Astrana Health, Inc. Reports Second Quarter 2024 Results

Rhea-AI Summary

Astrana Health (NASDAQ: ASTH) reported strong Q2 2024 results, with total revenue up 40% to $486.3 million and net income up 46% to $19.2 million. The company's Care Partners segment drove growth, with revenue increasing 44% to $463.3 million. Adjusted EBITDA rose 34% to $47.9 million. Astrana expanded into Arizona and Hawaii, partnered with Anthem Blue Cross and Elation Health, and agreed to acquire Collaborative Health Systems. The company updated its 2024 guidance, projecting total revenue between $1.75-$1.85 billion and net income of $54-$66 million. CEO Brandon K. Sim highlighted the company's progress in delivering value-based care across communities.

Positive

• Total revenue increased 40% year-over-year to $486.3 million in Q2 2024
• Net income attributable to Astrana grew 46% to $19.2 million in Q2 2024
• Care Partners segment revenue rose 44% to $463.3 million
• Adjusted EBITDA increased 34% to $47.9 million in Q2 2024
• Expanded into Arizona and Hawaii markets
• Partnered with Anthem Blue Cross and Elation Health
• Agreed to acquire Collaborative Health Systems, serving 2,500 primary care providers and 100,000 beneficiaries
• Updated 2024 guidance with projected revenue of $1.75-$1.85 billion

Negative

• None.

Company to Host Conference Call on Wednesday, August 7, 2024, at 2:30 p.m. PT/5:30 p.m. ET

ALHAMBRA, Calif., Aug. 7, 2024 /PRNewswire/ -- Astrana Health, Inc. ("Astrana," and together with its subsidiaries and affiliated entities, the "Company") (NASDAQ: ASTH), a leading provider-centric, technology-powered healthcare company enabling providers to deliver accessible, high-quality, and high-value care to all, today announced its consolidated financial results for the second quarter ended June 30, 2024.

"We believe our strong second quarter results and entry into new states reflect the progress, scale, and momentum we continue to build at Astrana as we drive towards our mission to empower entrepreneurial providers and deliver great healthcare to local communities across the country. Strong revenue and adjusted EBITDA growth in the quarter were driven by continued organic growth in our Care Partners segment, the successful integration of the Community Family Care acquisition, and continued success in managing total cost of care for our one million members in value-based, risk-bearing arrangements. Our entry into Arizona and Hawai'i, partnerships with Anthem Blue Cross and Elation Health, and our agreement to acquire Collaborative Health Systems are anticipated to continue driving strong, sustainable, and profitable growth for the Astrana platform. We are excited to continue proving that value-based care can be done successfully in communities across the country," said President and CEO of Astrana Health, Brandon K. Sim.

Financial Highlights for Second Quarter Ended June 30, 2024:

All comparisons are to the quarter ended June 30, 2023 unless otherwise stated.

• Total revenue of $486.3 million, up 40% from $348.2 million
• Care Partners revenue of $463.3 million, up 44% from $321.8 million
• Net income attributable to Astrana of $19.2 million, up 46% from $13.2 million
• Earnings per share - diluted ("EPS - diluted") of $0.40, up 43% from $0.28 per share
• Adjusted EBITDA of $47.9 million, up 34% from $35.8 million

Financial Highlights for Six Months Ended June 30, 2024:

All comparisons are to the six months ended June 30, 2023 unless otherwise stated.

• Total revenue of $890.6 million, up 30% from $685.5 million
• Care Partners revenue of $845.6 million, up 33% from $636.4 million
• Net income attributable to Astrana of $34.0 million, up 29% from $26.3 million
• EPS - diluted of $0.71, up 27% from $0.56 per share
• Adjusted EBITDA of $90.2 million, up 38% from $65.6 million

Recent Operating Highlights

• On May 24, 2024, the Company entered the state of Arizona through its Care Partners segment, partnering with an anchor primary care physician group with over 45 primary care providers serving around 50,000 patients across Medicare, Medicaid, and Commercial lines of business. The group is expected to be onboarded onto Astrana's Care Enablement platform by the end of 2024.
• On July 15, 2024, the Company announced a new partnership with Anthem Blue Cross to build and operate primary care clinics aimed at improving access to high-quality healthcare for their shared members.
• On July 17, 2024, the Company announced its strategic partnership with Elation Health, a technology company whose electronic health record platform is used nationwide by more than 32,000 clinicians. Together, the two organizations will aim to empower primary care providers via value-based arrangements, leveraging both Astrana and Elation's technology platform and solutions. As part of the partnership, Astrana entered the state of Hawai'i, partnering with a provider organization of over 100 primary care providers serving just under 20,000 primarily Medicare patients. Astrana will serve as the group's exclusive care enablement provider, with providers anticipated to fully integrate onto Astrana's Care Enablement platform by the end of the third quarter of 2024.
• On July 24, 2024, the Company entered into a definitive agreement to acquire Collaborative Health Systems ("CHS"), a value-based care enablement organization serving around 2,500 primary care providers and more than 100,000 beneficiaries and a company of Centene Corporation, a leading healthcare enterprise focused on transforming the health of the communities it serves. The acquisition is intended to facilitate the expansion of both Astrana's and CHS' payer-agnostic care delivery capabilities, which serve members across all lines of business, and further empower CHS' providers in the delivery of care to the communities it serves. Astrana and Centene also share a mutual commitment to providing high-quality and coordinated care to members and will continue to work together to expand the scope of their existing value-based partnerships in order to advance that joint mission. The acquisition is expected to close during the fourth quarter of 2024, subject to customary closing conditions and regulatory approval.

		Three Months Ended June 30, 2024
(in thousands)		Care Partners				Care Delivery				Care Enablement				Other				Intersegment Elimination					Corporate Costs				Consolidated Total
Total revenues		$	463,277			$	34,857			$	36,172				—			$	(48,041)					—			$	486,265
% change vs. prior year quarter			44	%			32	%			3	%
Cost of services			379,413				26,252				19,939				—				(12,799)					—				412,805
General and administrative(1)			43,541				6,780				9,315				—				(35,247)					19,005				43,394
Total expenses			422,954				33,032				29,254				—				(48,046)					19,005				456,199
Income (loss) from operations		$	40,323			$	1,825			$	6,918			$	—			$	5		(2)		$	(19,005)			$	30,066
% change vs. prior year quarter			45	%			221	%			(9)	%

(1) Balance includes general and administrative expenses and depreciation and amortization.

(2) Income from operations for the intersegment elimination represents rental income from segments renting from other segments. Rental income is presented within other income which is not presented in the table.

2024 Guidance:

Taking all of Astrana's recent growth initiatives and capital allocation strategy into account, the Company is updating its revenue, net income attributable to Astrana, and EPS - diluted guidance for 2024 while reiterating guidance for Adjusted EBITDA for the year ending December 31, 2024.

($ in millions, except per share amounts)		2024 Guidance Range
		Low				High
Total revenue		$	1,750			$	1,850
Net income attributable to Astrana Health, Inc.		$	54			$	66
Adjusted EBITDA		$	165			$	185
EPS – diluted		$	1.12			$	1.36

See "Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA" and "Use of Non-GAAP Financial Measures" below for additional information. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. See "Forward-Looking Statements" below for additional information.

Conference Call and Webcast Information:

Astrana will host a conference call at 2:30 p.m. PT/5:30 p.m. ET today (Wednesday, August 7, 2024), during which management will discuss the results of the second quarter ended June 30, 2024. To participate in the conference call, please use the following dial-in numbers about 5 minutes prior to the scheduled conference call time:

U.S. & Canada (Toll-Free):       +1 (888) 437-3179
International (Toll):                    +1 (862) 298-0702

The conference call can also be accessed via webcast at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=pihVtJqf.  

An accompanying slide presentation will be available in PDF format on the "IR Calendar" page of the Company's website (https://ir.astranahealth.com/news-events/ir-calendar) after issuance of the earnings release and will be furnished as an exhibit to Astrana's current report on Form 8-K to be filed with the SEC, accessible at www.sec.gov. 

Those who are unable to attend the live conference call may access the recording at the above webcast link, which will be made available shortly after the conclusion of the call.

Note About Consolidated Entities

The Company consolidates entities in which it has a controlling financial interest. The Company consolidates subsidiaries in which it holds, directly or indirectly, more than 50% of the voting rights, and variable interest entities ("VIEs") in which the Company is the primary beneficiary. Noncontrolling interests represent third party equity ownership interests in the Company's consolidated entities (including certain VIEs). The amount of net income attributable to noncontrolling interests is disclosed in the Company's consolidated statements of income.

Note About Stockholders' Equity, Certain Treasury Stock and Earnings Per Share

As of the date of this press release, 41,048 holdback shares have not been issued to certain former shareholders of the Company's subsidiary, Astrana Health Management, Inc. ("AHM"), formerly known as Network Medical Management, Inc., who were AHM shareholders at the time of closing of the merger, as they have yet to submit properly completed letters of transmittal to Astrana in order to receive their pro rata portion of Astrana's common stock as contemplated under that certain Agreement and Plan of Merger, dated December 21, 2016, among Astrana, AHM, Apollo Acquisition Corp. ("Merger Subsidiary") and Kenneth Sim, M.D., as amended, pursuant to which Merger Subsidiary merged with and into AHM, with AHM as the surviving corporation. Pending such receipt, such former AHM shareholders have the right to receive, without interest, their pro rata share of dividends or distributions with a record date after the effectiveness of the merger. The Company's consolidated financial statements have treated such shares of common stock as outstanding, given the receipt of the letter of transmittal is considered perfunctory and Astrana is legally obligated to issue these shares in connection with the merger.

Shares of Astrana's common stock owned by Allied Physicians of California, a Professional Medical Corporation ("APC"), a VIE of the Company, are legally issued and outstanding but excluded from shares of common stock outstanding in the Company's consolidated financial statements, as such shares are treated as treasury shares for accounting purposes. Such shares, therefore, are not included in the number of shares of common stock outstanding used to calculate the Company's earnings per share.

About Astrana Health, Inc.

Astrana is a leading provider-centric, technology-powered healthcare company enabling providers to deliver accessible, high-quality, and high-value care to all. Leveraging its proprietary end-to-end technology solutions, Astrana operates an integrated healthcare delivery platform that enables providers to successfully participate in value-based care arrangements, thus empowering them to deliver high quality care to patients in a cost-effective manner.

Headquartered in Alhambra, California, Astrana serves over 10,000 providers and approximately one million patients in value-based care arrangements. Its subsidiaries and affiliates include management services organizations (MSOs), a network of risk-bearing organizations (RBOs) that encompasses independent practice associations (IPAs), accountable care organizations (ACOs), and state-specific entities such as Restricted Knox-Keene licensed health plans in California, and care delivery entities across primary, multi-specialty, and ancillary care. For more information, please visit www.astranahealth.com. 

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements about the Company's guidance for the year ending December 31, 2024, ability to meet operational goals, ability to meet expectations in deployment of care coordination and management capabilities, ability to decrease cost of care while improving quality and outcomes, ability to deliver sustainable revenue and EBITDA growth as well as long-term value, ability to respond to the changing environment, and successful implementation of strategic growth plans, acquisition strategy, including successfully completing and realizing the benefits of anticipated acquisitions, and merger and acquisition integration efforts. Forward-looking statements reflect current views with respect to future events and financial performance and therefore cannot be guaranteed. Such statements are based on the current expectations and certain assumptions of the Company's management, and some or all of such expectations and assumptions may not materialize or may vary significantly from actual results. Actual results may also vary materially from forward-looking statements due to risks, uncertainties and other factors, known and unknown, including the risk factors described from time to time in the Company's reports to the Securities and Exchange Commission, including, without limitation the risk factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, and any subsequent quarterly reports on Form 10-Q.

FOR MORE INFORMATION, PLEASE CONTACT:

Investor Relations
(626) 943-6491
investors@astranahealth.com

 

ASTRANA HEALTH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
		June 30, 2024				December 31, 2023
		(Unaudited)
Assets
Current assets
Cash and cash equivalents		$	325,310			$	293,807
Investment in marketable securities			2,383				2,498
Receivables, net			132,323				76,780
Receivables, net – related parties			69,269				58,980
Income taxes receivable			22,005				10,657
Other receivables			1,642				1,335
Prepaid expenses and other current assets			17,417				17,450
Total current assets			570,349				461,507
Non-current assets
Land, property and equipment, net			10,305				7,171
Intangible assets, net			116,231				71,648
Goodwill			409,581				278,831
Income taxes receivable			15,943				15,943
Loans receivable, non-current			49,163				26,473
Investments in other entities – equity method			33,276				25,774
Investments in privately held entities			8,896				6,396
Restricted cash			646				345
Operating lease right-of-use assets			28,792				37,396
Other assets			9,289				1,877
Total non-current assets			682,122				471,854
Total assets(1)		$	1,252,471			$	933,361
Liabilities, mezzanine equity and equity
Current liabilities
Accounts payable and accrued expenses		$	95,757			$	59,949
Fiduciary accounts payable			7,321				7,737
Medical liabilities			151,482				106,657
Dividend payable			638				638
Finance lease liabilities			591				646
Operating lease liabilities			4,884				4,607
Current portion of long-term debt			17,000				19,500
Other liabilities			32,152				18,940
Total current liabilities			309,825				218,674
Non-current liabilities
Deferred tax liability			3,250				4,072
Finance lease liabilities, net of current portion			879				1,033
Operating lease liabilities, net of current portion			27,092				36,289
Long-term debt, net of current portion and deferred financing costs			425,006				258,939
Other long-term liabilities			7,723				3,586
Total non-current liabilities			463,950				303,919
Total liabilities(1)			773,775				522,593
Commitments and contingencies
Mezzanine equity
Noncontrolling interest in Allied Physicians of California, a Professional Medical Corporation ("APC")			(204,312)				(205,883)
Stockholders' equity
Series A Preferred stock, $0.001 par value per share; 5,000,000 shares authorized (inclusive of all preferred stock, including Series B Preferred stock); zero issued and zero outstanding as of June 30, 2024 and 1,111,111 issued and zero outstanding as of December 31, 2023			—				—
Series B Preferred stock, $0.001 par value per share; 5,000,000 shares authorized (inclusive of all preferred stock, including Series A Preferred stock); zero issued and zero outstanding as of June 30, 2024 and 555,555 issued and zero outstanding as of December 31, 2023			—				—
Common stock, $0.001 par value per share; 100,000,000 shares authorized, 47,541,549 and 46,843,743 shares issued and outstanding, excluding 10,584,340 and 10,584,340 treasury shares, as of June 30, 2024 and December 31, 2023, respectively			48				47
Additional paid-in capital			401,686				371,037
Retained earnings			277,140				243,134
Total stockholders' equity			678,874				614,218
Non-controlling interest			4,134				2,433
Total equity			683,008				616,651
Total liabilities, mezzanine equity and equity		$	1,252,471			$	933,361

(1)The Company's condensed consolidated balance sheets include the assets and liabilities of its consolidated VIEs. The condensed consolidated balance sheets include total assets that can be used only to settle obligations of the Company's consolidated VIEs totaling $671.9 million and $540.8 million as of June 30, 2024 and December 31, 2023, respectively, and total liabilities of the Company's consolidated VIEs for which creditors do not have recourse to the general credit of the primary beneficiary of $175.8 million and $146.0 million as of June 30, 2024 and December 31, 2023, respectively. These VIE balances do not include $516.4 million of investment in affiliates and $72.8 million of amounts due to affiliates as of June 30, 2024, and $273.2 million of investment in affiliates and $107.3 million of amounts due to affiliates as of December 31, 2023, as these are eliminated upon consolidation and not presented within the condensed consolidated balance sheets.

 

ASTRANA HEALTH, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenue
Capitation, net		$	442,574			$	300,549			$	808,484			$	600,753
Risk pool settlements and incentives			18,408				20,121				35,785				33,583
Management fee income			1,604				12,493				5,682				22,389
Fee-for-service, net			19,959				13,262				35,896				25,324
Other revenue			3,720				1,784				4,774				3,404
Total revenue			486,265				348,209				890,621				685,453
Operating expenses
Cost of services, excluding depreciation and amortization			412,805				292,876				743,204				582,273
General and administrative expenses			35,953				24,056				74,675				45,236
Depreciation and amortization			7,441				4,248				12,537				8,541
Total expenses			456,199				321,180				830,416				636,050
Income from operations			30,066				27,029				60,205				49,403
Other income (expense)
Income from equity method investments			902				2,723				1,534				5,207
Interest expense			(8,587)				(3,632)				(16,172)				(6,901)
Interest income			3,513				3,327				7,509				6,335
Unrealized (loss) gain on investments			(123)				859				976				(5,533)
Other income			6,126				1,185				1,849				2,389
Total other income (expenses), net			1,831				4,462				(4,304)				1,497
Income before provision for income taxes			31,897				31,491				55,901				50,900
Provision for income taxes			10,031				14,009				17,173				20,930
Net income			21,866				17,482				38,728				29,970
Net income attributable to non-controlling interest			2,695				4,312				4,722				3,668
Net income attributable to Astrana Health, Inc.		$	19,171			$	13,170			$	34,006			$	26,302
Earnings per share – basic		$	0.40			$	0.28			$	0.72			$	0.57
Earnings per share – diluted		$	0.40			$	0.28			$	0.71			$	0.56

EBITDA

Set forth below are reconciliations of Net Income to EBITDA and Adjusted EBITDA as well as the reconciliation to Adjusted EBITDA margin for the three and six months ended June 30, 2024 and 2023. The Company defines Adjusted EBITDA margin as Adjusted EBITDA over total revenue.

		Three Months Ended June 30,										Six Months Ended June 30,
(in thousands)		2024					2023					2024					2023
Net income		$	21,866				$	17,482				$	38,728				$	29,970
Interest expense			8,587					3,632					16,172					6,901
Interest income			(3,513)					(3,327)					(7,509)					(6,335)
Provision for income taxes			10,031					14,009					17,173					20,930
Depreciation and amortization			7,441					4,248					12,537					8,541
EBITDA			44,412					36,044					77,101					60,007
Income from equity method investments			(902)					(297)					(1,534)					(546)
Other, net			(2,983)		(1)			(1,618)		(2)			1,457		(3)			(216)		(2)
Stock-based compensation			7,390					4,213					13,138					7,658
APC excluded asset costs			—					(2,570)					—					(1,304)
Adjusted EBITDA		$	47,917				$	35,772				$	90,162				$	65,599
Total revenue		$	486,265				$	348,209				$	890,621				$	685,453
Adjusted EBITDA margin			10	%				10	%				10	%				10	%

(1)	Other, net for the three months ended June 30, 2024 relates to non-cash changes related to change in the fair value of the Company's Collar Agreement, transaction costs incurred for our investments and tax restructuring fees, and reimbursement from a related party of the Company for taxes associated with the Excluded Assets spin-off.
(2)	Other, net for the three and six months ended June 30, 2023 relates to non-cash changes in the fair value of our financing obligation to purchase the remaining equity interests in one of our investments, changes in the fair value of our contingent liabilities, and changes in the fair value of the Company's Collar Agreement.
(3)	Other, net for the six months ended June 30, 2024 relates to financial guarantee via a letter of credit that we provided almost three years ago in support of two local provider-led ACOs, non-cash changes related to change in the fair value of our financing obligation to purchase the remaining equity interests in one of our investments, non-cash changes related to change in the fair value of the Company's Collar Agreement, transaction costs incurred for our investments and tax restructuring fees, and reimbursement from a related party of the Company for taxes associated with the Excluded Assets spin-off.

Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA

		2024 Guidance Range
(in thousands)		Low				High
Net income		$	62,500			$	75,500
Interest expense			18,000				18,000
Provision for income taxes			28,000				35,000
Depreciation and amortization			28,500				28,500
EBITDA			137,000				157,000
Income from equity method investments			(5,000)				(5,000)
Other, net			6,000				6,000
Stock-based compensation			27,000				27,000
Adjusted EBITDA		$	165,000			$	185,000

Use of Non-GAAP Financial Measures

This press release contains the non-GAAP financial measures EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin, of which the most directly comparable financial measure presented in accordance with U.S. generally accepted accounting principles ("GAAP") is net income. These measures are not in accordance with, or alternatives to, GAAP, and may be calculated differently from similar non-GAAP financial measures used by other companies. The Company uses Adjusted EBITDA as a supplemental performance measure of our operations, for financial and operational decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization, excluding income or loss from equity method investments, non-recurring and non-cash transactions, stock-based compensation, and APC excluded assets costs. The Company defines Adjusted EBITDA margin as Adjusted EBITDA over total revenue.

The Company believes the presentation of these non-GAAP financial measures provides investors with relevant and useful information, as it allows investors to evaluate the operating performance of the business activities without having to account for differences recognized because of non-core or non-recurring financial information. When GAAP financial measures are viewed in conjunction with non-GAAP financial measures, investors are provided with a more meaningful understanding of the Company's ongoing operating performance. In addition, these non-GAAP financial measures are among those indicators the Company uses as a basis for evaluating operational performance, allocating resources, and planning and forecasting future periods. Non-GAAP financial measures are not intended to be considered in isolation, or as a substitute for, GAAP financial measures. Other companies may calculate both EBITDA and Adjusted EBITDA differently, limiting the usefulness of these measures for comparative purposes. To the extent this release contains historical or future non-GAAP financial measures, the Company has provided corresponding GAAP financial measures for comparative purposes. The reconciliation between certain GAAP and non-GAAP measures is provided above.

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SOURCE Astrana Health, Inc.

FAQ

What was Astrana Health's (ASTH) revenue growth in Q2 2024?

Astrana Health reported a 40% year-over-year increase in total revenue, reaching $486.3 million in Q2 2024.

How much did Astrana Health's (ASTH) net income grow in Q2 2024?

Astrana Health's net income attributable to the company grew 46% year-over-year to $19.2 million in Q2 2024.

What is Astrana Health's (ASTH) updated revenue guidance for 2024?

Astrana Health updated its 2024 revenue guidance to a range of $1.75 billion to $1.85 billion.

Which new states did Astrana Health (ASTH) enter in 2024?

Astrana Health entered the states of Arizona and Hawaii in 2024, expanding its market presence.

What major acquisition did Astrana Health (ASTH) announce in July 2024?

Astrana Health announced a definitive agreement to acquire Collaborative Health Systems (CHS), a value-based care enablement organization serving around 2,500 primary care providers and more than 100,000 beneficiaries.