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]

Core Viewpoint - Astrana Health, Inc. (ASTH) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - Astrana Health, Inc. is expected to earn $1.59 per share for the fiscal year ending December 2025, with no year-over-year change, but the Zacks Consensus Estimate has increased by 19.5% over the past three months [8]. Institutional Investor Influence - Institutional investors utilize earnings estimates to determine the fair value of stocks, and changes in these estimates can lead to significant buying or selling actions, impacting stock prices [4][5]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Astrana Health, Inc. to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting potential for higher stock movement in the near term [10].

Core Viewpoint - Investors in the Medical - Outpatient and Home Healthcare sector should consider Astrana Health, Inc. (ASTH) as a potentially better value option compared to Chemed (CHE) based on various financial metrics and rankings [1]. Group 1: Zacks Rank and Earnings Outlook - Astrana Health, Inc. has a Zacks Rank of 1 (Strong Buy), indicating a positive earnings estimate revision trend, while Chemed has a Zacks Rank of 4 (Sell) [3]. - The improving earnings outlook for ASTH suggests a favorable investment opportunity compared to CHE [7]. Group 2: Valuation Metrics - ASTH has a forward P/E ratio of 15.66, significantly lower than CHE's forward P/E of 20.47, indicating that ASTH may be undervalued [5]. - The PEG ratio for ASTH is 0.91, while CHE's PEG ratio is 2.09, further suggesting that ASTH offers better value considering expected earnings growth [5]. - ASTH's P/B ratio is 1.85 compared to CHE's P/B of 5.84, reinforcing the notion that ASTH is more attractively priced relative to its book value [6]. - Based on these metrics, ASTH has earned a Value grade of A, while CHE has a Value grade of C [6].

Core Insights - Investors often focus on the price-to-earnings (P/E) ratio for stock valuation, but it has limitations [1] - The EV-to-EBITDA ratio is considered a more comprehensive valuation metric, providing a clearer picture of a company's true value and earnings potential [2][4] Valuation Metrics - EV-to-EBITDA is calculated by dividing a company's enterprise value (EV) by its earnings before interest, taxes, depreciation, and amortization (EBITDA) [4] - EV accounts for market capitalization, debt, and preferred stock, minus cash and cash equivalents, offering a complete view of a company's value [4] - EBITDA provides insight into profitability by excluding non-cash expenses, making it a useful proxy for cash flows [4] Investment Opportunities - Stocks with low EV-to-EBITDA ratios are often seen as undervalued and attractive for acquisition [5] - Companies like Astrana Health, KT Corporation, Upbound Group, Noah Holdings, and DXP Enterprises have impressive EV-to-EBITDA ratios, indicating potential investment opportunities [3][9] Screening Criteria for Bargain Stocks - Parameters for screening include EV-to-EBITDA less than the industry median, P/E less than the industry median, and P/B less than the industry median [8][10] - Additional criteria include a minimum average trading volume, current price above $5, and a favorable Zacks Rank [11] Company Profiles - Astrana Health is a physician-centric healthcare company with a Zacks Rank of 1 and an expected earnings growth rate of 76.7% for 2025 [12][13] - KT Corporation, the largest telecommunications operator in South Korea, has a Zacks Rank of 2 and an expected earnings growth rate of 280% for 2025 [13] - Upbound Group, a lease-to-own provider, has a Zacks Rank of 2 with a projected earnings growth rate of 9.1% for 2025 [14] - Noah Holdings, a wealth management service provider in China, has a Zacks Rank of 2 and an expected earnings growth rate of 28% for 2025 [15] - DXP Enterprises, providing innovative solutions and services, has a Zacks Rank of 2 and an expected earnings growth rate of 17.5% for 2025 [16]

[Completion of Acquisition](index=2&type=section&id=Item%202.01%20Completion%20of%20Acquisition%20or%20Disposition%20of%20Assets) On July 1, 2025, Astrana Health, Inc. completed the acquisition of Alta Newport Hospital, LLC, Prospect Health Plan, Inc., and certain PHP Holdings subsidiaries for a final price of **$707.9 million**, financed by a term loan and involving ancillary agreements [Transaction Details](index=2&type=section&id=Item%202.01_1) - On July 1, 2025, the Company completed the acquisition of all outstanding equity interests of Alta Newport Hospital, LLC (doing business as Foothill Regional Medical Center) and Prospect Health Plan, Inc[5](index=5&type=chunk) - The acquisition also included substantially all assets of certain direct and indirect subsidiaries of PHP Holdings, LLC ("PHPH")[5](index=5&type=chunk) - The parties entered into a transition services agreement, under which the sellers will provide certain post-closing services to the Company[6](index=6&type=chunk) [Financial Terms and Financing](index=2&type=section&id=Item%202.01_2) Purchase Price Details | Term | Amount | | :--- | :--- | | Original Purchase Price | $745.0 million | | Final Purchase Price | $707.9 million | - The final purchase price consisted of **$707.9 million** in cash and the assumption of certain identified liabilities[7](index=7&type=chunk) - The transaction was financed using **$707.9 million** in proceeds from a five-year delayed draw term loan credit facility of up to **$745 million** with Truist Bank as the administrative agent[7](index=7&type=chunk) - A letter agreement removed certain post-closing purchase price adjustments and related escrow[6](index=6&type=chunk) [Updated Financial Guidance](index=3&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) Following the acquisition, on July 2, 2025, the Company reaffirmed its second-quarter guidance and updated its full-year 2025 revenue and adjusted EBITDA forecasts, noting these preliminary figures are unaudited and subject to change - The Company issued a press release on July 2, 2025, announcing the closing of the acquisition[10](index=10&type=chunk) - The company reaffirmed its second-quarter guidance[10](index=10&type=chunk) - The company updated its full-year 2025 revenue and adjusted EBITDA guidance[10](index=10&type=chunk) - The preliminary financial results and forecasts are based on management's assumptions and are inherently uncertain; audited financials may differ materially[11](index=11&type=chunk) [Financial Statements and Exhibits](index=4&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This report lists key exhibits, including the Asset and Equity Purchase Agreement and the Second Amended and Restated Credit Agreement, with required financial statements and pro forma information to be filed via amendment within 71 days - The financial statements of the acquired businesses and the pro forma financial information are not filed with this report[16](index=16&type=chunk) - This required financial information will be filed by amendment to the Current Report no later than 71 days after the report's required filing date[16](index=16&type=chunk) - Key exhibits filed include the Asset and Equity Purchase Agreement (Exhibit 2.1), the Second Amended and Restated Credit Agreement (Exhibit 10.1), and a Press Release (Exhibit 99.1)[17](index=17&type=chunk)