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Astrana Health(ASTH) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Astrana Health's H1 2025 financials show 43% revenue growth to $1.28 billion, with net income down 53% Condensed Consolidated Balance Sheets 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 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 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 acquisition36 - 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 million36 Notes to Condensed Consolidated Financial Statements - 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)4344 - 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 event42168 - Goodwill decreased by $2.3 million to $416.9 million as of June 30, 2025, due to measurement period adjustments for the CHS acquisition7079 - 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 acquisition9495 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations H1 2025 revenue grew 43% to $1.28 billion from acquisitions, but operating income and net income declined Results of Operations 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 plans190 - 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 acquisition194 Segment Financial Performance 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 acquisitions216 - 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 services219220 Liquidity and Capital Resources - 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 2024225 - 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 changes229230 - 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 facility228 Item 3. Quantitative and Qualitative Disclosures about Market Risk 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 Agreement238 - 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 Item 4. Controls and Procedures 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 quarter240 - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2025241 PART II OTHER INFORMATION Item 1. Legal Proceedings 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 condition243 Item 1A. Risk Factors 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 enrollees247 - 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 sellers249 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 plan251 - 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 awards251253 Item 6. Exhibits This section lists exhibits filed with or incorporated by reference into the Quarterly Report on Form 10-Q