Core Viewpoint - Investors are evaluating Astrana Health, Inc. (ASTH) and U.S. Physical Therapy (USPH) to determine which stock offers better value opportunities in the Medical - Outpatient and Home Healthcare sector [1] Valuation Metrics - ASTH has a Zacks Rank of 1 (Strong Buy), while USPH has a Zacks Rank of 3 (Hold), indicating a stronger earnings outlook for ASTH compared to USPH [3] - ASTH's forward P/E ratio is 23.09, significantly lower than USPH's forward P/E of 31.71, suggesting that ASTH may be undervalued [5] - The PEG ratio for ASTH is 0.78, while USPH's PEG ratio is 4.15, indicating that ASTH has a more favorable earnings growth outlook relative to its price [5] - ASTH's P/B ratio is 2.28, compared to USPH's P/B of 2.5, further supporting the argument that ASTH is a better value option [6] - ASTH has a Value grade of B, while USPH has a Value grade of C, reinforcing the conclusion that ASTH is the preferred choice for value investors [6]

Core Viewpoint - Astrana Health, Inc. (ASTH) is currently positioned as a more attractive investment option compared to U.S. Physical Therapy (USPH) based on various valuation metrics and earnings outlook [1][7]. Valuation Metrics - ASTH has a forward P/E ratio of 20.02, significantly lower than USPH's forward P/E of 33.65 [5]. - The PEG ratio for ASTH is 0.67, indicating a better valuation relative to its expected earnings growth compared to USPH's PEG ratio of 4.40 [5]. - ASTH's P/B ratio stands at 2.11, while USPH has a P/B ratio of 2.65, further suggesting that ASTH is undervalued [6]. Earnings Outlook - ASTH is experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model, indicating a stronger potential for future earnings growth compared to USPH [3][7]. Investment Ratings - ASTH holds a Zacks Rank of 1 (Strong Buy), while USPH has a Zacks Rank of 2 (Buy), reflecting a more favorable investment sentiment towards ASTH [3]. Value Grades - ASTH has received a Value grade of A, whereas USPH has a Value grade of C, indicating that ASTH is perceived as a better value investment [6].

Group 1 - Astrana Health, Inc. reported quarterly earnings of $0.19 per share, missing the Zacks Consensus Estimate of $0.36 per share, and down from $0.4 per share a year ago, representing an earnings surprise of -47.22% [1] - The company posted revenues of $654.81 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.31%, and up from $486.27 million year-over-year [2] - Astrana Health, Inc. shares have lost about 30.8% since the beginning of the year, while the S&P 500 has gained 7.9% [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.58 on revenues of $946.77 million, and for the current fiscal year, it is $1.59 on revenues of $3.17 billion [7] - The Zacks Industry Rank for Medical - Outpatient and Home Healthcare is currently in the top 27% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Financial Data and Key Metrics Changes - The company reported total revenues of $654.8 million for Q2 2025, representing a 35% year-over-year increase [6][16] - Adjusted EBITDA for the quarter was $48.1 million, reflecting strong profitability and cash flow generation [7][16] - Net income attributable to the company was $9.4 million, with an EPS of $0.19 per share [16] - The company closed the quarter with $342 million in cash and cash equivalents, and a pro forma net leverage ratio of 2.7 times [17] Business Line Data and Key Metrics Changes - Approximately 78% of revenue now comes from full risk contracts, up from 60% a year ago and 75% from the previous quarter [7] - The Care Partners segment continued to drive revenue growth as payer partners sought high-quality coordinated care [7] Market Data and Key Metrics Changes - Medical cost trends remained well controlled, coming in slightly below the full-year expectation of 4.5% [8] - Medicare Advantage and commercial lines of business performed below the 4.5% trend, while Medicaid ran slightly above but improved sequentially from Q1 [8][12] Company Strategy and Development Direction - The company aims to build a leading patient-centered healthcare platform by empowering entrepreneurial physicians and providers [6] - The integration of the Prospect Health acquisition is a key focus, with efforts to standardize workflows and align clinical operations [10] - The company updated its full-year 2025 revenue guidance to between $3.1 billion and $3.3 billion, and adjusted EBITDA guidance to between $215 million and $225 million [11][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating upcoming Medicaid changes and maintaining growth and profitability despite potential headwinds [12][30] - The company remains optimistic about Medicare Advantage, supported by favorable rate notices and increased scale from the Prospect acquisition [13][58] Other Important Information - The company is focused on deleveraging its balance sheet to below 2.5 times over the next 12 to 18 months [11] - The company has minimal exposure to Part D risk, with fewer than 2% of members carrying any amount of Part D risk [13] Q&A Session Summary Question: How have Prospect's numbers been year to date over the first half of the year? - Management noted continued strength in the Prospect business, with great retention on both the provider and member sides [24][25] Question: What is the worst-case scenario for Medicaid and exchange impacts? - Management estimated a conservative 20% to 25% decline in Medicaid enrollment could lead to a revenue headwind of $200 million to $250 million [30] Question: Can you provide insights on the 4.5% blended utilization trend by geography? - Management stated that most revenue comes from California, and while they are not breaking out geographic trends, Nevada has shown profitability [34] Question: How are the rates trending for Medicaid in 2025? - Management indicated that negotiations are ongoing, and they have not accounted for any resolution in their guidance yet [42] Question: What are the expected synergies from the Prospect acquisition? - Management reiterated a synergy target of $12 million to $15 million over the first 12 to 18 months, with potential for upside as integration progresses [52][78] Question: How does the company ensure accurate coding and revenue per member? - Management highlighted their in-house RAF modeling and HEDIS programs, ensuring accurate risk adjustment practices [95]

Financial Performance - Q2 2025 - Revenue reached $654.8 million[9], a 35% increase compared to Q2 2024's $486.3 million[30] - Adjusted EBITDA was $48.1 million[9], slightly up from $47.917 million in Q2 2024[30] - Net income attributable to Astrana Health was $9.4 million[9], compared to $19.171 million in Q2 2024[30] - EPS-Diluted was $0.19[9], down from $0.40 in Q2 2024[30] FY2025 Guidance - Total revenue is projected to be in the range of $3.1 billion to $3.3 billion[11] - Adjusted EBITDA is expected to be between $215 million and $225 million[11] Business Growth & Risk Management - Astrana Health now serves over 1.6 million patients in value-based arrangements following the acquisition of Prospect[13] - Care Partners segment has 1.4 million members pro forma[13] - 78% of revenues are from fully capitated arrangements, compared to 60% a year ago[13] - The company anticipates 75-85% of capitation revenue from full-risk arrangements exiting 2025[20]

PART I FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Astrana Health's H1 2025 financials show **43% revenue growth** to **$1.28 billion**, with net income down **53%** [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $339,703 | $288,455 | | Receivables, net | $348,730 | $275,990 | | Goodwill | $416,917 | $419,253 | | **Total Assets** | **$1,442,350** | **$1,354,894** | | **Liabilities & Equity** | | | | Medical liabilities | $287,691 | $209,039 | | Long-term debt, net | $401,057 | $425,299 | | **Total Liabilities** | **$904,404** | **$840,726** | | Total stockholders' equity | $765,461 | $712,720 | [Condensed Consolidated Statements of Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Financial Performance for the Three Months Ended June 30 (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $654,808 | $486,265 | 34.7% | | Capitation, net | $614,108 | $442,574 | 38.8% | | Income from Operations | $20,340 | $30,066 | (32.3)% | | Net Income Attributable to Astrana | $9,423 | $19,171 | (50.8)% | | Diluted EPS | $0.19 | $0.40 | (52.5)% | Financial Performance for the Six Months Ended June 30 (in thousands, except EPS) | Metric | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $1,275,196 | $890,621 | 43.2% | | Capitation, net | $1,198,071 | $808,484 | 48.2% | | Income from Operations | $40,921 | $60,205 | (32.0)% | | Net Income Attributable to Astrana | $16,115 | $34,006 | (52.6)% | | Diluted EPS | $0.33 | $0.71 | (53.5)% | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $107,527 | $29,165 | | Net cash used in investing activities | ($3,471) | ($150,964) | | Net cash (used in) provided by financing activities | ($52,808) | $153,603 | | **Net increase in cash** | **$51,248** | **$31,804** | - The significant decrease in cash used for investing activities in H1 2025 compared to H1 2024 is mainly because the prior year period included **$114.6 million** for a business acquisition[36](index=36&type=chunk) - Financing activities in H1 2025 involved a net cash outflow of **$52.8 million**, driven by debt repayments of **$431.4 million** and deferred financing costs of **$17.2 million**, partially offset by new borrowings of **$412.0 million**[36](index=36&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company operates through three reportable segments: Care Partners (managing provider networks), Care Delivery (primary, multi-specialty, and ancillary care), and Care Enablement (technology and MSO platform)[43](index=43&type=chunk)[44](index=44&type=chunk) - On July 1, 2025, the company completed the acquisition of Prospect, a value-based care network with over **11,000 providers**, which was a significant subsequent event[42](index=42&type=chunk)[168](index=168&type=chunk) - Goodwill decreased by **$2.3 million** to **$416.9 million** as of June 30, 2025, due to measurement period adjustments for the CHS acquisition[70](index=70&type=chunk)[79](index=79&type=chunk) - In February 2025, the company entered into a Second Amended and Restated Credit Agreement, securing a **$300 million** Revolver, a **$250 million** Term Loan, and a **$745 million** Delayed Draw Term Loan, which was subsequently used to finance the Prospect acquisition[94](index=94&type=chunk)[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) H1 2025 revenue grew **43%** to **$1.28 billion** from acquisitions, but operating income and net income declined [Results of Operations](index=48&type=section&id=Results%20of%20Operations) Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $654.8 | $486.3 | 35% | | Cost of Services | $576.8 | $412.8 | 40% | | G&A Expenses | $50.7 | $36.0 | 41% | | Income from Operations | $20.3 | $30.1 | (32)% | | Net Income (to Astrana) | $9.4 | $19.2 | (51)% | | Adjusted EBITDA | $48.1 | $47.9 | 0.4% | H1 2025 vs H1 2024 Performance (in millions) | Metric | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $1,275.2 | $890.6 | 43% | | Cost of Services | $1,125.9 | $743.2 | 51% | | G&A Expenses | $94.6 | $74.7 | 27% | | Income from Operations | $40.9 | $60.2 | (32)% | | Net Income (to Astrana) | $16.1 | $34.0 | (53)% | | Adjusted EBITDA | $84.5 | $90.2 | (6)% | - The **35%** revenue increase in Q2 2025 was driven by a **$171.5 million** rise in capitation revenue, primarily from recent acquisitions in the Care Partners segment and members moving to full-risk plans[190](index=190&type=chunk) - General and administrative expenses rose **41%** in Q2 2025, attributed to costs supporting operational growth, higher stock-based compensation, and transaction costs related to the Prospect acquisition[194](index=194&type=chunk) [Segment Financial Performance](index=54&type=section&id=Segment%20Financial%20Performance) Segment Revenue (in millions) | Segment | Q2 2025 | Q2 2024 | % Change | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Care Partners | $631.4 | $463.3 | 36% | $1,232.4 | $845.6 | 46% | | Care Delivery | $38.4 | $34.9 | 10% | $71.8 | $65.6 | 9% | | Care Enablement | $40.9 | $36.2 | 13% | $80.5 | $69.4 | 16% | Segment Operating Income (Loss) (in millions) | Segment | Q2 2025 | Q2 2024 | % Change | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Care Partners | $49.7 | $40.3 | 23% | $93.9 | $83.5 | 12% | | Care Delivery | $2.1 | $1.8 | 18% | ($1.0) | $1.6 | (161)% | | Care Enablement | $1.8 | $6.9 | (73)% | $5.4 | $10.4 | (48)% | - The Care Partners segment was the primary driver of growth, with revenue increasing **46%** in H1 2025 due to recent acquisitions[216](index=216&type=chunk) - The Care Enablement segment's operating income decreased significantly, down **73%** in Q2 and **48%** in H1 2025, due to higher costs from an increased workforce providing management and administrative services[219](index=219&type=chunk)[220](index=220&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company held **$342.1 million** in cash, cash equivalents, and marketable securities, an increase from **$290.8 million** at year-end 2024[225](index=225&type=chunk) - Net cash from operating activities increased substantially to **$107.5 million** for H1 2025, up from **$29.2 million** in H1 2024, driven by favorable working capital changes[229](index=229&type=chunk)[230](index=230&type=chunk) - The company believes it has sufficient liquidity to fund operations for at least the next **12 months**, supported by internally generated funds and its new credit facility[228](index=228&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces interest rate risk on **$408.9 million** variable-rate debt, partially mitigated by an interest rate collar - The company's primary market risk is interest rate fluctuations on its variable-rate debt under the Second Amended and Restated Credit Agreement[238](index=238&type=chunk) - An interest rate collar agreement is used to manage risk on the Revolver Loan, with a SOFR cap of **5.00%** and a floor of **2.34%**[238](index=238&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2025, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[240](index=240&type=chunk) - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2025[241](index=241&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management expects no material adverse financial impact - The company is party to various legal proceedings but does not expect them to have a material adverse effect on its financial condition[243](index=243&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) New risks include the 'One Big Beautiful Bill Act' impacting Medicaid and Prospect seller bankruptcy limiting recourse - A new risk factor is the 'One Big Beautiful Bill Act' (enacted July 4, 2025), which introduces stricter Medicaid eligibility and could reduce the company's patient population and managed care enrollees[247](index=247&type=chunk) - The bankruptcy of the Prospect seller entities on July 7, 2025, poses a risk of incurring additional costs, as Astrana may have to absorb liabilities with limited recourse against the bankrupt sellers[249](index=249&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a **$50.0 million** share repurchase plan with **$40.5 million** remaining, no public repurchases in Q2 - As of June 30, 2025, **$40.5 million** remained available under the company's **$50.0 million** share repurchase plan[251](index=251&type=chunk) - No shares were repurchased under the publicly announced plan during Q2 2025. The **28,130 shares** acquired were for satisfying employee tax obligations on vested stock awards[251](index=251&type=chunk)[253](index=253&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with or incorporated by reference into the Quarterly Report on Form 10-Q

Core Insights - The U.S. market experienced a slight decline as investors reacted to new earnings reports, economic data, and tariff announcements, particularly regarding semiconductor and pharmaceutical imports [1] - In the current environment characterized by geopolitical risks and policy changes, value investing is highlighted as a favorable strategy, focusing on purchasing undervalued stocks [1] Investment Strategy - Value investing involves buying stocks priced below their intrinsic value, capitalizing on market mispricing to achieve future profits [1] - Earnings yield is a key metric for value investors, calculated as (Annual Earnings per Share/Market Price) x 100, serving as a reverse indicator of the price-to-earnings (P/E) ratio [3] - A high earnings yield suggests a stock may be undervalued, while a low yield indicates potential overvaluation [3] Stock Selection Criteria - An earnings yield greater than 10% is set as a primary screening criterion, supplemented by additional parameters [5] - Estimated EPS growth for the next 12 months must be greater than or equal to the S&P 500, comparing forward EPS estimates with actual EPS [5] - Average daily trading volume over the past 20 days should be at least 100,000, indicating sufficient liquidity [6] - Current stock price must be $5 or higher, and stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) are expected to outperform peers [7] Highlighted Stocks - Barrick Mining Corporation is a leading gold mining company with projected earnings growth of 56% and 24% for 2025 and 2026, respectively, and a Zacks Rank of 1 [8] - Astrana Health, a tech-enabled healthcare provider, anticipates earnings growth of 77% and 49% for 2025 and 2026, respectively, also holding a Zacks Rank of 1 [9][10] - StoneCo Ltd., a fintech company, expects earnings growth of 10.4% and 16% for 2025 and 2026, with a Zacks Rank of 1 [11] - Plains GP Holdings, involved in crude oil transportation and marketing, projects earnings growth of 206% and 24% for 2025 and 2026, respectively, and has a Zacks Rank of 1 [12] - PHINIA Inc., a supplier for the mobility industry, forecasts earnings growth of 14% and 19.5% for 2025 and 2026, respectively, and holds a Zacks Rank of 1 [13]

Core Viewpoint - Astrana Health, Inc. (ASTH) is currently positioned as a better value investment compared to Chemed (CHE) based on Zacks Rank and various valuation metrics [3][7]. Valuation Metrics - ASTH has a Zacks Rank of 1 (Strong Buy), indicating a positive earnings outlook, while CHE has a Zacks Rank of 4 (Sell) [3]. - The forward P/E ratio for ASTH is 14.68, significantly lower than CHE's forward P/E of 20.43, suggesting that ASTH is undervalued relative to CHE [5]. - ASTH's PEG ratio is 0.85, indicating better expected earnings growth compared to CHE's PEG ratio of 2.09, which suggests overvaluation [5]. - ASTH has a P/B ratio of 1.74, while CHE's P/B ratio is 5.83, further indicating that ASTH is more attractively priced [6]. Value Grades - ASTH has received a Value grade of A, reflecting its strong valuation metrics, whereas CHE has a Value grade of C, indicating it is less favorable for value investors [6].

Company Overview - Astrana Health, Inc. is a leading provider-centric, technology-powered healthcare company focused on delivering accessible, high-quality, and high-value care [1][4] - The company supports over 20,000 providers and more than 1.6 million patients in value-based care arrangements through its affiliated networks and integrated care delivery clinics [5] Financial Results Announcement - Astrana Health will release its financial results for the second quarter ended June 30, 2025, after the stock market closes on August 7, 2025 [1] - A conference call to discuss these results will take place at 2:30 p.m. PT/5:30 p.m. ET on the same day [1] Accessing the Conference Call - Participants can dial in to the conference call using the numbers 877-858-9810 or +1 201-689-8517, and should join approximately five minutes before the start time [2] - An accompanying slide presentation will be available in PDF format on the company's Investor Relations website after the earnings release [2] Webcast Availability - The conference call will also be accessible via an online webcast, with a recording available shortly after the call concludes [3]

Core Viewpoint - Astrana Health, Inc. (ASTH) shows significant upside potential with a mean price target of $49.56, indicating a 97.3% increase from the current price of $25.12 [1] Price Targets and Analyst Consensus - The average price target consists of nine estimates ranging from a low of $36.00 to a high of $70.00, with a standard deviation of $12.39, suggesting variability in analyst opinions [2] - The lowest estimate indicates a potential increase of 43.3%, while the highest suggests a 178.7% upside [2] - A low standard deviation indicates a high degree of agreement among analysts regarding the stock's price movement direction [9] Earnings Estimates and Analyst Optimism - Analysts have shown increasing optimism about ASTH's earnings prospects, with a strong consensus on higher EPS estimates, which correlates with potential stock price increases [11] - Over the last 30 days, two estimates have been revised upward, leading to a 46.4% increase in the Zacks Consensus Estimate for the current year [12] Zacks Rank and Investment Potential - ASTH holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for upside [13] - While consensus price targets may not be entirely reliable, the implied direction of price movement appears to be a useful guide for investors [14]