Astrana Health (ASTH): Three Filters Pass, One Doesn't
Astrana Health (NASDAQ: ASTH, $1.74B market cap) passes three of four hard screening filters as of May 21, 2026 — TTM revenue growth of +56.7%, TTM OCF of +$166.0M, and market cap well below $10B — but fails the GAAP PEG filter because TTM GAAP EPS declined 15.3% after Prospect Health acquisition-related costs (interest expense +51%, amortization +59%, $13M legal settlement). The non-GAAP forward P/E of 13.3x sits far below the sector median of 55.3x; the qualification path requires GAAP EPS growth to turn positive on a TTM basis, with Q2 2026 earnings (~August 7) as the next verification checkpoint.
Transparency note: All four hard filters must clear simultaneously for a stock to become a formal pick. Astrana Health passes three of them by comfortable margins — but the fourth, GAAP PEG, fails in a way that requires explanation rather than dismissal. The failure is real. It is also almost entirely a function of acquisition accounting, not operational deterioration. This profile covers the full picture.
The screening verdict
As of May 21, 2026, here is where ASTH stands against the four mandatory criteria:
| Hard filter | Threshold | ASTH result | Status |
|---|---|---|---|
| Market cap | < $10B | $1.74B 1 | ✅ Pass |
| TTM revenue growth | > 30% | +56.7% 23 | ✅ Pass |
| GAAP PEG | < 1 | Negative (EPS −15.3% TTM) 1 | ❌ Fail |
| TTM operating cash flow | Positive | +$166.0M 23 | ✅ Pass |
ASTH passes three of four filters. It fails on GAAP PEG.
Why the filter fails: TTM GAAP diluted EPS is $0.61 (the four quarters Q2 2025 through Q1 2026: $0.19 + $0.01 + $0.12 + $0.29). The prior-year equivalent was $0.72 — a decline of 15.3%. With negative EPS growth, the GAAP PEG ratio is mathematically negative (~−4.19 at P/E 63.5x), which fails any standard PEG screen 13.
What drove the EPS drag: Three acquisition-related costs loaded into FY2025 after ASTH closed the Prospect Health purchase in July 2025 for $707.9M, financed by a five-year term loan. Interest expense jumped to $49.9M in FY2025 from $33.1M in FY2024 (up 51%), intangible asset amortization rose to $40.7M from $25.6M (up 59%), and a $13.0M legal settlement (CFC HP) added a one-time charge 3. None of these reflect deterioration in the core care-management business. On a non-GAAP basis, TTM adjusted EPS is approximately $2.52, implying a non-GAAP PEG of roughly 4.78 — still above 1.0, so the fail holds even there, but the cause is different 1.
The screen applies uniformly. ASTH does not qualify today.
What Astrana Health does
Astrana Health (NASDAQ: ASTH, headquartered in Alhambra, CA) is a physician-centered, AI-enabled value-based care management company. It supports more than 20,000 contracted physicians and approximately 1.55 million patients across 16 states 2.
The business model sits between health insurers and physicians. ASTH accepts delegated risk — capitation payments from payers — then sub-delegates fixed per-member payments to its contracted physician network. The company earns by managing medical utilization tightly enough that actual costs come in below the capitation it receives. In Q1 2026, net capitation revenue was $892.9M, or 92.5% of total revenue 2. ASTH holds no insurance license and takes on no claims infrastructure — it is an operating layer that coordinates care.
Three business segments: Care Partners (physician network management, 94% of Q1 2026 revenue), Care Delivery (owned clinics), and Care Enablement (technology and management services). About 80% of Care Partners capitation revenue and 40% of enrolled members are now under full-risk arrangements 2.
Financial snapshot
Q1 2026 results, reported May 7, 2026, were strong on every operational metric:
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Sources: 2
The revenue trajectory shows the step-change effect of the Prospect Health consolidation (closed July 2025):
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FY2025 full-year revenue was $3,181.8M (+56% YoY) with adjusted EBITDA of $205.4M (+21%) and TTM OCF of $166.0M 3.
Management's 2026 full-year guidance, reaffirmed on the Q1 call: revenue $3.8B–$4.1B, adjusted EBITDA $250M–$280M, free cash flow $105M–$132.5M 2. At the midpoint, that implies about 24% revenue growth and 29% adjusted EBITDA growth for the year — decelerating from the acquisition-inflated TTM growth rate as the base normalizes.
Balance sheet: At March 31, 2026, ASTH held $478.4M in cash against $1.07B in total debt, for net debt of approximately $591M 13. Net leverage (pro-forma TTM basis) was approximately 2.3x at quarter-end, down from the initial post-Prospect peak; management targets ≤2.0x by year-end 2026. Capital expenditure was only $10.1M in FY2025, typical of an asset-light model 3.
Valuation
At $38.76 (May 20 close), ASTH trades at a large premium on trailing GAAP earnings but at a significant discount on forward non-GAAP earnings 1:
| Metric | ASTH | AGL (agilon) | PRVA (Privia) | Industry median* |
|---|---|---|---|---|
| Market cap | $1.74B | $1.35B | $2.92B | — |
| P/E (TTM GAAP) | 63.5x | N/M (loss) | 138.8x | 83.8x |
| Forward P/E (non-GAAP) | 13.3x | N/M | N/M | 55.3x |
| P/S (TTM) | 0.55x | 0.23x | 1.30x | — |
| EV/EBITDA | 15.7x | N/M | 52.7x | — |
*Healthcare support services sector median, Damodaran (104 companies) 6
Peer identities: AGL (agilon health) is a physician enablement platform focused on Medicare Advantage — currently loss-making. PRVA (Privia Health Group) is a physician management and enablement company with a lighter risk model and no meaningful debt.
The trailing GAAP P/E of 63.5x looks expensive, but it reflects depressed GAAP earnings from acquisition amortization and interest costs rather than a high earnings multiple on a going-concern basis. The forward non-GAAP P/E of 13.3x — based on FY2026 analyst consensus adjusted EPS of $2.92 9 — is well below both GAAP peer valuations and the sector forward PE median of 55.3x 6. Whether that discount is warranted depends on how quickly leverage comes down and whether Prospect integration sustains its current trajectory.
Eleven analysts cover the stock. The consensus is Buy, with an average 12-month price target of $44.56 (approximately 15% above the current price of $38.76) and a range of $37–$50 10. Jefferies recently cut its target from $44 to $37 (maintained Buy), citing risk re-pricing for 2026. Analyst targets carry systematic optimism bias and are reference points, not forecasts.
Non-GAAP EPS has beaten analyst consensus in each of the past four quarters: +21.1% (Q2 2025), +10.7% (Q3 2025), +28.6% (Q4 2025), +13.9% (Q1 2026) 9.
Growth catalysts
Prospect integration is tracking ahead of plan. The $707.9M acquisition added scale in California (Prospect Health Plan, multiple medical groups, an MSO, pharmacy RightRx, and Foothill Regional Medical Center). Core physician retention exceeded 99% post-close, annual synergies of $12M–$15M are tracking toward the high end, and Prospect's annualized adjusted EBITDA has already exceeded the $80M target management set at announcement 2.
Full-risk contract conversion is improving unit economics. As of Q1 2026, 80% of Care Partners capitation revenue operates under full-risk arrangements, up from partial-risk contracts that generate lower margins. New full-risk contracts entered in late 2025 are performing in line with underwriting expectations early in the ramp 2.
AI is beginning to move the operating metrics. G&A as a percentage of revenue declined 70 basis points YoY in Q1 2026, attributed to AI-driven workflow automation. Care gap closure rates improved 24%, annual wellness visit completion rates improved 30%, and AI-assisted claims processing cut turnaround time roughly in half versus manual review 2. These are early operational numbers, not margin transformations — but the direction is consistent with the CEO's framing of AI as a long-term driver of medical loss ratio improvement.
New geography is adding scale. ASTH launched full-risk Medicare Advantage operations in Texas in Q1 2026, covering more than 14,000 members. Its South Nevada market reached profitability, with medical loss ratio improving 20 percentage points YoY 2.
2027 Medicare Advantage rate environment is supportive. CMS's April 2026 final rate notice for 2027 included a moderate benchmark increase and retained the 2024 risk adjustment model rather than shifting to a more restrictive framework. Management said on the Q1 call that ASTH's conservative encounter-based risk adjustment approach is unaffected by the changes retained in the final rule, and that the 2027 rate environment should support existing Medicare Advantage margins 11.
Upcoming catalyst: Q2 2026 earnings, expected around August 7, 2026 10. Q2 guidance is revenue $965M–$1.0B and adjusted EBITDA $65M–$70M 2.
Key risks
Customer concentration is the top structural risk. A single unnamed payer accounted for 20.9% of Q1 2026 revenue and 39.2% of accounts receivable 2. Based on nine-month 2025 data, the top three payers together represented approximately 54% of revenue (Payer A ~28%, Payer B ~16%, Payer C ~10%). None of these payer identities are disclosed in public filings. Any contract renegotiation or non-renewal by a top payer would hit revenue immediately.
Medicare Advantage exposure carries regulatory tail risk. Medicare is approximately 61% of revenue (per company investor presentation, nine-month 2025 basis) 12. The 2027 CMS rate environment is currently favorable, but Medicare Advantage reimbursement is subject to annual federal rulemaking. A future CMS shift toward more aggressive risk adjustment reform or benchmark cuts would affect ASTH more directly than peers with diversified payer mixes.
Leverage constrains flexibility. Total debt at March 31, 2026 was approximately $1.07B, with net leverage at about 2.3x pro-forma TTM EBITDA 2. GAAP net margin in Q1 2026 was 1.5% ($14.4M on $965.1M revenue) — thin enough that a sustained uptick in medical costs or a single large adverse legal settlement would pressure free cash flow and slow deleveraging. Peers Privia Health and agilon health carry $9M and $33M in debt, respectively 78, giving them considerably more cushion in an adverse Medicare reimbursement scenario.
The 10-K delay is a compliance flag. ASTH filed an NT 10-K on March 2, 2026, disclosing a material weakness in internal controls related to the timing and documentation of Prospect acquisition accounting 3. Management stated the weakness does not involve misstatement of financial data or require restatement. The FY2025 10-K had not been filed as of the research date. Compliance delays after major acquisitions are not uncommon, but the weakness is worth monitoring through the next annual filing.
Short interest is elevated. 2.86M shares are sold short, representing 8.9% of float and a 6.43-day cover ratio as of the most recent disclosure 1. Short sellers may be positioned on the leverage and margin compression thesis.
Price action and ownership
At $38.76 (May 20 close), ASTH is up approximately 56% year-to-date, trading near its 52-week high of $39.93 (May 15, 2026) and well above both its 50-day ($30.58) and 200-day ($27.34) moving averages 1. The stock has a beta of 0.99.
Insider ownership is concentrated: Executive Chairman Kenneth T. Sim holds approximately 61% of shares, and the broader Sim family group (including CEO Brandon Sim and director Thomas Lam) controls over 60% of voting power combined. In the past six months, there have been zero open-market sales — all insider share disposals were tax-withholding surrenders triggered by restricted stock vesting (Form 4 code F). The only net addition was CEO Brandon Sim exercising options for 21,334 shares in February 2026 at a $23.24 strike price 13. Institutional holders include BlackRock (12.4%) and Vanguard (8.55%) 14.
What would make it qualify
The formal entry condition is GAAP PEG below 1, which requires GAAP EPS growth to turn positive on a trailing twelve-month basis.
The arithmetic: current TTM GAAP EPS is $0.61. For TTM EPS growth to be positive, the rolling four-quarter sum must exceed $0.72 (the prior-year TTM figure). Q1 2026's GAAP EPS was $0.29. If the remaining three quarters of the TTM window (Q2, Q3, Q4 2026) each come in above the equivalent 2025 quarters ($0.19, $0.01, $0.12), the TTM sum will grow. That is a low bar on an absolute level — management's guidance trajectory supports it — but the GAAP P/E also needs to decline from 63.5x as EPS recovers, otherwise the resulting PEG still won't cross below 1.0.
The cleaner path: if FY2026 GAAP EPS lands in the range implied by non-GAAP guidance ($2.92 consensus adjusted EPS), meaningful GAAP EPS growth would emerge as interest expense stabilizes post-Prospect and amortization becomes a known fixed drag. Monitoring the Q2 2026 report on August 7 — specifically GAAP diluted EPS versus year-ago Q2 2025's $0.19 — will indicate whether the recovery trend is on track.
Until TTM GAAP EPS growth turns positive and the resulting PEG falls below 1.0, ASTH does not qualify as a formal pick.
Screening data as of May 21, 2026. Stock price as of May 20, 2026 (most recent close).
References
- 1ASTH Key Statistics — Yahoo Finance
finance.yahoo.com
- 2Astrana Health Q1 2026 Results — PR Newswire
prnewswire.com
- 3Astrana Health Q4 & FY2025 Results — PR Newswire
prnewswire.com
- 4Astrana Health Q3 2025 Results — IR
ir.astranahealth.com
- 5Astrana Health Q2 2025 Results — PR Newswire
prnewswire.com
- 6PE Ratios by Industry — Damodaran Online
pages.stern.nyu.edu
- 7agilon health Key Statistics — Yahoo Finance
finance.yahoo.com
- 8Privia Health Key Statistics — Yahoo Finance
finance.yahoo.com
- 9ASTH Analyst Estimates — Yahoo Finance
finance.yahoo.com
- 10ASTH Consensus — MarketScreener
marketscreener.com
- 11
- 12ASTH J.P. Morgan Healthcare Conference Presentation — SEC 8-K
ir.astranahealth.com
- 13ASTH Insider Holders — SECForm4.com
secform4.com
- 14ASTH Ownership — Simply Wall St
simplywall.st
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