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Astrana Health, Inc. 8-K-A Analysis & Summary – 3/14/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Astrana Health Inc.
,

Filing date:

03/14/2025

TLDR:

Astrana Health, Inc. filed an amendment to their previous 8-K to update preliminary financial results for the year ended December 31, 2024, including revisions to the consolidated balance sheet and reaffirming their full-year 2025 guidance.

ELI5:

Astrana Health updated its financial report to reflect some changes to its assets and debts after buying other companies. These changes don’t affect how much money they made or their predictions for the next year.

Accession #:

0001104659-25-023741

Published on

Analyst Summary

  • The 8-K/A addresses revisions to the preliminary consolidated balance sheet as of December 31, 2024, stemming from final accounting of fourth-quarter acquisitions.
  • Key revisions include decreases in receivables, net, intangible assets, net, and goodwill, and increases in other receivables and other liabilities.
  • The company explicitly states that these revisions do not impact the previously reported consolidated statements of income for the three and twelve months ended December 31, 2024, or the full-year 2025 guidance.
  • Total assets increased significantly compared to December 31, 2023, primarily due to acquisitions, leading to a higher leverage ratio.
  • FY 2024 Revenue was $2,034.5 million, and Adjusted EBITDA was $170.4 million. FY 2025 Revenue Guidance is $2,500 – $2,700 million, with Adjusted EBITDA Guidance of $170 – $190 million.
  • The company is actively transitioning to full-risk contracts, which could improve unit economics but also increases financial risk. Investments in automation and AI are expected to yield significant operating efficiencies.
  • Operating Profit Margin decreased by 28.03% from 6.10% to 4.39%.
  • Net Profit Margin decreased by 41.25% from 4.17% to 2.45%.
  • Return on Assets decreased by 40.48% from 6.20% to 3.69%.
  • Return on Equity decreased by 38.88% from 9.85% to 6.02%.
  • Diluted EPS decreased by 30.23% from $1.29 to $0.90.
  • Current Ratio decreased by 17.06% from 2.11 to 1.75.
  • Quick Ratio decreased by 21.84% from 2.06 to 1.61.
  • Cash Ratio decreased by 40.99% from 1.35 to 0.796.
  • Debt-to-Equity Ratio increased by 35.56% from 0.45 to 0.61.
  • Interest Coverage Ratio decreased by 43.13% from 3.64 to 2.07.
  • Days Sales Outstanding increased by 39.69% from 35.78 to 49.98.
  • Days Payable Outstanding increased by 20.34% from 15.78 to 18.99.
  • Revenue Growth increased by 46.72%.
  • Net Income Growth decreased by 13.69%.
  • EPS Growth decreased by 30.23%.
  • Adjusted EBITDA increased by 16.23%.

Opportunities and Risks

  • Integration Risk: Integrating acquired companies, such as Collaborative Health Systems and Prospect Health, poses a significant risk.
  • Leverage: The high debt-to-equity ratio increases financial risk, especially if revenue growth slows or margins decline.
  • Full-Risk Contracts: Transitioning to full-risk contracts exposes the company to greater financial risk if patient outcomes are not effectively managed.
  • Adjusted EBITDA Reconciliation: The reliance on Adjusted EBITDA as a key performance indicator requires careful scrutiny of the reconciliation to GAAP net income.
  • Revenue Growth: The projected revenue growth for FY 2025 is a significant opportunity.
  • Operating Leverage: Investments in Care Enablement and AI could drive significant operating efficiencies.
  • Market Expansion: Entering new markets and expanding the company’s footprint offers substantial growth potential.
  • Value-Based Care: The increasing focus on value-based care aligns with industry trends and could improve patient outcomes and reduce costs.

Potential Implications

Company Performance

  • Successful integration of acquired companies is crucial for realizing synergies and achieving projected revenue growth.
  • Effective management of full-risk contracts is essential for improving unit economics and mitigating financial risk.
  • Continued investment in Care Enablement and AI could drive significant operating efficiencies and improve profitability.
  • The company’s ability to manage its debt load and generate sufficient cash flow will be critical for maintaining financial stability.

Stock Price

  • Positive revenue growth and improved profitability could drive the stock price higher.
  • Successful execution of the company’s growth strategy and effective management of risks could enhance investor confidence.
  • Any setbacks in integrating acquired companies or managing full-risk contracts could negatively impact the stock price.
  • Increased financial leverage could make the stock more sensitive to changes in interest rates and economic conditions.

Astrana Health, Inc. (ASTH) – Form 8-K/A Report – March 14, 2025

Executive Summary

This report analyzes Astrana Health’s Form 8-K/A filed on March 14, 2025, which amends the original 8-K filed on February 27, 2025, regarding preliminary financial results for the year ended December 31, 2024. The amendment primarily addresses revisions to the consolidated balance sheet due to adjustments related to fourth-quarter acquisitions. While the revisions impact balance sheet figures, they do not affect the previously reported consolidated statements of income for the three and twelve months ended December 31, 2024, or the full-year 2025 guidance. The overall assessment remains neutral, as the core business performance appears unchanged. Investors should focus on the upcoming 10-K for a comprehensive view of the company’s financial position and performance.

Company Overview

Astrana Health, Inc. (ASTH) operates in the healthcare sector, focusing on value-based care. The company provides services through its Care Partners, Care Delivery, and Care Enablement segments. Recent developments include acquisitions aimed at expanding its market presence and capabilities.

Detailed Analysis

Item 2.02: Results of Operations and Financial Condition

The 8-K/A addresses revisions to the preliminary consolidated balance sheet as of December 31, 2024. These revisions stem from the finalization of accounting related to acquisitions made in the fourth quarter of 2024.

Key Revisions:

* Receivables, net: Decreased by $1.0 million (from $226.7 million to $225.7 million).
* Other receivables: Increased by $25.8 million (from $3.7 million to $29.5 million).
* Intangible assets, net: Decreased by $8.0 million (from $126.2 million to $118.2 million).
* Goodwill: Decreased by $18.4 million (from $437.7 million to $419.3 million).
* Accounts payable and accrued expenses: Decreased by $8.5 million (from $114.6 million to $106.1 million).
* Other liabilities: Increased by $7.0 million (from $19.3 million to $26.3 million).
* VIE Footnote: Updated assets and liabilities of consolidated variable interest entities (VIEs).

Impact:

The revisions primarily affect the asset and liability sides of the balance sheet. The decrease in goodwill and intangible assets, coupled with the increase in other receivables and liabilities, suggests adjustments to the initial valuation and accounting for acquired entities. The updated VIE footnote provides more accurate information regarding the consolidated entities.

Important Note: The company explicitly states that these revisions *do not* impact the previously reported consolidated statements of income for the three and twelve months ended December 31, 2024, or the full-year 2025 guidance.

Financial Statement Analysis (Corrected Preliminary Consolidated Balance Sheet)

The corrected preliminary consolidated balance sheet as of December 31, 2024, shows the following:

* Total Assets: $1,354.9 million
* Total Liabilities: $840.7 million
* Total Stockholders’ Equity: $712.7 million

Key Observations:

* Total assets increased significantly compared to December 31, 2023 ($933.4 million), primarily due to acquisitions.
* Total liabilities also increased substantially (from $522.6 million), reflecting the debt and other obligations assumed in the acquisitions.
* Stockholders’ equity increased, but at a slower pace than assets and liabilities, indicating a higher leverage ratio.

Ratios:

* Debt-to-Equity Ratio: Approximately 1.18 (Total Liabilities / Total Stockholders’ Equity). This indicates a relatively high level of financial leverage.

Exhibit 99.2: Corrected Supplemental Data

Exhibit 99.2 provides a supplemental data presentation, including forward-looking statements and non-GAAP financial measures. Key highlights from the presentation include:

* FY 2024 Revenue: $2,034.5 million
* FY 2024 Adjusted EBITDA: $170.4 million
* FY 2025 Revenue Guidance: $2,500 – $2,700 million
* FY 2025 Adjusted EBITDA Guidance: $170 – $190 million

The presentation emphasizes the company’s growth strategy, risk progression towards full-risk contracts, operating leverage initiatives, and expansion into new markets.

Key Takeaways from Supplemental Data:

* Revenue Growth: Significant revenue growth is projected for FY 2025.
* Adjusted EBITDA: Adjusted EBITDA is expected to grow, but at a slower rate than revenue, suggesting potential margin pressure.
* Risk Progression: The company is actively transitioning to full-risk contracts, which could improve unit economics but also increases financial risk.
* Care Enablement: Investments in automation and AI are expected to yield significant operating efficiencies.
* Acquisitions: The presentation highlights recent and intended acquisitions, indicating an aggressive growth strategy.

Risk and Opportunity Assessment

Risks:

* Integration Risk: Integrating acquired companies, such as Collaborative Health Systems and Prospect Health, poses a significant risk.
* Leverage: The high debt-to-equity ratio increases financial risk, especially if revenue growth slows or margins decline.
* Full-Risk Contracts: Transitioning to full-risk contracts exposes the company to greater financial risk if patient outcomes are not effectively managed.
* Adjusted EBITDA Reconciliation: The reliance on Adjusted EBITDA as a key performance indicator requires careful scrutiny of the reconciliation to GAAP net income.

Opportunities:

* Revenue Growth: The projected revenue growth for FY 2025 is a significant opportunity.
* Operating Leverage: Investments in Care Enablement and AI could drive significant operating efficiencies.
* Market Expansion: Entering new markets and expanding the company’s footprint offers substantial growth potential.
* Value-Based Care: The increasing focus on value-based care aligns with industry trends and could improve patient outcomes and reduce costs.

Conclusion and Actionable Insights

The Astrana Health Form 8-K/A primarily addresses revisions to the consolidated balance sheet due to acquisition-related adjustments. These revisions do not impact the previously reported income statement or FY 2025 guidance.

Overall Assessment:

The overall assessment remains neutral. While the balance sheet revisions are important for accurate financial reporting, they do not fundamentally alter the company’s business performance or outlook.

Recommendations:

* Monitor Integration Progress: Closely monitor the integration of acquired companies, particularly Collaborative Health Systems and Prospect Health.
* Assess Financial Leverage: Evaluate the company’s ability to manage its debt load and generate sufficient cash flow to meet its obligations.
* Track Risk Progression: Monitor the performance of full-risk contracts and the company’s ability to manage patient outcomes and costs effectively.
* Analyze GAAP Net Income: Pay close attention to the reconciliation of Adjusted EBITDA to GAAP net income to assess the true profitability of the business.
* Review 10-K: Conduct a thorough analysis of the upcoming 10-K filing for a comprehensive view of the company’s financial position, performance, and risk factors.

1. Commentary

Astrana Health, Inc. demonstrates strong revenue growth, increasing by 47% year-over-year, driven primarily by a significant rise in capitation revenue. While revenue increased substantially, the company reported a net loss attributable to Astrana Health for the year, contrasting with a net income in the previous year. Adjusted EBITDA, a non-GAAP metric, also increased, indicating improved operational performance when excluding certain non-recurring and non-cash items. The company is strategically transitioning towards full-risk contracts and expanding its market presence through acquisitions, which are expected to contribute to future growth.

2. Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin:

    • Metric: Not directly calculable from provided data. Need Cost of Goods Sold.
    • Trend: N/A
    • Industry: N/A
  • Operating Profit Margin:

    • Metric: 2024: $89,350 / $2,034,540 = 4.39%; 2023: $84,613 / $1,386,661 = 6.10%
    • Trend: (4.39 – 6.10) / 6.10 = -28.03%
    • Industry: The average operating margin for healthcare companies varies, but a reasonable benchmark is between 5% and 15%. Astrana’s operating margin is below this range.
  • Net Profit Margin:

    • Metric: 2024: $49,932 / $2,034,540 = 2.45%; 2023: $57,849 / $1,386,661 = 4.17%
    • Trend: (2.45 – 4.17) / 4.17 = -41.25%
    • Industry: The average net profit margin for healthcare companies is typically between 3% and 7%. Astrana’s net profit margin is below this range.
  • Return on Assets (ROA):

    • Metric: 2024: $49,932 / $1,354,894 = 3.69%; 2023: $57,849 / $933,361 = 6.20%
    • Trend: (3.69 – 6.20) / 6.20 = -40.48%
    • Industry: A good ROA for healthcare companies is generally considered to be above 5%. Astrana’s ROA is below this benchmark.
  • Return on Equity (ROE):

    • Metric: 2024: $43,149 / $716,726 = 6.02%; 2023: $60,717 / $616,651 = 9.85%
    • Trend: (6.02 – 9.85) / 9.85 = -38.88%
    • Industry: A good ROE for healthcare companies is generally considered to be above 10%. Astrana’s ROE is below this benchmark.
  • Earnings Per Share (EPS) – Basic and Diluted:

    • Metric: Diluted EPS 2024: $0.90; 2023: $1.29
    • Trend: (0.90 – 1.29) / 1.29 = -30.23%
    • Industry: N/A

Liquidity

  • Current Ratio:

    • Metric: 2024: $638,496 / $365,608 = 1.75; 2023: $461,507 / $218,674 = 2.11
    • Trend: (1.75 – 2.11) / 2.11 = -17.06%
    • Industry: A current ratio between 1.5 and 2.0 is generally considered healthy. Astrana’s current ratio is within this range, but has decreased.
  • Quick Ratio (Acid-Test Ratio):

    • Metric: (Cash + Marketable Securities + Receivables) / Current Liabilities
      2024: ($288,455 + $2,378 + $225,733 + $50,257 + $19,316 + $29,496 + $22,861) / $365,608 = 1.61
      2023: ($293,807 + $2,498 + $76,780 + $58,980 + $10,657 + $1,335 + $17,450) / $218,674 = 2.06
    • Trend: (1.61 – 2.06) / 2.06 = -21.84%
    • Industry: A quick ratio above 1.0 is generally considered acceptable. Astrana’s quick ratio is above 1.0, but has decreased.
  • Cash Ratio:

    • Metric: 2024: ($288,455 + $2,378) / $365,608 = 0.796; 2023: ($293,807 + $2,498) / $218,674 = 1.35
    • Trend: (0.796 – 1.35) / 1.35 = -40.99%
    • Industry: A cash ratio of 0.5 or higher is often considered desirable. Astrana’s cash ratio is below this benchmark and has decreased significantly.

Solvency/Leverage

  • Debt-to-Equity Ratio:

    • Metric: 2024: $434,674 / $716,726 = 0.61; 2023: $278,439 / $616,651 = 0.45
    • Trend: (0.61 – 0.45) / 0.45 = 35.56%
    • Industry: A debt-to-equity ratio of 1.0 or lower is generally considered healthy. Astrana’s debt-to-equity ratio is below this benchmark, but has increased.
  • Debt-to-Assets Ratio:

    • Metric: 2024: $434,674 / $1,354,894 = 0.32; 2023: $278,439 / $933,361 = 0.30
    • Trend: (0.32 – 0.30) / 0.30 = 6.67%
    • Industry: A debt-to-assets ratio below 0.5 is generally considered healthy. Astrana’s debt-to-assets ratio is below this benchmark.
  • Interest Coverage Ratio (Times Interest Earned):

    • Metric: 2024: ($49,932 + $33,097 – $14,508) / $33,097 = 2.07; 2023: ($57,849 + $16,102 – $14,208) / $16,102 = 3.64
    • Trend: (2.07 – 3.64) / 3.64 = -43.13%
    • Industry: An interest coverage ratio above 2.0 is generally considered acceptable. Astrana’s interest coverage ratio is above this benchmark, but has decreased.

Activity/Efficiency

  • Inventory Turnover:

    • Metric: Not applicable as Astrana Health is not primarily a retail or manufacturing company.
    • Trend: N/A
    • Industry: N/A
  • Days Sales Outstanding (DSO):

    • Metric: (Receivables / Revenue) * 365
      2024: (($225,733 + $50,257) / $2,034,540) * 365 = 49.98
      2023: (($76,780 + $58,980) / $1,386,661) * 365 = 35.78
    • Trend: (49.98 – 35.78) / 35.78 = 39.69%
    • Industry: The healthcare industry typically has a DSO between 40 and 60 days. Astrana’s DSO is within this range, but has increased.
  • Days Payable Outstanding (DPO):

    • Metric: (Accounts Payable / Revenue) * 365
      2024: ($106,142 / $2,034,540) * 365 = 18.99
      2023: ($59,949 / $1,386,661) * 365 = 15.78
    • Trend: (18.99 – 15.78) / 15.78 = 20.34%
    • Industry: The healthcare industry typically has a DPO between 20 and 40 days. Astrana’s DPO is below this range.
  • Asset Turnover:

    • Metric: 2024: $2,034,540 / $1,354,894 = 1.50; 2023: $1,386,661 / $933,361 = 1.49
    • Trend: (1.50 – 1.49) / 1.49 = 0.67%
    • Industry: An asset turnover ratio between 1.0 and 2.0 is generally considered efficient. Astrana’s asset turnover ratio is within this range.

Valuation

  • Price-to-Earnings Ratio (P/E):

    • Metric: $29.34 / $0.90 = 32.60
    • Trend: N/A
    • Industry: The average P/E ratio for the healthcare industry is around 20-30. Astrana’s P/E ratio is slightly above this range.
  • Price-to-Book Ratio (P/B):

    • Metric: Market Cap = Shares Outstanding * Price = (47,929,872 + 10,603,849) * $29.34 = $1,729,488,000
      P/B = $1,729,488,000 / $716,726,000 = 2.41
    • Trend: N/A
    • Industry: A P/B ratio between 1 and 3 is generally considered reasonable. Astrana’s P/B ratio is within this range.
  • Price-to-Sales Ratio (P/S):

    • Metric: $1,729,488,000 / $2,034,540,000 = 0.85
    • Trend: N/A
    • Industry: A P/S ratio below 2 is generally considered good. Astrana’s P/S ratio is below this benchmark.
  • Enterprise Value to EBITDA (EV/EBITDA):

    • Metric: EV = Market Cap + Total Debt – Cash
      Total Debt = $425,299 + $9,375 + $607 + $554 = $435,835
      EV = $1,729,488 + $435,835 – $288,455 = $1,876,868
      EV/EBITDA = $1,876,868 / $127,334 = 14.74
    • Trend: N/A
    • Industry: An EV/EBITDA ratio between 10 and 15 is generally considered reasonable. Astrana’s EV/EBITDA ratio is within this range.

Growth Rates

  • Revenue Growth:

    • Metric: ($2,034.540 – $1,386.661) / $1,386.661 = 46.72%
    • Trend: N/A
    • Industry: N/A
  • Net Income Growth:

    • Metric: ($49.932 – $57.849) / $57.849 = -13.69%
    • Trend: N/A
    • Industry: N/A
  • EPS Growth:

    • Metric: ($0.90 – $1.29) / $1.29 = -30.23%
    • Trend: N/A
    • Industry: N/A

Other Relevant Metrics

  • Adjusted EBITDA:

    • Description: Adjusted EBITDA is a non-GAAP financial measure 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.
    • Calculation: As defined by the company, it starts with net income and adds back interest, taxes, depreciation, amortization, and other non-cash or non-recurring items.
    • Significance: The company uses Adjusted EBITDA as a supplemental performance measure for operational decision-making and evaluating period-to-period comparisons. It provides investors with relevant information to evaluate operating performance without accounting for differences recognized because of non-core or non-recurring financial information.
    • Trend: 2024: $170.4 million; 2023: $146.6 million. ($170.4 – $146.6) / $146.6 = 16.23% increase.
    • Critical Assessment: While Adjusted EBITDA can be useful, it’s important to remember it’s a non-GAAP measure. Investors should carefully review the reconciliation to net income to understand the adjustments made. The company’s adjustments seem reasonable, focusing on removing non-operational and non-recurring items to provide a clearer picture of core business performance.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️