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Astrana Health, Inc. (ASTH)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 88% year over year to $665.2M, driven by Care Partners growth and CHS contribution; adjusted EBITDA increased 21% to $35.0M, but GAAP diluted EPS was $(0.15) on higher interest expense and integration costs .
  • Management introduced FY 2025 guidance of $2.50–$2.70B revenue and $170–$190M adjusted EBITDA, including ~$15M integration/automation/AI costs; Q1 2025 guidance is $600–$650M revenue and $32–$37M adjusted EBITDA .
  • Strategic updates: 73% of capitation revenue from full-risk by year-end; CHS integration tracking to breakeven late 2025; expanded credit facilities to fund Prospect acquisition and growth; APG “Elite” recognitions underscore quality focus .
  • Estimate benchmarking from S&P Global was unavailable at time of request; beats/misses vs consensus cannot be assessed. Expect investor focus on margin trajectory, Medicaid trend/rate relief, and Prospect closing/timing as catalysts .

What Went Well and What Went Wrong

What Went Well

  • Full-risk progression: 73% of capitation revenue from full-risk by end-2024; management expects 75–85% in 2025, a structural driver of alignment and long-term margin normalization .
  • Quality and outcomes: “Eight of Astrana’s affiliates have been recognized as Elite status recipients in the 2024 Standards of Excellence survey,” highlighting strong care coordination and outcomes (APG five-star status) .
  • Platform and M&A execution: CHS delivered ~$170M revenue in Q4’24 and is on track for $350–$400M in FY’25 with breakeven late in 2025; management reiterated medium-term adjusted EBITDA ≥$350M in 2027, supported by automation/AI investments targeting ~$10M efficiencies by early 2026 .

What Went Wrong

  • Margin compression: Adjusted EBITDA margin fell to 5% in Q4’24 (vs. 8% in Q4’23) on integration costs, CHS low initial margins, and higher medical cost trend; GAAP diluted EPS turned negative to $(0.15) vs $0.26 last year .
  • Medicaid headwinds: Elevated 8–9% utilization trend with insufficient rate catch-up; guidance conservatively excludes potential Prop 35 rate relief or renegotiations, creating near-term pressure .
  • Interest expense and integration drag: Q4’24 interest expense rose to $8.1M; management highlighted ~$15M 2025 expense for integration/automation/AI, dampening near-term EBITDA growth despite top-line momentum .

Financial Results

Quarterly Performance (oldest → newest)

MetricQ4 2023Q1 2024Q3 2024Q4 2024
Revenue ($USD Millions)$353.0 $404.4 $478.7 $665.2
Net Income attributable to Astrana ($USD Millions)$12.356 $14.835 $16.094 $(6.951)
Diluted EPS ($USD)$0.26 $0.31 $0.33 $(0.15)
Adjusted EBITDA ($USD Millions)$29.0 $42.2 $45.2 $35.0
Adjusted EBITDA Margin (%)8% 10% 9% 5%

Notes: Q4’24 revenue +88% YoY, adjusted EBITDA +21% YoY; GAAP net loss driven by interest expense, taxes, and integration costs .

Segment Revenue Breakdown (Q4)

Segment ($USD Millions)Q4 2023Q4 2024
Care Partners$326.8 $647.7
Care Delivery$38.1 $36.4
Care Enablement$33.4 $45.1
Intercompany Elimination$(45.5) $(63.9)
Total$353.0 $665.2

KPIs and Mix (Q4 2024)

  • Revenue by type: Capitation 93%; risk pool 4%; management fees 1%; FFS 1%; other 1% .
  • Payer mix: Medicare 64%; Medicaid 29%; Commercial 6%; Other 1% .
  • Capitation risk mix: Full-risk 73%; partial-risk 27%; Members by risk: 33% full-risk, 67% partial .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Billions)FY 2025N/A$2.50–$2.70 New
Adjusted EBITDA ($USD Millions)FY 2025N/A$170–$190 New
Net Income ($USD Millions)FY 2025N/A$62.5–$73.5 (recon.) New
Interest Expense, net ($USD Millions)FY 2025N/A$16–$19 (recon.) New
Provision for Income Taxes ($USD Millions)FY 2025N/A$34–$40 (recon.) New
Depreciation & Amortization ($USD Millions)FY 2025N/A$32.5 (recon.) New
Revenue ($USD Millions)Q1 2025N/A$600–$650 New
Adjusted EBITDA ($USD Millions)Q1 2025N/A$32–$37 New
Adjusted EBITDA ($USD Millions)FY 2027≥$350 (medium-term)≥$350 (reiterated) Maintained
Full-Risk Share of Capitation Revenue (%)FY 2025N/A75–85% assumption New
Integration/Automation/AI Costs ($USD Millions)FY 2025N/A~15 included New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2024, Q3 2024)Current Period (Q4 2024)Trend
AI/Automation efficiencyInitiated platform investments; strong tech enablement ~$15M spend in 2025 to yield ~$10M annual efficiencies by early 2026 Increasing investment; efficiencies realized in 2026
Risk progression to full-risk~60% capitation revenue at 4/1/24; moving cohorts responsibly 73% of capitation revenue full-risk by YE; 75–85% expected in 2025 Accelerating progression
Utilization/cost trendMid-single-digit trend; accrual discipline 5.3% blended ’24; guide ~4.5–5% in ’25 Stabilizing relative to peers
Medicaid rate mismatch/Prop 35Elevated trend noted; cautious stance 8–9% trend; guidance excludes potential Prop 35 rate relief; renegotiations ongoing Overhang persists; potential upside if rates improve
CHS integrationClosed Oct 2024; segment growth ~$170M Q4 rev; $350–$400M ’25 rev; breakeven late ’25 On track; low initial margins
Prospect acquisition & financingAnnounced Nov 8, 2024; strategic fit [8:—]New $300M revolver, $250M TLA, $745M delayed draw; pro forma leverage ~3.4x; target <3x in 9 months post-close Financing secured; closing targeted Q2’25
New markets (NV/TX)Opened NV clinics; ramping density NV/TX nearing breakeven in 2025 per operational milestones Progress toward profitability

Management Commentary

  • “Our significant growth and geographic expansion, alongside robust financial performance, are a direct result of our disciplined execution across the four pillars of the Astrana playbook.” — Brandon K. Sim, President & CEO .
  • “We anticipate realizing approximately $10,000,000 in operational efficiencies from [automation and AI] investments by early twenty twenty six.” — Brandon K. Sim .
  • “By the end of twenty twenty four, approximately 73% of our total capitation revenue came from full risk arrangements.” — Brandon K. Sim .
  • “We expect CHS to contribute approximately $350–$400 million of revenue for the full year of 2025 and approach breakeven late in the year with profitability coming in 2026.” — Brandon K. Sim .
  • “Our best estimate of pro forma net leverage…is approximately 3.4 times at close. We remain committed to delever below the three times range within nine months post close.” — CFO/COO .

Q&A Highlights

  • EBITDA margin bridge and guidance: Margin decline driven by CHS dilution and medical expense trend; 2025 guide assumes ~4.5% trend and ~$15M integration/AI costs .
  • Free cash flow conversion: 2024 FCF impacted by one-time CHS items (~$10M) and software licenses; 2025 expected to revert with ~45% conversion of adjusted EBITDA historically .
  • Medicaid: Elevated 8–9% trend; contracts locked for 2–3 years; guidance excludes Prop 35 rate relief—potential upside if realized .
  • MSSP revenue: Booked ~$5M in Q4 for 2024; similar magnitude assumed in 2025 .
  • Macro events: Wildfires had minimal impact; severe flu season anticipated and accrued; trends tracking expectations .

Estimates Context

  • S&P Global/Capital IQ consensus estimates (EPS, revenue, EBITDA) were unavailable at time of request due to data access limits. As a result, we cannot evaluate beats/misses vs consensus for Q4 2024. If required, we can refresh comparisons once access is restored [GetEstimates error].

Key Takeaways for Investors

  • Top-line momentum is strong, but near-term margins are pressured by integration costs, CHS low initial margins, and Medicaid trend-rate mismatch; watch for slope of adjusted EBITDA margin recovery in 2025 .
  • Full-risk share of capitation revenue reached 73% and is expected at 75–85% in 2025—structural positive for long-term unit economics once inpatient and rate dynamics normalize .
  • CHS integration and Prospect closing are primary stock catalysts; updated financing de-risks funding, but execution on breakeven and deleveraging (<3x in ~9 months) will be scrutinized .
  • AI/automation investments (~$15M in 2025) should begin yielding ~$10M run-rate savings in 2026, offering medium-term operating leverage tailwinds .
  • Medicaid rate relief (Prop 35) and payer renegotiations present potential upside not included in guidance; monitor regulatory updates and contract cycles (2–3 years) .
  • Q1 2025 guide ($600–$650M revenue; $32–$37M adj. EBITDA) sets the near-term trajectory; track CHS contribution, flu-season utilization, and MSSP revenue cadence .
  • Balance sheet flexibility enhanced via new $1.295B credit facilities (revolver/TLA/delayed draw), supporting M&A and integration while managing interest expense .

Sources

  • Q4 2024 8-K press release and supplement .
  • Q4 2024 earnings call transcript .
  • Prior quarter earnings (Q3 2024 8-K press release) .
  • Prior quarter earnings (Q1 2024 press release) .