Astrana Health, Inc. Reports Second Quarter 2024 Results

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.