Astrana Health, Inc. Reports Fourth Quarter and Year-End 2023 Results

Published

Company to Host Conference Call on Tuesday, Feb. 27, 2024, at 2:30 p.m. PT/5:30 p.m. ET

ALHAMBRA, Calif., Feb. 27, 2024 /PRNewswire/ -- Astrana Health, Inc. (together with its subsidiaries and affiliated entities, "Astrana") (NASDAQ: ASTH), a leading provider-centric, technology-powered healthcare company focused on enabling providers in the successful delivery of value-based care, today announced its consolidated financial results for the fourth quarter and year ended December 31, 2023.

ameh logo (PRNewsfoto/Apollo Medical Holdings, Inc.)

"We are proud to announce another year marked by rapid scaling of our unique care model to empower providers and improve healthcare for local communities at Astrana Health. We coupled that with robust financial achievements, ensuring that our growth efforts are sustainable and maintaining a focus on profitability. We continue to execute against our strategic roadmap: 1) focusing on expanding our membership base across existing and new geographies, 2) increasing the level of accountability and risk we are responsible for in our value-based care contracts, 3) empowering our providers to achieve superior patient outcomes, and 4) executing strategic acquisitions to further accelerate our growth trajectory for the foreseeable future," said Brandon K. Sim, President and Chief Executive Officer of Astrana Health.

Financial Highlights for the Year Ended December 31, 2023:

All comparisons are to year ended December 31, 2022 unless otherwise stated.

  • Total revenue of $1,386.7 million, up 21% from $1,144.2 million
  • Care Partners revenue of $1,300.1 million, up 24% from $1,051.5 million
  • Net income attributable to Astrana of $60.7 million, up 34% from $45.2 million
  • Earnings per share — diluted ("EPS — diluted") of $1.29, up 30% from $0.99 per share
  • Adjusted EBITDA(1) of $146.6 million, up 5% from $140.0 million

(1) See "Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin" and "Use of Non-GAAP Financial Measures" below for additional information.

Financial Highlights for Fourth Quarter 2023:

All comparisons are to the quarter ended December 31, 2022 unless otherwise stated.

  • Total revenue of $353.0 million, up 20% from $294.2 million
  • Care Partners revenue of $333.7 million, up 24% from $269.3 million
  • Net income attributable to Astrana of $12.4 million, compared to a loss of $3.7 million
  • EPS — diluted of $0.26, compared to $(0.08) per share
  • Adjusted EBITDA(1) of $29.0 million, up 23% from $23.7 million

(1) See "Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin" and "Use of Non-GAAP Financial Measures" below for additional information.

Recent Operating Highlights

  • On February 26, 2024 the Company changed its name from Apollo Medical Holdings, Inc. to Astrana Health, Inc. Alongside the corporate name change, the Company's common stock is trading under the new symbol "ASTH" on the NASDAQ.
  • In November 2023, the Company entered into an Asset and Equity Purchase Agreement (the "Purchase Agreement") to acquire the partnership interests of Advanced Health Management Systems, L.P. ("AHMS") and certain assets of Community Family Care Medical Group IPA, Inc. ("CFC"), which acquisitions the Company expected would occur in two separate closings. In November 2023, AHM (as defined below) also entered into a Stock Purchase Agreement (the "I Health Purchase Agreement") to purchase 25% of the outstanding shares of common stock of I Health, Inc. ("I Health"). On January 31, 2024, the first closing under the Purchase Agreement occurred, and the Company completed its acquisition of CFC's assets. CFC IPA manages the healthcare of over 200,000 members in the Los Angeles, California area, serving patients across Medicare, Medicaid, and Commercial payers. The Company expects to complete the second closing under the Purchase Agreement and acquire the outstanding general and limited partnership interests of AHMS during the first quarter of 2024, subject to obtaining required regulatory approvals. It is currently expected that the I Health Purchase Agreement closing will occur during the first quarter of 2024.
  • On January 29, 2024, the Company announced its strategic long-term partnership with BASS Medical Group, one of the largest multi-specialty medical groups in the Greater San Francisco Bay Area. Together, the two organizations will aim to bring high-quality care via value-based arrangements to patients of all insurance types, including Medicare, Medicaid, ACA Marketplace, and Commercial. Astrana has provided BASS Medical Group with a $20 million senior secured promissory note ("BASS secured promissory note") which is intended to be used, in partnership with Astrana, to continue to grow their footprint and invest in high-quality, high-value, and accessible primary and multi-specialty care for communities across California. The BASS secured promissory note matures on January 11, 2031 and has an interest rate per annum equal to 2.9% plus the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (or a successor administrator) compounded annually.
  • Effective January 19, 2024, the Company had the following leadership changes:
    • Thomas S. Lam, M.D., M.P.H., previously Co-Chief Executive Officer and President and a director, was appointed Vice Chairman of the Board;
    • Brandon K. Sim, M.S., previously Co-Chief Executive Officer, was appointed Chief Executive Officer and President; and
    • Chan Basho, M.B.A., previously Chief Financial Officer and Chief Strategy Officer, was appointed Chief Financial Officer and Chief Operating Officer.
    • In addition, Dinesh Kumar, M.D., was appointed Chief Medical Officer effective January 23, 2024.
  • On January 1, 2024, the Company's Employee Stock Purchase Plan ("ESPP") came into effect. The Company's ESPP allows eligible employees to contribute up a portion of their eligible earnings toward the semi-annual purchase of the Company's common stock at a discounted price, subject to an annual maximum dollar amount.
  • On January 1, 2024, in addition to participating in the ACO REACH Model, one of our other ACOs will participate in the Medicare Shared Savings Program ("MSSP"). The MSSP was created to promote accountability and improve coordination of care for Medicare beneficiaries. Unlike the ACO REACH Program, CMS continues to pay participant and preferred providers on a fee-for-service basis for Medicare covered services provided to MSSP Aligned Beneficiaries. Our shared savings or losses in managing our beneficiaries are generally determined on an annual basis after reconciliation with CMS.

Segment Results for the Year Ended December 31, 2023:

Year Ended December 31, 2023

(in thousands)

CarePartners

CareDelivery

CareEnablement

Other

IntersegmentElimination

CorporateCosts

ConsolidatedTotal

Total revenues

$ 1,300,112

$   119,904

$    135,824

$          937

$       (170,116)

$                 —

$        1,386,661

% change vs. prior year

24 %

25 %

13 %

Cost of services

1,182,484

96,265

59,075

296

(166,417)

1,171,703

General and administrative(1)

25,907

17,766

57,672

3,752

(7,923)

33,171

130,345

Total expenses

1,208,391

114,031

116,747

4,048

(174,340)

33,171

1,302,048

Income (loss) from operations

$      91,721

$       5,873

$      19,077

$     (3,111)

$             4,224

(2)

$        (33,171)

$             84,613

% change vs. prior year

8 %

(35) %

(29) %

(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.

Guidance:

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

($ in millions)

2024 Guidance Range

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 (Tuesday, February 27, 2024), during which management will discuss the results of the fourth quarter and year ended December 31, 2023. 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 (877) 858-9810 or;

+

1 (201) 689-8517

The conference call can also be accessed via webcast at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=EM7HqFSl

An accompanying slide presentation will be available in PDF format on the "IR Calendar" page of the Company's website (ir.astranahealth.com) after issuance of the earnings release and will be filed 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 and warrants 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 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 900,000 Americans 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, which will be filed with the SEC, and any subsequent quarterly reports on Form 10-Q. Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. 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 any applicable securities laws.

FOR MORE INFORMATION, PLEASE CONTACT:

Investor RelationsAsher Dewhurstinvestors@astranahealth.com

 

ASTRANA HEALTH, INC.

 CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

December 31,

December 31,

2023

2022

Assets

Current assets

Cash and cash equivalents

$           293,807

$           288,027

Investment in marketable securities

2,498

5,567

Receivables, net

76,780

49,631

Receivables, net – related parties

58,980

65,147

Income taxes receivable

10,657

Other receivables

1,335

1,834

Prepaid expenses and other current assets

17,450

14,798

Loans receivable

996

Loans receivable – related party

2,125

Total current assets

461,507

428,125

Non-current assets

Land, property and equipment, net

7,171

108,536

Intangible assets, net

71,648

76,861

Goodwill

278,831

269,053

Income taxes receivable

15,943

15,943

Loans receivable, non-current

26,473

Investments in other entities – equity method

25,774

40,299

Investments in privately held entities

6,396

2,396

Restricted cash

345

Operating lease right-of-use assets

37,396

20,444

Other assets

1,877

4,556

Total non-current assets

471,854

538,088

Total assets(1)

$           933,361

$           966,213

Liabilities, Mezzanine Equity (Deficit), and Stockholders' Equity

Current liabilities

 Accounts payable and accrued expenses

$             59,949

$             49,562

 Fiduciary accounts payable

7,737

8,065

 Medical liabilities

106,657

81,255

 Income taxes payable

4,279

 Dividend payable

638

664

 Finance lease liabilities

646

594

 Operating lease liabilities

4,607

3,572

Current portion of long-term debt

19,500

619

Other liabilities

18,940

Total current liabilities

218,674

148,610

Non-current liabilities

Deferred tax liability

4,072

14,217

Finance lease liabilities, net of current portion

1,033

1,275

Operating lease liabilities, net of current portion

36,289

19,915

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

258,939

203,389

Other long-term liabilities

3,586

20,260

Total non-current liabilities

303,919

259,056

Total liabilities(1)

522,593

407,666

Mezzanine (deficit) equity

Noncontrolling interest in Allied Physicians of California, a Professional Medical Corporation

(205,883)

14,237

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, 46,843,743 and

 46,575,699 shares outstanding, excluding 10,584,340 and 10,299,259 treasury shares,

 at December 31, 2023 and 2022, respectively

47

47

Additional paid-in capital

371,037

360,097

Retained earnings

243,134

182,417

614,218

542,561

Non-controlling interest

2,433

1,749

  Total stockholders' equity

616,651

544,310

Total liabilities, mezzanine equity (deficit), and stockholders' equity

$           933,361

$           966,213

(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 $540.8 million and $579.8 million as of December 31, 2023 and December 31, 2022, 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 $146.0 million and $149.6 million as of December 31, 2023 and December 31, 2022, respectively. These VIE balances do not include $273.2 million of investment in affiliates and $107.3 million of amounts due to affiliates as of December 31, 2023 and $304.8 million of investment in affiliates and $11.6 million of amounts due from affiliates as of December 31, 2022 as these are eliminated upon consolidation and not presented within the consolidated balance sheets.

 

ASTRANA HEALTH, INC.

CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Three Months Ended

December 31,

Year Ended

 December 31,

2023

2022

2023

2022

Revenue

Capitation, net

$       309,184

$       252,878

$    1,215,614

$       930,131

Risk pool settlements and incentives

14,863

15,537

63,468

117,254

Management fee income

6,390

10,607

38,677

41,094

Fee-for-service, net

18,442

13,823

59,658

49,517

Other income

4,157

1,363

9,244

6,167

Total revenue

353,036

294,208

1,386,661

1,144,163

Operating expenses

Cost of services, excluding depreciation and amortization

314,055

253,119

1,171,703

944,685

General and administrative expenses

37,949

24,446

112,597

77,670

Depreciation and amortization

4,902

4,063

17,748

17,543

Total expenses

356,906

281,628

1,302,048

1,039,898

(Loss) income from operations

(3,870)

12,580

84,613

104,265

Other (expense) income

Income from equity method investments

2,475

1,225

5,579

5,622

Interest expense

(5,422)

(2,572)

(16,102)

(7,920)

Interest income

4,591

1,286

14,208

1,976

Unrealized gain (loss) on investments

1,294

(3,680)

(4,581)

(21,271)

Other income

1,856

1,616

6,121

3,944

Total other income (expense), net

4,794

(2,125)

5,225

(17,649)

Income before provision for income taxes

924

10,455

89,838

86,616

Provision for income taxes

1,018

11,338

31,989

40,875

Net (loss) income

(94)

(883)

57,849

45,741

Net (loss) income attributable to noncontrolling interests

(12,450)

2,845

(2,868)

570

Net income (loss) attributable to Astrana Health, Inc.

$         12,356

$         (3,728)

$         60,717

$         45,171

Earnings (losses) per share – basic

$              0.26

$            (0.08)

$              1.30

$              1.00

Earnings (losses) per share – diluted

$              0.26

$            (0.08)

$              1.29

$              0.99

 

Reconciliation of Net Income to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin(1)

Three Months Ended

 December 31,

Year Ended

 December 31,

 (in thousands)

2023

2022

2023

2022

Net (loss) income

$          (94)

$       (883)

$    57,849

$    45,741

Interest expense

5,422

2,572

16,102

7,920

Interest income

(4,591)

(1,286)

(14,208)

(1,976)

Provision for income taxes

1,018

11,338

31,989

40,875

Depreciation and amortization

4,902

4,063

17,748

17,543

EBITDA

$      6,657

$    15,804

$  109,480

$  110,103

Income from equity method investments

(1,989)

(1,322)

(2)

$    (5,149)

(5,680)

(2)

Other, net

4,721

(3)

1,927

(4)

$      6,228

(3)

3,309

(4)

Stock-based compensation

8,676

5,624

$    22,040

16,101

APC excluded assets costs

10,949

1,619

$    13,988

16,193

Adjusted EBITDA

$    29,014

$    23,652

$  146,587

$  140,026

Total Revenue

$  353,036

$  294,208

$  1,386,661

$  1,144,163

Adjusted EBITDA margin

8 %

8 %

11 %

12 %

(1)

The Company defines Adjusted EBITDA margin as Adjusted EBITDA over total revenue.

(2)

Certain APC minority interests where APC owns the asset but not the right to the dividends were reclassified from APC excluded asset costs to income from equity method investments.

(3)

Other, net for the three and twelve months ended December 31, 2023 consists of nonrecurring transaction costs and tax restructuring fees incurred, non-cash gains and losses related to the changes in the fair value of our financing obligation to purchase the remaining equity interests, contingent liabilities,  and the Company's Collar Agreement, and excise tax related to a nonrecurring buyback of the Company's stock from APC.

(4)

Other, net for the three and twelve months ended December 31, 2022 consists of one-time transaction costs incurred and non-cash gains and losses related to the changes in the fair value of our financing obligation to purchase the remaining equity interests and contingent considerations.

 

Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA

(in thousands)

2024 Guidance Range

Low

High

Net income

$             71,500

$          85,500

Interest expense, net

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 different from other 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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SOURCE Astrana Health, Inc.

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