Astrana Health enters its third-quarter report with something it lacked for most of the past year: a raised outlook. Last quarter's modest lift to full-year adjusted EBITDA guidance, combined with deleveraging that is running well ahead of plan, ended a stretch of reaffirmations that followed the timing-driven cut in the third quarter of 2025. The question for the November 5 release, due after the close, is whether that improvement holds up while a few new cracks are visible. Commercial cost trend is running a bit hot, and California Medicaid attrition is tracking toward the high end of management's expectations.
The Street is looking for earnings of $0.44 a share on revenue of about $1.02 billion. The eye-catching projected EPS growth of roughly 4,300% is mostly an artifact of a year-ago quarter in which the company earned just a penny. That comparison flatters the trend more than it describes it. The revenue picture is more telling. Expected growth of about 6.7% marks a sharp slowdown from the near-50% gains of recent quarters, because the company is now lapping the period when the Prospect acquisition entered its numbers. Management guided third-quarter revenue to $1.00 billion to $1.03 billion, which puts consensus in the upper half of that range rather than safely in the middle. Reaching it requires a clean quarter, not a lucky one, especially since the second quarter's $972.5 million absorbed a one-time $15 million ACO REACH billing adjustment that should not recur.
The call laid out several things this report needs to show. First, the full-risk contracts that started in the first quarter, whose delay triggered last year's guidance cut, were described as performing to underwriting two quarters in. A third quarter of stable medical cost ratios on those contracts would confirm the problem is truly behind the company. Second, management pointed to accelerating operating leverage, with G&A improving about 210 basis points year over year after a 70-basis-point gain the prior quarter, and a target of exiting the year near 6%. Further progress here would show the EBITDA raise rests on structure rather than timing. Third, free cash flow of $93 million in the first half, about 69% conversion, has supported net leverage falling to 2.26x. Continued conversion would keep the balance sheet story intact.
The risks run the other way. If the commercial outpatient specialty cost pressure that surfaced last quarter widens, or if Medi-Cal attrition goes beyond the high end of expectations, the reaffirmed $3.8 billion to $4.1 billion revenue range could start to look heavier at the top. The implied fourth-quarter EBITDA range of $47 million to $67 million is wide, and any narrowing in this report will signal how confident management really is. Early signs from the new Hawaii and Texas Medicare Advantage agreements, the roughly 3,000 added Texas lives, and the planned shift of California Medi-Cal lives toward full risk would help show that growth is broadening beyond integrating Prospect.
Sentiment has warmed noticeably, with bullish readings well above where they stood before the last report, and the shares have gained about 7% since then while the S&P 500 was flat. Still, at $36.94 the stock sits above its 200-day average of $33.67 but in the middle of its post-earnings range, and well below the prior quarter's high of $51.60. That suggests investors have regained some trust without fully pricing in a durable recovery.
Ultimately, this report hinges on whether cost trend stays contained enough for Astrana to hold or tighten its raised EBITDA outlook while revenue lands near the upper half of guidance. Do that, and the improving narrative from last quarter gains credibility heading into the 2027 Medicaid changes. Stumble on medical costs, and the market may decide the raise was more cushion than conviction.