Astrana Health's Q3 2025: Emerging Contradictions on Payer Transitions, Medicaid Stabilization, Medical Trends, and Revenue Guidance

Date of Call: November 05, 2025

Financials Results

• Revenue: $956.0M, up 100% YOY and 46% sequentially

Guidance:

• Updated FY2025 revenue guidance: $3.10B to $3.18B.
• Updated FY2025 adjusted EBITDA guidance: $200M to $210M.
• Timing note: several payer contracts shifted from mid-2025 to Q1 2026, driving a roughly $15M EBITDA impact for H2 (~$30M run-rate); this is a timing issue, not an operational deterioration.
• Synergies reiterated: $12M–$15M expected through 2026; expect 2026 tailwinds from improved MA rates, Prospect synergies and maturation of full-risk cohorts; expect Medicaid/exchange headwinds.

Business Commentary:

* Strong Financial Performance:

- Astrana Health delivered total revenues of $956 million in Q3 2025, up 100% year-over-year and 46% sequentially.
- Adjusted EBITDA was $68.5 million, up 52% year-over-year and 42% sequentially.
- The growth was driven by the integration of Prospect Health and strong organic growth across the core business.

• Prospect Health Integration:
• Post-acquisition, Prospect Health contributed significantly to Astrana's growth, with its integration expected to fully onboard by mid-2026.

• The company is realizing savings and synergies from integrating Prospect's systems and platforms, with a target of $12 million to $15 million in savings by 2026.

• Predictable Medical Cost Trends:

• Medical cost trends across both legacy Astrana and Prospect remained within expectations, with a full-year blended cost trend of approximately 4.5% in the legacy Astrana business.

• Medicaid trends decelerated, aligning with Astrana's trend expectations, contributing to consistent financial performance.

• Strategic Partnerships and Market Expansion:

• Astrana expanded its strategic partnership with Intermountain Health in Nevada, enhancing its presence in one of its fastest-growing markets.

• The company also secured a new partnership with a provider group in Southern California, adding over 40,000 members to its Care Enablement business.

• Financial Guidance Adjustment:

• Astrana updated its 2025 guidance due to a delay in several payer contracts transitioning from partial risk to full risk arrangements, impacting revenue and EBITDA guidance.
• The company now expects revenue of $3.1 billion to $3.18 billion and adjusted EBITDA of $200 million to $210 million, reflecting these timing changes rather than underlying performance issues.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted 'another strong quarter' with total revenues of $956M (up 100% YOY, 46% sequentially) and adjusted EBITDA of $68.5M (up 52% YOY). They reiterated synergy targets ($12M–$15M), described stable medical cost trends, and characterized the guidance change as a timing shift rather than performance weakness, stating confidence that delayed full-risk contracts will commence in Q1 2026.

Q&A:

• Question from Jailendra Singh (Truist Securities): Were the full-risk timing delays related to one payer or multiple, were they on Prospect or legacy Astrana, is this definitive for 1/1/26, and does it change your approach to other partial-to-full transitions?
  Response: Delay spans multiple payer partners across both legacy Astrana and Prospect, was procedural (regulatory/operational feeds) not technical, and management expects finalization and go-live in Q1 2026 without changing their broader approach to transitions.

• Question from Jailendra Singh (Truist Securities): Was the $10M EBITDA reduction entirely due to this timing delay?
  Response: Yes — the EBITDA reduction is attributable to timing of full-risk transitions; core medical cost trends remain in line or slightly better than expected.

• Question from Jailendra Singh (Truist Securities): Can you provide more color on the Intermountain Health partnership economics and expansion opportunity?
  Response: Partnership pairs Intermountain's clinical infrastructure with Astrana's delivery model in Nevada to improve coordination and outcomes; discussions about broader expansion are possible but not yet underway.

• Question from Matthew Mardula (William Blair): When do you expect Medicaid cost trends to approach the ~4.5% target and how confident are you in Q4 assumptions?
  Response: Medicaid is improving sequentially but regulatory instability may persist; management expects margins to stabilize sometime in 2026, perhaps late '26, and remains cautiously optimistic about Q4 assumptions.

• Question from Matthew Mardula (William Blair): For the new 40,000-member Southern California partner, what's the payer mix, percent full-risk, and expected profitability on onboarding?
  Response: Payer mix roughly mirrors existing mix (Medicare/Medicaid/commercial), members are all shared-risk (not full risk), and Care Enablement's operating leverage should make the relationship EBITDA-additive early on.

• Question from Meghan Holtz (Jefferies): What drove the segment margin divergence in Q3 (Enablement high, Care Partners lower)?
  Response: Enablement margin strong due to Prospect bringing sizable enablement clients and technology-driven operating leverage; Care Partners blended lower because Prospect runs at a higher trend than legacy Astrana but management expects to align Prospect performance over time.

• Question from Michael Ha (Baird): Are you seeing Medicaid disenrollment/acuity shifts in California and how are you factoring payer developments into 2026 planning?
  Response: Year-to-date Medicaid disenrollment for Astrana is an annualized mid- to high-single-digit attrition (less severe than some statewide reports); plans retain members disproportionately with Astrana and management is scenario-planning for 2026 headwinds.

• Question from Michael Ha (Baird): Where do you see MA margins now and how might strong rate notices for 2027 impact margins and the path to the 2027 EBITDA target?
  Response: Management sees room for margin stabilization and potential expansion in 2026–27 as MA rates rise (expecting mid- to high-single-digit in 2027), but it's too early to quantify specific per-line margin impacts while AEP is ongoing.

• Question from Ryan Langston (TD Cowen): The guidance cut implies certain margin/run-rate assumptions — are the implied numbers (~25% margin on delayed contracts) correct or are there other moving parts?
  Response: Management characterizes the impact as roughly $15M for the half-year (implying nearer a $30M annualized run-rate) and says the margin on those contracts is not as low as the implied 25% figure; the change is primarily timing-related.

• Question from Ryan Langston (TD Cowen): Did the Prospect beat include any of the $12M–$15M synergies or was it standalone performance?
  Response: The positive Prospect commentary referred to standalone medical cost and utilization performance versus diligence expectations; synergies are separate and not included in that comment.

• Question from Thomas Walsh (Barclays): Can you share Prospect's specific cost trend and is its delta structural versus legacy Astrana?
  Response: They haven't disclosed a specific Prospect trend number; management expects Prospect's trend to be several points higher than legacy Astrana today but believes it's not structural and can be improved via platform integration and care pathways.

• Question from David Larsen (BTIG): What was medical trend in the quarter by line and what are expectations for 2026; also how complete are claims?
  Response: Blended medical trend just under 4.5% with Medicare better, Medicaid improving sequentially and commercial stable; no specific 2026 trend disclosed yet; claim completion rates are >85% and prior-period development has been consistently minimal.

• Question from Craig Jones (Stifel): Timing/impact of the reconciliation bill work requirements — any California implementation timing?
  Response: Management expects this to be a 2027 item as currently constructed and not to materially impact results in the near term.

• Question from Craig Jones (Stifel): Thoughts on potential V29 risk-adjustment changes and impact of nCounter data on Astrana?
  Response: Management is comfortable with their risk adjustment (believes RAF may be conservative) and is not particularly concerned about V28/V29 changes, expecting to continue improving coding and care regardless of model adjustments.

• Question from Zachary Haggerty (KeyBanc): Any guideposts for the shift to full risk through the remainder of 2026 after these delays?
  Response: Management expects high-70s percentage of revenue from full risk into 2026 and continues to transition contracts (including delegated models outside California) as planned, with the noted slight delay on specific items.

• Question from Eugene Mannheimer (Freedom Capital Markets): If you strip out Prospect, what is organic growth and was the new 40k-member group related to Prospect?
  Response: Core Astrana organic growth is mid-teens/low-teens; Prospect growth was mid-to-high single digits per prior guidance; the 40k-member win is an independent pipeline client, not sourced from Prospect.

Contradiction Point 1

Payer Transition Timing and Revenue Impact

It involves the timing of full risk transitions and the impact of delays on revenue guidance, which are crucial for understanding the company's financial outlook and operational efficiency.

Is the revenue guidance update due to multiple payers or a single payer? Was it technical or data integration issues? Are there impacts on partial-to-full risk transitions? - Jailendra Singh(Truist Securities)

20251107-2025 Q3: The delay is strictly a timing issue and not due to technical or technology or data issues. Half of the delay is procedural, such as regulatory filings, while the other half is in late-stage conversations. - [Chan Basho](COO&CFO)

Was the revenue guidance update due to one payer or multiple payers? Could you provide more details on the tech and data integration? Were these contracts under Prospect or legacy Astrana? - Jailendra Singh(Truist Securities, Inc., Research Division)

2025Q3: The delay was strictly a timing issue. It relates to both legacy Astrana and the Prospect businesses. The delay was not due to technical or technology issues. - [Chan Basho](COO&CFO)

Contradiction Point 2

Medicaid Cost Trend Stabilization Timeline

It pertains to the expected timeline for Medicaid cost trends to stabilize, which impacts the company's cost management and financial forecasts.

What factors support the expectation of Medicaid cost stabilization by late 2026? What are the payer type and full-risk lives for the new Southern California group? - Matthew Mardula (William Blair)

20251107-2025 Q3: We expect Medicaid cost trends to stabilize by late '26 due to state and federal regulatory instability. - [Brandon Sim](CEO)

What are your expectations for Medicaid cost trends approaching 4.5%? Considering Q4 seasonality, what gives you confidence in the guidance’s seasonality adjustments? - Matthew Mardula (William Blair & Company L.L.C., Research Division)

2025Q3: We expect Medicaid cost trends to stabilize sometime in late 2026, with continued improvement shown in the trend. - [Brandon Sim](CEO)

Contradiction Point 3

Revenue Guidance Adjustments

It involves changes in revenue guidance, which directly impacts investor expectations and financial forecasts.

Was the revenue guidance update caused by multiple payers or a single payer? Was it due to technical or data integration issues? Are there any impacts on transitions from partial to full risk? - Jailendra Singh(Truist Securities)

20251107-2025 Q3: The delay is strictly a timing issue and not due to technical or technology or data issues. Half of the delay is procedural, such as regulatory filings, while the other half is in late-stage conversations. - [Chan Basho](COO)

With Prospect's closure and improved deal terms, how have their year-to-date results been in the first half? Have synergy expectations become more or less optimistic, and what are your capital deployment priorities moving forward? - Hua Ha(Baird)

2025Q2: Strong performance in Prospect as expected during diligence. Good retention on provider and member sides. We are confident in achieving $12 million to $15 million of synergies over the next 12 to 18 months. - [Brandon Sim](CEO)

Contradiction Point 4

Medical Cost Trends

It involves expectations about medical cost trends, which are crucial for financial projections and operational planning.

What was the medical trend this quarter compared to expectations? - David Larsen(BTIG)

20251107-2025 Q3: The blended trend was just under 4.5%. Medicare is favorable, Medicaid deceleration continued, and commercial was stable. Overall, in line with expectations. - [Brandon Sim](CEO)

How have 2025 Medicaid rates trended given Q1-Q2 improvement but past rate-trend mismatches? - Craig Jones(Bank of America)

2025Q2: Medicaid still volatile. California hasn't issued rate updates yet. Active negotiations with payers to resolve rate acuity mismatch. A conservative view is factored into guidance and Q2 financials. - [Brandon Sim](CEO)