Astrana Health, Inc. Q3 FY2025 earnings call

• Strategy pillars: smart growth, disciplined risk progression, quality and cost excellence, operating leverage through technology platform.
• Prospect integration: Focus on aligning provider/patient experience, standardizing systems/reporting, implementing Astrana technology platform; on track to onboard Prospect's physician groups and care teams to the platform by mid-2026.
• AI initiatives: Predictive models for high-risk patients, AI-driven tools for claims analytics and fraud prevention, large language model for clinical record queries.
• New partnerships: Expanded with Intermountain Health in Nevada and signed a new provider group in Southern California serving 40,000 members across all lines of business.

Total revenues for the third quarter of 2025 were $956 million, up 100% year-over-year and 46% sequentially. In the legacy Astrana core business, Medicare trended favorably below the 4.5% aggregate trend expectation for the year, and Medicaid trend decelerated relative to the second quarter. Inpatient costs trended favorably, with a full year blended cost trend expected to be approximately 4.5%. Prospect performed ahead of expectations during the third quarter, and the company reiterated synergy targets of $12 million to $15 million over the coming quarters. The Care Enablement segment saw revenue more than double quarter-over-quarter as Prospect brought more provider group clients.

• Updated 2025 revenue guidance to $3.1 billion to $3.18 billion and adjusted EBITDA to $200 million to $210 million due to full risk contracts shifting from 2025 to Q1 2026.
• Positive factors for 2026: Tailwinds from improved Medicare Advantage rates, prospect-related synergies, maturation of full risk cohorts; headwinds: Medicaid and exchange regulatory dynamics pressure on membership and rates.

• Medicaid and exchange regulatory uncertainties affecting membership and rates.
• Potential headwinds from work requirements (anticipated 2027 impact).
• V29/RA model changes and disenrollment trends in Medicaid.

Q: Were the revenue guidance updates related to one payer or multiple payers? Can you be more specific on tech/data integration?

A: The delay was due to timing, related to both legacy Astrana and Prospect businesses, not tech/data issues; across several payer partners, to be finalized in Q1 2026.

Q: When do you expect Medicaid cost trends to come closer to 4.5%?

A: Anticipate further headwinds in Medicaid due to regulatory instability, but improvement seen, with margins expected to stabilize in late 2026.

Q: What's the margin breakdown by segment?

A: Care Enablement grew rapidly with strong EBITDA margin; Care Partners margin lower due to legacy Prospect's slightly higher trend, but potential to improve.