ASTH

Astrana is a value-based-care MSO compounding revenue at a breakneck pace — FY2025 revenue of $3.18B is up 56.4% YoY and more than 4x the $774M of FY2021, driven by the Prospect acquisition and continued IPA/risk-bearing expansion. The cash engine is genuinely strong: operating cash flow of $115M (+119.5%) and free cash flow of $104M (per MD&A) are real and growing fast, and management's Adjusted EBITDA of $205M (6% margin) and Adjusted EPS of $2.20 (vs $1.94) put the stock at roughly 20x adjusted earnings and 0.8x sales — not a demanding price for this growth. On those numbers alone the stock looks cheap.

The problem is earnings quality. GAAP net income has fallen every year as revenue has quadrupled — from $68.9M in FY2021 to just $22.5M in FY2025 (-47.9% YoY), with net margin of 0.7%, operating margin of 2.5%, and ROE of 2.9%. The MD&A shows why: ~$45.4M of 'other, net' charges (incl. $13.0M for the CFC HP legal matter and $25.9M of Prospect transaction/integration costs), $40.7M of intangible amortization, $38.6M of stock-based comp, and interest expense that jumped to $49.9M from $33.1M. Because Astrana's strategy IS acquisition, several of these 'adjustments' (transaction costs, amortization, SBC) recur, so the true economics sit somewhere between the ugly GAAP print and the flattering $108.6M adjusted figure. The headline GAAP P/E of 97.9 is therefore not meaningful, but it is a fair warning sign.