Great. Welcome back to the Barclays Global Healthcare Conference. My name is Andrew Mok. I'm the Facilities and Managed Care Analyst here at Barclays, and I'm pleased to welcome Astrana Health to the stage. Joining me here is Brandon Sim, CEO. Brandon, welcome. Thank you so much, Andrew. Thanks to Barclays, for having us here. Absolutely. Brandon, you just finished up Q4 results guided for 2026. Why don't you give us a current state of affairs of the business and run through kinda like the highlights of what you see for the year ahead? Yeah, absolutely. For those of you who are not familiar, Astrana Health is a risk-bearing provider group. We operate a unique single- payer model in which we take reimbursement, a percentage of premium from our payer partners, all large nationals, as well as regional payer partners. We operate a unified multi-line of business and multi-payer downstream provider network that's well coordinated, delivers better care at a lower cost. I know the industry has obviously been very volatile of late, and we're very proud to continue to deliver on the consistency and stability of our single payer diversified model. Over the last 30 years, we've been profitable. We've continued to grow the business. Since I joined the company around seven years ago, we've, you know, six-folded revenue, close to eight-folded free cash flow, and continued to grow at a very, very rapid clip, you know, in the 20%-30% CAGR over a very long period of time. We just reported results, as Andrew mentioned last week or a couple weeks ago, where we delivered record revenue, free cash flow, Adjusted EBITDA, continuing to grow at a I think we grew 40%-50% year-over-year, and have very strong guidance planned, you know, for this year as well, with another 20%-30% growth on both the top and the bottom lines. You know, there are obviously a lot of puts and takes to that given the regulatory volatility in the environment, in the macro environment that we're in. We believe that our unique care model, the unique technology platform, and the diversity of the multi-payer, multi-line of business model has allowed us to weather some of this volatility better than, you know, the market has. Going forward into this year, we expect tailwinds from strong Medicare Advantage rate updates resulting from the 2026 Medicare Advantage rate notice from last year. We expect some incremental headwinds due to Medicaid and some incremental headwinds from the exchange populations, but well kind of made up for by the increases in the Medicare Advantage rate. We also expect continuing operating leverage from our G&A platform and our technology platform, which we built completely internally, in-house, proprietary. You know, from 2024 to 2025, we improved G&A as a percentage of revenue by 75 basis points, 110 on an adjusted basis. We continue to look for opportunities to scale our platform efficiently. As a reference point, we ran G&A as, you know, 6.8% of revenue last year, the full year of 2025, despite also taking on a lot of payer-related responsibilities such as claims processing for our ops, network building, credentialing, contracting, and even the customer service lines, even patient service lines we are responsible for. We're running that at kind of mid- to slightly high single-digit percentages of revenue versus payers who broadly run at, you know, 10%+ of G&A, as a percentage of revenue. We really focus on efficiency and investing, taking those dollars and investing in our patients to prevent long-term, more acute issues, which are a greater burden to the healthcare, you know, ecosystem and the healthcare dollar. Overall, we continue to believe that although there are headwinds, that we are relatively more insulated from those headwinds than our peers. We continue to deliver extremely strong growth both in the top and the bottom lines, and we're well positioned to expand market share across cycles. Great. Brandon, over the last few years, Astrana has consistently held medical cost trends in that mid-single digit range, even as, you know, many value-based care peers have struggled with the volatility. In 2025, trends finished slightly better than your original 4.5% expectation. To start, can you walk us through what you think has enabled that level of consistency in recent years? Yeah, absolutely. I mean, the biggest part of it is really the business model, which is our ability to engage patients longitudinally over time, the higher LTV of the patient in our system versus in any given insurance company system or any of our peer systems, and the ability for that to translate into better outcomes both for the patient and from a financial perspective for us and for the payer partners that we serve. What I mean by that is that we actually engage the patient across all lines of business regardless of which payer they're with. Obviously, Medicare Advantage patients select a different plan every year, and seniors have become quite efficient shoppers of late in terms of understanding which benefit designs are better for their particular situation or shopping around for the best supplemental rebate, whatever the case might be. Regardless of the plan that a senior chooses any given year, as long as they remain with their PCP or with the PCP that's in our network, they are still Astrana kind of risk-bearing members. We're able to not only have a more complete data map of their history because we are seeing their claims and their chart history, and their risk factors through our time across different plans, but we're also able to manage and build a relationship with the patient, engage them more effectively, have them be more involved in their own health, and more effectively invest in them proactively, knowing that the LTV of the patient in our system is gonna be longer and we'll have longer period of time to, so to speak, reap the reward of the proactive preventive care. From an economic standpoint, we have a greater return on investment in investing proactively in a patient's health than structurally any insurance company might have because they have no certainty that the patient will remain their risk to bear at all in the near future. Whereas for us, given our multi-payer, multi-line of business approach, we have a much longer LTV of the patient in our system and therefore better ROI if we would invest proactively in their health. There are a lot of reasons why. From a stability standpoint, sure, there have been headwinds, and we have been hit by some of those headwinds. The volatility has been smoothed out because of that longer-term relationship and the fundamental business model that we operate. Great. Moving on to membership. In your 2026 guidance, you're assuming about mid-single-digit growth in Medicare, roughly a 10% decline in Medicaid, and a 20%-30% decline in ACA exchange lives. Right. First, how much visibility do you have into those membership forecasts today, and how are trends tracking relative to those assumptions so far this year? Right. It really varies by line of business. You know, in Medicare Advantage, we already see some of the new enrollment from the AEP period. We are pretty certain, you know, good visibility into that MA growth. You know, reasonable growth, not extraordinary, but obviously the industry has had a pullback in terms of benefits this year, and we are downstream of some of those benefit design choices. On Medicaid, you know, we have some unique dynamics facing our Medicaid book because a lot of our Medicaid members are in California, so are in the Medi-Cal program. In Medicaid, especially in California, we have seen declines in Medicaid enrollment even through last year, I think 7% or 8% last year. We're expecting 10%-13% this year, because of some of the undocumented immigrant status members that were enrolled into Medicaid over the past years. Our payer partners are actually seeing, you know, mid-teen impact from the UIS status members. We tend to have lower indexed UIS membership because those members typically do not have a long-term PCP relationship, and so they are less likely to be attributed to our kind of provider groups. That being said, we still expect conservatively a 10%-13% decline in Medicaid as well as actually, built into our guidance is our assumptions that there will be a slight mix shift as well because of the acuity of the departing populations. Finally in exchange, while we are actually seeing flat to slightly up exchange membership early in the year, we do anticipate, as is consistent with industry commentary, I think, that there will be 20%-30% declines once some of the auto re-enrollments or auto re-enrolled members drop off in April. Right. What gives you the confidence to maintain that mid-single digit sort of trend forecast throughout all this disruption? Yeah. I mean, I think the first part of it is really our actuarial team has been very strong in predicting what trend was gonna be. I mean, last year, even in a time of high single-digit trend for the industry, we predicted 4.5%, and we came in under 4.5% on trend. We actually built into our models a higher trend this year than last year, despite trends typically decelerating in our populations for two reasons. One, because of the adverse selection effect in exchanges and Medicaid, so wanting to be thoughtful about what that looks like. And then two, because of the recently acquired population in terms of our Prospect Health deal that came in, you know, operating at a slightly higher trend than our legacy business. Those two factors combined led us to be a little more conservative in terms of trend, bake in kind of a mid, like 5-ish% trend versus the 4.5 and the low 4s that we actually saw last year, again, out of conservatism to ensure that we have room to, you know, meet our expectations for the year. Great. Move on to the Medicare Advantage rate notice. There's been a lot of discussion on the rebasing of the risk model, which places greater coefficient weights on the skin substitutes at the expense of more chronic conditions. That seems like a fairly obvious, you know, flaw in methodology. Is that argument resonating with the administration, and how likely do you think it is that CMS will revisit that calibration? Yeah. I think you're referring to the 3.4-ish% of the risk model renormalization, the new re-regressed weights on the post-COVID claims. You know, I think the administration has a lot of really smart people in it, now. They've really recruited a lot of very talented folks from private sector, from entrepreneurs from the private sector to help bolster their ranks. I actually have a lot of respect for the administration and kind of the talent level they've brought in. It's very different from, well, the government just has a reputation for not having that level of talent, perhaps, but that's very different in today's CMS. Really props to them there. I'm not just saying that, I truly mean it. The reason I say that is because they really have, I think a pride, which they should have, in kind of following the appropriate mathematics, essentially, the right math and the right actuarial analyses to come up with the effective growth rate and the risk model renormalization that they end up coming up with. I think the math is correct. In fact, if you think about what happened in fee-for-service Medicare post-COVID, if there is skin substitute or skin graft fraud, then the way that that would manifest in the data is that there would be a very high claims cost for patients that have diagnoses of skin conditions, because of the fraud. You know, it was very high because of the fraud. The question really is, if you run a regression on a dataset in which you have very high claims cost correlated to people with skin conditions, what coefficient comes out of that model for someone with a skin condition? Well, obviously, having a skin condition is explanatory for a lot of claims cost, and so therefore the coefficient is very high. The HCC, or the hierarchical condition category risk factor, you know, that when you add them all up, you get to the risk adjustment factor ultimately, that is essentially the coefficient for a skin condition. It almost is very natural coming out of the math, so to speak, that the coefficient for skin conditions would be high simply because of the math, almost by definition. Now I think the fix to that, there have been a couple fixes that industry has talked about. A lot of folks have lobbied for maybe a phase-in of that over a three-year period, kind of like V28 and this kind of pseudo V29, renormalization. I would argue that fundamentally is just the wrong thing to incentivize altogether, as you stated in your question. We've been in front of D.C. or in D.C., in front of CMS, helping them see that you can still run the math, but, you know, if you put garbage in, you get garbage out. If you put the right things in, you get the right results out. If you put in the right types of claims in, we strip out the kind of extenuating factors, things that relate to fraud, then you might get more reasonable set of coefficients that truly incentivize a lot of the, well, frankly, a lot of things that the administration itself espouses. Things like removing fraud, waste, and abuse, things like investing in patients' health proactively and preventively, to preserve long-term, you know, long-term health and lower the cost of health care in the United States. I think there is receptivity, we've been in front of them. It seems like something less. It seems more likely anyway than the removal of the disallowed diagnoses, which to me seems more philosophical in the sense that they just fundamentally don't believe that that should be allowed. I think there's some room, hopefully, on the effective growth rate as well. I think there are some assumptions in the growth rate that, you know, don't seem congruous with the data that we're seeing. Again, I think they're really smart folks, and I think they'll figure it out and hopefully that manifests in the final rate notice. I think the industry is aligned on some of those comments as well. Right. Despite the roughly flat industry-wide rate update, you've indicated that Astrana's MA rates are likely to be approximately 2.5%-3%, so much better than the industry. Can you help us unpack why your experience diverges from the broader industry? Yeah. I mean, historically, we've been very conservative on risk adjustment, as you know. Our RAF score today is 1.02, just above the industry average, despite having a very high percentage of duals relative to industry average, dual eligibles, that is. We've typically been very conservative. Our RAF score has actually gone up during V28 because of our conservatism. We haven't been impacted by a lot of the headwinds that our peers have faced because of aggressive risk coding practices. Also because of that, we're unaffected or less affected by some of the changes in the events we noticed. The 1.53% of the disallowed diagnoses, for example, we don't do audio-only calls for risk adjustment. We don't do unlinked chart chases for risk adjustment. Our model is an encounter-based model that is supported by the single- payer model that we have, where we're paying our claims, and we're actually reporting our quality and reporting our risk adjustment ourselves. Because of that, you know, the nine basis point increase, net increase that CMS reported, you know, the 1.53%, that gets us back up to around 1.6%. You add back kind of even the current coefficients that CMS has published, even if there's no change for the skin substitutes, if you take those coefficients and run them in our HCC profile in our population, you end up with a headwind, you know, because of the pushdown of the chronic condition coefficients, but less of a headwind than the industry is facing at 3.4%, you know. Closer to around 2.5%-3%. If you add all those together and add in even a bit of the risk adjustment, 2.5% that CMS kind of expects for the industry, you know, you get to that 2.5%-3% effective rate increase for Astrana. I'll note that, you know, that 2.5%-3% is only slightly margin dilutive for us, given that our MA book went low 4s% last year. Even a small increase, you know, in the advance to final would make MA actually margin, you know, accretive for us in 2027. We continue to believe that our ability to control trend allows us to differentiate ourselves even at a time of regulatory volatility. Right. There's still room for payers to change benefit design. For benefits. network strategy to protect those margins. Where does Astrana fit into those conversations? Yeah. That varies from plan to plan. Typically, we, you know, we're not as involved in the benefit design process. That's more of an actuarial thing that's upstream of us. There are certain plans where we've designed plans together, products together with the plan in what's called a provider-specific plan. We have that with a few different large plans now, where we've designed the benefits, we've designed what the bid will look like, and we work together with the plan to figure out actuarially how we're gonna help them grow and design differentiated product for patients, while managing cost effectively. It really depends from plan to plan, but typically in an environment where plans are cutting back or looking to preserve margin, that would actually pass through, you know, to our percentage of premium contracts as well. Right. Understood. Let's move on to the Prospect deal. Shortly after you announced that deal, you laid out a $350 million EBITDA target in 2027 that you framed, you know, as conservative at the time. Even though the Prospect integration appears to be tracking in line, if not ahead, the regulatory and operating environment has changed such that you're de-emphasizing, but not necessarily ruling out that target. What needs to go right on, you know, cost, rates, membership, or execution for that target to come back into view? Right. Prospect, you know, remind folks, we announced back in 2024, November of 2024. That was prior to actually, unfortunate timing, but prior to the election day, prior to OB3, prior to the 2027 rate notice, you know, prior to a lot of kind of seismic shifts in the regulatory environment and even macro shifts in terms of, you know, oil prices and so on and so forth. It was a very different environment before $1 trillion were being planned to be taken out of the healthcare ecosystem. That being said, the fact that $350 is still within view does reflect, in my view, the conservatism of the $350 guide to start with. Now, that wouldn't be my modal or median outcome necessarily today if I had to guess. The factors that would swing it kind of more to the where 350 would be the midpoint would really be around rate and acuity mismatch. This year, I think in our bridge from 2025 to 2026, which I talked about on our earnings call, we are baking in a $25 million-$30 million headwind related to Medicaid, related to disenrollments, related to rate, you know, adverse selection from disenrolled members. Even the reversal, for example, of that $30 million headwind would already take us, I think, from street consensus of 315 or wherever it is. I don't know the exact number, but I don't know where you have us, but low 300s, let's say, closer to 340, close to 350. Not to mention any kind of incremental headwind or tailwind, rather, that we get from Medicare Advantage star rating, kind of mismatched in a positive way, which we saw this year as a $30 million tailwind. Next year, for example, we talked about some of the math getting us to almost a margin neutral environment, and even 150-200 basis points of improvement could get us to a margin accretive territory in which that would add another $15-20 million. Just to run through quick math, I mean, we're at $4 billion, $3.95 billion at the midpoint for 2026. We've grown historically at a 30% CAGR. Even if you assume 10% into next year, talking about well above $4 billion of revenue into 2027, and 60% of that revenue is Medicare. Out of that 60%, two-thirds are Medicare Advantage. At least for this year's numbers, we take the $4 billion, 60%, you're at $2.4 billion. Take two-thirds of that, you're at 1.8 billion, something like that, 1.6 billion. We take that number, and you think about how much each percentage point of rate acuity is worth, right? One percentage point of $1.6 billion is worth $16 million. Each kind of 100 basis points of improvement, we're gonna get $16 million headwind or tailwind, sorry, year-over-year. If you kind of even just roll back the $30 million and even say there's a one percentage point tailwind on MA, you're already at $46 million, and you can easily bridge from kind of where street has us to well above the $350 number. Those are some of the ways that we think about kind of how the shifting landscape has affected what that number is. Regardless of what that number ends up being, depending on where regulatory shakes out, you know, we still continue to believe that our industry-leading ability to maintain trend in the mid-single digits versus high single digits, our resistance and resilience in terms of our conservative risk adjustment posture, and our ability to operate an industry-leading kind of G&A load will continue to allow us to grow market share even at the kind of 6% EBITDA margins that we're running at today. Right. On the 4Q call, you spent some time discussing the AI tools that are available. Can you help us distinguish which capabilities are furthest along and already deeply embedded in day-to-day operations versus those that are still in the earlier or pilot stages? Yeah, absolutely. I mean, we're very excited about our AI tooling and our overall just the entire technology platform as a whole. You know, when I started the company seven years ago, I was the first software engineer at the company. Some people here may know that. My background's actually in computer science and AI. I published papers in AI and machine learning. I did graduate studies, you know, in that field. Part of my enthusiasm for Astrana in the first place and why I wanted to stay was because of the massive opportunity we saw to make the healthcare system more efficient. Some of you may know that I used to be a quant trader. I used to spend all my time submitting jobs to Google Cloud, building large models, doing feature engineering, and trying to predict and get, like, two basis points of alpha on ES or on E-minis. It was a very fun and competitive experience, but also ultimately not a rewarding one for me personally, because two basis points on E-minis is just not that exciting, even if you put $1 billion to it. What we found in healthcare was I could build something kind of over a week and not be measuring percentage point increases in basis points, but in like tens of%. Like, I could do something, and we'd be improving the efficiency of a process by like 25%, not two basis points. That level of progress, the leaps and bounds that we're able to make in healthcare was very exciting to me. Where we're furthest along, we've been developing this for seven years, even before ChatGPT or LLMs were even a thing. You know, primarily in our payer tools business. You know, 90% of our claims are automatically adjudicated without human intervention. Over 70% of our prior auths are automatically approved. Nothing denied, of course, via AI. Even for those who require human intervention, we're giving tools to our nurses and our medical directors to allow them to make decisions much more quickly. For example, we now have tools that kind of aggregate all the data, both structured and unstructured data about a patient, and our teams can actually ask questions to that patient record. They can type in, "Hey, does this patient have CKD?" The AI will scan through, OCR the documents if necessary, scan through all the documents, figure out which things are supportive of that diagnosis, or even find the page where in the thousand-page PDF that exists, and then give all the citations, and the nurse or the medical director can click in, automatically scan to the right page in the PDF and apply their own human judgment as to whether the AI was correct or not. Again, nothing is automatically denied, you know, using AI. On the payer tool side, a lot of really great improvements. Increasingly on the care management side, you know, we built our own care management platform, which re-stratifies our patient populations and also handles a lot of the low-value tasks or that allow our teams to operate at the top of their license. For example, making calls to patients automatically in a post-discharge or re-reaching out to patients for their annual wellness visits, things of that nature are all now conducted by AI versus having a nurse have to make those calls despite, you know, them being able to do much more with their knowledge. Right. Well, with that, we're out of time. Brandon, thank you so much for joining us here today, and please enjoy the rest of the conference. Thank you, everyone. Thanks, Andrew Mok.