Astrana Health NASDAQ: ASTH reported second-quarter 2026 revenue of $973 million, up 49% from a year earlier, while adjusted EBITDA increased 43% to $69 million. Adjusted diluted earnings per share reached a record $0.80, up 45% year over year, as the company cited growth in value-based care arrangements, medical-cost management, Prospect Health acquisition synergies and operating leverage.
President and Chief Executive Officer Brandon Sim said the company generated $93 million in free cash flow during the first half of 2026, converting approximately 69% of adjusted EBITDA into free cash flow. Astrana used its cash generation to reduce debt, with net leverage declining to 2.26 times trailing 12-month adjusted EBITDA, ahead of its prior goal of reaching less than 2.5 times within 24 months of the Prospect acquisition.
Guidance Raised as Company Reinvests in Growth
Astrana raised its full-year adjusted EBITDA outlook to $255 million to $280 million, citing broad-based performance ahead of plan, the maturation of full-risk cohorts, Prospect synergies and operating leverage. The company reaffirmed revenue guidance of $3.8 billion to $4.1 billion and free-cash-flow guidance of $105 million to $132.5 million.
For the third quarter, Astrana projected revenue of $1 billion to $1.03 billion and adjusted EBITDA of $72.5 million to $77.5 million.
Sim said the company is reinvesting a substantial portion of its performance above plan into provider and payer growth opportunities. Those investments are expected to total the mid- to high-single-digit millions of dollars during 2026 and include expansion in core and new markets, new payer contracts, planned provider partnerships, tuck-in acquisitions and recently converted risk cohorts.
Chief Operating and Financial Officer Chandan Basho said the second-quarter revenue figure included a one-time $15 million reduction tied to the Centers for Medicare & Medicaid Services’ implementation of adjustments for significant anomalous and highly suspect billing activity in the ACO REACH program’s 2025 performance year. He said the associated expense reduction meant the net EBITDA effect was immaterial.
Value-Based Care Expansion and Cost Trends
At the end of the quarter, Astrana had about 1.5 million members in value-based arrangements. Approximately 81% of capitation revenue and 42% of membership came from full-risk arrangements, Sim said.
The company signed new Medicare Advantage agreements in Hawaii and Texas and expanded existing relationships in California. In Texas, Astrana added roughly 3,000 Medicare Advantage professional-risk lives with a payer that selected it as a risk partner. Sim said the company’s existing delegated full-risk partnership in Texas continued to perform in line with underwriting expectations after two full quarters of operation.
Astrana also plans new physician partnerships in the South and on the East Coast that it expects will begin contributing revenue in 2027. The company said it remains payer-agnostic, though it expects Medicare Advantage and original Medicare to represent a higher percentage of revenue over time given expected Medicaid changes.
Medical cost trend for the year to date has tracked slightly better than the company’s full-year assumption of approximately 5.2%, according to Sim. Medicare Advantage and original Medicare performed favorably relative to expectations, while Medicaid trends were in line with expectations. Commercial costs ran slightly above expectations, primarily in certain outpatient specialties, though management said commercial represents only a single-digit percentage of revenue and that it has levers to address the trend.
Sim said inpatient admissions per 1,000 members in Astrana’s Medicare business were relatively flat year over year during the first half. The company’s flagship MSSP ACO ranked seventh among 476 ACOs nationally in net shared savings per beneficiary for the 2024 performance year, while its flagship ACO REACH entity ranked in the top 15% nationally in net shared savings.
Medicaid Rebalancing and Membership Attrition
Astrana said membership changes during the quarter were mainly driven by Medicaid-related attrition that had already been incorporated into its guidance. California Medicaid attrition was at the higher end of the company’s previously discussed low- to mid-teens range, while exchange-product attrition was running somewhat better than Astrana’s prior expectation of 30% to 40%. Medicare Advantage and original Medicare membership were described as stable.
In California, the company is moving portions of its Medi-Cal membership from professional-risk arrangements to full-risk arrangements, responding to changes in the state Medicaid program. Sim said the transition is intended to better align Astrana’s clinical outcomes with its financial results, particularly as margins compress and enrollment declines.
The company expects “tens of thousands” of members to transition to these full-risk arrangements over the next 12 months, though it did not quantify the earnings impact. Management said it expects Medicaid policy changes beginning Jan. 1, 2027, but reaffirmed its expectation for mid- to high-teens EBITDA growth over the medium term.
Prospect Integration and Operating Efficiency
July 1 marked the one-year anniversary of Astrana’s acquisition of Prospect Health. Sim said the company has integrated Prospect’s clinical operations, technology workflows and operating framework into Astrana’s platform. Gross provider retention has remained above 99%, and management continues to expect operating-expense synergies toward the high end of its annual $12 million to $15 million target.
Medical cost trend within the legacy Prospect business has run slightly ahead of expectations, Sim said, although he added that the company has established the operational and clinical foundation it believes can support further improvement.
Astrana said its technology and AI-enabled workflows are also contributing to lower administrative costs. AI-supported processes in claims operations and referral management reduced handling times by more than 50%, creating capacity equivalent to about 60 full-time employees over the past 12 months, according to Sim.
General and administrative expenses improved by approximately 210 basis points as a percentage of revenue from the prior-year quarter. Astrana expects G&A to be about 6% of revenue as it exits 2026. Management said future efficiency gains should come from both continued Prospect synergies and operational changes across the legacy Astrana platform.
About Astrana Health (NASDAQ:ASTH)
Astrana Health, Inc, Inc, a physician-centric technology-powered healthcare management company, provides medical care services in the United States. It operates through three segments: Care Partners, Care Delivery, and Care Enablement. The company is leveraging its proprietary population health management and healthcare delivery platform, operates an integrated, value-based healthcare model which empowers the providers in its network to deliver care to its patients. It offers care coordination services to patients, families, primary care physicians, specialists, acute care hospitals, alternative sites of inpatient care, physician groups, and health plans.
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