Astrana Health’s third quarter results were met with a negative market reaction, as the company’s revenue growth was overshadowed by lower-than-expected profitability and a reduction in full-year guidance. Management attributed the robust revenue increase largely to the integration of Prospect Health and continued organic growth, while also acknowledging that operating margins fell due to the mix of new business and ongoing integration costs. CEO Brandon Sim noted, “Medical cost trends across both Prospect and Astrana’s core business remained firmly within expectations,” but the company’s GAAP profit lagged consensus, reflecting integration expenses and a shift in contract timing.
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Astrana Health (ASTH) Q3 CY2025 Highlights:
- Revenue: $956 million vs analyst estimates of $950.2 million (99.7% year-on-year growth, 0.6% beat)
- EPS (GAAP): $0.01 vs analyst expectations of $0.43 (97.6% miss)
- Adjusted EBITDA: $68.48 million vs analyst estimates of $67.29 million (7.2% margin, 1.8% beat)
- The company dropped its revenue guidance for the full year to $3.14 billion at the midpoint from $3.2 billion, a 1.9% decrease
- EBITDA guidance for the full year is $205 million at the midpoint, below analyst estimates of $220 million
- Operating Margin: 2%, down from 5.9% in the same quarter last year
- Market Capitalization: $1.18 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Astrana Health’s Q3 Earnings Call
- Jailendra Singh (Truist Securities) asked whether the guidance reduction was tied to technical integration delays. CFO Chan Basho clarified the delay was procedural, involving regulatory filings and contract standardization, not technology or data issues.
- Matthew Mardula (William Blair) inquired about Medicaid cost trends and margin stabilization. CEO Brandon Sim responded that Medicaid headwinds persist but improvement is expected by late 2026, depending on regulatory developments.
- Meghan Holtz (Jefferies) asked about divergent segment margins. Sim explained that Care Enablement benefited from technology adoption and large client onboarding, while Care Partners’ margins lagged due to higher cost trends in the legacy Prospect business.
- Michael Ha (Baird) pressed on Medicaid disenrollment in California and the impact on member mix. Sim noted disenrollment rates have been more moderate than feared and attributed retention to longstanding relationships with members and strong payer partnerships.
- Ryan Langston (TD Cowen) questioned the EBITDA impact from delayed contracts. Sim clarified that the EBITDA reduction primarily reflects the timing of full-risk contracts and not a margin compression in the core business.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely watch (1) the pace and effectiveness of full-risk contract activations and integration of new partnerships, (2) stabilization of Medicaid and exchange trends amid regulatory shifts, and (3) realization of expected synergies from the Prospect Health acquisition. The continued rollout of AI-enabled tools and successful onboarding of provider groups will also be important indicators of execution.
Astrana Health currently trades at $23.60, down from $33.37 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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