Astrana Health updates 2025 guidance to $3.1B–$3.18B revenue as full risk contract timing shifts, highlights AI integration

Earnings Call Insights: Astrana Health, Inc. (ASTH) Q3 2025

MANAGEMENT VIEW

* Brandon Sim, President & CEO, stated, "Astrana delivered another strong quarter of financial and operational results in the third quarter as we continue to execute on our strategy of building the nation's leading health care delivery platform." Sim highlighted the integration of Prospect Health following its acquisition in July, emphasizing the addition of new providers, patients, and team members, as well as the company's "four pillars" of smart growth, disciplined risk progression, quality and cost excellence, and operating leverage through technology.
* Sim announced, "For the third quarter of 2025, we delivered another strong performance across the business with total revenues of $956 million, up 100% year-over-year and 46% sequentially, driven by both the integration of Prospect Health into the company as well as solid organic growth across the core business." Adjusted EBITDA reached $68.5 million, up 52% year-over-year and 42% sequentially.
* Sim underscored the ongoing integration of Prospect, stating, "We are reiterating our synergy targets of $12 million to $15 million over the coming quarters." He also announced partnerships, including the expansion with Intermountain Health in Nevada and a new provider group in Southern California serving over 40,000 members, which will begin onboarding in the first half of 2026.
* Sim addressed updated 2025 guidance: "We now expect several payer contracts to transition from partial risk to full risk arrangements in the first quarter of 2026 instead of in mid-2025 as originally anticipated."
* Chan Basho, CFO, COO & Corporate Secretary, stated, "Our third quarter results reflect strong execution and continued consistency across the business. We successfully integrated Prospect into our consolidated financials while maintaining solid performance across legacy Astrana operations."
* Basho noted, "Within our Care Enablement segment, we added material scale this quarter, more than doubling revenue quarter-over-quarter as Prospect brings more provider group clients for us to serve with our technology-enabled offerings."

OUTLOOK

* Sim reported, "We are now updating our full year 2025 revenue guidance to a range of $3.1 billion to $3.18 billion and adjusted EBITDA to a range of $200 million to $210 million." He emphasized that the update is "purely a matter of timing" regarding full risk contract transitions, reaffirming stability in cost trends and clinical outcomes.
* Basho reiterated, "For full year 2025, we now expect total revenue in the range of $3.1 billion to $3.18 billion and adjusted EBITDA in the range of $200 million to $210 million."
* Sim shared, "While we're not yet providing formal guidance, there are several dynamics already coming into focus" for 2026, including anticipated tailwinds from Medicare Advantage rates, Prospect synergies, and maturing full risk cohorts, with offsetting headwinds in Medicaid and exchange businesses.

FINANCIAL RESULTS

* Astrana reported total revenue for Q3 2025 of $956 million, with adjusted EBITDA of $68.5 million. Cash and short-term investments at quarter end were approximately $463 million, and net debt was approximately $624 million. The net leverage ratio was about 2.5x on a pro forma trailing 12-month adjusted EBITDA basis.
* Cash flow from operations for the quarter was approximately $10 million, with a nine-month total of $118 million. Full-year free cash flow conversion is expected at 40% to 45% of adjusted EBITDA.
* Medical cost trends across both Prospect and Astrana's core business remained within expectations, with a full-year blended cost trend of approximately 4.5% in the legacy Astrana business.

Q&A

* Jailendra Singh, Truist Securities, Inc.: Questioned revenue guidance updates and the nature of the full risk contract transition delay. Basho responded the delay is "strictly a timing issue," affecting both legacy Astrana and Prospect, and clarified, "the delay was not due to technical or technology or data issues...around half of the delay is procedural in nature, such as regulatory filings."
* Singh asked if the EBITDA reduction was also all due to the timing delay. Sim replied, "That's right. Core trend, medical cost trend in both legacy Astrana and Prospect businesses continue to come in line to slightly better than expected."
* Meghan Holtz, Jefferies LLC: Inquired about margins by segment. Sim explained, "The enablement business grew rapidly in Q3...We're driving a very strong EBITDA margin in that business, and we expect that to continue to grow in the future."
* Michael Ha asked about Medicaid disenrollment and margin guidance. Sim stated, "Year-to-date in 2025, we're seeing an annualized mid- to high single-digit attrition rate in Medicaid in terms of eligibility and enrollment...we'll continue to observe what happens in 2026."
* Ryan Langston, TD Cowen: Queried about the impact of contract delays on revenue and EBITDA. Sim clarified, "We believe the run rate is close to $15 million -- around $15 million for the latter half of the year."

SENTIMENT ANALYSIS

* Analysts were focused on the timing of full risk transitions, margins, Medicaid headwinds, and integration progress, expressing slightly negative to neutral sentiment, particularly around the guidance reduction and Medicaid uncertainty.
* Management maintained a confident tone in prepared remarks, emphasizing operational discipline and the temporary nature of guidance changes. During Q&A, the tone remained calm and explanatory, with Sim and Basho providing detailed clarifications and reiterating confidence in integration progress and future margin expansion.
* Compared to the previous quarter, both analysts and management showed increased caution regarding Medicaid and the impact of regulatory and procedural delays, with management reiterating the non-structural nature of the guidance reduction.

QUARTER-OVER-QUARTER COMPARISON

* The company shifted its 2025 guidance down to $3.1 billion–$3.18 billion in revenue and $200 million–$210 million in adjusted EBITDA, primarily due to delayed timing in full risk contract transitions, compared to a prior range of $3.1 billion–$3.3 billion in revenue and $215 million–$225 million in adjusted EBITDA.
* Management tone shifted from highly optimistic in Q2 to more measured and focused on operational execution and risk management in Q3.
* Analyst focus remained on Medicaid cost trends, integration of Prospect, and margin sustainability, with new emphasis on the procedural nature of contract delays and potential for further Medicaid headwinds.
* Strategic priorities remained on integration, technology leverage, and disciplined contract transitions, with added attention to regulatory and payer negotiation processes.

RISKS AND CONCERNS

* Management identified procedural and regulatory delays as the primary reason for timing shifts in full risk contract transitions, impacting near-term revenue and EBITDA.
* Medicaid disenrollment and regulatory changes were highlighted as ongoing headwinds, with management emphasizing scenario planning and proactive engagement with payer partners and state agencies.
* Analysts raised concerns about margin sustainability, Medicaid trends, and the timing and execution of contract transitions.

FINAL TAKEAWAY

Astrana Health leadership emphasized that the updated 2025 guidance is a result of timing delays in full risk contract transitions rather than a change in underlying business fundamentals. Management reiterated operational discipline, successful integration of Prospect, and expanding technology-enabled partnerships as drivers of long-term growth. Despite Medicaid and regulatory headwinds, Astrana remains confident in achieving projected synergies and leveraging its technology platform for continued profitability and market expansion.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/asth/earnings/transcripts]

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* Astrana Health, Inc. (ASTH) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4839956-astrana-health-inc-asth-q3-2025-earnings-call-transcript]
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