Astrana Health, Inc.

Description of Business

Overview

Unless the context dictates otherwise, references in these notes to the financial statements to the “Company,” “we,” “us,” “our,” and similar words are references to Astrana Health, Inc. (“Astrana”) and its consolidated subsidiaries and affiliated entities, as appropriate, including its consolidated variable interest entities (“VIEs”).

Headquartered in Alhambra, California, Astrana is a physician-centric, technology-enabled, healthcare management company. Leveraging its proprietary end-to-end technology solutions, Astrana operates an integrated healthcare delivery platform that enables providers to participate in value-based care arrangements, empowering them to deliver accessible, high-quality care to patients in a cost-effective manner. Together with Astrana’s affiliated physician groups and consolidated subsidiaries and VIEs, the Company delivers value-based care to patients, of whom the majority are covered by private or public insurance provided through Medicare, Medicaid, and health maintenance organizations (“HMOs”), with a small portion of its revenue coming from non-insured patients. The Company provides care coordination services to each major constituent of the healthcare delivery system, including patients, families, primary care physicians, specialists, acute care hospitals, alternative sites of inpatient care, physician groups, and health plans. The Company’s physician network consists of primary care physicians, specialist physicians, physician and specialist extenders, and hospitalists.

Segments

The Company’sthree reportable segments are Care Partners, Care Delivery, and Care Enablement, which are described as follows:

Care Partners

The Company’s Care Partners segment is focused on building and managing high-quality and high-performance provider networks by partnering with, empowering, and investing in strong provider partners aligned on a shared vision for coordinated care delivery. By leveraging the Company’s unique Care Enablement platform and ability to recruit, empower, and incentivize physicians to manage total cost of care effectively, the Company is able to organize partnered providers into successful multi-payer risk-bearing organizations (“RBOs”) that take on varying levels of risk based on total cost of care across membership in all lines of business, including Medicare Advantage, Medicaid, Commercial, Exchange, and Medicare fee for service (“FFS”). The Company’s healthcare delivery entities in this segment consist of a network of RBOs that encompass independent practice associations (“IPAs”), accountable care organizations (“ACOs”), and state-specific entities such as Restricted Knox-Keene licensed health plans (“RKKs”) in California. These entities are tasked with coordinating and arranging high-quality care for patients within Astrana’s ecosystem. This helps ensure seamless continuity of care among patients in different age groups, stages of life, and life circumstances.

Care Delivery

The Company’s Care Delivery segment is a group of patient-centric, data-driven organizations focused on delivering high-quality, accessible care to all patients. This segment includes the following:

•

An acute care hospital facility and primary care clinics, including post-acute care services;

•

Specialty care clinics and inpatient services, including cardiac care, endocrinology, and ophthalmology, as well as hospitalist and intensivist services; and

•

Ancillary service providers, such as urgent care centers, outpatient imaging centers, ambulatory surgery centers, full-service labs, and a specialty pharmacy.

Care Enablement

The Company’s Care Enablement segment represents a comprehensive platform that integrates clinical, operational, financial, and administrative information, all powered by the Company’s proprietary technology suite. These tools are leveraged across the Company’s lines of business as well as third-party providers outside of Astrana’s ecosystem. The Company provides solutions to payers and providers, including independent physicians, provider and medical groups, and ACOs. The Company’s platform meets providers and payers wherever they are on the spectrum of total cost of care, offering solutions for FFS entities and providers open to taking upside and downside risks on professional and institutional spending and across all patient types, including Medicare, Medicaid, Commercial, and Exchange-insured patients. This segment includes the Company’s wholly owned subsidiaries that operate as management services organizations (“MSOs”), which enter into long-term management and/or administrative services agreements (“MSAs”) with RBOs and other providers. By leveraging the Company’s Care Enablement platform, providers and payers can improve their ability to deliver high-quality patient care and achieve better patient, clinical, and financial outcomes.

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated balance sheet at December 31, 2025 has been derived from the Company’s audited consolidated financial statements, but does not include all annual disclosures required by generally accepted accounting principles in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed consolidated financial statements as of September 30, 2026 and for the three and nine months ended September 30, 2026 and 2025 have been prepared in accordance with U.S. GAAP for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 12, 2026. In the opinion of management, all material adjustments (consisting of normal recurring adjustments as well as intercompany accounts and transactions, which have been eliminated) considered necessary for a fair presentation have been made to make the condensed consolidated financial statements not misleading, as required by Regulation S-X, Rule 10-01. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or any future periods.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include Astrana’s wholly owned subsidiaries and consolidated VIEs. All intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited condensed consolidated interim financial statements have been prepared under the assumption that users of the interim financial data have either read, or have access to, the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2025.

Reclassifications

Certain amounts disclosed in prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications were made to (i) the condensed consolidated balance sheet as of December 31, 2025 to reclassify investments in privately held entities to other assets within non-current assets; and (ii) the condensed consolidated statement of cash flows for the nine months ended September 30, 2025 to reclassify (a) change in fair value of contingent consideration liabilities from other within net cash provided by operating activities, (b) the issuance of loans receivable to other within net cash used in investing activities, and (c) purchase of treasury shares from other within net cash provided by financing activities. The reclassifications had no effect on net income, earnings per share, retained earnings, cash flows provided by (used in) operating, investing, or financing activities, or total assets.

Use of Estimates

The preparation of the condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include collectability of receivables, recoverability of long-lived and intangible assets, business combinations, goodwill valuation and impairment assessment, accrual of medical liabilities (incurred but not reported (“IBNR”) claims), determination of hospital shared-risk and health plan shared-risk revenue and receivables (including estimations of affiliated hospitals’ claims costs which involves assumptions for IBNR, such as utilization of healthcare services, historical payment patterns, cost trends, seasonality, changes in membership, and other factors), income tax-valuation allowance, stock-based compensation, and right-of-use assets and lease liabilities. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ materially from those estimates and assumptions.

Business Combinations

The Company uses the acquisition method of accounting for all business combinations, which requires assets and liabilities of the acquiree to be recorded at fair value, consideration transferred (including contingent consideration) to be measured at fair value as determined on the acquisition date, and to account for acquisition-related costs separately from the business combination, which are expensed as incurred.

Cash, Cash Equivalents, and Restricted Cash

The Company’s cash and cash equivalents primarily consist of money market funds and certificates of deposit. The Company considers all highly liquid investments that are readily convertible into known amounts of cash and have original maturities of 90 days or less from their date of purchase to be cash equivalents.

The Company maintains its cash in deposit accounts with several banks, which at times may exceed the insured limits of the Federal Deposit Insurance Corporation (“FDIC”). The Company believes it is not exposed to any significant credit risk with respect to its cash, cash equivalents, and restricted cash. As of September 30, 2026 and December 31, 2025, the Company’s deposit accounts with banks exceeded the FDIC’s insured limit by$427.4 million and$447.0 million, respectively. The Company has not experienced any losses to date and conducts ongoing evaluations of these financial institutions to limit the Company’s concentration of risk exposure.

Restricted cash consists of cash held as collateral in the event of default as required by certain health plan contracts. Restricted cash is included in other assets in the accompanying condensed consolidated balance sheets.

Receivables and Loans Receivable

The Company’s receivables are comprised of capitation receivables, ACO receivables, FFS receivables, risk pool settlements, incentive receivables, management fee income, and receivables from related parties. The Company’s receivables are recorded and stated at the amount expected to be collected.

The Company’s receivables, net consisted of the following (in thousands):

The Company maintains reserves for potential credit losses on the receivables. Management reviews the composition of the Company’s receivables and analyzes historical bad debts, customer concentrations, customer creditworthiness, current economic trends, and changes in customer payment patterns to evaluate the adequacy of these reserves. The Company also regularly analyzes the ultimate collectability of accounts receivable after certain stages of the collection cycle using a look-back analysis to determine the amount of receivables subsequently collected, and adjustments are recorded when necessary. Reserves are recorded based on historical trends. Any change in such an estimate of reserves is recorded in the period when such change is identified.

Receivables are recorded when the Company is able to determine amounts receivable under applicable contracts and agreements based on information provided and collection is reasonably likely to occur. The Company continuously monitors its receivable collections and expects that the historical credit loss experienced across its receivables portfolio is materially similar to any current expected credit losses (“CECL”) that would be estimated under the CECL model.

Related parties within receivables, net

The Company’s receivables from related parties are primarily with AHMC Healthcare Inc. (“AHMC”) and equity method investments. Receivables with AHMC involve hospital-shared risk pool settlements, capitation, FFS receivables related to patient care services, and miscellaneous receivables, and receivables with equity method investments are for management services provided. One of the Company’s directors serves as a senior executive of AHMC. Hospital-shared risk pool settlement receivables from related parties are recorded quarterly based on reports received from the Company’s hospital partners and management’s estimate of the Company’s portion of the estimated risk pool surplus for open performance years. Final settlement of risk pool surplus or deficits occurs within 18 months after the risk pool performance year is completed.

Loans receivable

The Company’s loans receivable consists of promissory notes that accrue interest per annum and are recorded and stated at amortized cost plus accrued interest. Interest income is accrued based on the outstanding principal amounts. As of September 30, 2026 and December 31, 2025, the balance of the Company’s aggregate loans receivable was$52.5 million and$53.7 million, respectively. Loans receivable from related parties was$1.8 million as of December 31, 2025 and settled in full during the three months ended June 30, 2026. For the three months ended September 30, 2026 and 2025, the Company accrued$1.4 million and$1.2 million, respectively, and for the nine months ended September 30, 2026 and 2025, the Company accrued$3.3 million, respectively, of interest related to loans within interest income on the accompanying condensed consolidated statements of income.

The Company assesses outstanding loans receivable under the CECL model by evaluating the party’s ability to pay, which involves reviewing quarterly interest payment history, annually reviewing financial history, assessing the value of any collateral, and reassessing any identified insolvency risk. As of September 30, 2026, the promissory notes are expected to be collected without default.

Concentrations of Credit Risks

The Company disaggregates revenue from contracts by service type and payer type. This level of detail provides useful information on how the Company generates revenue by significant revenue streams and by type of direct contracts, as used by the chief operating decision maker (“CODM”). The accompanying condensed consolidated statements of income present disaggregated revenue by service type. The following table presents disaggregated revenue generated by each payer type (in thousands):

The Company had major payers that contributed the following percentages of total consolidated net revenue. These payers are primarily within the Care Partners segment.

• Less than 10% of revenue.

The Company had major payers that contributed to the following percentages of receivables, net, and other receivables:

Revenue Recognition

The Company receives payments from the following sources for services rendered:

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Commercial insurers;

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Federal government under the Medicare program administered by CMS;

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State governments under Medicaid and other programs;

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Other third-party payers (e.g., hospitals and IPAs); and

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Individual patients and clients.

Revenue consisted of the following (in thousands):

Revenue is recorded in the period in which services are rendered, or the period, generally on a monthly basis, in which the Company is obligated to provide services. The form of billing and related collection risk for such services may vary by revenue type and customer.

Income Taxes

Federal and state income taxes are computed at currently enacted tax rates, less tax credits, using the asset and liability method. Deferred taxes are adjusted both for items that do not have tax consequences and for the cumulative effect of any changes in tax rates from those previously used to determine deferred tax assets or liabilities. Tax provisions include amounts that are currently payable, changes in deferred tax assets and liabilities that arise because of temporary differences between the timing of when items of income and expense are recognized for financial reporting and income tax purposes, changes in recognition of tax positions, and any changes in the valuation allowance caused by a change in judgment about the realizability of the related deferred tax assets. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.

The Company uses a recognition threshold of “more-likely-than-not” and a measurement attribute on all tax positions taken, or expected to be taken, in a tax return in order to be recognized in the accompanying condensed consolidated financial statements. Once the recognition threshold is met, the tax position is measured to determine the actual amount of benefit to recognize in the condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” to provide disaggregated information about certain income statement costs and expenses. ASU 2024-03 is effective for the Company’s annual periods beginning January 1, 2027, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its condensed consolidated financial statement disclosures.

On May 12, 2025, the FASB issued ASU 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810) — Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity,” to revise the guidance in ASC 805 on identifying the accounting acquirer in a business combination in which the legal acquiree is a VIE. The ASU is intended to improve comparability between business combinations that involve VIEs and those that do not. ASU 2025-03 is effective for the Company’s annual periods beginning January 1, 2027, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its condensed consolidated financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06, “Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which clarifies and modernizes the accounting for costs related to internal-use software. The amendments in ASU 2025-06 remove all references to project stages and clarify the threshold entities apply to begin capitalizing costs. ASU 2025-06 is effective for the Company’s annual periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its condensed consolidated financial statement disclosures.

Other than the new standards discussed above, there have been no other recent accounting pronouncements not yet adopted that are expected to have significance, or potential significance, to the Company’s financial position, results of operations, and cash flows.

Business Combination and Goodwill

During the nine months ended September 30, 2026, the Company completed several business combinations, consisting of clinic operations and an ACO. The aggregate purchase consideration for these acquisitions was $6.8 million. The Company is in the process of finalizing the valuation of the acquired assets and assumed liabilities, including goodwill and related tax impacts. Amounts presented below are subject to change as additional information becomes available.

The following table summarizes the preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed related to each acquisition at the acquisition date (in thousands):

Certain Businesses and Assets of Prospect

On July 1, 2025, the Company, and its affiliates, acquired substantially all the assets of certain direct and indirect subsidiaries of PHP Holdings, LLC, such as Prospect Medical Group and Prospect Medical Systems, and all of the outstanding equity interests of Prospect Health Plan, Inc., and Foothill Regional Medical Center, pursuant to the Asset and Equity Purchase Agreement, dated November 8, 2024 (such assets and equity collectively, “Prospect”). The acquisition significantly expanded the Company’s provider network and enhanced its ability to offer increased access, quality, and value to its members. The purchase price for the acquisition was $674.9 million. To finance the acquisition, the Company borrowed $707.3 million from afive-year delayed draw term loan credit facility. See Note 8 — “Credit Facility and Bank Loans” for further information on the Company’s debt.

The Company finalized the purchase price allocation for Prospect as of June 30, 2026. During the six months ended June 30, 2026, the Company recorded measurement period adjustments with corresponding changes to goodwill. These adjustments reflected additional information about facts and circumstances that existed as of the acquisition date, primarily related to a $20.2 million increase in assumed liabilities.

The following table summarizes the final purchase price allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (in thousands):

The table below represents intangible assets acquired in the Prospect acquisition (dollars in thousands):

(1)

Other consists of management contracts and a trade name.

Goodwill

The Company accounts for acquisitions under the acquisition method of accounting. The fair value of consideration transferred was allocated to acquired tangible and intangible assets and liabilities based on their fair values. The excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill. The goodwill is primarily attributable to the scale, skill sets, operations, and synergies from the acquisition, which can be leveraged to expand the Company’s network and enhance the value and quality of care the Company provides to its members.

At the time of acquisition, the Company estimates the amount of assets, including identifiable intangible assets, and liabilities based on a valuation and the facts and circumstances available at the time. The Company determines the final value of assets, including identifiable intangible assets, and liabilities as soon as information is available, but no later than one year from the date of acquisition.

The Company hadno impairment of its goodwill during thethree and nine months ended September 30, 2026 and 2025.

The change in the carrying value of goodwill for thenine months ended September 30, 2026 was as follows (in thousands):

Intangible Assets, Net

As of September 30, 2026, intangible assets, net, consisted of the following (dollars in thousands):

(1)

Other consists of management contracts, a patient management platform, trade name/trademarks, and developed technology.

As of December 31, 2025, intangible assets, net, consisted of the following (dollars in thousands):

(1)

Other consists of management contracts, a patient management platform, trade name/trademarks, and developed technology.

For the three months ended September 30, 2026 and 2025, the Company recognized amortization expense of$13.8 million and$14.2 million, respectively, in depreciation and amortization in the accompanying condensed consolidated statements of income. For the nine months ended September 30, 2026 and 2025, the Company recognized amortization expense of$41.4 million and$26.6 million, respectively, in depreciation and amortization in the accompanying condensed consolidated statements of income. The Company determined that there wasno impai rment of its finite-lived intangible or long-lived assets during the three and nine months ended September 30, 2026 and 2025.

Future amortization expense is estimated to be as follows for the years ending December 31 (in thousands):

Investments in Other Entities– Equity Method

The Company has invested in several entities in the healthcare industry similar to its Care Partners, Care Delivery, and Care Enablement segments. The Company holds 25.0% –51.0% equity interest in these investments that are accounted for under the equity method, as the Company has the ability to exercise significant influence, but not control over operations. No impairment loss was recorded related to equity method investments for thethree and nine months ended September 30, 2026 and 2025.

The following table summarizes the Company’s equity method investments as of September 30, 2026 and December 31, 2025 (dollars in thousands):

(1)

Other consists of smaller equity method investments.

The Company records its investments in certain non-consolidated VIEs within investments in other entities – equity method in the accompanying condensed consolidated balance sheets. Despite providing financial support to these entities, the Company lacks a controlling financial interest and is not the primary beneficiary. Thus, these VIEs are accounted for under the equity method of accounting.

Accounts Payable and Accrued Expenses

The Company’s accounts payable and accrued expenses consisted of the following (in thousands):

Medical Liabilities

The Company’s medical liabilities consisted of the following (in thousands):

(1)

Includes changes in estimate of acquired IBNR from prior acquisitions within the measurement period of adjustment

Credit Facility and Bank Loans

The Company’s debt balance consisted of the following (in thousands):

The estimated fair value of the Company’s long-term debt was determined using Level 2 inputs primarily related to comparable market prices. As of September 30, 2026 and December 31, 2025, the carrying value was not materially different from fair value, as the interest rates on the Company’s debt approximated rates currently available to the Company.

The following are the future commitments as of September 30, 2026 of the Company’s debt for the years ending December 31 (in thousands):

Credit Facility

Second Amended and Restated Credit Agreement

On February 26, 2025, the Company entered into the Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement,” and the credit facility thereunder, the “Second Amended and Restated Credit Facility”) with Truist Bank, in its capacities as administrative agent for the lenders, issuing bank, swingline lender and a lender, and the banks and other financial institutions from time to time party thereto, to, among other things, amend and restate that certain amended credit agreement, dated June 16, 2021, by and among the Company, Truist Bank, and certain lenders thereto, in its entirety. The Second Amended and Restated Credit Agreement provides for (i) afive-year revolving credit facility (the “Revolver Loan”) to the Company of $300.0 million, which includes a letter of credit sub-facility of up to $100.0 million and a swingline loan sub-facility of $25.0 million, (ii) afive-year term loan A credit facility (the “Term Loan”) to the Company of $250.0 million, and (iii) afive-year delayed draw term loan credit facility (the “DDTL A” and together with the Term Loan, the “Term Loans”) to the Company of $745.0 million, of which $707.3 million was drawn down in July 2025, with the remaining commitment termin ated. In June 2026, the Company paid $80.0 million toward the Revolver Loan. As of September 30, 2026, the Company had combined borrowings of$894.3 million on its Term Loans and$42.0 million under the Revolver Loan under the Second Amended and Restated Credit Agreement. The maturity of the Term Loans and the Revolver Loan is February 26, 2030.

Amounts borrowed under the Second Amended and Restated Credit Agreement bear interest at an annual rate equal to, at the Company’s elected option, the rate for term Secured Overnight Financing Rate (“SOFR”) published by the CME Group Benchmark Administration Limited two days prior to the first day of the applicable interest period, plus a spread of 1.25% to 2.50%, as determined on a quarterly basis based on the Company’s leverage ratio. As of September 30, 2026, interest rates on the Term Loans and the Revolver Loan were 5.90%.

The Company and its subsidiary Astrana Health Management, Inc. (“AHM”) have granted the lenders a security interest in all of their assets, including stock and other equity issued by their subsidiaries, pursuant to the Amended and Restated Guaranty and Security Agreement, dated February 26, 2025, by and among the Company, as borrower, and AHM, as guarantor, in favor of Truist Bank, which amends and restates that certain guaranty and security agreement, dated September 11, 2019, in its entirety. The Second Amended and Restated Credit Agreement contains certain customary events of default. If any event of default occurs and continues under the Second Amended and Restated Credit Agreement, the lenders may terminate their commitments and may require the Company and its guarantors to repay outstanding debt and/or provide a cash deposit as additional security for outstanding letters of credit. In addition, the agent, on behalf of the lenders, may pursue other remedies, including, without limitation, transferring pledged securities of the Company’s subsidiaries in the name of the agent and exercising all rights with respect thereto (including the right to vote and to receive dividends), collect on pledged accounts, instruments and other receivables, and other rights provided by law.

Deferred Financing Costs

As of September 30, 2026, unamortized deferred financing costs for the Revolver Loan and Term Loans were$4.3 million and$11.0 million, respectively. As of December 31, 2025, unamortized deferred financing costs for the Revolver Loan and Term Loans were$5.2 million and$13.5 million, respectively. Deferred financing costs associated with the Term Loans are presented as a direct reduction against the amounts borrowed on the Term Loans and amortized over the life of the loans using the effective interest rate method. Deferred financing costs associated with the Revolver Loan are recognized in other assets in the accompanying condensed consolidated balance sheets and amortized over the life of the loan using the straight-line method. Interest expense in the accompanying condensed consolidated statements of income includes amortization of deferred debt issuance costs.

Effective Interest Rate

The Company’s average effective interest rate on its total debt during the nine months ended September 30, 2026 and 2025 was 6.42% and 6.33%, respectively.

Mezzanine Deficit and Stockholders’ Equity

Mezzanine Deficit

APC

As the redemption feature of APC’s shares of common stock is not solely within the control of APC, the equity of APC, a consolidated affiliate of the Company, does not qualify as permanent equity and has been classified as non-controlling interest in mezzanine or temporary equity. APC’s shares were not redeemable, and it was not probable that the shares would become redeemable as of September 30, 2026 and December 31, 2025.

Stockholders’ Equity

As of September 30, 2026,41,048 holdback shares have not been issued to certain former AHM shareholders who were AHM shareholders at the time of closing of the 2017 merger of Astrana with AHM, as they have yet to submit properly completed letters of transmittal to Astrana in order to receive theirpro rata portion of Astrana common stock as contemplated under the 2017 merger agreement. Pending such receipt, such former AHM shareholders have the right to receive, without interest, their pro rata share of dividends or distributions with a record date after the effectiveness of the 2017 merger. The accompanying condensed consolidated financial statements have treated such shares of common stock as outstanding, given that the receipt of the letter of transmittal is considered perfunctory, and the Company is legally obligated to issue these shares in connection with the 2017 merger.

Treasury Stock

As of September 30, 2026 and December 31, 2025, APC owned 6,132,802 shares of Astrana common stock. While such shares of Astrana common stock are legally issued and outstanding, they are treated as treasury shares for accounting purposes and excluded from shares of common stock outstanding in the accompanying condensed consolidated financial statements. APC’s ownership in Astrana was 11.07% and 11.15% as of September 30, 2026 and December 31, 2025, respectively.

During the nine months ended September 30, 2026, the Company repurchased 153,247 shares of its common stock for$3.9 million, of which 28,500 shares were repurchased from two directors of the Company for$1.1 million andno shares were repurchased from APC. During thenine months ended September 30, 2025, the Company repurchased 33,214 shares of its common stock from two directors of the Company for$1.0 million and 300,000 shares of its common stock from APC for an aggregate purchase price of $10.6 million. As of September 30, 2026 and December 31, 2025, the Company had repurchased 4,591,456 and 4,438,209 shares, respectively, of its common stock. These are included as treasury stock.

As of September 30, 2026 and December 31, 2025, total treasury stock, including the Company’s stock held by APC, was 10,724,258 and 10,571,011, respectively.

Dividends

During the nine months ended September 30, 2026, no distributions were made to APC’s common shareholders. During thenine months ended September 30, 2025, APC distributed 699,896 Astrana shares owned by APC and $5.4 million in cash to its common shareholders. These shares were owned by APC, a consolidated VIE of Astrana, and were carved out from Astrana’s economic interest and performance metrics.

Stock-Based Compensation

The Company recognizes stock-based compensation expense associated with the issuance of restricted stock awards, restricted stock units, and shares under the ESPP within cost of services and general and administrative expenses in the accompanying condensed consolidated statements of income.

During the three months ended September 30, 2026 and 2025, the Company recognized$15.6 million and$7.7 million, respectively, in stock-based compensation expense. During the nine months ended September 30, 2026 and 2025, the Company recognized$37.2 million and$27.2 million, respectively, in stock-based compensation expense.

As of September 30, 2026, unrecognized compensation expense related to total stock-based payments outstanding was$58.3 million.

Commitments and Contingencies

Regulatory Matters

Laws and regulations governing the Medicare program and healthcare generally are complex and subject to interpretation. While the Company believes it complies in all material respects with applicable laws and regulations, compliance with such laws and regulations can be subject to future government review and interpretation, as well as significant regulatory action. Failure to comply with such laws and regulations may result in fines, penalties, and/or exclusion from the Medicare and Medi-Cal programs.

The Company’s affiliated IPAs and state-specific entities such as RKKs in California are required to follow the regulations of the Department of Managed Health Care (“DMHC”). They must comply with solvency requirements such as a minimum working capital requirement, a tangible net equity (“TNE”) requirement, a cash-to-claims ratio, and claims payment requirements prescribed by the DMHC, as well as other non-solvency metrics. TNE is defined as total assets minus total liabilities, reduced by the value of intangible assets and unsecured obligations of officers, directors, owners, or affiliates outside of the normal course of business, plus subordinated obligations.

The Company’s California IPAs and RKKs participating in the Medicaid line of business are subject to an 85% Medical Loss Ratio (“MLR”) requirement, which generally mandates that a minimum percentage of premium revenue be expended on medical care and healthcare quality improvement activities. If an IPA’s or RKK’s MLR falls below the required threshold, the IPA or RKK may be required to remit amounts to one or more contracted health plans in accordance with applicable contractual and regulatory requirements.

Many of the Company’s payer and provider contracts are complex in nature and may be subject to differing interpretations regarding amounts due for the provision of medical services. Such differing interpretations may not come to light until a substantial period of time has passed following contract implementation. Liabilities for claims disputes are recorded when the loss is probable and can be estimated. Any adjustments to reserves are reflected in current operations.

Standby Letters of Credit and Surety Bonds

The Company and certain of its affiliated IPAs established irrevocable standby letters of credit for a total of$28.2 million and$27.9 million, for the benefit of CMS and certain health plans as of September 30, 2026 and December 31, 2025, respectively. Unless the institution provides notification that the standby letters of credit will be terminated prior to the expiration date, the letters will be automatically extended without amendment for additionalone-year periods from the present or any future expiration date.

The Company currently has several surety bonds as required by CMS and other agencies. The bonds total$57.2 million and$46.6 million, in aggregate, as of September 30, 2026 and December 31, 2025, respectively. The bonds expire on various dates through December 31, 2030.

Litigation

From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of its business. The Company assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company records a liability in its consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable, or the amount of the loss is not estimable, the Company does not record an accrual, consistent with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, the Company’s ultimate liability in connection with these matters is not expected to have a material adverse effect on the Company’s results of operations, financial position, or cash flows, and the amounts accrued for any individual matter are not material. However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters may be material to the Company’s results of operations for a particular period, depending upon the size of the loss or the Company’s income for that particular period.

Community Family Care Health Plan, Inc. – Arbitration Proceeding

Prior to the acquisition of Advanced Health Management Systems, L.P. (“AHMS”) in 2024, Community Family Care Health Plan, Inc. (“CFC HP”), now a wholly owned subsidiary of the Company, was engaged in arbitration with a provider associated with CFC HP (the “CFC HP Provider”). Specifically, on or about October 23, 2023, the CFC HP Provider initiated arbitration proceedings by filing a Demand for Arbitration, alleging breach of contract and fraud related to CFC HP’s purported failure to pay for services in accordance with the terms of a hospital services agreement (the “CFC HP Arbitration”). On or about August 8, 2025, the CFC HP Provider filed a First Amended Demand for Arbitration, further alleging that CFC HP never intended to comply with the payment terms of the contract. The action was resolved by settlement and dismissed in February 2026. As of December 31, 2025, per the terms of the settlement agreement, the Company paid $12.0 million toward the settlement. In January 2026, the Company paid the final settlement payment in the amount of $1.0 million, andno amounts remained payable as of September 30, 2026.

Given that the CFC HP Provider had already commenced the CFC HP Arbitration at the time of the acquisition of AHMS, as part of the acquisition, the Company and the sellers of CFC HP entered into a side letter to the purchase agreement that required $14.0 million of the purchase price be placed in an escrow account and used as the sole means for satisfying any claims by the Company related to losses incurred in the CFC HP Arbitration. The Company has sought reimbursement for the loss from the CFC HP Arbitration through a claim to the escrow funds. As of September 30, 2026, no loss recovery was recorded.

Cybersecurity Incident

As previously disclosed in our Current Report on Form 8-K filed with the SEC on September 23, 2026, during the third quarter of 2026, the Company identified a series of social engineering attempts in which individuals, impersonating Company personnel and spoofing the Company’s main corporate telephone number, contacted certain employees in an effort to obtain unauthorized access to the Company’s systems. As a result, certain private and/or confidential information maintained on the Company’s servers was accessed and acquired without authorization (the “Cybersecurity Incident”). The Company’s investigation into the nature and scope of the attempts, including the scope of the data that was accessed, and its remediation efforts, including evaluating any required notifications as a result of the incident, remain ongoing.

The Company was served with multiple putative class action lawsuits in the Los Angeles Superior Court and the United Stated District Court for the Central District of California, alleging claims arising out of the Cybersecurity Incident. The Company continues to evaluate the allegations, assess potential defenses, and determine the appropriate responsive pleadings. As these lawsuits are still in early stages, the Company is unable to accurately predict the ultimate outcome of this incident or estimate a loss or range of loss that the Company may incur in the event of an unfavorable outcome. Accordingly, the Company has not recorded a provision for any estimated losses in respect of the litigation relating to the Cybersecurity Incident as of September 30, 2026.

Liability Insurance

The Company believes that its insurance coverage is appropriate based upon the Company’s claims experience and the nature and risks of the Company’s business. In addition to the known incidents that have resulted in the assertion of claims, the Company cannot be certain that its insurance coverage will be adequate to cover liabilities arising out of claims asserted against the Company, the Company’s affiliated professional organizations, or the Company’s affiliated hospitalists in the future, where the outcomes of such claims are unfavorable. The Company believes that the ultimate resolution of all pending claims — including potential liabilities in excess of the Company’s insurance coverage — will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows; however, there can be no assurance that future claims will not have such a material adverse effect on the Company’s business. Contracted physicians are required to obtain their own insurance coverage.

Although the Company currently maintains liability insurance policies on a claims-made basis, intended to cover malpractice liability and certain other claims, the coverage must be renewed annually and may not continue to be available to the Company in future years at acceptable costs and on favorable terms.

Related-Party Transactions

Equity Method Investments

During the three and nine months ended September 30, 2026, the Company paid$1.3 million and$6.3 million, respectively, to its equity method investees for provider, call center, and credentialing services. During the three and nine months ended September 30, 2025, the Company paid$1.1 million and$4.9 million, respectively, to its equity method investees, for management fee services, provider services, and interest expense. For one of our equity method investments, Third Way Health, Inc., one of Astrana’s officers is also a board member. See Note 5 — “Investments in Other Entities – Equity Method.”

Astrana Board Members and Officers

During the three months ended September 30, 2026 and 2025, the Company recognized approximately $1.5 million and $0.9 million, respectively, of claims expenses with Arroyo Vista Family Health Center. During the nine months ended September 30, 2026 and 2025, the Company recognized approximately $6.3 million and $2.8 million, respectively, of claims expenses from the same party. Arroyo Vista Family Health Center’s chief executive officer is a member of the Company’s board of directors.

During the three months ended September 30, 2026 and 2025, the Company incurred rent expenses of$1.3 million and$1.2 million, respectively, from certain properties that are managed by Allied Pacific Holdings Investment Management, LLC. During the nine months ended September 30, 2026 and 2025, the Company incurred$3.9 million and$3.7 million, respectively, in rent expense from the same properties. As of September 30, 2026 and December 31, 2025, the Company’s operating lease right-of-use asset balance included$21.1 million and$10.1 million, respectively, and the Company’s operating lease liabilities included$21.7 million and$10.7 million, respectively, for certain properties that are managed by Allied Pacific Holdings Investment Management, LLC. Two of the Company’s directors own a portion of Allied Pacific Holdings Investment Management, LLC. One of these directors also serves as its chief executive officer and chief financial officer. A third director of the Company also serves as an officer of Allied Pacific Holdings Investment Management, LLC.

The Company has an agreement with AHMC for services provided to the Company, involving payment for hospital and other inpatient-related services, at rates similar to the Company’s other contracted hospitals. The Company and AHMC also have a risk-sharing agreement with certain AHMC hospitals to share the surplus and deficits of each of the hospital pools. Under the risk-sharing agreement, during thethree months ended September 30, 2026 and 2025, the Company had recognized risk pool revenues of$5.8 million and$5.2 million, respectively. During the nine months ended September 30, 2026 and 2025, the Company had recognized risk pool revenues of$9.7 million and$13.1 million, respectively. As of September 30, 2026 and December 31, 2025,$62.0 million and$40.5 million, respectively, remained in outstanding risk pool receivables. One of the Company’s directors serves as a senior executive of AHMC.

Revenue with AHMC consists of capitation, risk pool, FFS revenue related to patient care services, and miscellaneous revenue. Expenses with AHMC primarily include claims and capitation expenses. The following table sets forth revenue recognized and fees incurred with AHMC for thethree and nine months ended September 30, 2026 and 2025 (in thousands):

APC Board Members

During the three months ended September 30, 2026 and 2025, the Company paid an aggregate of$5.4 million and$5.3 million, respectively, to APC board members for provider services, which included$1.2 million, respectively, paid to individuals who also serve as Astrana board members and/or officers. During the nine months ended September 30, 2026 and 2025, the Company paid an aggregate of$16.2 million and$14.5 million, respectively, to APC board members for provider services, which included$3.3 million and$2.4 million, respectively, paid to individuals who also serve as Astrana board members and/or officers.

Intercompany Transactions

Because of corporate practice of medicine laws, the Company uses designated shareholder professional corporations, of which the sole shareholder is a member of the Company’s key personnel, to engage in certain transactions and make intercompany loans from time to time. These corporations are reported on a consolidated basis, together with the Company’s subsidiaries, and therefore, the Company does not separately disclose transactions between such affiliates and the Company’s subsidiaries as related-party transactions.

Income Taxes

The Company uses the liability method of accounting for income taxes as set forth in ASC 740, “Income Taxes.” Under the liability method, deferred taxes are determined based on differences between the financial statement and tax bases of assets and liabilities using enacted tax rates.

On an interim basis, the Company estimates what its anticipated annual effective tax rate will be and records a quarterly income tax provision in accordance with the estimated annual rate, plus the tax effect of certain discrete items that arise during the quarter. As the fiscal year progresses, the Company refines its estimates based on actual events and financial results during the quarter. This process can result in significant changes to the Company’s estimated effective tax rate. When this occurs, the income tax provision is adjusted during the quarter in which the estimates are refined, so that the year-to-date provision reflects the estimated annual effective tax rate. These changes, along with adjustments to the Company’s deferred taxes and related valuation allowance, may create fluctuations in the overall effective tax rate from quarter to quarter.

The Company’s effective income tax rate for the three months ended September 30, 2026 and 2025 was 37.1% and 81.0%, respectively, and for the nine months ended September 30, 2026 and 2025 was 34.5% and 45.4%, respectively. The effective tax rates for the three and nine months ended September 30, 2026 differed from the U.S. federal statutory rate of 21% primarily due to state and local income taxes and nondeductible officer and stock-based compensation, partially offset by income from flow-through entities and federal research and development credits.

As of September 30, 2026, the Company had gross unrecognized tax benefits of$1.2 million that, if recognized, would reduce the annual effective tax rate. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. The Company accrued$0.1 million of interest and penalties as of the nine months ended September 30, 2026. The Company does not anticipate a material change to its unrecognized tax benefits within the next 12 months.

The Company’s U.S. federal income tax returns for the years ended December 31, 2020 through December 31, 2025, and its California income tax returns for the years ended December 31, 2019 through December 31, 2025, remain open to examination, either because of an amended return, the applicable statute of limitations has not expired or because the year is under audit. The Internal Revenue Service is currently examining the Company’s 2024 federal income tax return and reviewing amended federal income tax returns for 2020 and 2021. The California Franchise Tax Board is currently examining the Company’s California income tax returns for 2019 through 2021.

For the nine months ended September 30, 2026,$23.3 million of payments were made for income taxes, net of tax refunds.

Earnings Per Share

Basic earnings per share is computed by dividing net income attributable to Astrana by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income attributable to Astrana by the weighted average number of common shares outstanding, plus the dilutive effect of unvested restricted stock awards and units, contingently issuable shares, stock options and shares issuable under the ESPP, as calculated under the treasury stock method. The non-controlling interest in APC is allocated its share of Astrana’s income from APC’s ownership of Astrana common stock, and this amount is included in the net income attributable to non-controlling interests in the accompanying condensed consolidated statements of income. Therefore, none of the shares of Astrana held by APC are considered outstanding for the purpose of basic or diluted earnings per share computation. As of September 30, 2026 and 2025, total treasury stock, including the Company’s stock held by APC, was 10,724,258 and 9,937,167, respectively. These are treated as treasury shares for accounting purposes and are not included in the number of shares of common stock outstanding used to calculate earnings per share. See Note 9 — “Mezzanine Deficit and Stockholders’ Equity” for information on the Company’s treasury stock.

The following potentially dilutive outstanding securities were excluded from the computation ofdiluted weighted average common shares outstanding because the assumed proceeds, as calculated under the treasury stock method, resulted in these awards being antidilutive or the conditions to issue such shares were not achieved as of September 30, 2026 and 2025, respectively:

Below is a summary of the earnings per share computations:

Below is a summary of the shares included in the diluted earnings per share computations:

Variable Interest Entities (“VIEs”)

The Company’s condensed consolidated financial statements include its subsidiaries and consolidated VIEs. A VIE is defined as a legal entity whose equity owners lack sufficient equity at risk or, as a group, lack decision-making rights, the obligation to absorb losses, or the right to receive the expected residual returns of the entity. The primary beneficiary is the variable interest holder with both (i) the power to direct the activities most significantly affecting the VIE’s economic performance and (ii) the obligation to absorb expected losses or the right to receive benefits potentially significant to the VIE.

Certain states prohibit non-physician owned entities from practicing medicine, employing physicians to practice medicine, or exercising control over medical decisions (“corporate practice of medicine” laws). To comply with these laws, the Company maintains long-term MSAs with its affiliated IPAs and medical groups that are owned and operated solely by physicians. AHM, a wholly owned subsidiary, has entered into MSAs with several affiliated IPAs, including APC. APC has been determined to be a VIE of AHM, as AHM is its primary beneficiary with the ability, through majority representation on the APC Joint Planning Board, to direct the activities (excluding clinical decisions) that most significantly affect APC’s economic performance. Accordingly, APC and its wholly owned subsidiaries and VIEs are consolidated in the accompanying condensed consolidated financial statements.

Certain state laws also prohibit a multi-shareholder professional corporation from holding shares in another professional corporation; however, a single-shareholder professional corporation may do so. In reliance on this exception, the Company designated certain key personnel as the nominee shareholder of professional corporations that hold controlling and non-controlling ownership interests in several medical corporations. Via a Physician Shareholder Agreement with the nominee shareholder, the Company retains the right to designate alternative equity holders. These entities are also managed by the Company’s wholly owned MSOs via MSAs and are consolidated in the accompanying condensed consolidated financial statements.

The following table presents assets that may only be used to settle VIE obligations, to which the creditors of Astrana Health, Inc. have no recourse, and liabilities for which the creditors of the Company’s VIEs have no recourse to the general credit of Astrana Health, Inc. These assets and liabilities of the Company’s VIEs, with the exception of investments in affiliates and amounts due to, or from, affiliates, which are eliminated upon consolidation, are included in the accompanying condensed consolidated balance sheets (in thousands).

(1)

Investment in affiliates includes APC’s investment in Astrana. While such shares of Astrana’s common stock are legally issued to APC and outstanding, they are treated as treasury shares for accounting purposes and excluded from shares of common stock outstanding in the accompanying condensed consolidated financial statements. Amounts due to, or from, affiliates are receivables or payables with Astrana’s subsidiaries. As a result, these balances are eliminated upon consolidation and are not reflected on Astrana’s condensed consolidated balance sheets as of September 30, 2026 and December 31, 2025.

Operating Leases

The Company has operating leases for corporate and medical offices. These leases have remaining lease terms ranging from 2 months to 19 years. Some lease terms include renewal options toextend the leases for up to 7 years and are included in the lease term when it is reasonably certain that the Company will exercise the options. Some lease terms include options to terminate the leases withinone year. These leases consist of fixed or variable payments. Variable lease payments are based on an index or a rate such as the Consumer Price Index.

Leases with an initial term of 12 months or less are not recorded on the accompanying condensed consolidated balance sheets.

Lease expense for the three months ended September 30, 2026 and 2025 was$3.5 million and$4.7 million, respectively, of which operating lease costs were$3.5 million and$2.6 million, respectively. Lease expense for the nine months ended September 30, 2026 and 2025 was$13.3 million and$11.9 million, respectively, of which operating lease costs were$8.9 million and$6.6 million, respectively. The remaining amounts primarily consisted of short-term lease costs.

Cash paid for amounts included in the measurement of operating lease liabilities for the nine months ended September 30, 2026 and 2025 was$8.6 million and$6.2 million, respectively.

Other information related to operating leases was as follows:

The following are future minimum lease payments under non-cancellable operating leases for the years ending December 31 (in thousands):

Segments

The Company currently hasthree reportable segments consisting of: 1) Care Partners; 2) Care Delivery; and 3) Care Enablement (see Note 1 — “Description of Business”).

The Company's CODM is its Chief Executive Officer. The CODM evaluates the performance of the Company’s operating segments based on segment revenue growth and operating income. The CODM uses revenue growth and total segment operating income for budgeting, reviewing results, and assessing performance. The CODM does not evaluate the Company’s segments using asset information. The significant segment expenses that comprise operating income, as a measure used by the CODM in evaluating operating segment performance, do not differ from the operating expenses as presented on the accompanying condensed consolidated statements of income.

In the normal course of business, the Company’s reportable segments enter into transactions with each other. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues recognized by a segment and expenses incurred by the counterparty are eliminated in consolidation and do not affect consolidated results.

Corporate costs are unallocated and primarily include corporate initiatives, corporate infrastructure costs, and corporate shared costs, such as finance, human resources, legal, and executive management.

The following tables present information about the Company’s segments (in thousands):

(1)

Income from operations for the intersegment elimination represents sublease income between segments. Sublease income is presented within other income, which is not presented in the table.

(1)

Loss from operations for the intersegment elimination represents sublease income between segments. Sublease income is presented within other income, which is not presented in the table.

(1)

Income from operations for the intersegment elimination represents sublease income between segments. Sublease income is presented within other income, which is not presented in the table.

(1)

Loss from operations for the intersegment elimination represents sublease income between segments. Sublease income is presented within other income, which is not presented in the table.

Fair Value Measurements of Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments as of September 30, 2026 are presented below (in thousands):

(1)

Included in cash and cash equivalents.

(2)

Consists of Level 1 marketable securities and a Level 2 interest rate swap.

(3)

Consists of smaller contingent consideration liabilities.

The carrying amounts and fair values of the Company’s financial instruments as of December 31, 2025 are presented below (in thousands):

(1)

Included in cash and cash equivalents.

(2)

Included in prepaid expenses and other current assets.

(3)

Consists of a small Level 3 contingent consideration liability and a Level 2 interest rate swap.

The change in the fair value of Level 3 liabilities is recognized in other income (loss) or general and administrative expensesin the accompanying condensed consolidated statements of income. As of September 30, 2026, the reconciliation of Level 3 liabilities was as follows (in thousands):

Derivative Financial Instruments

Interest Rate Swap Agreement

On August 7, 2025, the Company entered into an interest rate swap agreement to effectively convert its floating-rate debt to a fixed-rate basis with the principal objective of eliminating or reducing the variability of cash flows in interest payments associated with the Company’s floating-rate debt. The swap involves a notional amount of $200 million, with the Company paying a fixed interest rate of 3.179%. Payments are exchanged monthly, starting August 29, 2025 and continuing through the termination date of August 31, 2029, with the bank having an option to shorten the term to August 31, 2027. See Note 8 — “Credit Facility and Bank Loans” for further information on the Company’s debt. The interest rate swap agreement is not designated as a hedging instrument. Changes in the fair value of the contract are recognized as unrealized gain or loss on investments in the accompanying condensed consolidated statements of income and reflected within other as an adjustment to reconcile net income to cash provided by operating activities in the accompanying condensed consolidated statements of cash flows.

Remaining Equity Interest Purchase

In 2021, the Company entered into a financing obligation to purchase the remaining equity interest in Sun Labs. The purchase of the remaining Sun Labs equity value is considered a financing obligation with a carrying value of$4.1 million and$7.4 million, as of September 30, 2026 and December 31, 2025, respectively. On October 1, 2026, the Company settled its obligation and purchased the remaining 51.0% equity interest in Sun Labs for $4.1 million. As the financing obligation is embedded in the non-controlling interest, the non-controlling interest is recognized in other liabilities in the accompanying condensed consolidated balance sheets. Changes in the fair value of the financing obligation are recognized as unrealized gain or loss on investments in the accompanying condensed consolidated statements of income and as change in fair value of financing obligation in the accompanying condensed consolidated statements of cash flows.

Contingent Consideration

CFC

Upon acquiring certain assets of CFC in 2024, the total consideration of the acquisition included contingent consideration, to be settled in cash. The Company determined the fair value of the contingent consideration using a probability-weighted model that includes significant unobservable inputs (Level 3). Specifically, the Company considered various scenarios of membership and assigned probabilities to each such scenario in determining fair value. In 2025, the first metric was achieved and paid. In June 2026, the second metric was determined to have been achieved and was paid in the amount of $5.0 million and was no longer outstanding as of September 30, 2026. As of December 31, 2025, the second metric was valued at$4.7 million and was included in other liabilities in the accompanying condensed consolidated balance sheets. As of September 30, 2026 and December 31, 2025, the third metric was valued at$2.0 million and$2.3 million, respectively, and was included in other liabilities and other long-term liabilities, respectively, in the accompanying condensed consolidated balance sheets. Changes in the CFC contingent consideration are presented in general and administrative expenses in the accompanying condensed consolidated statements of income.

CHS

Upon acquiring 100% of the equity interests of CHS in 2024, the total consideration of the acquisition included contingent consideration, to be settled in cash. As a result of and following the acquisition of certain assets associated with clinics in Texas in June 2026, the CHS member enrollment metrics measure was amended to provide for an earnout based on a cumulative measure of profit, over the earnout period from October 5, 2024 to October 5, 2029. The earnout payment will be further determined based on a percentage of membership contributed by the acquisition associated with the acquired clinics and reduced by the cash paid towards the purchase of such acquisition. The Company determined the fair value of the contingent consideration using a probability-weighted model that includes significant unobservable inputs (Level 3). Specifically, the Company considered various scenarios of revenue and membership and assigned probabilities to each such scenario in determining fair value. As of September 30, 2026, the amended CHS contingent consideration was valued at$3.2 million and included in other long-term liabilities in the accompanying condensed consolidated balance sheets. As of December 31, 2025, the CHS 2025 gross profit per total member months metric was not met and the related contingent consideration was not paid, and under the terms of the previous agreement, the CHS member enrollment metrics had been valued at$7.4 million and included in other long-term liabilities in the accompanying condensed consolidated balance sheets. Changes in the CHS contingent consideration are presented in general and administrative expenses in the accompanying condensed consolidated statements of income.

Subsequent Events

In October 2026, the Company acquired 100% of the equity interests ofa Georgia-based independent practice association. The purchase consideration included cash payments of $5.0 million and contingent consideration. The Company is currently evaluating the preliminary accounting for the acquisition, including the identification of the acquired assets and assumed liabilities. Accordingly, a reasonable estimate of the related financial statements effects cannot be made at this time.