Apollo Medical(AMEH) - 2025 Q1 - Quarterly Results

Executive Summary & Business Overview Company Overview Astrana Health is a physician-centric, technology-driven healthcare company focused on accessible, high-quality, patient-centered care, leveraging its proprietary platform to improve patient outcomes and provider well-being - Astrana Health is a physician-centric, technology-driven healthcare company dedicated to providing accessible, high-quality, patient-centered care[15] - The company's proprietary end-to-end technology platform empowers providers to deliver more proactive, preventive care, improving patient outcomes, enhancing patient experience, increasing provider well-being, and creating greater value[15] - Currently, Astrana supports over 12,000 providers and more than 1 million Americans in value-based care arrangements through its affiliated provider network, management services organizations, and primary, specialty, and ancillary care clinics[16] Q1 2025 Financial & Operating Highlights Astrana Health achieved strong Q1 2025 results with a 53% total revenue increase, despite a net income and adjusted EBITDA decline, while making significant progress in leadership, CHS integration, and the Prospect Health acquisition 2025 Q1 Key Financial Data (vs. 2024 Q1) | Metric | Q1 2025 | Q1 2024 | YoY Change (%) | | :----------------------------- | :------------- | :------------- | :----------- | | Total Revenue | $620.4 million | $404.4 million | 53% | | Care Partners Revenue | $601.0 million | $382.3 million | 57% | | Net Income Attributable to Astrana | $6.7 million | $14.8 million | -55% | | Diluted Earnings Per Share (EPS) | $0.14 | $0.31 | -55% | | Adjusted EBITDA | $36.4 million | $42.2 million | -14% | - Astrana announced several leadership team additions, including Georgie Sam as Chief Data and Analytics Officer, Glenn Sobotka as Chief Accounting Officer, and the promotion of Rita Pew to Chief People Officer, to support continued growth and execution[6] - The company successfully completed the integration of Collaborative Health Systems (CHS) into its proprietary technology platform, which has already yielded significant general and administrative (G&A) efficiencies[6] - Astrana has received Hart-Scott-Rodino (HSR) approval for its upcoming acquisition of Prospect Health, which is expected to close this summer[6] 2025 Guidance Astrana Health provided Q2 and reaffirmed full-year 2025 financial guidance, projecting continued growth in total revenue and adjusted EBITDA, including strategic investments in automation and AI, and acquisition-related integration costs 2025 Financial Guidance Ranges | Metric | Three Months Ending June 30, 2025 (Guidance Range) | Year Ending December 31, 2025 (Guidance Range) | | :---------------- | :----------------------------- | :----------------------------- | | | Low | High | Low | High | | Total Revenue | $615 million | $655 million | $2,500 million | $2,700 million | | Adjusted EBITDA | $45 million | $50 million | $170 million | $190 million | - The full-year 2025 guidance includes approximately $15 million for ongoing strategic investments in automation and AI, as well as ongoing and anticipated integration costs related to planned acquisitions[9] - Guidance does not include the contribution from any acquisitions not yet completed[9] Financial Statements CONDENSED CONSOLIDATED BALANCE SHEETS As of March 31, 2025, Astrana Health's total assets slightly decreased to $1.33 billion, with total liabilities reducing and total stockholders' equity increasing, driven by changes in cash, receivables, and long-term debt Condensed Consolidated Balance Sheets Summary (As of March 31, 2025 vs. December 31, 2024) | Metric | March 31, 2025 (thousand dollars) | December 31, 2024 (thousand dollars) | Change (thousand dollars) | | :-------------------------------- | :------------- | :--------------- | :----- | | Total Assets | $1,331,256 | $1,354,894 | -$23,638 | | Total Liabilities | $813,550 | $840,726 | -$27,176 | | Total Stockholders' Equity | $750,439 | $716,726 | +$33,713 | | Cash and Cash Equivalents | $258,517 | $288,455 | -$29,938 | | Accounts Receivable, Net | $241,078 | $225,733 | +$15,345 | | Long-Term Debt, Net of Current Portion and Deferred Financing Costs | $403,894 | $425,299 | -$21,405 | - As of March 31, 2025, the company's consolidated VIEs had total assets of $678.1 million and total liabilities of $212.1 million[21] CONSOLIDATED STATEMENTS OF INCOME In Q1 2025, Astrana Health's total revenue grew 53% to $620.4 million, primarily from capitated revenue, but net income attributable to Astrana Health decreased 55% to $6.7 million due to increased operating and net other expenses Consolidated Statements of Income Summary (For the Three Months Ended March 31) | Metric | 2025 (thousand dollars) | 2024 (thousand dollars) | YoY Change (%) | | :------------------------------------ | :------- | :------- | :----------- | | Total Revenue | $620,390 | $404,356 | 53% | | Capitated Revenue, Net | $583,963 | $365,910 | 60% | | Total Operating Expenses | $599,807 | $374,217 | 60% | | Operating Income | $20,583 | $30,139 | -32% | | Net Other Expenses | $(10,979) | $(6,135) | 79% | | Net Income Attributable to Astrana Health, Inc. | $6,692 | $14,835 | -55% | | Diluted Earnings Per Share | $0.14 | $0.31 | -55% | - Service costs (excluding depreciation and amortization) increased by 66% year-over-year to $549.1 million[24] - Other loss (net) increased from $4.277 million in Q1 2024 to $5.072 million in Q1 2025[24] CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Q1 2025 saw a significant increase in net cash from operating activities to $16.6 million, but net cash outflow from financing activities of $44.2 million, mainly due to long-term debt repayment, resulted in a $29.9 million net decrease in cash and equivalents Condensed Consolidated Statements of Cash Flows Summary (For the Three Months Ended March 31) | Activity | 2025 (thousand dollars) | 2024 (thousand dollars) | | :------------------------------------ | :------- | :------- | | Net Cash Provided by Operating Activities | $16,627 | $5,977 | | Net Cash Used in Investing Activities | $(2,394) | $(71,039) | | Net Cash (Used in) Provided by Financing Activities | $(44,170) | $106,351 | | Net (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash | $(29,937) | $41,289 | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $259,164 | $335,441 | - Net cash provided by operating activities increased, primarily due to changes in accounts receivable and income tax receivable[26] - Cash outflow from financing activities primarily included $428.2 million for long-term debt repayment and $17.2 million for deferred financing costs, partially offset by $412.0 million in long-term debt borrowings[26] - Net cash used in investing activities significantly decreased, mainly because there were no cash payments for business acquisitions during the quarter[26] Non-GAAP Financial Measures & Reconciliations Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin (Historical) Astrana Health's Q1 2025 adjusted EBITDA decreased 14% to $36.4 million, with a 6% adjusted EBITDA margin, primarily due to increased "other, net" expenses and stock-based compensation Reconciliation of Net Income to EBITDA and Adjusted EBITDA (For the Three Months Ended March 31) | Metric | 2025 (thousand dollars) | 2024 (thousand dollars) | YoY Change (%) | | :-------------------- | :------- | :------- | :----------- | | Net Income | $6,221 | $16,862 | -63% | | EBITDA | $21,449 | $32,689 | -34% | | Adjusted EBITDA | $36,386 | $42,245 | -14% | | Total Revenue | $620,390 | $404,356 | 53% | | Adjusted EBITDA Margin | 6% | 10% | -4 ppts | - In Q1 2025, "other, net" primarily related to debt issuance costs associated with the Second Amended and Restated Credit Facility, Prospect acquisition transaction costs, data conversion costs for recent acquisitions, CHS transaction-related costs, non-cash changes in the fair value of call options and collar agreements, and severance expenses[29] - Stock-based compensation increased from $5.7 million in Q1 2024 to $7.8 million in Q1 2025[29] Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA (Forward-Looking) Astrana Health provided full-year 2025 guidance for net income ranging from $62.5 million to $73.5 million and adjusted EBITDA from $170 million to $190 million 2025 Full-Year Guidance Reconciliation | Metric | Low (thousand dollars) | High (thousand dollars) | | :-------------------------- | :----------- | :----------- | | Net Income | $62,500 | $73,500 | | Interest Expense | $16,000 | $19,000 | | Provision for Income Taxes | $34,000 | $40,000 | | Depreciation and Amortization | $32,500 | $32,500 | | EBITDA | $145,000 | $165,000 | | Equity Method Investment Income | $(5,500) | $(5,500) | | Other, Net | $9,500 | $9,500 | | Stock-Based Compensation | $21,000 | $21,000 | | Adjusted EBITDA | $170,000 | $190,000 | Use of Non-GAAP Financial Measures Astrana Health utilizes non-GAAP financial measures like EBITDA and Adjusted EBITDA as supplementary performance metrics to help investors assess operational performance by excluding non-core or non-recurring financial information - The company uses Adjusted EBITDA as a supplemental performance measure for operations, financial and operational decision-making, and assessing consistency across periods[33] - Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, and amortization, excluding equity method investment income or loss, non-recurring and non-cash transactions, and stock-based compensation[33] - The company believes the presentation of these non-GAAP financial measures provides relevant and useful information to investors, enabling them to assess the operational performance of business activities without considering differences caused by non-core or non-recurring financial information[34] Additional Information Segment Results In Q1 2025, the Care Partners segment was the primary revenue driver, growing 57% and contributing most of the operating income, while Care Delivery and Care Enablement also saw revenue growth with varied operating income Q1 2025 Segment Revenue and Operating Income | Segment | Total Revenue (thousand dollars) | YoY Change (%) | Operating Income (thousand dollars) | | :---------------- | :--------------- | :----------- | :--------------- | | Care Partners | $600,951 | 57% | $44,215 | | Care Delivery | $33,388 | 9% | $(3,108) | | Care Enablement | $39,562 | 19% | $3,535 | | Corporate Costs | — | — | $(24,062) | | Consolidated Total | $620,390 | — | $20,583 | - The Care Delivery segment reported an operating loss of $3.108 million, while the Care Enablement segment achieved an operating income of $3.535 million[7] Note About Consolidated Entities The company consolidates entities where it holds a controlling financial interest, including subsidiaries with over 50% voting rights and Variable Interest Entities (VIEs) where it is the primary beneficiary - The company consolidates entities in which it has a controlling financial interest, including subsidiaries where it directly or indirectly holds more than 50% of the voting rights, and Variable Interest Entities (VIEs) where the company is the primary beneficiary[14] - Non-controlling interests represent the equity ownership of third parties in the company's consolidated entities, including certain VIEs, with net income attributable to non-controlling interests disclosed in the company's consolidated statements of income[14] Forward-Looking Statements This press release contains forward-looking statements regarding future events and financial performance, based on management's current expectations and assumptions, which are subject to risks and uncertainties - Forward-looking statements reflect current views regarding future events and financial performance, and therefore no assurance can be given[17] - Such statements are based on the current expectations and certain assumptions of the company's management, some or all of which may not materialize or may vary significantly from actual results[17] - The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by applicable securities laws[17] Conference Call and Webcast Information Astrana Health held a conference call on May 8, 2025, to discuss Q1 2025 results, providing dial-in numbers and a webcast link with a supplementary slide presentation - Astrana held a conference call on Thursday, May 8, 2025, at 2:30 p.m. Pacific Time / 5:30 p.m. Eastern Time, where management discussed results for the first quarter ended March 31, 2025[11] - The conference was accessible via provided dial-in numbers or a webcast link[11] - A supplementary slide presentation was available in PDF format on the "Investor Relations Calendar" page of the company's website and filed as an exhibit to Astrana's Current Report on Form 8-K with the SEC[11] FOR MORE INFORMATION, PLEASE CONTACT: Contact information for investor relations, including phone and email, is provided for inquiries - Investor Relations contact phone: (626) 943-6491[18] - Investor Relations contact email: investors@astranahealth.com[18]