Astrana Health, formerly known as Apollo Medical Holdings, is set to acquire certain businesses and assets from Prospect Health System for $745 million. This acquisition is expected to strengthen Astrana's position in the healthcare sector, particularly in value-based care arrangements, by adding approximately 610,000 members to its platform.
The acquisition includes various assets, such as the Prospect Health Plan, Prospect Medical Groups operating in multiple states, Prospect Medical Systems, the pharmacy asset RightRX, and the Alta Newport Hospital. The deal is expected to close in mid-2025, with Astrana funding the acquisition using cash reserves and a $1.1 billion senior secured bridge commitment.
In the third quarter, Astrana reported a 37% increase in revenue, reaching $479 million, while its care partners revenue surged by 42% to $456 million. However, the company experienced a decline in net income, which fell 27% year-over-year to $16.1 million, resulting in earnings per share dropping to 33 cents, down from 47 cents a year ago. Despite these challenges, analysts believe that the acquisition of Prospect Health will generate significant synergies, with management expecting at least $12 million in synergies by 2027.
The acquisition of Prospect Health is seen as a highly strategic move for Astrana, particularly given the geographic overlap in key markets such as Texas, California, and Arizona. This expansion is expected to open new opportunities for Astrana, especially in areas where it currently has limited operations. Brandon Sim, president and CEO of Astrana, emphasized that this acquisition will solidify the company as a leading healthcare delivery platform.
Astrana plans to invest in Prospect and its infrastructure to improve access and quality of care for patients. The company aims to leverage its existing technology stack and management service organization offerings to enhance the capabilities of Prospect Medical Systems. With the recent acquisition of Collaborative Health Systems, Astrana's pro forma revenue is projected to exceed $3 billion for 2024. This positions Astrana as one of the largest integrated care delivery and value-based care providers in the country.
As the healthcare landscape continues to evolve, Astrana's proactive approach to acquisitions and investments positions it favorably for future growth. The company's commitment to delivering high-quality, affordable, and accessible care aligns with the broader industry trend towards value-based care.