Hội nghị công bố kết quả kinh doanh Quý 3/2026 của Astrana Health (ASTH): Doanh thu kỷ lục, EBITDA tăng trưởng 13%

Điểm nhấn chính

• Doanh thu quý 3/2026 đạt mức kỷ lục 1,02 tỷ USD, tăng 7% so với cùng kỳ năm trước, nhờ sự tăng trưởng của các hợp đồng chịu toàn bộ rủi ro (full-risk), số lượng hội viên Medicare Advantage gia tăng và các hội viên Medicaid được chuyển giao sang Astrana Health.
• EBITDA điều chỉnh tăng 13% lên mức kỷ lục 77,2 triệu USD, tiệm cận cận trên trong khoảng dự báo từ 72,5 triệu USD đến 77,5 triệu USD của công ty. EPS pha loãng điều chỉnh đạt 0,71 USD.
• Astrana đã tạo ra khoảng 105 triệu USD dòng tiền tự do và trả 116 triệu USD nợ vay trong 9 tháng đầu năm. Tỷ lệ đòn bẩy ròng giảm xuống còn 2,2 lần.
• Số lượng hội viên Medicare Advantage tăng trưởng ở mức một chữ số cao, trong khi sự sụt giảm hội viên Medicaid và trên sàn giao dịch bảo hiểm đã bù trừ một phần mức tăng này. Ban lãnh đạo tiếp tục dự báo tỷ lệ sụt giảm hội viên Medicaid sẽ vào khoảng 10% đến 15% trong năm 2027.
• Công ty đã thu hẹp phạm vi dự báo cho năm 2026 trong khi vẫn giữ nguyên mức trung vị của từng chỉ tiêu: doanh thu từ 3,9 tỷ USD đến 4,0 tỷ USD, EBITDA điều chỉnh từ 261 triệu USD đến 274 triệu USD, và dòng tiền tự do từ 107,5 triệu USD đến 130 triệu USD.
• Ban lãnh đạo vẫn tự tin vào mức tăng trưởng EBITDA điều chỉnh hàng năm đạt ít nhất khoảng 15% (mid-teens) trong trung hạn, được hỗ trợ bởi các nhóm hội viên chịu rủi ro bước vào giai đoạn ổn định, các quan hệ đối tác mới với bên chi trả, sự gia tăng hội viên ACO và đòn bẩy hoạt động.

Dữ liệu tài chính cốt lõi

Hiệu quả kinh doanh và hoạt động

Mức tăng trưởng EBITDA điều chỉnh 13% của Astrana mang tính hữu cơ và vượt tốc độ tăng trưởng doanh thu. Ban lãnh đạo cho rằng sự cải thiện này đến từ việc các nhóm hội viên chịu rủi ro bước vào giai đoạn ổn định, chi phí y tế tại Care Partners diễn biến thuận lợi và hiệu quả vận hành tiếp tục được nâng cao.

Doanh thu định suất (capitation revenue) tăng 8,5% bất chấp sự sụt giảm hội viên Medicaid và sàn giao dịch bảo hiểm. Số lượng hội viên Medicare Advantage tăng trưởng hữu cơ ở mức một chữ số cao. Ban lãnh đạo cho biết khoảng 30% hội viên hiện đang tham gia các chương trình 4 sao và kỳ vọng tỷ lệ này sẽ đạt khoảng 50% vào năm 2027, tùy thuộc vào những thay đổi trong kỳ ghi danh hàng năm.

Công ty kỳ vọng khoảng 82% doanh thu định suất sẽ đến từ các thỏa thuận chịu toàn bộ rủi ro (full-risk) vào cuối năm, tăng từ mức 76% vào cuối năm 2025. Trong phân khúc Care Partners, 46% hội viên thuộc các thỏa thuận full-risk, so với mức 34% của một năm trước đó.

Thị trường Texas đạt kết quả vượt kế hoạch sau khi Astrana chuyển khoảng 7.000 hội viên Medicare Advantage từ cơ chế chia sẻ lợi ích (gain-share) sang rủi ro toàn diện (global risk), đồng thời bổ sung thêm 3.000 hội viên theo các thỏa thuận rủi ro chuyên môn (professional-risk). Xu hướng chi phí y tế khả quan hơn các giả định định phí bảo hiểm, và khả năng sinh lời cải thiện nhanh hơn dự kiến của ban lãnh đạo.

Xu hướng chi phí y tế tổng thể vẫn thấp hơn một chút so với giả định khoảng 5,2% được đưa vào dự báo cả năm. Medicare Advantage và Original Medicare đạt kết quả khả quan, trong khi chi phí Medicaid vượt giả định ban đầu và chi phí thương mại cao hơn một chút, chủ yếu do các loại thuốc do nhân viên y tế trực tiếp chỉ định và sử dụng (clinician-administered drugs).

Chương trình khám sức khỏe định kỳ hàng năm của Astrana từ đầu năm đến nay đã tiếp cận gần 65% hội viên đủ điều kiện, vượt tiến độ so với cùng kỳ năm ngoái. Công ty cũng đang mở rộng các chương trình quản lý bệnh tật, chăm sóc tại nhà và điều phối chăm sóc dựa trên nền tảng Pathways.

Mảng hỗ trợ chăm sóc y tế (care enablement) tạo ra hơn 300 triệu USD doanh thu. Trong quý 3, Astrana đã bổ sung một nhóm nhà cung cấp dịch vụ chăm sóc ban đầu và đa chuyên khoa tại Connecticut cùng một khách hàng bệnh viện tại California, cả hai dự kiến sẽ tham gia nền tảng vào đầu năm 2027.

Astrana cũng đã ra mắt Atlas, nền tảng nhà cung cấp dịch vụ y tế thế hệ mới. Ban lãnh đạo cho biết quy trình xử lý yêu cầu bồi thường và chuyển tuyến có hỗ trợ của AI đã giúp giảm hơn 50% thời gian xử lý, trong khi các tác tử AI (AI agents) mới hơn có thể rút ngắn một số quy trình cấu hình từ hợp đồng đến yêu cầu bồi thường từ hàng giờ xuống còn vài phút.

Prospect hiện được quản lý như một phần của mảng kinh doanh cốt lõi. Tỷ lệ giữ chân nhà cung cấp tổng thể duy trì trên 99%, và hiệu quả cộng hưởng chi phí hoạt động hàng năm nằm ở cận trên của mục tiêu ban đầu từ 12 triệu USD đến 15 triệu USD.

Dự báo của ban lãnh đạo

Ban lãnh đạo giữ nguyên mức trung vị của từng khoảng dự báo cả năm. Triển vọng này giả định xu hướng hội viên Medicaid ở mức thận trọng và không có đóng góp từ khoản mục được nhắc đến trong cuộc gọi là "ACO 10".

Công ty dự kiến quý 4 sẽ là quý có lợi nhuận thấp nhất trong năm 2026. Quý 3 đã ghi nhận khoản tiết kiệm chi phí chia sẻ từ MSSP và các đợt rà soát điều chỉnh rủi ro cuối cùng của Medicare Advantage, những khoản này dự kiến sẽ không lặp lại trong quý 4. Dự báo quý 4 cũng tính đến sự sụt giảm hội viên Medicaid tiếp diễn và các khoản đầu tư vào các hợp đồng chi trả mới cùng những sáng kiến tăng trưởng.

Đối với năm 2027, ban lãnh đạo kỳ vọng biên lợi nhuận của Medicare Advantage sẽ duy trì ổn định và dự báo số lượng hội viên Medicaid giảm từ 10% đến 15%. Công ty cũng kỳ vọng mức tăng trưởng hội viên đạt ít nhất khoảng 15% - 19% (mid-to-high-teens) trên khắp các chương trình ACO, mặc dù dự báo tài chính chính thức cho năm 2027 sẽ được công bố cùng kết quả quý 4.

Rủi ro và các yếu tố cần theo dõi

• Xu hướng chi phí y tế của Medicaid đang cao hơn giả định ban đầu, xuất hiện dấu hiệu lựa chọn bất lợi nhẹ khi số lượng hội viên sụt giảm. Ban lãnh đạo dự báo Medicaid sẽ tạo ra lực cản ròng ở mức một chữ số trung bình đối với tăng trưởng EBITDA năm 2027.
• Những thay đổi liên quan đến yêu cầu việc làm, việc xác định lại điều kiện tham gia, giới hạn tài sản và việc chuyển đổi một số hội viên diện bảo hiểm thất nghiệp (UI-status) sang hình thức chi trả theo dịch vụ (fee-for-service) có thể ảnh hưởng đến số lượng ghi danh và mức độ phức tạp bệnh lý (acuity) của Medicaid.
• Việc chuyển đổi từ ACO REACH sang LEAD và những thay đổi trong cơ cấu giữa LEAD và MSSP có thể làm thay đổi đáng kể doanh thu báo cáo theo chuẩn GAAP, nhưng không nhất thiết làm thay đổi mức chi tiêu Medicare được quản lý hoặc cơ hội chia sẻ khoản tiết kiệm chi phí.
• Astrana đang phối hợp với cơ quan thực thi pháp luật và các chuyên gia an ninh mạng bên ngoài để điều tra một sự cố an ninh mạng đã công bố trước đó. Ban lãnh đạo không định lượng tác động tiềm tàng của sự cố này.
• Quá trình khắc phục điểm yếu trọng yếu đã công bố trước đây vẫn đang được tiến hành, và ban lãnh đạo kỳ vọng sẽ hoàn tất việc đánh giá vào cuối năm.

Nội dung nổi bật từ phiên hỏi đáp với chuyên gia phân tích

Ban lãnh đạo mô tả mảng hỗ trợ chăm sóc y tế là một kênh mở rộng hiệu quả về mặt vốn, vì Astrana có thể bán công nghệ và cơ sở hạ tầng lâm sàng mà không cần phải gánh chịu ngay rủi ro phí bảo hiểm hay mua lại các phòng khám. Công ty cho biết mảng kinh doanh này vẫn tiếp tục thu hút thêm khách hàng dù không có đội ngũ nhân sự chuyên trách về bán hàng hay phát triển kinh doanh.

Về Medicare Advantage, ban lãnh đạo viện dẫn mức tăng biểu phí thực tế cho năm 2027 là khoảng 5% và cho biết xu hướng chi phí y tế dự kiến sẽ tăng với tốc độ tương đương, giúp củng cố biên lợi nhuận ổn định. Các thỏa thuận mới với bên chi trả được mô tả là các hợp đồng chăm sóc y tế dựa trên giá trị (value-based care) theo tỷ lệ phần trăm phí bảo hiểm và được phân quyền (delegated).

Ban lãnh đạo cho biết cơ hội biên lợi nhuận dài hạn mở rộng trên tất cả các mảng kinh doanh. Biên lợi nhuận của Medicare và mảng thương mại cao hơn mức chung của Care Partners, trong khi biên lợi nhuận của Medicaid thấp hơn đáng kể. Theo thời gian, ban lãnh đạo tin rằng biên lợi nhuận của Medicaid có thể phục hồi về khoảng một chữ số từ trung bình đến cao nếu biểu phí phản ánh tốt hơn mức độ phức tạp bệnh lý của hội viên.

Công ty đã đưa ra khái niệm "phí bảo hiểm chịu rủi ro" để đưa quy mô hội viên MSSP về cùng cơ sở tổng thể có thể so sánh được với ACO REACH. Astrana kỳ vọng mức phí bảo hiểm chịu rủi ro vào khoảng 4,45 tỷ USD trong năm 2026, so với dự báo doanh thu theo chuẩn GAAP là 3,9 tỷ USD đến 4,0 tỷ USD.

Liên quan đến Prospect, ban lãnh đạo nhận thấy tiềm năng nâng cao hiệu quả hơn nữa, nhưng kỳ vọng những lợi ích trong tương lai sẽ ngày càng được ghi nhận dưới dạng đòn bẩy hoạt động trên toàn công ty hơn là các khoản cộng hưởng từ thương vụ mua lại được tách riêng.

Toàn văn biên bản cuộc gọi báo cáo kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Hello, everyone, and welcome to Astrana Health's third quarter 2026 earnings call. [Operator Instructions] Today's speakers will be Brandon Sim, President and Chief Executive Officer of Astrana Health, and Chan Basho, Chief Operating and Financial Officer. The press release announcing Astrana Health's results for the third quarter ended September 30, 2026, is available in the Investor Relations section of the company's website at www.astranahealth.com. The company will discuss certain non-GAAP measures during this call. Reconciliations to the most comparable GAAP measures are included in the press release.

To provide some additional background on the results, the company has made a supplemental deck available on its website. A replay of this broadcast will be available on Astrana Health's website after the conclusion of this call. Before we get started, I would like to remind everyone that this conference call and any accompanying information discussed herein contains certain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by such terms as anticipate, believe, expect, future, guidance, plan, outlook, and will include, among other things, statements regarding the company's guidance, continued growth, acquisition strategy, ability to deliver sustainable long-term value, ability to respond to changing environment, liquidity, operational focus, strategic growth plans, and acquisition integration efforts.

Although the company believes that the expectations reflected in these forward-looking statements are reasonable as of today, statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. There can be no assurance that these expectations will prove to be correct. Information about risks associated with investing in Astrana Health is included in the filings with the Securities and Exchange Commission, which we encourage you to review before making any investment decision.

The company does not [ assume ] any obligation to update any forward-looking statement as a result of new information, future events, changing market conditions, or otherwise, except as required by law. Regarding the disclaimer language, if you would like to refer to slide 2 of the conference call presentation for further information. With that, I will turn the call over to Astrana Health's President and Chief Executive Officer, Brandon Sim. Please go ahead, Brandon.

Brandon Sim

Good afternoon, and thank you for joining us today. Astrana delivered another strong quarter, driven by continued growth, margin expansion, and disciplined execution across the business. Revenue in the third quarter reached a record $1.02 billion, up 7% year-over-year. Adjusted EBITDA was a record $77.2 million, up 13% year-over-year, and near the high end of guidance. Adjusted diluted earnings per share was $0.71. With Prospect now included in both comparison periods, these results provide a clearer view of the underlying earnings power of our combined business.

Importantly, our 13% year-over-year adjusted EBITDA growth was driven organically, reflecting the maturation of our risk-bearing cohorts, particularly in Texas, and by improved medical cost performance across our Care Partners business and continued operating efficiencies. Capitation revenue grew 8.5% despite Medicaid and exchange membership attrition, while adjusted EBITDA grew approximately twice as fast as total revenue, demonstrating the operating leverage and resilience of our business.

Free cash flow also remains strong. Through the first nine months of the year, we've generated approximately $105 million in free cash flow and repaid $116 million of debt. This brings net leverage to approximately 2.2x, well ahead of the deleveraging commitments we made when we acquired Prospect, and we remain on track to deliver on our free cash flow guidance for the year.

Underlying these results is the differentiated operating platform we have built at Astrana, bringing together three foundational capabilities: intelligence, alignment, and delivery. Intelligence is how we leverage our vast clinical and operational dataset, together with proprietary models and AI, to identify what care patients need, when they need it, and how to deliver it most effectively. Alignment is how we use our delegated, payer-agnostic model and provider-facing technology platform to align clinical and financial incentives around delivering the right care. And delivery is how we put this into practice, using our broad, integrated network of physicians, providers, and care teams to translate those insights into action and better outcomes for patients.

What makes this platform particularly powerful is the feedback loop between these capabilities. We can identify opportunities to improve care, enable physicians to act on them, and then measure the resulting clinical outcomes and total cost of care. Those insights then feed back into our platform, continuously improving our recommendations, execution, and underwriting. As this flywheel compounds, we believe we can reduce the upfront investment required to enter new markets, accelerate the path to profitability for new populations, and deliver increasingly consistent and predictable outcomes and economics.

Our third quarter results demonstrate the growing impact of our platform. I'll walk through our progress against the four strategic priorities we've consistently focused on. Our first priority is growing membership responsibly. We ended the quarter with approximately 1.5 million members under management. Medicare Advantage membership grew organically at a high single-digit rate year-over-year, even as many health plans across the industry continue to reduce their Medicare Advantage footprints. This growth was partially offset by Medicaid and exchange membership attrition, with Medicaid attrition expected to be at the middle to high end of the 10% to 15% range we assumed at the beginning of the year.

As we discussed last quarter, our strong operating performance has given us greater flexibility to invest in growth while maintaining our profitability and balance sheet objectives. We continue to reinvest a portion of that outperformance towards attractive new opportunities across markets and business lines while remaining on track to deliver on our full-year financial commitments, and we're seeing those investments translate into tangible progress.

On the provider side, we completed a tuck-in acquisition of an independent physician association in Georgia on October 1, further expanding our presence in the Southeast. We also added two new clients to our AI-powered care enablement platform during the quarter: a leading primary and multi-specialty provider group in Connecticut, and a hospital client in California. We expect both to be onboarded onto the Astrana platform by early 2027.

On the payer side, we've entered into several new Medicare Advantage partnerships effective January 1, 2027, building upon our existing networks and geographic expansion efforts. Together, these opportunities demonstrate the breadth of our growth model, spanning risk-bearing populations, physician network expansion, and technology-enabled services, all leveraging our shared platform to drive scalable, capital-efficient growth.

Our second priority is continuing to progress responsibly into full-risk arrangements. We are on track for approximately 82% of our capitation revenue to be generated under full-risk arrangements by year-end, up from 76% at year-end 2025. Within our Care Partners business, approximately 46% of members were in full-risk arrangements, compared to 34% a year ago. Importantly, the full-risk cohorts that we added earlier this year continue to perform in line with or ahead of our underwriting expectations.

Texas is a particularly compelling example. Throughout 2026, we transitioned approximately 7,000 Medicare Advantage members from gain share to global risk and added another 3,000 members under professional risk arrangements through a new payer partnership. Since then, we've onboarded those populations onto Astrana's technology platform and deployed our integrated care model, equipping local physicians and care teams with the clinical insights, care coordination capabilities, and operational support to manage patients more effectively.

Three quarters in, our Texas business is performing ahead of plan, with medical cost trends running favorably to our underwriting assumptions and profitability improving faster than anticipated. This is an important proof point for our ability to enter new markets, assume greater risk responsibly, and improve profitability as cohorts mature. We believe the same operating model can be replicated across additional markets, with Texas becoming an increasingly meaningful contributor over time.

Our third priority is managing medical cost trend through better clinical outcomes. Our delegated model enables us to intervene earlier, coordinate care more effectively, and align clinical decision-making with the long-term health of our patients. Year-to-date, overall medical cost trend remains slightly better than the approximately 5.2% assumption embedded in our full-year guidance. Within that, Medicare Advantage and Original Medicare continue to perform favorably relative to our expectations. Medicaid medical cost trend is running above our initial assumptions while commercial is slightly above expectations, primarily due to clinician-administered drug costs. These pressures remain manageable within our diversified portfolio, and our consolidated medical cost performance continues to outperform our expectations at the beginning of the year.

Underpinning our approach is our growing suite of technology-enabled clinical programs. Our annual wellness visit program has reached nearly 65% of eligible members so far this year, helping identify risks earlier and close gaps in care. We also continue to advance our disease management programs for high-risk conditions, including congestive heart failure, COPD, and chronic kidney disease, alongside our care-at-home capabilities. These programs, together with our annual wellness visit program, run on our proprietary care management platform, Pathways, enabling us to coordinate interventions and standardize care across markets. By building these capabilities directly into our own technology platform, we are creating a repeatable clinical operating model that can deliver consistent, high-quality care as we expand across physicians, populations, and geographies.

Our fourth priority is continuing to expand operating leverage as we scale. Last quarter, we highlighted how AI-powered workflows in claims operations and referral management reduced handling times by more than 50%. Since then, we've continued advancing beyond individual task automation towards automating entire business processes. One example is in claims administration, where we're building an AI-orchestrated process that translates the economic terms of a provider contract directly into accurate claims configuration and payment. Historically, these contracts required hours of manual work to process. Our newest AI agents are reducing that process from hours to minutes while improving accuracy. And importantly, all of these capabilities are being built into our own operating platform, allowing us to deploy them across our network and capture the benefits as we scale.

On the provider side, just this week, we launched Atlas, the next generation of our provider-facing platform. Atlas helps physicians prioritize patients who need attention most, identify gaps in care, and respond to high-risk events in real time, directly within their existing workflows. These applications are built on shared infrastructure, allowing us to deploy new capabilities across markets and business lines without rebuilding them independently. We're seeing the improvements to our platform continue to translate into tangible operating leverage.

Year-to-date G&A has declined to approximately 6.2% of revenue, an improvement of approximately 80 basis points year-over-year, even as we continue investing in growth and new capabilities. We expect full-year G&A to remain around this level with meaningful opportunity for further operating leverage over the medium term as our AI capabilities mature and as we continue to scale.

Turning briefly to Prospect, more than a year after closing the transaction, performance continues to validate our original investment thesis. Gross provider retention remains above 99%. Operating expense synergies are at the high end of our original annual target of $12 million to $15 million. And aggregate medical cost trend across the legacy Prospect business remains below our underwriting assumptions. Just as importantly, the operational transformation has taken hold.

We are consolidating legacy Prospect payer arrangements into our enterprise contracts with shared health plan partners. Our California growth efforts now operate through a unified team and pipeline. And legacy Prospect physicians are increasingly integrated into the Astrana care model. As a result, we now view and manage Prospect as part of our core business rather than as a separate integration initiative going forward.

Turning now to initial thoughts about 2027. In Medicare Advantage, the annual enrollment period is underway. We expect our weighted average paid star rating to improve modestly in 2027 versus 2026 and remain relatively stable in 2028. With our membership diversified across more than a dozen health plans, our exposure to any individual contract remains limited. Regarding the 2027 Medicare Advantage Final Rate Notice, we continue to believe that we face immaterial impact from the exclusion of certain diagnosis sources, and we expect Medicare Advantage margins to remain stable into 2027.

In Medicaid, we continue to plan conservatively for changes in 2027, including the transition of UI status members to fee-for-service, work requirements, more frequent eligibility redeterminations, and changes to asset limits. We are working closely with our health plan partners and our community to manage these transitions and support continuity of care for our members. We've been incorporating these developments into our planning for some time and currently anticipate a 10% to 15% decline in Medicaid membership in 2027.

In the exchange business, membership attrition has been more favorable than our original assumption of a 30% to 40% decline this year, and the business remains approximately 3% of revenue. Commercial membership also remains stable.

Stepping back, we enter 2027 with several meaningful growth drivers: a continued maturation of new cohorts in core and expansion markets, additional full-risk conversions, new Medicare Advantage payer partnerships, and continued operating leverage from our platform. These opportunities are balanced against the membership changes we've discussed in Medicaid and exchange, all of which will be reflected in our formal 2027 guidance. In all, we remain confident in our ability to deliver at least mid-teens annual adjusted EBITDA growth over the medium term.

We believe we're still in the early innings of realizing the full potential of the platform we built. At its core, Astrana's long-term opportunity is not defined by any single payer, program, or reimbursement model. We are a physician-centric company that uses technology to help doctors deliver better, more consistent care at a lower total cost. That value proposition extends across Medicare Advantage, Original Medicare, Medicaid, and commercial populations. And regardless of how healthcare policy and reimbursement evolve, improving quality, expanding access, and managing healthcare costs will remain fundamental national priorities.

And we believe Astrana is uniquely positioned to help address them. As we scale our platform nationally, we see a significant opportunity to improve outcomes for more Americans while delivering increasingly predictable and attractive economics for our business. With that, I'll turn the call over to Chan to review our financial results and outlook in more detail.

Chan Basho

Thank you, Brandon, and good afternoon, everyone. Our third quarter results demonstrate continued financial and operating discipline. Adjusted EBITDA was at the high end of our guidance range. We generated strong year-to-date free cash flow, and we continued reducing leverage. Performance puts us in a strong position entering the fourth quarter. We are maintaining the midpoint of our full-year adjusted EBITDA outlook while continuing to invest in payer relationships, recently converted risk cohorts, new care enablement clients, and geographic expansion opportunities that we expect to contribute to growth beyond 2026.

Today, I'll review our third quarter financial results, cash flow and balance sheet, the evolving revenue presentation of our ACO business, and our updated outlook for the year. Total revenue for the third quarter was $1.02 billion, up 7% versus the prior-year period. With Prospect included in both comparison periods for the first time, these results provide a clearer view of the underlying performance of our combined business. Revenue growth was driven by the continued ramp of full-risk contracts, including conversions in California and Texas, Medicare Advantage membership growth, and Medicaid members transitioned to us during the quarter. These contributions were partially offset by Medicaid and exchange membership attrition.

Adjusted EBITDA for the quarter was $77.2 million, up 13% versus the prior-year period and at the high end of our guidance range of $72.5 million to $77.5 million. This reflects strong performance in Texas, favorable results in our Original Medicare business, and continued improvement in our Care Partners' medical cost ratio. Net income attributable to Astrana was $13 million and adjusted diluted EPS was $0.71. SG&A was 6.6% of revenue in the quarter and 6.2% year-to-date, reflecting continued operating discipline as we scale the business and invest in new capabilities.

Turning to cash flow, we generated approximately $105 million in free cash flow through the first nine months of the year. As we noted last year, cash flow in the second half of the year is seasonally lighter, as a portion of our first half cash flow reflected the timing of ACO settlement receipts. We remain on track to deliver full-year free cash flow within our guidance range of $107.5 million to $130 million.

On the balance sheet, we repaid approximately $12 million of debt during the quarter, bringing year-to-date debt reduction to approximately $116 million. We ended the quarter with $396 million in cash and $581 million of net debt. Trailing 12-month gross leverage declined to 3.0x, down from a pro forma LTM gross leverage of 4.4x in the prior-year period. Net leverage declined to 2.2x on a trailing 12-month basis, down from a pro forma LTM net leverage of 2.5x in the prior-year period. We remain on track to approach 2x net leverage by year-end, well ahead of the deleveraging trajectory we originally outlined following the Prospect acquisition.

Separately, we continue to make progress on remediating the material weakness we disclosed previously. The work remains on schedule, and we are currently expecting to complete our assessment by year-end.

Turning briefly to our ACO business. With the ACO REACH model concluding at the end of 2026, we're preparing for CMS's transition to its new LEAD model in 2027. We remain disciplined in our approach to ACO programs, prioritizing opportunities where we believe our clinical and operating model can consistently deliver strong outcomes and attractive economics. I want to spend a moment on how these programs show up in our reported revenue because the accounting differs by program. Under ACO REACH, we recognize the full Medicare benchmark as revenue, with the associated medical costs in our expenses. We expect LEAD to be treated in the same manner. Under MSSP, we recognize only our share of the savings on a net basis. As a result, as our ACO program mix evolves, changes in our reported GAAP revenue won't necessarily reflect changes in the total Medicare spend we're managing or in our opportunity to generate shared savings.

Importantly, our focus remains on the underlying economics of these programs rather than how revenue is presented. We believe our clinical and operating capabilities position us to continue generating attractive shared savings as the accountable care landscape evolves. To provide investors with a more consistent view of the scale of our business across programs, we're introducing a supplemental measure: gross equivalent consolidated premiums or premiums at risk. It represents our MSSP populations on the same gross basis as ACO REACH by including their full Medicare expenditure benchmarks rather than only the net revenue recognized under GAAP. On this basis, we expect approximately $4.45 billion in premiums at risk for 2026, compared to our reported revenue guidance of $3.9 billion to $4 billion. The difference reflects the MSSP benchmarks that weren't included in GAAP revenue. We'll provide additional details on the anticipated financial impact of any ACO program transitions when we issue formal 2027 guidance with our fourth quarter results.

Finally, turning to our full-year outlook. We're narrowing our full-year guidance ranges for revenue, adjusted EBITDA, and free cash flow while maintaining the midpoint of each. We now expect revenue of $3.9 billion to $4 billion, adjusted EBITDA of $261 million to $274 million, and free cash flow of $107.5 million to $130 million. These updates reflect greater visibility in our full-year performance with one quarter remaining. Our outlook continues to assume conservative Medicaid membership trends and no contribution from [ ACO 10 ].

Importantly, our adjusted EBITDA outlook remains above our original expectations for the year, even as we are deliberately reinvesting a portion of our operating outperformance into new payer relationships, risk cohorts, care enablement expansion, and geographic growth opportunities. We believe this demonstrates our ability to deliver on our financial commitments while investing in the next phase of growth. For the fourth quarter, we expect revenue between $939 million and $1.04 billion and adjusted EBITDA between $48.5 million and $61.5 million. Consistent with prior years, we expect the fourth quarter to be our lowest quarter of the year in terms of profitability. Our third quarter results included recognition of MSSP shared savings and final Medicare Advantage risk adjustment sweeps, which are not expected to recur in the fourth quarter. Our fourth quarter outlook also incorporates continued Medicaid membership attrition and investments associated with onboarding new payer contracts and other growth opportunities.

We will provide formal 2027 guidance with our fourth quarter results. Taken together, our record revenue and quarterly adjusted EBITDA, strong free cash flow generation, and continued deleveraging reinforce our confidence in the trajectory of our business. We enter 2027 with a stronger balance sheet, a growing base of profitable risk-bearing populations, and the financial flexibility to continue investing in our long-term growth opportunities. With that, operator, we're happy to take questions.

Operator

[Operator Instructions] Our first question is from Jack Slevin with Jefferies. Please proceed.

Phần hỏi đáp

Jack Slevin

I wanted to pick up on some of the care enablement pieces that you guys talked about in prepared remarks. I think, Brandon, in my impression, this is something you've been speaking more about, or it feels like there's a level of excitement, and the notion of that contract win in Connecticut or ex-California felt somewhat meaningful. I was wondering if you could just talk a little bit about some of the efforts you're doing to bring that to other markets and maybe baseline for us some of the use cases you have of the care enablement business that you've already developed outside of California. Thanks.

Brandon Sim

Hey, Jack. Brandon here. Thank you for the question. Good evening. Absolutely. We're continuing to become more and more excited about our opportunity in our care enablement business. It is a large business already, over $300 million of segment revenue, operating at very healthy gross and operating margins. But historically, as the Street knows, we built our technology and clinical infrastructure primarily as a way to support our own physician networks and our own risk-bearing populations. What we're finding now more and more so is that many other healthcare organizations, risk-bearing entities, payer-like entities face many of the similar challenges that we do, and there's a growing demand very organically for the capabilities we've developed. Even now, we still have not a single dedicated growth, business development, or sales individual on this business, and yet we still keep growing, signing additional clients such as the multi-specialty group in Connecticut and the client in California. So we're really excited about the opportunity going forward.

I think there's opportunity to certainly invest a little bit more into sales and we view it as a way to increasingly scale our technology and care enablement capabilities without taking on necessarily premium risk at the very beginning or deploying significant capital to acquire clinics or large networks. Admittedly, we're still in the early stages of expanding the business externally outside of California especially, but we believe this can become an increasingly meaningful growth driver over time. In summary, pretty excited about it. Just a couple logos this quarter, but continuing to invest more behind this capability in this segment.

Jack Slevin

Awesome. Really helpful. And then just as a follow-up here, thinking about the Medicare Advantage business a little bit, plan bids in. I'm sure you guys have gotten a look at those. We'd just be curious how some of that has stacked up. And then as you continue to talk about layering in some new full-risk partnerships and non-capitated California markets with some of the upside, I guess any color you can provide on sort of how those payers are approaching it or how the terms look relative to other things you've entered on the front end? We'd just be curious about that side of things as well.

Brandon Sim

Yes, for sure. We're happy to continue expanding our partnerships in Medicare Advantage. We feel that the rate notice going into 2027 was constructive. And like I mentioned in the prepared remarks, we believe that the environment, especially given our conservatism around risk adjustment and some of the disallowed diagnoses, allows us to maintain a stable margin in MA going forward into '27. We think that our partnerships with new plans are struck at economically sound terms, so we're happy with where we are. We believe that will drive growth into our MA business going into '27. There is some impact of stars into '27 as well. Close to around 30% of our members today are in 4-star plans, and we expect that to be—barring any dramatic changes in annual enrollment—about 50% of our membership in 4-star plans going forward into '27. So we believe that MA is going to be a significant driver of our continued growth in the medium term.

Jack Slevin

Really helpful, appreciate the color.

Brandon Sim

Thanks, Jack.

Operator

Our next question is from Michael Ha with Baird. Please proceed. Thank you.

Unknown Speaker

I think this is the first time you provided your AWV rate, nearly 65% year-to-date. Just wondering, how does that compare to recent years at this time? And then as we think about '27 EBITDA, I know you guys are targeting a mid-to-high-teens growth target. That's exactly where the Street is. So as you think about what could allow you to hit the high end or move above the range, are there 1 or 2 levers you'd call out aside from cost trends? Would it be like RAF improvement or maybe a smaller headwind on Medicaid? Or are there other things that you would view as bigger potential levers for next year?

Brandon Sim

Thanks for the question, Michael. I'll take them in turn. The first around annual wellness visits, we do report that number every year. In fact, it's part of our incentive plan as well. So it's an important measure that we track and that we want to drive, among our other measures, including our disease management programs, our Care at Home programs, and more. Last year, approximately 4 out of every 5 members, 80% of our eligible members had an AWV. This year we shared the 65% number year-to-date, which does track a little better than where we were last year. So kind of on a year-over-year basis, we continue to improve our ability to engage our members, get them in for preventive care, and continue implementing the Astrana care model.

In terms of the levers for mid-teens EBITDA growth going into next year, happy to provide a more detailed bridge at some point, but a lot of it is—maybe I'll just share it now. We believe there's around mid-single-digits EBITDA growth from new membership and growth, inclusive of earnings drag from new cohorts that are yet to become profitable. We believe there's probably around a mid-teens increase based on our ability to control medical cost trend versus our rates, as well as progression of our existing cohorts up the J-curve as those cohorts mature in our ecosystem. We think there's around a low-to-mid, 3 to 5, let's say, percentage point increase from improvement in expansion markets. And these are balanced—an increase of mid-to-high single digits in operating leverage as well. And that's balanced by kind of some of our Medicaid challenges and potential changes to the ACO program. So in aggregate, these building blocks allow us to feel comfortable in the mid-teens EBITDA growth, even with some of the headwinds potentially from Medicaid. Hope that's helpful.

Unknown Speaker

Super helpful, thank you. And then on that topic of Medicaid, big changes, California governor, of course, so we'll see if there's favorable policies to come, but also in real time, just over the past week, seeing two things actively taking shape in California. Number one being California submitted a request for a good faith waiver exemption, 6-month delay on the work requirements. Number two, last week's medical frailty exemption ruling and California being one of the 25 plaintiffs. This has strong potential to moderate early disenrollment and acuity pressure next year. So I'm just wondering, how are you thinking about these new developments as potential tailwinds relative to your, I think you mentioned 10% to 15% attrition assumption for next year? So yes, we'd love to hear an update there.

Brandon Sim

Sure thing. I agree, there is a dynamic environment in Medicaid, especially in California, with our new governor who we supported and we're discussing some of this with. We continue to, though, take a deliberately conservative approach going into 2027. Certainly some of these items that you mentioned, medical frailty, a 6-month waiver, for example, could stem some of the bleeding that we are anticipating in Medicaid. However, at this time, especially with elections having just happened earlier this week, I think it's a bit too early to necessarily incorporate that all into our guidance at this moment. So at this point, we're still expecting a, like I mentioned earlier, mid-single-digit net headwind to EBITDA growth from Medicaid in '27 and kind of the 10% to 15% membership drop that we talked about in the prepared remarks.

Operator

Thank you. Our next question is from Jailendra Singh with Truist Securities. Please proceed.

Jailendra Singh

Hi, guys. It's Eduardo on for Jailendra. I just wanted to clarify one thing. I think, Chan, you mentioned that there are some MSSP shared savings that hit in the quarter. I thought the final '25 results were not out yet. So just curious if that has to do with performance year '25 or if it's something different.

Chan Basho

Hey, Eduardo, how are you? Good. The MSSP accrual that we spoke about is for 2026.

Jailendra Singh

Okay, so it has nothing to do with the prior year, as you said there.

Chan Basho

As I said, there are no changes in terms of '25.

Jailendra Singh

And then just on the Medicaid trend running above your initial assumptions, while attrition is, I think you said, at the middle to high end of 10% to 15%. I guess how far above is Medicaid trend? And is this attrition sort of leaving you with a sicker remaining population? Is that sort of being embedded in your thought process for 2027? Yes.

Brandon Sim

Hey, Eduardo, I'll take this one. That's right. The trend is slightly higher than we expected at the beginning of the year, higher than the overall blended average, 5.2%, which we're coming in under. Earlier this year we said that we weren't seeing as much adverse selection as we expected. We're starting to see signs of that ticking up a bit, modest changes in the risk profile of the members that are remaining as the year progresses. And so we are embedding some of these assumptions into our 2027 approach. As I mentioned earlier, we are expecting a mid-to-high or closer to mid EBITDA headwind from Medicaid, net of rate adjustments from both membership attrition as well as potential adverse selection going into 2027. So we're not being dismissive of this.

We are incorporating that into our thoughts around 2027. But given the strength of the overall platform, diversification of the business, and especially the strength of our Medicare, both original and MA performance, we believe that even with Medicaid headwinds, there is a mid-teens adjusted EBITDA growth guidance going forward into '27.

Jailendra Singh

Thank you, guys.

Operator

Thanks. Our next question is from Andrew Mok with Barclays. Please proceed.

Andrew Mok

I appreciate the new premiums at risk disclosure. It's the first time I've seen a company do that, but I think it makes a lot of sense. Can you talk about why you chose to introduce that and what it signals about the trajectory of the ACO business over the next year or two? Thanks.

Brandon Sim

Sure. Hey, Andrew. Thanks for the question. While we're not able to confirm at this time exactly what the plans are, the reason we're sharing this in general is that the accounting treatment from a GAAP perspective is slightly different between ACO REACH and MSSP ACO. And so all we've done in that premiums at risk measure is to share essentially what the benchmark is for MSSP as if the benchmark were accrued on a gross basis versus a net basis. That being said, I think we will continue to evaluate all of our opportunities for Original Medicare and see where it makes sense for our members to be and where we can best serve our physician partners and our members on a go-forward basis. I'm not sure there's an implication necessarily right now. We thought it would be a helpful measure to compare apples to apples from a gross versus a net basis across multiple programs today that we're in, including REACH and MSSP.

Andrew Mok

Great. I just wanted to follow up on the Medicaid trend comment, which is obviously running above target now. It sounded like most of that was driven by acuity. Can you help us understand what the patterns look like on continuing membership or whether rate is playing into that, if this at all is just all acuity driven? Thanks.

Brandon Sim

I think it's a bit of everything, Andrew, to be honest. Certainly we could use higher rates. We hope that the actuarial processes in California specifically, but across the country, will continue to reflect the acuity of the Medicaid population over the last several years, the way that Medicare Advantage has taken steps towards in the last couple of years as well. So we do think that there are actuarial adjustments to be made and that rate should hopefully catch up to the acuity that we're seeing in the populations. But there are a lot of moving pieces as well. For example, in our conversations with Medi-Cal health plan partners, there is a large percentage—call it anywhere from 10% to 20%—of those members in the UI status bucket, which as you know is moving to fee-for-service next year. So I think it's really a mix of both planned attrition into '27 and some rate acuity dynamics.

We continue to work very closely with the community partners in our enhanced care management program, which is part of CalAIM, and other care management programs to serve our Medicaid members as best as possible, and at the same time pushing for the appropriate contractual and rate changes with our payer partners upstream.

Andrew Mok

Great. If I could stick in one more, the 4Q guidance implies a pretty wide range for the quarter. Can you just help us understand what's embedded in the assumptions at the low end and high end of that? Thanks.

Operator

We are having technical difficulties. The conference will be resuming momentarily.

Brandon Sim

Hey, Andrew, sorry about that. I dropped our landline on accident. Could you repeat your last question?

Andrew Mok

Yes, the 4Q implied guidance range, over $13 million or so, a pretty big step up from what we've seen all year, like plus or minus 5. Just what's driving the wider range and what's implied at the low and high end in your assumptions? Thanks.

Brandon Sim

Hey, Andrew. Sorry about that again. Hope you guys enjoyed the hold music. But I think the wider range is really just, frankly, an artifact. We did narrow the overall range, and we continue to believe that we will perform as we have this year and in past years around the midpoint of guidance. I'm not sure necessarily that there is too much to read into a wider range at this time.

Andrew Mok

Okay, thank you.

Operator

Our next question is from Ryan Langston with TD Cowen. Please proceed.

Ryan Langston

Can you give us an update on the cyber incident that you announced in September? Maybe anything in terms of sizing the impact, what issues are still left to alleviate, or any other new details you can give us since the press release in September?

Brandon Sim

Hey, Ryan. Sure thing. Well, as we previously communicated, we experienced an incident, and obviously it involves criminal activity and there's an ongoing investigation including with law enforcement. We've taken the matter extremely seriously. We've engaged leading independent cybersecurity counsel and cybersecurity and digital forensics experts to investigate, contain, and remediate the incident. Given the ongoing investigation and the criminal nature of the activity, I think it's important I'm probably going to be appropriately measured in what I share publicly. I'm not sure it's extremely productive to speculate and get ahead of that process. Our focus remains on protecting our patients, our providers, and our payer partners, maintaining integrity of our systems, and continuing to execute on the very strong growth trajectory of the business. And certainly we'll provide additional updates as appropriate. Thanks, Ryan.

Ryan Langston

Okay. And then just one quick follow-up. In prepared remarks you talked about some sweeps revenue that hit in the third quarter. Can you give us a sense of the actual net benefit in the quarter? Thanks.

Chan Basho

Hey, Ryan. How are you? The pickup in terms of our sweeps revenue was, I think, about $5 million to $10 million for this period. It was in line with our expectations and consistent with what we had experienced in our prior-year quarter.

Ryan Langston

Okay, thank you.

Operator

Our next question is from Matthew Gillmor with KeyBank Capital Markets. Please proceed.

Matthew Gillmor

I wanted to ask about the provider agreement you all announced with Alignment Healthcare. I was just curious about the scope of that agreement, if that included any value-based care arrangement, and if that was anything material to call out for the 2027 period.

Brandon Sim

Sure, yes. Our agreement with all of our new partners in MA, including the one that you mentioned, are consistent with all of our value-based care contracts, which is to say it's a delegated MA contract with a percentage of premium, where we are implementing the Astrana care model to improve the outcomes and manage the total cost of care for the members. So very standard, nothing out of the ordinary there, but we're excited to continue growing with our new and existing partners and believe that that's the path for us to continue bringing our model to more patients.

Matthew Gillmor

Great. And then I wanted to see if you'd be willing to give a comment on sort of the margin profile by line of business, just so we can sort of understand how things are tracking and if there's any sort of embedded earnings to the extent margins are below any one of the business lines. Thanks.

Brandon Sim

We haven't shared exact numbers. I would maybe directionally share that commercial and Medicare are higher than our overall Care Partners margin profile, and Medicaid is far lower. In terms of where embedded upside could be, I think it really exists across the board, not just in Medicaid, obviously, because of some of the actuarial rate dynamics that I mentioned earlier. We think that over the long term, Medicaid should be perhaps not as high as it once was, but higher than where we are today, maybe back into the mid-to-high single-digit kind of margins over the long term.

In terms of the other lines of business, the margin potential is really around our ability to mature our newer cohorts, which we have seen great progress of. For example, like I mentioned in our prepared remarks in Nevada and Texas, and other states where we've onboarded new Medicare Advantage members. So I would say that if we're thinking about upside opportunity, it really exists across all lines of business, some of it because of structural reasons like in Medicaid where we need kind of the actuarial process to play out appropriately relative to the acuity that we've seen, and some of it because of the growth that we've brought on and as those cohorts mature, we will see those segment or line of business margins asymptotically reach kind of our at-scale margins.

Matthew Gillmor

Okay. Okay, great. Thanks a lot.

Brandon Sim

Thanks.

Operator

Our next question is from David Larsen with BTIG. Please proceed.

David Larsen

Can you talk about your MA rate expectations for next year, please, and what sort of margin expansion we might see? Thanks.

Brandon Sim

Okay. Hey, Dave, thanks for the question. Good to hear from you. As I mentioned earlier, we think Medicare Advantage is in a stable position going into next year. The CMS 2027 Final Rate Notice was just under 5%, around 5% effective growth rate going into next year. And given our broad exposure across the country, we see something like that as well. However, as I've mentioned before, we are not affected by some of the discontinued diagnosis sources. And we think that even given average RADV performance, we should experience a fairly strong rate increase going into next year that is approximately where we expect our trend to be as well. And so that's kind of the revenue and the rate and trend going up at the same pace is how we get to a stable margin in Medicare Advantage going forward into 2026.

That, combined with our higher percentage of members in 4-star plans and our plan growth across existing and new Medicare Advantage partners, really is getting us excited about the opportunity of Medicare Advantage going forward into '27. So we certainly expect to contribute to the mid-teens EBITDA growth that we projected for 2027.

David Larsen

Great. And then also, I think I heard you say that you were taking more risk for a set of lives, perhaps related to the Prospect deal. Just any more color you can add there would be helpful, like the incremental revenue lift, number of lives, how that sort of incremental penetration for full risk is progressing. Thanks.

Brandon Sim

Sure thing, Dave. We continue to, as part of our overall corporate strategy, continue to move up the risk progression ladder, not just in the legacy Prospect populations, but across the business. So in our prepared remarks, I think I called out, for example, around 7,000 lives that we moved into full-risk arrangements in Texas that have been doing well. We're starting new members along that track in professional risk that should move into full risk in coming years in Texas as well. And then in California, for the legacy Astrana and Prospect businesses, we continue to move members up the full-risk progression track as in our second strategic pillar. We provide quarterly updates on the percentage of members in full-risk arrangements, and we expect around 43% of our members to be in full-risk arrangements by the end of the year. So certainly more runway to go in terms of that driver of future growth. Now, to caveat, we will never probably hit 100% of our members in full risk necessarily, given the progression that we take in a prudent fashion as we bring on new cohorts. But certainly, we expect that to be a much higher number than 43 in the medium term.

David Larsen

Thanks a lot. Congrats on a good quarter.

Brandon Sim

Thanks, Dave.

Operator

Our next question is from Ryan Daniels with William Blair. Please proceed. Thank you.

Ryan Daniels

In regards to the two care enablement clients you announced tonight, I thought it was curious that one was a hospital in California. So I'm hoping you could dig a little bit deeper into that. I guess I wasn't familiar with you selling tech solutions to health systems and hospitals, more thinking it's provider groups. So is that unique or do you have a lot of those? If it is more unique, can you talk about that as a potential growth driver going forward? Thanks.

Brandon Sim

Thanks for joining the call, Ryan. I know that it's a busy evening, so we appreciate your time. That's right. We have sold historically to hospitals and health systems before. We have a couple of hospital/health system clients in our care enablement business already today. Admittedly, as you mentioned, it's not as large of a business as our physician risk-bearing entity business or clients. It is a very similar offering that we're selling to them, which is tools around population health management, around their value-based care infrastructure, and their ability to manage risk pools in much the same way that physician groups are managing risk pools. So I wouldn't view this necessarily as hospital IT in terms of selling an EHR or something to a hospital, but rather helping health systems think through their value-based care strategy, how they can continue to succeed in value-based care, especially at a very difficult time for health systems in value-based and accountable care ecosystems, and kind of the technology that they would need to be successful, just as we are providing those tools to our physician outpatient organizations.

Ryan Daniels

Okay, that's very helpful, thank you. And then, final one here, seems like there's been a lot of momentum this year in the industry with enablers working with practices to move them into MSSP, moving from REACH into LEAD. And I'm curious what kind of momentum you're seeing there. I think if I remember correctly, earlier this year you talked about working more with PACS, the Physician Association of California, to kind of enable more providers to move into MSSP. So I just want to get your view on the state of the marketplace there and kind of the momentum you're seeing nationally with MSSP growth into '27 and beyond. Thanks.

Brandon Sim

Thanks, Ryan. I agree. There's a ton of interest from the provider community in joining the accountable care organization programs. I think it's a testament to the way that CMS has designed these programs statutorily with MSSP, but also with some of the innovation models, such as ACO REACH and soon to come ACO LEAD. So we're working on those models too.

Ryan Daniels

Excellent.

Brandon Sim

Such as ACO REACH and ACO LEAD, which we're really excited about too. We think they've been an excellent way for providers to take accountability for the cost of their members and the quality of the care delivered to the members. Against that backdrop, we are seeing really strong growth. We've had strong ACO performance before in both the ACO REACH and MSSP programs. MSSP was top in the country. We're seeing a ton of membership growth. It's a bit early to say exactly what that will be given the changing programs, but we do expect at least mid-to-high-teens membership growth in our ACO programs going into 2027. So there's really strong membership growth and interest, and we think that's a large growth lever for us going forward in the medium term as well.

Ryan Daniels

Okay. I appreciate the comment. Congrats. Thanks, guys.

Brandon Sim

Thanks, Ryan.

Operator

Our final question is from Eugene Mannheimer with Freedom Capital Markets. Please proceed.

Eugene Mannheimer

You closed the Prospect deal around July 1. And you mentioned in your remarks, Brandon, that you're tracking at the high end of those synergies of $12 million to $15 million that you called out. My question is whether you think you can gain additional synergies in '27 and beyond, and how about any revenue synergies that you might touch on? Thank you.

Brandon Sim

Thanks, Gene, for the question. Always appreciate you joining our calls. We continue to be excited about that synergy opportunity. We are at the high end already now on an annualized basis. Certainly there could be—we think there's additional opportunity—but increasingly, as I mentioned in the prepared remarks, we're viewing Prospect as just part of the core business. So we are maybe starting to see this more as just operating leverage in our business as both of the combined entities scale on our platform versus specific enumerated integration synergies. And so on an ongoing basis, especially now with purely apples-to-apples, Prospect included in both comparison periods year-over-year, that's kind of how we're viewing it going forward.

That being said, we were very pleased with the synergies, very pleased with the execution against our investment thesis. And going forward, we think there's a lot of operating leverage on the cost side, as well as revenue opportunities in terms of securing the appropriate rates for the risk and the cost that we're taking on.

Eugene Mannheimer

Okay. Got it. Thank you.

Brandon Sim

Thanks, Gene.

Operator

If there are no further questions, this will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

This live transcript is auto-generated without human intervention or review.