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Astrana Health(ASTH) - 2024 Q3 - Earnings Call Transcript
ASTHAstrana Health(ASTH)2024-11-09 18:12
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Financial Data and Key Metrics Changes - Astrana Health reported total revenue of 478.7million,a37478.7 million, a 37% increase from the prior year period [23] - Adjusted EBITDA for the quarter was 45.2 million, a 13% decrease from 52millionintheprioryearperiod[24]−Year−to−dateadjustedEBITDAincreasedby1552 million in the prior year period [24] - Year-to-date adjusted EBITDA increased by 15% from 117.6 million in the first three quarters of 2023 to 135.3millioninthefirstthreequartersof2024[12][25]−NetincomeattributabletoAstranaforthequarterwas135.3 million in the first three quarters of 2024 [12][25] - Net income attributable to Astrana for the quarter was 16.1 million, down 27% from 22.1millionintheprioryearquarter[25]−Earningsperdilutedshareforthequarterstoodat22.1 million in the prior year quarter [25] - Earnings per diluted share for the quarter stood at 0.33, down from 0.47intheprioryearperiod[26]−Thecompanyendedthequarterwith0.47 in the prior year period [26] - The company ended the quarter with 348 million in cash and cash equivalents and total debt of 442million[26]BusinessLineDataandKeyMetricsChanges−Membershipwasaround1millionmembersasofSeptember30,withover200primarycareprovidersandover900specialistsaddedtothenetwork[13]−Fullriskbusinessaccountedforapproximately61442 million [26] Business Line Data and Key Metrics Changes - Membership was around 1 million members as of September 30, with over 200 primary care providers and over 900 specialists added to the network [13] - Full risk business accounted for approximately 61% of total capitation revenue as of October 1, 2024, up from 46% a year earlier [14] - Cost trends across all lines of business evolved in the mid-single-digit percentage range, with stabilizing trends in Medicare Advantage and ACO reach [15][16] Market Data and Key Metrics Changes - The acquisition of Collaborative Health Systems closed on October 4, expanding the company's footprint to serve over 1.1 million patients in value-based care arrangements across 12 states [21] - The company expects approximately 200 million in additional top line from CHS in Q4, with a negative 4millionadjustedEBITDAimpact[31][20]CompanyStrategyandDevelopmentDirection−Thecompanyfocusesonfourstrategicpillars:sustainablygrowingmembership,increasingalignmentwithoutcomes,achievingsuperiorpatientoutcomes,anddrivingoperatingleverage[8][10]−TheintegrationofCollaborativeHealthSystemsisunderway,withexpectationsforsignificantrevenuecontributionsinthefuture[20][21]−Thecompanyaimstohavearoundtwo−thirdsofitscapitationrevenuecomingfromafullriskecosystembyJanuary1,2025[14]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementexpressedoptimismaboutincreasedMedicaidfundinginCalifornia,whichisexpectedtobenefitcommunitiesserved[33][34]−ThecompanyanticipatesstabilizationinMedicaidtrendsasredeterminationprocessesnormalize[44][49]−Managementhighlightedtheimportanceoflocalmarketdynamicsandtheneedfortailoredapproachestocaredelivery[38][39]OtherImportantInformation−Thecompanyisfocusedontheseamlessintegrationofacquisitionsandstrengtheningitsfinancialposition[28]−Adjustedguidanceforfull−yearrevenueisnowbetween4 million adjusted EBITDA impact [31][20] Company Strategy and Development Direction - The company focuses on four strategic pillars: sustainably growing membership, increasing alignment with outcomes, achieving superior patient outcomes, and driving operating leverage [8][10] - The integration of Collaborative Health Systems is underway, with expectations for significant revenue contributions in the future [20][21] - The company aims to have around two-thirds of its capitation revenue coming from a full risk ecosystem by January 1, 2025 [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about increased Medicaid funding in California, which is expected to benefit communities served [33][34] - The company anticipates stabilization in Medicaid trends as redetermination processes normalize [44][49] - Management highlighted the importance of local market dynamics and the need for tailored approaches to care delivery [38][39] Other Important Information - The company is focused on the seamless integration of acquisitions and strengthening its financial position [28] - Adjusted guidance for full-year revenue is now between 1.95 billion and 2.03billion,withadjustedEBITDAexpectedtorangebetween2.03 billion, with adjusted EBITDA expected to range between 165 million and 175 million [27] Q&A Session Summary Question: Impact of CHS on guidance - The addition of CHS is expected to contribute approximately 200 million in top line for Q4, with a negative $4 million EBITDA impact [31] Question: Proposition 35 in California - Management is pleased with increased Medicaid funding, which is expected to enhance network sustainability and quality [33][34] Question: Medical cost trends and reinvestment areas - Medical cost trends are stabilizing, with reinvestments focused on clinical and care management programs [42][44] Question: Full risk percentage and future potential - The company aims for long-term full risk participation to reach around 50%, with significant revenue implications [70][72] Question: Technology infrastructure and margin management - The company utilizes purpose-built tools and a delegated environment to manage costs effectively [76][78]