What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-14 · 786 added, 401 removed, 249 unchanged (83% of the section changed)

3 unchanged sentences

(Dollars in thousands, except per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Three Months Ended

September 30,

Nine Months Ended

September 30,

Total revenue

1 unchanged sentence

Professional fees

Supplies 259,391 252,787 517,172 494,165

Rents and leases

4 unchanged sentences

Depreciation and amortization

Loss on debt extinguishment 1,898 — 1,898 —

Loss on extinguishment and modification of debt

Other non-operating gains

2 unchanged sentences

Income tax expense

Net income 66,961 55,706 112,812 79,488

Net income attributable to noncontrolling interests

Net income attributable to Ardent Health Partners, Inc.

$ 42,770 $ 33,076 $ 69,817 $ 37,219

Net income per share:

Basic and diluted $ 0.34 $ 0.26 $ 0.55 $ 0.30

Weighted-average common shares outstanding:

Basic and diluted 126,115,301 126,115,301 126,115,301 126,115,301

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Con tents

ARDENT HEALTH PARTNERS, INC.

1 unchanged sentence

(Dollars in thousands)

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net income $ 66,961 $ 55,706 $ 112,812 $ 79,488

Three Months Ended

September 30,

Nine Months Ended

September 30,

Other comprehensive (loss) income

4 unchanged sentences

Comprehensive income

Net income attributable to noncontrolling interests 24,191 22,630 42,995 42,269

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to Ardent Health Partners, Inc.

$ 40,515 $ 37,665 $ 68,265 $ 37,244

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Con tents

ARDENT HEALTH PARTNERS, INC.

1 unchanged sentence

(Dollars in thousands)

June 30, 2024 (1)

December 31, 2023 (1)

September 30,

Current assets:

1 unchanged sentence

Accounts receivable

Inventories 105,010 105,485

Prepaid expenses

4 unchanged sentences

Operating lease right of use assets, related party

Goodwill 852,001 844,704

Other intangible assets, net

Deferred income taxes

Other assets 144,504 147,106

Total assets $ 4,608,691 $ 4,731,558

Liabilities and Equity

11 unchanged sentences

Total liabilities

Commitment and contingencies (see Note 9)

Commitments and contingencies (see Note 9 )

Redeemable noncontrolling interests

Common units (Unlimited units authorized;

485,909,683 and 484,922,828 units issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)

497,620 496,882

Common units, no and unlimited units authorized as of September 30, 2024 and December 31, 2023 ,

respectively;

no and 484,922,828 units issued and outstanding as of September 30, 2024 and December 31, 2023 ,

Preferred stock, par value $ 0.01 per share;

50,000,000 and no shares authorized as of September 30, 2024 and

December 31, 2023 , respectively;

no shares issued and outstanding as of September 30, 2024 and December 31,

Common stock, par value $ 0.01 per share;

750,000,000 and no shares authorized as of September 30, 2024 and

December 31, 2023 , respectively;

142,735,842 and no shares issued and outstanding as of September 30, 2024

and December 31, 2023 , respectively

Additional paid-in capital

Accumulated other comprehensive income

1 unchanged sentence

Equity attributable to Ardent Health Partners, Inc.

739,899 670,896

Noncontrolling interests

Total equity 1,158,989 1,075,014

Total liabilities and equity

(1) As of June 30, 2024 and December 31, 2023, the unaudited condensed consolidated balance sheet included total liabilities of consolidated variable interest entities of $ 317.1 million and $ 337.8 million, respectively.

(1) As of September 30, 2024 and December 31, 2023 , the unaudited condensed consolidated balance sheets included total liabilities of consolidated variable interest entities of

$ 303.2 million and $ 337.8 million , respectively.

Refer to Note 2 , Summary of Significant Accounting Policies , for further discussion.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Con tents

The acc ompanying notes are an integral part of these condensed consolidated financial statements.

ARDENT HEALTH PARTNERS, INC.

1 unchanged sentence

(Dollars in thousands)

Six Months Ended June 30,

Nine Months Ended

September 30,

Cash flows from operating activities:

Net income $ 112,812 $ 79,488

Adjustments to reconcile net income to net cash provided by operating activities:

1 unchanged sentence

Other non-operating gains

Loss on debt extinguishment 1,898 —

Loss on extinguishment and modification of debt

Amortization of deferred financing costs and debt discounts

Deferred income taxes

Unit-based compensation 738 542

Equity-based compensation

Loss from non-consolidated affiliates

1 unchanged sentence

Accounts receivable

Inventories 540 ( 906 )

Prepaid expenses and other current assets

5 unchanged sentences

Purchases of property and equipment

Other 58 ( 1,554 )

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from initial public offering, net of underwriting discounts and commissions

Proceeds from insurance financing arrangements

6 unchanged sentences

Redemption of equity attributable to noncontrolling interests

Other — ( 5,399 )

Net cash used in financing activities ( 138,281 ) ( 60,462 )

Net decrease in cash and cash equivalents ( 103,039 ) ( 51,420 )

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

1 unchanged sentence

Supplemental Cash Flow Information:

Non-cash purchase of property and equipment $ 4,929 $ 9,009

Deferred offering costs not yet paid $ 4,825 —

Non-cash purchases of property and equipment

Offering costs not yet paid

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Con tents

ARDENT HEALTH PARTNERS, INC.

3 unchanged sentences

Ardent Health Partners, Inc.

Noncontrolling Interests

Redeemable Noncontrolling Interests Common Units Accumulated Other Comprehensive Income Retained Earnings

Noncontrolling

Comprehensive

Balance at December 31, 2022

Net income attributable to Ardent Health Partners, Inc.

— — — — 4,143 — 4,143

Net income attributable to noncontrolling interests — — — — — 20,427 20,427

Net loss attributable to redeemable noncontrolling interests ( 788 ) — — — — — —

Net income attributable to

Ardent Health Partners, Inc.

Net income attributable to

noncontrolling interests

Net loss attributable to

redeemable noncontrolling

Other comprehensive loss

Distributions to noncontrolling interests — — — — — ( 12,555 ) ( 12,555 )

Distributions to

noncontrolling interests

Vesting of Class C Units

Balance at March 31, 2023

Net income attributable to Ardent Health Partners, Inc.

— — — — 33,076 — 33,076

Net income attributable to noncontrolling interests — — — — — 23,600 23,600

Net loss attributable to redeemable noncontrolling interests ( 970 ) — — — — — —

Net income attributable to

Ardent Health Partners, Inc.

Net income attributable to

noncontrolling interests

Net loss attributable to

redeemable noncontrolling

Other comprehensive income

Distributions to noncontrolling interests — — — — — ( 19,254 ) ( 19,254 )

Redemption of equity attributable to noncontrolling interests — — ( 14,990 ) — — ( 11,034 ) ( 26,024 )

Distributions to

noncontrolling interests

Redemption of equity

attributable to noncontrolling

Vesting of Class C Units

Balance at June 30, 2023

Net income attributable to

Ardent Health Partners, Inc.

Net income attributable to

noncontrolling interests .........

Net income attributable to

redeemable noncontrolling

interests ..................................

Other comprehensive income

Distributions to

noncontrolling interests .........

Vesting of Class C Units .......

Balance at September 30, 2023 ..

(*) See Note 1 , Description of the Business and Basis of Presentation - Initial Public Offering and Corporate Conversion, for further discussion.

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Con tents

The accompanying notes are an integral part of these condensed consolidated financial statements.

ARDENT HEALTH PARTNERS, INC.

3 unchanged sentences

Ardent Health Partners, Inc.

Noncontrolling Interests

Redeemable Noncontrolling Interests Common Units Accumulated Other Comprehensive Income Retained Earnings

Noncontrolling

Comprehensive

Balance at December 31, 2023

Net income attributable to Ardent Health Partners, Inc.

— — — — 27,047 — 27,047

Net income attributable to noncontrolling interests — — — — — 21,089 21,089

Net loss attributable to redeemable noncontrolling interests ( 2,285 ) — — — — — —

Net income attributable to

Ardent Health Partners, Inc.

Net income attributable to

noncontrolling interests

Net loss attributable to

redeemable noncontrolling

Other comprehensive income

Distributions to noncontrolling interests — — — — — ( 14,256 ) ( 14,256 )

Distributions to

noncontrolling interests

Vesting of Class C Units

Balance at March 31, 2024

Net income attributable to Ardent Health Partners, Inc.

— — — — 42,770 — 42,770

Net income attributable to noncontrolling interests — — — — — 25,540 25,540

Net loss attributable to redeemable noncontrolling interests ( 1,349 ) — — — — — —

Net income attributable to

Ardent Health Partners, Inc.

Net income attributable to

noncontrolling interests

Net loss attributable to

redeemable noncontrolling

Other comprehensive loss

Distributions to noncontrolling interests — — — — — ( 17,401 ) ( 17,401 )

Distributions to

noncontrolling interests

Vesting of Class C Units

Balance at June 30, 2024

Net income attributable to

Ardent Health Partners, Inc.

Net income attributable to

noncontrolling interests

Net loss attributable to

redeemable noncontrolling

Other comprehensive loss

Issuance of common stock in

connection with initial public

offering, net of underwriting

discounts and commissions

and other offering costs

Conversion of member units

to common stock

( 485,909,683 )

Distributions to

noncontrolling interests

Vesting of restricted stock

Tax withholding on vesting

of restricted stock unit

Forfeiture of restricted stock

Equity-based compensation

Balance at September 30, 2024

(*) See Note 1 , Description of the Business and Basis of Presentation - Initial Public Offering and Corporate Conversion, for further discussion.

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Con tents

ARDENT HEALTH PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Description of the Business and Basis of Presentation

2 unchanged sentences

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.

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.

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 these notes to the unaudited condensed consolidated financial statements, refer to Ardent Health Partners, LLC and its affiliates and, subsequent to July 16, 2024, Ardent Health Partners, Inc.

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

“Ardent,” the “Company,” “we,” “our” and “us,” as used in these notes to the unaudited condensed consolidated financial

statements, refer to Ardent Health Partners, LLC and its affiliates and, subsequent to July 16, 2024, Ardent Health Partners,

and its affiliates, unless stated otherwise or indicated by context.

The term “affiliates” includes direct and indirect subsidiaries of Ardent and partnerships and joint ventures in which such subsidiaries are equity owners.

At June 30, 2024, the Company operated 30 acute care hospitals in six states, including two rehabilitation hospitals and two surgical hospitals.

The term “affiliates” includes direct and indirect

subsidiaries of Ardent and partnerships and joint ventures in which such subsidiaries are equity owners.

At September 30,

2024 , the Company operated 30 acute care hospitals in six states , including two rehabilitation hospitals and two surgical

Basis of Presentation

1 unchanged sentence

generally accepted accounting principles (“GAAP”) for interim financial information.

Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.

In the opinion of management, all adjustments, which consist of normal recurring adjustments, and disclosures considered necessary for a fair presentation have been included.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements.

Actual results could differ from these estimates under different assumptions or conditions.

The financial statements include the unaudited condensed consolidated balance sheets, income statements, comprehensive income statements, statements of cash flows and statements of changes in equity of the Company and its affiliates, which are controlled by the Company through the Company’s direct or indirect ownership of a majority equity interest and rights granted to the Company through certain variable interests.

All intercompany balances and transactions have been eliminated in consolidation.

Certain information and disclosures normally included in annual financial statements presented in accordance with GAAP have been omitted pursuant to rules and regulations of the Securities and Exchange Commission ("SEC").

Accordingly, these unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company's audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023 included in the Company's final prospectus, dated July 17, 2024, filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on July 18, 2024 (the "Final Prospectus") in connection with the Company's initial public offering.

Accordingly, they do not include all of

the information and notes required by GAAP for complete financial statements.

In the opinion of management, all

adjustments, which consist of normal recurring adjustments, and disclosures considered necessary for a fair presentation have

been included.

The preparation of financial statements in conformity with GAAP requires management to make estimates and

assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements.

Actual results

could differ from these estimates under different assumptions or conditions.

The financial statements include the unaudited condensed consolidated balance sheets, income statements, comprehensive

income statements, statements of cash flows and statements of changes in equity of the Company and its affiliates, which are

controlled by the Company through the Company’s direct or indirect ownership of a majority equity interest and rights

granted to the Company through certain variable interests.

All intercompany balances and transactions have been eliminated

in consolidation.

Certain information and disclosures normally included in annual financial statements presented in accordance with GAAP

have been omitted pursuant to rules and regulations of the Securities and Exchange Commission ("SEC").

these unaudited condensed consolidated financial statements and related notes should be read in conjunction with the

Company's audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023

included in the Company's final prospectus, dated July 17, 2024, filed with the SEC pursuant to Rule 424(b) under the

Securities Act of 1933, as amended, on July 18, 2024 in connection with the Company's initial public offering.

Initial Public Offering and Corporate Conversion

On July 19, 2024, the Company completed an initial public offering of 12,000,000 shares of its common stock at a public offering price of $ 16.00 per share (the "IPO") for aggregate gross proceeds of $ 192.0 million and net proceeds of approximately $ 181.4 million, after deducting underwriting discounts and commissions of approximately $ 10.6 million.

The Company provided the underwriters with an option to purchase up to an additional 1,800,000 shares of common stock of the Company, which was fully exercised by the underwriters, and, on July 30, 2024, the Company issued 1,800,000 additional shares of common stock at $ 16.00 per share for additional net proceeds of approximately $ 27.2 million, after deducting

Table of Con tents

On July 19, 2024, the Company completed an initial public offering of 12,000,000 shares of its common stock at a public

offering price of $ 16.00 per share (the "IPO") for aggregate gross proceeds of $ 192.0 million and net proceeds of

approximately $ 181.4 million , after deducting underwriting discounts and commissions of approximately $ 10.6 million .

Company provided the underwriters with an option to purchase up to an additional 1,800,000 shares of common stock of the

Company, which was fully exercised by the underwriters, and, on July 30, 2024, the Company issued 1,800,000 additional

shares of common stock at $ 16.00 per share for additional net proceeds of approximately $ 27.2 million , after deducting

underwriting discounts and commissions of approximately $ 1.6 million .

The Company’s common stock is listed on the New York Stock Exchange under the symbol “ARDT”.

On July 17, 2024, in connection with the IPO and immediately prior to the effectiveness of the Company's IPO registration statement on Form S-1, the Company converted from a Delaware limited liability company into a Delaware corporation by means of a statutory conversion (the “Corporate Conversion”) and changed its name to Ardent Health Partners, Inc.

As a result of the Corporate Conversion, the outstanding limited liability company membership units and vested profits interest units were converted into 120,937,099 shares of common stock and outstanding unvested profits interest units were converted into 2,848,027 shares of restricted common stock.

Immediately following the Corporate Conversion, ALH Holdings, LLC, a subsidiary of Ventas, Inc.

("Ventas"), a common unit holder that beneficially owned a percentage of the Company’s outstanding membership interests and maintained a seat on the Company’s board of managers, making Ventas a related party, contributed all of its outstanding common stock in AHP Health Partners, Inc.

("AHP Health Partners"), a direct subsidiary of the Company, to Ardent Health Partners, Inc.

in exchange for 5,178,202 shares of common stock of Ardent Health Partners, Inc.

The Company’s common stock is listed on the New

York Stock Exchange under the symbol “ARDT”.

On July 17, 2024, in connection with the IPO and immediately prior to the effectiveness of the Company's registration

statement on Form S-1, the Company converted from a Delaware limited liability company into a Delaware corporation by

means of a statutory conversion (the “Corporate Conversion”) and changed its name to Ardent Health Partners, Inc.

result of the Corporate Conversion, the outstanding limited liability company membership units and vested profits interest

units were converted into 120,937,099 shares of common stock and outstanding unvested profits interest units were converted

into 2,848,027 shares of restricted common stock.

Immediately following the Corporate Conversion, ALH Holdings, LLC, a

subsidiary of Ventas, Inc.

("Ventas"), a common unit holder that beneficially owned a percentage of the Company’s

outstanding membership interests and maintained a seat on the Company’s board of managers, making Ventas a related party,

contributed all of its outstanding common stock in AHP Health Partners, Inc.

("AHP Health Partners"), a direct subsidiary of

the Company, to Ardent Health Partners, Inc.

in exchange for 5,178,202 shares of common stock of Ardent Health Partners,

(the "ALH Contribution").

As a result of the ALH Contribution, AHP Health Partners is a wholly-owned subsidiary of Ardent Health Partners, Inc.

The Corporate Conversion and the ALH Contribution have been retrospectively applied to prior periods herein for the purposes of calculating basic and diluted net income per share.

The Company’s certificate of incorporation authorizes 750,000,000 shares of common stock and 50,000,000 shares of preferred stock, each with a $ 0.01 par value per share.

As a result of the ALH Contribution, AHP Health Partners is a wholly-owned subsidiary of

Ardent Health Partners, Inc.

The Corporate Conversion and the ALH Contribution have been retrospectively applied to prior

periods herein for the purposes of calculating basic and diluted net income per share.

The Company’s certificate of

incorporation authorizes 750,000,000 shares of common stock and 50,000,000 shares of preferred stock, each with a $ 0.01

par value per share.

Cybersecurity Incident

In November 2023, the Company determined that a ransomware cybersecurity incident had impacted and disrupted a number of the Company’s operational and information technology systems (the “Cybersecurity Incident”).

During this time, the Company’s hospitals remained operational and continued to deliver patient care utilizing established downtime procedures.

The Company immediately suspended user access to impacted information technology applications, executed cybersecurity protection protocols, and took steps to restrict further unauthorized activity.

Additionally, because of the time taken to contain and remediate the Cybersecurity Incident, online electronic billing systems were not functioning at their full capacities and certain billing, reimbursement and payment functions were delayed, which had an adverse impact on the Company’s results of operations and cash flows for 2023.

While the Company’s hospitals continued to deliver patient care at varying levels during the disruption and remediation periods and the Company’s business is no longer materially disrupted, the Company has incurred, and will continue to incur, certain expenses related to the Cybersecurity Incident, including expenses to respond to, remediate and investigate the Cybersecurity Incident.

The full scope of the costs and related impacts of the Cybersecurity Incident, including any future impact on our financial condition and results of operations, as well as the extent to which these costs will be offset by our cybersecurity insurance, has not been determined.

In November 2023, the Company determined that a ransomware cybersecurity incident had impacted and disrupted a number

of the Company’s operational and information technology systems (the “Cybersecurity Incident”).

During this time, the

Company’s hospitals remained operational and continued to deliver patient care utilizing established downtime procedures.

The Company immediately suspended user access to impacted information technology applications, executed cybersecurity

protection protocols, and took steps to restrict further unauthorized activity.

Additionally, because of the time taken to contain

and remediate the Cybersecurity Incident, online electronic billing systems were not functioning at their full capacities and

certain billing, reimbursement and payment functions were delayed, which had an adverse impact on the Company’s results

of operations and cash flows for 2023 and the first quarter of 2024.

While the Company’s hospitals continued to deliver patient care at varying levels during the disruption and remediation

periods and the Company’s business is no longer materially disrupted, the Company has incurred, and will continue to incur,

certain expenses related to the Cybersecurity Incident, including expenses related to the settlement of the consolidated class

action lawsuit related to the Cybersecurity Incident.

The Company continues to work with its various insurance carriers to

obtain reimbursement for its costs and liabilities incurred due to the Cybersecurity Incident.

Pure Health Equity Investment

On May 1, 2023, an affiliate of Pure Health Holding PJSC (“Pure Health”) purchased a minority interest in the Company from the unit holders at the time.

In connection with Pure Health’s investment, unit holders were eligible to exercise tag-along rights to sell a proportionate share of their individual equity ownership interest in Ardent Health Partners, LLC and AHP Health Partners, the Company's direct subsidiary.

Ventas, a common unit holder that beneficially owned a percentage of the Company's outstanding membership interests and maintained a seat on the Company's board of managers, making Ventas a related party, exercised its tag-along right to sell its proportionate share of ownership interest in both Ardent Health Partners, LLC and AHP Health Partners.

To fulfill Ventas’ right to sell its proportionate share of noncontrolling ownership interest in AHP Health Partners, the Company exercised its right to repurchase those shares from Ventas for $ 26.0 million concurrent with Pure Health’s purchase of a minority interest in the Company.

The carrying value of the noncontrolling interest was adjusted proportionate to the shares repurchased to reflect the change in ownership of AHP Health Partners, with the difference between the fair value of the consideration paid and the amount by which the noncontrolling interest was adjusted recognized in equity attributable to Ardent Health Partners, LLC.

As of July 30, 2024, following the consummation of the IPO and the underwriters’ exercise of their option to purchase additional shares, Pure Health and Ventas beneficially owned approximately 21.2 % and 6.5 %, respectively, of the Company’s outstanding common stock.

Table of Con tents

On May 1, 2023, an affiliate of Pure Health Holding PJSC (“Pure Health”) purchased a minority interest in the Company

from the unit holders at the time.

In connection with Pure Health’s investment, unit holders were eligible to exercise tag-

along rights to sell a proportionate share of their individual equity ownership interest in Ardent Health Partners, LLC and

AHP Health Partners, the Company's direct subsidiary.

Ventas exercised its tag-along right to sell its proportionate share of

ownership interest in both Ardent Health Partners, LLC and AHP Health Partners.

To fulfill Ventas’ right to sell its

proportionate share of noncontrolling ownership interest in AHP Health Partners, the Company exercised its right to

repurchase those shares from Ventas for $ 26.0 million concurrent with Pure Health’s purchase of a minority interest in the

The carrying value of the noncontrolling interest was adjusted proportionate to the shares repurchased to reflect

the change in ownership of AHP Health Partners, with the difference between the fair value of the consideration paid and the

amount by which the noncontrolling interest was adjusted recognized in equity attributable to Ardent Health Partners, LLC.

As of September 30, 2024 , Pure Health and Ventas beneficially owned approximately 21.2 % and 6.5 % , respectively, of the

Company’s outstanding common stock .

General and Administrative Costs

The majority of the Company’s expenses are “cost of revenue” items.

Costs that could be classified as general and administrative by the Company would include its corporate office costs, which were $ 29.1 million and $ 26.7 million for the three months June 30, 2024 and 2023, respectively, and $ 62.0 million and $ 53.2 million for the six months ended June 30, 2024 and 2023, respectively.

The majority o f the Company’s expenses are “cost of revenue” items.

Costs that could be classified as general and

administrative by the Company would include its corporate office costs, which were $ 33.7 million and $ 29.0 million for the

three months ended September 30, 2024 and 2023 , respectively, and $ 95.7 million and $ 82.2 million for the nine months

ended September 30, 2024 and 2023 , respectively.

Summary of Significant Accounting Policies

COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of Coronavirus Disease 2019 (“COVID-19”), a disease caused by a novel strain of coronavirus, a global pandemic.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted by the federal government.

Among other provisions, the CARES Act authorized relief funding to healthcare providers through the Public Health and Social Services Emergency Fund (“Provider Relief Fund”).

The CARES Act also expanded the Medicare Accelerated and Advance Payment Program through which eligible providers could request accelerated Medicare payments to be repaid through withholdings against future Medicare fee-for-service payments.

Distributions from the Provider Relief Fund were intended to reimburse healthcare providers for lost revenue and increased expenses related to the pandemic and were not subject to repayment, provided recipients attested to and complied with applicable terms and conditions set forth by legislation.

Distributions provided by the Provider Relief Fund were accounted for as government grants and were recognized in the unaudited condensed consolidated income statements once the grant was received and there was reasonable assurance that the applicable terms and conditions required to retain the distributions were met.

During the three and six months ended June 30, 2024, the Company received and recognized no cash distributions from the Provider Relief Fund and other state and local programs.

During the three and six months ended June 30, 2023, the Company received $ 8.3 million and $ 8.5 million, respectively, in cash distributions from the Provider Relief Fund and other state and local programs and recognized the distributions as government stimulus income, a reduction of operating expenses, on its unaudited condensed consolidated income statements.

Issuance of new guidance, as well as government compliance audits, may result in changes to management’s estimate of government stimulus income and, in certain cases, may result in derecognition of amounts previously recognized and repayment of such amounts.

Since 2020, the Company has received and recognized $ 366.4 million of government stimulus income.

Pursuant to Accounting Standards Update (“ASU”) 2021-10, Disclosures by Business Entities about Government Assistance , as an accounting policy election, the Company has utilized International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance, by analogy to recognize funds received under the CARES Act from the Provider Relief Fund as revenue, given no direct authoritative guidance is available to for-profit organizations to recognize revenue for government contributions and grants.

CARES Act revenue may be subject to future adjustments based on future changes to statutes.

In March 2020, the World Health Organization declared the outbreak of Coronavirus Disease 2019 (“COVID-19”), a disease

caused by a novel strain of coronavirus, a global pandemic.

On March 27, 2020, the Coronavirus Aid, Relief and Economic

Security Act (“CARES Act”) was enacted by the federal government.

Among other provisions, the CARES Act authorized

relief funding to healthcare providers through the Public Health and Social Services Emergency Fund (“Provider Relief

The CARES Act also expanded the Medicare Accelerated and Advance Payment Program through which eligible

providers could request accelerated Medicare payments to be repaid through withholdings against future Medicare fee-for-

service payments.

Distributions from the Provider Relief Fund were intended to reimburse healthcare providers for lost

revenue and increased expenses related to the pandemic and were not subject to repayment, provided recipients attested to

and complied with applicable terms and conditions set forth by legislation.

Distributions provided by the Provider Relief

Fund were accounted for as government grants and were recognized in the unaudited condensed consolidated income

statements once the grant was received and there was reasonable assurance that the applicable terms and conditions required

to retain the distributions were met.

During the three and nine months ended September 30, 2024 , the Company did not receive or recognize any cash

distributions from the Provider Relief Fund and other state and local programs .

During the three and nine months ended

September 30, 2023 , the Company receiv ed $ 0.0 million and $ 8.5 million , resp ectively, in cash distributions from the

Provider Relief Fund and other state and local programs and recognized the distributions as government stimulus income, a

reduction of operating expenses, on its unaudited condensed consolidated income statements.

Government compliance audits

may result in derecognition of amounts previously recognized and repayment of such amounts.

Since 2020, the Company has

received and recognized $ 366.4 million of government stimulus income.

Pursuant to Accounting Standards Update (“ASU”)

2021-10, Disclosures by Business Entities about Government Assistance , as an accounting policy election, the Company has

utilized International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosure of Government

Assistance, by analogy to recognize funds received under the CARES Act from the Provider Relief Fund as revenue, given no

direct authoritative guidance is available to for-profit organizations to recognize revenue for government contributions and

CARES Act revenue may be subject to future adjustments based o n co mpliance audits.

Adoption of Recently Issued Accounting Standards

1 unchanged sentence

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

ASU 2020-04 provides optional guidance for a limited period of time to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting and applies only to contracts, hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

ASU 2020-04 is effective as of March 12, 2020 through December 31, 2024.

Entities may adopt ASU 2020-04 as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued.

ASU 2020-04 provides

optional guidance for a limited period of time to ease the potential burden in accounting for or recognizing the effects of

reference rate reform on financial reporting and applies only to contracts, hedging relationships, and other transactions that

reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued because of

reference rate reform.

ASU 2020-04 became effective as of March 12, 2020 and continues through December 31, 2024.

Entities may adopt ASU 2020-04 as of any date from the beginning of an interim period that includes or is subsequent to

March 12, 2020 or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to

the date that the financial statements are available to be issued.

The Company adopted the standard as of January 1, 2023.

The adoption of this standard had no material impact on the Company’s unaudited condensed consolidated financial statements and notes.

Table of Con tents

adoption of this standard had no material impact on the Company’s unaudited condensed consolidated financial statements

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which expands disclosures about reportable segments and provides requirements for more detailed reporting of a segment’s expenses that are regularly provided to the Chief Operating Decision Maker ("CODM") and included within each reported measure of a segment’s profit or loss.

Additionally, ASU 2023-07 requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning one year later.

Early adoption is permitted, and amendments must be applied retrospectively to all prior periods presented.

The adoption of this guidance will not impact the Company’s consolidated results of operations, financial position or cash flows.

The Company is currently evaluating the standard to determine its impact on the Company’s disclosures.

Improvements to Reportable Segment

Disclosures ("ASU 2023-07"), which expands disclosures about reportable segments and provides requirements for more

detailed reporting of a segment’s expenses that are regularly provided to the Chief Operating Decision Maker ("CODM") and

included within each reported measure of a segment’s profit or loss.

Additionally, ASU 2023-07 requires all segment profit or

loss and assets disclosures to be provided on an annual and interim basis.

ASU 2023-07 is effective for fiscal years beginning

after December 15, 2023 and interim periods within fiscal years beginning one year later.

Early adoption is permitted, and

amendments must be applied retrospectively to all prior periods presented.

The adoption of this guidance will not impact the

Company’s consolidated results of operations, financial position or cash flows.

The Company is currently evaluating the

standard to determine its impact on the Company’s disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires a public business entity to disclose specific categories in its annual effective tax rate reconciliation and provide disaggregated information about significant reconciling items by jurisdiction and by nature.

ASU 2023-09 also requires entities to disclose their income tax payments (net of refunds) to international, federal, and state and local jurisdictions and includes several other changes to income tax disclosure requirements.

This standard is effective for annual periods beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively.

The adoption of this guidance will not affect the Company’s consolidated results of operations, financial position or cash flows.

The Company is currently evaluating the standard to determine its impact on the Company’s disclosures.

Improvements to Income Tax Disclosures

("ASU 2023-09"), which requires a public business entity to disclose specific categories in its annual effective tax rate

reconciliation and provide disaggregated information about significant reconciling items by jurisdiction and by nature.

2023-09 also requires entities to disclose their income tax payments (net of refunds) to international, federal, and state and

local jurisdictions and includes several other changes to income tax disclosure requirements.

This standard is effective for

annual periods beginning after December 15, 2024, and requires prospective application with the option to apply it

retrospectively.

The adoption of this guidance will not affect the Company’s consolidated results of operations, financial

position or cash flows.

The Company is currently evaluating the standard to determine its impact on the Company’s

Variable Interest Entities

GAAP requires variable interest entities (“VIEs”) to be consolidated if an entity’s interest in the VIE is a controlling financial interest in accordance with ASC 810, Consolidation .

Under the variable interest model, a controlling financial interest is determined based on which entity, if any, has (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb the losses, or the right to receive benefits, from the VIE that could potentially be significant to the VIE.

The Company performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE could cause the Company’s consolidation conclusion to change.

The consolidation status of the VIEs with which the Company is involved may change as a result of such reassessments.

Changes in consolidation status are applied prospectively.

The Company, through its wholly-owned subsidiaries, owns majority interests in certain limited liability companies (“LLCs”), with each LLC owning and operating one or more hospitals.

The noncontrolling interest is typically owned by a not-for-profit medical system, university, academic medical center or foundation or combination thereof (individually or collectively referred to as “minority member”).

The employees that work for the LLC and the related hospital(s) are employees of the Company, and the Company manages the day-to-day operations of the LLC and the hospital(s) pursuant to a management services agreement (“MSA”).

GAAP requires variable interest entities (“VIEs”) to be consolidated if an entity’s interest in the VIE is a controlling financial

interest in accordance with ASC 810, Consolidation .

Under the variable interest model, a controlling financial interest is

determined based on which entity, if any, has (i) the power to direct the activities of the VIE that most significantly impact

the VIE’s economic performance and (ii) the obligation to absorb the losses, or the right to receive benefits, from the VIE that

could potentially be significant to the VIE.

The Company performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s

involvement with a VIE could cause the Company’s consolidation conclusion to change.

The consolidation status of the VIEs

with which the Company is involved may change as a result of such reassessments.

Changes in consolidation status are

applied prospectively.

The Company, through its wholly-owned subsidiaries, owns majority interests in certain limited liability companies

(“LLCs”), with each LLC owning and operating one or more hospitals.

The noncontrolling interest is typically owned by a

not-for-profit medical system, university, academic medical center or foundation or combination thereof (individually or

collectively referred to as “minority member”).

The employees that work for the LLC and the related hospital(s) are

employees of the Company, and the Company manages the day-to-day operations of the LLC and the hospital(s) pursuant to

a management services agreement (“MSA”).

The LLCs are VIEs due to their structure as LLCs and the control that resides with the Company through the MSA.

The Company consolidates each of these LLCs as it is considered the primary beneficiary due to the MSA providing the Company the right to direct the day-to-day operating and capital activities of the LLC and the respective hospital(s) that most significantly impact the LLC’s economic performance.

Additionally, the Company would absorb a majority of the entity’s expected losses, receive a majority of the entity’s expected residual returns, or both, as a result of its majority ownership, contractual or other financial interests in the entity.

The MSAs are subject to termination only by mutual agreement of the Company and minority member, except in the case of gross negligence, fraud or bankruptcy of the Company, in which case the minority member can force termination of the MSA.

The governance rights of the minority members are restricted to those that protect their financial interests and do not preclude consolidation of the LLCs.

The rights of minority members generally are limited to the right to approve the issuance of new ownership interests, calls for additional cash contributions, the acquisition or divestiture of significant assets and the incurrence of debt in excess of levels not expected to be incurred in the normal course of business.

Table of Con tents

All of the Company’s VIEs meet the definition of a business, and the Company holds a majority of their issued voting equity interest.

Their assets are not required to be used only for the settlement of VIE obligations as the Company has the ability to direct the use of the VIE assets through its joint venture and cash management agreements.

As of June 30, 2024 and December 31, 2023, nine of the Company’s hospitals were owned and operated through LLCs that have been determined to be VIEs and were consolidated by the Company.

Consolidated assets at June 30, 2024 and December 31, 2023 included total assets of VIEs equal to $ 1.2 billion.

The Company’s VIEs do not have creditors that have recourse to the Company.

As the structure and nature of business are very similar for each of the LLCs, they are discussed and presented herein on a combined basis.

The total liabilities of VIEs included in the Company’s unaudited condensed consolidated balance sheets are shown below (in thousands):

June 30, 2024 December 31, 2023

Company consolidates each of these LLCs as it is considered the primary beneficiary due to the MSA providing the

Company the right to direct the day-to-day operating and capital activities of the LLC and the respective hospital(s) that most

significantly impact the LLC’s economic performance.

Additionally, the Company would absorb a majority of the entity’s

expected losses, receive a majority of the entity’s expected residual returns, or both, as a result of its majority ownership,

contractual or other financial interests in the entity.

The MSAs are subject to termination only by mutual agreement of the

Company and minority member, except in the case of gross negligence, fraud or bankruptcy of the Company, in which case

the minority member can force termination of the MSA.

The governance rights of the minority members are restricted to those that protect their financial interests and do not preclude

consolidation of the LLCs.

The rights of minority members generally are limited to such items as the right to approve the

issuance of new ownership interests, calls for additional cash contributions, the acquisition or divestiture of significant assets

and the incurrence of debt in excess of levels not expected to be incurred in the normal course of business.

All of the Company’s VIEs meet the definition of a business, and the Company holds a majority of their issued voting equity

Their assets are not required to be used only for the settlement of VIE obligations as the Company has the ability to

direct the use of the VIE assets through its joint venture and cash management agreements.

As of September 30, 2024 and December 31, 2023 , nine of the Company’s hospitals were owned and operated through LLCs

that have been determined to be VIEs and were consolidated by the Company.

Consolidated assets at September 30, 2024 and

December 31, 2023 included total assets of VIEs equal to $ 1.2 billion .

The Company ’ s VIEs do not have creditors that have

recourse to the Company.

As the structure and nature of business are very similar for each of the LLCs, they are discussed

and presented herein on a combined basis.

The total liabilities of VIEs included in the Company’s unaudited condensed consolidated balance sheets are shown below (in

September 30, 2024

December 31, 2023

Current liabilities

10 unchanged sentences

Total liabilities

Income from operations before income taxes attributable to VIEs was $ 76.7 million and $ 72.2 million for the three months ended June 30, 2024 and 2023, respectively.

Income from operations before income taxes attributable to VIEs was $ 138.4 million and $ 138.1 million for the six months ended June 30, 2024 and 2023, respectively.

Income from operations before income taxes attributable to VIEs was $ 68.6 million and $ 60.3 million for the three months

ended September 30, 2024 and 2023 , respectively.

Income from operations before income taxes attributable to VIEs was

$ 207.0 million and $ 198.4 million for the nine months ended September 30, 2024 and 2023 , respectively.

Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes.

On an ongoing basis, the Company evaluates its estimates.

The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates.

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments

that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes.

an ongoing basis, the Company evaluates its estimates.

The Company bases its estimates on historical experience and on

various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for

making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

results may differ from these estimates.

Deferred Offering Costs

Deferred offering costs consist primarily of legal and accounting fees, which are direct and incremental fees related to the IPO.

The deferred offering costs will be offset against the IPO proceeds, which will be recorded in the third quarter of 2024.

As of June 30, 2024, the Company had incurred approximately $ 7.6 million in deferred offering costs related to the IPO.

Due to the Company’s closure of the IPO on July 19, 2024, the deferred offering costs were reclassified from other assets to other current assets on the condensed consolidated balance sheet.

Deferred offering costs consist primarily of legal and accounting fees, which are direct and incremental fees related to equity

The Company capitalizes these costs until equity financings are consummated, at which time the costs are

recorded against the gross proceeds of the offering.

Upon receipt of the IPO proceeds during the current period, deferred

offering costs were recorded against the IPO proceeds within additional paid-in capital on the Company's condensed

consolidated balance sheet as of September 30, 2024 .

Revenue Recognition

The Company’s revenue generally relates to contracts with patients in which its performance obligations are to provide healthcare services to the patients.

The Company’s revenue generally relates to contracts with patients in which its performance obligations are to provide

healthcare services to the patients.

Revenue is recorded during the period the Company’s obligations to provide healthcare

Table of Con tents

services are satisfied.

Revenue for performance obligations satisfied over time is recognized based on charges incurred in relation to total expected charges.

The Company’s performance obligations for inpatient services are generally satisfied over periods that average approximately five days.

The Company’s performance obligations for outpatient services are generally satisfied over a period of less than one day.

As the Company’s performance obligations relate to contracts with a duration of one year or less, the Company elected the optional exemption under ASC Topic 606, Revenue from Contracts with Customers , and, therefore, is not required to disclose the transaction price for the remaining performance obligations at the end of the reporting period or when the Company expects to recognize revenue.

Additionally, the Company is not required to adjust the consideration for the existence of a significant financing component when the period between the transfer of the services and the payment for such services is one year or less.

Contractual relationships with patients, in most cases, involve a third-party payor (Medicare, Medicaid and managed care health plans) and the transaction prices for services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans) the third-party payors.

The payment arrangements with third-party payors for the services provided to the related patients typically specify payments at amounts less than the Company’s standard charges.

The Company’s revenue is based upon the estimated amounts the Company expects to be entitled to receive from patients and third-party payors.

Estimates of contractual adjustments under managed care insurance plans are based upon the payment terms specified in the related contractual agreements.

Revenue related to uninsured patients and copayment and deductible amounts for patients who have healthcare coverage may have discounts applied (uninsured discounts and other discounts).

The Company also records estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenue at the estimated amounts expected to be collected.

Medicare and Medicaid regulations and various managed care contracts, under which the discounts from the Company’s standard charges must be calculated, are complex and are subject to interpretation and adjustment.

The Company estimates contractual adjustments on a payor-specific basis based on its interpretation of the applicable regulations or contract terms.

However, the necessity of the services authorized and provided, and resulting reimbursements, are often subject to interpretation.

Revenue for performance obligations satisfied over time is recognized based on charges incurred in

relation to total expected charges.

The Company’s performance obligations for inpatient services are generally satisfied over

periods that average approximately five days.

The Company’s performance obligations for outpatient services are generally

satisfied over a period of less than one day.

As the Company’s performance obligations relate to contracts with a duration of

one year or less, the Company elected the optional exemption under ASC Topic 606, Revenue from Contracts with

Customers , and, therefore, is not required to disclose the transaction price for the remaining performance obligations at the

end of the reporting period or when the Company expects to recognize revenue.

Additionally, the Company is not required to

adjust the consideration for the existence of a significant financing component when the period between the transfer of the

services and the payment for such services is one year or less.

Contractual relationships with patients, in most cases, involve a third-party payor (Medicare, Medicaid and managed care

health plans) and the transaction prices for services provided are dependent upon the terms provided by (Medicare and

Medicaid) or negotiated with (managed care health plans) the third-party payors.

The payment arrangements with third-party

payors for the services provided to the related patients typically specify payments at amounts less than the Company’s

standard charges.

The Company’s revenue is based upon the estimated amounts the Company expects to be entitled to receive from patients

and third-party payors.

Estimates of contractual adjustments under managed care insurance plans are based upon the payment

terms specified in the related contractual agreements.

Revenue related to uninsured patients and copayment and deductible

amounts for patients who have healthcare coverage may have discounts applied (uninsured discounts and other discounts).

The Company also records estimated implicit price concessions (based primarily on historical collection experience) related

to uninsured accounts to record self-pay revenue at the estimated amounts expected to be collected.

Medicare and Medicaid regulations and various managed care contracts, under which the discounts from the Company’s

standard charges must be calculated, are complex and are subject to interpretation and adjustment.

The Company estimates

contractual adjustments on a payor-specific basis based on its interpretation of the applicable regulations or contract terms.

However, the necessity of the services authorized and provided, and resulting reimbursements, are often subject to

interpretation.

These interpretations may result in payments that differ from the Company’s estimates.

Additionally, updated regulations and contract renegotiations occur frequently, necessitating continual review and assessment of the estimates by management.

Additionally, updated

regulations and contract renegotiations occur frequently, necessitating continual review and assessment of the estimates by

Laws and regulations governing Medicare and Medicaid programs are complex and subject to interpretation.

Estimated reimbursement amounts are adjusted in subsequent periods as cost reports are prepared and filed and as final settlements are determined (in relation to certain government programs, primarily Medicare, this is generally referred to as the “cost report” filing and settlement process).

Settlements under reimbursement agreements with third-party payors are estimated and recorded in the period in which the related services are rendered and are adjusted in future periods as final settlements are determined.

Final determination of amounts earned under the Medicare, Medicaid and other third-party payor programs often occurs in subsequent years because of audits by the programs, rights of appeal, and the application of technical provisions.

Settlements are considered in the recognition of net patient service revenue on an estimated basis in the period the related services are rendered, and such amounts are subsequently adjusted in future periods as adjustments become known or as years are no longer subject to such audits and reviews.

Differences between original estimates and subsequent revisions, including final settlements, are included in the results of operations of the period in which the revisions are made.

These adjustments resulted in changes to net patient service revenue of a decrease of $ 0.5 million and an increase of $ 2.2 million for the three months ended June 30, 2024 and 2023, respectively, and an increase to net patient service revenue of $ 0.0 million and $ 5.1 million for the six months ended June 30, 2024 and 2023, respectively.

At June 30, 2024 and December 31, 2023, the Company’s settlements under reimbursement agreements with third-party payors were a net payable of $ 14.4 million and $ 10.3 million, respectively, of which a receivable of $ 31.6 million and $ 34.4 million, respectively, was included in other current assets and a payable of $ 46.0 million and $ 44.7 million, respectively, was included in other accrued expenses and liabilities in the unaudited condensed consolidated balance sheets.

Final determination of amounts earned under prospective payment and other reimbursement activities is subject to review by appropriate governmental authorities or their agents.

In the opinion of the Company’s management, adequate provision has been made for any adjustments that may result from such reviews.

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Subsequent adjustments that are determined to be the result of an adverse change in the patient’s or the payor’s ability to pay are recognized as bad debt expense.

Bad debt expense for the three and six months ended June 30, 2024 and 2023 was not material to the Company.

Currently, several states utilize supplemental reimbursement programs for the purpose of providing reimbursement to providers to offset a portion of the cost of providing care to Medicaid and indigent patients.

These programs are designed with input from the Center for Medicare & Medicaid Services (“CMS”) and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers.

Under these supplemental programs, the Company recognizes revenue and related expenses in the period in which amounts are estimable and collection is reasonably assured.

reimbursement amounts are adjusted in subsequent periods as cost reports are prepared and filed and as final settlements are

determined (in relation to certain government programs, primarily Medicare, this is generally referred to as the “cost report”

filing and settlement process).

Settlements under reimbursement agreements with third-party payors are estimated and

recorded in the period in which the related services are rendered and are adjusted in future periods as final settlements are

Final determination of amounts earned under the Medicare, Medicaid and other third-party payor programs often

occurs in subsequent years because of audits by the programs, rights of appeal, and the application of technical provisions.

Settlements are considered in the recognition of net patient service revenue on an estimated basis in the period the related

services are rendered, and such amounts are subsequently adjusted in future periods as adjustments become known or as

years are no longer subject to such audits and reviews.

Differences between original estimates and subsequent revisions,

including final settlements, are included in the results of operations of the period in which the revisions are made.

adjustments resulted in changes to net patient service revenue of an increase of $ 4.9 million and $ 1.1 million for the three

months ended September 30, 2024 and 2023 , respectively, and an increase to net patient service revenue of $ 4.9 million and

$ 6.1 million for the nine months ended September 30, 2024 and 2023 , respectively.

At September 30, 2024 and December 31, 2023 , the Company’s settlements under reimbursement agreements with third-

party payors were a net payable of $ 2.9 million and $ 10.3 million , respectively, of which a receivable of $ 39.2 million and

$ 34.4 million , respectively, was included in other current assets and a payable of $ 42.1 million and $ 44.7 million ,

respectively, was included in other accrued expenses and liabilities in the unaudited condensed consolidated balance sheets.

Final determination of amounts earned under prospective payment and other reimbursement activities is subject to review by

appropriate governmental authorities or their agents.

In the opinion of the Company’s management, adequate provision has

been made for any adjustments that may result from such reviews.

Subsequent adjustments that are determined to be the result of an adverse change in the patient’s or the payor’s ability to pay

are recognized as bad debt expense.

Bad debt expense for the three and nine months ended September 30, 2024 and 2023 was

not material to the Company.

Currently, several states utilize supplemental reimbursement programs for the purpose of providing reimbursement to

providers to offset a portion of the cost of providing care to Medicaid and indigent patients.

These programs are designed

with input from the Center for Medicare & Medicaid Services (“CMS”) and are funded with a combination of state and

federal resources, including, in certain instances, fees or taxes levied on the providers.

Under these supplemental programs,

the Company recognizes revenue and related expenses in the period in which amounts are estimable and collection is

reasonably assured.

Reimbursement under these programs is reflected in total revenue.

Taxes or other program-related costs are reflected in other operating expenses.

Taxes or other program-related costs

are reflected in other operating expenses.

The Company’s total revenue is presented in the following table (dollars in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Amount % of Revenue Amount % of Revenue Amount % of Revenue Amount % of Revenue

$ 578,163 39.3 % $ 533,805 39.0 % $ 1,147,646 39.4 % $ 1,070,157 39.8 %

155,334 10.6 % 153,691 11.2 % 311,612 10.7 % 307,843 11.5 %

Three Months Ended September 30,

Nine Months Ended September 30,

Other managed care

634,476 43.1 % 582,169 42.5 % 1,247,593 42.9 % 1,126,162 41.9 %

Self-pay and other

77,914 5.3 % 74,017 5.5 % 155,132 5.4 % 134,577 5.1 %

Net patient service revenue

$ 1,445,887 98.3 % $ 1,343,682 98.2 % $ 2,861,983 98.4 % $ 2,638,739 98.3 %

Other revenue

25,033 1.7 % 25,052 1.8 % 47,983 1.6 % 46,983 1.7 %

Total revenue

$ 1,470,920 100.0 % $ 1,368,734 100.0 % $ 2,909,966 100.0 % $ 2,685,722 100.0 %

The Company provides care without charge to certain patients who qualify under the local charity care policy of the hospital where the patient receives services.

The Company estimates that its costs of care provided under its charity care programs approximated $ 13.8 million and $ 13.0 million for the three months ended June 30, 2024 and 2023, respectively.

The Company estimates that its costs of care provided under its charity care programs approximated $ 33.6 million and $ 25.6 million for the six months ended June 30, 2024 and 2023, respectively.

The Company does not report a charity care patient’s charges in revenue as it is the Company’s policy not to pursue collection of amounts related to these patients, and therefore contracts with these patients do not exist.

The Company’s management estimates its costs of care provided under its charity care programs utilizing a calculated ratio of costs to gross charges multiplied by the Company’s gross charity care charges provided.

The Company’s gross charity care charges include only services provided to patients who are unable to pay and qualify under the Company’s local charity care policies.

To the extent the Company receives reimbursement through the various governmental assistance programs in which it participates to subsidize its care of indigent patients, the Company does not include these patients’ charges in its cost of care provided under its charity care program.

Table of Con tents

The Company’s revenue is subject to potential regulatory and economic changes in certain states where the Company generates significant revenue.

The following is an analysis by state of revenue as a percentage of the Company’s total revenue for those states in which the Company generates significant revenue:

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

25.4 % 24.2 % 24.8 % 24.1 %

14.7 % 16.2 % 15.1 % 15.9 %

35.5 % 35.1 % 36.0 % 35.2 %

10.1 % 10.5 % 10.2 % 10.6 %

14.3 % 14.0 % 13.9 % 14.2 %

100.0 % 100.0 % 100.0 % 100.0 %

The Company provides care without charge to certain patients who qualify under the local charity care policy of the hospital

where the patient receives services.

The Company estimates that its costs of care provided under its charity care programs

approximated $ 8.2 million and $ 8.4 million for the three months ended September 30, 2024 and 2023 , respectively.

Company estimates that its costs of care provided under its charity care programs approximated $ 41.8 million and $ 34.0

million for the nine months ended September 30, 2024 and 2023 , respectively.

The Company does not report a charity care

patient’s charges in revenue as it is the Company’s policy not to pursue collection of amounts related to these patients, and

therefore contracts with these patients do not exist.

The Company’s management estimates its costs of care provided under its charity care programs utilizing a calculated ratio of

costs to gross charges multiplied by the Company’s gross charity care charges provided.

The Company’s gross charity care

charges include only services provided to patients who are unable to pay and qualify under the Company’s local charity care

To the extent the Company receives reimbursement through the various governmental assistance programs in which

it participates to subsidize its care of indigent patients, the Company does not include these patients’ charges in its cost of

care provided under its charity care program.

The Company’s revenue is subject to potential regulatory and economic changes in certain states where the Company

generates significant revenue.

The following is an analysis by state of revenue as a percentage of the Company’s total

revenue for those states in which the Company generates significant revenue:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Texas Waiver Program

Certain of the Company’s facilities receive supplemental Medicaid reimbursement, including reimbursement from programs supported by broad-based provider taxes to fund the non-federal share of Medicaid programs or fund indigent care within a state.

The State of Texas operates the Texas Health Care Transformation and Quality Improvement Program pursuant to a Medicaid waiver, the Texas Waiver Program (the “Program”), granted by Section 1115 of the Social Security Act.

The Program expands managed care programs in the state, provides funding for uncompensated care and supports various delivery system reform initiatives.

Certain of the Company’s facilities receive supplemental Medicaid reimbursement, including reimbursement from programs

supported by broad-based provider taxes to fund the non-federal share of Medicaid programs or fund indigent care within a

The State of Texas operates the Texas Health Care Transformation and Quality Improvement Program pursuant to a

Medicaid waiver, the Texas Waiver Program (the “Program”), granted by Section 1115 of the Social Security Act.

Program expands managed care programs in the state, provides funding for uncompensated care and supports various

delivery system reform initiatives.

On March 25, 2022, the Program was extended through September 2030;

however, certain delivery system reform initiatives within the Program operate under separate approval periods.

however, certain

delivery system reform initiatives within the Program operate under separate approval periods.

The timing, determination and basis of funding is specific to the Program’s various components.

For example, reimbursements associated with the Program’s uncompensated care component are determined based on a participating provider’s costs incurred with providing unreimbursed care to Medicaid and uninsured patients.

The Company accrues for estimated payments associated with the Program’s uncompensated care component to be received in the period in which the associated unreimbursed care is provided constrained to an amount such that a significant reversal of cumulative revenue is not probable in the future.

Payments associated with certain directed payment programs are contingent on a provider reporting and meeting certain pre-determined metrics and clinical outcomes and contributing to the non-federal share of the Program component via provider assessments.

The Company accrues directed payment program funding in the period in which metrics are expected to be achieved and collection is reasonably assured.

Management routinely monitors communications regarding the Program from the State of Texas and CMS to ensure there is no uncertainty about entitlement or collectability, such as disruption in state and federal funding.

reimbursements associated with the Program’s uncompensated care component are determined based on a participating

provider’s costs incurred with providing unreimbursed care to Medicaid and uninsured patients.

The Company accrues for

estimated payments associated with the Program’s uncompensated care component to be received in the period in which the

associated unreimbursed care is provided constrained to an amount such that a significant reversal of cumulative revenue is

not probable in the future.

Payments associated with certain directed payment programs are contingent on a provider

reporting and meeting certain pre-determined metrics and clinical outcomes and contributing to the non-federal share of the

Program component via provider assessments.

The Company accrues directed payment program funding in the period in

which metrics are expected to be achieved and collection is reasonably assured.

Management routinely monitors

communications regarding the Program from the State of Texas and CMS to ensure there is no uncertainty about entitlement

or collectability, such as disruption in state and federal funding.

Payments from the Program are received at different points of time during a funding year.

Differences between original estimates and subsequent revisions to the payments, including final settlements, represent changes in the estimate and are recognized in the period in which the revisions are made.

Subsequent adjustments to the payments received and the Company’s related estimates have historically been insignificant.

The Company recognized revenue of $ 58.2 million and $ 37.2 million for the three months ended June 30, 2024 and 2023, respectively, and $ 111.9 million and $ 78.7 million for the six months ended June 30, 2024 and 2023, respectively.

Additionally, the Company incurred costs related to provider assessments for the Program in the amounts of $ 20.8 million and $ 14.7 million for the three months ended June 30, 2024 and 2023, respectively, and $ 41.7 million and $ 30.1 million for the six months ended June 30, 2024 and 2023, respectively, which were included in other operating expenses on the unaudited condensed consolidated income statements.

Differences between original

estimates and subsequent revisions to the payments, including final settlements, represent changes in the estimate and are

recognized in the period in which the revisions are made.

Subsequent adjustments to the payments received and the

Company’s related estimates have historically been insignificant.

The Company recognized revenue of $ 54.0 million and

$ 68.6 million for the three months ended September 30, 2024 and 2023 , respectively, and $ 165.9 million and $ 147.3 million

for the nine months ended September 30, 2024 and 2023 , respectively.

Additionally, the Company incurred costs related to

provider assessments for the Program in the amounts of $ 15.1 million and $ 28.7 million for the three months ended

September 30, 2024 and 2023 , respectively, and $ 56.8 million and $ 58.8 million for the nine months ended September 30,

2024 and 2023 , respectively, which were included in other operating expenses on the unaudited condensed consolidated

income statements.

Fair Value of Financial Instruments

Cash and cash equivalents, accounts receivable, inventories, prepaid expenses, other current assets, accounts payable, accrued salaries and benefits, accrued interest and other accrued expenses and current liabilities (other than those pertaining to lease liabilities) are reflected in the accompanying unaudited condensed consolidated financial statements at amounts that approximate fair value because of the short-term nature of these instruments.

Cash and cash equivalents, accounts receivable, inventories, prepaid expenses, other current assets, accounts payable, accrued

salaries and benefits, accrued interest and other accrued expenses and current liabilities (other than those pertaining to lease

liabilities) are reflected in the accompanying unaudited condensed consolidated financial statements at amounts that

approximate fair value because of the short-term nature of these instruments.

The fair value of the Company’s revolving

Table of Con tents

credit facility also approximates its carrying value as it bears interest at current market rates.

Refer to Note 5, Interest Rate Swap Agreements, for discussion of the fair value measurement of the Company’s derivative instruments.

The carrying amounts and fair values of the Company’s senior secured term loan facility and its 5.75 % Senior Notes due 2029 (the “ 5.75 % Senior Notes”) were as follows (in thousands):

Carrying Amount Fair Value

June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

Refer to Note 5 , Interest Rate

Swap Agreements , for discussion of the fair value measurement of the Company ’ s derivative instruments.

The carrying amounts and fair values of the Company’s senior secured term loan facility and its 5.75 % Senior Notes due

2029 (the “ 5.75 % Senior Notes”) were as follows (in thousands):

Carrying Amount

September 30, 2024

December 31, 2023

September 30, 2024

December 31, 2023

Senior Secured Term Loan Facility

$ 773,168 $ 874,262 $ 774,135 $ 876,448

5.75 % Senior Notes

$ 299,551 $ 299,506 $ 283,076 $ 259,822

The estimated fair values of the Company’s senior secured term loan facility and the 5.75 % Senior Notes were based upon quoted market prices at that date and are categorized as Level 2 within the fair value hierarchy.

The estimated fair values of the Company’s senior secured term loan facility and the 5.75 % Senior Notes were based upon

quoted market prices at that date and are categorized as Level 2 within the fair value hierarchy.

Noncontrolling Interests

The financial statements include the financial position and results of operations of hospital and healthcare operations in which the Company owned less than 100% of the equity interests, but maintained a controlling interest during the presented periods.

The financial statements include the financial position and results of operations of hospital and healthcare operations in which

the Company owned less than 100% of the equity interests, but maintained a controlling interest during the presented periods.

Earnings or losses attributable to the noncontrolling interests are presented separately in the consolidated income statements.

In accordance with ASC 810, Consolidation , holders of noncontrolling interests are considered to be equity holders in the consolidated company, pursuant to which noncontrolling interests are classified as part of equity, unless the noncontrolling interests are redeemable.

Certain redemptive features associated with the noncontrolling interests for The University of Kansas Health System – St.

In accordance with ASC 810, Consolidation , holders of noncontrolling interests are considered to be equity holders in the

consolidated company, pursuant to which noncontrolling interests are classified as part of equity, unless the noncontrolling

interests are redeemable.

Certain redemptive features associated with the noncontrolling interests for The University of

Kansas Health System – St.

Francis Campus (“St.

Francis”) could require the Company to deliver cash if the redemptive features are exercised.

These redemptive features could be exercised upon, among other things, the Company’s exclusion or suspension from participation in any federal or state government healthcare payor program.

Therefore, the noncontrolling interests balance for St.

Francis is classified outside the permanent equity section of the Company’s unaudited condensed consolidated balance sheets.

Francis”) could require the Company to deliver cash if the redemptive

features are exercised.

These redemptive features could be exercised upon, among other things, the Company’s exclusion or

suspension from participation in any federal or state government healthcare payor program.

Therefore, the noncontrolling

interests balance for St.

Francis is classified outside the permanent equity section of the Company’s unaudited condensed

consolidated balance sheets.

The redeemable noncontrolling interests related to St.

Francis at June 30, 2024 and December 31, 2023 have not been subsequently measured at fair value since the acquisition date.

The noncontrolling interests are not currently redeemable and it is not probable that the noncontrolling interests will become redeemable as the possibility of the Company being excluded or suspended from participation in any federal or state government healthcare payor program is remote.

Francis at September 30, 2024 and December 31, 2023 have not been

subsequently measured at fair value since the acquisition date in 2017.

The noncontrolling interests are not currently

redeemable and it is not probable that the noncontrolling interests will become redeemable as the possibility of the Company

being excluded or suspended from participation in any federal or state government healthcare payor program is remote.

Earnings Per Share

Basic net income per share is computed by dividing net income available to common stockholders by the weighted-average common shares outstanding during the period.

Diluted net income per share takes into account the potential dilution that could occur if securities or other contracts to issue shares, such as stock options and unvested restricted stock units, were exercised and converted into shares.

Diluted net income per share is computed by dividing net income available to common stockholders by the weighted-average common shares outstanding during the period, increased by the number of additional shares that would have been outstanding if the potential shares had been issued and were dilutive.

Basic net income per share is computed by dividing net income available to common stockholders by the weighted-average

common shares outstanding during the period.

Diluted net income per share takes into account the potential dilution that

could occur if securities or other contracts to issue shares, such as stock options and unvested restricted stock units, were

exercised and converted into shares.

Diluted net income per share is computed by dividing net income available to common

stockholders by the weighted-average common shares outstanding during the period, increased by the number of additional

shares that would have been outstanding if the potential shares had been issued and were dilutive.

Segment Reporting

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healthcare services.

The healthcare services segment provides healthcare services primarily through its ownership and operation of hospitals, certain of which provide related healthcare services through physician practices, outpatient centers, and post-acute facilities.

The CODM is its President and Chief Executive Officer, who regularly reviews financial operating results on a consolidated basis for purposes of allocating resources and evaluating financial performance.

The Company’s CODM manages the operations on a consolidated basis to make decisions about overall company resource allocation and to assess overall company performance.

Table of Con tents

As of June 30, 2024 and December 31, 2023, all of the Company’s long-lived assets were located in the United States, and for the three and six months ended June 30, 2024 and 2023, all revenue was earned in the United States.

The healthcare services segment provides healthcare services

primarily through its ownership and operation of hospitals, certain of which provide related healthcare services through

physician practices, outpatient centers, and post-acute facilities.

The CODM is its President and Chief Executive Officer, who

regularly reviews financial operating results on a consolidated basis for purposes of allocating resources and evaluating

financial performance.

The Company’s CODM manages the operations on a consolidated basis to make decisions about

overall company resource allocation and to assess overall company performance.

As of September 30, 2024 and December 31, 2023 , all of the Company’s long-lived assets were located in the United States,

and for the three and nine months ended September 30, 2024 and 2023 , all revenue was earned in the United States.

Related Party Transactions

Effective August 4, 2015, Ventas acquired ownership of the Company’s real estate in exchange for a $ 1.4 billion payment from Ventas and the Company’s agreement to lease the acquired real estate back from Ventas (the “Ventas Master Lease”).

The Ventas Master Lease is a 20-year master lease agreement (with a renewal option for an additional 10 years) with certain subsidiaries of Ventas, pursuant to which the Company currently leases 10 of the Company’s hospitals.

The Ventas Master Lease includes an annual rent escalator equal to the lesser of four times the Consumer Price Index or 2.5 %.

In accordance with ASC 842, Leases (“ASC 842”), variable lease payments are excluded from the Company’s minimum rental payments used to determine the right-of-use assets and lease obligations and are recognized as expense when incurred.

The Ventas Master Lease includes a number of operating and financial restrictions on the Company.

Management believes it was in compliance with all financial covenants as of June 30, 2024 and December 31, 2023.

The Company recorded rent expense related to the Ventas Master Lease and other lease agreements with Ventas for certain medical office buildings of $ 37.0 million and $ 36.4 million for the three months ended June 30, 2024 and 2023, respectively, and $ 74.2 million and $ 72.5 million for the six months ended June 30, 2024 and 2023, respectively.

Effective August 4, 2015, Ventas acquired ownership of the Company’s real estate in exchange for a $ 1.4 billion payment

from Ventas and the Company’s agreement to lease the acquired real estate back from Ventas (the “Ventas Master Lease”).

The Ventas Master Lease is a 20 -year master lease agreement (with a renewal option for an additional 10 years ) with certain

subsidiaries of Ventas, pursuant to which the Company currently leases 10 of the Company’s hospitals.

The Ventas Master

Lease includes an annual rent escalator equal to the lesser of four times the Consumer Price Index or 2.5 % .

In accordance

with ASC 842, Leases (“ASC 842”), variable lease payments are excluded from the Company’s minimum rental payments

used to determine the right-of-use assets and lease obligations and are recognized as expense when incurred.

Master Lease includes a number of operating and financial restrictions on the Company.

Management believes it was in

compliance with all financial covenants as of September 30, 2024 and December 31, 2023 .

The Company recorded rent expense related to the Ventas Master Lease and other lease agreements with Ventas for certain

medical office buildings of $ 37.2 million a n d $ 36.4 million f or the three months ended September 30, 2024 and 2023 ,

respectively, and $ 111.4 million a nd $ 108.9 million f or the nine months ended September 30, 2024 and 2023 , respectively.

Long-Term Debt and Financing Matters

Long-term debt consists of the following (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024

December 31, 2023

Senior secured term loan facility

$ 773,168 $ 874,262

5.75 % Senior Notes

299,551 299,506

Finance leases

21,497 21,706

15,442 12,322

Deferred financing costs

( 16,970 ) ( 20,938 )

1,092,688 1,186,858

Less current maturities

( 10,725 ) ( 18,605 )

Long-term debt, less current maturities

$ 1,081,963 $ 1,168,253

As of June 30, 2024 and December 31, 2023, the senior secured term loan facility reflected an original issue discount (“OID”) of $ 4.3 million and $ 5.5 million, respectively.

As of June 30, 2024 and December 31, 2023, the 5.75 % Senior Notes balance reflected an OID of $ 0.4 million and $ 0.5 million, respectively.

As of September 30, 2024 and December 31, 2023 , the senior secured term loan facility reflected an original issue discount

(“OID”) of $ 4.0 million and $ 5.5 million , respectively.

As of September 30, 2024 and December 31, 2023 , the 5.75 % Senior

Notes balance reflected an OID of $ 0.4 million and $ 0.5 million , respectively .

Senior Secured Credit Facilities

On August 24, 2021, the Company entered into a credit agreement for its senior secured term loan facility (the "Term Loan B Facility"), which provides funding up to a principal amount of $ 900.0 million.

The Term Loan B Facility has a seven year maturity with principal due in consecutive equal quarterly installments of 0.25 % of the initial $ 900.0 million principal amount (subject to certain reductions from time to time as a result of the application of prepayments), with the remaining balance due upon maturity of the Term Loan B Facility.

The proceeds from the Term Loan B Facility were used to prepay in full the Company's $ 825.0 million senior secured term loan facility (the "2018 Term Loan B Facility"), including any accrued and unpaid interest, fees and other expenses related to the transaction.

Except as described herein, the terms of the Term Loan B Facility are substantially consistent with those of the 2018 Term Loan B Facility.

On June 8, 2023, the Company further amended and restated the Term Loan B Facility credit agreement to replace LIBOR with Term Secured Overnight Financing Rate ("SOFR") and Daily Simple SOFR (each as defined in the amended Term Loan B Facility credit agreement) as the reference interest rate effective June 30, 2023.

On June 26, 2024, the Company used cash on hand to prepay $ 100.0 million of the $ 877.5 million outstanding principal on the Term Loan B Facility;

no modification was made to the Term Loan B Facility credit agreement as a result of this prepayment.

Table of Con tents

Effective July 8, 2021, the Company entered into an amended and restated senior credit agreement for its $ 225.0 million senior secured asset based revolving credit facility (the “ABL Credit Agreement”).

The ABL Credit Agreement consisted of a $ 225.0 million senior secured asset-based revolving credit facility with a five-year maturity.

On April 21, 2023, the Company further amended and restated the ABL Credit Agreement to replace LIBOR with the Term SOFR and Daily Simple SOFR (each, as defined in the amended ABL Credit Agreement) as the reference interest rate.

On June 26, 2024, the Company further amended the ABL Credit Agreement to increase the revolving commitment to $ 325.0 million and extend its maturity date to June 26, 2029.

The ABL Credit Agreement contains a number of customary affirmative and negative covenants that limit or restrict the ability of the Company and its subsidiaries to (subject, in each case, to a number of important exceptions, thresholds and qualifications as set forth in the ABL Credit Agreement):

On August 24, 2021, the Company entered into a credit agreement for its senior secured term loan facility (the " Term Loan B

Facility"), which provides funding up to a principal amount of $ 900.0 million .

The Term Loan B Facility has a seven year

maturity with principal due in consecutive equal quarterly installments of 0.25 % of the initial $ 900.0 million principal

amount (subject to certain reductions from time to time as a result of the application of prepayments), with the remaining

balance due upon maturity of the Term Loan B Facility.

The proceeds from the Term Loan B Facility were used to prepay in

full the Company's $ 825.0 million senior secured term loan facility (the "2018 Term Loan B Facility"), including any accrued

and unpaid interest, fees and other expenses related to the transaction.

On June 8, 2023, the Company further amended and

restated the Term Loan B Facility credit agreement (the "Term Loan B Credit Agreement") to replace LIBOR with the Term

Secured Overnight Financing Rate ("SOFR") and Daily Simple SOFR (each as defined in the amended Term Loan B Credit

Agreement) as the reference interest rate effective June 30, 2023.

On June 26, 2024, the Company used cash on hand to

prepay $ 100.0 million of the $ 877.5 million outstanding principal on the Term Loan B Facility;

no modification was made to

the Term Loan B Credit Agreement as a result of this prepayment.

On September 18, 2024, the Company executed an

amendment to reprice its Term Loan B Credit Agreement.

The repricing reduced the applicable interest rate by 50 basis

points from Term SOFR plus 3.25 % to Term SOFR plus 2.75 % and eliminated the credit spread adjustment.

modifications were made to the maturity of the loans as a result of the repricing and all other terms were substantially

Effective July 8, 2021, the Company entered into an amended and restated senior credit agreement for its $ 225.0 million

senior secured asset based revolving credit facility (the “ABL Credit Agreement”).

The ABL Credit Agreement consisted of a

$ 225.0 million senior secured asset-based revolving credit facility with a five -year maturity.

On April 21, 2023, the Company

further amended and restated the ABL Credit Agreement to replace LIBOR with the Term SOFR and Daily Simple SOFR

(each, as defined in the amended ABL Credit Agreement) as the reference interest rate.

On June 26, 2024, the Company

further amended the ABL Credit Agreement to increase the revolving commitment to $ 325.0 million and extend its maturity

date to June 26, 2029.

The Term Loan B Credit Agreement and ABL Credit Agreement contain a number of customary affirmative and negative

covenants that limit or restrict the ability of the Company and its subsidiaries to (subject, in each case, to a number of

important exceptions, thresholds and qualifications as set forth in the Term Loan B Credit Agreement and ABL Credit

• incur additional indebtedness (including guarantee obligations);

4 unchanged sentences

• engage in certain transactions with affiliates.

In addition, the ABL Credit Agreement contains a springing financial covenant that requires the maintenance, after failure to maintain a specified minimum amount of availability to borrow under the senior secured asset-based revolving credit facility, of a minimum fixed charge coverage ratio of 1.00 to 1.00, as determined at the end of each fiscal quarter.

Management believes that, as of June 30, 2024 and December 31, 2023, the Company maintained the minimum amount of availability under the senior secured asset-based revolving credit facility and, therefore, the minimum fixed charge ratio described herein was not applicable.

In addition, the ABL Credit Agreement contains a springing financial covenant that requires the maintenance, after failure to

maintain a specified minimum amount of availability to borrow under the senior secured asset-based revolving credit facility,

of a minimum fixed charge coverage ratio of 1.00 to 1.00, as determined at the end of each fiscal quarter.

believes that, as of September 30, 2024 and December 31, 2023 , the Company maintained more than the minimum amount of

availability under the senior secured asset-based revolving credit facility and, therefore, the minimum fixed charge ratio

described herein was not applicable.

Interest Rate Swap Agreements

Market risks relating to the Company’s operations result primarily from changes in interest rates.

The Company’s exposure to interest rate risk results from the financial debt instruments that arise from transactions entered into during the normal course of business.

As part of an overall risk management program, the Company evaluates and manages exposure to changes in interest rates on an ongoing basis.

The Company has no intention of entering into financial derivative contracts, other than to hedge a specific financial risk.

To mitigate the Company’s exposure to fluctuations in interest rates, the Company uses pay-fixed interest rate swaps, generally designated as cash flow hedges of interest payments on floating rate borrowings.

The Company’s exposure to

interest rate risk results from the entry into financial debt instruments that arose from transactions entered into during the

normal course of business.

As part of an overall risk management program, the Company evaluates and manages exposure to

changes in interest rates on an ongoing basis.

The Company has no intention of entering into financial derivative contracts,

other than to hedge a specific financial risk.

To mitigate the Company’s exposure to fluctuations in interest rates, the

Company uses pay-fixed interest rate swaps, generally designated as cash flow hedges of interest payments on floating rate

Pay-fixed swaps effectively convert floating-rate borrowings to fixed-rate borrowings.

Unrealized gains or losses from the designated cash flow hedges are deferred in accumulated other comprehensive income (“AOCI”) and recognized as interest expense as the interest payments occur.

Hedges and derivative financial instruments may continue to be used in the future in order to manage interest rate exposure.

Unrealized gains or losses

from the designated cash flow hedges are deferred in accumulated other comprehensive income (“AOCI”) and recognized as

interest expense as the interest payments occur.

Hedges and derivative financial instruments may continue to be used in the

future in order to manage interest rate exposure.

The Company has entered into interest rate swap agreements to manage its exposure to fluctuations in interest rates.

The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative.

This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.

The Company has determined the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy.

On August 26, 2021, the Company amended its existing interest rate swap agreements with Barclays Bank PLC and Bank of America, N.A.

valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow

analysis on the expected cash flows of each derivative.

This analysis reflects the contractual terms of the derivatives,

including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied

volatilities.

The Company has determined the inputs used to value its derivatives fall within Level 2 of the fair value

On August 26, 2021, the Company amended its existing interest rate swap agreements with Barclays Bank PLC and Bank of

America, N.A.

as counterparties, with original notional amounts totaling $ 558.0 million and expiring August 31, 2023.

Under the amended agreements, the Company was required to make monthly fixed rate payments at annual rates ranging from 2.50 % to 2.51 %, and the counterparties were obligated to make monthly floating rate payments to the Company based on one-month LIBOR, each subject to a floor of 0.50 %.

On October 8, 2021, the Company executed new interest rate swap agreements (the “October 2021 Agreements”) with Barclays Bank PLC and Bank of America, N.A.

as counterparties, with notional amounts totaling $ 529.0 million and an effective date of August 31, 2023 and expiring June 30, 2026.

Under the October 2021 Agreements, the Company was required to make monthly fixed rate payments at annual rates ranging from 1.53 % to 1.55 %, and the counterparties were

Table of Con tents

the amended agreements, the Company was required to make monthly fixed rate payments at annual rates ranging from

2.50 % to 2.51 % , and the counterparties were obligated to make monthly floating rate payments to the Company based on

one-month LIBOR, each subject to a floor of 0.50 % .

On October 8, 2021, the Company executed new interest rate swap agreements (the “October 2021 Agreements”) with

Barclays Bank PLC and Bank of America, N.A.

as counterparties, with notional amounts totaling $ 529.0 million and an

effective date of August 31, 2023 and expiring June 30, 2026.

Under the October 2021 Agreements, the Company was

required to make monthly fixed rate payments at annual rates ranging from 1.53 % to 1.55 % , and the counterparties were

obligated to make monthly floating rate payments to the Company based on one-month LIBOR, each subject to a floor of

Effective August 31, 2023, the Company amended the October 2021 Agreements to adjust the fixed rates and replace the LIBOR floating interest rate options with Term SOFR floating rate options.

Under the amended October 2021 Agreements, the Company is required to make monthly fixed rate payments at annual rates ranging from 1.47 % to 1.48 %, and the counterparties are obligated to make monthly floating rate payments to the Company based on one-month Term SOFR, each subject to a floor of 0.39 %.

Effective August 31, 2023, the Company amended the October 2021 Agreements to adjust the fixed rates and replace

the LIBOR floating interest rate options with Term SOFR floating rate options.

Under the amended October 2021

Agreements, the Company is required to make monthly fixed rate payments at annual rates ranging from 1.47 % to 1.48 % ,

and the counterparties are obligated to make monthly floating rate payments to the Company based on one-month Term

SOFR, each subject to a floor of 0.39 % .

The Company accounts for its interest rate swap agreements in accordance with ASC 815, Derivatives and Hedging .

Because the interest rate swap agreements amended on August 26, 2021 did not meet the definition of derivatives in their entirety due to the financing element of the agreements, the Company accounted for these as hybrid instruments that consisted of a debt instrument (debt host) and an embedded at-market derivative.

At August 26, 2021, the debt portion of the hybrid instruments was equal to the fair value of the existing interest rate swap agreements, and the balance within AOCI associated with the debt portion was amortized on a straight-line basis to interest expense over the remaining effective period of the amended agreements, which expired August 31, 2023.

The at-market derivative portion of each hybrid instrument was designated as a cash flow hedge with changes in fair value included in AOCI as a component of equity.

Amounts were subsequently reclassified from AOCI into interest expense in the same periods during which the hedged transactions affected earnings.

Cash interest payments associated with the at-market derivative portion of the hybrid instruments were classified as operating activities in the Company’s unaudited condensed consolidated statements of cash flows;

whereas, cash interest payments for the debt portion of the hybrid instruments were classified as financing activities.

The Company performs assessments of effectiveness for its cash flow hedges on a quarterly basis to confirm that the hedges continue to meet the highly effective criteria required to continue applying cash flow hedge accounting.

During the six months ended June 30, 2024 and the year ended December 31, 2023, these hedges were highly effective.

Accordingly, no unrealized gain or loss related to these hedges was reflected in the accompanying unaudited condensed consolidated income statements, and the change in fair value was included in AOCI as a component of equity.

Realized gains and losses during the period have been reclassified from AOCI to interest expense.

The following table presents the effects of derivatives in cash flow hedging relationships on the Company’s AOCI and earnings (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

the interest rate swap agreements amended on August 26, 2021 did not meet the definition of derivatives in their entirety due

to the financing element of the agreements, the Company accounted for these as hybrid instruments that consisted of a debt

instrument (debt host) and an embedded at-market derivative.

At August 26, 2021, the debt portion of the hybrid instruments

was equal to the fair value of the existing interest rate swap agreements, and the balance within AOCI associated with the

debt portion was amortized on a straight-line basis to interest expense over the remaining effective period of the amended

agreements, which expired August 31, 2023.

The at-market derivative portion of each hybrid instrument was designated as a

cash flow hedge with changes in fair value included in AOCI as a component of equity.

Amounts were subsequently

reclassified from AOCI into interest expense in the same periods during which the hedged transactions affected earnings.

Cash interest payments associated with the at-market derivative portion of the hybrid instruments were classified as operating

activities in the Company’s unaudited condensed consolidated statements of cash flows;

whereas cash interest payments for

the debt portion of the hybrid instruments were classified as financing activities.

The Company performs assessments of effectiveness for its cash flow hedges on a quarterly basis to confirm that the hedges

continue to meet the highly effective criteria required to continue applying cash flow hedge accounting.

During the nine

months ended September 30, 2024 and the year ended December 31, 2023 , these hedges were highly effective.

no unrealized gain or loss related to these hedges was reflected in the accompanying unaudited condensed consolidated

income statements, and the change in fair value was included in AOCI as a component of equity.

Realized gains and losses

during the period have been reclassified from AOCI to interest expense.

The following table presents the effects of derivatives in cash flow hedging relationships on the Company’s AOCI and

earnings (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Classification

Unrealized income recognized AOCI $ 2,052 $ 9,844 $ 8,139 $ 6,592

Loss reclassified from AOCI into earnings Interest expense, net ( 5,103 ) ( 3,635 ) ( 10,239 ) ( 6,559 )

Unrealized (loss) income recognized

Loss reclassified from AOCI into earnings

Interest expense, net

Net change in AOCI

In the 12 months following June 30, 2024, the Company estimates that an additional $ 15.1 million will be reclassified as a reduction to interest expense.

As of June 30, 2024 and December 31, 2023, the fair value of the Company’s interest rate swap agreements reflected an asset balance of $ 23.0 million and $ 25.1 million, respectively.

The following table presents the fair value of the Company’s interest rate swap agreements as recorded in the unaudited condensed consolidated balance sheets (in thousands):

Classification June 30, 2024 December 31, 2023

In the 12 months following September 30, 2024 , the Company estimates that an additional $ 9.5 million will be reclassified as

a reduction to interest expense.

As of September 30, 2024 and December 31, 2023 , the fair value of the Company’s interest rate swap agreements reflected

an asset balance of $ 12.8 million and $ 25.1 million , respectively.

The following table presents the fair value of the

Company’s interest rate swap agreements as recorded in the unaudited condensed consolidated balance sheets (in thousands):

Classification

September 30, 2024

December 31, 2023

Other current assets

Other assets 7,883 9,100

Fair value $ 23,019 $ 25,066

The Company’s tax provisions for the three months ended June 30, 2024 and 2023 were income tax expense of $ 15.2 million, which equates to an effective tax rate of 18.5 %, and $ 12.1 million, which equates to an effective tax rate of 17.9 %, respectively.

The Company’s tax provisions for the six months ended June 30, 2024 and 2023 were income tax expense of

Table of Con tents

$ 25.9 million, which equates to an effective tax rate of 18.7 %, and $ 17.3 million, which equates to an effective tax rate of 17.9 %, respectively.

The Company’s tax provisions for the three months ended September 30, 2024 and 2023 were income tax expense of $ 11.1

million , which equates to an effective tax rate of 19.4 % , and $ 7.3 million , which equates to an effective tax rate of 15.8 % ,

respectively.

The Company’s tax provisions for the nine months ended September 30, 2024 and 2023 were income tax

expense of $ 37.0 million , which equates to an effective tax rate of 18.9 % , and $ 24.6 million , which equates to an effective

tax rate of 17.2 % , respectively.

The Company follows the provisions of ASC 740, Income Taxes , regarding uncertain tax positions.

At June 30, 2024 and December 31, 2023, the Company had a liability for uncertain tax positions of $ 12.1 million.

The Company believes that it is reasonably possible that the reserve for uncertain tax positions will change in the coming 12 months as a result of being within the applicable statute of limitations with respect to uncertain tax positions.

As of June 30, 2024, the Company had no ongoing or pending federal examinations for prior years.

The Company has outstanding federal income tax refund claims for the 2016 and 2018 tax years.

Due to the total amount of refund of $ 10.0 million, which was classified within other current assets on the Company’s unaudited condensed consolidated balance sheet at June 30, 2024, the refund is subject to ongoing Joint Committee on Taxation reviews.

The Company’s tax years from 2016 through 2023 remain open to examination by federal and state taxing authorities.

At September 30, 2024

and December 31, 2023 , the Company had a liability for uncertain tax positions of $ 12.1 million .

The Company believes that

it is reasonably possible that the reserve for uncertain tax positions will change in the coming 12 months as a result of being

within the applicable statute of limitations with respect to uncertain tax positions.

As of September 30, 2024 , the Company had no ongoing or pending federal examinations for prior years.

The Company has

outstanding federal income tax refund claims for the 2016 and 2018 tax years.

Since the total amount of refund claims is

equal to $ 10.0 million , which was classified within other current assets on the Company’s unaudited condensed consolidated

balance sheet at September 30, 2024 , the refund claims are subject to ongoing Joint Committee on Taxation reviews.

Company’s tax years from 2021 through 2023 remain open to examination by federal and state taxing authorities.

Self-Insured Liabilities

The liabilities for professional, general, workers’ compensation and occupational injury liability risks are based on actuarially determined estimates.

Such liabilities represent the estimated ultimate cost of all reported and unreported losses incurred through the respective balance sheet dates.

The Company provides an accrual for actuarially determined claims reported but not paid and estimates of claims incurred but not reported.

The liabilities for professional, general, workers’ compensation and occupational injury liability risks are based on actuarially

determined estimates.

Such liabilities represent the estimated ultimate cost of all reported and unreported losses incurred

through the respective balance sheet dates.

The Company provides an accrual for actuarially determined claims reported but

not paid and estimates of claims incurred but not reported.

Professional and General Liability

The total costs for professional and general liability losses are based on the Company’s premiums and retention costs, and were $ 16.4 million and $ 13.6 million for the three months ended June 30, 2024 and 2023, respectively, and were $ 34.9 million and $ 27.2 million for the six months ended June 30, 2024 and 2023, respectively.

The total costs for professional and general liability losses are based on the Company’s premiums and retention costs, and

were $ 15.6 million and $ 13.7 million for the three months ended September 30, 2024 and 2023 , respectively, and were $ 50.5

million and $ 40.9 million for the nine months ended September 30, 2024 and 2023 , respectively.

Workers' Compensation and Occupational Injury Liability

The total costs for workers’ compensation liability insurance are based on the Company’s premiums and retention costs, and were $ 0.9 million and $ 2.5 million for the three months ended June 30, 2024 and 2023, respectively, and were $ 3.3 million and $ 5.1 million for the six months ended June 30, 2024 and 2023, respectively.

The total costs for workers’ compensation liability insurance are based on the Company’s premiums and retention costs, and

were $ 2.4 million and $ 2.5 million for the three months ended September 30, 2024 and 2023 , respectively, and were $ 5.7

million and $ 7.6 million for the nine months ended September 30, 2024 and 2023 , respectively.

Employee Benefit Plans

1 unchanged sentence

The Company maintains defined contribution retirement plans that cover its eligible employees.

The Company incurred total costs related to the retirement plans of $ 11.8 million and $ 11.1 million for the three months ended June 30, 2024 and 2023, respectively, and $ 25.0 million and $ 23.2 million for the six months ended June 30, 2024 and 2023, respectively.

The Company incurred total

costs related to the retirement plans of $ 11.2 million and $ 10.3 million for the three months ended September 30, 2024 and

2023 , respectively, and $ 36.2 million and $ 33.5 million for the nine months ended September 30, 2024 and 2023 ,

respectively.

Employee Health Plan

The Company maintains a self-insured medical and dental plan for substantially all of its employees.

Amounts are accrued under the Company’s medical and dental plans as the claims that give rise to them occur and the Company includes a provision for incurred but not reported claims.

Incurred but not reported claims are estimated based on an average lag time and experience.

Amounts are accrued

under the Company’s medical and dental plans as the claims that give rise to them occur and the Company includes a

provision for incurred but not reported claims.

Incurred but not reported claims are estimated based on an average lag time

and experience.

Accruals are based on the estimated ultimate cost of settlement, including claim settlement expenses.

The total costs of employee health coverage were $ 42.9 million and $ 40.7 million for the three months ended June 30, 2024 and 2023, respectively, and $ 86.7 million and $ 82.2 million for the six months ended June 30, 2024 and 2023, respectively.

Table of Con tents

The total costs of employee health coverage were $ 47.2 million and $ 40.7 million for the three months ended September 30,

2024 and 2023 , respectively, and $ 133.9 million and $ 122.9 million for the nine months ended September 30, 2024 and 2023 ,

respectively.

Commitments and Contingencies

1 unchanged sentence

From time to time, claims and suits arise in the ordinary course of the Company’s business.

The Company has been, is currently, and may in the future be subject to claims, lawsuits, qui tam actions, civil investigative demands, subpoenas, investigations, audits and other inquiries related to its operations.

In certain of these actions, plaintiffs request punitive or other damages against the Company that may not be covered by insurance.

These claims, lawsuits, and proceedings are in various stages of adjudication or investigation and involve a wide variety of claims and potential outcomes.

Depending on whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a material, adverse effect on the Company’s results of operations, financial position or liquidity.

The Company records accruals for such contingencies to the extent that the Company concludes it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

The Company does not believe that it is party to any proceeding that, either individually or in the aggregate, in the opinion of management, could have a material adverse effect on the business, financial condition, results of operations or liquidity.

As a result of the Cybersecurity Incident that occurred in November 2023, three putative class actions were filed against the Company in the U.S.

The Company has been, is

currently, and may in the future be subject to claims, lawsuits, qui tam actions, civil investigative demands, subpoenas,

investigations, audits and other inquiries related to its operations.

In certain of these actions, plaintiffs request punitive or

other damages against the Company that may not be covered by insurance.

These claims, lawsuits, and proceedings are in

various stages of adjudication or investigation and involve a wide variety of claims and potential outcomes.

whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution

could have a material adverse effect on the Company’s results of operations, financial position or liquidity.

The Company records accruals for such contingencies to the extent that the Company concludes it is probable that a liability

has been incurred and the amount of the loss can be reasonably estimated.

The Company does not believe that it is party to

any proceeding that, either individually or in the aggregate, in the opinion of management, could have a material adverse

effect on the business, financial condition, results of operations or liquidity.

As a result of the Cybersecurity Incident that occurred in November 2023, 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.

1 unchanged sentence

and Epperson v.

AHS Management Company, Inc., No.

AHS Management Company, Inc.,

3:24-cv-00396.

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

AHS Management Company, Inc., No.

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

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 protected health information 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.

In July 2024, the Company reached an agreement in principle to settle the consolidated case, but the settlement has not yet been approved by the court.

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

The Company expects the final settlement and resolution of the case to occur in the second or third quarter of 2025.

The Company is pursuing insurance coverage in relation to costs and liabilities incurred due to the Cybersecurity Incident.

The complaint for the consolidated class action, filed on

behalf of approximately 38,000 individuals who allege their personal information and protected health information 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

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.

The Company has acquired, and plans to continue to acquire, businesses with prior operating histories.

Acquired companies may have unknown or contingent liabilities, including liabilities for failure to comply with healthcare laws and regulations, such as billing and reimbursement, fraud and abuse and anti-kickback laws.

The Company has from time to time identified certain past practices of acquired companies that do not conform to its standards.

Although the Company institutes policies designed to conform such practices to its standards following completion of acquisitions, there can be no assurance that the Company will not become liable for the past activities of these acquired facilities that may later be asserted to be improper by private plaintiffs or government agencies.

Although the Company generally seeks to obtain indemnification from prospective sellers covering such matters, there can be no assurance that any such matter will be covered by indemnification or, if covered, that such indemnification will be adequate to cover potential losses and fines.

Acquired companies

may have unknown or contingent liabilities, including liabilities for failure to comply with healthcare laws and regulations,

such as billing and reimbursement, fraud and abuse and anti-kickback laws.

The Company has from time to time identified

certain past practices of acquired companies that do not conform to its standards.

Although the Company institutes policies

designed to conform such practices to its standards following completion of acquisitions, there can be no assurance that the

Company will not become liable for the past activities of these acquired facilities that may later be asserted to be improper by

private plaintiffs or government agencies.

Although the Company generally seeks to obtain indemnification from prospective

sellers covering such matters, there can be no assurance that any such matter will be covered by indemnification or, if

covered, that such indemnification will be adequate to cover potential losses and fines.

Earnings Per Share

Basic net income per share is calculated by dividing net income attributable to common stockholders by the weighted-average number of common shares.

For the purposes of determining the basic and diluted weighted-average number of common shares outstanding during the periods presented, the Company retrospectively reflected the effects of the Corporate Conversion and the ALH Contribution.

As such, the basic and diluted weighted-average number of common shares outstanding for the periods presented reflect the conversion of the Company's membership units into common stock on the date of the Corporate Conversion and ALH Contribution, assuming that all common stock issued in conjunction with the Corporate Conversion and ALH Contribution was issued and outstanding as of the beginning of the earliest period presented.

Table of Con tents

As a result of the Corporate Conversion and ALH Contribution occurring after the balance sheet date as described in Note 1, there were no potentially dilutive instruments outstanding for any of the periods presented.

Therefore, basic and diluted net income per share were the same for all periods presented as reflected below.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except share and per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Basic and Diluted:

Basic net income per share is computed by dividing net income attributable to common stockholders by the weighted-average

number of common shares outstanding.

Diluted net income per share is computed by dividing net income attributable to

common stockholders by the weighted-average number of common shares outstanding plus the dilutive effect of outstanding

securities, and such dilutive effect is computed using the treasury stock method.

For the purposes of determining the basic and diluted weighted-average number of common shares outstanding during the

periods presented that are prior to the Corporate Conversion and ALH Contribution, the Company retrospectively reflected

the effects of the Corporate Conversion and the ALH Contribution.

As such, the basic and diluted weighted-average number

of common shares outstanding for those periods reflect the conversion of the Company's membership units into common

stock on the date of the Corporate Conversion and ALH Contribution, assuming that all common stock issued in conjunction

with the Corporate Conversion and ALH Contribution was issued and outstanding as of the beginning of the earliest period

The following table sets forth the computation of basic and diluted net income per share (in thousands, except share and per

share amounts):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Net income attributable to common stockholders

1 unchanged sentence

Net income per common share

Subsequent Events

2024 Omnibus Incentive Award Plan and Non-Employee Director Compensation Program

In conjunction with the IPO, the Company’s 2024 Omnibus Incentive Award Plan (the “Equity Plan”) became effective.

The Equity Plan authorized the issuance of up to 15,750,000 shares of common stock associated with its awards.

On July 18, 2024, (i) 1,882,979 restricted stock units ("RSUs") were granted under the Equity Plan to certain key members of management, which consisted of 835,272 service-based RSUs and 1,047,707 performance-based RSUs, and (ii) 92,496 service-based RSUs were granted under the Equity Plan to non-employee directors of the Company.

The RSUs were granted at the IPO price of $ 16.00 per share.

For the RSUs issued to management, the service-based awards vest in three substantially equal annual installments on each anniversary of March 31, 2024 and the performance-based RSUs vest upon the achievement of certain Company-wide profitability metrics and include a service-based vesting component.

The RSUs issued to the Company's board of directors vest in full on the first anniversary of March 31, 2024.

Table of Con tents

Net income attributable to common stockholders

Weighted-average number of common shares

Net income per common share

The following table sets forth the components of the denominator for the computation of basic and diluted net income per

share for net income attributable to Ardent Health Partners, Inc.

stockholders:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Weighted-average number of common shares - basic

Effect of dilutive securities (1)

Weighted-average number of common shares - diluted

(1) The effect of dilutive securities does not reflect 370,579 and 123,526 weighted-average potential common shares from restricted stock awards and

restricted stock units for the three and nine months ended September 30, 2024 , respectively, because their effect was antidilutive as calculated under

the treasury stock method.

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-Q

Item 1. Financial Statements