Astrana Health Holds 2026 Outlook as Medicaid Attrition Bites

$1.02 billion in revenue for the quarter ended Sept. 30, 2026 was a record for Astrana Health (NASDAQ: ASTH), up 7% year over year. Adjusted EBITDA (a non-GAAP profit measure) rose 13% to a record $77.2 million; net income attributable to Astrana reached $13 million and adjusted diluted earnings per share were $0.71.

Medicare Advantage membership growth and full-risk contracts (contracts carrying medical-cost risk) supplied the lift, offsetting declines in Medicaid and exchange enrollment. President and CEO Brandon Sim called the 13% adjusted EBITDA increase organic, citing maturing risk-bearing populations, particularly in Texas, better medical costs in Care Partners and operating efficiencies. Prospect, acquired more than a year ago, appeared in both periods.

What does the outlook imply?

Narrower guidance changed the tolerance, not the target. Astrana expects:

• 2026 revenue of $3.9 billion to $4 billion.
• Adjusted EBITDA of $261 million to $274 million.
• Free cash flow (after capital spending) of $107.5 million to $130 million.

Fourth-quarter guidance calls for $939 million to $1.04 billion in revenue and $48.5 million to $61.5 million in adjusted EBITDA. COO and CFO Chan Basho said the final quarter is expected to be the year’s least profitable, consistent with prior years.

Third-quarter results included Medicare Shared Savings Program accruals and final Medicare Advantage risk-adjustment sweeps. Basho said neither item should recur in the fourth quarter; the sweeps added approximately $5 million to $10 million, in line with expectations and the prior-year period.

The fourth-quarter outlook also includes continued Medicaid attrition and spending to onboard new payer contracts and other growth opportunities. Sim said Astrana continues to expect performance “around the midpoint,” despite the guidance range’s width.

Astrana generated approximately $105 million of free cash flow through the first nine months of 2026 and repaid approximately $116 million of debt. Quarter-end cash was $396 million, net debt $581 million and net leverage (net debt over trailing-12-month earnings) 2.2 times. Basho said Astrana remains on track to approach two times net leverage by year-end.

How large is the Medicaid drag?

About 1.5 million members were under management at quarter-end. Medicare Advantage membership grew organically at a high-single-digit rate year over year, partly offset by Medicaid and exchange attrition.

Medicaid attrition for 2026 is expected at the middle to high end of Astrana’s initial 10% to 15% assumption. For 2027, Astrana plans another 10% to 15% decline as it considers work requirements, frequent eligibility checks and the transition of UIS members to fee-for-service.

Sim reported modest signs that the remaining Medicaid population carries higher risk. He expects Medicaid to be a roughly mid-single-digit percentage-point headwind to adjusted EBITDA growth in 2027, net of rate adjustments.

Overall medical cost trend stayed slightly better than Astrana’s approximately 5.2% full-year assumption, according to Sim. Medicare Advantage and Original Medicare trends were favorable; Medicaid costs exceeded initial assumptions, while commercial costs were slightly above expectations