Introduction & Market Context
Astrana Health Inc. (ASTH) recently presented its first quarter 2025 earnings results, revealing a company in transition with strong revenue growth but facing profitability headwinds. The healthcare provider’s stock declined 3.96% in after-hours trading following the May 8th earnings release, reflecting investor concerns about the company’s earnings miss despite substantial top-line growth.
According to the presentation materials, Astrana Health achieved significant revenue expansion while continuing its strategic shift toward full-risk arrangements. However, this growth came with compressed margins and lower profitability metrics compared to the same period last year. The stock, which had gained 4.04% during regular trading hours before the announcement, retreated to $31.94 in pre-market trading.
Quarterly Performance Highlights
Astrana Health reported Q1 2025 revenue of $620.4 million, representing a substantial 53% year-over-year increase from $404.4 million in Q1 2024. However, this figure fell short of analyst expectations of $628.11 million. The company’s bottom line showed more significant challenges, with net income attributable to Astrana Health at $6.7 million, down from $14.8 million in the prior-year quarter.
As shown in the following financial highlights slide, diluted earnings per share came in at $0.14, significantly below the forecasted $0.30:
Adjusted EBITDA for Q1 2025 was $36.4 million, representing a 13.9% decline from $42.2 million in Q1 2024. The adjusted EBITDA margin contracted to 6%, compared to 10% in the same period last year, indicating pressure on profitability despite the revenue expansion.
The company highlighted several operational achievements during the quarter, including growing its Care Partners segment to 910,000 members and completing the integration of Collaborative Health Systems. Astrana also noted continued clinic expansion in partnership with Anthem.
Strategic Initiatives
A central theme of Astrana’s presentation was its ongoing transition toward full-risk arrangements, which now represent 75% of total capitation revenue, up from 73% in 2024. The company views this shift as a key strategic initiative to enhance long-term value creation, though only 38% of Care Partners members are currently in full-risk arrangements.
The following chart illustrates Astrana’s multi-year progression toward full-risk contracts, with projections showing continued momentum through 2025:
The company’s revenue mix remains heavily weighted toward capitation revenue (94%), with Medicare representing 63% of revenue by payer type, followed by Medicaid at 28% and Commercial at 7%. This diversified payer mix provides some stability while the company executes its risk progression strategy.
Astrana Health continues to expand its geographical footprint, now operating in 16 markets with 1.7 million value-based care members and partnerships with over 20,000 providers. The company’s presentation emphasized its position as a premier healthcare platform with a focus on growth, risk progression, improved outcomes, and operating leverage.
Detailed Financial Analysis
The presentation included a historical view of Astrana’s financial performance, showing consistent revenue growth from $561 million in 2019 to a projected $2.5-2.7 billion in 2025, representing a compound annual growth rate of approximately 29%. However, adjusted EBITDA growth has been less dramatic, with a CAGR of about 22% over the same period.
A closer examination of quarterly segment performance reveals that the Care Partners segment drove most of the revenue growth, increasing from $285.4 million in Q1 2024 to $458.7 million in Q1 2025. However, quarter-over-quarter revenue declined from $665.2 million in Q4 2024 to $620.4 million in Q1 2025, suggesting some seasonal factors or integration challenges.
The company’s balance sheet showed $260.9 million in cash and cash equivalents as of March 31, 2025, down from $290.8 million at the end of 2024. Working capital also declined by $20.9 million during the quarter, while total stockholders’ equity increased by $33.7 million to $750.4 million.
Forward-Looking Statements
Despite the Q1 earnings miss, Astrana Health maintained its full-year 2025 guidance, projecting revenue between $2.5 billion and $2.7 billion and adjusted EBITDA between $170 million and $190 million. This guidance suggests management’s confidence in improving performance throughout the remainder of the year.
The following slide details the company’s FY2025 guidance alongside Q1 2025 results and FY2024 actuals:
CEO Brandon Sim expressed optimism about the company’s direction, stating in the earnings call, "We are proud to continue demonstrating that value-based care can be both scalable and effective." CFO Chand Basho added, "We remain confident in our ability to drive sustainable, profitable growth."
The company highlighted ongoing investments in automation and AI, which are expected to yield at least $10 million in annual operating efficiencies by early 2026. These initiatives may help address the margin compression evident in the Q1 results.
For Q2 2025, management expects revenue between $615 million and $665 million, with adjusted EBITDA projected at $45 million to $50 million, suggesting sequential improvement in profitability. The company’s longer-term strategy includes achieving a medium-term adjusted EBITDA target of $350 million by 2027, more than double the current annual run rate.
While Astrana Health continues to demonstrate impressive revenue growth and strategic execution, investors will likely focus on the company’s ability to translate this expansion into improved profitability in upcoming quarters. The stock’s current valuation, with a P/E ratio of 36.7x despite the recent pullback, suggests the market continues to price in expectations for significant future earnings growth.
Full presentation:
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