “us,” as used in this Annual Report on Form 10-K (“Annual Report”), refer to Ardent Health Partners, Inc.

The terms "Ardent," the "Company," "we," "our" and "us," as used in this Annual Report on Form 10-K ("Annual Report"), refer to Ardent Health, Inc.

and its affiliates and, on or prior to July 16, 2024, Ardent Health Partners, LLC and its affiliates, unless stated otherwise or indicated by context.

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Texas, Oklahoma, New Mexico, New Jersey, Idaho, and Kansas.

We deliver care through a system of 30 acute care hospitals, approximately 280 sites of care, and over 1,800 providers that are either employed by or affiliated 1 with us, as of December 31, 2024.

We deliver care through a system of 30 acute care hospitals, more than 280 sites of care, and over 2,000 providers that are either employed by or affiliated 1 with us, as of December 31, 2025.

We hold a leading position in a majority of our markets 2 and believe we are one of the leading healthcare systems based on market share and given our integrated network of hospitals, ambulatory facilities, and physician practices.

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We focus on establishing long-term relationships to engage with patients over their lifetime and seek to deliver superior, cost-effective health outcomes.

On average, we care for more than 16,000 people every day across our healthcare ecosystem and during 2024, we served approximately 1.2 million unique patients who had approximately 5.8 million visits with our healthcare providers.

On average, we care for approximately 17,000 people every day across our healthcare ecosystem and during 2025, we served approximately 1.2 million unique patients who had more than 6.1 million visits with our healthcare providers.

We provide both general and specialty services, including internal medicine, general surgery, cardiology, oncology, orthopedics, women’s services, neurology, urology, and emergency services, within inpatient and ambulatory care settings.

In addition to our 30 acute care hospitals, we operate a broad network of ambulatory facilities and telehealth services, including 188 primary care and specialty care clinics, three ambulatory surgery centers (“ASCs”), 40 urgent care centers, two free-standing emergency departments, and 11 diagnostic imaging centers.

Bolstered by our provider network, which consists of more than 390 primary care providers and over 1,450 specialists, our network allows us to provide accessible and convenient healthcare to our patients in the optimal location, whether that be in a hospital, ambulatory care or virtual care setting.

In addition to our 30 acute care hospitals, we operate a broad network of ambulatory facilities and telehealth services, including 188 primary care and specialty care clinics, four ambulatory surgery centers (“ASCs”), 45 urgent care centers, two free-standing emergency departments, and 12 diagnostic imaging centers.

Bolstered by our provider network, which consists of 400 primary care providers and 1,620 specialists, our network allows us to provide accessible and convenient healthcare to our patients in the optimal location, whether that be in a hospital, ambulatory care or virtual care setting.

As part of our growth strategy, we are accelerating our ambulatory and physician alignment initiatives to expand both physical and virtual consumer access points.

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For our not-for-profit hospital, community physicians, and community foundation partners, the JVs allow them to continue to serve the healthcare needs of their communities while retaining an economic ownership interest in the local healthcare delivery system.

For our academic medical center partners, the JVs allow them to

1 Affiliated providers are physicians and advanced practice providers with whom we contract for services through a professional services agreement or other independent contract agreement.

2 Leading positions defined as first or second based on inpatient market share.

maintain focus on their core competency – training the next generation of healthcare providers – while we strengthen the facilities where this training and care are provided.

For our academic medical center partners, the JVs allow them to maintain focus on their core competency – training the next generation of healthcare providers – while we strengthen the facilities where this training and care are provided.

We help our partners enhance their network and regional presence through our operational acumen.

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We believe we are the JV partner-of-choice for academic medical centers and not-for-profit health systems in new and existing markets.

1 Affiliated providers are physicians and advanced practice providers with whom we contract for services through a professional services agreement or other independent contract agreement.

2 Leading positions defined as first or second based on inpatient market share.

Our hospital portfolio consists of 30 acute care hospitals, 18 of which are operated by JVs.

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Additionally, the interests of our JV partners may differ from the interests of our Company as a whole, which could limit our ability to effectively operate the related JVs and maximize the economic benefits of our JV model.

For more information, see “Item 1A, Risk Factors—Risks Related to our Business and Industry—We conduct a significant portion of our operations through JVs, which may expose us to certain risks and uncertainties, including risks as a result of our lack of sole decision-making authority.

For more information, see “Item 1A.

Risk Factors—Risks Related to our Business and Industry—We conduct a significant portion of our operations through JVs, which may expose us to certain risks and uncertainties, including risks as a result of our lack of sole decision-making authority.

In addition, we may be required under certain circumstances to purchase our JV partners’ equity interests, which could adversely affect our liquidity and financial condition.”

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We are guided by our operating principles and values, which we define as “The Ardent Way.” The Ardent Way has resulted in national recognition as demonstrated by our numerous awards, ratings, and accolades praising our quality, safety, and employee satisfaction.

In 2024, we saw a 7.2% increase in Sepsis Bundle compliance which led to greater than 13% reduction in Septic Shock mortality and a 33% decrease in catheter-associated urinary tract infections.

Additionally, 96% of our hospitals are performing above the national average with respect to sepsis bundle compliance.

In 2025, we had 85% systemwide compliance with the sepsis bundle resulting in severe sepsis mortality of 2.7% and septic shock mortality 17.4%, both of which outperformed the national averages of approximately 15% and 35%, respectively.

Our safety ratings consistently exceed the national average.

For example, ten of our hospitals received the Leapfrog Group’s prestigious 2024 Top Hospital designation and 81% of our hospitals that were graded received a Fall 2024 Leapfrog Hospital Safety Grade of A or B, compared to the national average of 56% of hospitals.

We have been recognized as an employer of choice by numerous organizations including Modern Healthcare , The Tennessean and Comparably .

For example, nine of our hospitals received the Leapfrog Group’s prestigious 2025 Top Hospital designation and 88% of our hospitals that were graded received a Fall 2025 Leapfrog Hospital Safety Grade of A or B, compared to the national average of 58% of hospitals.

We have been recognized as an employer of choice by numerous organizations including Modern Healthcare and The Tennessean .

Our scale provides a significant opportunity to capture market share.

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We believe that this approach enhances our market share, contributes to a higher quality of care for our patients, increases our operational efficiency, and drives revenue and earnings growth.

We operate health systems in the following markets:

We operate health systems in the following markets (as of December 31, 2025):

Health System Market

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1,942,608 2 % $ 65,834

Hackensack Meridian Medical Centers Montclair/Westwood, NJ 2 27 139 476 1 22.0% ^

Hackensack Meridian Medical Centers Montclair/Westwood, NJ 2 27 155 476 1 51.7% *

543,770 0 % $ 139,718

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(3) This metric represents the total number of providers employed by us at our operated hospitals and affiliated providers, measured as of December 31, 2025, including physicians at UKHS St.

Francis Campus and UT Health East Texas whom are employed by the hospitals’ respective JV partners but managed by us.

Francis Campus and UT Health East Texas who are employed by the hospitals’ respective JV partners but managed by us.

(4) Market share statistics are based on most recent available state data and compiled by the following sources:

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Our provider network serves as the foundation through which we deliver quality care.

We have over 1,800 providers, including over 1,360 employed and more than 480 affiliated physicians and advanced practice providers.

We have 2,020 providers, including 1,480 employed providers and 540 affiliated physicians and advanced practice providers.

Affiliated providers perform services for us through professional services agreements or other independent contractor agreements.

Our growing provider network, which consists of more than 390 primary care providers and over 1,450 specialists, affords us the opportunity to drive growth and deliver on value-based care initiatives.

To date, we have more than 80 contracts with a value-based component between us and third party payors that include a variety of quality incentives, shared savings, and upside risk incentives across all markets, covering more than 220,000 lives.

Moreover, our providers work alongside independent providers in collaborative clinically integrated networks and ACOs, with the objective of reducing costs and improving outcomes, such as safety of care, readmission, and mortality rates.

Our growing provider network, which consists of 400 primary care providers and 1,620 specialists, affords us the opportunity to drive growth and deliver on value-based care initiatives.

Moreover, our providers work alongside independent providers in collaborative clinically integrated networks and accountable care organizations (“ACOs”), with the objective of reducing costs and improving outcomes, such as safety of care, readmission, and mortality rates.

A robust technology platform supports care delivery.

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These solutions include virtual visits, remote patient monitoring, chronic care management, as well as a consumer engagement platform.

For example, we currently utilize virtual nurses, wireless biosensors, and artificial intelligence monitoring to supplement the delivery of care at a patient’s bedside.

We currently utilize artificial intelligence to monitor and interpret biosensor data for signs of patient deterioration, which enables our caregivers to intervene earlier than would be possible otherwise.

These biosensors also help determine when a patient is stable and ready for discharge, and, when coupled with remote patient monitoring using artificial intelligence, can also help to alert caregivers to the early signs of adverse health events and determine when additional care may be needed following discharge

from the hospital.

For example, we currently utilize virtual nurses, wireless biosensors, and artificial intelligence (“AI”) monitoring to supplement the delivery of care at a patient’s bedside.

We currently utilize AI to monitor and interpret biosensor data for signs of patient deterioration, which enables our caregivers to intervene earlier than would be possible otherwise.

These biosensors also help determine when a patient is stable and ready for discharge, and, when coupled with remote patient monitoring using AI, can also help to alert caregivers to the early signs of adverse health events and determine when additional care may be needed following discharge from the hospital.

For example, we have partnered with BioIntelliSense to use their BioButton in certain of our medical surgical units.

The BioButton is a medical-grade, FDA-approved wearable device used for continuous monitoring of vital signs in hospitalized patients and is placed on a patient’s upper left chest upon hospital admission to measure heart rate, respiratory rate, skin temperature and patient activity levels (low, medium, and high).

The BioButton, which is approved by the U.S.

Food and Drug Administration (the “FDA”), is a medical-grade wearable device used for continuous monitoring of vital signs in hospitalized patients and is placed on a patient’s upper left chest upon hospital admission to measure heart rate, respiratory rate, skin temperature and patient activity levels (low, medium, and high).

The device captures up to 1,440 measurements per patient per day, transmitting data wirelessly to a cloud-based software system for analysis and real-time clinical notifications.

The early results so far in our medical surgical units where we are using this device have shown an approximately 9-hour reduction in length of stay ("LOS").

In 2025, the wearable technology was utilized by more than 77,000 patients.

Early implementation has shown a 15% reduction in mortality in monitored units, while easing the nursing workload and reducing length of stay (“LOS”) by approximately one-third of a day.

Over the last three years, we have invested nearly $32.7 million in enhanced technologies designed to broaden our service capabilities, increase patient engagement, grow revenue, and expand margins.

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Our JV transactions have been structured in such a way that we receive a majority ownership interest in the JV and our partners receive a minority ownership interest in the JV, with each party contributing cash or assets having a value commensurate with their respective percentage interest.

The JV’s profits, losses and cash distributions are distributed between us and our partners pro rata based upon the respective ownership interest in the JV.

The JV’s profits, losses and cash distributions are

distributed between us and our partners pro rata based upon the respective ownership interest in the JV.

The following table provides a summary of the JV-operated hospitals in each of our markets:

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that is, such actions will require the approval of both a majority of the members appointed by us, and a majority of the members appointed by our JV partner.

In addition, the members of the JV Board appointed by our partner have unilateral and exclusive authority to make certain decisions that are essential to the maintenance of the status of our JV partner as a 501(c)(3) organization or to ensure that the JV complies with the Community Benefit Standards (as defined below), such as the right to (i) name the chairman of the JV Board, (ii) cause the dissolution of the JV in the event the JV fails to satisfy the “community benefit standards” set forth in IRS Revenue Ruling 69-545 (the “Community Benefit Standards”), (iii) terminate the Chief Executive Officer of the JV or the Chief Executive Officer of the hospital operated by the JV due to the failure of such Chief Executive Officer to ensure that the JV is operating consistently with the Community Benefit Standards and (iv) terminate the JV’s Management Services Agreement (as described below) with us in the event

that our provision of services results in failure to satisfy the Community Benefit Standards.

Further, the members of the JV Board appointed by us and the members of the JV Board appointed by our JV partner shall each have the unilateral but not exclusive right to terminate the Chief Executive Officer of the JV or the Chief Executive Officer of the hospital operated by the JV for any other reason.

In addition, the members of the JV Board appointed by our partner have unilateral and exclusive authority to make certain decisions that are essential to the maintenance of the status of our JV partner as a 501(c)(3) organization or to ensure that the JV complies with the Community Benefit Standards (as defined below), such as the right to (i) name the chairman of the JV Board, (ii) cause the dissolution of the JV in the event the JV fails to satisfy the “community benefit standards” set forth in IRS Revenue Ruling 69-545 (the “Community Benefit Standard”), (iii) terminate the Chief Executive Officer of the JV or the Chief Executive Officer of the hospital operated by the JV due to the failure of such Chief Executive Officer to ensure that the JV is operating consistently with the Community Benefit Standards and (iv) terminate the JV’s Management Services Agreement (as described below) with us in the event that our provision of services results in failure to satisfy the Community Benefit Standards.

Further, the members of the JV Board appointed by us and the members of the JV Board appointed by our JV partner have the unilateral but not exclusive right to terminate the Chief Executive Officer of the JV or the Chief Executive Officer of the hospital operated by the JV for any other reason.

Neither us nor our JV partner has the right to transfer its membership interest in the JV unless approved by the JV Board or after the completion of the right of first refusal and tag-along process.

Each member of the JV grants to the other a standard right of first refusal, pursuant to which a member has the right to acquire the ownership interests of the other in the event that such other member wishes to sell its ownership interests to an unrelated third party.

If a member does not exercise its right of first refusal, it shall have the right to tag along with the sale to the third party.

If a member does not exercise its right of first refusal, it has the right to tag along with the sale to the third party.

There are very limited ways that the JV can be dissolved or terminated.

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These services include, among others, corporate oversight and operational support, reimbursement services, purchasing and supply chain services, business planning and budgeting, quality and resource management support, human resources support, facility planning, legal support services, risk management support and compliance services.

The MSA usually has an initial term of five years and automatically renews for successive terms of five years unless terminated as set forth therein.

The MSA usually has an initial term of five years and automatically

renews for successive terms of five years unless terminated as set forth therein.

The MSAs are subject to termination by (i) the JV (at the election of our JV partner) upon, among other things, a breach of the Manager’s obligations under the MSA with the failure to cure within a specified period, the willful misconduct, gross negligence, violation of criminal law, fraud or bankruptcy of the Manager, or the Manager’s exclusion from the federal or state healthcare programs or (ii) the Manager upon a breach of the JV’s obligations under the MSA with the failure to cure within a specified period or the bankruptcy of the JV.

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In the event our JV partner delivers a put notice to us, we may be required to settle the put/call arrangement in cash.

In the event that our JV partner exercises their option to buy out our interest in the JV, the purchase price shall be determined by the product of the appraised fair market value of the JV and the fraction of all issued and outstanding equity units of the JV to be purchased.

In the event that our JV partner exercises their option to buy out our interest in the JV, the purchase price is determined by the product of the appraised fair market value of the JV and the fraction of all issued and outstanding equity units of the JV to be purchased.

Our Market Opportunity

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gross domestic product (“GDP”), or nearly $5.3 trillion, in 2024.

After taking into account the expected impacts of the Inflation Reduction Act, including that people with Medicare prescription drug coverage are projected to experience lower out-of-pocket spending on prescription drugs for 2024 and beyond, CMS projects NHE will grow by an average of 5.6% annually from 2023 to 2032, surpassing $7.7 trillion and representing nearly 20% of GDP.

After taking into account the expected decline in insurance enrollment due to the expiration of the Inflation Reduction Act's temporary extension of enhanced subsidies and associated temporary Special Enrollment Period at the end of 2025, CMS projects NHE will grow by an average of 5.8% annually from 2024 to 2033, surpassing $8.6 trillion and representing 20.3% of GDP.

CMS projects that NHE is generally expected to grow more rapidly, on average, than the overall economy.

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While the GDP is expected to increase at an average annual growth rate of 4.3% from 2024 to 2033, hospital expenditures are expected to rise at a 5.9% average annual growth rate over the same period.

The projected annual growth rate for NHE was not achieved for 2022 (4.3% projected for 2022 compared to 4.1% actual) but was achieved for 2023 (7.5% projected for 2023 compared to 7.5% actual) while the projected annual growth rate for U.S.

hospital expenditures was achieved for both 2022 (0.8% projected for 2022 compared to 2.2% actual) and 2023 (10.1% projected for 2023 compared to 10.4% actual).

The projected annual growth rate for NHE was achieved for 2023 (7.5% projected for 2023 compared to 7.5% actual) but was not achieved for 2024 (8.2% projected for 2024 compared to 7.2% actual), while the projected annual growth rate for U.S.

hospital expenditures was achieved for 2023 (10.1% projected for 2023 compared to 10.4% actual) and was not achieved for 2024 (9.2% projected for 2024 compared to 8.9% actual).

The projected annual growth rates for NHE and hospital expenditures for 2025 were 7.1% and 6.8%, respectively.

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According to CMS National Healthcare Expenditure Data, hospital services and physician and clinical services expenditures collectively accounted for approximately $2.7 trillion in 2024, or 52% of the total healthcare spending in the United States:

• Hospital services represent the single largest category of spend at nearly $1.5 trillion, or approximately 31% of total healthcare spending in 2023, and these expenditures are expected to grow approximately 59% to $2.4 trillion by 2032, representing approximately 31% of total spending.

• Physician and clinical services accounted for nearly $1.0 trillion, or approximately 20% of total spending in 2023, and these expenditures are expected to grow approximately 59% to approximately $1.5 trillion by 2032, representing approximately 20% of total spending.

• Hospital services represent the single largest category of spend at nearly $1.6 trillion, or approximately 31% of total healthcare spending in 2024.

Expenditures grew 8.4% year-over-year due to higher utilization, increased care intensity, and elevated insurance coverage.

Hospital services expenditures are expected to grow approximately 63% to $2.7 trillion by 2033, representing approximately 31% of total spending.

• Physician and clinical services accounted for nearly $1.1 trillion, or approximately 21% of total spending in 2024.

These expenditures reflect a 7.4% growth over the prior year amid strong demand for ambulatory and clinical services.

Physical and clinical services expenditures are expected to grow approximately 59% to approximately $1.7 trillion by 2033, representing approximately 20% of total spending.

We believe there are approximately 350 markets that fit our strategic focus of mid-sized urban communities based on the most recently available data.

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(i) hospital systems facing increased financial pressures due to a lack of scale;

(ii) hospital systems struggling to recruit medical providers

given the significant competition for clinical talent;

(ii) hospital systems struggling to recruit medical providers given the significant competition for clinical talent;

and (iii) hospital systems experiencing the inability to support continued investments in new services, facilities, and technology.

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Anchored by our network of providers and healthcare facilities, we focus on delivering care that supports patients across their unique health journeys, recognizing that care does not stop when a hospital stay or clinic visit ends.

For example, effective January 2025, we acquired 18 urgent care centers across New Mexico and Oklahoma, which positioned us to better serve a broad spectrum of acuity throughout the community.

For example, on January 1, 2025, we acquired 18 urgent care centers across New Mexico and Oklahoma, which positioned us to better serve a broad spectrum of acuity throughout the community.

Additionally, regular touchpoints with our patients using channels such as email, chat, text, and Epic’s MyChart app allow us to stay engaged with patients and deliver care when and where needed.

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We have implemented a suite of programs to support and monitor quality of care, including hospital acquired conditions (“HACs”) and serious safety events.

These efforts have resulted in a Leapfrog hospital safety grade that consistently outranks the national average (including seven “Top Hospitals”).

These efforts have resulted in a Leapfrog hospital safety grade that consistently outranks the national average (including nine “Top Hospitals”).

Centralized and Standardized Operating Model

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We believe we are currently the only large investor-owned company that has embraced Epic and expect this platform will be highly beneficial to us as the industry moves further into value-based care models, and we believe Epic makes us a more attractive partner for emerging technology providers and facilitates physician use of novel technology.

We also continually assess advanced technologies to supplement care delivered at the bedside and are currently utilizing a variety of artificial intelligence-powered tools including clinical decision support and smart monitoring devices.

We also continually assess advanced technologies to supplement care delivered at the bedside and are currently utilizing a variety of AI-powered tools including clinical decision support, smart monitoring devices, and clinical documentation tools.

The deployment of these and other tools improves patient care and safety while reducing the administrative burden placed on caregivers.

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As we continue to grow our footprint, build density and scale, and further implement our consumer-centric delivery model, we expect to grow market share within our existing markets.

We also intend to replicate our model across the approximately 350 markets that we believe fit our strategic focus on mid-sized urban communities, allowing us to meet evolving healthcare needs across more geographies, which we believe will drive shareholder value.

Our culture of care is core to our consumer-centric delivery model and overall value proposition.

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We intend to fuel additional growth by advancing capabilities that enable us to succeed in a value-based care environment.

We currently have a strong foundation of more than 80 value-based care contracts and programs and plan to continue to build out the infrastructure and operational rigor to expand our participation in these programs and drive better health and cost outcomes.

We currently have a strong foundation of value-based care contracts and programs and plan to continue to build out the infrastructure and operational rigor to expand our participation in these programs and drive better health and cost outcomes.

We plan to grow our extensive and diverse provider network through our robust recruitment pipeline of primary care and specialist physicians.

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Local management teams, in consultation with our corporate staff, develop annual operating plans setting forth revenue growth strategies through the expansion of offered services, as well as plans to improve operating efficiencies and reduce costs.

We believe that the ability of the local management team to identify and meet the needs of our patients, medical staff and the community is critical to the success of our hospitals and allows our local providers and clinical staff to provide the quality and level of care needed for the patients they are treating.

clinical staff to provide the quality and level of care needed for the patients they are treating.

We base the compensation for each local management team in part on its ability to achieve the clinical quality and financial goals set forth in the annual operating plan.

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The locations of our hospitals and the number of licensed beds at each hospital as of December 31, 2025 are set forth in the table above under “Item 1.

Business—Our Platform.” We operate 30 acute care hospitals including one managed hospital, two rehabilitation hospitals and two surgical hospitals, with a total of 4,281 licensed beds, and provided physician and other ancillary healthcare services through a system of more than 1,360 employed providers.

Our healthcare facilities serve urban and suburban markets in Amarillo, Texas;

Harker Heights, Texas;

Killeen, Texas;

Tyler, Texas;

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As of December 31, 2025, we leased approximately 102,290 square feet of office space at 340 Seven Springs Way, Suite 100, Brentwood, Tennessee for our corporate headquarters.

In addition, as of December 31, 2024, we leased approximately 1,582 square feet of office space at 7100 Commerce Way, Suite 15, Brentwood, Tennessee and 22,500 square feet of office space at 565 Marriott Drive, Suite 500, Nashville, Tennessee, for our information systems operations.

In addition, as of December 31, 2025, we leased approximately 1,582 square feet of office space at 7100 Commerce Way, Suite 15, Brentwood, Tennessee for our information systems operations.

We own, or control through our JVs, Portneuf Medical Center in Pocatello, Idaho;

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Physicians Surgical Hospitals in Amarillo, Texas;

Seton Medical Center Harker Heights in Harker Heights, Texas;

Seton Medical Center Harker Heights in Killeen, Texas;

UT Health Henderson in Henderson, Texas;

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We lease ten of our hospitals from subsidiaries of Ventas pursuant to the Ventas Master Lease (the “Ventas Master Lease”).

For additional information regarding the terms of the Ventas Master Lease, see Note 4, "Related Party Transactions" to our consolidated financial statements.

Additionally, during 2022, we completed the sale of 18 medical office buildings to Ventas in exchange for $204.0 million and concurrently entered into agreements to lease the real estate back from Ventas over a 12-year initial term with eight options to renew for additional five-year terms (the "MOB Transactions").

For additional information regarding the MOB Transactions, refer to Note 5, "Leases" to our consolidated financial statements.

For additional information regarding the terms of the Ventas Master Lease, see Note 4, Related Party Transactions, to our consolidated financial statements included within this Annual Report.

Additionally, we lease 18 medical office buildings from Ventas pursuant to lease agreements with initial terms of 12 years and eight options to renew for additional five-year terms.

We lease from Medical Properties Trust, Inc.

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These reductions apply to certain other federally funded healthcare programs, including TRICARE.

As a result of the American Rescue Plan Act of 2021 ("ARPA"), an additional Medicare payment reduction of up to 4% was required to take effect in January 2022, although Congress has delayed implementation of this reduction until 2025.

As of January 1, 2025, Medicare payments under the Physician Fee Schedule have been reduced 2.8% from prior year levels.

As a result of the American Rescue Plan Act of 2021 (“ARPA”), an additional Medicare payment reduction of up to 4% was required to take effect in January 2022, although Congress has delayed implementation of this reduction through at least federal fiscal year 2026.

And while Medicare payments under the Physician Fee Schedule received a one-time increase of 2.5% under the 2026 Medicare Physician Fee Schedule Final Rule, this increase is largely offset by 2.5% “efficiency adjustment” reductions to certain non-time-based codes.

We anticipate that the federal deficit will continue to place pressure on government healthcare programs, and it is possible that future deficit reduction legislation will impose additional spending reductions.

Inpatient Acute Care

Payments for inpatient acute services are generally made pursuant to PPS.

Payments for inpatient acute services are generally made pursuant to the inpatient prospective payment system (“PPS”).

Under PPS, our hospitals are paid a predetermined amount for each hospital discharge based on the patient’s diagnosis.

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Third, the bottom quartile of hospitals based on the national risk-adjusted HAC rates in the previous year have their total inpatient operating Medicare payments reduced by 1%.

In response to the COVID-19 pandemic, CMS paused or refined several measures across various hospital quality measurement and value-based purchasing programs.

However, as of fiscal year 2024, these programs have resumed in their standard form.

Outpatient Services

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Supreme Court invalidated past payment cuts for hospitals participating in the 340B Drug Pricing Program.

Although our hospitals do not participate in the 340B program, the decision has implications for all hospitals reimbursed under the outpatient prospective payment system ("PPS").

Although our hospitals do not participate in the 340B program, the decision has implications for all hospitals reimbursed under the outpatient PPS.

The 340B program allows participating hospitals to purchase certain outpatient drugs from manufacturers at discounted rates.

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Department of Health and Human Services (“HHS”) implemented a payment policy that reduced Medicare payments to 340B hospitals for most drugs obtained at 340B-discounted rates, and which resulted in increased payments for non-340B hospitals, including our facilities.

Instead of ordering HHS to pay 340B hospitals the difference between the rates under the 2018 payment policy and what should have been paid, the United States District Court for the District of Columbia allowed HHS to develop an appropriate remedy to address underpayments to 340B hospitals that resulted from the policy in

past payment years.

For calendar year 2023, CMS finalized the payment rate for drugs acquired through the 340B program in light of the U.S.

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This reflected a market basket update of 3.5% reduced by a 0.5 percentage point productivity adjustment, with adjustments related to outlier threshold results.

For federal fiscal year 2025, CMS increased inpatient rehabilitation payment rates by 3.0% based on a market basket update of 3.5% reduced by a 0.5 percentage point productivity adjustment.

For federal fiscal year 2026, CMS increased inpatient rehabilitation payment rates by 2.6% based on a market basket update of 3.3% reduced by a 0.7 percentage point productivity

In addition, CMS requires IRFs to report quality measures to avoid receiving a reduction of 2 percentage points to the market basket update.

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CMS annually reviews resource inputs for select services.

For calendar year 2024, CMS reduced the conversion factor by approximately 3.4%, though reductions for that calendar year were mitigated through partial offsets enacted by the Consolidated Appropriations Act of 2024.

For calendar year 2025, CMS reduced the conversion factor by approximately 2.38%.

For calendar year 2026, CMS reduced the conversion factor by 2.5%.

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The federal government and many states are considering various strategies to reduce Medicaid expenditures.

Currently, several states utilize supplemental reimbursement programs intended to offset a portion of the costs to providers associated with providing care to Medicaid and indigent patients.

Currently, several states in which we operate utilize supplemental reimbursement programs intended to offset a portion of the costs to providers associated with providing care to Medicaid and indigent patients.

These programs are designed with input from CMS and may be funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the healthcare providers.

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Each state Medicaid program must deny payments to providers for the treatment of hospital-acquired conditions designated by CMS as well as other provider-preventable conditions that may be designated by the state.

Disproportionate Share Hospital and Medicaid Supplemental Payments

Disproportionate Share Hospital

In addition to making payments for services provided directly to beneficiaries, Medicare makes additional payments to hospitals that treat a disproportionately large number of low-income patients (Medicaid and Medicare patients eligible to receive Supplemental Security Income).

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These changes could lower DSH payments for many hospitals and adversely impact our results of operations.

CMS also distributes a payment to each DSH hospital that is allocated according to the hospital’s proportion of uncompensated care costs relative to the uncompensated care amount of other DSH hospitals.

Some states make additional supplemental payments to providers through the Medicaid program that are separate from base payments and are not specifically tied to an individual’s care.

CMS also distributes a payment to each DSH hospital allocated according to the hospital’s proportion of uncompensated care costs relative to the uncompensated care amounts of other qualifying DSH hospitals.

Medicaid Supplemental Payment Programs

Certain states make payments to providers through Medicaid supplemental payment programs that are separate from base payments and are not specifically tied to an individual’s care.

These supplemental payments may be in the form of Medicaid DSH payments, which are intended to offset hospital uncompensated care costs.

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The Affordable Care Act and subsequent legislation provide for reductions to the Medicaid DSH hospital program.

Under current law, Medicaid DSH payments will be reduced by $8 billion for the period beginning January 1, 2025 and ending September 30, 2025, and in each of federal fiscal years 2026 and 2027.

Many states have implemented state directed payment ("SDP") arrangements to direct certain Medicaid managed care plan expenditures.

These arrangements, which are subject to approval by CMS, allow states to implement delivery system and provider payment initiatives by requiring Medicaid managed care organizations to pay providers according to specific rates or methods.

Under current law, Medicaid DSH payments were reduced by $8 billion for the period beginning January 1, 2025 and ending September 30, 2025, and will be reduced by an additional $8 billion per year in each of federal fiscal years 2026 and 2027.

Many states in which we operate have implemented state directed payment (“SDP”) arrangements to direct certain Medicaid managed care plan expenditures.

These arrangements, which are subject to annual approval by CMS, allow states to implement delivery system and provider payment initiatives by requiring Medicaid managed care organizations to pay providers according to specific rates or methods.

For example, SDP arrangements may require managed care plans to implement value-based purchasing models or performance improvement initiatives, or may direct managed care plans to adopt specific payment parameters, such as minimum or maximum fee schedules for specific types of providers.

States are increasingly using SDP arrangements, and the use of SDP arrangements may decrease state utilization of other supplemental payment programs, diverting or reducing previously-available funding for certain providers.

SDP arrangements can be limited to a specific subset of providers, and providers that do not satisfy applicable criteria may

be ineligible for payments.

All SDP programs are subject to annual approval by CMS.

SDP arrangements can be limited to a specific subset of providers, and providers that do not satisfy applicable criteria may be ineligible for payments.

If a state is unable to obtain future CMS approvals of these programs or if the funds available under these programs are reduced, eliminated, or grow at a slower rate than expected, our revenues could be negatively impacted.

Supplemental payments may also be in the form of non-DSH payments, such as upper payment limit payments, which are intended to address the difference between Medicaid fee-for-service payments and Medicare reimbursement rates, or payments under other programs that vary by state under Section 1115 waivers.

Medicaid supplemental payments may also be in the form of non-DSH payments, such as upper payment limit payments, which are intended to address the difference between Medicaid fee-for-service payments and Medicare reimbursement rates, or payments under other programs that vary by state under Section 1115 waivers.

These supplemental reimbursement programs are generally authorized by CMS for a specified period of time and require CMS’s approval to be extended.

2024 Supplemental Payment Program Updates

On April 1, 2024, a new Oklahoma directed payment program (the "OK DPP") became effective, under which hospitals receive directed payments through Oklahoma’s new Medicaid managed care delivery system, resulting in reimbursement near the average commercial rate.

The existing upper payment limit component of Oklahoma’s Supplemental Hospital Offset Payment Program will remain in place for certain categories of Medicaid patients that will continue to be enrolled in Oklahoma’s traditional Medicaid Fee for Service program.

In March 2024, New Mexico’s Healthcare Delivery and Access Act (the "HDA Act") was signed into law and was approved by CMS on November 25, 2024 with an effective period of July 1, 2024 through December 31, 2024.

The HDA Act provides directed payments for hospitals that serve patients in New Mexico’s Medicaid managed care delivery system.

Under the OK DPP and the directed payment program pursuant to the HDA Act, we recognized an aggregate net benefit to pre-tax income of approximately $98.0 million during the year ended December 31, 2024.

In recent years, the regulatory landscape governing Medicaid supplemental payment programs has continued to evolve.

Federal policy changes finalized in 2024 require HHS to revise the methodology for determining allowable payment limits under SDP arrangements.

Under these rules, beginning with managed care rating periods on or after July 4, 2025, total payment rates for certain services furnished under SDP arrangements are capped at 100% of Medicare rates in Medicaid expansion states and 110% of Medicare rates in non‑expansion states.

The revised regulations include limited grandfathering provisions for SDP arrangements that received CMS approval or had applications submitted before specified effective dates;

however, these grandfathered arrangements will be gradually reduced over time, with phase‑downs beginning January 1, 2028.

As states transition their existing programs to comply with these requirements, certain funding previously available through legacy supplemental payment methodologies may be reduced, restructured, or converted into new SDP formats.

CMS has also adopted additional requirements governing the design and administration of SDP arrangements, including provisions intended to expand the use of value‑based purchasing models and broaden provider participation.

The rules require states to collect provider attestations no later than January 1, 2028 confirming that providers do not participate in any arrangement that holds taxpayers harmless for the cost of provider taxes.

These new rules and related administrative requirements may limit provider eligibility or require changes to how states structure their directed payment programs.

Medicaid supplemental payment programs require periodic CMS review and approval, the timing, scope, and continuation of payments under these programs remain subject to uncertainty.

Any delay in CMS approval, modification of program methodologies, or reduction in available funding could negatively impact the revenues we receive under these arrangements.

Medicaid supplemental payment programs continue to undergo significant policy and structural changes.

States in which we operate have implemented, expanded, or revised these programs in recent years.

We cannot predict whether future federal or state actions will alter these programs, the extent of future funding, or the timing of when payments will be authorized or distributed.

Revenue from Medicaid supplemental payment programs totaled approximately $707.5 million, $530.3 million and $402.6 million in 2025, 2024 and 2023, respectively.

TRICARE is the Department of Defense’s healthcare program for members of the armed forces.

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Enrollment in Medicare Advantage plans is increasing, with industry estimates stating that more than one half of the eligible Medicare population enrolled in such a plan in 2025;

projected enrollment estimates remain consistent for 2025.

projected enrollment estimates remain consistent and continue to trend upward for 2026.

Similarly, enrollment in managed Medicaid programs has increased in recent years as state governments seek to control healthcare costs.

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Accountable Care Organizations and Bundled Payment Initiatives

With the aim of reducing healthcare costs by improving quality and operational efficiency, accountable care organizations ("ACOs") are gaining traction in both the public and private sectors.

With the aim of reducing healthcare costs by improving quality and operational efficiency, ACOs are gaining traction in both the public and private sectors.

An ACO is a network of providers and suppliers (including hospitals, physicians and other designated professionals) that work together to invest in infrastructure and redesign delivery processes to achieve high-quality and efficient delivery of services.

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The Center for Medicare & Medicaid Innovation Center (“CMMI”) is responsible for establishing demonstration projects and other initiatives in order to identify, develop, test and encourage the adoption of new methods of delivering and paying for healthcare that create savings under the Medicare and Medicaid programs while improving quality of care.

For example, providers participating in bundled payment initiatives agree to receive one payment for services provided to Medicare patients for certain medical conditions or

episodes of care, accepting accountability for costs and quality of care.

For example, providers participating in bundled payment initiatives agree to receive one payment for services provided to Medicare patients for certain medical conditions or episodes of care, accepting accountability for costs and quality of care.

By rewarding providers for increasing quality and reducing costs and penalizing providers if costs exceed a set amount, these models are intended to lead to higher quality, more coordinated care at a lower cost to the Medicare program.

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Therefore, we devote significant time and resources to regulatory compliance, including compliance with those laws and regulations described below.

Healthcare facility construction and operation are subject to numerous federal, state and local regulations relating to the adequacy of medical care, equipment, personnel, operating policies and procedures, maintenance of adequate records, dispensing narcotics, handling radioactive materials, fire prevention, rate-setting, building codes and environmental protection.

handling radioactive materials, fire prevention, rate-setting, building codes and environmental protection.

Facilities are subject to periodic inspection by governmental and other authorities to assure continued compliance with the various standards necessary for permitting, licensing and accreditation.

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Failure to provide required notifications or obtain necessary approvals in these circumstances can result in the inability to complete an acquisition or change of ownership, loss of licensure, lapses in reimbursement or other penalties.

addition of new beds or services may be subject to review by and prior approval of, or notifications to, state regulatory agencies under a CON program.

In some states where we operate hospitals and other healthcare facilities, the construction or expansion of healthcare facilities, the acquisition of existing facilities, the transfer or change of ownership, capital expenditures exceeding a prescribed amount and the addition of new beds or services may be subject to review by and prior approval of, or notifications to, state regulatory agencies under a CON program.

Such laws generally require the reviewing state agency to determine the public need for additional or expanded healthcare facilities and services.

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Medical Technology Innovations

HHS and the U.S.

Food and Drug Administration (the “FDA”) have spearheaded regulatory oversight of medical technology innovations in the healthcare industry, most notably with respect to the use of artificial intelligence in support of clinical decision-making.

In 2023, for example, HHS issued a final rule implementing transparency requirements for healthcare providers using artificial intelligence and other predictive algorithms when making clinical healthcare determinations.

HHS and the FDA have spearheaded regulatory oversight of medical technology innovations in the healthcare industry, most notably with respect to the use of AI in support of clinical decision-making.

In 2023, for example, HHS issued a final rule implementing transparency requirements for healthcare providers using AI and other predictive algorithms when making clinical healthcare determinations.

The FDA has expressed that its jurisdiction extends to such software when used to support clinical decision-making because the software qualifies as a “medical device” under the Food, Drug, and Cosmetic Act.

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Future rulemakings by either HHS or the FDA could affect or limit our use of these software programs, or otherwise increase the costs associated with using such software.

We are unable to predict the level of scrutiny these or other regulatory bodies will place on our operations that currently utilize, or will in the future utilize, artificial intelligence and/or predictive algorithms in the clinical space;

We are unable to predict the level of scrutiny these or other regulatory bodies will place on our operations that currently utilize, or will in the future utilize, AI and/or predictive algorithms in the clinical space;

however, we expect that new, applicable laws and regulations will be passed in the near future at both the federal and state level.

In early 2025, for example, the Texas legislature began deliberating passage of the Texas Responsible AI Government Act (“TRAIGA”), which would seek to regulate the use of “high-risk artificial intelligence systems” in certain “high-risk” industries such as healthcare, finance, and legal services.

If passed into law, TRAIGA would become one of the most expansive state laws governing artificial intelligence systems currently in effect.

In June 2025, for example, Texas passed into law the Texas Responsible AI Government Act (“TRAIGA”), which regulates the use of “high-risk artificial intelligence systems” in certain “high-risk” industries such as healthcare, finance, and legal services.

TRAIGA is one of the most expansive state laws governing AI systems currently in effect.

Other states in which we operate are currently considering or have passed similar laws, including Oklahoma, New Jersey, and Kansas.

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It is expected that the Loper Bright decision and those that follow it will have a significant impact on highly regulated industries, including the healthcare industry.

In the short term, the Loper Bright decision has introduced significant regulatory uncertainty, increasing the powers of the courts in the context of regulatory oversight, delaying or halting ongoing agency rulemaking processes, and prompting modifications or reversals of longstanding agency policy.

longstanding agency policy.

Further adding to regulatory uncertainty and potential for significant policy changes, recent presidential executive orders have established a presidential advisory commission tasked with restructuring government agencies to reduce or eliminate regulations, government programs, and other expenditures.

At the same time, attempts to make significant changes to recent trends in healthcare public policy continue at the state and federal level.

The most significant change to date in 21st century healthcare policy has been the Affordable Care Act, which affects how healthcare services are covered, delivered and reimbursed through expanded health insurance coverage, reduced growth in Medicare program spending, reductions in Medicare and Medicaid DSH payments and the establishment of programs that tie reimbursement to clinical integration and quality of care.

Since its passage, the Affordable Care Act has been subjected to repeated attempts to repeal, replace, or otherwise amend its framework with varying degrees of success.

Subsequent legislation and regulation at the state and federal level have affected, and may continue to affect, individual eligibility for coverage under the Affordable Care Act.

For example, ARPA increased access to health insurance subsidies for individuals eligible to purchase coverage through Affordable Care Act

marketplaces;

while these subsidies have been extended through the end of calendar year 2025, extension into future calendar years remains uncertain.

For example, though ARPA increased access to health insurance subsidies for individuals eligible to purchase coverage through Affordable Care Act marketplaces, Congress failed to extend these subsidies in late 2025, resulting in their expiration on December 31, 2025.

Efforts to renew the subsidies are ongoing in Congress though the outcome of the efforts remains uncertain.

These and other changes may impact the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if purchased.

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The Medicaid landscape is constantly evolving as the federal and state governments consider and test various models of delivery and payment system reform.

Additional uncertainty arises from other reform efforts at the federal and state levels.

A recent example of federal legislation that may significantly impact Medicaid provider reimbursement and beneficiary eligibility is the One Big Beautiful Bill Act (the “OBBBA”), which passed on July 4, 2025 and served as Congress’ budget reconciliation act for fiscal year 2025.

Provisions of the OBBBA seek to reduce the federal government’s overall Medicaid expenditures by approximately $1 trillion over the next decade, tighten Medicaid eligibility through the expansion of work and reporting requirements for enrollees, and restrict funding mechanisms historically used by states Medicaid programs to fund the state share of Medicaid program expenditures.

If implemented, these provisions are likely to negatively impact patients’ access to care as state Medicaid programs, providers, and beneficiaries become subject to material financing limitations and administrative burden.

Additional uncertainty arises from other reform efforts at the federal and state levels with respect to the Medicare program.

For example, members of Congress have proposed legislation with the intent of transitioning the Medicare program away from traditional Medicare and toward a model based solely on Medicare Advantage.

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Further, submission of a claim for services or items generated in violation of the Anti-Kickback Statute may be subject to additional penalties under the False Claims Act (“FCA”) as a false or fraudulent claim.

Violations of the Anti-Kickback Statute may result in substantial criminal fines for each violation, imprisonment, substantial civil monetary penalties per violation that are subject to annual adjustment based on updates to the consumer price index, and damages of up to three times the total amount of the remuneration and/or mandatory exclusion from participation in government healthcare programs, including Medicare and Medicaid.

Violations of the Anti-Kickback Statute may result in substantial criminal fines for each violation, imprisonment, substantial civil

monetary penalties per violation that are subject to annual adjustment based on updates to the consumer price index, and damages of up to three times the total amount of the remuneration and/or mandatory exclusion from participation in government healthcare programs, including Medicare and Medicaid.

The HHS Office of Inspector General (“OIG”) is one entity responsible for identifying and investigating fraud and abuse activities in federal healthcare programs.

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Failure to refund amounts received as a result of a prohibited referral on a timely basis may constitute a false or fraudulent claim and may result in civil penalties and additional penalties under the FCA.

The statute also provides for a penalty for a circumvention scheme.

The statute also

provides for a penalty for a circumvention scheme.

These penalties are updated annually based on changes to the consumer price index.

There are ownership and compensation arrangement exceptions to the self-referral prohibition.

There are exceptions for many of the customary financial arrangements between physicians and providers, including employment contracts, leases and recruitment

There are exceptions for many of the customary financial arrangements between physicians and providers, including employment contracts, leases and recruitment agreements.

A financial relationship must comply with every requirement of a Stark Law exception or the arrangement is in violation of the Stark Law.

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Clinical Laboratory Regulation

Our clinical laboratories are subject to federal oversight under the Clinical Laboratory Improvement Amendments of 1988 ("CLIA"), which extends federal oversight to most clinical laboratories by requiring that they be certified by the federal government or by a federally-approved accreditation agency.

Our clinical laboratories are subject to federal oversight under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”), which extends federal oversight to most clinical laboratories by requiring that they be certified by the federal government or by a

federally-approved accreditation agency.

Clinical laboratories that are subject to CLIA must meet quality assurance, quality control and personnel standards.

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HHS may, and in some cases is required to, exclude individuals and entities that HHS determines have committed an act in violation of applicable fraud and abuse laws or improperly filed claims in violation of such laws from participating in any federal healthcare program.

For example, HHS has the ability to exclude from Medicare and Medicaid any business entities and any investors, officers

and managing employees associated with business entities that have committed healthcare fraud, even if the officer or managing employee had no knowledge of the fraud.

For example, HHS has the ability to exclude from Medicare and Medicaid any business entities and any investors, officers and managing employees associated with business entities that have committed healthcare fraud, even if the officer or managing employee had no knowledge of the fraud.

This standard does not require that specific intent to defraud.

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These penalties will be updated annually based on changes to the consumer price index.

In addition, the Eliminating Kickbacks in Recovery Act ("EKRA") establishes criminal penalties for paying, receiving, soliciting or offering any remuneration in return for referring a patient to a laboratory, clinical treatment facility or recovery home, or in exchange for an individual using the services of one of these entities.

In addition, the Eliminating Kickbacks in Recovery Act (“EKRA”) establishes criminal penalties for paying, receiving, soliciting or offering any remuneration in return for referring a patient to a laboratory, clinical treatment facility or recovery home, or in exchange

for an individual using the services of one of these entities.

The EKRA prohibitions apply to services covered by government healthcare programs and by private health plans.

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In addition to enforcement by HHS, state attorneys general are authorized to bring civil actions seeking either injunction or damages in response to violations of HIPAA privacy and security regulations that threaten the privacy of state residents.

HHS may resolve HIPAA violations through informal means, such as allowing a covered entity to implement a corrective action plan,

but HHS has the discretion to move directly to impose monetary penalties and is required to impose penalties for violations resulting from willful neglect.

HHS may resolve HIPAA violations through informal means, such as allowing a covered entity to implement a corrective action plan, but HHS has the discretion to move directly to impose monetary penalties and is required to impose penalties for violations resulting from willful neglect.

While HIPAA does not create a private right of action allowing individuals to sue covered entities or business associates for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.

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Healthcare providers and industry participants are also subject to a growing number of requirements intended to promote the interoperability and exchange of patient health information.

For example, healthcare providers and certain other entities are subject to information blocking restrictions pursuant to the 21st Century Cures Act that prohibit practices that are likely to interfere with the access, exchange or use of electronic health information, except as required by law or specified by HHS as a reasonable and necessary activity.

Violations may result in penalties or other significant disincentives.

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Hospitals may face conflicting interpretations of EMTALA’s requirements, particularly with respect to state laws that limit access to abortion or other reproductive health services.

For example, in July 2022, CMS provided guidance regarding EMTALA obligations specific to patients who are pregnant or are experiencing pregnancy loss and the preemption of state law, which the agency subsequently revised.

This guidance is the subject of legal challenges, including pending cases in Texas and Idaho that currently have allowed state restrictions to remain in effect or stayed or limited application of CMS guidance as the cases continue.

As of January 2025, this guidance is no longer accessible on the CMS website and future guidance repealing or replacing it is yet to be seen.

For example, in July 2022, CMS provided guidance regarding EMTALA obligations specific to patients who are pregnant or are experiencing pregnancy loss and the preemption of state law.

In June 2025, CMS rescinded the guidance, removing it from the agency’s website, but subsequently issued a letter reaffirming that EMTALA continues to apply to all patients experiencing a medical emergency, including patients who are pregnant.

Sanctions for failing to fulfill the EMTALA requirements include exclusion from participation in Medicare and Medicaid programs and civil money penalties, which are increased annually based on updates to the consumer price index.

In addition, an injured individual, the individual’s family or a medical facility that suffers a financial loss as a direct result of a hospital’s violation of the law can bring a civil suit against the hospital.

Cybersecurity Incident

In November 2023, we determined that a ransomware cybersecurity incident had impacted and disrupted a number of our operational and information technology systems (the "Cybersecurity Incident").

Upon detecting the Cybersecurity Incident, we quickly activated our incident response protocols and implemented a series of containment and remediation measures, including engaging the services of cybersecurity experts and incident response professionals.

We also promptly launched an investigation, engaging external counsel to support the investigation and involving federal and state law enforcement.

During this time, our hospitals remained operational and continued to deliver patient care utilizing established downtime procedures;

however, we advised local emergency medical services ("EMS") systems and other providers to divert emergency ambulance transports to other facilities for a few days until the Cybersecurity Incident had been contained.

As a result of our investigation, we determined that the unauthorized actor acquired a copy of certain personal information and PHI of a limited number of our patients and personal information of certain of our employees but did not gain access to our EHR platform.

We have cooperated with law enforcement authorities that have made inquiries into the Cybersecurity Incident and have been in contact with, and complied with, the requirements of various governmental authorities that require notification of such incidents.

Additionally, because of the time taken to contain and remediate the Cybersecurity Incident, our

online electronic billing systems were not functioning at their full capacities and certain billing, reimbursement and payment functions were delayed.

We estimate the Cybersecurity Incident had an adverse pre-tax impact of approximately $74 million during the year ended December 31, 2023.

This estimate includes lost revenues from the associated business interruption and costs to remediate the issue, net of insurance proceeds.

For the three months ended December 31, 2023, we also experienced decreases in admissions, surgeries (both inpatient and outpatient) and emergency room visits of 2.5%, 2.1% and 5.7%, respectively, compared to the three months ended December 31, 2022, which, prior to the Cybersecurity Incident, were estimated to have increased by 4.1%, 5.5% and 3.3%, respectively, compared to the same period in 2022.

We continued to experience delays in billing claims and obtaining reimbursements and payments through the first quarter of 2024, and will incur certain expenses related to the Cybersecurity Incident, including expenses to defend claims brought by individuals (including the class action described below) and other expenses related to the Cybersecurity Incident.

We have taken steps to ensure that the data appropriated is deleted by the unauthorized actor, although we cannot guarantee this result.

Out of an abundance of caution, we have offered credit monitoring and identity theft protection services to all persons whose personal information was involved in the incident.

As a result of the Cybersecurity Incident, three putative class actions were filed against the Company in the U.S.

District Court for the Middle District of Tennessee:

AHS Medical Holdings LLC, No.

3:23- cv-01308;

AHS Medical Holdings, LLC, No.

3:23-cv-01342;

and Epperson v.

AHS Management Company, Inc., No.

3:24-cv-00396.

These cases were consolidated by the District Court on April 24, 2024, under the caption Hodge v.

AHS Management Company, Inc., No.

3:23-cv-01308 (M.D.

The complaint for the consolidated class action, filed on behalf of approximately 38,000 individuals who allege their personal information and PHI were affected by the Cybersecurity Incident, generally asserts state common law claims of negligence, breach of implied contract, unjust enrichment, breach of fiduciary duty, and invasion of privacy with respect to how the Company managed sensitive data.

On October 4, 2024, the Company executed a settlement agreement to resolve the consolidated class action litigation.

On October 9, 2024, the District Court preliminarily approved the settlement and set the hearing for the District Court’s final approval of the settlement for August 1, 2025.

Settlement of the consolidated case on the agreed terms will require the Company to make cash settlement payments that will not have a material impact on the Company’s results of operations, financial position or liquidity.

Professional and General Liability

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The total costs for professional and general liability losses are based on our premiums and retention costs, and were $131.3 million, $63.0 million, and $55.5 million for the years ended December 31, 2025, 2024, and 2023, respectively.

The costs for professional and general liability losses for the year ended December 31, 2022 included an unfavorable adjustment to the estimated losses associated with prior years’ claims of $40.1 million.

We experienced an increase in professional and general liability losses during the year ended December 31, 2025, primarily related to the emergence of adverse prior period claim developments, particularly with respect to our New Mexico market, combined with increased social inflationary pressures as described further in Note 11, Self-Insured Liabilities, to our consolidated financial statements included within this Annual Report.

Workers’ Compensation and Occupational Injury Liability

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We purchase excess coverage for the occupational injury benefit program from an independent third party carrier for claims up to $25.0 million per occurrence or $5.0 million per person, subject to a $250,000 deductible per occurrence.

The total costs for workers’ compensation liability insurance are based on our premiums and retention costs and were $8.0 million, $6.6 million, and $7.5 million for the years ended December 31, 2024, 2023, and 2022, respectively.

The total amounts for workers’ compensation liability insurance are based on our premiums and retention costs and were a benefit of $0.2 million, an expense of $8.0 million, and an expense of $6.6 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Environmental Matters

We are subject to certain federal, state and local laws, rules and regulations that, among other things, govern the disposal of materials, including medical waste, as well as our use, storage, transportation and disposal of hazardous and toxic materials.

In addition, we could be affected by climate change to the extent that climate change results in severe weather conditions or other disruptions impacting the communities in which our facilities are located or adversely impacts general economic conditions, including in

communities in which our facilities are located.

Moreover, regulations limiting greenhouse gas emissions and energy inputs may increase in coming years, which may increase our costs associated with compliance and adversely affect our operations.

We do not believe that we will be required to expend any material amounts in order to comply with these laws and regulations as presently in effect.

However, it is possible that future environmental-related developments may impact us, including as a result of climate change and/or new legal requirements associated with the transition to a lower carbon economy, in a manner that we are currently unable to predict.

However, it is possible that future environmental-related developments may impact us, including as a result of

climate change and/or new legal requirements associated with the transition to a lower carbon economy, in a manner that we are currently unable to predict.

We recognize the environment is an exhaustible resource and the importance of using the environment and its resources responsibly.

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Human Capital Resources

As of December 31, 2024, we had approximately 24,900 total employees, including more than 19,200 full-time employees and more than 1,360 employed providers.

As of December 31, 2025, we had approximately 25,200 total employees, including more than 19,500 full-time employees and 1,480 employed providers.

As of December 31, 2025, approximately 279 employees at the Hackensack Meridian Mountainside Medical Center were represented by two labor unions, and the Hackensack Meridian Mountainside Medical Center is party to two collective bargaining agreements.

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In collaboration with local partners, we have established nursing and medical residency programs across five states.

These programs not only build a pipeline of skilled providers, but also strengthen healthcare delivery in underserved areas.

These programs not only build a pipeline of skilled providers, but also strengthen healthcare

delivery in underserved areas.

Our partnerships with colleges and universities add hundreds of new graduates to our teams and our intern and extern programs provide hands-on clinical training to aspiring nurses.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business