Astrana Health Enters Definitive Agreement to Acquire Collaborative Health Systems

Rhea-AI Summary

Astrana Health (NASDAQ: ASTH) has announced a definitive agreement to acquire Collaborative Health Systems (CHS), a management services organization serving over 129,000 beneficiaries across 17 states and a company of Centene (NYSE:CNC). This acquisition aims to expand Astrana's payer-agnostic care delivery capabilities and empower CHS' providers. The deal combines Astrana's technology platform and care model with CHS's provider base and payer partnerships, potentially accelerating Astrana's goal of organizing providers and enhancing patient healthcare experiences.

CHS has a complementary provider footprint in key markets including Connecticut, Georgia, Maryland, New Mexico, Virginia, and Texas. Astrana plans to leverage its Care Enablement platform to improve patient outcomes. The transaction is expected to close by year-end, subject to regulatory approvals. Financial details will be updated post-closure, with more information to be discussed during Astrana's August 7 quarterly earnings presentation.

Positive

• Acquisition expands Astrana's care delivery capabilities across 17 states
• Adds over 129,000 beneficiaries to Astrana's patient base
• Complements Astrana's existing presence in Texas with 350+ primary care physicians
• Potential for improved patient outcomes through Astrana's Care Enablement platform
• Strengthens partnership with Centene's Medicare business, Wellcare

Negative

• Financial terms of the acquisition not disclosed
• Integration challenges may arise from combining two large organizations
• Regulatory approvals still pending, which could delay or affect the deal closure

Insights

Financial Analyst

This acquisition marks a significant strategic move for Astrana Health, potentially reshaping its market position and operational capabilities. The deal to acquire Collaborative Health Systems (CHS) from Centene is poised to expand Astrana's geographical footprint and enhance its value-based care delivery model.

Key financial implications include:

• Increased market reach: CHS serves over 129,000 beneficiaries across 17 states, which should substantially boost Astrana's patient base and revenue potential.
• Synergies in technology and care models: Astrana's Care Enablement platform could drive operational efficiencies and improve patient outcomes in CHS's network.
• Strategic partnerships: The continued collaboration with Centene's Medicare business, Wellcare, suggests potential for future revenue streams and market expansion.

While specific financial terms weren't disclosed, investors should watch for the updated financial outlook post-closure. The transaction's impact on Astrana's balance sheet, cash flow and profitability will be important metrics to evaluate. Additionally, the successful integration of CHS's operations and realization of synergies will be critical for long-term value creation.

From a market perspective, this acquisition positions Astrana as a more formidable player in the value-based care space, potentially leading to improved negotiating power with payers and increased attractiveness to healthcare providers. However, investors should also consider the execution risks associated with large-scale integrations and the regulatory approvals required for deal closure.

Healthcare Industry Analyst

Astrana Health's acquisition of Collaborative Health Systems (CHS) represents a significant development in the evolving landscape of value-based care. This strategic move aligns with the industry-wide shift towards integrated, technology-driven healthcare delivery models.

Key industry implications include:

• Market consolidation: This deal exemplifies the ongoing trend of consolidation in the healthcare management services sector, as companies seek scale and efficiency.
• Technology integration: Astrana's plan to leverage its Care Enablement platform across CHS's network highlights the growing importance of AI and data analytics in improving patient outcomes and operational efficiency.
• Geographic expansion: The acquisition gives Astrana a stronger presence in key markets, particularly in the South and East Coast, potentially altering competitive dynamics in these regions.
• Provider empowerment: The focus on supporting and empowering providers aligns with the industry's move towards more provider-centric models of care delivery.

This acquisition could serve as a catalyst for further consolidation in the sector, as competitors may seek similar deals to remain competitive. It also underscores the importance of technological capabilities in driving value-based care initiatives.

For the broader healthcare ecosystem, this deal may accelerate the adoption of value-based care models and potentially lead to improved patient outcomes and cost efficiencies. However, the success of this strategy will depend on Astrana's ability to effectively integrate CHS's operations and deliver on the promised synergies.

ALHAMBRA, Calif., July 25, 2024 /PRNewswire/ -- Astrana Health, Inc. ("Astrana"), together with its subsidiaries and affiliated entities ("the Company") (NASDAQ: ASTH), a leading provider-centric, technology-powered healthcare company enabling providers to deliver accessible, high-quality, and high-value care to all, today announced it has entered into a definitive agreement to acquire Collaborative Health Systems ("CHS"), a management services organization serving more than 129,000 beneficiaries across 17 states and a company of Centene Corporation (NYSE:CNC) ("Centene"), a leading healthcare enterprise focused on transforming the health of the communities it serves. The acquisition facilitates the expansion of both Astrana's and CHS' payer-agnostic care delivery capabilities, which serve members across all lines of business, and further empower CHS' providers in the delivery of care to the communities it serves. Astrana and Centene also share a mutual commitment to providing high-quality and coordinated care to members and will continue to work together to expand the scope of their existing value-based partnerships in order to advance that joint mission.

"With this acquisition, we believe Astrana will be even better positioned to deliver accessible, high-quality, and high-value care to more patients across the nation," said President and CEO of Astrana Health, Brandon Sim. "CHS has built a scaled and impactful value-based care ecosystem in markets spanning the South and East Coast. We believe combining Astrana's robust technology platform and care model with CHS's strong provider base and deep payer partnerships will accelerate our goal of organizing and empowering providers while elevating the healthcare experience for patients throughout the country."

CHS has built a highly complementary provider footprint across several states, including key markets such as Connecticut, Georgia, Maryland, New Mexico, and Virginia, as well as a scaled ecosystem of more than 350 primary care physicians across Texas, where Astrana already has a growing presence. Astrana plans to leverage its proven Care Enablement platform, a set of care management tools and technology, including value-based contracting and credentialing, AI-driven population health analytics, its NCQA®-certified Healthcare Effectiveness Data and Information Set gaps in care engine, care management and disease management platform, and other administrative services to further advance improvements in patient outcomes.

"Astrana shares CHS' commitment to improving providers' experiences in delivering care and is well positioned to support CHS' future growth," said Senior Vice President of Clinical and Specialty Services at Centene, Sarah Baiocchi. "We look forward to Astrana continuing to be a key partner to our Medicare business, Wellcare, and to working together to drive high-quality, affordable care for members."

The transaction is expected to close by year-end, following customary regulatory approvals. The Company will provide an update to the combined entity's financial outlook once the transaction closes.

Ernst & Young acted as financial advisor and Russ August & Kabat LLP acted as legal advisor to Astrana in the transaction. Guggenheim Securities, LLC acted as the financial advisor and Bass, Berry & Sims PLC acted as legal advisor to Centene.

Additional details regarding Astrana's acquisition of CHS will be discussed during its August 7 quarterly earnings presentation at 2:30 pm PST / 5:30pm EST. For call and webcast details please visit: https://ir.astranahealth.com/news-events/ir-calendar/detail/20240807-second-quarter-2024-financial-results-conference-call.

About Astrana Health, Inc.
Astrana is a leading provider-centric, technology-powered healthcare company enabling providers to deliver accessible, high-quality, and high-value care to all. Leveraging its proprietary end-to-end technology solutions, Astrana operates an integrated healthcare delivery platform that enables providers to successfully participate in value-based care arrangements, thus empowering them to deliver high quality care to patients in a cost-effective manner.

Headquartered in Alhambra, California, Astrana serves over 10,000 providers and 1.0 million Americans in value-based care arrangements. Its subsidiaries and affiliates include management services organizations (MSOs), affiliated independent practice associations (IPAs), accountable care organizations (ACOs), and care delivery entities across primary, multi-specialty, and ancillary care. For more information, please visit www.astranahealth.com.

About Collaborative Health Systems
Collaborative Health Systems (CHS) is a management services organization that partners with independent primary care physicians as they move to value-based models. Its core belief is that primary care physicians are in the best position to influence the quality and cost of healthcare. CHS provides comprehensive support for its physician partners by providing management services, risk contracting, and population health capabilities, including actionable data and other tools, to deliver care coordination and closure of gaps in care. CHS provides additional services to secure and deliver favorable value-based contracts with commercial and other health plans. CHS currently manages three Direct Contracting entities, seven Medicare Shared Savings Program Accountable Care Organizations, a Care Transformation Organization, and three Independent Practice Associations. CHS is a Centene Corporation company (NYSE: CNC), focused on transforming the health of the communities it serves.

Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements about the Company's ability to successfully complete and realize the intended benefits of the acquisition of CHS, including satisfying all conditions to the closing of the acquisition, integrate the operations of CHS, and expand its operations. The foregoing number of providers and beneficiaries are estimated as of July 2024. Forward-looking statements reflect current views with respect to future events and financial performance and therefore cannot be guaranteed. Such statements are based on the current expectations and certain assumptions of the Company's management, and some or all of such expectations and assumptions may not materialize or may vary significantly from actual results. Actual results may also vary materially from forward-looking statements due to risks, uncertainties and other factors, known and unknown, including the risk factors described from time to time in the Company's reports to the Securities and Exchange Commission ("SEC"), including without limitation the risk factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and any subsequent quarterly reports on Form 10-Q.

FOR MORE INFORMATION, PLEASE CONTACT:

Astrana Investor Relations
Asher Dewhurst
(626) 943-6491 
investors@astranahealth.com

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SOURCE Astrana Health, Inc.

FAQ

What company is Astrana Health (ASTH) acquiring?

Astrana Health (ASTH) is acquiring Collaborative Health Systems (CHS), a management services organization and a company of Centene (CNC).

How many beneficiaries does Collaborative Health Systems serve?

Collaborative Health Systems serves more than 129,000 beneficiaries across 17 states.

When is the Astrana Health and CHS acquisition expected to close?

The acquisition is expected to close by year-end 2024, subject to customary regulatory approvals.

What are the key markets where CHS has a provider footprint?

CHS has a provider footprint in key markets including Connecticut, Georgia, Maryland, New Mexico, Virginia, and Texas.

When will Astrana Health discuss additional details about the CHS acquisition?

Astrana Health will discuss additional details during its quarterly earnings presentation on August 7, 2024, at 2:30 pm PST / 5:30pm EST.