1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___.
Commission File No. 001-37392
Astrana Health, Inc.
(Exact name of registrant as specified in its charter)
Delaware
95-4472349
(State or Other Jurisdiction
(I.R.S. Employer
of Incorporation or Organization)
Identification Number)
1668 S. Garfield Avenue, 2nd Floor, Alhambra, California 91801
(Address of principal executive offices and zip code)
(626) 282-0288
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common Stock, $0.001 par value per share
ASTH
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of August 3, 2026, there were 55,737,168 shares of common stock of the registrant, $0.001 par value per share, issued and outstanding, which includes 6,132,802 treasury shares that are owned by Allied Physicians of California, a Professional Medical Corporation d.b.a. Allied Pacific of California IPA (“APC”), a consolidated affiliate of Astrana Health, Inc. These shares are legally issued and outstanding but treated as treasury shares for accounting purposes.
INDEX TO FORM 10-Q FILING
TABLE OF CONTENTS
PAGE
Glossary
3
Introductory Note
Note About Forward-Looking Statements
4
PART I
ITEM 1
Condensed Consolidated Financial Statements
5
Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025
Condensed Consolidated Statements of Income for the three and six months ended June 30, 2026 and 2025
6
Condensed Consolidated Statements of Mezzanine Deficit and Stockholders’ Equity for the three and six months ended June 30, 2026 and 2025
7
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025
8
Notes to Condensed Consolidated Financial Statements
9
ITEM 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
38
ITEM 3
Quantitative and Qualitative Disclosures About Market Risk
52
ITEM 4
Controls and Procedures
PART II
Legal Proceedings
53
ITEM 1A
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
54
Defaults Upon Senior Securities
Mine Safety Disclosures
ITEM 5
Other Information
ITEM 6
Exhibits
55
SIGNATURES
57
2
The following abbreviations or acronyms that may be used in this document shall have the adjacent meanings set forth below:
AHM
Astrana Health Management, Inc. (f/k/a Network Medical Management, Inc.)
AHMC
AHMC Healthcare Inc.
AHMS
Advanced Health Management Systems, L.P.
APC
Allied Physicians of California, a Professional Medical Corporation
Astrana
Astrana Health, Inc. (f/k/a Apollo Medical Holdings, Inc.)
CFC
Community Family Care Medical Group IPA, Inc.
CFC HP
Community Family Care Health Plan, Inc.
CHS
Collaborative Health Systems, LLC, Golden Triangle Physician Alliance, and Heritage Physician Networks
CMS
Centers for Medicare & Medicaid Services
DMHC
California Department of Managed Health Care
IPA
Independent Practice Association
Prospect
Certain businesses and assets of Prospect Medical Holdings, Inc. acquired by the Company
Sun Labs
Sun Clinical Laboratories, a California corporation
VIE
Variable Interest Entity
INTRODUCTORY NOTE
Unless the context dictates otherwise, references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us,” “our,” and similar words are references to Astrana Health, Inc., a Delaware corporation (“Astrana”), and its consolidated subsidiaries and affiliated entities, as appropriate, including its consolidated variable interest entities (“VIEs”).
This Quarterly Report on Form 10-Q includes the financial statements for the quarter ended June 30, 2026 and provides management’s discussion and analysis of the Company’s financial condition, results of operations, and other required disclosures, as mandated by the Securities and Exchange Commission (the “SEC”).
The Centers for Medicare & Medicaid Services (“CMS”) has not reviewed any statements contained in this report, including statements describing the Company’s participation in the ACO Realizing Equity, Access, and Community Health Model (the “ACO REACH Model”), in the ACO Long-Term Enhanced ACO Design Model (the “ACO LEAD Model”), or in the Medicare Shared Savings Program (the “MSSP”).
Trade names and trademarks of Astrana and its subsidiaries referred to herein, and their respective logos, are our property. This Quarterly Report on Form 10-Q may contain additional trade names and/or trademarks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names and/or trademarks, if any, to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any statements about our business, financial condition, operating results, plans, objectives, expectations, and intentions; any projections of earnings, revenue, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), Adjusted EBITDA, Adjusted EBITDA margin, adjusted earnings per share (“EPS”) – diluted, free cash flow, or other financial items, such as our projected capitation from CMS, our forward-looking guidance, and our future liquidity; any statements of any plans, strategies, and objectives of management for future operations, such as the material opportunities that we believe exist for our Company; any statements concerning proposed services, developments, mergers, acquisitions, or dispositions; any statements relating to our completed acquisition of certain businesses and assets of Prospect Medical Holdings, Inc. (“Prospect”); any statements with respect to dividends or stock repurchases and timing, methods, and payment of same; any statements regarding the outlook of the ACO REACH Model, the ACO LEAD Model, the MSSP, or strategic transactions; any statements relating to delayed payments under, or potential cuts to, Medicaid and/or Medicare programs and/or changes in federal or state funding policies; any statements regarding management’s view of future expectations and prospects for us; any statements about prospective adoption of new accounting standards or effects of changes in accounting standards; any statements regarding our ability to remediate the material weakness in our internal control over financial reporting and maintain effective internal control over financial reporting and disclosure controls and procedures; any statements regarding potential changes to our tax structure; any statements regarding future economic conditions or performance; any statements relating to the potential impact of cybersecurity breaches or disruptions to our management information systems or widespread outages, interruptions, or other failures of operational, communication, and other systems; any statements of belief; any statements of assumptions underlying any of the foregoing; and other statements that are not historical facts. Forward-looking statements may be identified by the use of forward-looking terms, such as “anticipate,” “could,” “can,” “may,” “might,” “potential,” “predict,” “should,” “estimate,” “expect,” “project,” “believe,” “think,” “plan,” “envision,” “intend,” “continue,” “target,” “seek,” “contemplate,” “budgeted,” “will,” or “would,” and the negative of such terms, other variations on such terms or other similar or comparable words, phrases, or terminology. These forward-looking statements present our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q and are subject to change.
Forward-looking statements involve risks and uncertainties, many of which are difficult to predict, are outside of our control, and are based on the current beliefs, expectations, and certain assumptions of management. Some or all of such beliefs, expectations, and assumptions may not materialize or may vary significantly from actual results. Such statements are qualified by important economic, competitive, governmental, and technological factors that could cause our business, strategy, or actual results or events to differ materially from those in our forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026, including the risk factors discussed under the heading “Risk Factors” in Part I, Item 1A thereof. Although we believe the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change. Significant risks and uncertainties could cause actual conditions, outcomes, and results to differ materially from those indicated by such statements. Any forward-looking statement made by the Company in this Quarterly Report on Form 10-Q speaks only as of the date it is made. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by any applicable securities laws.
Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ASTRANA HEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
June 30,2026
December 31,2025
(Unaudited)
Assets
Current assets
Cash and cash equivalents
$
400,792
429,474
Receivables, net (including amounts from related parties)
465,080
374,465
Income taxes receivable
—
1,799
Other receivables
24,113
26,385
Prepaid expenses and other current assets
25,857
26,264
Loans receivable
3,318
4,926
Total current assets
919,160
863,313
Non-current assets
Property and equipment, net
62,567
57,332
Intangible assets, net
243,312
270,968
Goodwill
886,995
865,305
Income taxes receivable, net of current portion
26,220
Loans receivable, net of current portion
49,273
48,724
Investments in other entities – equity method
27,805
25,637
Operating lease right-of-use assets
39,194
35,738
Other assets
27,554
25,424
Total non-current assets
1,362,920
1,355,348
Total assets (1)
2,282,080
2,218,661
Liabilities, Mezzanine Deficit, and Stockholders’ Equity
Current liabilities
Accounts payable and accrued expenses
245,860
195,912
Fiduciary accounts payable
3,771
3,524
Income taxes payable
2,082
Medical liabilities
415,765
335,705
Operating lease liabilities
8,938
7,809
Current portion of long-term debt
53,848
47,865
Other liabilities
17,375
24,458
Total current liabilities
747,639
615,273
Non-current liabilities
Deferred tax liability
8,795
5,491
Operating lease liabilities, net of current portion
33,975
31,552
Long-term debt, net of current portion and deferred financing costs
882,650
990,904
Other long-term liabilities
10,442
17,107
Total non-current liabilities
935,862
1,045,054
Total liabilities (1)
1,683,501
1,660,327
Commitments and contingencies (Note 11)
Mezzanine deficit
Non-controlling interest in Allied Physicians of California, a Professional Medical Corporation (“APC”)
(242,261
)
(234,962
Stockholders’ equity
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized; and zero shares issued and outstanding as of June 30, 2026 and December 31, 2025
Common stock, $0.001 par value per share; 100,000,000 shares authorized, 49,226,943 and 48,885,358 shares issued and outstanding, excluding 10,695,758 and 10,571,011 treasury shares, as of June 30, 2026 and December 31, 2025, respectively
49
Additional paid-in capital
487,820
470,863
Retained earnings
342,355
308,379
Total stockholders’ equity
830,224
779,291
Non-controlling interests
10,616
14,005
Total equity
840,840
793,296
Total liabilities, mezzanine deficit, and stockholders’ equity
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(UNAUDITED)
Three Months EndedJune 30,
Six Months EndedJune 30,
2026
2025
Revenue
Capitation and other revenue, net
972,520
654,808
1,937,620
1,275,196
Operating expenses
Cost of services, excluding depreciation and amortization
868,498
576,839
1,727,855
1,125,900
General and administrative expenses
54,150
50,725
115,888
94,623
Depreciation and amortization
15,550
6,904
31,028
13,752
Total expenses
938,198
634,468
1,874,771
1,234,275
Income from operations
34,322
20,340
62,849
40,921
Other (expense) income
Income (loss) from equity method investments
548
381
2,268
(486
Interest expense
(15,997
(7,382
(32,098
(14,690
Interest income
5,907
2,336
9,723
4,647
Unrealized gain (loss) on investments
4,732
14
5,816
(30
Other (loss) income
(2,302
1,136
(1,640
(3,934
Total other expense, net
(7,112
(3,515
(15,931
(14,493
Income before provision for income taxes
27,210
16,825
46,918
26,428
Provision for income taxes
8,758
6,609
15,335
9,991
Net income
18,452
10,216
31,583
16,437
Net (loss) income attributable to non-controlling interests
(1,287
793
(2,592
322
Net income attributable to Astrana Health, Inc.
19,739
9,423
34,175
16,115
Earnings per share – basic
0.40
0.19
0.70
0.33
Earnings per share – diluted
0.69
CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE DEFICIT AND STOCKHOLDERS’ EQUITY
(in thousands, except share data)
MezzanineDeficit –Non-Controlling
Common Stock Outstanding
AdditionalPaid-in
Retained
Non-Controlling
Stockholders’
Interest in APC
Shares
Amount
Capital
Earnings
Interests
Equity
Balance at January 1, 2026
48,885,358
Net (loss) income
(2,677
14,436
1,372
15,808
Purchase of non-controlling interests
(450
Shares issued for vesting of restricted stock awards and units
138,260
(1,172
Shares issued for cash and exercise of options
37,065
496
Repurchase of subsidiary’s shares
(100
Purchase of treasury shares
(124,747
(2,805
Share-based compensation
9,895
Issuance of shares for Employee Stock Purchase Plan (“ESPP”)
10,463
231
Dividends
(104
Balance at March 31, 2026
(237,739
48,946,399
477,508
322,711
14,927
815,195
(3,064
1,777
21,516
1,187
(6,188
(5,001
Sale of non-controlling interest
100
280,544
(2,662
(1,458
11,787
(95
Balance at June 30, 2026
49,226,943
Balance at January 1, 2025
(202,558
47,929,872
48
426,389
286,283
4,006
716,726
(1,564
6,692
1,093
7,785
(28
388,173
(4,053
(4,052
(1,316
7,867
Issuance of shares for ESPP
10,683
301
(27,295
699,896
21,935
21,840
Balance at March 31, 2025
(232,733
49,028,624
452,439
292,880
5,071
750,439
(849
1,642
11,065
Shares issued for vesting of restricted stock awards
110,007
(1,001
11,765
(94
(684
(778
Balance at June 30, 2025
(233,582
49,138,631
463,203
302,209
6,067
771,528
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of debt issuance cost
2,280
1,740
21,682
19,519
Non-cash lease expense
4,131
2,559
Deferred tax
2,734
(1,961
Change in fair value of contingent consideration liabilities
(4,820
3,351
Other
(6,735
560
Changes in operating assets and liabilities, net of business combinations
18,921
51,571
Net cash provided by operating activities
100,804
107,528
Cash flows from investing activities
Payments for business and assets acquisition, net of cash acquired
(3,739
Purchases of property and equipment
(7,878
(4,490
2,545
1,019
Net cash used in investing activities
(9,072
(3,471
Cash flows from financing activities
Dividends paid
(199
(6,233
Borrowings on debt
412,000
Repayment of debt
(103,933
(431,357
Deferred financing cost
(17,241
Payment of contingent liabilities
(2,864
(3,631
Taxes paid from net share settlement of restricted stock
(3,834
(5,053
Repurchase of treasury shares
(2,806
(1,558
(4,840
23
Net cash used in financing activities
(120,034
(52,808
Net (decrease) increase in cash, cash equivalents, and restricted cash
(28,302
51,249
Cash, cash equivalents, and restricted cash, beginning of period
434,045
289,101
Cash, cash equivalents, and restricted cash, end of period
405,743
340,350
Supplemental disclosures of cash flow information
Cash paid for income taxes
(1)
4,728
Cash paid for interest
29,348
13,535
Supplemental disclosures of non-cash investing and financing activities
Right-of-use assets obtained in exchange for operating lease liabilities
2,795
7,110
Dividend paid in the form of common stock
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the accompanying condensed consolidated balance sheets to the total amounts of cash, cash equivalents, and restricted cash shown in the accompanying condensed consolidated statements of cash flows (in thousands).
June 30,2025
339,703
Restricted cash (1)
4,951
4,571
647
Total cash, cash equivalents, and restricted cash, end of period shown in the statement of cash flows
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Overview
Unless the context dictates otherwise, references in these notes to the financial statements to the “Company,” “we,” “us,” “our,” and similar words are references to Astrana Health, Inc. (“Astrana”) and its consolidated subsidiaries and affiliated entities, as appropriate, including its consolidated variable interest entities (“VIEs”).
Headquartered in Alhambra, California, Astrana is a physician-centric, technology-enabled, healthcare management company. Leveraging its proprietary end-to-end technology solutions, Astrana operates an integrated healthcare delivery platform that enables providers to participate in value-based care arrangements, empowering them to deliver accessible, high-quality care to patients in a cost-effective manner. Together with Astrana’s affiliated physician groups and consolidated subsidiaries and VIEs, the Company delivers value-based care to patients, of whom the majority are covered by private or public insurance provided through Medicare, Medicaid, and health maintenance organizations (“HMOs”), with a small portion of its revenue coming from non-insured patients. The Company provides care coordination services to each major constituent of the healthcare delivery system, including patients, families, primary care physicians, specialists, acute care hospitals, alternative sites of inpatient care, physician groups, and health plans. The Company’s physician network consists of primary care physicians, specialist physicians, physician and specialist extenders, and hospitalists.
Segments
The Company’s three reportable segments are Care Partners, Care Delivery, and Care Enablement, which are described as follows:
Care Partners
The Company’s Care Partners segment is focused on building and managing high-quality and high-performance provider networks by partnering with, empowering, and investing in strong provider partners aligned on a shared vision for coordinated care delivery. By leveraging the Company’s unique Care Enablement platform and ability to recruit, empower, and incentivize physicians to manage total cost of care effectively, the Company is able to organize partnered providers into successful multi-payer risk-bearing organizations (“RBOs”) that take on varying levels of risk based on total cost of care across membership in all lines of business, including Medicare Advantage, Medicaid, Commercial, Exchange, and Medicare fee for service (“FFS”). The Company’s healthcare delivery entities in this segment consist of a network of RBOs that encompass independent practice associations (“IPAs”), accountable care organizations (“ACOs”), and state-specific entities such as Restricted Knox-Keene licensed health plans in California. These entities are tasked with coordinating and arranging high-quality care for patients within Astrana’s ecosystem. This helps ensure seamless continuity of care among patients in different age groups, stages of life, and life circumstances.
Care Delivery
The Company’s Care Delivery segment is a group of patient-centric, data-driven organizations focused on delivering high-quality, accessible care to all patients. This segment includes the following:
Care Enablement
The Company’s Care Enablement segment represents a comprehensive platform that integrates clinical, operational, financial, and administrative information, all powered by the Company’s proprietary technology suite. These tools are leveraged across the Company’s lines of business as well as third-party providers outside of Astrana’s ecosystem. The Company provides solutions to payers and providers, including independent physicians, provider and medical groups, and ACOs. The Company’s platform meets providers and payers wherever they are on the spectrum of total cost of care, offering solutions for FFS entities and providers open to taking upside and downside risks on professional and institutional spending and across all patient types, including Medicare, Medicaid, Commercial, and Exchange-insured patients. This segment includes the Company’s wholly owned subsidiaries that operate as management services organizations (“MSOs”), which enter into long-term management and/or administrative services agreements (“MSAs”) with RBOs and other providers. By leveraging the Company’s Care Enablement platform, providers and payers can improve their ability to deliver high-quality patient care and achieve better patient, clinical, and financial outcomes.
Basis of Presentation
The accompanying condensed consolidated balance sheet at December 31, 2025 has been derived from the Company’s audited consolidated financial statements, but does not include all annual disclosures required by generally accepted accounting principles in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed consolidated financial statements as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025 have been prepared in accordance with U.S. GAAP for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 12, 2026. In the opinion of management, all material adjustments (consisting of normal recurring adjustments as well as intercompany accounts and transactions, which have been eliminated) considered necessary for a fair presentation have been made to make the condensed consolidated financial statements not misleading, as required by Regulation S-X, Rule 10-01. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or any future periods.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include Astrana’s wholly owned subsidiaries and consolidated VIEs. All intercompany transactions and balances have been eliminated in consolidation.
The accompanying unaudited condensed consolidated interim financial statements have been prepared under the assumption that users of the interim financial data have either read, or have access to, the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2025.
10
Reclassifications
Certain amounts disclosed in prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications were made to (i) the condensed consolidated balance sheet as of December 31, 2025 to reclassify investments in privately held entities to other assets within non-current assets; and (ii) the condensed consolidated statement of cash flows for the six months ended June 30, 2025 to reclassify (a) change in fair value of contingent consideration liabilities from other within net cash provided by operating activities, (b) the issuance of loans receivable to other within net cash used in investing activities, and (c) payment of contingent liabilities and repurchase of treasury shares from other within net cash used in financing activities. The reclassifications had no effect on net income, earnings per share, retained earnings, cash flows provided by (used in) operating, investing, or financing activities, or total assets.
Use of Estimates
The preparation of the condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include collectability of receivables, recoverability of long-lived and intangible assets, business combinations and goodwill valuation and impairment assessment, accrual of medical liabilities (incurred but not reported (“IBNR”) claims), determination of hospital shared-risk and health plan shared-risk revenue and receivables (including estimations of affiliated hospitals’ claims costs which involves assumptions for IBNR, such as utilization of healthcare services, historical payment patterns, cost trends, seasonality, changes in membership, and other factors), income tax-valuation allowance, share-based compensation, and right-of-use assets and lease liabilities. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ materially from those estimates and assumptions.
Business Combinations
The Company uses the acquisition method of accounting for all business combinations, which requires assets and liabilities of the acquiree to be recorded at fair value, to measure the fair value of the consideration transferred, including contingent consideration, to be determined on the acquisition date, and to account for acquisition-related costs separately from the business combination, which are expensed as incurred.
Cash, Cash Equivalents, and Restricted Cash
The Company’s cash and cash equivalents primarily consist of money market funds and certificates of deposit. The Company considers all highly liquid investments that are readily convertible into known amounts of cash and have original maturities of 90 days or less from their date of purchase to be cash equivalents.
The Company maintains its cash in deposit accounts with several banks, which at times may exceed the insured limits of the Federal Deposit Insurance Corporation (“FDIC”). The Company believes it is not exposed to any significant credit risk with respect to its cash, cash equivalents, and restricted cash. As of June 30, 2026 and December 31, 2025, the Company’s deposit accounts with banks exceeded the FDIC’s insured limit by $411.1 million and $447.0 million, respectively. The Company has not experienced any losses to date and conducts ongoing evaluations of these financial institutions to limit the Company’s concentration of risk exposure.
Restricted cash consists of cash held as collateral in the event of default as required by certain health plan contracts. Restricted cash is included in other assets in the accompanying condensed consolidated balance sheets.
11
Receivables and Loans Receivable
The Company’s receivables are comprised of capitation receivables, ACO receivables, FFS receivables, risk pool settlements, incentive receivables, management fee income, and receivables from related parties. The Company’s receivables are recorded and stated at the amount expected to be collected.
The Company’s receivables, net consisted of the following (in thousands):
Receivables, net
25,276
31,377
Capitation receivables, net
123,498
94,229
ACO receivables
186,435
109,777
FFS receivables, net
29,082
45,568
Hospital risk pool receivables
7,377
17,420
Risk pool and incentives receivables, net
23,053
24,568
Management fee receivables
12,791
7,073
Receivables from related parties, net
57,568
44,453
Total receivables, net
The Company maintains reserves for potential credit losses on the receivables. Management reviews the composition of the Company’s receivables and analyzes historical bad debts, customer concentrations, customer creditworthiness, current economic trends, and changes in customer payment patterns to evaluate the adequacy of these reserves. The Company also regularly analyzes the ultimate collectability of accounts receivable after certain stages of the collection cycle using a look-back analysis to determine the amount of receivables subsequently collected, and adjustments are recorded when necessary. Reserves are recorded based on historical trends. Any change in such an estimate of reserves is recorded in the period when such change is identified.
Receivables are recorded when the Company is able to determine amounts receivable under applicable contracts and agreements based on information provided and collection is reasonably likely to occur. The Company continuously monitors its receivable collections and expects that the historical credit loss experienced across its receivables portfolio is materially similar to any current expected credit losses (“CECL”) that would be estimated under the CECL model.
The Company’s receivables from related parties are comprised of hospital-shared risk pool settlements with AHMC Healthcare Inc. (“AHMC”), for which one of the Company’s directors is an officer, and management fee income from equity method investments. Hospital-shared risk pool settlement receivables from related parties are recorded quarterly based on reports received from the Company’s hospital partners and management’s estimate of the Company’s portion of the estimated risk pool surplus for open performance years. Final settlement of risk pool surplus or deficits occurs within 18 months after the risk pool performance year is completed.
12
The Company’s loans receivable consists of promissory notes that accrue interest per annum and are recorded and stated at amortized cost plus accrued interest. Interest income is accrued based on the outstanding principal amounts. As of June 30, 2026 and December 31, 2025, the balance of the Company’s aggregate loans receivable was $52.6 million and $53.7 million, respectively. During the three months ended June 30, 2026, the Company’s loans receivable from related parties was settled in full. As of December 31, 2025, loans receivable from related parties in aggregate was $1.8 million. For the three months ended June 30, 2026 and 2025, the Company accrued $0.9 million and $1.1 million, respectively, and for the six months ended June 30, 2026 and 2025, the Company accrued $2.0 million and $2.1 million, respectively, of interest related to loans within interest income on the accompanying condensed consolidated statements of income.
The Company assesses outstanding loans receivable under the CECL model by evaluating the party’s ability to pay, which involves reviewing quarterly interest payment history, annually reviewing financial history, assessing the value of any collateral, and reassessing any identified insolvency risk. As of June 30, 2026, the promissory notes are expected to be collected without default.
Concentrations of Credit Risks
The Company disaggregates revenue from contracts by service type and payer type. This level of detail provides useful information on how the Company generates revenue by significant revenue streams and by type of direct contracts, as used by the chief operating decision maker (“CODM”). The accompanying condensed consolidated statements of income present disaggregated revenue by service type. The following table presents disaggregated revenue generated by each payer type (in thousands):
Commercial
87,190
46,049
171,730
93,278
Medicare
593,876
403,111
1,200,017
790,995
Medicaid
265,619
192,621
494,166
365,802
Other third parties
25,835
13,027
71,707
25,121
Total revenue
The Company had major payers that contributed the following percentages of total consolidated net revenue. These payers are primarily within the Care Partners segment.
Payer A
18.5
%
31.9
19.7
32.4
Payer B
15.3
17.6
14.4
16.5
Payer C
*
10.3
10.4
Payer D
Payer E
10.1
* Less than 10% of revenue.
13
The Company had major payers that contributed to the following percentages of receivables, net, and other receivables:
As of June 30,2026
As of December 31,2025
38.1
27.4
Payer F
11.2
11.0
Revenue Recognition
The Company receives payments from the following sources for services rendered:
Revenue consisted of the following (in thousands):
Capitation, net
905,804
614,108
1,798,712
1,198,071
Risk pool settlements and incentives
21,816
15,402
34,302
29,893
Management fee income
13,211
2,577
28,896
4,887
FFS, net
22,982
17,878
60,813
32,769
Other revenue
8,707
4,843
14,897
9,576
Revenue is recorded in the period in which services are rendered, or the period, generally on a monthly basis, in which the Company is obligated to provide services. The form of billing and related collection risk for such services may vary by revenue type and customer.
Income Taxes
Federal and state income taxes are computed at currently enacted tax rates, less tax credits, using the asset and liability method. Deferred taxes are adjusted both for items that do not have tax consequences and for the cumulative effect of any changes in tax rates from those previously used to determine deferred tax assets or liabilities. Tax provisions include amounts that are currently payable, changes in deferred tax assets and liabilities that arise because of temporary differences between the timing of when items of income and expense are recognized for financial reporting and income tax purposes, changes in recognition of tax positions, and any changes in the valuation allowance caused by a change in judgment about the realizability of the related deferred tax assets. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.
The Company uses a recognition threshold of “more-likely-than-not” and a measurement attribute on all tax positions taken, or expected to be taken, in a tax return in order to be recognized in the accompanying condensed consolidated financial statements. Once the recognition threshold is met, the tax position is measured to determine the actual amount of benefit to recognize in the condensed consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” to provide disaggregated information about certain income statement costs and expenses. ASU 2024-03 is effective for the Company’s annual periods beginning January 1, 2027, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its condensed consolidated financial statement disclosures.
On May 12, 2025, the FASB issued ASU 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810) — Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity,” to revise the guidance in ASC 805 on identifying the accounting acquirer in a business combination in which the legal acquiree is a VIE. The ASU is intended to improve comparability between business combinations that involve VIEs and those that do not. ASU 2025-03 is effective for the Company’s annual periods beginning January 1, 2027, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its condensed consolidated financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06, “Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which clarifies and modernizes the accounting for costs related to internal-use software. The amendments in ASU 2025-06 remove all references to project stages and clarify the threshold entities apply to begin capitalizing costs. ASU 2025-06 is effective for the Company’s annual periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its condensed consolidated financial statement disclosures.
Other than the new standards discussed above, there have been no other recent accounting pronouncements not yet adopted that are expected to have significance, or potential significance, to the Company’s financial position, results of operations, and cash flows.
Certain Businesses and Assets of Prospect
On July 1, 2025, the Company, and its affiliates, acquired substantially all the assets of certain direct and indirect subsidiaries of PHP Holdings, LLC, such as Prospect Medical Group and Prospect Medical Systems, and all of the outstanding equity interests of Prospect Health Plan, Inc., and Foothill Regional Medical Center, pursuant to the Asset and Equity Purchase Agreement, dated November 8, 2024 (such assets and equity collectively, “Prospect”). The acquisition significantly expanded the Company’s provider network and enhanced its ability to offer increased access, quality, and value to its members. The purchase price for the acquisition was $674.9 million. To finance the acquisition, the Company borrowed $707.3 million from a five-year delayed draw term loan credit facility. See Note 8 — “Credit Facility and Bank Loans” for further information on the Company’s debt.
As of June 30, 2026, the Company finalized the purchase price allocation for Prospect. During the six months ended June 30, 2026, the Company recorded measurement period adjustments with corresponding changes to goodwill. These adjustments reflect additional information about facts and circumstances that existed as of the acquisition date, primarily related to a $20.2 million increase in assumed liabilities.The following table summarizes the final purchase price allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (in thousands):
15
Purchase consideration
674,902
124,834
Receivables
83,673
4,868
7,557
794
Property and equipment
37,498
Intangible assets
193,500
462,145
Loans receivable, non-current
278
4,535
6,126
Total assets acquired
925,808
Liabilities
109,301
2,100
121,950
1,772
4,250
5,869
2,763
2,901
Total liabilities assumed
250,906
Total net assets acquired
The table below represents intangible assets acquired in the Prospect acquisition (dollars in thousands):
Useful Life(Years)
Fair Value
License
Indefinite
1,900
Network relationships
15 years
53,800
Member relationships
12 years
123,500
Other (1)
3–10 years
14,300
Total intangible assets acquired
16
The Company accounts for acquisitions under the acquisition method of accounting. The fair value of consideration transferred was allocated to acquired tangible and intangible assets and liabilities based on their fair values. The excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill. The goodwill is primarily attributable to the scale, skill sets, operations, and synergies from the acquisition, which can be leveraged to expand the Company’s network and enhance the value and quality of care the Company provides to its members.
At the time of acquisition, the Company estimates the amount of assets, including identifiable intangible assets, and liabilities based on a valuation and the facts and circumstances available at the time. The Company determines the final value of assets, including identifiable intangible assets, and liabilities as soon as information is available, but no later than one year from the date of acquisition.
The Company had no impairment of its goodwill during the three and six months ended June 30, 2026 and 2025.
The change in the carrying value of goodwill for the six months ended June 30, 2026 was as follows (in thousands):
Acquisition
2,432
Adjustments
19,258
Unaudited Pro Forma Financial Information
The pro forma financial information in the table below presents the combined results of the Company and Prospect as if the acquisition had occurred on January 1, 2025. The pro forma financial information presented has been adjusted to exclude Prospect’s historical interest expense as all outstanding debt obligations were settled at closing and not assumed by the Company. The pro forma financial information presented has been adjusted to include the Company’s incremental interest expense, as if the borrowing from the delayed draw term loan credit facility had occurred on January 1, 2025, to finance the purchase of Prospect. The pro forma financial information presented is shown for illustrative purposes only and is not necessarily indicative of future results of operations of the Company, or results of operations of the Company that would have actually occurred had the transactions been in effect for the periods presented.
(in thousands, except per share amounts)
983,190
1,912,494
10,193
12,000
0.21
0.25
0.24
17
As of June 30, 2026, intangible assets, net, consisted of the following (dollars in thousands):
UsefulLife(Years)
GrossJune 30,2026
AccumulatedAmortization
NetJune 30,2026
Indefinite-lived assets:
Trademarks and licenses
N/A
5,950
Amortized intangible assets:
10–21
225,717
(131,562
94,155
7–14
196,577
(67,152
129,425
3–20
40,310
(26,528
13,782
468,554
(225,242
As of December 31, 2025, intangible assets, net, consisted of the following (dollars in thousands):
GrossDecember 31,2025
NetDecember 31,2025
(125,359
100,358
(47,908
148,669
(24,319
15,991
(197,586
For the three months ended June 30, 2026 and 2025, the Company recognized amortization expense of $13.8 million and $6.2 million, respectively, in depreciation and amortization in the accompanying condensed consolidated statements of income. For the six months ended June 30, 2026 and 2025, the Company recognized amortization expense of $27.7 million and $12.4 million, respectively, in depreciation and amortization in the accompanying condensed consolidated statements of income. The Company determined that there was no impairment of its finite-lived intangible or long-lived assets during the three and six months ended June 30, 2026 and 2025.
18
Future amortization expense is estimated to be as follows for the years ending December 31 (in thousands):
2026 (excluding the six months ended June 30, 2026)
27,452
2027
44,125
2028
35,715
2029
28,622
2030
21,687
Thereafter
79,761
Total
237,362
The Company has invested in several entities in the healthcare industry similar to its Care Partners, Care Delivery, and Care Enablement segments. The Company holds 25.0% – 51.0% equity interest in these investments that are accounted for under the equity method, as the Company has the ability to exercise significant influence, but not control over operations. Equity method investments are subject to impairment evaluation. No impairment loss was recorded related to equity method investments for the three and six months ended June 30, 2026 and 2025.
The following table summarizes the Company’s equity method investments as of June 30, 2026 and December 31, 2025 (dollars in thousands):
% ofOwnership
LaSalle Medical Associates – IPA line of business
25.0%
16,002
14,742
Third Way Health
27.7%
5,627
6,000
25.0% – 51.0%
6,176
4,895
The Company records its investments in certain non-consolidated VIEs within investments in other entities – equity method in the accompanying condensed consolidated balance sheets. These entities were determined to be VIEs but are not consolidated. Despite providing financial support to these entities, the Company lacks a controlling financial interest and is not the primary beneficiary. Thus, these VIEs are accounted for under the equity method of accounting.
19
The Company’s accounts payable and accrued expenses consisted of the following (in thousands):
Accounts payable and other accruals
46,525
47,501
Capitation payable
32,636
22,374
Subcontractor IPA payable
5,562
3,928
Hospital quality assurance fee program payable
11,487
11,541
Professional fees
9,492
4,636
Due to related parties
8,700
8,993
Accrued compensation
41,161
31,614
Risk pool payable
11,811
15,830
Provider incentives
61,267
36,439
Other provider accruals
17,219
13,056
Total accounts payable and accrued expenses
The Company’s medical liabilities consisted of the following (in thousands):
Medical liabilities, beginning of period
209,039
Acquired
(2,127
(6,134
Components of medical care costs related to claims incurred:
Current period
1,088,515
780,050
Prior periods
(43,496
(1,874
Total medical care costs
1,045,019
778,176
Payments for medical care costs related to claims incurred:
(708,455
(518,450
(245,284
(169,318
Claims paid for acquired balance
(9,093
(5,622
Total paid
(962,832
(693,390
Medical liabilities, end of period
287,691
20
The Company’s debt balance consisted of the following (in thousands):
Term Loans
906,310
930,243
Revolver Loan
42,000
122,000
Total debt
948,310
1,052,243
Less: Current portion of debt
(53,848
(47,865
Less: Unamortized financing costs
(11,812
(13,474
Long-term debt
The estimated fair value of the Company’s long-term debt was determined using Level 2 inputs primarily related to comparable market prices. As of June 30, 2026 and December 31, 2025, the carrying value was not materially different from fair value, as the interest rates on the Company’s debt approximated rates currently available to the Company.
The following are the future commitments as of June 30, 2026 of the Company’s debt for the years ending December 31 (in thousands):
23,932
65,814
71,798
89,747
697,019
Credit Facility
Second Amended and Restated Credit Agreement
On February 26, 2025, the Company entered into the Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement,” and the credit facility thereunder, the “Second Amended and Restated Credit Facility”) with Truist Bank, in its capacities as administrative agent for the lenders, issuing bank, swingline lender and a lender, and the banks and other financial institutions from time to time party thereto, to, among other things, amend and restate that certain amended credit agreement, dated June 16, 2021, by and among the Company, Truist Bank, and certain lenders thereto, in its entirety. The Second Amended and Restated Credit Agreement provides for (i) a five-year revolving credit facility (the “Revolver Loan”) to the Company of $300.0 million, which includes a letter of credit sub-facility of up to $100.0 million and a swingline loan sub-facility of $25.0 million, (ii) a five-year term loan A credit facility (the “Term Loan”) to the Company of $250.0 million, and (iii) a five-year delayed draw term loan credit facility (the “DDTL A” and together with the Term Loan, the “Term Loans”) to the Company of $745.0 million, of which $707.3 million was drawn down in July 2025, with the remaining commitment terminated. In June 2026, the Company paid $80.0 million toward the Revolver Loan. As of June 30, 2026, the Company had combined borrowings of $906.3 million on its Term Loans and $42.0 million under the Revolver Loan under the Second Amended and Restated Credit Agreement. The maturity of the Term Loans and the Revolver Loan is February 26, 2030.
21
Amounts borrowed under the Second Amended and Restated Credit Agreement bear interest at an annual rate equal to, at the Company’s elected option, the rate for term Secured Overnight Financing Rate (“SOFR”) published by the CME Group Benchmark Administration Limited two days prior to the first day of the applicable interest period, plus a spread of 1.25% to 2.50%, as determined on a quarterly basis based on the Company’s leverage ratio. As of June 30, 2026, interest rates on the Term Loans and the Revolver Loan were 5.64%.
The Company and its subsidiary Astrana Health Management, Inc. (“AHM”) have granted the lenders a security interest in all of their assets, including stock and other equity issued by their subsidiaries, pursuant to the Amended and Restated Guaranty and Security Agreement, dated February 26, 2025, by and among the Company, as borrower, and AHM, as guarantor, in favor of Truist Bank, which amends and restates that certain guaranty and security agreement, dated September 11, 2019, in its entirety. The Second Amended and Restated Credit Agreement contains certain customary events of default. If any event of default occurs and continues under the Second Amended and Restated Credit Agreement, the lenders may terminate their commitments and may require the Company and its guarantors to repay outstanding debt and/or provide a cash deposit as additional security for outstanding letters of credit. In addition, the agent, on behalf of the lenders, may pursue other remedies, including, without limitation, transferring pledged securities of the Company’s subsidiaries in the name of the agent and exercising all rights with respect thereto (including the right to vote and to receive dividends), collect on pledged accounts, instruments and other receivables, and other rights provided by law.
Deferred Financing Costs
As of June 30, 2026, unamortized deferred financing costs for the Revolver Loan and Term Loans were $4.6 million and $11.8 million, respectively. As of December 31, 2025, unamortized deferred financing costs for the Revolver Loan and Term Loans were $5.2 million and $13.5 million, respectively. Deferred financing costs associated with the Term Loans are presented as a direct reduction against the amounts borrowed on the Term Loans and amortized over the life of the loans using the effective interest rate method. Deferred financing costs associated with the Revolver Loan are recognized in other assets in the accompanying condensed consolidated balance sheets and amortized over the life of the loan using the straight-line method. Interest expense in the accompanying condensed consolidated statements of income includes amortization of deferred debt issuance costs.
Effective Interest Rate
The Company’s average effective interest rate on its total debt during the six months ended June 30, 2026 and 2025 was 6.31% and 6.43%, respectively.
Mezzanine Deficit
As the redemption feature of APC’s shares of common stock is not solely within the control of APC, the equity of APC, a consolidated affiliate of the Company, does not qualify as permanent equity and has been classified as non-controlling interest in mezzanine or temporary equity. APC’s shares were not redeemable, and it was not probable that the shares would become redeemable as of June 30, 2026 and December 31, 2025.
22
Stockholders’ Equity
As of June 30, 2026, 41,048 holdback shares have not been issued to certain former AHM shareholders who were AHM shareholders at the time of closing of the 2017 merger of Astrana with AHM, as they have yet to submit properly completed letters of transmittal to Astrana in order to receive their pro rata portion of Astrana common stock as contemplated under the 2017 merger agreement. Pending such receipt, such former AHM shareholders have the right to receive, without interest, their pro rata share of dividends or distributions with a record date after the effectiveness of the 2017 merger. The accompanying condensed consolidated financial statements have treated such shares of common stock as outstanding, given that the receipt of the letter of transmittal is considered perfunctory, and the Company is legally obligated to issue these shares in connection with the 2017 merger.
Treasury Stock
As of June 30, 2026 and December 31, 2025, APC owned 6,132,802 shares of Astrana common stock. While such shares of Astrana common stock are legally issued and outstanding, they are treated as treasury shares for accounting purposes and excluded from shares of common stock outstanding in the accompanying condensed consolidated financial statements. APC’s ownership in Astrana was 11.09% and 11.15% as of June 30, 2026 and December 31, 2025, respectively.
During the six months ended June 30, 2026, the Company repurchased 124,747 shares of its common stock for $2.8 million, of which no shares were repurchased from APC. During the six months ended June 30, 2025, the Company repurchased 300,000 shares of its common stock from APC for an aggregate purchase price of $10.6 million. As of June 30, 2026 and December 31, 2025, the Company had repurchased 4,562,956 and 4,438,209 shares, respectively, of its common stock. These are included as treasury stock.
As of June 30, 2026 and December 31, 2025, total treasury stock, including the Company’s stock held by APC, was 10,695,758 and 10,571,011, respectively.
During the six months ended June 30, 2026, no distributions were made to APC’s common shareholders. During the six months ended June 30, 2025, APC distributed 699,896 Astrana shares owned by APC and $5.4 million in cash to its common shareholders. These shares were owned by APC, a consolidated VIE of Astrana, and were carved out from Astrana’s economic interest and performance metrics.
The Company recognizes stock-based compensation expense associated with the issuance of restricted stock awards, restricted stock units, and shares under the ESPP within cost of services and general and administrative expenses in the accompanying condensed consolidated statements of income.
During the three months ended June 30, 2026 and 2025, the Company recognized $11.8 million and $11.7 million, respectively, in stock-based compensation expense. During the six months ended June 30, 2026 and 2025, the Company recognized $21.7 million and $19.5 million, respectively, in stock-based compensation expense.
As of June 30, 2026, unrecognized compensation expense related to total stock-based payments outstanding was $56.9 million.
Regulatory Matters
Laws and regulations governing the Medicare program and healthcare generally are complex and subject to interpretation. While the Company believes it complies in all material respects with applicable laws and regulations, compliance with such laws and regulations can be subject to future government review and interpretation, as well as significant regulatory action. Failure to comply with such laws and regulations may result in fines, penalties, and/or exclusion from the Medicare and Medi-Cal programs.
The Company’s affiliated RBOs are required to follow the regulations of the Department of Managed Health Care (“DMHC”). They must comply with a minimum working capital requirement, a tangible net equity (“TNE”) requirement, a cash-to-claims ratio, and claims payment requirements prescribed by the DMHC. TNE is defined as total assets minus total liabilities, reduced by the value of intangible assets and unsecured obligations of officers, directors, owners, or affiliates outside of the normal course of business, plus subordinated obligations.
Many of the Company’s payer and provider contracts are complex in nature and may be subject to differing interpretations regarding amounts due for the provision of medical services. Such differing interpretations may not come to light until a substantial period of time has passed following contract implementation. Liabilities for claims disputes are recorded when the loss is probable and can be estimated. Any adjustments to reserves are reflected in current operations.
Standby Letters of Credit and Surety Bonds
The Company and certain of its affiliated IPAs established irrevocable standby letters of credit for a total of $27.5 million and $27.9 million, for the benefit of CMS and certain health plans as of June 30, 2026 and December 31, 2025, respectively. Unless the institution provides notification that the standby letters of credit will be terminated prior to the expiration date, the letters will be automatically extended without amendment for additional one-year periods from the present or any future expiration date.
The Company currently has several surety bonds as required by CMS and other agencies. The bonds total $57.2 million and $46.6 million, in aggregate, as of June 30, 2026 and December 31, 2025, respectively. The bonds expire on various dates through December 31, 2030.
Litigation
From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of its business. The Company assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company records a liability in its consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable, or the amount of the loss is not estimable, the Company does not record an accrual, consistent with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, the Company’s ultimate liability in connection with these matters is not expected to have a material adverse effect on the Company’s results of operations, financial position, or cash flows, and the amounts accrued for any individual matter are not material. However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters may be material to the Company’s results of operations for a particular period, depending upon the size of the loss or the Company’s income for that particular period.
24
Community Family Care Health Plan, Inc. – Arbitration Proceeding
Prior to the acquisition of Advanced Health Management Systems, L.P. (“AHMS”) in 2024, Community Family Care Health Plan, Inc. (“CFC HP”), now a wholly owned subsidiary of the Company, was engaged in arbitration with a provider associated with CFC HP (the “CFC HP Provider”). Specifically, on or about October 23, 2023, the CFC HP Provider initiated arbitration proceedings by filing a Demand for Arbitration, alleging breach of contract and fraud related to CFC HP’s purported failure to pay for services in accordance with the terms of a hospital services agreement (the “CFC HP Arbitration”). On or about August 8, 2025, the CFC HP Provider filed a First Amended Demand for Arbitration, further alleging that CFC HP never intended to comply with the payment terms of the contract. The action was resolved by settlement and dismissed in February 2026. As of December 31, 2025, per the terms of the settlement agreement, the Company paid $12.0 million toward the settlement. In January 2026, the Company paid the final settlement payment in the amount of $1.0 million, and no amounts remained payable as of June 30, 2026.
Given that the CFC HP Provider had already commenced the CFC HP Arbitration at the time of the acquisition of AHMS, as part of the acquisition, the Company and the sellers of CFC HP entered into a side letter to the purchase agreement that required $14.0 million of the purchase price be placed in an escrow account and used as the sole means for satisfying any claims by the Company related to losses incurred in the CFC HP Arbitration. The Company has sought reimbursement for the loss from the CFC HP Arbitration through a claim to the escrow funds. As of June 30, 2026, no loss recovery was recorded.
Liability Insurance
The Company believes that its insurance coverage is appropriate based upon the Company’s claims experience and the nature and risks of the Company’s business. In addition to the known incidents that have resulted in the assertion of claims, the Company cannot be certain that its insurance coverage will be adequate to cover liabilities arising out of claims asserted against the Company, the Company’s affiliated professional organizations, or the Company’s affiliated hospitalists in the future, where the outcomes of such claims are unfavorable. The Company believes that the ultimate resolution of all pending claims — including potential liabilities in excess of the Company’s insurance coverage — will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows; however, there can be no assurance that future claims will not have such a material adverse effect on the Company’s business. Contracted physicians are required to obtain their own insurance coverage.
Although the Company currently maintains liability insurance policies on a claims-made basis, intended to cover malpractice liability and certain other claims, the coverage must be renewed annually and may not continue to be available to the Company in future years at acceptable costs and on favorable terms.
Equity Method Investments
During the three and six months ended June 30, 2026, the Company paid $3.6 million and $5.0 million, respectively, to its equity method investees for provider, call center, and credentialing services. During the three and six months ended June 30, 2025, the Company paid $2.2 million and $3.8 million, respectively to its equity method investees, for management fee services, provider services, and interest expense. For one of our equity method investments, Third Way Health, one of Astrana’s officers is also a board member. See Note 5 — “Investments in Other Entities – Equity Method.”
25
Astrana Board Members and Officers
During the three months ended June 30, 2026 and 2025, the Company incurred rent expenses of $1.2 million and $1.3 million, respectively, from certain properties that are managed by Allied Pacific Holdings Investment Management, LLC. During the six months ended June 30, 2026 and 2025, the Company incurred $2.5 million and $2.5 million, respectively, in rent expense from the same properties. As of June 30, 2026 and December 31, 2025, the Company’s operating lease right-of-use asset balance included $11.2 million and $10.1 million, respectively, and the Company’s operating lease liabilities included $11.9 million and $10.7 million, respectively, for certain properties that are managed by Allied Pacific Holdings Investment Management, LLC. Two of the Company’s directors own a portion of Allied Pacific Holdings Investment Management, LLC. One of these directors also serves as its chief executive officer and chief financial officer. A third director of the Company also serves as an officer of Allied Pacific Holdings Investment Management, LLC.
The Company has an agreement with AHMC for services provided to the Company, involving payment for hospital and other inpatient-related services, at rates similar to the Company’s other contracted hospitals. The Company and AHMC also have a risk-sharing agreement with certain AHMC hospitals to share the surplus and deficits of each of the hospital pools. Under the risk-sharing agreement, during the three months ended June 30, 2026 and 2025, the Company had recognized risk pool revenues of $1.9 million and $2.8 million, respectively. During the six months ended June 30, 2026 and 2025, the Company had recognized risk pool revenues of $4.0 million and $7.8 million, respectively. As of June 30, 2026 and December 31, 2025, $49.4 million and $40.5 million, respectively, remained in outstanding risk pool receivables. One of the Company’s directors is an officer of AHMC.
Revenue with AHMC consists of capitation, risk pool, and miscellaneous fees. Expenses with AHMC primarily include claims expenses. The following table sets forth revenue recognized and fees incurred with AHMC for the three and six months ended June 30, 2026 and 2025 (in thousands):
5,538
4,574
11,107
11,345
Expenses
(64,287
(46,320
(109,840
(78,000
Net
(58,749
(41,746
(98,733
(66,655
APC Board Members
During the three months ended June 30, 2026 and 2025, the Company paid an aggregate of $5.8 million and $4.7 million, respectively, to APC board members for provider services, which included $1.2 million and $0.6 million, respectively, paid to individuals who also serve as Astrana board members and/or officers. During the six months ended June 30, 2026 and 2025, the Company paid an aggregate of $10.8 million and $9.2 million, respectively, to APC board members for provider services, which included $2.1 million and $1.2 million, respectively, paid to individuals who also serve as Astrana board members and/or officers.
Intercompany Transactions
Because of corporate practice of medicine laws, the Company uses designated shareholder professional corporations, of which the sole shareholder is a member of the Company’s key personnel, to engage in certain transactions and make intercompany loans from time to time. These corporations are reported on a consolidated basis, together with the Company’s subsidiaries, and therefore, the Company does not separately disclose transactions between such affiliates and the Company’s subsidiaries as related-party transactions.
26
The Company uses the liability method of accounting for income taxes as set forth in ASC 740, “Income Taxes.” Under the liability method, deferred taxes are determined based on differences between the financial statement and tax bases of assets and liabilities using enacted tax rates.
On an interim basis, the Company estimates what its anticipated annual effective tax rate will be and records a quarterly income tax provision in accordance with the estimated annual rate, plus the tax effect of certain discrete items that arise during the quarter. As the fiscal year progresses, the Company refines its estimates based on actual events and financial results during the quarter. This process can result in significant changes to the Company’s estimated effective tax rate. When this occurs, the income tax provision is adjusted during the quarter in which the estimates are refined, so that the year-to-date provision reflects the estimated annual effective tax rate. These changes, along with adjustments to the Company’s deferred taxes and related valuation allowance, may create fluctuations in the overall effective tax rate from quarter to quarter.
The Company’s effective income tax rate was 32.4% and 39.3% for the three months ended June 30, 2026 and 2025, respectively, and 32.7% and 37.8% for the six months ended June 30, 2026 and 2025, respectively. The effective tax rates for the three and six months ended June 30, 2026 differed from the U.S. federal statutory rate of 21% primarily due to state and local income taxes and nondeductible officer and stock-based compensation, partially offset by income from flow-through entities and federal research and development credits.
As of June 30, 2026, the Company had gross unrecognized tax benefits of $1.2 million that, if recognized, would reduce the annual effective tax rate. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. The Company recognized $0.1 million of interest and penalties for the six months ended June 30, 2026. The Company does not anticipate a material change to its unrecognized tax benefits within the next 12 months.
The Company’s U.S. federal income tax returns for the years ended December 31, 2020 through December 31, 2025, and its California income tax returns for the years ended December 31, 2019 through December 31, 2025, remain open to examination, either because the applicable statute of limitations has not expired or because the year is under audit. The Internal Revenue Service is currently examining the Company’s 2024 federal income tax return and reviewing amended federal income tax returns for 2020 and 2021. The California Franchise Tax Board is currently examining the Company’s California income tax returns for 2019 through 2021.
For the six months ended June 30, 2026, $10.9 million of payments were made for income taxes, net of tax refunds.
Basic earnings per share is computed by dividing net income attributable to Astrana by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income attributable to Astrana by the weighted average number of common shares outstanding, plus the dilutive effect of unvested restricted stock awards and units, contingently issuable shares, stock options and shares issuable under the ESPP, as calculated under the treasury stock method. The non-controlling interest in APC is allocated its share of Astrana’s income from APC’s ownership of Astrana common stock, and this amount is included in the net (loss) income attributable to non-controlling interests in the accompanying condensed consolidated statements of income. Therefore, none of the shares of Astrana held by APC are considered outstanding for the purpose of basic or diluted earnings per share computation. As of June 30, 2026 and 2025, total treasury stock, including the Company’s stock held by APC, was 10,695,758 and 9,903,953, respectively. These are treated as treasury shares for accounting purposes and are not included in the number of shares of common stock outstanding used to calculate earnings per share. See Note 9 — “Mezzanine Deficit and Stockholders’ Equity” for information on the Company’s treasury stock.
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The following potentially dilutive outstanding securities were excluded from the computation of diluted weighted average common shares outstanding because the assumed proceeds, as calculated under the treasury stock method, resulted in these awards being antidilutive or the conditions to issue such shares were not achieved as of June 30, 2026 and 2025, respectively:
For the Three Months Ended June 30,
For the Six Months Ended June 30,
Stock options
113,490
119,599
Restricted stock awards and units
157,091
812,780
705,745
611,258
Contingently issuable shares
1,352,348
1,085,413
1,212,242
1,103,156
Total potentially dilutive securities
1,622,929
2,011,683
2,031,477
1,834,013
Below is a summary of the earnings per share computations:
Weighted average shares of common stock outstanding – basic
49,115,835
49,187,885
Weighted average shares of common stock outstanding – diluted
49,778,028
49,470,677
48,986,953
48,831,265
49,418,278
49,162,653
Below is a summary of the shares included in the diluted earnings per share computations:
Stock options and ESPP shares
25,409
95,179
440,358
40,259
196,426
147,354
28
20,593
104,019
260,401
85,157
150,331
142,212
The Company’s condensed consolidated financial statements include its subsidiaries and consolidated VIEs. A VIE is defined as a legal entity whose equity owners lack sufficient equity at risk or, as a group, lack decision-making rights, the obligation to absorb losses, or the right to receive the expected residual returns of the entity. The primary beneficiary is the variable interest holder with both (i) the power to direct the activities most significantly affecting the VIE’s economic performance and (ii) the obligation to absorb expected losses or the right to receive benefits potentially significant to the VIE.
Certain states prohibit non-physician owned entities from practicing medicine, employing physicians to practice medicine, or exercising control over medical decisions (“corporate practice of medicine” laws). To comply with these laws, the Company maintains long-term MSAs with its affiliated IPAs and medical groups that are owned and operated solely by physicians. AHM, a wholly owned subsidiary, has entered into MSAs with several affiliated IPAs, including APC. APC has been determined to be a VIE of AHM, as AHM is its primary beneficiary with the ability, through majority representation on the APC Joint Planning Board, to direct the activities (excluding clinical decisions) that most significantly affect APC’s economic performance. Accordingly, APC and its wholly owned subsidiaries and VIEs are consolidated in the accompanying condensed consolidated financial statements.
Certain state laws also prohibit a multi-shareholder professional corporation from holding shares in another professional corporation; however, a single-shareholder professional corporation may do so. In reliance on this exception, the Company designated certain key personnel as the nominee shareholder of professional corporations that hold controlling and non-controlling ownership interests in several medical corporations. Via a Physician Shareholder Agreement with the nominee shareholder, the Company retains the right to designate alternative equity holders. These entities are also managed by the Company’s wholly owned MSOs via MSAs and are consolidated in the accompanying condensed consolidated financial statements.
The following table presents assets that may only be used to settle VIE obligations, to which the creditors of Astrana have no recourse, and liabilities for which the creditors of the Company’s VIEs have no recourse to the general credit of Astrana. These assets and liabilities of the Company’s VIEs, with the exception of investments in affiliates and amounts due to, or from, affiliates, which are eliminated upon consolidation, are included in the accompanying condensed consolidated balance sheets (in thousands).
29
June 30, 2026
December 31, 2025
199,454
202,164
195,449
208,929
11,387
8,907
10,946
12,946
762
753
Amount due from affiliates (1)
25,050
58,265
443,048
491,964
44,192
41,646
195,368
216,594
545,674
524,751
12,405
111
194
18,355
17,069
Investment in affiliates (1)
284,623
152,155
29,687
26,499
5,154
3,692
1,135,569
995,005
Total assets
1,578,617
1,486,969
127,107
108,309
173,017
198,919
Income tax payable
16,145
15,007
6,426
5,473
4,601
6,505
331,067
337,737
30
7,418
7,159
26,571
24,241
1,832
6,855
35,821
38,255
Total liabilities
366,888
375,992
The Company has operating leases for corporate and medical offices. These leases have remaining lease terms ranging from 1 month to 20 years. These renewal terms may include options to extend the leases for up to 7 years and are included in the lease term when it is reasonably certain that the Company will exercise the options. Some lease terms may include options to terminate the leases within one year. These leases consist of fixed or variable payments. Variable lease payments are based on an index or a rate such as the Consumer Price Index.
Leases with an initial term of 12 months or less are not recorded on the accompanying condensed consolidated balance sheets.
Lease expense for the three months ended June 30, 2026 and 2025 were $4.9 million and $3.6 million, respectively, of which operating lease costs were $2.8 million and $2.0 million, respectively. Lease expense for the six months ended June 30, 2026 and 2025 were $9.9 million and $7.2 million, respectively, of which operating lease costs were $5.4 million and $4.0 million, respectively. The remaining amount primarily consisted of short-term lease costs.
Other information related to operating leases was as follows (dollars in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
Supplemental cash flow information
Cash paid for operating lease liabilities
1,864
5,116
3,632
Right-of-use assets obtained in exchange for new operating lease obligations
2,445
1,381
June 30,
Weighted average remaining lease term
5.68 years
6.99 years
Weighted average discount rate
6.54
6.87
31
The following are future minimum lease payments under non-cancellable operating leases for the years ending December 31 (in thousands):
OperatingLeases
5,948
10,773
9,841
7,928
5,638
12,127
Total future minimum lease payments
52,255
Less: imputed interest
9,342
Total lease liabilities
42,913
Less: current portion
Long-term lease liabilities
The Company currently has three reportable segments consisting of: 1) Care Partners; 2) Care Delivery; and 3) Care Enablement (see Note 1 — “Description of Business”).
The Company's CODM is its Chief Executive Officer. The CODM evaluates the performance of the Company’s operating segments based on segment revenue growth and operating income. The CODM uses revenue growth and total segment operating income for budgeting, reviewing results, and assessing performance. The CODM does not evaluate the Company’s segments using asset information. The significant segment expenses that comprise operating income, as a measure used by the CODM in evaluating operating segment performance, do not differ from the operating expenses as presented on the accompanying condensed consolidated statements of income.
In the normal course of business, the Company’s reportable segments enter into transactions with each other. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues recognized by a segment and expenses incurred by the counterparty are eliminated in consolidation and do not affect consolidated results.
Corporate costs are unallocated and primarily include corporate initiatives, corporate infrastructure costs, and corporate shared costs, such as finance, human resources, legal, and executive management.
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Certain amounts disclosed in prior periods have been recast to conform to the current period presentation. Specifically, depreciation and amortization expense is disclosed separately from general and administrative expenses in the accompanying segment table for the three and six months ended June 30, 2025. The following tables present information about the Company’s segments (in thousands):
Three Months Ended June 30, 2026
CarePartners
CareDelivery
CareEnablement
IntersegmentElimination
CorporateCosts
ConsolidatedTotal
Third Party
931,449
27,361
13,710
Intersegment
1,387
47,335
71,888
(120,610
Total revenues
932,836
74,696
85,598
Cost of services
805,469
61,923
51,665
(50,559
72,133
14,552
16,158
(70,091
21,398
12,362
1,188
1,378
622
889,964
77,663
69,201
(120,650
22,020
Income (loss) from operations
42,872
(2,967
16,397
40
(22,020
Three Months Ended June 30, 2025
631,442
20,014
3,352
18,380
37,549
(55,929
38,394
40,901
536,266
27,873
31,130
(18,430
40,222
7,794
7,026
(37,511
33,194
5,269
580
904
151
581,757
36,247
39,060
(55,941
33,345
49,685
2,147
1,841
(33,345
33
Six Months Ended June 30, 2026
1,840,240
67,911
29,469
2,299
91,862
143,874
(238,035
1,842,539
159,773
173,343
1,591,000
134,467
100,370
(97,982
144,679
28,926
33,418
(140,065
48,930
24,532
2,310
3,006
1,180
1,760,211
165,703
136,794
(238,047
50,110
82,328
(5,930
36,549
(50,110
Six Months Ended June 30, 2025
1,232,393
36,704
6,099
35,078
74,362
(109,440
71,782
80,461
1,048,934
55,012
56,948
(34,994
78,977
16,615
16,236
(74,461
57,256
10,582
1,116
1,903
1,138,493
72,743
75,087
(109,455
57,407
93,900
(961
5,374
(57,407
34
The carrying amounts and fair values of the Company’s financial instruments as of June 30, 2026 are presented below (in thousands):
Fair Value Measurements
Level 1
Level 2
Level 3
Money market accounts (1)
6,475
Other (2)
1,240
1,351
6,586
7,826
Sun Clinical Laboratories, a California corporation (“Sun Labs”) remaining equity interest purchase
4,080
Community Family Care Medical Group IPA, Inc. (“CFC”) contingent consideration
1,296
Collaborative Health Systems, LLC, Golden Triangle Physician Alliance, and Heritage Physician Networks (“CHS”) contingent consideration
3,287
Other (3)
1,215
9,878
The carrying amounts and fair values of the Company’s financial instruments as of December 31, 2025 are presented below (in thousands):
8,798
Marketable securities (2)
115
8,913
Sun Labs remaining equity interest purchase
7,352
CFC contingent consideration
CHS contingent consideration
7,378
817
832
21,771
22,588
35
The change in the fair value of Level 3 liabilities is recognized in other income (loss) or general and administrative expenses in the accompanying condensed consolidated statements of income. As of June 30, 2026, the reconciliation of Level 3 liabilities was as follows (in thousands):
Addition
1,200
Change in fair value of existing Level 3 liabilities
(8,093
Settlement
(5,000
Derivative Financial Instruments
Interest Rate Swap Agreement
On August 7, 2025, the Company entered into an interest rate swap agreement to effectively convert its floating-rate debt to a fixed-rate basis with the principal objective of eliminating or reducing the variability of cash flows in interest payments associated with the Company’s floating-rate debt. The swap involves a notional amount of $200 million, with the Company paying a fixed interest rate of 3.179%. Payments are exchanged monthly, starting August 29, 2025 and continuing through the termination date of August 31, 2029, with the bank having an option to shorten the term to August 31, 2027. See Note 8 — “Credit Facility and Bank Loans” for further information on the Company’s debt. The interest rate swap agreement is not designated as a hedging instrument. Changes in the fair value of the contract are recognized as unrealized gain or loss on investments in the accompanying condensed consolidated statements of income and reflected within other as an adjustment to reconcile net income to cash provided by operating activities in the accompanying condensed consolidated statements of cash flows.
Remaining Equity Interest Purchase
In 2021, the Company entered into a financing obligation to purchase the remaining equity interest in Sun Labs. The purchase of the remaining Sun Labs equity value is considered a financing obligation with a carrying value of $4.1 million and $7.4 million, as of June 30, 2026 and December 31, 2025, respectively. As the financing obligation is embedded in the non-controlling interest, the non-controlling interest is recognized in other liabilities in the accompanying condensed consolidated balance sheets. Changes in the fair value of the financing obligation are recognized as unrealized gain or loss on investments in the accompanying condensed consolidated statements of income.
Contingent Consideration
Upon acquiring certain assets of CFC in 2024, the total consideration of the acquisition included contingent consideration, to be settled in cash. The Company determined the fair value of the contingent consideration using a probability-weighted model that includes significant unobservable inputs (Level 3). Specifically, the Company considered various scenarios of membership and assigned probabilities to each such scenario in determining fair value. In 2025, the first metric was achieved and paid. As of June 30, 2026, the second metric was determined to have been achieved and subsequently paid in the amount of $5.0 million. As of December 31, 2025, the second metric was valued at $4.7 million and was included in other liabilities in the accompanying condensed consolidated balance sheets. As of June 30, 2026 and December 31, 2025, the third metric was valued at $1.3 million and $2.3 million, respectively, and was included in other liabilities and other long-term liabilities, respectively, in the accompanying condensed consolidated balance sheets. Changes in the CFC contingent consideration are presented in general and administrative expenses in the accompanying condensed consolidated statements of income.
36
Upon acquiring 100% of the equity interest of CHS in 2024, the total consideration of the acquisition included contingent consideration, to be settled in cash. As a result of and following the acquisition of certain assets associated with clinics in Texas in June 2026, the CHS member enrollment metrics measure was amended to provide for an earnout based on a cumulative measure of profit, over the earnout period from October 5, 2024 to October 5, 2029. The earnout payment will be further determined based on a percentage of membership contributed by the acquisition associated with the acquired clinics and reduced by the cash paid towards the purchase of such acquisition. The Company determined the fair value of the contingent consideration using a probability-weighted model that includes significant unobservable inputs (Level 3). Specifically, the Company considered various scenarios of revenue and membership and assigned probabilities to each such scenario in determining fair value. As of June 30, 2026, the amended CHS contingent consideration was valued at $3.3 million and included in other long-term liabilities in the accompanying condensed consolidated balance sheets. As of December 31, 2025, the CHS 2025 gross profit per total member months metric was not met and the related contingent consideration was not paid, and under the terms of the previous agreement, the CHS member enrollment metrics had been valued at $7.4 million and included in other long-term liabilities in the accompanying condensed consolidated balance sheets. Changes in the CHS contingent consideration are presented in general and administrative expenses in the accompanying condensed consolidated statements of income.
37
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1, “Condensed Consolidated Financial Statements,” of this Quarterly Report on Form 10-Q. In addition, reference is made to our audited consolidated financial statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026.
In this section, “we,” “our,” “ours,” and “us” refer to Astrana Health, Inc. (“Astrana”) and its consolidated subsidiaries and affiliated entities, as appropriate, including its consolidated variable interest entities (“VIEs”).
Astrana is a leading physician-centric, AI-powered, risk-bearing healthcare management company. Leveraging our proprietary population health management and healthcare delivery platform, we operate an integrated, value-based healthcare model that aims to empower the providers in our network to deliver the highest quality of care in a cost-effective manner. Together with our affiliated physician groups and consolidated entities, we cost-effectively provide coordinated outcomes-based medical care.
Through our risk-bearing organizations with more than 20,000 contracted physicians, we were responsible for coordinating the care for approximately 1.5 million patients as of June 30, 2026. These covered patients are managed care members whose health coverage is provided either through their employers, directly from a health plan, or as a result of their eligibility for Medicaid or Medicare benefits. Our managed patients benefit from an integrated approach that places physicians at the center of patient care and utilizes sophisticated risk management techniques and clinical protocols to deliver high-quality, cost-effective care.
Key Financial Measures and Indicators
Operating Revenues
Our revenue, which is recorded in the period during which services are rendered and earned, generally on a monthly basis, primarily consists of capitation revenue, risk pool settlements and incentives, management fee income, fee-for-service (“FFS”) revenue, and other revenue primarily consisting of revenues earned from maternity care. The form of billing and related collection risk for such services may vary by revenue type and customer.
Operating Expenses
Our largest expenses consist of the cost of (a) patient care paid to contracted providers and (b) staff to provide management and administrative support services to our affiliated physician groups, as further described in the following sections. These services include claims processing, utilization management, contracting, accounting, credentialing, and administrative oversight.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA margin are supplemental performance measures of our operations for financial and operational decision-making and are used as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation, and amortization, excluding income or loss from equity method investments, non-recurring and non-cash transactions, and stock-based compensation. We define Adjusted EBITDA margin as Adjusted EBITDA over total revenue.
Adjusted Net Income Attributable to Astrana and Adjusted Earnings Per Share (“EPS”) – Diluted
Our adjusted EPS – diluted is a supplemental performance measure of our operations for financial and operational decision-making and is used as a supplemental means of evaluating period-to-period comparisons on a consistent basis. We define adjusted EPS – diluted as adjusted net income attributable to Astrana over weighted average shares of common stock outstanding – diluted. Adjusted net income attributable to Astrana is calculated as net income, excluding income or loss from equity method investments, non-recurring and non-cash transactions, stock-based compensation, amortization of intangibles, certain tax adjustments, and amounts related to net income or loss attributable to non-controlling interests.
Free Cash Flow
Our free cash flow is a supplemental performance measure of our operations for financial and operational decision-making and is used as a supplemental means of evaluating period-to-period comparisons on a consistent basis and reflects the cash flow trends in our business. We define free cash flow as net cash provided by operating activities minus cash used in purchases of property and equipment.
39
Results of Operations
Condensed Consolidated Statements of Income (in thousands)
$ Change
% Change
317,712
291,659
51
3,425
8,646
125
303,730
13,982
69
Income from equity method investments
167
44
(8,615
117
3,571
153
Unrealized gain on investments
4,718
(3,438
(303
)%
(3,597
102
10,385
62
2,149
8,236
81
(2,080
(262
10,316
109
Adjusted EBITDA
68,889
48,101
20,788
43
* Percentage change of over 500%
662,424
601,955
21,265
17,276
126
640,496
21,928
2,754
(17,408
119
5,076
5,846
Other loss
2,294
(58
(1,438
20,490
78
5,344
15,146
92
(2,914
18,060
112
135,185
84,485
50,700
60
41
Risk-Bearing Organizations and Patients
As of June 30, 2026 and 2025, we managed a total of 29 and 21 independent risk-bearing organizations, respectively, including both affiliated and non-affiliated. The total number of patients for whom we managed the delivery of healthcare services was approximately 1.5 million and 1.0 million as of June 30, 2026 and 2025, respectively.
Revenue for the three months ended June 30, 2026 was $972.5 million, as compared to $654.8 million for the three months ended June 30, 2025, an increase of $317.7 million or 49%. The increase in revenue was primarily attributable to the Prospect acquisition, which contributed $281.5 million of revenue. In addition, capitation revenue increased by $45.0 million primarily as a result of enrollees transitioning to full risk through our Restricted Knox-Keene plans.
Revenue for the six months ended June 30, 2026 was $1,937.6 million, as compared to $1,275.2 million for the six months ended June 30, 2025, an increase of $662.4 million or 52%. The increase in revenue was primarily attributable to the Prospect acquisition, which contributed $581.6 million of revenue. In addition, capitation revenue increased by $91.4 million primarily as a result of enrollees transitioning to full risk through our Restricted Knox-Keene plans.
Cost of Services, Excluding Depreciation and Amortization
Expenses related to cost of services, excluding depreciation and amortization for the three months ended June 30, 2026 were $868.5 million, as compared to $576.8 million for the same period in 2025, an increase of $291.7 million or 51%. The overall increase was primarily due to $229.5 million from the acquisition of Prospect and increased participation in a value-based Medicare FFS model and medical costs associated with both professional and institutional risk of our Restricted Knox-Keene licensed health plans.
Expenses related to cost of services, excluding depreciation and amortization for the six months ended June 30, 2026 were $1,727.9 million, as compared to $1,125.9 million for the same period in 2025, an increase of $602.0 million or 53%. The overall increase was primarily due to $488.8 million from the acquisition of Prospect and increased participation in a value-based Medicare FFS model and medical costs associated with both professional and institutional risk of our Restricted Knox-Keene licensed health plans.
General and Administrative Expenses
General and administrative expenses for the three months ended June 30, 2026 were $54.2 million, as compared to $50.7 million for the same period in 2025, an increase of $3.4 million or 7%. The increase was primarily due to $13.3 million from the acquisition of Prospect as well as other general and administrative expenses to support operational growth.
General and administrative expenses for the six months ended June 30, 2026 were $115.9 million, as compared to $94.6 million for the same period in 2025, an increase of $21.3 million or 22%. The increase was primarily due to $29.8 million from the acquisition of Prospect.
Depreciation and Amortization
Depreciation and amortization expenses for the three months ended June 30, 2026 were $15.6 million, as compared to $6.9 million for the same period in 2025, an increase of $8.6 million or 125%, driven by $9.2 million due to the Prospect acquisition, primarily from the acquisition of its intangible assets. This amount includes depreciation of property and equipment and the amortization of intangible assets.
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Depreciation and amortization expenses for the six months ended June 30, 2026 were $31.0 million, as compared to $13.8 million for the same period in 2025, an increase of $17.3 million or 126%, driven by $18.4 million due to the Prospect acquisition, primarily from the acquisition of its intangible assets. This amount includes depreciation of property and equipment and the amortization of intangible assets.
Income from Equity Method Investments
Income from equity method investments for the three months ended June 30, 2026 was $0.5 million, as compared to $0.4 million for the same period in 2025. This amount includes our portion of the equity method investment’s net earnings and losses. This increase was primarily due to Allied Physicians of California, a Professional Medical Corporation’s (“APC”) equity method investment in LaSalle Medical Associates and our non-consolidated VIEs.
Income from equity method investments for the six months ended June 30, 2026 was $2.3 million, as compared to a loss of $0.5 million for the same period in 2025. This amount includes our portion of the equity method investment’s net earnings and losses. This increase was primarily due to APC equity method investment in LaSalle Medical Associates and our non-consolidated VIEs.
Interest Expense
Interest expense for the three months ended June 30, 2026 was $16.0 million, as compared to $7.4 million for the same period in 2025, an increase of $8.6 million or 117%. The increase in interest expense was primarily due to the increased borrowings under the Second Amended and Restated Credit Facility to finance the Prospect acquisition, partially offset by a decrease in interest rates on our floating-rate debt. Our outstanding borrowings, as of June 30, 2026, increased to $948.3 million on the Second Amended and Restated Credit Facility from $408.9 million borrowed under the facility as of June 30, 2025. The interest rate on the Term Loans and the Revolver Loan was 5.64% as of June 30, 2026. As of June 30, 2025, the interest rate for the Term Loans and the Revolver Loan was 6.08%.
Interest expense for the six months ended June 30, 2026 was $32.1 million, as compared to $14.7 million for the same period in 2025, an increase of $17.4 million or 119%. The increase in interest expense was primarily due to the increased borrowings under the Second Amended and Restated Credit Facility to finance the Prospect acquisition, partially offset by a decrease in interest rates on our floating-rate debt. Our outstanding borrowings, as of June 30, 2026, increased to $948.3 million on the Second Amended and Restated Credit Facility from $408.9 million borrowed under the facility as of June 30, 2025. The interest rate on the Term Loans and the Revolver Loan was 5.64% as of June 30, 2026. As of June 30, 2025, the interest rate for the Term Loans and the Revolver Loan was 6.08%.
Interest Income
Interest income for the three months ended June 30, 2026 was $5.9 million, as compared to $2.3 million for the same period in 2025, an increase of $3.6 million or 153%. Interest income reflects interest earned on cash held in bank accounts, money market and certificate of deposit accounts, and the interest from our loans receivable. The change in interest income was primarily due to an increase in our cash held in interest bearing bank accounts, including $1.1 million of interest income related to cash accounts from the Prospect acquisition.
Interest income for the six months ended June 30, 2026 was $9.7 million, as compared to $4.6 million for the same period in 2025, an increase of $5.1 million or 109%. Interest income reflects interest earned on cash held in bank accounts, money market and certificate of deposit accounts, and the interest from our loans receivable. The change in interest income was primarily due to an increase in our cash held in interest bearing bank accounts, including $1.6 million of interest income related to cash accounts from the Prospect acquisition.
Unrealized Gain (Loss) on Investments
Unrealized gain on investments for the three months ended June 30, 2026, as compared to the same period in 2025, increased $4.7 million primarily due to the change in fair value of our interest rate swap and the change in fair value of our financing obligation.
Unrealized gain on investments for the six months ended June 30, 2026, as compared to the same period in 2025, increased $5.8 million primarily due to the change in fair value of our interest rate swap and the change in fair value of our financing obligation.
Other Income (Loss)
Other loss for the three months ended June 30, 2026 was $2.3 million, as compared to other income of $1.1 million for the same period in 2025, a decrease in other income of $3.4 million or 303%. The decrease in other income was primarily due to accrual for a non-routine legal matter.
Other loss for the six months ended June 30, 2026 was $1.6 million, as compared to other loss of $3.9 million for the same period in 2025, a decrease in other loss of $2.3 million or 58%. The decrease in other loss was primarily due to accrual for a non-routine legal matter in the 2026 period, partially offset by debt issuance costs incurred in connection with the Second Amended and Restated Credit Facility in 2025. No similar transaction occurred for the six months ended June 30, 2026.
Provision for Income Taxes
Provision for income taxes was $8.8 million for the three months ended June 30, 2026, as compared to $6.6 million for the same period in 2025, an increase of $2.1 million primarily due to an increase in pre-tax income.
Provision for income taxes was $15.3 million for the six months ended June 30, 2026, as compared to $10.0 million for the same period in 2025, an increase of $5.3 million primarily due to an increase in pre-tax income.
Net Income
Net income for the three months ended June 30, 2026 was $18.5 million, as compared to $10.2 million for the same period in 2025, an increase of $8.2 million.
Net income for the six months ended June 30, 2026 was $31.6 million, as compared to $16.4 million for the same period in 2025, an increase of $15.1 million.
Net (Loss) Income Attributable to Non-Controlling Interests
Net loss attributable to non-controlling interests for the three months ended June 30, 2026 was $1.3 million, as compared to a net income attributable to non-controlling interests of $0.8 million for the same period in 2025, a decrease of $2.1 million. The increase was primarily driven by losses in APC.
Net loss attributable to non-controlling interest for the six months ended June 30, 2026 was $2.6 million, as compared to a net income attributable to non-controlling interests of $0.3 million for the same period in 2025, a decrease of $2.9 million. The increase was primarily driven by losses in APC.
Net Income Attributable to Astrana Health, Inc.
Our net income attributable to Astrana Health, Inc. for the three months ended June 30, 2026 was $19.7 million, as compared to $9.4 million for the same period in 2025, an increase of $10.3 million.
Our net income attributable to Astrana Health, Inc. for the six months ended June 30, 2026 was $34.2 million, as compared to $16.1 million for the same period in 2025, an increase of $18.1 million.
Adjusted EBITDA for the three months ended June 30, 2026 was $68.9 million, as compared to $48.1 million for the same period in 2025, an increase of $20.8 million primarily due to the Prospect acquisition.
Adjusted EBITDA for the six months ended June 30, 2026 was $135.2 million, as compared to $84.5 million for the same period in 2025, an increase of $50.7 million primarily due to the Prospect acquisition.
See “Reconciliation of Net Income to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin” below for additional information.
Segment Financial Performance
We currently have three reportable segments consisting of Care Partners, Care Delivery, and Care Enablement. Segment performance is evaluated based on segment revenue growth and operating income. Management uses revenue growth and total segment operating income as a measure of the performance of operating businesses, separate from non-operating factors. See Note 17 — “Segments” to our unaudited condensed consolidated financial statements under Item 1 in this Quarterly Report on Form 10-Q for additional information.
The following tables set forth our revenue and operating income (loss) by segment for the three and six months ended June 30, 2026 and 2025 (in thousands):
Segment Revenue
301,394
36,302
95
44,697
Segment Operating Income (Loss)
(6,813
(14
(5,114
(238
14,556
610,146
50
87,991
123
92,882
(11,572
(12
(4,969
31,175
45
Care Partners Segment
Revenue for the three months ended June 30, 2026 was $932.8 million, as compared to $631.4 million for the three months ended June 30, 2025, an increase of $301.4 million. Operating income for the three months ended June 30, 2026 was $42.9 million, as compared to $49.7 million for the three months ended June 30, 2025, a decrease in operating income of $6.8 million. The increase in revenue was primarily due to our acquisitions within our Care Partners segment, including $252.3 million in revenue from the Prospect acquisition, and members transitioning to full risk through our Restricted Knox-Keene plans. The decrease in operating income was primarily due to higher claims expense reflecting typical quarterly utilization patterns.
Revenue for the six months ended June 30, 2026 was $1,842.5 million, as compared to $1,232.4 million for the six months ended June 30, 2025, an increase of $610.1 million. Operating income for the six months ended June 30, 2026 was $82.3 million, as compared to $93.9 million for the six months ended June 30, 2025, a decrease in operating income of $11.6 million. The increase in revenue was primarily due to recent acquisitions within our Care Partners segment, including $518.9 million in revenue from the Prospect acquisition, and members transitioning to full risk through our Restricted Knox-Keene plans. The decrease in operating income was primarily due to non-routine allowances recorded against receivables that we plan to recover from the payer and higher claims expense reflecting typical quarterly utilization patterns.
Care Delivery Segment
Revenue for the three months ended June 30, 2026 was $74.7 million, as compared to $38.4 million for the three months ended June 30, 2025, an increase of $36.3 million. Operating loss for the three months ended June 30, 2026 was $3.0 million, as compared to operating income of $2.1 million for the three months ended June 30, 2025, a decrease in operating income of $5.1 million. The increase in revenue was primarily driven by $36.0 million of revenue from the inclusion of Prospect, as well as increased volume in patient visits and continued investments at our primary, multi-specialty, and ancillary Care Delivery entities. The decrease in operating income was driven by increased costs to support the growth of our Care Delivery business.
Revenue for the six months ended June 30, 2026 was $159.8 million, as compared to $71.8 million for the six months ended June 30, 2025, an increase of $88.0 million. Operating loss for the six months ended June 30, 2026 was $5.9 million, as compared to a loss of $1.0 million, for the six months ended June 30, 2025, a decrease in operating income of $5.0 million. The increase in revenue was primarily driven by $85.9 million of revenue from the inclusion of Prospect, as well as increased volume in patient visits and continued investments at our primary, multi-specialty, and ancillary Care Delivery entities. The decrease in operating income was driven by increased costs to support the growth of our Care Delivery business.
Care Enablement Segment
Revenue for the three months ended June 30, 2026, was $85.6 million, as compared to $40.9 million for the three months ended June 30, 2025, an increase of $44.7 million. Operating income for the three months ended June 30, 2026 was $16.4 million, as compared to $1.8 million for the three months ended June 30, 2025, an increase of $14.6 million. The increases in revenue and operating income were primarily due to the addition of Prospect, which contributed $36.7 million in revenue, and management fees earned from increased Care Partners revenue and new external contracts.
Revenue for the six months ended June 30, 2026 was $173.3 million, as compared to $80.5 million for the six months ended June 30, 2025, an increase of $92.9 million. Operating income for the six months ended June 30, 2026 was $36.5 million, as compared to $5.4 million, for the six months ended June 30, 2025, an increase in operating income of $31.2 million. The increases in revenue and operating income were primarily due to the addition of Prospect, which contributed $77.5 million in revenue, and management fees earned from increased Care Partners revenue and new external contracts.
As of June 30, 2026 and 2025, the total number of affiliated physician groups we managed were 29 and 21 groups, respectively.
46
Reconciliation of Net Income to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
Set forth below are reconciliations of Net Income to EBITDA and Adjusted EBITDA, as well as the reconciliations to Adjusted EBITDA margin for the three and six months ended June 30, 2026 and 2025.
15,997
7,382
32,098
14,690
(5,907
(2,336
(9,723
(4,647
EBITDA
52,850
28,775
100,321
50,223
(Income) loss from equity method investments
(548
(381
(2,268
486
Other, net
4,800
7,998
(2)
15,450
(3)
14,257
(4)
Stock-based compensation
11,709
Adjusted EBITDA margin
47
Reconciliation of Net Income to Adjusted Net Income Attributable to Astrana and Adjusted EPS – Diluted
Set forth below are reconciliations of net income to adjusted net income attributable to Astrana as well as the reconciliations to adjusted EPS – diluted for the three and six months ended June 30, 2026 and 2025.
(in thousands, except for share and per share data)
Other, net (1)
Amortization of intangible assets attributable to acquisitions
13,806
6,179
27,656
12,442
Tax adjustments
(5,965
(4,637
(13,490
(9,238
Adjusted net income attributable to non-controlling interests
(2,561
(3,715
(5)
(4,489
(6,032
Adjusted net income attributable to Astrana Health, Inc.
39,771
27,369
76,124
47,871
Adjusted earnings per share - diluted
0.80
0.55
1.54
0.97
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
The following table provides a reconciliation of net cash provided by operating activities to free cash flow for the six months ended June 30, 2026 and 2025 (in thousands):
Free cash flow
92,926
103,038
Use of Non-GAAP Financial Measures
This Quarterly Report on Form 10-Q contains the non-GAAP financial measures EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, adjusted net income attributable to Astrana, and adjusted EPS – diluted, of which the most directly comparable financial measure presented in accordance with U.S. generally accepted accounting principles (“GAAP”) is net income. This Quarterly Report on Form 10-Q also contains the non-GAAP financial measure free cash flow, of which the most directly comparable financial measure presented in accordance with U.S. GAAP is net cash provided by operating activities. These measures are not in accordance with, or alternatives to, GAAP, and may be calculated differently from similar non-GAAP financial measures used by other companies. We use Adjusted EBITDA, Adjusted EBITDA margin, adjusted EPS – diluted, and free cash flow as supplemental performance measures of our operations, for financial and operational decision-making, and as supplemental means of evaluating period-to-period comparisons on a consistent basis and, for free cash flow, to reflect the cash flow trends in our business. Adjusted EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation, and amortization, excluding income or loss from equity method investments, non-recurring and non-cash transactions, and stock-based compensation. We define Adjusted EBITDA margin as Adjusted EBITDA over total revenue. Adjusted net income attributable to Astrana is calculated as net income, excluding income or loss from equity method investments, non-recurring and non-cash transactions, stock-based compensation, amortization of intangible assets attributable to acquisitions, certain tax adjustments, and amounts related to net income or loss attributable to non-controlling interests. We define adjusted EPS – diluted as adjusted net income attributable to Astrana over weighted average shares of common stock outstanding – diluted. We define free cash flow as net cash provided by operating activities minus cash used in purchases of property and equipment.
We believe the presentation of these non-GAAP financial measures provides investors with relevant and useful information, as it allows investors to evaluate the operating performance of the business activities without having to account for differences recognized because of non-core or non-recurring financial information. When GAAP financial measures are viewed in conjunction with non-GAAP financial measures, investors are provided with a more meaningful understanding of our ongoing operating performance. In addition, these non-GAAP financial measures are among those indicators we use as a basis for evaluating operational performance, allocating resources, and planning and forecasting future periods. Non-GAAP financial measures are not intended to be considered in isolation, or as a substitute for, GAAP financial measures. Other companies may calculate EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, adjusted net income attributable to Astrana, adjusted EPS – diluted, and free cash flow differently, limiting the usefulness of these measures for comparative purposes. To the extent this Quarterly Report on Form 10-Q contains historical or future non-GAAP financial measures, we have provided corresponding GAAP financial measures for comparative purposes. The reconciliations between certain GAAP and non-GAAP measures are provided above.
Liquidity and Capital Resources
Cash and cash equivalents at June 30, 2026 totaled $400.8 million, as compared to $429.5 million at December 31, 2025. Working capital totaled $171.5 million at June 30, 2026, as compared to $248.0 million at December 31, 2025, a decrease of $76.5 million.
We have historically financed our operations primarily through internally generated funds and borrowings on long-term debt. We generate cash primarily from capitation contracts, risk pool settlements and incentives, fees for medical management services provided to our affiliated physician groups, FFS reimbursements, and other revenues. We generally invest cash in money market accounts, which are classified as cash and cash equivalents. In February 2025, we entered into the Second Amended and Restated Credit Agreement, which amended and restated that certain amended credit agreement and provides for a five-year revolving credit facility of $300.0 million (the “Revolver Loan”), a term loan of $250.0 million, and a delayed-draw term loan that was drawn for $707.3 million in July 2025, which we primarily used to refinance certain existing indebtedness and to fund the costs associated with the Prospect acquisition (as combined, the “Term Loans”). We had $258.0 million remaining available under the revolving credit facility as of June 30, 2026. In addition, we have a current shelf registration statement filed with the SEC under which we may issue common stock, preferred stock, debt securities, and other securities that may be offered in one or more offerings on terms to be determined at the time of the offering. We believe we have sufficient liquidity to fund our operations through at least the next 12 months and the foreseeable future.
Cash Flow Activities
Our cash flows are summarized as follows (in thousands):
(6,724
(6
(5,601
161
(67,226
127
(79,551
(155
Operating Activities
Cash provided by operating activities for the six months ended June 30, 2026, was $100.8 million, as compared to cash provided by operating activities of $107.5 million for the six months ended June 30, 2025. The decrease in cash provided by operating activities was primarily driven by unfavorable changes in working capital relative to the six months ended June 30, 2025 and partially offset by higher adjusted net income. The change in working capital for the 2026 and 2025 periods included timing of claims payments related to our medical liabilities, timing of payments for provider incentives, and a decrease in cash paid for income taxes. For the six months ended June 30, 2026, net income, exclusive of depreciation and amortization, amortization of debt issuance cost, share-based compensation, non-cash lease expense, deferred tax, change in fair value of contingent consideration liabilities, and other was $81.9 million, as compared to $56.0 million for the six months ended June 30, 2025.
Investing Activities
Cash used in investing activities during the six months ended June 30, 2026, was $9.1 million, primarily due to purchases of property and equipment of $7.9 million and payments for business and assets acquisition, net of cash acquired of $3.7 million. Cash used in investing activities during the six months ended June 30, 2025 was $3.5 million primarily due to purchases of property and equipment of $4.5 million.
Financing Activities
Cash used in financing activities during the six months ended June 30, 2026, was $120.0 million, primarily due to repayments of debt of $103.9 million, repurchase of treasury and subsidiary’s shares of $4.4 million, tax payments from net share settlement of restricted stock of $3.8 million, payment of contingent liabilities of $2.9 million, and dividend payments of $0.2 million. Cash used in financing activities during the six months ended June 30, 2025 was $52.8 million, primarily due to repayments of debt of $431.4 million, payments of deferred financing costs of $17.2 million, dividends paid of $6.2 million, taxes paid from net share settlement of restricted stock of $5.1 million, and other financing activities of $4.9 million consisting of payment of contingent consideration and repurchase of treasury shares, partially offset by borrowings on debt of $412.0 million.
The following are the future commitments of our debt for the years ending December 31 (in thousands) below:
The Revolver Loan and the Term Loans under our Second Amended and Restated Credit Agreement mature on February 26, 2030. See Note 8 — “Credit Facility and Bank Loans” to our unaudited condensed consolidated financial statements under Part I. Item 1 in this Quarterly Report on Form 10-Q for additional information.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires our management to make judgments, assumptions, and estimates that affect the amounts of revenue, expenses, income, assets, and liabilities reported in our condensed consolidated financial statements and accompanying notes. Actual results and the timing of recognition of such amounts could differ. In addition, judgments, assumptions, and estimates routinely require adjustment based on changing circumstances and the receipt of new or better information. Understanding our accounting policies and the extent to which management uses judgment, assumptions, and estimates in applying these policies is therefore integral to understanding our financial statements. Critical accounting policies and estimates are defined as those that reflect significant judgments and uncertainties, potentially resulting in materially different results under different assumptions and conditions. We summarize our most significant accounting policies in relation to the accompanying condensed consolidated financial statements in Note 2 — “Basis of Presentation and Summary of Significant Accounting Policies” thereto. Please also refer to the “Critical Accounting Policies” section of Management’su Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Off-Balance Sheet Arrangements
As of June 30, 2026, we had no off-balance sheet arrangements that are, or have been, reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Borrowings under the Term Loans and Revolver Loan provided for under our Second Amended and Restated Credit Agreement as of June 30, 2026 were $906.3 million and $42.0 million, respectively. The loans under the Second Amended and Restated Credit Agreement bear interest at an annual rate equal to, at our elected option, the rate for term SOFR published by the CME Group Benchmark Administration Limited two days prior to the first day of the applicable interest period, plus a spread of 1.25% to 2.50%, as determined on a quarterly basis based on the Company’s leverage ratio. We have entered into an interest swap agreement to effectively convert our floating-rate debt to a fixed-rate basis, with a termination date of August 31, 2029, provided that the bank has the right to change the swap to a two-year term. The interest swap agreement sets a fixed rate of 3.179% for the first $200.0 million of our aggregate debt balance. The principal objective of the swap agreement is to eliminate or reduce the variability of cash flows associated with our floating-rate debt, thereby reducing the impact of interest rate changes on future interest payment cash flows. Based on our current outstanding borrowings as of June 30, 2026, a hypothetical 1% change in our interest rates would increase or decrease our interest expense, on an annual basis, by $7.5 million.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Exchange Act, designed to ensure that information required to be disclosed by a company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well-designed and well-operated, can provide only reasonable assurance of achieving their objectives.
As of June 30, 2026, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial and Operating Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. As previously disclosed in the Form 10-K for the year ended December 31, 2025, management identified a material weakness in internal control over financial reporting associated with the accounting for business combinations. Because this material weakness had not been remediated as of June 30, 2026, management concluded that our disclosure controls and procedures were not effective as of June 30, 2026. Notwithstanding the identified material weakness, our management, including our Chief Executive Officer and our Chief Financial and Operating Officer, believes that the condensed consolidated financial statements fairly present, in all material respects, our financial position, results of operations, and cash flows for the periods presented in this Quarterly Report on Form 10-Q, in accordance with accounting principles generally accepted in the United States.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Following the identification of the material weakness described in the Form 10-K for the year ended December 31, 2025, management is continuing to make progress in our design and implementation of remediation activities to address the material weakness, and therefore these remediation activities are not reflected as changes in internal control over financial reporting for the quarter ended June 30, 2026. We excluded the operations of Prospect as we continue to evaluate its internal control over financial reporting. This exclusion is in accordance with the general guidance issued by the Staff of the Securities and Exchange Commission that an assessment of a recent business combination may be omitted from management's report on internal control over financial reporting in the first year of consolidation.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are, from time to time, party to lawsuits, threatened lawsuits, disputes, and other claims arising in the normal course of business. We assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable, or the amount of the loss is not estimable, we do not record an accrual, in accordance with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, our ultimate liability in connection with these matters is not expected to have a material adverse effect on our results of operations, financial position, or cash flows, and the amounts accrued for any individual matter are not material. However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period.
Certain of the pending or threatened legal proceedings or claims in which we are involved are discussed under Note 11 — “Commitments and Contingencies” to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q, which disclosure is incorporated by reference herein.
ITEM 1A. RISK FACTORS
Our business, financial condition, and operating results are affected by a number of factors, whether currently known or unknown, including risks specific to us or the healthcare industry, as well as risks that affect businesses in general. In addition to the information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026. The risks disclosed in such Annual Report could materially adversely affect our business, financial condition, cash flows, or results of operations, and thus our stock price. These disclosures reflect our beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. We believe there have been no material changes in our risk factors from those disclosed in the Annual Report. However, additional risks and uncertainties not currently known or which we currently deem to be immaterial may also materially adversely affect our business, financial condition, or results of operations.
Because of such risk factors, as well as other factors affecting our financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. In addition, the disclosure of any risk factor should not be interpreted to imply that the risk has not already materialized.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In December 2022, Astrana’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $50.0 million of its shares of common stock. In February 2026, the Board of Directors increased the total authorization under the share repurchase program to $100.0 million of its shares of common stock, including the $35.9 million that remained available under the previously announced stock repurchase program. Repurchases may be made through a variety of methods, which could include open market purchases, accelerated share repurchase transactions, negotiated block transactions, 10b5-1 plans, other transactions that may be structured through investment banking institutions or privately negotiated, or a combination of the foregoing. This share repurchase program has no expiration date. The Board may suspend, modify, or discontinue the repurchase program at any time. This repurchase program does not obligate the Company to make additional repurchases at any specific time or in any specific situation. During the three months ended June 30, 2026, no shares were repurchased under the Company’s share repurchase program. As of June 30, 2026, $83.1 million remained available under the repurchase program.
The following table provides information about purchases made by the Company of the Company’s common stock during the three months ended June 30, 2026.
Period
Total Numberof SharesPurchased (1)
Average PricePaid PerShare
Total Number ofSharesPurchased asPart of PubliclyAnnounced Plansor Programs
Approximate DollarValue of Shares ThatMay Yet BePurchased Under thePlans or Programs(in thousands)
April 1, 2026 to April 30, 2026
76,715
25.45
83,105
May 1, 2026 to May 31, 2026
16,646
35.15
June 1, 2026 to June 30, 2026
2,780
40.75
96,141
27.58
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the quarter ended June 30, 2026, none of the Company’s directors or executive officers adopted, modified, or terminated any contract, instruction, or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).
ITEM 6. EXHIBITS
The following exhibits are either incorporated by reference into or filed or furnished with this Quarterly Report on Form 10-Q, as indicated below.
Exhibit
No.
Description
2.1†
Agreement and Plan of Merger, dated December 21, 2016, among Astrana Health, Inc. (f/k/a Apollo Medical Holdings, Inc.), Astrana Health Management, Inc. (f/k/a Network Medical Management, Inc.), Apollo Acquisition Corp., and Kenneth Sim, M.D. (incorporated herein by reference to Annex A to the joint proxy statement/prospectus filed pursuant to Rule 424(b)(3) on November 15, 2017, that is a part of a Registration Statement on Form S-4)
2.2
Amendment to the Agreement and Plan of Merger, dated March 30, 2017, among Astrana Health, Inc. (f/k/a Apollo Medical Holdings, Inc.), Astrana Health Management, Inc. (f/k/a Network Medical Management, Inc.), Apollo Acquisition Corp., and Kenneth Sim, M.D. (incorporated herein by reference to Annex A to the joint proxy statement/prospectus filed pursuant to Rule 424(b)(3) on November 15, 2017 that is a part of a Registration Statement on Form S-4)
2.3
Amendment No. 2 to the Agreement and Plan of Merger, dated October 17, 2017, among Astrana Health, Inc. (f/k/a Apollo Medical Holdings, Inc.), Astrana Health Management, Inc. (f/k/a Network Medical Management, Inc.), Apollo Acquisition Corp. and Kenneth Sim, M.D. (incorporated herein by reference to Annex A to the joint proxy statement/prospectus filed pursuant to Rule 424(b)(3) on November 15, 2017 that is a part of a Registration Statement on Form S-4)
2.4†
Asset and Equity Purchase Agreement, dated November 8, 2024, by and among Astrana Health, Inc., PHP Holdings, LLC, PHS Holdings, LLC, Prospect Intermediate Holdings, LLC, each of the entities set forth on Schedule C of the agreement, and Prospect Medical Holdings, Inc. (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on November 8, 2024)
3.1
Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on January 21, 2015)
3.2
Certificate of Amendment of Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 27, 2015)
3.3
Certificate of Amendment of Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 13, 2017)
3.4
Certificate of Amendment of Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 21, 2018)
3.5
Certificate of Amendment of Restated Certificate of Incorporation (effective February 26, 2024) (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on January 26, 2024)
3.6
Certificate of Amendment of Restated Certificate of Incorporation (effective June 13, 2024) (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 13, 2024)
3.7
Amended and Restated By-laws (effective February 28, 2024) (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 29, 2024)
10.1+
Astrana Health, Inc. Amended and Restated 2024 Equity Incentive Plan (June 2026) (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 10, 2026)
10.2+*
Form of Director and Officer Indemnification Agreement (2026)
31.1*
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32**
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*
Inline XBRL Instance Document
101.SCH*
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith.
** Furnished herewith.
+ Management contract or compensatory plan, contract, or arrangement.
† Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K, Item 601(a)(5). The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
56
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
August 10, 2026
By:
/s/ Brandon K. Sim
Brandon K. Sim, M.S.
Chief Executive Officer and President
(Principal Executive Officer)
/s/ Chandan Basho
Chandan Basho, M.B.A.
Chief Financial and Operating Officer
(Principal Financial Officer)