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Business Combinations and Goodwill
 9 Months Ended
Sep. 30, 2025
Business Combination and Asset Acquisition [Abstract]  
Business Combinations and Goodwill
3.
Business Combinations 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