Astrana Health Q1 Earnings Call Highlights
by Scott Moore · The Cerbat GemAstrana Health (NASDAQ:ASTH) executives highlighted strong first-quarter 2026 results and reaffirmed full-year guidance, pointing to disciplined growth, continued deleveraging, and early performance of new full-risk contracts that tracked in line with underwriting expectations.
First-quarter results and leverage improvement
President and CEO Brandon Sim said the company “delivered a strong start to 2026,” citing disciplined growth, “well-controlled medical cost trend,” and “meaningful operating leverage.” For the quarter, Astrana reported revenue of $965.1 million, up 56% year over year, and adjusted EBITDA of $66.3 million, up 82%.
Chief Operating and Financial Officer Chan Basho said results landed at the “higher end” of the company’s guidance range, driven by a full-quarter contribution from Prospect, the commencement of new full-risk contracts, and continued organic growth in the Care Partners segment. Net income attributable to Astrana was $14.4 million and non-GAAP adjusted EPS was $0.74 per share, according to Basho.
The company also emphasized free cash flow and deleveraging. Sim said free cash flow was “just over $64 million” in the quarter and that net leverage fell to about 2.3x on a pro forma trailing 12-month basis. Basho added that Astrana ended the quarter with $478.4 million of cash and $586.8 million of net debt, with net leverage down from 2.6x at year-end. Sim said Astrana achieved its previously stated milestone of getting below 2.5x net leverage within 24 months “in just 3 quarters,” and he said the company anticipates ending 2026 “at or below 2 turns of net leverage.”
AI-enabled platform and operating leverage
Sim framed the quarter as support for Astrana’s broader platform strategy, arguing that advantage in a more complex healthcare environment will accrue to organizations that integrate “care delivery, data, and financial accountability into a single operating system.” He said Astrana’s platform was built internally rather than assembled from third-party vendors, and he described Astrana as a delegated, payer-agnostic platform with a “continuous longitudinal view” of patients across plans and settings.
Sim said Astrana’s AI tools are embedded across authorizations, claims processing, care management, quality outreach, and “next best actions” within provider workflows. He cited operational and clinical metrics, including a 24% higher gap-closure rate and a 30% higher annual wellness visit completion rate among providers actively using the platform. He also pointed to “around 500,000 automated member interactions across voice and text each month” and said AI claims agents reduced provider payment cycle times to “less than half” that of manually processed claims.
On expenses, both executives cited operating leverage. G&A was 6.4% of revenue in the quarter, down from 7.1% a year earlier. Sim said the company expects to exit the year with G&A as a percentage of revenue below the first-quarter level as it continues embedding “agentic workflows.” During Q&A, Sim said it was “hard to say exactly” how much of the year-over-year improvement was directly driven by AI, but said “a meaningful part” was aided by AI’s ability to scale the business without proportional growth in G&A.
Medical cost trends, membership, and full-risk progression
Astrana said medical cost performance was in line with or better than its plan. Sim noted first-quarter medical cost trends “slightly outperformed” the full-year trend assumption of about 5.2%, with strong results across both the legacy Astrana and legacy Prospect populations. Basho added that first-quarter actuals were “consistent or better than plan across all lines of business.”
The company ended the quarter serving about 1.55 million members in value-based care arrangements. Sim said Medicaid and Exchange membership trends were generally in line with expectations, with “puts and takes” offsetting across the portfolio. He said Medicaid attrition was modestly below expectations in prepared remarks, while acuity remained favorable, which he attributed in part to longitudinal patient relationships and less adverse selection than modeled.
During Q&A, management provided additional color on enrollment and attrition dynamics:
- Medicare: Basho said eligibility was up “mid-single digit” versus prior expectations.
- Medicaid: Basho said disenrollment was tracking “slightly ahead of the midpoint” of the company’s range and now appeared likely to be “on the high end” of the annual range, while trend performed better than expected, with lower adverse selection so far.
- Exchange: Basho said disenrollments came in “better than expected” in the quarter, consistent with industry trends. Later, management said it initially embedded a 30%–40% annual disenrollment assumption but was seeing attrition closer to “high-single-digit” so far, and was internally projecting a 20%–30% decline rather than 30%–40%, though it had not reflected that in guidance “out of conservatism.”
On risk progression, Sim said Astrana followed through on its late-2025 commitment to convert key contracts to full risk. At quarter-end, about 80% of Care Partners revenue and about 40% of owned membership were in full-risk arrangements, with new contracts performing in line with underwriting. Addressing a later question, management said the full-risk mix stepped up in Q1 due to the start of contracts the company had guided to in late 2025 and that it expects continued growth in the percentage of full-risk members over time.
Prospect integration, expansion markets, and regulatory outlook
Sim said the integration of Prospect remained on track, with financial standardization completed, “full visibility into medical economics,” and clinical workflows aligned under the Astrana Care Model. He said gross provider retention remained above 99% in the quarter and that the company was tracking toward the high end of its $12 million–$15 million annual synergy target. In response to a question, Sim said Prospect’s adjusted EBITDA was on track for about $80 million annualized and “tracking a bit ahead” of expectations.
Management also discussed expansion markets. Sim said Southern Nevada reached run-rate profitability in 2025 and delivered a 20% year-over-year improvement in medical loss ratio, and he said performance continued to be strong. In Texas, Sim said a full-risk delegated launch with a large payer partner began Jan. 1 and is progressing in line with expectations; management cited moving more than 14,000 Medicare Advantage members into a full-risk delegated construct in Texas in the first quarter.
On regulation, Sim said Astrana sees “structural tailwinds” from the 2027 Medicare Advantage final rate notice and argued the company is not dependent on diagnosis sources being disallowed. He also said Astrana’s “historically conservative encounter-based approach” to risk adjustment positions it well under revised frameworks. In discussion of possible future risk-adjustment reforms, Sim referenced ACO REACH’s “phasing in of an AI-inferred risk score” concept and said such approaches could help standardize risk determination.
Basho reaffirmed full-year 2026 guidance, including revenue of $3.8 billion to $4.1 billion, adjusted EBITDA of $250 million to $280 million, and free cash flow of $105 million to $132.5 million. For the second quarter, Astrana expects revenue of $965 million to $1.0 billion and adjusted EBITDA of $65 million to $70 million.
Management said the full-year outlook continues to assume conservative Medicaid membership trends and “zero contribution from HQAF.” In Q&A, the company said it expects more clarity on the Quality Assurance Fund later in the year, likely in the third or fourth quarter.
About Astrana Health (NASDAQ:ASTH)
Astrana Health, Inc, Inc, a physician-centric technology-powered healthcare management company, provides medical care services in the United States. It operates through three segments: Care Partners, Care Delivery, and Care Enablement. The company is leveraging its proprietary population health management and healthcare delivery platform, operates an integrated, value-based healthcare model which empowers the providers in its network to deliver care to its patients. It offers care coordination services to patients, families, primary care physicians, specialists, acute care hospitals, alternative sites of inpatient care, physician groups, and health plans.