Form: 8-K

Current report filing

May 7, 2024

Exhibit 99.1

 

 

Astrana Health, Inc. Reports First Quarter 2024 Results

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

 

ALHAMBRA, Calif., May 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 first quarter ended March 31, 2024.

 

“We believe our strong first quarter performance continues to demonstrate the uniqueness of our platform, care model, and technology. Revenue growth of 20%, net income attributable to Astrana growth of 13% and adjusted EBITDA growth of 42% relative to the prior year quarter were primarily driven by solid membership growth across all lines of business and successful management of total cost of care for our members. Additionally, organic membership growth of 10% year-to-date increased our total number of lives managed to approximately one million. We also made further progress transitioning our members into full-risk arrangements, which expect to account for approximately 60% of our total capitation revenue as of April 1, 2024. We believe our consistent execution against our strategic roadmap has set the stage for continued growth this year as we bring high-quality, high-value care to the communities we serve,” said Brandon K. Sim, President and Chief Executive Officer of Astrana Health.

 

Financial Highlights for First Quarter Ended March 31, 2024:

 

All comparisons are to the quarter ended March 31, 2023 unless otherwise stated.

· Total revenue of $404.4 million, up 20% from $337.2 million

 

· Care Partners revenue of $397.1 million, up 26% from $314.7 million

 

· Net income attributable to Astrana of $14.8 million, up 13% from $13.1 million

 

· Adjusted EBITDA of $42.2 million, up 42% from $29.8 million

 

· Earnings per share - diluted (“EPS - diluted”) of $0.31 per share, up 11% from $0.28 per share

 

Recent Operating Highlights

 

· We successfully closed the second and final part of our Community Family Care (“CFC”) acquisition on March 31, 2024. This acquisition marks the largest in Astrana’s history and allows the Company to take on greater responsibility for the outcomes of the patients we serve with CFC’s full-risk Medicaid Restricted Knox-Keene license.

 

· We also completed the acquisition of Prime Community Care of Central Valley (“PCCCV”) on March 29, 2024. PCCCV is a risk-bearing provider organization with over 150 primary care and multi-specialty care providers which serves around 26,000 primarily Medicaid members in the Central Valley of California.

 

· We opened two new de novo clinics in Nevada in April.

 

 

 

 

Segment Results for the First Quarter Ended March 31, 2024:

 

    Three Months Ended March 31, 2024  
(in thousands)   Care
Partners
    Care
Delivery
    Care
Enablement
    Other     Intersegment
Elimination
    Corporate
Costs
    Consolidated
Total
 
Total revenues   $ 397,095     $ 30,719     $ 33,274     $     $ (56,732 )   $     $ 404,356  
% change vs. prior year quarter     26 %     21 %     9 %                             20 %
                                                         
Cost of services     314,966       24,794       17,373             (26,734 )           330,399  
General and administrative(1)      38,933       6,163       12,397             (30,075 )     16,400       43,818  
Total expenses     353,899       30,957       29,770             (56,809 )     16,400       374,217  
                                                         
Income (loss) from operations   $ 43,196     $ (238 )   $ 3,504     $     $ 77 (2)    $ (16,400 )   $ 30,139  
% change vs. prior year quarter     94 %     (75 )%     (39 )%                             35 %

 

(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:

 

Astrana is reiterating the following guidance for total revenue, net income attributable to Astrana, Adjusted EBITDA, and EPS - diluted, based on the Company’s existing business, current view of existing market conditions and assumptions for the year ending December 31, 2024.

 

    2024 Guidance Range  
($ in millions)   Low     High  
Total revenue   $ 1,650.0     $ 1,850.0  
Net income attributable to Astrana Health, Inc.   $ 61.0     $ 73.0  
Adjusted EBITDA   $ 165.0     $ 185.0  
EPS – diluted   $ 1.28     $ 1.52  

 

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 (Tuesday, May 7, 2024), during which management will discuss the results of the first quarter ended March 31, 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=y3Hig4E8.

 

 

 

 

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 StockholdersEquity, 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 1.0 million patients in value-based care arrangements. Its subsidiaries and affiliates include management services organizations (MSOs), affiliated independent practice associations (IPAs), accountable care organizations (ACOs), 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, and merger 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 SEC, 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.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 

    March 31,
2024
    December 31,
2023
 
      (Unaudited)          
Assets                
                 
Current assets                
Cash and cash equivalents   $ 334,796     $ 293,807  
Investment in marketable securities     2,490       2,498  
Receivables, net     120,106       76,780  
Receivables, net – related parties     62,354       58,980  
Income taxes receivable           10,657  
Other receivables     1,783       1,335  
Prepaid expenses and other current assets     17,281       17,450  
                 
Total current assets     538,810       461,507  
                 
Non-current assets                
Land, property and equipment, net     7,985       7,171  
Intangible assets, net     119,707       71,648  
Goodwill     410,267       278,831  
Income taxes receivable     15,943       15,943  
Loans receivable, non-current     47,412       26,473  
Investments in other entities – equity method     35,893       25,774  
Investments in privately held entities     6,396       6,396  
Restricted cash     645       345  
Operating lease right-of-use assets     39,152       37,396  
Other assets     4,067       1,877  
                 
Total non-current assets     687,467       471,854  
                 
Total assets(1)   $ 1,226,277     $ 933,361  
                 
Liabilities, mezzanine equity and equity                
                 
Current liabilities                
Accounts payable and accrued expenses   $ 146,473     $ 59,949  
Fiduciary accounts payable     7,792       7,737  
Medical liabilities     136,494       106,657  
Income taxes payable     5,522        
Dividend payable     638       638  
Finance lease liabilities     636       646  
Operating lease liabilities     5,007       4,607  
Current portion of long-term debt     20,750       19,500  
Other liabilities     31,960       18,940  
                 
Total current liabilities     355,272       218,674  

 

 

 

 

    March 31,
2024
    December 31,
2023
 
Non-current liabilities                
Deferred tax liability     3,756       4,072  
Finance lease liabilities, net of current portion     1,015       1,033  
Operating lease liabilities, net of current portion     37,716       36,289  
Long-term debt, net of current portion and deferred financing costs     368,448       258,939  
Other long-term liabilities     7,652       3,586  
                 
Total non-current liabilities     418,587       303,919  
                 
Total liabilities(1)     773,859       522,593  
                 
Mezzanine equity                
Noncontrolling interest in Allied Physicians of California, a Professional Medical Corporation ("APC")     (205,557 )     (205,883 )
                 
Stockholders’ equity                
Series A Preferred stock, par value $0.001; 5,000,000 shares authorized (inclusive of Series B Preferred stock); 1,111,111 issued and zero outstanding            
Series B Preferred stock, par value $0.001; 5,000,000 shares authorized (inclusive of Series A Preferred stock); 555,555 issued and zero outstanding            
Common stock, par value $0.001; 100,000,000 shares authorized, 47,458,264 and 46,843,743 shares outstanding, excluding 10,584,340 and 10,584,340  Treasury shares, at March 31, 2024 and December 31, 2023, respectively     48       47  
Additional paid-in capital     395,473       371,037  
Retained earnings     257,969       243,134  
Total Stockholders' equity     653,490       614,218  
                 
Non-controlling interest     4,485       2,433  
                 
Total equity     657,975       616,651  
                 
Total liabilities, mezzanine equity, and stockholders’ equity   $ 1,226,277     $ 933,361  

 

(1) The Company’s consolidated balance sheets include the assets and liabilities of its consolidated VIEs. The consolidated balance sheets include total assets that can be used only to settle obligations of the Company’s consolidated VIEs totaling $717.5 million and $540.8 million as of March 31, 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 $179.6 million and $146.0 million as of March 31, 2024 and December 31, 2023, respectively. The VIE balances do not include $299.5 million of investment in affiliates and $110.1 million of amounts due to affiliates as of March 31, 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 consolidated balance sheets.

 

 

 

 

ASTRANA HEALTH, INC.

CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(UNAUDITED)

 

    Three Months Ended
March 31,
 
    2024     2023  
Revenue                
Capitation, net   $ 365,910     $ 300,204  
Risk pool settlements and incentives     17,377       13,462  
Management fee income     4,078       9,896  
Fee-for-service, net     15,937       12,062  
Other revenue     1,054       1,620  
                 
Total revenue     404,356       337,244  
                 
Operating expenses                
Cost of services, excluding depreciation and amortization     330,399       289,397  
General and administrative expenses     38,722       21,182  
Depreciation and amortization     5,096       4,292  
                 
Total expenses     374,217       314,871  
                 
Income from operations     30,139       22,373  
                 
Other income (expense)                
Income from equity method investments     632       2,484  
Interest expense     (7,585 )     (3,269 )
Interest income     3,996       3,009  
Unrealized gain (loss) on investments     1,099       (6,392 )
Other (loss) income     (4,277 )     1,204  
                 
Total other expense, net     (6,135 )     (2,964 )
                 
Income before provision for income taxes     24,004       19,409  
                 
Provision for income taxes     7,142       6,921  
                 
Net income     16,862       12,488  
                 
Net income (loss) attributable to non-controlling interest     2,027       (644 )
                 
Net income attributable to Astrana Health, Inc.   $ 14,835     $ 13,132  
                 
Earnings per share – basic   $ 0.31     $ 0.28  
                 
Earnings per share – diluted   $ 0.31     $ 0.28  

 

 

 

 

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 months ended March 31, 2024 and 2023. The Company defines Adjusted EBITDA margin as Adjusted EBITDA over total revenue.

 

    Three Months Ended
March 31,
 
(in thousands)   2024     2023  
Net income   $ 16,862     $ 12,488  
Interest expense     7,585       3,269  
Interest income     (3,996 )     (3,009 )
Provision for income taxes     7,142       6,921  
Depreciation and amortization     5,096       4,292  
EBITDA     32,689       23,961  
                 
Income from equity method investments     (632 )     (249 )
Other, net     4,440 (1)      1,402 (2) 
Stock-based compensation     5,748       3,445  
APC excluded asset costs           1,266  
Adjusted EBITDA   $ 42,245     $ 29,825  
                 
Total revenue   $ 404,356     $ 337,244  
                 
Adjusted EBITDA margin     10 %     9 %

 

(1) Other, net for the three months ended March 31, 2024 relates to a 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, and transaction costs incurred for our investments and tax restructuring fees.

 

(2) Other, net for the three months ended March 31, 2023 relates to changes in the fair value of our financing obligation to purchase the remaining equity interest in one of our investments.

 

Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA

 

    2024 Guidance Range  
(in thousands)   Low     High  
Net income   $ 71,500     $ 85,500  
Interest expense     14,500       12,500  
Provision for income taxes     36,500       44,500  
Depreciation and amortization     14,500       14,500  
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.