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Business Combinations and Goodwill | 9 Months Ended
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Sep. 30, 2025
Business Combination and Asset Acquisition [Abstract] |
Business Combinations and Goodwill | 3. Business Combinat ions and Goodwill Certain businesses and assets of Prospect Medical Holdings, Inc. (“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 (“FRMC”), pursuant to the Asset and Equity Purchase Agreement, dated November 8, 2024 (such assets and equity collectively, “Prospect”). Prospect is a provider-centric risk-bearing healthcare company that operates an integrated healthcare delivery platform enabling a network of over 11,000 providers to successfully participate in value-based care arrangements, thus empowering them to deliver accessible, high-quality care to patients in a cost-effective manner. Prospect enables providers to deliver payer-agnostic, patient-centered care across Medicare Advantage, Medicaid, and Commercial lines of business. Prospect also operates a California Restricted Knox-Keene-licensed health plan, a management services organization, a specialty pharmacy, and a fully-accredited acute care hospital. The acquisition significantly expanded the Company’s provider network and enhanced our ability to offer increased access, quality, and value to our members. During the three and nine months ended September 30, 2025, the Company incurred $10.3 million and $20.4 million, respectively, of acquisition-related costs associated with the transaction. The Company has recorded these costs as general and administrative expenses within the accompanying condensed consolidated statements of income. 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. The Company is currently finalizing its valuation of the acquired assets and liabilities. Preliminary amounts have been recorded and are subject to change, primarily for accounts that include the use of estimates, such as medical liabilities, collectability of receivables, and tax liabilities. The final purchase price allocation may result in adjustments to the amounts presented. The following table summarizes the purchase price allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (in thousands):
|  | Prospect |
Purchase consideration: |  | $ | 674,901 |
Assets: |  |  |
Cash and cash equivalents |  | $ | 124,834 |
Receivables, net |  |  | 76,247 |
Other receivables |  |  | 310 |
Prepaid expenses and other current assets |  |  | 7,904 |
Loan receivable |  |  | 794 |
Property and equipment |  |  | 37,501 |
Intangible assets |  |  | 193,500 |
Goodwill |  |  | 442,190 |
Loans receivable, non-current |  |  | 278 |
Operating lease right-of-use assets |  |  | 4,406 |
Other assets |  |  | 6,117 |
Total assets acquired |  | $ | 894,081 |
Liabilities: |  |  |
Accounts payable and accrued expenses |  | $ | 85,388 |
Medical liabilities |  |  | 120,759 |
Operating lease liabilities |  |  | 1,733 |
Other liabilities |  |  | 823 |
Deferred tax liability |  |  | 4,903 |
Operating lease liabilities, net of current portion |  |  | 2,673 |
Other long-term liabilities |  |  | 2,901 |
Total liabilities assumed |  | $ | 219,180 |
Total net assets acquired |  | $ | 674,901 |
The table below represents intangible assets acquired for the Prospect (in thousands):
|  | Fair Value |  |  | Useful Life (Years)
License |  | $ | 1,900 |  |  | Indefinite
Member relationships |  |  | 123,500 |  |  | 12 years
Network relationships |  |  | 53,800 |  |  | 15 years
Other(1) |  |  | 14,300 |  |  | 3-10 years
Total intangible assets acquired |  | $ | 193,500 |  |  |
(1) Other consists of management contracts and a trade name. I Health, Inc. On March 31, 2024, a wholly owned subsidiary of the Company acquired a 25% equity interest in I Health, Inc. (“I Health”), a management service organization, and accounted for the investment under the equity method. The transaction included a call option, that was amended in May 2025, for the Company to purchase an additional 37.5% equity interest from and after March 31, 2025 and the remaining 37.5% from and after March 31, 2026 (“I Health Call Option”). See Note 18 — “Fair Value Measurements of Financial Instruments” for additional information on the I Health Call Option. On July 1, 2025, the Company exercised the first call option to purchase an additional 37.5% equity interest in I Health, resulting in 62.5% ownership. The Company became the primary beneficiary with majority controlling interest and accounted for the acquisition as a step acquisition, recognizing $5.1 million of goodwill. Total consideration was $5.8 million, including a $0.5 million cash payment, the $6.2 million fair value of the previously held call option, $3.8 million equity method investment, and $5.4 million of noncontrolling interest, offset by the effective settlement of the $10.0 million note payable to I Health. Goodwill The acquisitions were accounted for under the acquisition method of accounting. The fair value of the consideration for the acquired companies 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 acquisitions that can be leveraged to expand our network and enhance our value and quality of care to our members. Of the total goodwill recognized from the acquisitions that closed in 2025, $250.0 million was assigned to the Care Partners segment, $55.5 million was assigned to the Care Delivery segment, and $141.7 million was assigned to the Care Enablement segment. Transaction costs associated with business acquisitions are expensed as they are incurred. 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 not more than one year from the date of acquisition. The total amount of goodwill that is expected to be deductible for tax purposes is $423.8 million for acquisitions closed in 2025, subject to certain limitations. The Company had no impairment of its goodwill during the three and nine months ended September 30, 2025 and 2024. The change in the carrying value of goodwill for the nine months ended September 30, 2025, was as follows (in thousands):
|  | Amount |
Balance at January 1, 2025 |  | $ | 419,253 |
Acquisitions |  |  | 447,163 |
Adjustments |  |  | (3,150 | )
Balance at September 30, 2025 |  | $ | 863,266 |
Measurement Period Adjustments for Prior Period Acquisitions Measurement period adjustments for the nine months ended September 30, 2025 impacted receivables, net; other receivables; accounts payable and accrued expenses; and medical liabilities for Advanced Health Management Systems, L.P. (“AHMS”) and Collaborative Health Systems, LLC, Golden Triangle Physician Alliance, and Heritage Physician Networks (collectively, “CHS”). As of September 30, 2025, the Company finalized the purchase price allocation for AHMS and is in the process of finalizing CHS. Therefore, the CHS balances are subject to change as a result of any working capital adjustments, primarily for the finalization of medical liabilities and CHS’ participation in government savings programs for the 2024 performance year. CHS On October 4, 2024, the Company and its affiliated professional entity acquired all of the outstanding membership interests relating to CHS. CHS partners with independent primary care physicians and accountable care organizations to provide care for Medicare members and comprehensive support for its physician partners by providing management services, risk contracting, and population health capabilities, including actionable data and other tools, to deliver care coordination and closure of gaps in care. Total consideration for the acquisition was $47.5 million, consisting of $35.3 million cash funded upon the close date, $6.9 million due to the seller based on estimated working capital adjustments, contingent consideration fair valued at $5.2 million, and $0.1 million of replacement restricted stock awards. See Note 18 — “Fair Value Measurements of Financial Instruments” for additional information on contingent consideration. AHMS On March 31, 2024, a wholly owned subsidiary of the Company, purchased all of the outstanding general and limited partnership interests of AHMS. AHMS’s wholly owned subsidiary operates a Restricted Knox-Keene licensed health plan in Los Angeles, California. The total consideration for the acquisition was $60.9 million, consisting of $63.9 million cash funded upon the close date and $3.0 million due from the seller based on estimated working capital adjustments. The following table summarizes the purchase price allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (in thousands):
|  | CHS |  |  | AHMS |
Total purchase consideration: |  |  |  |  |  |
Cash paid |  | $ | 35,322 |  |  | $ | 63,935 |
Purchase price due to (from) seller |  |  | 6,944 |  |  |  | (2,995 | )
Contingent consideration |  |  | 5,154 |  |  |  | — |
Common stock issued and replacement awards |  |  | 118 |  |  |  | — |
|  | $ | 47,538 |  |  | $ | 60,940 |
Assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 4,556 |  |  | $ | 33,950 |
Receivables |  |  | 102,447 |  |  |  | 11,007 |
Other receivables |  |  | 36,766 |  |  |  | — |
Prepaid expenses and other current assets |  |  | 356 |  |  |  | 36 |
Intangible assets |  |  | 14,200 |  |  |  | 23,600 |
Goodwill |  |  | 9,161 |  |  |  | 25,571 |
Investments in other entities – equity method |  |  | 3,121 |  |  |  | — |
Restricted cash |  |  | — |  |  |  | 300 |
Total assets acquired |  | $ | 170,607 |  |  | $ | 94,464 |
Liabilities: |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 69,258 |  |  | $ | 13,001 |
Medical liabilities |  |  | 53,889 |  |  |  | 14,093 |
Non-controlling interest |  |  | (78 | ) |  |  | — |
Deferred tax liability |  |  | — |  |  |  | 6,430 |
Total liabilities assumed |  | $ | 123,069 |  |  | $ | 33,524 |
Total net assets acquired |  | $ | 47,538 |  |  | $ | 60,940 |
Unaudited Pro Forma Financial Information Operating results of the acquired businesses have been included in our condensed consolidated financial statements. For the period from the acquisition dates through September 30, 2025, the total revenue and net income of our acquisitions closed in 2025, in aggregate, were $308.0 million and $13.1 million, respectively. The pro forma financial information in the table below presents the combined results of the Company and the acquisitions that occurred during the three and nine months ended September 30, 2025 and 2024, as if the acquisitions had occurred on January 1, 2024. 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, 2024 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.
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(in thousands, except per share amounts) |  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Total revenue |  | $ | 956,048 |  |  | $ | 965,839 |  |  | $ | 2,861,725 |  |  | $ | 2,939,243 |
Net income (loss) attributable to Astrana Health, Inc. |  | $ | 373 |  |  | $ | (8,975 | ) |  | $ | (4,780 | ) |  | $ | 27,577 |
Earnings (loss) per share – basic |  | $ | 0.01 |  |  | $ | (0.19 | ) |  | $ | (0.10 | ) |  | $ | 0.58 |
Earnings (loss) per share – diluted |  | $ | 0.01 |  |  | $ | (0.19 | ) |  | $ | (0.10 | ) |  | $ | 0.57 |

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