EX-99.3 5 tm2525148d1_ex99-3.htm EXHIBIT 99.3

Exhibit 99.3

ASTRANA HEALTH, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On July 1, 2025 (the “Closing”), Astrana Health, Inc. (the “Company” or “Astrana”) completed the acquisition of all of the outstanding equity interests of Prospect Health Plan, Inc. (“PHP”) and Alta Newport Hospital, LLC (d/b/a Foothill Regional Medical Center) (“Alta”), and substantially all the assets of certain direct and indirect subsidiaries of PHP Holdings, LLC (“PHPH”), pursuant to the Asset and Equity Purchase Agreement (the “Purchase Agreement”), initially entered into on November 8, 2024, by and among the Company and certain of its direct and indirect subsidiaries, PHPH, PHS Holdings, LLC (“PHS”), Prospect Intermediate Holdings, LLC (“PIH” and, together with PHPH, Prospect Provider Group RI, LLC, and PHS, the “Prospect Equity Sellers”), certain other related entities party thereto (such entities, the “Prospect Asset Sellers” and, together with the Prospect Equity Sellers, the “Sellers”) and Prospect Medical Holdings, Inc. (“Prospect”), as Seller Representative (such transaction, the “Acquisition”). The aggregate purchase price for the Acquisition consisted of approximately $678.2 million in cash transferred at Closing.

To finance the Acquisition, Company borrowed $707.3 million from a five-year delayed draw term loan credit facility (the “DDTL A”) with an original available amount of up to $745.0 million pursuant to the Second Amended and Restated Credit Agreement, dated as of February 26, 2025, by and among the Company, as borrower, the lenders from time to time party thereto, and Truist Bank, as administrative agent for the lenders, as issuing bank and as swingline lender (the “Financing”, and together with the Acquisition, the “Transactions”).

The following unaudited pro forma condensed combined financial information presents the financial information of Astrana, adjusted to give effect to the Transactions. The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X.

The following unaudited pro forma condensed combined financial information combines the historical consolidated financial statements of Astrana and the historical combined and consolidated financial statements of PHP Holdings, LLC, Prospect Health Services RI, Inc., and Prospect Provider Group RI, LLC (which is substantially reflective of the assets and entities acquired in the Acquisition and are referred to hereinafter as the “Prospect Business”). Astrana’s fiscal year ends on December 31, and the fiscal year end of the Prospect Business is September 30. Although Astrana’s and the Prospect Business’s fiscal year ends differ by only one fiscal quarter, the Company has elected to prepare the unaudited pro forma condensed combined statements of income utilizing the historical statements of operations of the Prospect Business, adjusted to conform to the same calendar periods as Astrana’s fiscal year and interim period. The unaudited pro forma condensed combined balance sheet as of March 31, 2025 combines the historical balance sheets of Astrana and the Prospect Business as of March 31, 2025 on a pro forma basis as if the Transactions had been consummated on March 31, 2025. The unaudited pro forma condensed combined statements of income for the year ended December 31, 2024 and the three months ended March 31, 2025 combine Astrana’s historical statements of income and the Prospect Business’s historical statements of operations for such periods on a pro forma basis as if the Transactions had been consummated on January 1, 2024, the beginning of the earliest period presented.

Assumptions and estimates underlying the unaudited pro forma adjustments included in the unaudited pro forma condensed combined financial statements are described in the accompanying notes. The unaudited pro forma adjustments are based on available preliminary information and certain assumptions that the Company believes are reasonable under the circumstances. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results and financial position that would have been achieved had the Transactions occurred on the dates indicated. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

ASTRANA HEALTH, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information gives effect to the following:

| · | The Acquisition, inclusive of the following:

| · | reclassification of certain historical financial information of the Prospect Business to conform to Astrana’s presentation of similar assets, liabilities, revenues and expenses;

| · | the preliminary allocation of the estimated purchase price to the acquired assets and assumed liabilities, as well as other estimated adjustments including expense associated with the allocation of the purchase price to the acquired assets (i.e., depreciation and amortization expense);

| · | the consummation of the Financing and incremental interest expense effects; and

| · | the related income tax effects of the pro forma adjustments.

The Acquisition will be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). Under the acquisition method of accounting, the total estimated purchase price has been allocated to the tangible and intangible assets acquired and liabilities assumed of the Prospect Business based on a preliminary estimate of their fair values. The preliminary allocation of the estimated purchase price is based upon management’s estimates utilizing information currently available and is subject to revision as additional information on the fair value of the assets and liabilities become available and final appraisals and detailed analyses are completed. The Company is still evaluating the fair value of intangible assets and income taxes, in addition to ensuring all other assets and liabilities and contingencies have been identified and recorded. Differences between these preliminary estimates and the final purchase price allocation could occur, and these differences may be material. A change in the fair value of the net assets of the Prospect Business may change the amount of the purchase price allocable to goodwill, and could have a material impact on the accompanying unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial information was derived from, and should be read together with, the accompanying notes to the unaudited pro forma condensed combined financial information, Astrana’s historical consolidated financial statements, accompanying notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its annual report on Form 10-K for the fiscal year ended December 31, 2024 as filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2025 and quarterly report on Form 10-Q as of and for the three months ended March 31, 2025 as filed with the SEC on May 9, 2025. The unaudited pro forma condensed combined financial information should also be read together with the Prospect Business’s historical audited combined and consolidated financial statements as of and for the fiscal year ended September 30, 2024, the unaudited condensed combined and consolidated financial statements as of and for the six months ended March 31, 2025, and related notes, filed as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K/A.

ASTRANA HEALTH, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2025

(in thousands, except share data)

| Historical |  |  |  | Pro Forma |
|  |  | Prospect |  |  |  |  |  |  |  |  |  |  |
|  |  | Business |  | Financing |  |  |  | Transaction |  |  |  |  |
| Astrana |  | As Reclassified |  | Adjustments |  |  |  | Adjustments |  |  |  | Pro Forma |
| As Reported |  | (Note 2) |  | (Note 4) |  | Note |  | (Note 4) |  | Note |  | Combined |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 258,517 |  | $ | 129,168 |  | $ | 705,335 |  | 4(b) |  | $ | (678,202 | ) | 4(d) |  | $ | 397,868 |
|  |  |  |  |  |  |  | - |  |  |  |  | (16,950 | ) | 4(h) |  |  |  |
Investment in marketable securities |  | 2,397 |  |  | - |  |  | - |  |  |  |  | - |  |  |  |  | 2,397 |
Receivables, net |  | 241,078 |  |  | 66,945 |  |  | - |  |  |  |  | - |  |  |  |  | 308,023 |
Receivables, net – related parties |  | 56,846 |  |  | - |  |  | - |  |  |  |  | - |  |  |  |  | 56,846 |
Income taxes receivable |  | 15,802 |  |  | - |  |  | - |  |  |  |  | - |  |  |  |  | 15,802 |
Other receivables |  | 14,919 |  |  | - |  |  | - |  |  |  |  | - |  |  |  |  | 14,919 |
Prepaid expenses and other current assets |  | 23,711 |  |  | 14,596 |  |  | - |  |  |  |  | (152 | ) | 4(c) |  |  | 38,155 |
Total current assets |  | 613,270 |  |  | 210,709 |  |  | 705,335 |  |  |  |  | (695,304 | ) |  |  |  | 834,010 |
Non-current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property and equipment, net |  | 16,849 |  |  | 21,680 |  |  | - |  |  |  |  | 22,543 |  | 4(f) |  |  | 61,072 |
Intangible assets, net |  | 111,916 |  |  | - |  |  | - |  |  |  |  | 193,500 |  | 4(g) |  |  | 305,416 |
Goodwill |  | 416,386 |  |  | 29,666 |  |  | - |  |  |  |  | 392,961 |  | 4(j) |  |  | 839,013 |
Income taxes receivable |  | 15,943 |  |  | - |  |  | - |  |  |  |  | - |  |  |  |  | 15,943 |
Loans receivable, non-current |  | 48,134 |  |  | 486 |  |  | - |  |  |  |  | - |  |  |  |  | 48,620 |
Investments in other entities – equity method |  | 38,005 |  |  | - |  |  | - |  |  |  |  | - |  |  |  |  | 38,005 |
Investments in privately held entities |  | 8,896 |  |  | - |  |  | - |  |  |  |  | - |  |  |  |  | 8,896 |
Restricted cash |  | 647 |  |  | 1,300 |  |  | - |  |  |  |  | - |  |  |  |  | 1,947 |
Operating lease right-of-use assets |  | 30,698 |  |  | 4,511 |  |  | - |  |  |  |  | - |  |  |  |  | 35,209 |
Other assets |  | 30,512 |  |  | 4,143 |  |  | (426 | ) | 4(a) |  |  | - |  |  |  |  | 26,231 |
|  |  |  |  |  |  |  | (7,998 | ) | 4(b) |  |  | - |  |  |  |  |  |
Total non-current assets |  | 717,986 |  |  | 61,786 |  |  | (8,424 | ) |  |  |  | 609,004 |  |  |  |  | 1,380,352 |
Total assets | $ | 1,331,256 |  | $ | 272,495 |  | $ | 696,911 |  |  |  |  | (86,300 | ) |  |  | $ | 2,214,362 |
Liabilities, Mezzanine Deficit, and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued expenses | $ | 105,559 |  | $ | 126,569 |  | $ | - |  |  |  | $ | (44,671 | ) | 4(c) |  | $ | 186,501 |
|  |  |  |  |  |  |  | - |  |  |  |  | (956 | ) | 4(h) |  |  |  |
Fiduciary accounts payable |  | 4,840 |  |  | - |  |  | - |  |  |  |  | - |  |  |  |  | 4,840 |
Medical liabilities |  | 204,101 |  |  | 108,857 |  |  | - |  |  |  |  | - |  |  |  |  | 312,958 |
Income taxes payable |  | - |  |  | 28,077 |  |  | - |  |  |  |  | (28,077 | ) | 4(c) |  |  | - |
Dividend payable |  | 638 |  |  | - |  |  | - |  |  |  |  | - |  |  |  |  | 638 |
Finance lease liabilities |  | 471 |  |  | 722 |  |  | - |  |  |  |  | (722 | ) | 4(c) |  |  | 471 |
Operating lease liabilities |  | 4,979 |  |  | 2,354 |  |  | - |  |  |  |  | - |  |  |  |  | 7,333 |
Current portion of long-term debt |  | 12,500 |  |  | 219 |  |  | 35,365 |  | 4(b) |  |  | (219 | ) | 4(c) |  |  | 47,865 |
Other liabilities |  | 28,180 |  |  | 2,291 |  |  | - |  |  |  |  | - |  |  |  |  | 30,471 |
Total current liabilities |  | 361,268 |  |  | 269,089 |  |  | 35,365 |  |  |  |  | (74,645 | ) |  |  |  | 591,077 |
Non-current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax liability |  | 4,197 |  |  | - |  |  | - |  |  |  |  | 4,865 |  | 4(i) |  |  | 9,062 |
Finance lease liabilities, net of current portion |  | 543 |  |  | 1,409 |  |  | - |  |  |  |  | (1,409 | ) | 4(c) |  |  | 543 |
Operating lease liabilities, net of current portion |  | 28,963 |  |  | 2,830 |  |  | - |  |  |  |  | - |  |  |  |  | 31,793 |
Long-term debt, net of current portion and deferred financing costs |  | 403,894 |  |  | 1,216,392 |  |  | 661,972 |  | 4(b) |  |  | (1,216,392 | ) | 4(c) |  |  | 1,065,866 |
Other long-term liabilities |  | 14,685 |  |  | 8,159 |  |  | - |  |  |  |  | (8,109 | ) | 4(c) |  |  | 14,735 |
Total non-current liabilities |  | 452,282 |  |  | 1,228,790 |  |  | 661,972 |  |  |  |  | (1,221,045 | ) |  |  |  | 1,121,999 |
Total liabilities |  | 813,550 |  |  | 1,497,879 |  |  | 697,337 |  |  |  |  | (1,295,690 | ) |  |  |  | 1,713,076 |
Mezzanine deficit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noncontrolling interest in Allied Physicians of California, a Professional Medical Corporation (“APC”) |  | (232,733 | ) |  | - |  |  | - |  |  |  |  | - |  |  |  |  | (232,733 | )
Redeemable convertible preferred stock |  | - |  |  | 75,295 |  |  | - |  |  |  |  | (75,295 | ) | 4(e) |  |  | - |
Total mezzanine deficit |  | (232,733 | ) |  | 75,295 |  |  | - |  |  |  |  | (75,295 | ) |  |  |  | (232,733 | )
Stockholders’ equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Series A Preferred stock |  | - |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  | - |
Series B Preferred stock |  | - |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  | - |
Common stock |  | 49 |  |  | - |  |  | - |  |  |  |  | - |  |  |  |  | 49 |
Additional paid-in capital |  | 452,439 |  |  | 151,496 |  |  | - |  |  |  |  | (151,496 | ) | 4(e) |  |  | 452,439 |
Retained earnings |  | 292,880 |  |  | (1,437,879 | ) |  | (426 | ) | 4(a) |  |  | 1,437,879 |  | 4(e) |  |  | 276,460 |
|  |  |  |  |  |  |  |  |  |  |  |  | (15,994 | ) | 4(h) |  |  |  |
Due from related parties |  | - |  |  | (14,441 | ) |  | - |  |  |  |  | 14,441 |  | 4(c) |  |  | - |
Total stockholders’ equity |  | 745,368 |  |  | (1,300,824 | ) |  | (426 | ) |  |  |  | 1,284,830 |  |  |  |  | 728,948 |
Non-controlling interest |  | 5,071 |  |  | 145 |  |  | - |  |  |  |  | (145 | ) | 4(e) |  |  | 5,071 |
Total equity |  | 750,439 |  |  | (1,300,679 | ) |  | (426 | ) |  |  |  | 1,284,685 |  |  |  |  | 734,019 |
Total liabilities, mezzanine deficit, and stockholders’ equity | $ | 1,331,256 |  | $ | 272,495 |  | $ | 696,911 |  |  |  | $ | (86,300 | ) |  |  | $ | 2,214,362 |

See Notes to Unaudited Pro Forma Condensed Combined Financial Information

ASTRANA HEALTH, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31, 2024

(in thousands, except share data)

| Historical |  |  |  |  |  | Pro Forma |
|  |  |  | Prospect |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  | Business |  |  | Financing |  |  |  |  | Transaction |  |  |  |  |  |  |  |
| Astrana |  |  | As Reclassified |  |  | Adjustments |  |  |  |  | Adjustments |  |  |  |  | Pro Forma |  |  |
| As Reported |  |  | (Note 2) |  |  | (Note 5) |  |  | Note |  | (Note 5) |  |  | Note |  | Combined |  | Note |
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capitation, net | $ | 1,856,785 |  |  | $ | 1,087,465 |  |  | $ | - |  |  |  |  | $ | - |  |  |  |  | $ | 2,944,250 |  |  |
Risk pool settlements and incentives |  | 86,224 |  |  |  | 8,676 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 94,900 |  |  |
Management fee income |  | 13,979 |  |  |  | 26,340 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 40,319 |  |  |
Fee-for-service, net |  | 62,331 |  |  |  | 96,399 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 158,730 |  |  |
Other revenue |  | 15,221 |  |  |  | 21,334 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 36,555 |  |  |
Total revenue |  | 2,034,540 |  |  |  | 1,240,214 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 3,274,754 |  |  |
Operating expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of services, excluding depreciation and amortization |  | 1,763,152 |  |  |  | 1,052,062 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 2,815,214 |  |  |
General and administrative expenses |  | 154,111 |  |  |  | 81,577 |  |  |  | - |  |  |  |  |  | 15,994 |  |  | 5(f) |  |  | 251,682 |  |  |
Depreciation and amortization |  | 27,927 |  |  |  | 4,336 |  |  |  | - |  |  |  |  |  | 31,108 |  |  | 5(d) |  |  | 63,371 |  |  |
Total expenses |  | 1,945,190 |  |  |  | 1,137,975 |  |  |  | - |  |  |  |  |  | 47,102 |  |  |  |  |  | 3,130,267 |  |  |
Income from operations |  | 89,350 |  |  |  | 102,239 |  |  |  | - |  |  |  |  |  | (47,102 | ) |  |  |  |  | 144,487 |  |  |
Other income (expense) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Loss) income from equity method investments |  | 4,451 |  |  |  | 336 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 4,787 |  |  |
Interest expense |  | (33,097 | ) |  |  | (164,597 | ) |  |  | (43,010 | ) |  | 5(b) |  |  | 164,597 |  |  | 5(e) |  |  | (76,107 | ) |  |
Interest income |  | 14,508 |  |  |  | 2,198 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 16,706 |  |  |
Unrealized gain (loss) on investments |  | 731 |  |  |  | - |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 731 |  |  |
Other (loss) income |  | 4,875 |  |  |  | 104 |  |  |  | (426 | ) |  | 5(a) |  |  | - |  |  |  |  |  | 4,553 |  |  |
Total other (expense) income, net |  | (8,532 | ) |  |  | (161,959 | ) |  |  | (43,436 | ) |  |  |  |  | 164,597 |  |  |  |  |  | (49,330 | ) |  |
Income (loss) before provision for income taxes |  | 80,818 |  |  |  | (59,720 | ) |  |  | (43,436 | ) |  |  |  |  | 117,495 |  |  |  |  |  | 95,157 |  |  |
Provision for income taxes |  | 30,886 |  |  |  | 14,459 |  |  |  | (13,248 | ) |  | 5(c) |  |  | 35,836 |  |  | 5(g) |  |  | 67,933 |  |  |
Net income (loss) |  | 49,932 |  |  |  | (74,179 | ) |  |  | (30,188 | ) |  |  |  |  | 81,659 |  |  |  |  |  | 27,224 |  |  |
Net income (loss) attributable to noncontrolling interests |  | 6,783 |  |  |  | - |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 6,783 |  |  |
Net income (loss) attributable to Astrana Health, Inc. | $ | 43,149 |  |  | $ | (74,179 | ) |  | $ | (30,188 | ) |  |  |  | $ | 81,659 |  |  |  |  | $ | 20,441 |  |  |
Earnings per share - basic | $ | 0.91 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 0.43 |  | Note 6 |
Earnings per share - diluted | $ | 0.90 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 0.43 |  | Note 6 |
Weighted average shares of common stock outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | 47,597,295 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 47,597,295 |  | Note 6 |
Diluted |  | 47,974,334 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 47,974,334 |  | Note 6 |

See Notes to Unaudited Pro Forma Condensed Combined Financial Information

ASTRANA HEALTH, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

THREE MONTHS ENDED MARCH 31, 2025

(in thousands, except share data)

| Historical |  |  |  |  |  | Pro Forma |
|  |  |  | Prospect |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  | Business |  |  | Financing |  |  |  |  | Transaction |  |  |  |  |  |  |  |
| Astrana |  |  | As Reclassified |  |  | Adjustments |  |  |  |  | Adjustments |  |  |  |  | Pro Forma |  |  |
| As Reported |  |  | (Note 2) |  |  | (Note 5) |  |  | Note |  | (Note 5) |  |  | Note |  | Combined |  | Note |
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capitation, net | $ | 583,963 |  |  | $ | 269,116 |  |  | $ | - |  |  |  |  | $ | - |  |  |  |  | $ | 853,079 |  |  |
Risk pool settlements and incentives |  | 14,491 |  |  |  | 1,969 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 16,460 |  |  |
Management fee income |  | 2,310 |  |  |  | 10,398 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 12,708 |  |  |
Fee-for-service, net |  | 14,890 |  |  |  | 22,487 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 37,377 |  |  |
Other revenue |  | 4,736 |  |  |  | 1,538 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 6,274 |  |  |
Total revenue |  | 620,390 |  |  |  | 305,508 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 925,898 |  |  |
Operating expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of services, excluding depreciation and amortization |  | 549,061 |  |  |  | 265,953 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 815,014 |  |  |
General and administrative expenses |  | 43,897 |  |  |  | 20,632 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 64,529 |  |  |
Depreciation and amortization |  | 6,849 |  |  |  | 940 |  |  |  | - |  |  |  |  |  | 8,259 |  |  | 5(d) |  |  | 16,048 |  |  |
Total expenses |  | 599,807 |  |  |  | 287,525 |  |  |  | - |  |  |  |  |  | 8,259 |  |  |  |  |  | 895,591 |  |  |
Income from operations |  | 20,583 |  |  |  | 17,983 |  |  |  | - |  |  |  |  |  | (8,259 | ) |  |  |  |  | 30,307 |  |  |
Other income (expense) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Loss) income from equity method investments |  | (867 | ) |  |  | - |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | (867 | ) |  |
Interest expense |  | (7,308 | ) |  |  | (37,647 | ) |  |  | (10,279 | ) |  | 5(b) |  |  | 37,647 |  |  | 5(e) |  |  | (17,587 | ) |  |
Interest income |  | 2,312 |  |  |  | 522 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | 2,834 |  |  |
Unrealized gain (loss) on investments |  | (44 | ) |  |  | - |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | (44 | ) |  |
Other (loss) income |  | (5,072 | ) |  |  | 85 |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | (4,987 | ) |  |
Total other (expense) income, net |  | (10,979 | ) |  |  | (37,040 | ) |  |  | (10,279 | ) |  |  |  |  | 37,647 |  |  |  |  |  | (20,651 | ) |  |
Income (loss) before provision for income taxes |  | 9,604 |  |  |  | (19,057 | ) |  |  | (10,279 | ) |  |  |  |  | 29,388 |  |  |  |  |  | 9,656 |  |  |
Provision for income taxes |  | 3,383 |  |  |  | 1,706 |  |  |  | (3,135 | ) |  | 5(c) |  |  | 8,963 |  |  | 5(g) |  |  | 10,917 |  |  |
Net income (loss) |  | 6,221 |  |  |  | (20,763 | ) |  |  | (7,144 | ) |  |  |  |  | 20,425 |  |  |  |  |  | (1,261 | ) |  |
Net income (loss) attributable to noncontrolling interests |  | (471 | ) |  |  | - |  |  |  | - |  |  |  |  |  | - |  |  |  |  |  | (471 | ) |  |
Net income (loss) attributable to Astrana Health, Inc. | $ | 6,692 |  |  | $ | (20,763 | ) |  | $ | (7,144 | ) |  |  |  | $ | 20,425 |  |  |  |  | $ | (790 | ) |  |
Earnings per share - basic | $ | 0.14 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (0.02 | ) | Note 6 |
Earnings per share - diluted | $ | 0.14 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (0.02 | ) | Note 6 |
Weighted average shares of common stock outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | 48,470,682 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 48,470,682 |  | Note 6 |
Diluted |  | 48,850,666 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 48,470,682 |  | Note 6 |

See Notes to Unaudited Pro Forma Condensed Combined Financial Information

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

| 1. | Basis of Presentation

The unaudited pro forma condensed combined financial information has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Article 11 of Regulation S-X. The accompanying pro forma financial information is based on the historical consolidated financial statements of Astrana and the historical combined and consolidated financial statements of the Prospect Business after giving effect to the Acquisition and the Financing, as well as certain reclassifications (see Note 2).

The pro forma financial information was prepared assuming the Acquisition will be accounted for under the acquisition method of accounting in accordance with ASC 805 with Astrana as the acquirer of the Prospect Business. In accordance with the acquisition method of accounting, Astrana will record the preliminary estimated fair value of assets acquired and liabilities assumed from the Prospect Business on the acquisition date, July 1, 2025. Fair value is defined in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements can be highly subjective, and it is possible the application of reasonable judgment could result in different assumptions resulting in a range of alternative estimates using the same facts and circumstances. The preliminary allocation of the estimated purchase price is based upon management’s estimates utilizing information currently available and is subject to revision as additional information on the fair value of the assets and liabilities become available and final appraisals and detailed analyses are completed. The Company is still evaluating the fair value of intangible assets and income taxes, in addition to ensuring all other assets and liabilities and contingencies have been identified and recorded. Differences between these preliminary estimates and the final acquisition accounting could occur, and these differences may be material. A change in the fair value of the net assets of the Prospect Business may change the amount of the purchase price allocable to goodwill, and could have a material impact on the accompanying unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined balance sheet as of March 31, 2025 combines the historical balance sheets of Astrana and the Prospect Business as of March 31, 2025 on a pro forma basis as if the Transactions had been consummated on March 31, 2025. The unaudited pro forma condensed combined statements of income for the year ended December 31, 2024 and the three months ended March 31, 2025 combine Astrana’s historical statements of income and the Prospect Business’s historical statements of operations for such periods on a pro forma basis as if the Transactions had been consummated on January 1, 2024, the beginning of the earliest period presented.

The unaudited pro forma condensed combined balance sheet as of March 31, 2025 has been prepared using, and should be read in conjunction with, the following:

| · | Astrana’s unaudited condensed consolidated balance sheet as of March 31, 2025 and the related notes as included in Astrana’s quarterly report on Form 10-Q for the three month period ended March 31, 2025 as filed with the SEC on May 9, 2025; and

| · | The Prospect Business’s unaudited condensed combined and consolidated balance sheet data as of March 31, 2025 and the related notes as filed as Exhibit 99.2 to this Current Report on Form 8-K/A.

The unaudited pro forma condensed combined statement of income for the fiscal year ended December 31, 2024 has been prepared using, and should be read in conjunction with, the following:

| · | Astrana’s audited consolidated statement of income for the fiscal year ended December 31, 2024 and the related notes included in Astrana’s annual report on Form 10-K for the fiscal year ended December 31, 2024 as filed with the SEC on March 14, 2025; and

| · | The Prospect Business’s audited combined and consolidated statement of operations for the fiscal year ended September 30, 2024 and the related notes, filed as Exhibit 99.1 to this Current Report on Form 8-K/A.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The unaudited pro forma condensed combined statement of income for the three months ended March 31, 2025 has been prepared using, and should be read in conjunction with, the following:

| · | Astrana’s unaudited condensed consolidated statement of income for the three months ended March 31, 2025 and the related notes as included in Astrana’s quarterly report on Form 10-Q for the three month period ended March 31, 2025 as filed with the SEC on May 9, 2025; and

| · | The Prospect Business’s unaudited condensed combined and consolidated statement of operations data for the six months ended March 31, 2025 and the related notes, filed as Exhibit 99.2 to this Current Report on Form 8-K/A.

The foregoing historical financial statements have been prepared in accordance with GAAP. The unaudited pro forma condensed combined financial information has been prepared based on the aforementioned historical financial statements and the assumptions and adjustments as described in the notes to the unaudited pro forma condensed combined financial information. Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations would have been had the Transactions taken place on the date indicated, nor are they indicative of the future consolidated results of operations or financial position of the post-combination company. The unaudited pro forma condensed combined financial information does not give effect to any synergies, operating efficiencies, tax savings or cost savings that may be associated with the Transactions.

| 2. | Accounting Policies and Reclassifications

During the preparation of the unaudited pro forma condensed combined financial information, Astrana performed a preliminary analysis to identify differences in Astrana’s and the Prospect Business’s historical financial statement presentation and significant accounting policies. Based on its initial analysis, Astrana has identified certain adjustments required to the unaudited pro forma condensed combined financial information to conform the Prospect Business’s significant accounting policies to Astrana’s. Additionally, certain reclassification adjustments have been made to conform the Prospect Business’s historical financial statement captions to Astrana’s financial statement captions in the unaudited pro forma condensed combined financial statements.

Following the completion of the Acquisition, or as more information becomes available, Astrana will finalize its comprehensive review of financial statement presentation and accounting policies. Therefore, the pro forma financial information may not reflect all reclassifications necessary to conform the Prospect Business’s presentation to that of Astrana due to limitations on the availability of information as of the date of this Current Report on Form 8-K/A. Additional accounting policy differences and reclassification adjustments may be identified as more information becomes available.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following sets forth the accounting policy and reclassification adjustments made to conform the Prospect Business’s presentation to Astrana’s presentation in the unaudited pro forma condensed combined balance sheet as of March 31, 2025 (in thousands):

|  |  |  | Historical |  |  |  |  |  |  |  |  |  |
|  |  |  | Prospect |  |  |  |  |  |  |  |  | Prospect |
|  |  |  | Business |  |  | Reclassification |  |  |  |  |  | Business |
Prospect Business caption |  | Astrana caption |  | As Reported |  |  | Adjustments |  |  | Note |  |  | As Reclassified |
Assets |  | Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current assets: |  | Current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | Cash and cash equivalents |  | $ | 129,168 |  |  | $ | - |  |  |  |  |  |  | $ | 129,168 |
Hospital fee program receivable |  |  |  |  | 21,550 |  |  |  | (21,550 | ) |  |  | 2(a) |  |  | - |
Patient accounts receivable, net of allowance for credit losses |  |  |  |  | 16,118 |  |  |  | (16,118 | ) |  |  | 2(a) |  |  | - |
Due from government payers |  |  |  |  | 386 |  |  |  | (386 | ) |  |  | 2(a) |  |  | - |
Risk pool and other receivables, net |  |  |  |  | 31,200 |  |  |  | (31,200 | ) |  |  | 2(a) |  |  | - |
|  | Receivables, net |  |  |  |  |  |  | 69,254 |  |  |  | 2(a) |  |  | 66,945 |
|  |  |  |  |  |  |  |  | (3,908 | ) |  |  | 2(b) |  |  |  |
|  |  |  |  |  |  |  |  | 1,599 |  |  |  | 2(c) |  |  |  |
Prepaid expenses and other current assets |  | Prepaid expenses and other current assets |  |  | 13,241 |  |  |  | 1,355 |  |  |  | 2(d) |  |  | 14,596 |
Note receivable |  | Loan receivable |  |  | 1,355 |  |  |  | (1,355 | ) |  |  | 2(d) |  |  | - |
Total current assets |  | Total current assets |  |  | 213,018 |  |  |  | (2,309 | ) |  |  |  |  |  |  | 210,709 |
|  | Non-current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property, improvements and equipment, net |  | Property and equipment, net |  |  | 21,680 |  |  |  |  |  |  |  |  |  |  |  | 21,680 |
Operating lease right-of use assets |  | Operating lease right-of use assets |  |  | 4,511 |  |  |  |  |  |  |  |  |  |  |  | 4,511 |
Deposits and other assets |  | Other assets |  |  | 4,143 |  |  |  |  |  |  |  |  |  |  |  | 4,143 |
Goodwill |  | Goodwill |  |  | 29,666 |  |  |  |  |  |  |  |  |  |  |  | 29,666 |
Restricted cash |  | Restricted cash |  |  | 1,300 |  |  |  |  |  |  |  |  |  |  |  | 1,300 |
Note receivable, net of current portion |  | Loans receivable, non-current |  |  | 486 |  |  |  |  |  |  |  |  |  |  |  | 486 |
Total assets |  | Total assets |  | $ | 274,804 |  |  | $ | (2,309 | ) |  |  |  |  |  | $ | 272,495 |
Liabilities |  | Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities: |  | Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accrued medical claims and other healthcare costs payable |  |  |  |  | 121,351 |  |  |  | (121,351 | ) |  |  | 2(f) |  |  | - |
Accounts payable and other accrued liabilities |  | Accounts payable and accrued expenses |  |  | 86,689 |  |  |  | 2,175 |  |  |  | 2(f) |  |  | 126,569 |
|  |  |  |  |  |  |  |  | 39,126 |  |  |  | 2(g) |  |  |  |
|  |  |  |  |  |  |  |  | (1,421 | ) |  |  | 2(b) |  |  |  |
|  | Medical liabilities |  |  |  |  |  |  | 119,176 |  |  |  | 2(f) |  |  | 108,857 |
|  |  |  |  |  |  |  |  | 1,599 |  |  |  | 2(c) |  |  |  |
|  |  |  |  |  |  |  |  | (11,918 | ) |  |  | 2(e) |  |  |  |
Accrued salaries, wages and benefits |  |  |  |  | 26,525 |  |  |  | (26,525 | ) |  |  | 2(g) |  |  | - |
Hospital fee program liability |  |  |  |  | 8,625 |  |  |  | (8,625 | ) |  |  | 2(g) |  |  | - |
Due to government payers |  |  |  |  | 3,976 |  |  |  | (3,976 | ) |  |  | 2(g) |  |  | - |
Income taxes payable |  | Income taxes payable |  |  | 28,077 |  |  |  |  |  |  |  |  |  |  |  | 28,077 |
Current portion of long-term debt |  | Current portion of long-term debt |  |  | 219 |  |  |  |  |  |  |  |  |  |  |  | 219 |
Current portion of finance lease labilities |  | Finance lease liabilities |  |  | 722 |  |  |  |  |  |  |  |  |  |  |  | 722 |
Current portion of operating lease liabilities |  | Operating lease liabilities |  |  | 2,354 |  |  |  |  |  |  |  |  |  |  |  | 2,354 |
Other current liabilities |  | Other liabilities |  |  | 2,291 |  |  |  |  |  |  |  |  |  |  |  | 2,291 |
Total current liabilities |  | Total current liabilities |  |  | 280,829 |  |  |  | (11,740 | ) |  |  |  |  |  |  | 269,089 |
|  | Non-current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt, net of current portion |  | Long-term debt, net of current portion and deferred financing costs |  |  | 1,216,392 |  |  |  |  |  |  |  |  |  |  |  | 1,216,392 |
Finance lease liabilities, net of current portion |  | Finance lease liabilities, net of current portion |  |  | 1,409 |  |  |  |  |  |  |  |  |  |  |  | 1,409 |
Operating lease liabilities, net of current portion |  | Operating lease liabilities, net of current portion |  |  | 2,830 |  |  |  |  |  |  |  |  |  |  |  | 2,830 |
Malpractice reserves |  |  |  |  | 2,572 |  |  |  | (2,572 | ) |  |  | 2(h) |  |  | - |
Other long-term liabilities |  | Other long-term liabilities |  |  | 5,587 |  |  |  | 2,572 |  |  |  | 2(h) |  |  | 8,159 |
Total liabilities |  | Total liabilities |  | $ | 1,509,619 |  |  |  | (11,740 | ) |  |  |  |  |  | $ | 1,497,879 |
Mezzanine equity: |  | Mezzanine deficit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Redeemable convertible preferred stock |  |  |  |  | 75,295 |  |  |  |  |  |  |  |  |  |  |  | 75,295 |
Members’ deficit: |  | Stockholders’ equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Additional paid-in capital |  | Additional paid-in capital |  |  | 151,496 |  |  |  |  |  |  |  |  |  |  |  | 151,496 |
Accumulated deficit |  | Retained earnings |  |  | (1,447,310 | ) |  |  | (2,487 | ) |  |  | 2(b) |  |  | (1,437,879 | )
|  |  |  |  |  |  |  |  | 11,918 |  |  |  | 2(e) |  |  |  |
Due from related parties |  |  |  |  | (14,441 | ) |  |  |  |  |  |  |  |  |  |  | (14,441 | )
Total PHP Holdings, LLC’s & RI Market members’ deficit |  | Total stockholders’ equity |  |  | (1,310,255 | ) |  |  | 9,431 |  |  |  |  |  |  |  | (1,300,824 | )
Non-controlling interests |  | Non-controlling interest |  |  | 145 |  |  |  |  |  |  |  |  |  |  |  | 145 |
Total members’ deficit |  | Total equity |  |  | (1,310,110 | ) |  |  | 9,431 |  |  |  |  |  |  |  | (1,300,679 | )
Total liabilities, mezzanine equity and members’ deficit |  | Total liabilities, mezzanine deficit, and stockholders’ equity |  | $ | 274,804 |  |  | $ | (2,309 | ) |  |  |  |  |  | $ | 272,495 |

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

| 2(a) | Represents the reclassification of “Hospital fee program receivable”, “Patient accounts receivable”, “Due from government payers”, and “Risk pool and other receivables, net” on the Prospect Business’s balance sheet to “Receivables, net” to conform to Astrana’s balance sheet presentation.

| 2(b) | Reflects an adjustment to reduce “Receivables, net” and “Accounts payable and accrued expenses” made to conform to Astrana’s policies for constraining variable consideration resulting in a net increase to the Prospect Business’s historical “Accumulated deficit” as of March 31, 2025.

| 2(c) | Reflects an adjustment to increase “Receivables, net” and “Medical liabilities” to conform the net presentation on the Prospect Business’s balance sheet to Astrana’s gross presentation.

| 2(d) | Represents the reclassification of the current portion of the “Note receivable” on the Prospect Business’s balance sheet to “Prepaid expenses and other current assets” to conform to Astrana’s balance sheet presentation.

| 2(e) | Reflects an adjustment to reduce “Medical liabilities” and an offsetting adjustment to decrease the Prospect Business’s historical “Accumulated deficit” as of March 31, 2025, to eliminate the provision for adverse deviation reported by the Prospect Business to conform to Astrana’s policies, which do not include such a provision.

| 2(f) | Represents the reclassification of “Accrued medical claims and other healthcare costs payable” on the Prospect Business’s balance sheet to “Medical liabilities” and “Accounts payable and accrued expenses,” to conform to Astrana’s balance sheet presentation.

| 2(g) | Represents the reclassification of “Accrued salaries, wages, and benefits”, “Hospital fee program liability”, and “Due to government payers” on the Prospect Business’s balance sheet to “Accounts payable and accrued expenses” to conform to Astrana’s balance sheet presentation.

| 2(h) | Represents the reclassification of “Malpractice reserves” on the Prospect Business’s balance sheet to “Other long-term liabilities” to conform to Astrana’s balance sheet presentation.

The following sets forth the reclassification adjustments made to conform the Prospect Business’s presentation to Astrana’s presentation in the unaudited pro forma statement of income for the year ended December 31, 2024 (in thousands):

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

|  |  |  | For the Twelve Months Ended December 31, 2024 |
|  |  |  | Prospect |  |  |  |  |  |  |  |  | Prospect |
|  |  |  | Business |  |  |  |  |  |  |  |  | Business |
Prospect Business caption |  | Astrana caption |  | (Note 7) |  |  | Reclassifications |  |  | Note |  |  | As Reclassified |
Operating revenues: |  | Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capitation |  | Capitation, net |  | $ | 1,087,465 |  |  | $ | - |  |  |  |  |  |  | $ | 1,087,465 |
Patient services, net |  |  |  |  | 111,527 |  |  |  | (111,527 | ) |  |  | 2(i) |  |  | - |
|  | Fee-for-service, net |  |  |  |  |  |  | 96,399 |  |  |  | 2(i) |  |  | 96,399 |
Management fees |  | Management fee income |  |  | 26,340 |  |  |  |  |  |  |  |  |  |  |  | 26,340 |
Other operating revenues |  |  |  |  | 16,469 |  |  |  | (16,469 | ) |  |  | 2(j) |  |  | - |
|  | Risk pool settlements and incentives |  |  |  |  |  |  | 8,676 |  |  |  | 2(j) |  |  | 8,676 |
|  | Other revenues |  |  |  |  |  |  | 6,206 |  |  |  | 2(j) |  |  | 21,334 |
|  |  |  |  |  |  |  |  | 15,128 |  |  |  | 2(i) |  |  |  |
Total net revenue |  | Total revenue |  |  | 1,241,801 |  |  |  | (1,587 | ) |  |  |  |  |  |  | 1,240,214 |
Cost of revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Claims expense |  |  |  |  | 597,209 |  |  |  | (597,209 | ) |  |  | 2(k) |  |  | - |
Capitation expense |  |  |  |  | 248,139 |  |  |  | (248,139 | ) |  |  | 2(k) |  |  | - |
Other cost of revenues |  |  |  |  | 64,523 |  |  |  | (64,523 | ) |  |  | 2(k) |  |  | - |
Total cost of revenues |  |  |  |  | 909,871 |  |  |  | (909,871 | ) |  |  |  |  |  |  | - |
Operating expenses: |  | Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Cost of services, excluding depreciation and amortization |  |  | - |  |  |  | (1,244 | ) |  |  | 2(j) |  |  | 1,052,062 |
|  |  |  |  |  |  |  |  | 909,871 |  |  |  | 2(k) |  |  |  |
|  |  |  |  |  |  |  |  | 137,919 |  |  |  | 2(l) |  |  |  |
|  |  |  |  |  |  |  |  | 1,392 |  |  |  | 2(m) |  |  |  |
|  |  |  |  |  |  |  |  | 5,717 |  |  |  | 2(n) |  |  |  |
|  |  |  |  |  |  |  |  | 2,576 |  |  |  | 2(o) |  |  |  |
|  |  |  |  |  |  |  |  | (4,169 | ) |  |  | 2(r) |  |  |  |
Salary and benefits |  |  |  |  | 143,581 |  |  |  | (143,581 | ) |  |  | 2(l) |  |  | - |
Outside services |  |  |  |  | 32,516 |  |  |  | (32,516 | ) |  |  | 2(m) |  |  | - |
Management fees |  |  |  |  | 12,923 |  |  |  | (12,923 | ) |  |  | 2(p) |  |  | - |
Professional fees |  |  |  |  | 5,593 |  |  |  | (5,593 | ) |  |  | 2(o) |  |  | - |
Marketing |  |  |  |  | 3,072 |  |  |  | (3,072 | ) |  |  | 2(p) |  |  | - |
Lease and rental expense |  |  |  |  | 3,435 |  |  |  | (3,435 | ) |  |  | 2(p) |  |  | - |
Repair, maintenance and utilities |  |  |  |  | 4,925 |  |  |  | (4,925 | ) |  |  | 2(p) |  |  | - |
Software licensing |  |  |  |  | 8,558 |  |  |  | (8,558 | ) |  |  | 2(p) |  |  | - |
Taxes, licenses and fees |  |  |  |  | 7,284 |  |  |  | (7,284 | ) |  |  | 2(n) |  |  | - |
Insurance |  |  |  |  | 3,182 |  |  |  | (3,182 | ) |  |  | 2(p) |  |  | - |
Other operating expenses |  |  |  |  | 4,112 |  |  |  | (4,112 | ) |  |  | 2(p) |  |  | - |
|  | General and administrative expenses |  |  | - |  |  |  | 5,662 |  |  |  | 2(l) |  |  | 81,577 |
|  |  |  |  |  |  |  |  | 31,124 |  |  |  | 2(m) |  |  |  |
|  |  |  |  |  |  |  |  | 1,567 |  |  |  | 2(n) |  |  |  |
|  |  |  |  |  |  |  |  | 3,017 |  |  |  | 2(o) |  |  |  |
|  |  |  |  |  |  |  |  | 40,207 |  |  |  | 2(p) |  |  |  |
Depreciation and amortization |  | Depreciation and amortization |  |  | 4,336 |  |  |  |  |  |  |  |  |  |  |  | 4,336 |
Total operating expenses |  | Total expenses |  |  | 233,517 |  |  |  | 904,458 |  |  |  |  |  |  |  | 1,137,975 |
Operating income |  | Income from operations |  |  | 98,413 |  |  |  | 3,826 |  |  |  |  |  |  |  | 102,239 |
|  | Other income (expense) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating gain (loss) from unconsolidated joint venture |  |  |  |  | 336 |  |  |  | (336 | ) |  |  | 2(s) |  |  | - |
|  | (Loss) income from equity method investments |  |  |  |  |  |  | 336 |  |  |  | 2(s) |  |  | 336 |
Interest expense, net |  |  |  |  | (162,399 | ) |  |  | 162,399 |  |  |  | 2(t) |  |  | - |
|  | Interest expense |  |  |  |  |  |  | (164,597 | ) |  |  | 2(t) |  |  | (164,597 | )
|  | Interest income |  |  |  |  |  |  | 2,198 |  |  |  | 2(t) |  |  | 2,198 |
Other expense |  | Other (loss) income |  |  | (239 | ) |  |  | 343 |  |  |  | 2(j) |  |  | 104 |
|  | Total other (expense) income, net |  |  | (162,302 | ) |  |  | 343 |  |  |  |  |  |  |  | (161,959 | )
(Loss) income before income taxes |  | (Loss) Income before provision for income taxes |  |  | (63,889 | ) |  |  | 4,169 |  |  |  |  |  |  |  | (59,720 | )
Income tax expense |  | Provision for income taxes |  |  | 14,459 |  |  |  |  |  |  |  |  |  |  |  | 14,459 |
Net (loss) income |  | Net income (loss) attributable to Astrana Health, Inc. |  | $ | (78,348 | ) |  | $ | 4,169 |  |  |  |  |  |  | $ | (74,179 | )

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following sets forth the reclassification adjustments made to conform the Prospect Business’s presentation to Astrana’s presentation in the unaudited pro forma statement of income for the three months ended March 31, 2025 (in thousands):

|  |  |  | For the Three Months Ended March 31, 2025 |
|  |  |  | Prospect |  |  |  |  |  |  |  | Prospect |
|  |  |  | Business |  |  |  |  |  |  |  | Business |
Prospect Business caption |  | Astrana caption |  | (Note 7) |  |  | Reclassifications |  |  | Note |  | As Reclassified |
Operating revenues: |  | Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capitation |  | Capitation, net |  | $ | 269,116 |  |  | $ | - |  |  |  |  | $ | 269,116 |
Patient services, net |  |  |  |  | 26,395 |  |  |  | (26,395 | ) |  | 2(i) |  |  | - |
|  | Fee-for-service, net |  |  |  |  |  |  | 22,487 |  |  | 2(i) |  |  | 22,487 |
Management fees |  | Management fee income |  |  | 10,398 |  |  |  |  |  |  |  |  |  | 10,398 |
Other operating revenues |  |  |  |  | 3,755 |  |  |  | (3,755 | ) |  | 2(j) |  |  | - |
|  | Risk pool settlements and incentives |  |  |  |  |  |  | 1,969 |  |  | 2(j) |  |  | 1,969 |
|  | Other revenues |  |  |  |  |  |  | 1,538 |  |  | 2(j) |  |  | 1,538 |
|  |  |  |  |  |  |  |  | 3,908 |  |  | 2(i) |  |  |  |
|  |  |  |  |  |  |  |  | (3,908 | ) |  | 2(q) |  |  |  |
Total net revenue |  | Total revenue |  |  | 309,664 |  |  |  | (4,156 | ) |  |  |  |  | 305,508 |
Cost of revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Claims expense |  |  |  |  | 152,649 |  |  |  | (152,649 | ) |  | 2(k) |  |  | - |
Capitation expense |  |  |  |  | 64,661 |  |  |  | (64,661 | ) |  | 2(k) |  |  | - |
Other cost of revenues |  |  |  |  | 12,187 |  |  |  | (12,187 | ) |  | 2(k) |  |  | - |
Total cost of revenues |  |  |  |  | 229,497 |  |  |  | (229,497 | ) |  |  |  |  | - |
Operating expenses: |  | Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Cost of services, excluding depreciation and amortization |  |  | - |  |  |  | (163 | ) |  | 2(j) |  |  | 265,953 |
|  |  |  |  |  |  |  |  | 229,497 |  |  | 2(k) |  |  |  |
|  |  |  |  |  |  |  |  | 35,805 |  |  | 2(l) |  |  |  |
|  |  |  |  |  |  |  |  | 438 |  |  | 2(m) |  |  |  |
|  |  |  |  |  |  |  |  | 1,421 |  |  | 2(n) |  |  |  |
|  |  |  |  |  |  |  |  | 692 |  |  | 2(o) |  |  |  |
|  |  |  |  |  |  |  |  | (1,421 | ) |  | 2(q) |  |  |  |
|  |  |  |  |  |  |  |  | (316 | ) |  | 2(r) |  |  |  |
Salary and benefits |  |  |  |  | 37,300 |  |  |  | (37,300 | ) |  | 2(l) |  |  | - |
Outside services |  |  |  |  | 6,137 |  |  |  | (6,137 | ) |  | 2(m) |  |  | - |
Management fees |  |  |  |  | 4,099 |  |  |  | (4,099 | ) |  | 2(p) |  |  | - |
Professional fees |  |  |  |  | 1,142 |  |  |  | (1,142 | ) |  | 2(o) |  |  | - |
Marketing |  |  |  |  | 696 |  |  |  | (696 | ) |  | 2(p) |  |  | - |
Lease and rental expense |  |  |  |  | 747 |  |  |  | (747 | ) |  | 2(p) |  |  | - |
Repair, maintenance and utilities |  |  |  |  | 1,381 |  |  |  | (1,381 | ) |  | 2(p) |  |  | - |
Software licensing |  |  |  |  | 2,533 |  |  |  | (2,533 | ) |  | 2(p) |  |  | - |
Taxes, licenses and fees |  |  |  |  | 1,845 |  |  |  | (1,845 | ) |  | 2(n) |  |  | - |
Insurance |  |  |  |  | 1,616 |  |  |  | (1,616 | ) |  | 2(p) |  |  | - |
Other operating expenses |  |  |  |  | 1,492 |  |  |  | (1,492 | ) |  | 2(p) |  |  | - |
|  | General and administrative expenses |  |  | - |  |  |  | 1,495 |  |  | 2(l) |  |  | 20,632 |
|  |  |  |  |  |  |  |  | 5,699 |  |  | 2(m) |  |  |  |
|  |  |  |  |  |  |  |  | 424 |  |  | 2(n) |  |  |  |
|  |  |  |  |  |  |  |  | 450 |  |  | 2(o) |  |  |  |
|  |  |  |  |  |  |  |  | 12,564 |  |  | 2(p) |  |  |  |
Depreciation and amortization |  | Depreciation and amortization |  |  | 940 |  |  |  |  |  |  |  |  |  | 940 |
Total operating expenses |  | Total expenses |  |  | 59,928 |  |  |  | 227,597 |  |  |  |  |  | 287,525 |
Operating income |  | Income from operations |  |  | 20,239 |  |  |  | (2,256 | ) |  |  |  |  | 17,983 |
|  | Other income (expense) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense, net |  |  |  |  | (37,125 | ) |  |  | 37,125 |  |  | 2(t) |  |  | - |
|  | Interest expense |  |  |  |  |  |  | (37,647 | ) |  | 2(t) |  |  | (37,647 | )
|  | Interest income |  |  |  |  |  |  | 522 |  |  | 2(t) |  |  | 522 |
|  | Other (loss) income |  |  |  |  |  |  | 85 |  |  | 2(j) |  |  | 85 |
|  | Total other (expense) income, net |  |  | (37,125 | ) |  |  | 85 |  |  |  |  |  | (37,040 | )
(Loss) income before income taxes |  | (Loss) Income before provision for income taxes |  |  | (16,886 | ) |  |  | (2,171 | ) |  |  |  |  | (19,057 | )
Income tax expense |  | Provision for income taxes |  |  | 1,706 |  |  |  |  |  |  |  |  |  | 1,706 |
Net (loss) income |  | Net income (loss) attributable to Astrana Health, Inc. |  | $ | (18,592 | ) |  | $ | (2,171 | ) |  |  |  | $ | (20,763 | )

| 2(i) | Reflects the reclassification of “Patient services, net” on the Prospect Business’s statement of operations to “Fee-for-service, net” and “Other revenues” to conform to Astrana’s statement of income presentation.

| 2(j) | Represents the reclassification of “Other operating revenues” on the Prospect Business’s statement of operations to “Risk pool settlements and incentives”, “Other revenues”, “Cost of services, excluding depreciation and amortization”, and “Other (loss) income” to conform to Astrana’s statement of income presentation.

| 2(k) | Represents the reclassification of “Claims expense”, “Capitation expense”, and “Other costs of revenues” on the Prospect Business’s statement of operations to “Cost of services, excluding depreciation and amortization” to conform to Astrana’s statement of income presentation.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

| 2(l) | Represents the reclassification of “Salary and benefits” on the Prospect Business’s statement of operations to “Cost of services, excluding depreciation and amortization” and “General and administrative expenses” to conform to Astrana’s statement of income presentation.

| 2(m) | Represents the reclassification of “Outside services” on the Prospect Business’s statement of operations to “Cost of services, excluding depreciation and amortization” and “General and administrative expenses” to conform to Astrana’s statement of income presentation.

| 2(n) | Represents the reclassification of “Taxes, licenses and fees” on the Prospect Business’s statement of operations to “Cost of services, excluding depreciation and amortization” and “General and administrative expenses” to conform to Astrana’s statement of income presentation.

| 2(o) | Represents the reclassification of “Professional fees” on the Prospect Business’s statement of operations to “Cost of services, excluding depreciation and amortization” and “General and administrative expenses” to conform to Astrana’s statement of income presentation.

| 2(p) | Represents the reclassification of “Management fees”, “Marketing”, “Lease and rental expense”, “Repair, maintenance and utilities”, “Software licensing”, “Insurance” and “Other operating expenses” on the Prospect Business’s statement of operations to “General and administrative expenses” to conform to Astrana’s statement of income presentation.

| 2(q) | Reflects the adjustment to “Other revenues” and “Cost of services, excluding depreciation and amortization” for the three months ended March 31, 2025 to conform to the Company’s policies for constraining variable consideration. This adjustment does not impact the Prospect Business’s historical statement of operations for the year ended December 31, 2024.

| 2(r) | Reflects an adjustment to reduce “Cost of services, excluding depreciation and amortization” to eliminate the change in the provision for adverse deviation reported by the Prospect Business to conform to Astrana’s policies, which do not include such a provision.

| 2(s) | Represents the reclassification of the Prospect Business’s “Operating gain (loss) from unconsolidated joint venture” to “(Loss) income from equity method investments” for the year ended December 31, 2024 to conform to Astrana’s statement of income presentation.

| 2(t) | Represents the reclassification of “Interest expense, net” on the Prospect Business’s statement of operations to “Interest expense” and “Interest income” to conform to Astrana’s statement of income presentation.

| 3. | Estimated Consideration and Preliminary Purchase Price Allocation

Astrana will account for the Acquisition as a business combination in accordance with GAAP. Accordingly, for purposes of preparing the unaudited pro forma condensed combined financial information, the estimated purchase price attributable to the Acquisition has been allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values. Upon the closing of the acquisition of the Prospect Business, Astrana paid preliminary estimated cash consideration of $678.2 million. The estimated purchase consideration is preliminary and subject to additional customary adjustments.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following table sets forth the preliminary allocation of the estimated purchase price to the tangible and intangible assets acquired and liabilities assumed based on a preliminary estimate of the fair values, as if the Acquisition had been completed on March 31, 2025 (in thousands):

|  | As of March 31, 2025 |
Purchase consideration: |  |  |  |
Cash paid |  | $ | 678,202 |
|  | $ | 678,202 |
Assets: |  |  |  |
Cash and cash equivalents |  | $ | 129,168 |
Receivables |  |  | 66,945 |
Prepaid expenses and other current assets |  |  | 14,444 |
Loan receivable, non-current |  |  | 486 |
Property and equipment |  |  | 44,223 |
Intangible assets |  |  | 193,500 |
Goodwill |  |  | 422,627 |
Restricted cash |  |  | 1,300 |
Operating lease right-of-use assets |  |  | 4,511 |
Other assets |  |  | 4,143 |
Estimated total assets acquired: |  | $ | 881,347 |
Liabilities: |  |  |  |
Accounts payable and accrued expenses |  | $ | 81,898 |
Medical liabilities |  |  | 108,857 |
Operating lease liabilities, current and non-current |  |  | 5,184 |
Other liabilities |  |  | 2,291 |
Deferred tax liability |  |  | 4,865 |
Other long-term liabilities |  |  | 50 |
Estimated total liabilities assumed |  | $ | 203,145 |
Estimated total net assets acquired |  | $ | 678,202 |

The pro forma purchase price allocation is preliminary and the estimated fair value of the assets acquired and liabilities assumed are based upon available information and certain assumptions. The final determination of the purchase price allocation will be completed as soon as practicable and will be based on the fair value of the assets acquired and liabilities assumed as of the Closing date. Accordingly, the pro forma purchase price allocation is subject to revision as a more detailed analysis is completed and additional information on the fair value of the assets and liabilities become available, including receipt of final appraisals of the net assets acquired. A change in the fair value of the net assets may change the amount of purchase price allocable to the goodwill, and could have a material impact on the amount of expense included in the accompanying unaudited pro forma condensed combined statements of income.

| 4. | Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

Pro Forma Financing Adjustments

The following pro forma adjustments are included in the unaudited pro forma condensed combined balance sheet as of March 31, 2025 to reflect the Financing:

| 4(a) | Reflects an adjustment to retained earnings of $0.4 million representing the proportionate write-off of unamortized deferred financing costs previously allocated to the DDTL A and reported in other assets on Astrana’s historical consolidated balance sheet due to the reduction in the aggregate delayed draw term loan commitment from $745.0 million to $707.3 million.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

| 4(b) | Reflects the receipt of net cash proceeds of $705.3 million from the funding of the $707.3 million DDTL A, net of approximately $2.0 million in lender fees and issuance costs paid in connection with the Financing. Of the $707.3 million in incremental DDTL A principal, $35.4 million is presented as a current obligation based on the timing of principal installments due in one year, assuming the Financing was completed on March 31, 2025. The remaining amount is classified as non-current and is presented net of the incremental financing costs paid at the closing of the Financing and $8.0 million in unamortized deferred financing costs previously allocated to the DDTL A (net of the write-off discussed in Note 4(a)), which were reported in other assets prior to the Financing.

Pro Forma Transaction Accounting Adjustments

The following pro forma adjustments are included in the unaudited pro forma condensed combined balance sheet as of March 31, 2025 to reflect the effects of the Acquisition:

| 4(c) | Reflects adjustments to remove assets not acquired and liabilities not assumed by Astrana, comprised of the following (in thousands):

|  | As of March 31, 2025 |  |  |  |
Prepaid expenses and other current assets |  |  | (152 | ) |  |  | (i) |
Accounts payable and accrued expenses |  |  | (44,671 | ) |  |  | (i)(ii) |
Income taxes payable |  |  | (28,077 | ) |  |  | (i)(ii) |
Finance lease liabilities |  |  | (722 | ) |  |  | (ii) |
Current portion of long-term debt |  |  | (219 | ) |  |  | (ii) |
Finance lease liabilities, net of current portion |  |  | (1,409 | ) |  |  | (ii) |
Long-term debt, net of current portion and deferred financing costs |  |  | (1,216,392 | ) |  |  | (ii) |
Other long-term liabilities |  |  | (8,109 | ) |  |  | (i) |
Due from related parties |  |  | 14,441 |  |  |  | (i) |

| (i) | Represents assets and liabilities of the Prospect Business excluded from the transaction perimeter pursuant to the terms of the Purchase Agreement.

| (ii) | Represents balances settled by the Prospect Business with the cash consideration transferred by Astrana. Note that the amounts reflected on the March 31, 2025 Prospect Business balance sheet may differ from the actual cash settlements at Closing on July 1, 2025.

| 4(d) | Represents estimated total preliminary consideration for the Acquisition of approximately $678.2 million paid in cash as of the Closing.

| 4(e) | Reflects the elimination of historical equity balances of the Prospect Business, including additional paid-in capital, accumulated deficit and redeemable convertible preferred stock presented in mezzanine equity.

| 4(f) | Reflects a net adjustment to recognize the estimated fair value of the property and equipment acquired. The estimated net fair value adjustment and the useful life of the property and equipment acquired is as follows (in thousands):

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

|  |  |  |  |  |  |  | Estimated depreciation expense |
|  | Estimated fair value |  |  | Estimated useful life (years) |  |  | For the Year Ended December 31, 2024 |  |  | For the Three Months Ended March 31, 2025 |
Land |  | $ | 25,239 |  |  |  | NA |  |  | $ | - |  |  | $ | - |
Buildings |  |  | 11,420 |  |  |  | 35.0 |  |  |  | 326 |  |  |  | 82 |
Site Improvements |  |  | 341 |  |  |  | 15.0 |  |  |  | 23 |  |  |  | 6 |
Personal property |  |  | 7,223 |  |  |  | 4.0 |  |  |  | 1,806 |  |  |  | 452 |
Total estimated fair value of acquired property and equipment |  | $ | 44,223 |  |  |  |  |  |  | $ | 2,155 |  |  | $ | 540 |
Less: Prospect historical carrying value of property and equipment, net |  |  | (21,680 | ) |  |  |  |  |  |  |  |  |  |  |  |
Net adjustment to property and equipment, net |  | $ | 22,543 |  |  |  |  |  |  |  |  |  |  |  |  |

The preliminary fair values of the property and equipment were estimated using a combination of the cost, market, and income approaches. The market approach estimates the fair value of the tangible assets by comparing the subject to similar assets that have been sold or offered for sale, adjusted to reflect differences between the asset being valued and the comparable assets, such as conditions of sale, market conditions, utility and physical characteristics. The income approach estimates fair value based on the net cash flows the asset is expected to generate, considering market inputs such as rent coverage ratios and capitalization rates.

The fair value of property and equipment and related useful lives are based on preliminary valuations. As such, the amount that will ultimately be allocated to property and equipment and the subsequent depreciation expense may differ materially from this preliminary estimate. In addition, the depreciation impacts will ultimately be based upon the periods in which the associated economic benefits are expected to be derived. Therefore, the amount of depreciation may differ significantly between periods based upon the final value and useful lives assigned.

Depreciation of the acquired property and equipment is reflected as a pro forma adjustment in the unaudited pro forma condensed combined statements of income based on the estimated useful lives above, as further described in Note 5(d).

| 4(g) | Reflects an adjustment to recognize the estimated fair value of the identifiable intangible assets acquired in the Acquisition. The preliminary estimated fair value and the useful life of the intangible assets acquired is as follows (in thousands):

|  |  |  |  |  |  |  | Estimated amortization expense |
|  | Estimated fair value |  |  | Estimated useful life (years) |  |  | For the Year Ended December 31, 2024 |  |  | For the Three Months Ended March 31, 2025 |
Customer-related intangibles |  | $ | 136,300 |  |  |  | 10.0 - 12.0 |  |  | $ | 29,202 |  |  | $ | 7,637 |
Provider network |  |  | 53,800 |  |  |  | 15.0 |  |  |  | 3,587 |  |  |  | 897 |
Restricted Knox-Keene license |  |  | 1,900 |  |  |  | Indefinite |  |  |  | - |  |  |  | - |
Trademarks and trade names |  |  | 1,500 |  |  |  | 3.0 |  |  |  | 500 |  |  |  | 125 |
Total estimated fair value of intangible assets acquired |  | $ | 193,500 |  |  |  |  |  |  | $ | 33,289 |  |  | $ | 8,659 |

The preliminary fair value of the customer-related intangibles was estimated using the “multi-period excess earnings” method, an income approach that considers the net cash flows expected to be generated by the intangible asset, excluding any cash flows related to contributory assets. Significant assumptions include the customer attrition rate, contributory asset charges, and the concluded discount rate.

The preliminary fair value of the trademarks and trade names was estimated using the “relief-from-royalty” method, an income approach that considers the market-based royalty a company would pay to enjoy the benefits of the trademark or trade name in lieu of actual ownership of the trademark or trade name. The hypothetical streams of royalty payments are then discounted to present value. Significant assumptions used in this method include the estimated royalty rate and the concluded discount rate.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The preliminary fair values of the provider network and the Restricted Knox-Keene license were estimated using the “cost-to-recreate” method, a cost approach that estimates the fair value of an intangible asset based on the estimated costs that would be required currently to replace the service capacity of an asset. This method considers the direct and indirect costs required to develop the asset, as well as adjustments for factors such as obsolescence to arrive at an indication of value.

The identified intangible assets and related amortization are preliminary. As such, the amount that will ultimately be allocated to identified intangible assets and the subsequent amortization expense may differ materially from this preliminary allocation. In addition, the amortization impacts will ultimately be based upon the periods in which the associated economic benefits are expected to be derived. Therefore, the amount of amortization following the merger may differ significantly between periods based upon the final value and useful lives assigned, and amortization methodology used for each identified intangible asset.

Amortization related to the identified finite-lived intangible assets is reflected as a pro forma adjustment in the unaudited pro forma condensed combined statements of income based on the estimated useful lives above, as further described in Note 5(d).

| 4(h) | Reflects additional transaction costs of $16.0 million incurred by Astrana subsequent to March 31, 2025 as a reduction to retained earnings, and an adjustment to cash and cash equivalents to reflect the settlement of such transaction costs as of the Closing. The adjustment to cash and cash equivalents also reflect the settlement of $1.0 million unpaid transaction costs reported in Accounts payable and accrued expenses on Astrana’s historical consolidated balance sheet as of March 31, 2025.

Remaining transaction costs of $6.7 million and $1.3 million previously incurred are included in Astrana’s historical statements of income for the year ended December 31, 2024 and the three months ended March 31, 2025, respectively.

| 4(i) | Reflects the adjustment to recognize a deferred tax liability of approximately $4.9 million, arising from the excess book intangible value over tax basis from the preliminary purchase price allocation. This determination is subject to change based upon the final determination of the fair value of assets acquired and liabilities assumed on the acquisition date.

| 4(j) | Reflects a net adjustment to recognize the preliminary estimated goodwill expected to arise from the Acquisition, comprised of the following (in thousands):

|  | As of March 31, 2025 |
Elimination of the Prospect Business’s historical goodwill balance |  | $ | (29,666 | )
Estimated goodwill expected to arise from the Acquisition |  |  | 422,627 |
Net adjustment to goodwill |  | $ | 392,961 |

Goodwill is primarily attributable to the assembled workforce and synergies expected to be achieved from combining the operations of Astrana and the Prospect Business. See Note 3 for significant estimates and assumptions used to determine the preliminary estimate of goodwill for the purpose of preparing the unaudited pro forma condensed combined financial information.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

| 5. | Adjustments to Unaudited Pro Forma Condensed Combined Statements of Income

Pro Forma Financing Adjustments

The following pro forma adjustments are included in the unaudited pro forma condensed combined statements of income for the year ended December 31, 2024 and the three months ended March 31, 2025 to reflect the Financing:

| 5(a) | Reflects the recognition of a non-recurring expense during the year ended December 31, 2024 representing the proportionate write-off of $0.4 million in unamortized deferred financing costs previously allocated to the DDTL A due to the reduction in the aggregate delayed draw term loan commitment from $745.0 million to $707.3 million.

| 5(b) | Reflects the recognition of estimated incremental interest expense associated with the Financing, comprised of the following (in thousands):

|  | For the Year Ended |  |  | For the Three Months |
|  | December 31, 2024 |  |  | Ended March 31, 2025 |
Incremental interest expense on new $707.3 million DDTL A |  | $ | 42,693 |  |  | $ | 10,201 |
Amortization of new deferred financing costs paid in connection with the Financing (net of the write-off discussed in Note 5(a)) |  |  | 317 |  |  |  | 78 |
Total adjustment to interest expense |  | $ | 43,010 |  |  | $ | 10,279 |

The pro forma adjustment to interest expense is calculated based on an estimated interest rate of 6.08%, calculating using the three month Term SOFR as of July 1, 2025, plus a spread of 1.75%, representing the applicable spread as of July 1, 2025 based on the Company’s leverage ratio, in accordance with the terms of the Second Amended and Restated Credit Agreement. Interest expense on the DDTL A is variable and may be higher or lower depending on fluctuations in the benchmark rate of interest and the Company’s leverage ratio in each quarterly period. The following table reflects the estimated impact to the pro forma adjustment to interest expense as a result of interest rate changes of plus or minus 12.5 basis points (in thousands):

|  | For the Year Ended |  |  | For the Three Months |
Pro forma adjustment to interest expense: |  | December 31, 2024 |  |  | Ended March 31, 2025 |
As presented |  | $ | 43,010 |  |  | $ | 10,279 |
+ 12.5 basis points |  |  | 43,888 |  |  |  | 10,489 |
- 12.5 basis points |  |  | 42,132 |  |  |  | 10,069 |

For purposes of the unaudited pro forma condensed combined statements of income, the amortization of incremental deferred financing costs is calculated using the effective interest method over the period from January 1, 2024, the beginning of the earliest period presented, through the five-year term.

| 5(c) | Reflects an adjustment to the provision for income taxes as a result of the estimated income tax effects of the pro forma financing adjustments herein. The adjustment was calculated using a blended statutory income tax rate of 30.5%. The blended statutory tax rate is not necessarily indicative of the effective tax rate of Astrana following the Acquisition, which could be significantly different depending on various factors.

Pro Forma Transaction Accounting Adjustments

The following pro forma adjustments are included in the unaudited pro forma condensed combined statements of income for the year ended December 31, 2024 and the three months ended March 31, 2025 to reflect the effects of the Acquisition:

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

| 5(d) | Reflects the estimated incremental depreciation and amortization expense resulting from the Acquisition, and is comprised of the following (in thousands):

|  | For the Year Ended December 31, 2024 |  |  | For the Three Months Ended March 31, 2025 |
Estimated depreciation expense related to the acquired property and equipment |  | $ | 2,155 |  |  | $ | 540 |
Estimated amortization expense related to the acquired finite-lived intangibles |  |  | 33,289 |  |  |  | 8,659 |
Elimination of historical depreciation and amortization expense reported by the Prospect Business |  |  | (4,336 | ) |  |  | (940 | )
Net adjustment to depreciation and amortization expense |  | $ | 31,108 |  |  | $ | 8,259 |

Depreciation expense related to the acquired property and equipment is calculated assuming a straight-line method of amortization based on the preliminary estimated fair values and useful lives presented Note 4(f) above. Amortization expense related to the acquired finite-lived intangible assets is based on the preliminary estimated fair values and useful lives presented Note 4(g) above, calculated using the straight-line method of amortization for the provider network and trademarks and trade names and the discounted cash flow method for the customer-related intangibles.

The amount of depreciation and amortization expense will ultimately be based on the periods in which the associated economic benefits are expected to be derived and the pattern of benefit for each tangible and intangible asset, and therefore, the amount reported after the Acquisition may differ significantly between periods based upon the final values assigned and depreciation or amortization methodology used for each asset.

A 10% increase or decrease in the estimated fair value of the property and equipment would cause an increase or decrease of $0.2 million and $0.05 million to the depreciation expense amounts as presented in the unaudited pro forma condensed combined statements of income for the year ended December 31, 2024 and the three months ended March 31, 2025, respectively, assuming the estimated useful lives presented Note 4(f) above. A 10% increase or decrease in the estimated fair value of the intangible assets would cause an increase or decrease of $3.3 million and $0.9 million to the amortization amounts as presented in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024 and the three months ended March 31, 2025, respectively, assuming the estimated useful lives presented Note 4(g) above.

| 5(e) | Reflects the reversal of the Prospect Business’ historical interest expense, inclusive of amortization of debt discounts and premiums for the year ended December 31, 2024 and the three months ended March 31, 2025, that would not have been incurred had the Acquisition been consummated on January 1, 2024 as all outstanding debt obligations were settled at Closing and not assumed by Astrana pursuant to the terms of the Purchase Agreement.

| 5(f) | Reflects a non-recurring adjustment to record the estimated incremental transaction-related costs of approximately $16.0 million incurred by Astrana after March 31, 2025. Transaction costs of $6.7 million and $1.3 million are reflected in Astrana’s historical statements of income for the year ended December 31, 2024 and the three months ended March 31, 2025, respectively. Direct transaction costs are expensed as incurred and these additional transaction costs are reflected as if incurred on January 1, 2024, the beginning of the earliest period presented. The unaudited pro forma condensed combined statement of income for the three months ended March 31, 2025 does not reflect an adjustment for transaction costs as such costs are not expected to recur beyond one year from the acquisition date.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

| 5(g) | Reflects an adjustment to the provision for income taxes as a result of the estimated income tax effects of the pro forma transaction accounting adjustments herein. The adjustment was calculated using a blended statutory income tax rate of 30.5%. The blended statutory tax rate is not necessarily indicative of the effective tax rate of Astrana following the Acquisition, which could be significantly different depending on various factors.

| 6. | Earnings (Loss) per Share

Pro forma basic and diluted earnings (loss) per share has been adjusted to reflect the pro forma adjustments herein for the three months ended March 31, 2025 and the year ended December 31, 2024. The following table sets forth the computation of pro forma combined basic and diluted net earnings (loss) per share (in thousands, except share and per share amounts):

|  | For the Year Ended December 31, 2024 |  |  | For the Three Months Ended March 31, 2025 |
Pro forma net income (loss) attributable to Astrana Health, Inc. |  | $ | 20,441 |  |  | $ | (790 | )
Astrana historical weighted-average shares of common stock outstanding - basic(1) |  |  | 47,597,295 |  |  |  | 48,470,682 |
Pro forma weighted-average shares of common stock outstanding - basic |  |  | 47,597,295 |  |  |  | 48,470,682 |
Astrana historical weighted-average shares of common stock outstanding - diluted(1) |  |  | 47,974,334 |  |  |  | 48,850,666 |
Add: Astrana historical effects of dilutive securities(2) |  |  | - |  |  |  | (379,984 | )
Pro forma weighted-average shares of common stock outstanding - diluted |  |  | 47,974,334 |  |  |  | 48,470,682 |
Pro forma earnings (loss) per share attributable to Astrana Health, Inc. common stockholders: |  |  |  |  |  |  |  |
Basic |  | $ | 0.43 |  |  | $ | (0.02 | )
Diluted |  | $ | 0.43 |  |  | $ | (0.02 | )

| (1) | As reported by Astrana for the year ended December 31, 2024 and the three months ended March 31, 2025.

| (2) | Dilutive securities included in Astrana’s historical calculation of diluted earnings per share for the three months ended March 31, 2025, including 112,858 stock options, 130,055 restricted stock awards and units, and 137,071 contingently issuable shares, were added back in computing the pro forma diluted weighted-average shares of common stock outstanding, as the effects would have been antidilutive to the pro forma net loss for the three months ended March 31, 2025. Therefore, the pro forma diluted net loss per share is the same as the pro forma basic net loss per share.

| 7. | Prospect Business Statement of Operations Reconciliation

As previously discussed, Astrana’s fiscal year ends on December 31, and the fiscal year end of the Prospect Business is September 30. The Company has prepared the unaudited pro forma condensed combined statements of income utilizing the historical statements of operations of the Prospect Business, adjusted to conform to the same calendar periods as Astrana’s fiscal year and interim period.

The statement of operations data of the Prospect Business presented in the unaudited pro forma condensed combined statement of income for the year ended December 31, 2024 was derived from the Prospect Business’s audited combined and consolidated statement of operations for the fiscal year ended September 30, 2024, adjusted to exclude the unaudited statement of operations data for the three months ended December 31, 2023, and adjusted to include the unaudited statement of operations data for the three months ended December 31, 2024, as follows (in thousands):

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

|  | Year Ended September 30, 2024 |  |  | Three Months Ended December 31, 2023 |  |  | Three Months Ended December 31, 2024 |  |  | For the Twelve Months Ended December 31, 2024 |
|  | (A) |  |  | (B) |  |  | (C) |  |  | (A - B + C) |
Operating revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capitation |  | $ | 1,044,463 |  |  | $ | 240,104 |  |  | $ | 283,106 |  |  | $ | 1,087,465 |
Patient services, net |  |  | 109,811 |  |  |  | 26,445 |  |  |  | 28,161 |  |  |  | 111,527 |
Management fees |  |  | 25,392 |  |  |  | 6,021 |  |  |  | 6,969 |  |  |  | 26,340 |
Other operating revenues |  |  | 14,934 |  |  |  | 3,191 |  |  |  | 4,726 |  |  |  | 16,469 |
Total net revenue |  |  | 1,194,600 |  |  |  | 275,761 |  |  |  | 322,962 |  |  |  | 1,241,801 |
Cost of revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Claims expense |  |  | 560,434 |  |  |  | 126,083 |  |  |  | 162,858 |  |  |  | 597,209 |
Capitation expense |  |  | 240,061 |  |  |  | 56,192 |  |  |  | 64,270 |  |  |  | 248,139 |
Other cost of revenues |  |  | 69,479 |  |  |  | 20,986 |  |  |  | 16,030 |  |  |  | 64,523 |
Total cost of revenues |  |  | 869,974 |  |  |  | 203,261 |  |  |  | 243,158 |  |  |  | 909,871 |
Gross margin |  |  | 324,626 |  |  |  | 72,500 |  |  |  | 79,804 |  |  |  | 331,930 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salary and benefits |  |  | 140,105 |  |  |  | 32,476 |  |  |  | 35,952 |  |  |  | 143,581 |
Outside services |  |  | 26,424 |  |  |  | 5,070 |  |  |  | 11,162 |  |  |  | 32,516 |
Management fees |  |  | 11,736 |  |  |  | 2,545 |  |  |  | 3,732 |  |  |  | 12,923 |
Professional fees |  |  | 5,388 |  |  |  | 1,339 |  |  |  | 1,544 |  |  |  | 5,593 |
Marketing |  |  | 3,138 |  |  |  | 774 |  |  |  | 708 |  |  |  | 3,072 |
Lease and rental expense |  |  | 3,425 |  |  |  | 779 |  |  |  | 789 |  |  |  | 3,435 |
Repair, maintenance and utilities |  |  | 4,511 |  |  |  | 982 |  |  |  | 1,396 |  |  |  | 4,925 |
Software licensing |  |  | 8,205 |  |  |  | 1,642 |  |  |  | 1,995 |  |  |  | 8,558 |
Taxes, licenses and fees |  |  | 6,997 |  |  |  | 1,496 |  |  |  | 1,783 |  |  |  | 7,284 |
Insurance |  |  | 2,901 |  |  |  | 605 |  |  |  | 886 |  |  |  | 3,182 |
Depreciation and amortization |  |  | 3,953 |  |  |  | 429 |  |  |  | 812 |  |  |  | 4,336 |
Other operating expenses |  |  | 4,000 |  |  |  | 1,402 |  |  |  | 1,514 |  |  |  | 4,112 |
Total operating expenses |  |  | 220,783 |  |  |  | 49,539 |  |  |  | 62,273 |  |  |  | 233,517 |
Operating income |  |  | 103,843 |  |  |  | 22,961 |  |  |  | 17,531 |  |  |  | 98,413 |
Operating gain (loss) from unconsolidated joint venture |  |  | 348 |  |  |  | 12 |  |  |  | - |  |  |  | 336 |
Interest expense, net |  |  | (138,251 | ) |  |  | (19,276 | ) |  |  | (43,424 | ) |  |  | (162,399 | )
Other expense |  |  | (2,739 | ) |  |  | (2,500 | ) |  |  | - |  |  |  | (239 | )
(Loss) income before income taxes |  |  | (36,799 | ) |  |  | 1,197 |  |  |  | (25,893 | ) |  |  | (63,889 | )
Income tax expense |  |  | 41,890 |  |  |  | 29,696 |  |  |  | 2,265 |  |  |  | 14,459 |
Net (loss) income attributable to PHP Holdings, LLC & RI Market |  | $ | (78,689 | ) |  | $ | (28,499 | ) |  | $ | (28,158 | ) |  | $ | (78,348 | )

The statement of operations data of the Prospect Business presented in the unaudited pro forma condensed combined statement of income for the three months ended March 31, 2025 was derived from the Prospect Business’s unaudited combined and consolidated statement of operations for the six months ended March 31, 2025, adjusted to exclude the three months ended December 31, 2024, as follows (in thousands):

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

|  | Six Months Ended March 31, 2025 |  |  | Three Months Ended December 31, 2024 |  |  | For the Three Months Ended March 31, 2025 |
|  | (A) |  |  | (B) |  |  | (A - B) |
Operating revenues: |  |  |  |  |  |  |  |  |  |  |  |
Capitation |  | $ | 552,222 |  |  | $ | 283,106 |  |  | $ | 269,116 |
Patient services, net |  |  | 54,556 |  |  |  | 28,161 |  |  |  | 26,395 |
Management fees |  |  | 17,367 |  |  |  | 6,969 |  |  |  | 10,398 |
Other operating revenues |  |  | 8,481 |  |  |  | 4,726 |  |  |  | 3,755 |
Total net revenue |  |  | 632,626 |  |  |  | 322,962 |  |  |  | 309,664 |
Cost of revenues: |  |  |  |  |  |  |  |  |  |  |  |
Claims expense |  |  | 315,507 |  |  |  | 162,858 |  |  |  | 152,649 |
Capitation expense |  |  | 128,931 |  |  |  | 64,270 |  |  |  | 64,661 |
Other cost of revenues |  |  | 28,217 |  |  |  | 16,030 |  |  |  | 12,187 |
Total cost of revenues |  |  | 472,655 |  |  |  | 243,158 |  |  |  | 229,497 |
Gross margin |  |  | 159,971 |  |  |  | 79,804 |  |  |  | 80,167 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
Salary and benefits |  |  | 73,252 |  |  |  | 35,952 |  |  |  | 37,300 |
Outside services |  |  | 17,299 |  |  |  | 11,162 |  |  |  | 6,137 |
Management fees |  |  | 7,831 |  |  |  | 3,732 |  |  |  | 4,099 |
Professional fees |  |  | 2,686 |  |  |  | 1,544 |  |  |  | 1,142 |
Marketing |  |  | 1,404 |  |  |  | 708 |  |  |  | 696 |
Lease and rental expense |  |  | 1,536 |  |  |  | 789 |  |  |  | 747 |
Repair, maintenance and utilities |  |  | 2,777 |  |  |  | 1,396 |  |  |  | 1,381 |
Software licensing |  |  | 4,528 |  |  |  | 1,995 |  |  |  | 2,533 |
Taxes, licenses and fees |  |  | 3,628 |  |  |  | 1,783 |  |  |  | 1,845 |
Insurance |  |  | 2,502 |  |  |  | 886 |  |  |  | 1,616 |
Depreciation and amortization |  |  | 1,752 |  |  |  | 812 |  |  |  | 940 |
Other operating expenses |  |  | 3,006 |  |  |  | 1,514 |  |  |  | 1,492 |
Total operating expenses |  |  | 122,201 |  |  |  | 62,273 |  |  |  | 59,928 |
Operating income |  |  | 37,770 |  |  |  | 17,531 |  |  |  | 20,239 |
Interest expense, net |  |  | (80,549 | ) |  |  | (43,424 | ) |  |  | (37,125 | )
(Loss) income before income taxes |  |  | (42,779 | ) |  |  | (25,893 | ) |  |  | (16,886 | )
Income tax expense |  |  | 3,971 |  |  |  | 2,265 |  |  |  | 1,706 |
Net (loss) income attributable to PHP Holdings, LLC & RI Market |  | $ | (46,750 | ) |  | $ | (28,158 | ) |  | $ | (18,592 | )