Astrana Health (NASDAQ:ASTH) CEO Brandon Sim said the company expects to continue delivering growth in 2026 despite a volatile regulatory and macro environment, citing its “risk-bearing provider group” model and internally built technology platform as key differentiators. Sim spoke with Barclays analyst Andrew Mok at the Barclays Global Healthcare Conference following the company’s recent fourth-quarter results and 2026 guidance.
Business model and 2026 outlook
Sim described Astrana as operating a “unique single-payer model” in which it receives reimbursement as a percentage of premium from a diversified set of payer partners, including large national and regional plans. He said the company runs a “unified multi-line of business and multi-payer downstream provider network” intended to deliver coordinated care at lower cost.
Looking to 2026, Sim said the company is planning “another 20%-30% growth on both the top and the bottom lines,” while acknowledging “puts and takes” tied to regulatory volatility. He said Astrana expects tailwinds from Medicare Advantage rate updates stemming from the 2026 Medicare Advantage rate notice, offset in part by headwinds in Medicaid and exchange populations.
Cost trend consistency and operating leverage
Mok highlighted that Astrana has held medical cost trends in the mid-single digits, with 2025 coming in slightly better than the company’s initial 4.5% expectation. Sim attributed this consistency primarily to Astrana’s model of engaging patients “longitudinally over time” across lines of business and payers.
Sim said Astrana’s approach allows it to maintain patient relationships even when seniors switch Medicare Advantage plans year to year, as long as they stay with a primary care physician in Astrana’s network. He said the company can build a more complete data history from claims and charts across plans and has greater economic incentive to invest in proactive and preventive care because it expects a longer “LTV” (lifetime value) of the patient within its system.
On efficiency, Sim emphasized operating leverage from G&A and a proprietary, internally built technology platform. He said the company improved G&A as a percentage of revenue by 75 basis points from 2024 to 2025 (110 basis points on an adjusted basis) and ran G&A at about 6.8% of revenue for full-year 2025, despite taking on payer-like responsibilities such as claims processing, network building, credentialing, contracting, and patient service lines.
Membership assumptions: Medicare growth, Medicaid and exchange declines
Discussing membership assumptions embedded in 2026 guidance, Mok noted Astrana is modeling mid-single-digit Medicare growth, roughly a 10% decline in Medicaid, and a 20%-30% decline in ACA exchange lives.
- Medicare Advantage: Sim said the company has “good visibility” into MA growth because it can already see new enrollment from the annual enrollment period. He characterized expected growth as “reasonable,” while noting the broader industry has pulled back on benefits.
- Medicaid (Medi-Cal exposure): Sim said Astrana’s Medicaid book has unique dynamics because many members are in California’s Medi-Cal program. He said Medicaid enrollment in California declined around 7%-8% last year and Astrana is expecting a 10%-13% decline this year, driven in part by impacts related to undocumented immigrant status (UIS) members. He added that Astrana believes it has lower indexed UIS membership because those members are less likely to have long-term PCP relationships and therefore are less likely to be attributed to its provider groups. He also said guidance assumes a mix shift due to the acuity of departing populations.
- ACA exchange: Sim said exchange membership has been “flat to slightly up” early in the year, but Astrana anticipates 20%-30% declines after auto re-enrolled members drop off in April, aligning with broader industry commentary.
On medical cost trend expectations amid disruption, Sim said Astrana’s actuarial team has historically been strong at forecasting trends. He said the company modeled a higher trend for 2026 than 2025—around “5-ish%”—due to potential adverse selection effects in exchanges and Medicaid and because the recently acquired Prospect Health population was operating at a slightly higher trend than Astrana’s legacy business.
Medicare Advantage rates and CMS risk model discussion
Sim addressed debate around CMS’s risk model recalibration, including concerns about higher coefficient weights for skin substitutes at the expense of chronic conditions. Sim argued the outcome is a function of the underlying “math” in regressions using post-COVID fee-for-service Medicare claims data, saying that if fraud drives high claims costs for certain diagnoses, coefficients will rise accordingly. He said Astrana has been “in front of CMS” advocating for stripping out extenuating factors such as fraud, waste, and abuse so the model produces coefficients that better align incentives with preventive care.
While the industry-wide rate update was discussed as roughly flat, Mok noted Astrana has indicated its Medicare Advantage rates may increase approximately 2.5%-3%. Sim attributed Astrana’s relative performance to conservative risk adjustment practices and an encounter-based model, including not using audio-only calls or “unlinked chart chases” for risk adjustment. He said Astrana’s RAF score is about 1.02, “just above the industry average,” despite a high percentage of dual eligibles.
Sim said Astrana expects the net impact from published factors—including disallowed diagnoses and coefficient changes—to be a smaller headwind than the broader industry’s 3.4% risk model renormalization, resulting in the 2.5%-3% effective rate increase. He added that this level of increase would be only slightly margin dilutive given the company’s MA medical cost trend in the low 4% range last year, and that even a modest improvement in the advance-to-final rate dynamics could make MA margin accretive in 2027.
Prospect integration and AI tools in operations
On the previously discussed $350 million EBITDA target for 2027 tied to the Prospect deal, Sim said the target remains “within view” but would not necessarily be his “modal or median outcome” given changes in the regulatory environment since the deal was announced in November 2024. He cited factors such as Medicaid disenrollments, rate dynamics, and acuity mix as swing items, noting Astrana baked in a $25 million-$30 million headwind in its 2025-to-2026 bridge related to Medicaid disenrollments and adverse selection. He also referenced a $30 million tailwind this year from Medicare Advantage star rating mismatch and said incremental margin improvement could add further upside.
Sim also outlined AI capabilities already embedded in operations, emphasizing that Astrana’s technology has been developed internally over seven years. Among the examples he provided:
- About 90% of claims are automatically adjudicated without human intervention.
- More than 70% of prior authorizations are automatically approved, with Sim emphasizing that “nothing [is] denied” via AI.
- Tools that aggregate structured and unstructured patient data and allow staff to query records (including OCR of documents), returning citations for human review.
- Care management automation, including AI-enabled outreach such as post-discharge calls and scheduling annual wellness visits, intended to let nurses operate at the top of their license.
The conversation concluded with Sim reiterating that Astrana’s ability to manage trend, its conservative posture on risk adjustment, and its operating efficiency position the company to grow market share even amid regulatory volatility.
About Astrana Health (NASDAQ:ASTH)
Astrana Health, Inc, Inc, a physician-centric technology-powered healthcare management company, provides medical care services in the United States. It operates through three segments: Care Partners, Care Delivery, and Care Enablement. The company is leveraging its proprietary population health management and healthcare delivery platform, operates an integrated, value-based healthcare model which empowers the providers in its network to deliver care to its patients. It offers care coordination services to patients, families, primary care physicians, specialists, acute care hospitals, alternative sites of inpatient care, physician groups, and health plans.
