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Astrana Health Reports First Quarter 2024 Results

May 07, 2024 | Last Trade: US$33.48 0.01 0.03
  • Company to Host Conference Call on Tuesday, May 7, 2024, at 2:30 p.m. PT/5:30 p.m. ET

ALHAMBRA, Calif., May 7, 2024 /PRNewswire/ -- Astrana Health, Inc. ("Astrana," and together with its subsidiaries and affiliated entities, the "Company") (NASDAQ: ASTH), a leading provider-centric, technology-powered healthcare company enabling providers to deliver accessible, high-quality, and high-value care to all, today announced its consolidated financial results for the first quarter ended March 31, 2024.

"We believe our strong first quarter performance continues to demonstrate the uniqueness of our platform, care model, and technology. Revenue growth of 20%, net income attributable to Astrana growth of 13% and adjusted EBITDA growth of 42% relative to the prior year quarter were primarily driven by solid membership growth across all lines of business and successful management of total cost of care for our members. Additionally, organic membership growth of 10% year-to-date increased our total number of lives managed to approximately one million. We also made further progress transitioning our members into full-risk arrangements, which we expect to account for approximately 60% of our total capitation revenue as of April 1, 2024. We believe our consistent execution against our strategic roadmap has set the stage for continued growth this year as we bring high-quality, high-value care to the communities we serve," said Brandon K. Sim, President and Chief Executive Officer of Astrana Health.

Financial Highlights for First Quarter Ended March 31, 2024:

All comparisons are to the quarter ended March 31, 2023 unless otherwise stated.

  • Total revenue of $404.4 million, up 20% from $337.2 million
  • Care Partners revenue of $397.1 million, up 26% from $314.7 million
  • Net income attributable to Astrana of $14.8 million, up 13% from $13.1 million
  • Adjusted EBITDA of $42.2 million, up 42% from $29.8 million
  • Earnings per share - diluted ("EPS - diluted") of $0.31 per share, up 11% from $0.28 per share

Recent Operating Highlights

  • We successfully closed the second and final part of our Community Family Care ("CFC") acquisition on March 31, 2024. This acquisition marks the largest in Astrana's history and allows the Company to take on greater responsibility for the outcomes of the patients we serve with CFC's full-risk Medicaid Restricted Knox-Keene license.
  • We also completed the acquisition of Prime Community Care of Central Valley ("PCCCV") on March 29, 2024. PCCCV is a risk-bearing provider organization with over 150 primary care and multi-specialty care providers which serves around 26,000 primarily Medicaid members in the Central Valley of California.
  • We opened two new de novo clinics in Nevada in April.

Segment Results for the First Quarter Ended March 31, 2024:

 

Three Months Ended March 31, 2024

(in thousands)

Care
Partners

 

Care
Delivery

 

Care
Enablement

 

Other

 

Intersegment
Elimination

  

Corporate
Costs

 

Consolidated
Total

Total revenues

$    397,095

 

$     30,719

 

$      33,274

 

$            —

 

$         (56,732)

  

$                 —

 

$        404,356

% change vs. prior year quarter

26 %

 

21 %

 

9 %

        

20 %

               

Cost of services

314,966

 

24,794

 

17,373

 

 

(26,734)

  

 

330,399

General and administrative(1)

38,933

 

6,163

 

12,397

 

 

(30,075)

  

16,400

 

43,818

Total expenses

353,899

 

30,957

 

29,770

 

 

(56,809)

  

16,400

 

374,217

               

Income (loss) from operations

$      43,196

 

$        (238)

 

$        3,504

 

$            —

 

$                  77

(2)

 

$        (16,400)

 

$          30,139

% change vs. prior year quarter

94 %

 

(75) %

 

(39) %

        

35 %

 

(1) Balance includes general and administrative expenses and depreciation and amortization.

(2) Income from operations for the intersegment elimination represents rental income from segments renting from other segments. Rental income is presented within other income which is not presented in the table.

2024 Guidance:

Astrana is reiterating the following guidance for total revenue, net income attributable to Astrana, Adjusted EBITDA, and EPS - diluted, based on the Company's existing business, current view of existing market conditions and assumptions for the year ending December 31, 2024.

  

2024 Guidance Range

($ in millions)

 

Low

 

High

Total revenue

 

$             1,650.0

 

$             1,850.0

Net income attributable to Astrana Health, Inc.

 

$                   61.0

 

$                   73.0

Adjusted EBITDA

 

$                 165.0

 

$                 185.0

EPS – diluted

 

$                   1.28

 

$                   1.52

See "Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA" and "Use of Non-GAAP Financial Measures" below for additional information. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. See "Forward-Looking Statements" below for additional information.

Conference Call and Webcast Information:

Astrana will host a conference call at 2:30 p.m. PT/5:30 p.m. ET today (Tuesday, May 7, 2024), during which management will discuss the results of the first quarter ended March 31, 2024. To participate in the conference call, please use the following dial-in numbers about 5 minutes prior to the scheduled conference call time:

U.S. & Canada (Toll-Free):

+1 (888) 437-3179

International (Toll):     

+1 (862) 298-0702

The conference call can also be accessed via webcast at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=y3Hig4E8

An accompanying slide presentation will be available in PDF format on the "IR Calendar" page of the Company's website (https://ir.astranahealth.com/news-events/ir-calendar) after issuance of the earnings release and will be furnished as an exhibit to Astrana's current report on Form 8-K to be filed with the SEC, accessible at www.sec.gov

Those who are unable to attend the live conference call may access the recording at the above webcast link, which will be made available shortly after the conclusion of the call.

Note About Consolidated Entities

The Company consolidates entities in which it has a controlling financial interest. The Company consolidates subsidiaries in which it holds, directly or indirectly, more than 50% of the voting rights, and variable interest entities ("VIEs") in which the Company is the primary beneficiary. Noncontrolling interests represent third party equity ownership interests in the Company's consolidated entities (including certain VIEs). The amount of net income attributable to noncontrolling interests is disclosed in the Company's consolidated statements of income.

Note About Stockholders' Equity, Certain Treasury Stock and Earnings Per Share

As of the date of this press release, 41,048 holdback shares have not been issued to certain former shareholders of the Company's subsidiary, Astrana Health Management, Inc. ("AHM"), formerly known as Network Medical Management, Inc., who were AHM shareholders at the time of closing of the merger, as they have yet to submit properly completed letters of transmittal to Astrana in order to receive their pro rata portion of Astrana's common stock as contemplated under that certain Agreement and Plan of Merger, dated December 21, 2016, among Astrana, AHM, Apollo Acquisition Corp. ("Merger Subsidiary") and Kenneth Sim, M.D., as amended, pursuant to which Merger Subsidiary merged with and into AHM, with AHM as the surviving corporation. Pending such receipt, such former AHM shareholders have the right to receive, without interest, their pro rata share of dividends or distributions with a record date after the effectiveness of the merger. The Company's consolidated financial statements have treated such shares of common stock as outstanding, given the receipt of the letter of transmittal is considered perfunctory and Astrana is legally obligated to issue these shares in connection with the merger.

Shares of Astrana's common stock owned by Allied Physicians of California, a Professional Medical Corporation ("APC"), a VIE of the Company, are legally issued and outstanding but excluded from shares of common stock outstanding in the Company's consolidated financial statements, as such shares are treated as treasury shares for accounting purposes. Such shares, therefore, are not included in the number of shares of common stock outstanding used to calculate the Company's earnings per share.

About Astrana Health,  Inc.

Astrana is a leading provider-centric, technology-powered healthcare company enabling providers to deliver accessible, high-quality, and high-value care to all. Leveraging its proprietary end-to-end technology solutions, Astrana operates an integrated healthcare delivery platform that enables providers to successfully participate in value-based care arrangements, thus empowering them to deliver high quality care to patients in a cost-effective manner.

Headquartered in Alhambra, California, Astrana serves over 10,000 providers and 1.0 million patients in value-based care arrangements. Its subsidiaries and affiliates include management services organizations (MSOs), affiliated independent practice associations (IPAs), accountable care organizations (ACOs), and care delivery entities across primary, multi-specialty, and ancillary care. For more information, please visit www.astranahealth.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements about the Company's guidance for the year ending December 31, 2024, ability to meet operational goals, ability to meet expectations in deployment of care coordination and management capabilities, ability to decrease cost of care while improving quality and outcomes, ability to deliver sustainable revenue and EBITDA growth as well as long-term value, ability to respond to the changing environment, and successful implementation of strategic growth plans, acquisition strategy, and merger integration efforts. Forward-looking statements reflect current views with respect to future events and financial performance and therefore cannot be guaranteed. Such statements are based on the current expectations and certain assumptions of the Company's management, and some or all of such expectations and assumptions may not materialize or may vary significantly from actual results. Actual results may also vary materially from forward-looking statements due to risks, uncertainties and other factors, known and unknown, including the risk factors described from time to time in the Company's reports to the SEC, including, without limitation the risk factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, and any subsequent quarterly reports on Form 10-Q.

FOR MORE INFORMATION, PLEASE CONTACT:

Investor Relations
(626) 943-6491
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ASTRANA HEALTH, INC.

 CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 
     
  

March 31,
2024

 

December 31,
2023

  

(Unaudited)

  

Assets

    
     

Current assets

    

Cash and cash equivalents

 

$           334,796

 

$           293,807

Investment in marketable securities

 

2,490

 

2,498

Receivables, net

 

120,106

 

76,780

Receivables, net – related parties

 

62,354

 

58,980

Income taxes receivable

 

 

10,657

Other receivables

 

1,783

 

1,335

Prepaid expenses and other current assets

 

17,281

 

17,450

     

Total current assets

 

538,810

 

461,507

     

Non-current assets

    

Land, property and equipment, net

 

7,985

 

7,171

Intangible assets, net

 

119,707

 

71,648

Goodwill

 

410,267

 

278,831

Income taxes receivable

 

15,943

 

15,943

Loans receivable, non-current

 

47,412

 

26,473

Investments in other entities – equity method

 

35,893

 

25,774

Investments in privately held entities

 

6,396

 

6,396

Restricted cash

 

645

 

345

Operating lease right-of-use assets

 

39,152

 

37,396

Other assets

 

4,067

 

1,877

     

Total non-current assets

 

687,467

 

471,854

     

Total assets(1)

 

$       1,226,277

 

$           933,361

     

Liabilities, mezzanine equity and equity

    
     

Current liabilities

    

Accounts payable and accrued expenses

 

$           146,473

 

$             59,949

Fiduciary accounts payable

 

7,792

 

7,737

Medical liabilities

 

136,494

 

106,657

Income taxes payable

 

5,522

 

Dividend payable

 

638

 

638

Finance lease liabilities

 

636

 

646

Operating lease liabilities

 

5,007

 

4,607

Current portion of long-term debt

 

20,750

 

19,500

Other liabilities

 

31,960

 

18,940

     

Total current liabilities

 

355,272

 

218,674

  

March 31,
2024

 

December 31,
2023

     

Non-current liabilities

    

Deferred tax liability

 

3,756

 

4,072

Finance lease liabilities, net of current portion

 

1,015

 

1,033

Operating lease liabilities, net of current portion

 

37,716

 

36,289

Long-term debt, net of current portion and deferred financing costs

 

368,448

 

258,939

Other long-term liabilities

 

7,652

 

3,586

     

Total non-current liabilities

 

418,587

 

303,919

     

Total liabilities(1)

 

773,859

 

522,593

     

Mezzanine equity

    

Noncontrolling interest in Allied Physicians of California, a Professional Medical Corporation ("APC")

 

(205,557)

 

(205,883)

     

Stockholders' equity

    

Series A Preferred stock, par value $0.001; 5,000,000 shares authorized (inclusive of Series B Preferred stock); 1,111,111 issued and zero outstanding

 

 

Series B Preferred stock, par value $0.001; 5,000,000 shares authorized (inclusive of Series A Preferred stock); 555,555 issued and zero outstanding

 

 

Common stock, par value $0.001; 100,000,000 shares authorized, 47,458,264 and 46,843,743 shares outstanding, excluding 10,584,340 and 10,584,340 Treasury shares, at March 31, 2024 and December 31, 2023, respectively

 

48

 

47

Additional paid-in capital

 

395,473

 

371,037

Retained earnings

 

257,969

 

243,134

Total Stockholders' equity

 

653,490

 

614,218

     

Non-controlling interest

 

4,485

 

2,433

     

Total equity

 

657,975

 

616,651

     

Total liabilities, mezzanine equity, and stockholders' equity

 

$       1,226,277

 

$           933,361

 

(1)The Company's consolidated balance sheets include the assets and liabilities of its consolidated VIEs. The consolidated balance sheets include total assets that can be used only to settle obligations of the Company's consolidated VIEs totaling $717.5 million and $540.8 million as of March 31, 2024 and December 31, 2023, respectively, and total liabilities of the Company's consolidated VIEs for which creditors do not have recourse to the general credit of the primary beneficiary of $179.6 million and $146.0 million as of March 31, 2024 and December 31, 2023, respectively. The VIE balances do not include $299.5 million of investment in affiliates and $110.1 million of amounts due to affiliates as of March 31, 2024 and $273.2 million of investment in affiliates and $107.3 million of amounts due to affiliates as of December 31, 2023 as these are eliminated upon consolidation and not presented within the consolidated balance sheets.

ASTRANA HEALTH, INC.

CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(UNAUDITED)

 
  

Three Months Ended

March 31,

  

2024

 

2023

     

Revenue

    

Capitation, net

 

$       365,910

 

$       300,204

Risk pool settlements and incentives

 

17,377

 

13,462

Management fee income

 

4,078

 

9,896

Fee-for-service, net

 

15,937

 

12,062

Other revenue

 

1,054

 

1,620

     

Total revenue

 

404,356

 

337,244

     

Operating expenses

    

Cost of services, excluding depreciation and amortization

 

330,399

 

289,397

General and administrative expenses

 

38,722

 

21,182

Depreciation and amortization

 

5,096

 

4,292

     

Total expenses

 

374,217

 

314,871

     

Income from operations

 

30,139

 

22,373

     

Other income (expense)

    

Income from equity method investments

 

632

 

2,484

Interest expense

 

(7,585)

 

(3,269)

Interest income

 

3,996

 

3,009

Unrealized gain (loss) on investments

 

1,099

 

(6,392)

Other (loss) income

 

(4,277)

 

1,204

     

Total other expense, net

 

(6,135)

 

(2,964)

     

Income before provision for income taxes

 

24,004

 

19,409

     

Provision for income taxes

 

7,142

 

6,921

     

Net income

 

16,862

 

12,488

     

Net income (loss) attributable to non-controlling interest

 

2,027

 

(644)

     

Net income attributable to Astrana Health, Inc.

 

$         14,835

 

$         13,132

     

Earnings per share – basic

 

$              0.31

 

$              0.28

     

Earnings per share – diluted

 

$              0.31

 

$              0.28

EBITDA

Set forth below are reconciliations of Net Income to EBITDA and Adjusted EBITDA as well as the reconciliation to Adjusted EBITDA margin for the three months ended March 31, 2024 and 2023. The Company defines Adjusted EBITDA margin as Adjusted EBITDA over total revenue.

  

Three Months Ended

March 31,

 

(in thousands)

 

2024

 

2023

 
      

Net income

 

$      16,862

 

$      12,488

 

Interest expense

 

7,585

 

3,269

 

Interest income

 

(3,996)

 

(3,009)

 

Provision for income taxes

 

7,142

 

6,921

 

Depreciation and amortization

 

5,096

 

4,292

 

EBITDA

 

32,689

 

23,961

 
      

Income from equity method investments

 

(632)

 

(249)

 

Other, net

 

4,440

(1)

1,402

(2)

Stock-based compensation

 

5,748

 

3,445

 

APC excluded asset costs

 

 

1,266

 

Adjusted EBITDA

 

$      42,245

 

$      29,825

 
      

Total revenue

 

$    404,356

 

$    337,244

 
      

Adjusted EBITDA margin

 

10 %

 

9 %

 
 

(1) Other, net for the three months ended March 31, 2024 relates to a financial guarantee via a letter of credit that we provided almost three years ago in support of two local provider-led ACOs, non-cash changes related to change in the fair value of our financing obligation to purchase the remaining equity interests in one of our investments, non-cash changes related to change in the fair value of the Company's Collar Agreement, and transaction costs incurred for our investments and tax restructuring fees.

(2) Other, net for the three months ended March 31, 2023 relates to changes in the fair value of our financing obligation to purchase the remaining equity interest in one of our investments.

Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA

     
  

2024 Guidance Range

(in thousands)

 

Low

 

High

Net income

 

$             71,500

 

$             85,500

Interest expense

 

14,500

 

12,500

Provision for income taxes

 

36,500

 

44,500

Depreciation and amortization

 

14,500

 

14,500

EBITDA

 

137,000

 

157,000

     

Income from equity method investments

 

(5,000)

 

(5,000)

Other, net

 

6,000

 

6,000

Stock-based compensation

 

27,000

 

27,000

Adjusted EBITDA

 

$           165,000

 

$           185,000

Use of Non-GAAP Financial Measures

This press release contains the non-GAAP financial measures EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, of which the most directly comparable financial measure presented in accordance with U.S. generally accepted accounting principles ("GAAP") is net income. These measures are not in accordance with, or alternatives to GAAP, and may be calculated differently from similar non-GAAP financial measures used by other companies. The Company uses Adjusted EBITDA as a supplemental performance measure of our operations, for financial and operational decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization, excluding income or loss from equity method investments, non-recurring and non-cash transactions, stock-based compensation, and APC excluded assets costs. The Company defines Adjusted EBITDA margin as Adjusted EBITDA over total revenue.

The Company believes the presentation of these non-GAAP financial measures provides investors with relevant and useful information, as it allows investors to evaluate the operating performance of the business activities without having to account for differences recognized because of non-core or non-recurring financial information. When GAAP financial measures are viewed in conjunction with non-GAAP financial measures, investors are provided with a more meaningful understanding of the Company's ongoing operating performance. In addition, these non-GAAP financial measures are among those indicators the Company uses as a basis for evaluating operational performance, allocating resources, and planning and forecasting future periods. Non-GAAP financial measures are not intended to be considered in isolation, or as a substitute for, GAAP financial measures. Other companies may calculate both EBITDA and Adjusted EBITDA differently, limiting the usefulness of these measures for comparative purposes. To the extent this release contains historical or future non-GAAP financial measures, the Company has provided corresponding GAAP financial measures for comparative purposes. The reconciliation between certain GAAP and non-GAAP measures is provided above.

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