8-K
Astrana Health, Inc. (ASTH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 7, 2024
ASTRANA HEALTH, INC.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-37392 | 95-4472349 |
|---|---|---|
| (State or Other Jurisdiction | (Commission | (I.R.S. Employer |
| of Incorporation) | File Number) | Identification No.) |
1668 S. Garfield Avenue, 2nd Floor, Alhambra, California 91801
(Address of Principal Executive Offices) (Zip Code)
(626) 282-0288
Registrant’s Telephone Number, Including Area Code
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | 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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ¨
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On August 7, 2024, Astrana Health, Inc. (the “Company”) issued a press release announcing its financial results for the three and six months ended June 30, 2024. A copy of the press release and supplemental data is furnished with this Current Report on Form 8-K as Exhibit 99.1 and Exhibit 99.2, respectively, and incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information furnished pursuant to this Item 2.02, including Exhibit 99.1 and Exhibit 99.2 furnished herewith, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release of Astrana Health, Inc. Regarding its Financial Results for the Three and Six Months Ended June 30, 2024, dated August 7, 2024. |
| 99.2 | Supplemental Data of Astrana Health, Inc., dated August 7, 2024. |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document). |
SIGNATURES
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 hereunto duly authorized.
| ASTRANA HEALTH, INC. | ||
|---|---|---|
| Date: August 7, 2024 | By: | /s/ Brandon K. Sim |
| Name: | Brandon K. Sim | |
| Title: | Chief Executive Officer and President |
Exhibit 99.1
Astrana Health, Inc. Reports Second Quarter2024 Results
Company to Host Conference Call on Wednesday,August 7, 2024, at 2:30 p.m. PT/5:30 p.m. ET
ALHAMBRA, Calif., August 7, 2024 /PRNewswire/ -- Astrana Health, Inc. (“Astrana,” and together with its subsidiaries and affiliated entities, the “Company”) (NASDAQ: ASTH), a leading provider-centric, technology-powered healthcare company enabling providers to deliver accessible, high-quality, and high-value care to all, today announced its consolidated financial results for the second quarter ended June 30, 2024.
“We believe our strong second quarter results and entry into new states reflect the progress, scale, and momentum we continue to build at Astrana as we drive towards our mission to empower entrepreneurial providers and deliver great healthcare to local communities across the country. Strong revenue and adjusted EBITDA growth in the quarter were driven by continued organic growth in our Care Partners segment, the successful integration of the Community Family Care acquisition, and continued success in managing total cost of care for our one million members in value-based, risk-bearing arrangements. Our entry into Arizona and Hawai'i, partnerships with Anthem Blue Cross and Elation Health, and our agreement to acquire Collaborative Health Systems are anticipated to continue driving strong, sustainable, and profitable growth for the Astrana platform. We are excited to continue proving that value-based care can be done successfully in communities across the country," said President and CEO of Astrana Health, Brandon K. Sim.
Financial Highlights for Second Quarter EndedJune 30, 2024:
All comparisons are to the quarter ended June 30,2023 unless otherwise stated.
| • | Total revenue of $486.3 million, up 40% from $348.2 million |
|---|---|
| • | Care Partners revenue of $463.3 million, up 44% from $321.8 million |
| --- | --- |
| • | Net income attributable to Astrana of $19.2 million, up 46% from $13.2 million |
| --- | --- |
| • | Earnings per share - diluted (“EPS - diluted”) of $0.40, up 43% from $0.28 per share |
| --- | --- |
| • | Adjusted EBITDA of $47.9 million, up 34% from $35.8 million |
| --- | --- |
Financial Highlights for Six Months Ended June 30,2024:
All comparisons are to the six months endedJune 30, 2023 unless otherwise stated.
| • | Total revenue of $890.6 million, up 30% from $685.5 million |
|---|---|
| • | Care Partners revenue of $845.6 million, up 33% from $636.4 million |
| --- | --- |
| • | Net income attributable to Astrana of $34.0 million, up 29% from $26.3 million |
| --- | --- |
| • | EPS - diluted of $0.71, up 27% from $0.56 per share |
| --- | --- |
| • | Adjusted EBITDA of $90.2 million, up 38% from $65.6 million |
| --- | --- |
Recent Operating Highlights
| • | On May 24, 2024, the Company entered the state of Arizona through its Care Partners segment, partnering<br>with an anchor primary care physician group with over 45 primary care providers serving around 50,000 patients across Medicare, Medicaid,<br>and Commercial lines of business. The group is expected to be onboarded onto Astrana’s Care Enablement platform by the end of 2024. | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| • | On July 15, 2024, the Company announced a new partnership with Anthem Blue Cross to build and operate<br>primary care clinics aimed at improving access to high-quality healthcare for their shared members. | ||||||||||||||||||
| --- | --- | ||||||||||||||||||
| • | On July 17, 2024, the Company announced its strategic partnership with Elation Health, a technology<br>company whose electronic health record platform is used nationwide by more than 32,000 clinicians. Together, the two organizations will<br>aim to empower primary care providers via value-based arrangements, leveraging both Astrana and Elation’s technology platform and<br>solutions. As part of the partnership, Astrana entered the state of Hawai'i, partnering with a provider organization of over 100 primary<br>care providers serving just under 20,000 primarily Medicare patients. Astrana will serve as the group's exclusive care enablement provider,<br>with providers anticipated to fully integrate onto Astrana’s Care Enablement platform by the end of the third quarter of 2024. | ||||||||||||||||||
| --- | --- | ||||||||||||||||||
| • | On July 24, 2024, the Company entered into a definitive agreement to acquire Collaborative Health<br>Systems ("CHS"), a value-based care enablement organization serving around 2,500 primary care providers and more than 100,000<br>beneficiaries and a company of Centene Corporation, a leading healthcare enterprise focused on transforming the health of the communities<br>it serves. The acquisition is intended to facilitate the expansion of both Astrana's and CHS' payer-agnostic care delivery capabilities,<br>which serve members across all lines of business, and further empower CHS' providers in the delivery of care to the communities it serves.<br>Astrana and Centene also share a mutual commitment to providing high-quality and coordinated care to members and will continue to work<br>together to expand the scope of their existing value-based partnerships in order to advance that joint mission. The acquisition is expected<br>to close during the fourth quarter of 2024, subject to customary closing conditions and regulatory approval. | ||||||||||||||||||
| --- | --- | ||||||||||||||||||
| Three<br> Months Ended June 30, 2024 | |||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Care<br><br> Partners | Care<br><br> Delivery | Care<br><br> Enablement | Other | Intersegment<br><br> Elimination | Corporate<br><br> Costs | Consolidated<br><br> Total | ||||||||||||
| Total revenues | $ | 463,277 | $ | 34,857 | $ | 36,172 | — | $ | (48,041 | ) | — | $ | 486,265 | ||||||
| % change vs. prior year quarter | 44 | % | 32 | % | 3 | % | |||||||||||||
| Cost of services | 379,413 | 26,252 | 19,939 | — | (12,799 | ) | — | 412,805 | |||||||||||
| General<br> and administrative^(1)^ | 43,541 | 6,780 | 9,315 | — | (35,247 | ) | 19,005 | 43,394 | |||||||||||
| Total expenses | 422,954 | 33,032 | 29,254 | — | (48,046 | ) | 19,005 | 456,199 | |||||||||||
| Income<br> (loss) from operations | $ | 40,323 | $ | 1,825 | $ | 6,918 | $ | — | $ | 5 | ^(2)^ | $ | (19,005 | ) | $ | 30,066 | |||
| % change vs. prior year quarter | 45 | % | 221 | % | (9 | )% |
^(1)^ Balance includes general and administrative expenses and depreciation and amortization.
^(2)^ Income from operations for the intersegment elimination represents rental income from segments renting from other segments. Rental income is presented within other income which is not presented in the table.
2024 Guidance:
Taking all of Astrana's recent growth initiatives and capital allocation strategy into account, the Company is updating its revenue, net income attributable to Astrana, and EPS - diluted guidance for 2024 while reiterating guidance for Adjusted EBITDA for the year ending December 31, 2024.
| ($ in millions, except per share amounts) | 2024 Guidance Range | |||
|---|---|---|---|---|
| Low | High | |||
| Total revenue | $ | 1,750 | $ | 1,850 |
| Net income attributable to Astrana Health, Inc. | $ | 54 | $ | 66 |
| Adjusted EBITDA | $ | 165 | $ | 185 |
| EPS – diluted | $ | 1.12 | $ | 1.36 |
See “Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA” and “Use of Non-GAAP Financial Measures” below for additional information. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. See “Forward-Looking Statements” below for additional information.
Conference Call and Webcast Information:
Astrana will host a conference call at 2:30 p.m. PT/5:30 p.m. ET today (Wednesday, August 7, 2024), during which management will discuss the results of the second quarter ended June 30, 2024. To participate in the conference call, please use the following dial-in numbers about 5 minutes prior to the scheduled conference call time:
| U.S. & Canada (Toll-Free): | +1 (888) 437-3179 |
|---|---|
| International (Toll): | +1 (862) 298-0702 |
The conference call can also be accessed via webcast at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=pihVtJqf.
An accompanying slide presentation will be available in PDF format on the “IR Calendar” page of the Company’s website (https://ir.astranahealth.com/news-events/ir-calendar) after issuance of the earnings release and will be furnished as an exhibit to Astrana’s current report on Form 8-K to be filed with the SEC, accessible at www.sec.gov.
Those who are unable to attend the live conference call may access the recording at the above webcast link, which will be made available shortly after the conclusion of the call.
Note About Consolidated Entities
The Company consolidates entities in which it has a controlling financial interest. The Company consolidates subsidiaries in which it holds, directly or indirectly, more than 50% of the voting rights, and variable interest entities (“VIEs”) in which the Company is the primary beneficiary. Noncontrolling interests represent third party equity ownership interests in the Company’s consolidated entities (including certain VIEs). The amount of net income attributable to noncontrolling interests is disclosed in the Company’s consolidated statements of income.
NoteAbout Stockholders’ Equity, Certain Treasury Stock and Earnings Per Share
As of the date of this press release, 41,048 holdback shares have not been issued to certain former shareholders of the Company’s subsidiary, Astrana Health Management, Inc. (“AHM”), formerly known as Network Medical Management, Inc., who were AHM shareholders at the time of closing of the merger, as they have yet to submit properly completed letters of transmittal to Astrana in order to receive their pro rata portion of Astrana’s common stock as contemplated under that certain Agreement and Plan of Merger, dated December 21, 2016, among Astrana, AHM, Apollo Acquisition Corp. (“Merger Subsidiary”) and Kenneth Sim, M.D., as amended, pursuant to which Merger Subsidiary merged with and into AHM, with AHM as the surviving corporation. 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 merger. The Company’s consolidated financial statements have treated such shares of common stock as outstanding, given the receipt of the letter of transmittal is considered perfunctory and Astrana is legally obligated to issue these shares in connection with the merger.
Shares of Astrana’s common stock owned by Allied Physicians of California, a Professional Medical Corporation (“APC”), a VIE of the Company, are legally issued and outstanding but excluded from shares of common stock outstanding in the Company’s consolidated financial statements, as such shares are treated as treasury shares for accounting purposes. Such shares, therefore, are not included in the number of shares of common stock outstanding used to calculate the Company’s earnings per share.
About Astrana Health, Inc.
Astrana is a leading provider-centric, technology-powered healthcare company enabling providers to deliver accessible, high-quality, and high-value care to all. Leveraging its proprietary end-to-end technology solutions, Astrana operates an integrated healthcare delivery platform that enables providers to successfully participate in value-based care arrangements, thus empowering them to deliver high quality care to patients in a cost-effective manner.
Headquartered in Alhambra, California, Astrana serves over 10,000 providers and approximately one million patients in value-based care arrangements. Its subsidiaries and affiliates include management services organizations (MSOs), a network of risk-bearing organizations (RBOs) that encompasses independent practice associations (IPAs), accountable care organizations (ACOs), and state-specific entities such as Restricted Knox-Keene licensed health plans in California, and care delivery entities across primary, multi-specialty, and ancillary care. For more information, please visit www.astranahealth.com.
Forward-Looking Statements
Thispress release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, such asstatements about the Company’s guidance for the year ending December 31, 2024, ability to meet operational goals, ability tomeet expectations in deployment of care coordination and management capabilities, ability to decrease cost of care while improving qualityand outcomes, ability to deliver sustainable revenue and EBITDA growth as well as long-term value, ability to respond to the changingenvironment, and successful implementation of strategic growth plans, acquisition strategy, including successfully completingand realizing the benefits of anticipated acquisitions, and merger and acquisition integration efforts. Forward-looking statements reflectcurrent views with respect to future events and financial performance and therefore cannot be guaranteed. Such statements are based onthe current expectations and certain assumptions of the Company’s management, and some or all of such expectations and assumptionsmay not materialize or may vary significantly from actual results. Actual results may also vary materially from forward-looking statementsdue to risks, uncertainties and other factors, known and unknown, including the risk factors described from time to time in the Company’sreports to the Securities and Exchange Commission, including, without limitation the risk factors discussed in the Company’s AnnualReport on Form 10-K for the year ended December 31, 2023, and any subsequent quarterly reports on Form 10-Q.
FOR MORE INFORMATION, PLEASE CONTACT:
Investor Relations
(626) 943-6491
investors@astranahealth.com
ASTRANA HEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| June 30,<br> 2024 | December 31,<br> 2023 | ||||
|---|---|---|---|---|---|
| (Unaudited) | |||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | $ | 325,310 | $ | 293,807 | |
| Investment in marketable securities | 2,383 | 2,498 | |||
| Receivables, net | 132,323 | 76,780 | |||
| Receivables, net – related parties | 69,269 | 58,980 | |||
| Income taxes receivable | 22,005 | 10,657 | |||
| Other receivables | 1,642 | 1,335 | |||
| Prepaid expenses and other current assets | 17,417 | 17,450 | |||
| Total current assets | 570,349 | 461,507 | |||
| Non-current assets | |||||
| Land, property and equipment, net | 10,305 | 7,171 | |||
| Intangible assets, net | 116,231 | 71,648 | |||
| Goodwill | 409,581 | 278,831 | |||
| Income taxes receivable | 15,943 | 15,943 | |||
| Loans receivable, non-current | 49,163 | 26,473 | |||
| Investments in other entities – equity method | 33,276 | 25,774 | |||
| Investments in privately held entities | 8,896 | 6,396 | |||
| Restricted cash | 646 | 345 | |||
| Operating lease right-of-use assets | 28,792 | 37,396 | |||
| Other assets | 9,289 | 1,877 | |||
| Total non-current assets | 682,122 | 471,854 | |||
| Total assets^(1)^ | $ | 1,252,471 | $ | 933,361 | |
| Liabilities, mezzanine equity and equity | |||||
| Current liabilities | |||||
| Accounts payable and accrued expenses | $ | 95,757 | $ | 59,949 | |
| Fiduciary accounts payable | 7,321 | 7,737 | |||
| Medical liabilities | 151,482 | 106,657 | |||
| Dividend payable | 638 | 638 | |||
| Finance lease liabilities | 591 | 646 | |||
| Operating lease liabilities | 4,884 | 4,607 | |||
| Current portion of long-term debt | 17,000 | 19,500 | |||
| Other liabilities | 32,152 | 18,940 | |||
| Total current liabilities | 309,825 | 218,674 | |||
| Non-current liabilities | |||||
| Deferred tax liability | 3,250 | 4,072 | |||
| Finance lease liabilities, net of current portion | 879 | 1,033 | |||
| Operating lease liabilities, net of current portion | 27,092 | 36,289 | |||
| Long-term debt, net of current portion and deferred financing costs | 425,006 | 258,939 | |||
| Other long-term liabilities | 7,723 | 3,586 | |||
| Total non-current liabilities | 463,950 | 303,919 | |||
| Total liabilities^(1)^ | 773,775 | 522,593 | |||
| June 30, | December 31, | ||||
| --- | --- | --- | --- | --- | --- |
| 2024 | 2023 | ||||
| (Unaudited) | |||||
| Commitments and contingencies | |||||
| Mezzanine equity | |||||
| Noncontrolling interest in Allied Physicians of California, a Professional Medical Corporation ("APC") | (204,312 | ) | (205,883 | ) | |
| Stockholders’ equity | |||||
| Series A Preferred stock, 0.001 par value per share; 5,000,000 shares authorized (inclusive of all preferred stock, including Series B Preferred stock); zero issued and zero outstanding as of June 30, 2024 and 1,111,111 issued and zero outstanding as of December 31, 2023 | — | — | |||
| Series B Preferred stock, 0.001 par value per share; 5,000,000 shares authorized (inclusive of all preferred stock, including Series A Preferred stock); zero issued and zero outstanding as of June 30, 2024 and 555,555 issued and zero outstanding as of December 31, 2023 | — | — | |||
| Common stock, 0.001 par value per share; 100,000,000 shares authorized, 47,541,549 and 46,843,743 shares issued and outstanding, excluding 10,584,340 and 10,584,340 treasury shares, as of June 30, 2024 and December 31, 2023, respectively | 48 | 47 | |||
| Additional paid-in capital | 401,686 | 371,037 | |||
| Retained earnings | 277,140 | 243,134 | |||
| Total stockholders’ equity | 678,874 | 614,218 | |||
| Non-controlling interest | 4,134 | 2,433 | |||
| Total equity | 683,008 | 616,651 | |||
| Total liabilities, mezzanine equity and equity | 1,252,471 | $ | 933,361 |
All values are in US Dollars.
^(1)^The Company’s condensed consolidated balance sheets include the assets and liabilities of its consolidated VIEs. The condensed consolidated balance sheets include total assets that can be used only to settle obligations of the Company’s consolidated VIEs totaling $671.9 million and $540.8 million as of June 30, 2024 and December 31, 2023, respectively, and total liabilities of the Company’s consolidated VIEs for which creditors do not have recourse to the general credit of the primary beneficiary of $175.8 million and $146.0 million as of June 30, 2024 and December 31, 2023, respectively. These VIE balances do not include $516.4 million of investment in affiliates and $72.8 million of amounts due to affiliates as of June 30, 2024, and $273.2 million of investment in affiliates and $107.3 million of amounts due to affiliates as of December 31, 2023, as these are eliminated upon consolidation and not presented within the condensed consolidated balance sheets.
ASTRANA HEALTH, INC.
CONDENSED****CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
| Three Months Ended<br> June 30, | Six Months Ended<br> June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Revenue | ||||||||||||
| Capitation, net | $ | 442,574 | $ | 300,549 | $ | 808,484 | $ | 600,753 | ||||
| Risk pool settlements and incentives | 18,408 | 20,121 | 35,785 | 33,583 | ||||||||
| Management fee income | 1,604 | 12,493 | 5,682 | 22,389 | ||||||||
| Fee-for-service, net | 19,959 | 13,262 | 35,896 | 25,324 | ||||||||
| Other revenue | 3,720 | 1,784 | 4,774 | 3,404 | ||||||||
| Total revenue | 486,265 | 348,209 | 890,621 | 685,453 | ||||||||
| Operating expenses | ||||||||||||
| Cost of services, excluding depreciation and amortization | 412,805 | 292,876 | 743,204 | 582,273 | ||||||||
| General and administrative expenses | 35,953 | 24,056 | 74,675 | 45,236 | ||||||||
| Depreciation and amortization | 7,441 | 4,248 | 12,537 | 8,541 | ||||||||
| Total expenses | 456,199 | 321,180 | 830,416 | 636,050 | ||||||||
| Income from operations | 30,066 | 27,029 | 60,205 | 49,403 | ||||||||
| Other income (expense) | ||||||||||||
| Income from equity method investments | 902 | 2,723 | 1,534 | 5,207 | ||||||||
| Interest expense | (8,587 | ) | (3,632 | ) | (16,172 | ) | (6,901 | ) | ||||
| Interest income | 3,513 | 3,327 | 7,509 | 6,335 | ||||||||
| Unrealized (loss) gain on investments | (123 | ) | 859 | 976 | (5,533 | ) | ||||||
| Other income | 6,126 | 1,185 | 1,849 | 2,389 | ||||||||
| Total other income (expenses), net | 1,831 | 4,462 | (4,304 | ) | 1,497 | |||||||
| Income before provision for income taxes | 31,897 | 31,491 | 55,901 | 50,900 | ||||||||
| Provision for income taxes | 10,031 | 14,009 | 17,173 | 20,930 | ||||||||
| Net income | 21,866 | 17,482 | 38,728 | 29,970 | ||||||||
| Net income attributable to non-controlling interest | 2,695 | 4,312 | 4,722 | 3,668 | ||||||||
| Net income attributable to Astrana Health, Inc. | $ | 19,171 | $ | 13,170 | $ | 34,006 | $ | 26,302 | ||||
| Earnings per share – basic | $ | 0.40 | $ | 0.28 | $ | 0.72 | $ | 0.57 | ||||
| Earnings per share – diluted | $ | 0.40 | $ | 0.28 | $ | 0.71 | $ | 0.56 |
EBITDA
Set forth below are reconciliations of Net Income to EBITDA and Adjusted EBITDA as well as the reconciliation to Adjusted EBITDA margin for the three and six months ended June 30, 2024 and 2023. The Company defines Adjusted EBITDA margin as Adjusted EBITDA over total revenue.
| Three Months Ended<br> June 30, | Six Months Ended<br> June 30, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net income | $ | 21,866 | $ | 17,482 | $ | 38,728 | $ | 29,970 | ||||||||
| Interest expense | 8,587 | 3,632 | 16,172 | 6,901 | ||||||||||||
| Interest income | (3,513 | ) | (3,327 | ) | (7,509 | ) | (6,335 | ) | ||||||||
| Provision for income taxes | 10,031 | 14,009 | 17,173 | 20,930 | ||||||||||||
| Depreciation and amortization | 7,441 | 4,248 | 12,537 | 8,541 | ||||||||||||
| EBITDA | 44,412 | 36,044 | 77,101 | 60,007 | ||||||||||||
| Income from equity method investments | (902 | ) | (297 | ) | (1,534 | ) | (546 | ) | ||||||||
| Other, net | (2,983 | ) | ^(1)^ | (1,618 | ) | ^(2)^ | 1,457 | ^(3)^ | (216 | ) | ^(2)^ | |||||
| Stock-based compensation | 7,390 | 4,213 | 13,138 | 7,658 | ||||||||||||
| APC excluded asset costs | — | (2,570 | ) | — | (1,304 | ) | ||||||||||
| Adjusted EBITDA | $ | 47,917 | $ | 35,772 | $ | 90,162 | $ | 65,599 | ||||||||
| Total revenue | $ | 486,265 | $ | 348,209 | $ | 890,621 | $ | 685,453 | ||||||||
| Adjusted EBITDA margin | 10 | % | 10 | % | 10 | % | 10 | % | ||||||||
| ^(1)^ | Other, net for the three months ended June 30, 2024 relates to non-cash changes related to change<br>in the fair value of the Company’s Collar Agreement, transaction costs incurred for our investments and tax restructuring fees,<br>and reimbursement from a related party of the Company for taxes associated with the Excluded Assets spin-off. | |||||||||||||||
| --- | --- | |||||||||||||||
| ^(2)^ | Other, net for the three and six months ended June 30, 2023 relates to non-cash changes in the fair<br>value of our financing obligation to purchase the remaining equity interests in one of our investments, changes in the fair value of our<br>contingent liabilities, and changes in the fair value of the Company's Collar Agreement. | |||||||||||||||
| --- | --- | |||||||||||||||
| ^(3)^ | Other, net for the six months ended June 30, 2024 relates to financial guarantee via a letter of<br>credit that we provided almost three years ago in support of two local provider-led ACOs, non-cash changes related to change in the fair<br>value of our financing obligation to purchase the remaining equity interests in one of our investments, non-cash changes related to change<br>in the fair value of the Company’s Collar Agreement, transaction costs incurred for our investments and tax restructuring fees,<br>and reimbursement from a related party of the Company for taxes associated with the Excluded Assets spin-off. | |||||||||||||||
| --- | --- |
Guidance Reconciliation of Net Income toEBITDA and Adjusted EBITDA
| 2024 Guidance Range | ||||||
|---|---|---|---|---|---|---|
| (in thousands) | Low | High | ||||
| Net income | $ | 62,500 | $ | 75,500 | ||
| Interest expense | 18,000 | 18,000 | ||||
| Provision for income taxes | 28,000 | 35,000 | ||||
| Depreciation and amortization | 28,500 | 28,500 | ||||
| EBITDA | 137,000 | 157,000 | ||||
| Income from equity method investments | (5,000 | ) | (5,000 | ) | ||
| Other, net | 6,000 | 6,000 | ||||
| Stock-based compensation | 27,000 | 27,000 | ||||
| Adjusted EBITDA | $ | 165,000 | $ | 185,000 |
Use of Non-GAAP Financial Measures
This press release contains the non-GAAP financial measures EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin, of which the most directly comparable financial measure presented in accordance with U.S. generally accepted accounting principles (“GAAP”) is net income. 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. The Company uses Adjusted EBITDA as a supplemental performance measure of our operations, for financial and operational decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization, excluding income or loss from equity method investments, non-recurring and non-cash transactions, stock-based compensation, and APC excluded assets costs. The Company defines Adjusted EBITDA margin as Adjusted EBITDA over total revenue.
The Company believes 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 the Company’s ongoing operating performance. In addition, these non-GAAP financial measures are among those indicators the Company uses 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 both EBITDA and Adjusted EBITDA differently, limiting the usefulness of these measures for comparative purposes. To the extent this release contains historical or future non-GAAP financial measures, the Company has provided corresponding GAAP financial measures for comparative purposes. The reconciliation between certain GAAP and non-GAAP measures is provided above.
Exhibit 99.2
Exhibit 99.2