Passing On Astrana Health
Oct 7, 2024
Astrana Health (ASTH) is a healthcare management company, providing a technology and solutions platform for both primary care and specialty physicians, as well as owning some of their own medical offices. The firm currently operates in 3 states (CA, NV, and TX), but is expanding into several more with the pending purchase of Collaborative Health Systems. This was a close call, as there is plenty of growth potential, the network is sticky (98% provider retention), and revenues are recurring in the "full-risk" model where coverage pays a fixed fee per patient. However, growth will largely be through acquisitions, which will (and has) result in low ROIs. I'm also not a huge fan of the 87% cut of revenue paid by Medicare and Medicaid. Astrana is largely exposed to political whims around reimbursement rates. It gets a pass, but investors could do worse, and the stock is reasonably valued right now.
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