# Astrana Health, Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [Astrana Health, Inc.](/companies/asth.md) (CIK 1083446)
- Form: 10-Q
- Filed: 2024-05-09
- Accepted by EDGAR: May 9, 2024, 16:29 ET
- Period: 2024-03-31
- Accession: 0001628280-24-022272
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1083446/000162828024022272/asth-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1083446/000162828024022272/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $404.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $30.1m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $7.6m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $7.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $14.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.31 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.31 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 47,699,537 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $6.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $369.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $95.0k | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2024-03-31 | $334.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $538.8m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $1.23bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $355.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $773.9m | us-gaap:Liabilities |
| Long-term debt | at 2024-03-31 | $368.4m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-03-31 | $20.8m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-03-31 | $653.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 28,116 characters.

*The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q. In addition, reference is made to our audited condensed consolidated financial statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 29, 2024.*

### Overview

Astrana Health, Inc. (“Astrana”) is a leading physician-centric, technology-powered, risk-bearing healthcare management company. Leveraging its proprietary population health management and healthcare delivery platform, Astrana operates an integrated, value-based healthcare model, which aims to empower the providers in its network to deliver the highest quality of care to its patients in a cost-effective manner. Together with our affiliated physician groups and consolidated entities, we provide coordinated outcomes-based medical care in a cost-effective manner.

Through our accountable care organization and a network of IPAs with more than 10,000 contracted physicians, we are responsible for coordinating care in value-based care arrangements for approximately 1.0 million patients primarily in California as of March 31, 2024. These covered patients are comprised of managed care members whose health coverage is provided either through their employers, acquired directly from a health plan, or as a result of their eligibility for Medicaid or Medicare benefits. Our managed patients benefit from an integrated approach that places physicians at the center of patient care and utilizes sophisticated risk management techniques and clinical protocols to provide high-quality, cost-effective care.

### Recent Developments

### Second Closing of Community Family Care (“CFC”) Acquisition

On March 31, 2024, the Company successfully closed the second and final part of the CFC acquisition. This acquisition marks the largest in Astrana’s history and allows the Company to take on greater responsibility for the outcomes of the patients we serve with CFC’s full-risk Medicaid Restricted Knox-Keene license.

### Closing of Prime Community Care of Central Valley (“PCCCV”) Acquisition

On March 29, 2024, the Company completed the acquisition of PCCCV, a risk-bearing provider organization with over 150 primary care and multi-specialty care providers which serves around 26,000 primarily Medicaid members in the Central Valley of California.

### Key Financial Measures and Indicators

#### Operating Revenues

Our revenue, which is recorded in the period in which services are rendered and earned, primarily consists of capitation revenue, risk pool settlements and incentives, management fee income, and fee-for-service (“FFS”) revenue. The form of billing and related risk of collection for such services may vary by type of revenue and the customer.

#### Operating Expenses

Our largest expenses consist of the cost of (i) patient care paid to contracted providers; (ii) information technology equipment and software; and (iii) hiring staff to provide management and administrative support services to our affiliated physician groups, as further described in the following sections. These services include claims processing, utilization management, contracting, accounting, credentialing, and administrative oversight.

#### Adjusted EBITDA and Adjusted EBITDA Margin

Our Adjusted EBITDA and Adjusted EBITDA margin are supplemental performance measures of our operations for financial and operational decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization, excluding income or loss from equity method investments, non-recurring and non-cash transactions, stock-based compensation, and APC excluded assets costs. The Company defines Adjusted EBITDA margin as Adjusted EBITDA over total revenue.

### Results of Operations

### Condensed Consolidated Statements of Income

(In thousands)

(Unaudited)

| Revenue | Three Months Ended March 31, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Capitation, net | $365,910 | $300,204 | $65,706 | 22% |
| Risk pool settlements and incentives | 17,377 | 13,462 | 3,915 | 29% |
| Management fee income | 4,078 | 9,896 | (5,818) | (59)% |
| Fee-for-services, net | 15,937 | 12,062 | 3,875 | 32% |
| Other revenue | 1,054 | 1,620 | (566) | (35)% |
| Total revenue | 404,356 | 337,244 | 67,112 | 20% |
| **Operating expenses** |  |  |  |  |
| Cost of services, excluding depreciation and amortization | 330,399 | 289,397 | 41,002 | 14% |
| General and administrative expenses | 38,722 | 21,182 | 17,540 | 83% |
| Depreciation and amortization | 5,096 | 4,292 | 804 | 19% |
| Total expenses | 374,217 | 314,871 | 59,346 | 19% |
| **Income from operations** | 30,139 | 22,373 | 7,766 | 35% |
| **Other income (expense)** |  |  |  |  |
| Income from equity method investments | 632 | 2,484 | (1,852) | (75)% |
| Interest expense | (7,585) | (3,269) | (4,316) | 132% |
| Interest income | 3,996 | 3,009 | 987 | 33% |
| Unrealized gain (loss) on investments | 1,099 | (6,392) | 7,491 | (117)% |
| Other (loss) income | (4,277) | 1,204 | (5,481) | (455)% |
| Total other expense, net | (6,135) | (2,964) | (3,171) | 107% |
| **Income before provision for income taxes** | 24,004 | 19,409 | 4,595 | 24% |
| Provision for income taxes | 7,142 | 6,921 | 221 | 3% |
| **Net income** | 16,862 | 12,488 | 4,374 | 35% |
| Net income (loss) attributable to non-controlling interest | 2,027 | (644) | 2,671 | (415)% |
| **Net income attributable to Astrana Health, Inc.** | $14,835 | $13,132 | $1,703 | 13% |

43

### Physician Groups and Patients

As of March 31, 2024 and 2023, we managed a total of 18 and 15 independent physician groups that are affiliated and non-affiliated, respectively. The total number of patients for whom we managed the delivery of healthcare services was approximately 1.0 million and 1.3 million as of March 31, 2024 and 2023, respectively.

### Revenue

Our total revenue for the three months ended March 31, 2024, was $404.4 million, as compared to $337.2 million for the three months ended March 31, 2023, an increase of $67.1 million, or 20%. The increase in revenue was primarily attributable to the following:

(i) Capitation revenue increased by $65.7 million primarily as a result of our recent acquisitions within our Care Partners segment, including the acquisition of CFC IPA assets that closed on January 31, 2024.

### Cost of Services, Excluding Depreciation and Amortization

Expenses related to cost of services for the three months ended March 31, 2024 were $330.4 million, as compared to $289.4 million for the same period in 2023, an increase of $41.0 million. The increase was primarily due to our recent acquisitions within our Care Partners segment.

### General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2024 were $38.7 million, as compared to $21.2 million for the same period in 2023, an increase of $17.5 million, or 83%. The increase was primarily due to general and administrative expenses to support operational growth.

### Depreciation and Amortization

Depreciation and amortization expenses for the three months ended March 31, 2024 were $5.1 million, as compared to $4.3 million for the same period in 2023. This amount includes depreciation of property and equipment and the amortization of intangible assets.

### Income From Equity Method Investments

Income from equity method investments for the three months ended March 31, 2024 was $0.6 million, as compared to income from equity method investments of $2.5 million for the same period in 2023, a decrease of $1.9 million. The decrease was primarily due to APC’s equity method investment in LMA. For the three months ended March 31, 2024 and 2023, APC recognized income from this investment of $0.4 million and $2.2 million, respectively.

### Interest Expense

Interest expense for the three months ended March 31, 2024 was $7.6 million, as compared to $3.3 million for the same period in 2023, an increase of $4.3 million. The increase in interest expense was due to greater amounts borrowed on the Amended Credit Facility. As of March 31, 2024, the Company borrowed $391.3 million on the Amended Credit Facility compared to $180.0 million as of March 31, 2023.

### Interest Income

Interest income for the three months ended March 31, 2024 was $4.0 million compared to $3.0 million for the three months ended March 31, 2023. Interest income reflects interest earned on cash held in bank accounts, money market and certificate of deposit accounts and the interest from notes receivable. The increase in interest income was primarily from the IntraCare convertible promissory note and BASS secured promissory note.

### Unrealized Gain (Loss) on Investments

Unrealized gain for the three months ended March 31, 2024 was $1.1 million, as compared to a $6.4 million loss for the same period in 2023, a decrease in unrealized loss of $7.5 million. The decrease in unrealized loss on investments was primarily driven by changes in the fair value of equity securities.

### Other Income (Loss)

Other loss for the three months ended March 31, 2024 was $4.3 million, as compared to other income of $1.2 million for the same period in 2023, a decrease of $5.5 million. The decrease in other income was primarily due to an expense related to a financial guarantee via a letter of credit that we provided almost three years ago in support of two local provider-led ACOs.

### Provision for Income Taxes

Provision for income taxes was $7.1 million for the three months ended March 31, 2024, as compared to a provision for income taxes of $6.9 million for the same period in 2023, an increase of $0.2 million. The increase in provision for income taxes was due to an increase in pretax income.

### Net Income (Loss) Attributable to Non-controlling Interests

Net income attributable to non-controlling interests for the three months ended March 31, 2024 was $2.0 million, as compared to net loss attributable to non-controlling interests for the three months ended March 31, 2023 of $0.6 million, an increase in net income attributable to non-controlling interest of $2.7 million. The increase was primarily driven by a decrease in unrealized loss resulting from the change in the fair value of equity securities held by APC.

### Net Income Attributable to Astrana Health, Inc.

Our net income attributable to Astrana Health, Inc. for the three months ended March 31, 2024 was $14.8 million, as compared to $13.1 million for the same period in 2023, an increase of $1.7 million.

### Segment Financial Performance

The Company currently has three reportable segments consisting of Care Partners, Care Delivery and Care Enablement. The Company evaluates the performance of its operating segments based on segment revenue growth as well as operating income. Management uses revenue growth and total segment operating income as a measure of the performance of operating businesses separate from non-operating factors. For more information about our segments, refer to Note 1 — “Description of Business” and Note 18 - “Segments” to our condensed consolidated financial statements under Item 1 in this Quarterly Report on Form 10-Q for additional information.

The following table sets forth our revenue and operating income by segment for the three months ended March 31, 2024 and 2023 (in thousands):

| Segment Revenue | Three Months Ended March 31, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Care Partners | $397,095 | $314,653 | $82,442 | 26% |
| Care Delivery | $30,719 | $25,383 | $5,336 | 21% |
| Care Enablement | $33,274 | $30,566 | $2,708 | 9% |

| Segment Operating Income (Loss) | Three Months Ended March 31, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Care Partners | $43,196 | $22,321 | $20,875 | 94% |
| Care Delivery | $(238) | $(966) | $728 | (75)% |
| Care Enablement | $3,504 | $5,746 | $(2,242) | (39)% |

45

### Care Partners Segment

Revenue for the three months ended March 31, 2024 was $397.1 million, as compared to $314.7 million for the three months ended March 31, 2023, an increase of $82.4 million, or 26%. Operating income for the three months ended March 31, 2024 was $43.2 million, as compared to $22.3 million for the three months ended March 31, 2023, an increase in operating income of $20.9 million, or 94%. The increase in revenue and operating income was primarily due to recent acquisitions within our Care Partners segment.

### Care Delivery Segment

Revenue for the three months ended March 31, 2024 was $30.7 million, as compared to $25.4 million for the three months ended March 31, 2023, an increase of $5.3 million, or 21%. Operating loss for the three months ended March 31, 2024 was $0.2 million, as compared to a loss of $1.0 million for the three months ended March 31, 2023, an increase in operating income of $0.7 million, or 75%. The increase in revenue and operating income was primarily driven by increased volume in patient visits at our primary, multi-specialty, and ancillary care delivery entities.

### Care Enablement Segment

Revenue for the three months ended March 31, 2024 was $33.3 million, as compared to $30.6 million for the three months ended March 31, 2023. Operating income for the three months ended March 31, 2024 was $3.5 million, as compared to operating income of $5.7 million for the three months ended March 31, 2023, a decrease in operating income of $2.2 million, or 39%. The increase in revenue was primarily due to managing more IPAs and the decrease in operating income was due to more expenses incurred to support the growth in Care Enablement operations.

### 2024 Guidance

Astrana is reiterating the following guidance for total revenue, net income attributable to Astrana, Adjusted EBITDA, and EPS - diluted, based on the Company’s existing business, current view of existing market conditions and assumptions for the year ending December 31, 2024.

*($ in millions, except per share amounts)*

|  | 2024 Guidance Range Low | High |
| --- | ---: | ---: |
| Total revenue | $1,650.0 | $1,850.0 |
| Net income attributable to Astrana Health, Inc. | $61.0 | $73.0 |
| Adjusted EBITDA | $165.0 | $185.0 |
| EPS – diluted | $1.28 | $1.52 |

See “Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA” and “Use of Non-GAAP Financial Measures” below for additional information. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. See “Note about Forward-Looking Statements” for additional information.

*Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA*

*(in thousands)*

|  | 2024 Guidance Range Low | High |
| --- | ---: | ---: |
| Net income | $71,500 | $85,500 |
| Interest expense | 14,500 | 12,500 |
| Provision for income taxes | 36,500 | 44,500 |
| Depreciation and amortization | 14,500 | 14,500 |
| **EBITDA** | 137,000 | 157,000 |
| Income from equity method investments | (5,000) | (5,000) |
| Other, net | 6,000 | 6,000 |
| Stock-based compensation | 27,000 | 27,000 |
| **Adjusted EBITDA** | $165,000 | $185,000 |

### EBITDA

Set forth below are reconciliations of Net Income to EBITDA and Adjusted EBITDA as well as the reconciliation to Adjusted EBITDA margin for the three months ended March 31, 2024 and 2023. The Company defines Adjusted EBITDA margin as Adjusted EBITDA over total revenue.

*(in thousands)*

|  | Three Months Ended March 31, 2024 |  | 2023 |  |
| --- | ---: | ---: | ---: | ---: |
| Net income | $16,862 |  | $12,488 |  |
| Interest expense | 7,585 |  | 3,269 |  |
| Interest income | (3,996) |  | (3,009) |  |
| Provision for income taxes | 7,142 |  | 6,921 |  |
| Depreciation and amortization | 5,096 |  | 4,292 |  |
| **EBITDA** | 32,689 |  | 23,961 |  |
| Income from equity method investments | (632) |  | (249) |  |
| Other, net | 4,440 | (1) | 1,402 | (2) |
| Stock-based compensation | 5,748 |  | 3,445 |  |
| APC excluded asset costs | — |  | 1,266 |  |
| **Adjusted EBITDA** | $42,245 |  | $29,825 |  |
| **Total revenue** | $404,356 |  | $337,244 |  |
| **Adjusted EBITDA margin** | 10% |  | 9% |  |

(1) Other, net for the three months ended March 31, 2024 relates to financial guarantee via a letter of credit that we provided almost three years ago in support of two local provider-led ACOs, non-cash changes related to change in the fair value of our financing obligation to purchase the remaining equity interests in one of our investments, non-cash changes related to change in the fair value of the Company’s Collar Agreement, and transaction costs incurred for our investments and tax restructuring fees.

(2) Other, net for the three months ended March 31, 2023 relates to changes in the fair value of our financing obligation to purchase the remaining equity interest in one of our investments.

#### Use of Non-GAAP Financial Measures

This Quarterly Report on Form 10-Q contains the non-GAAP financial measures EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, of which the most directly comparable financial measure presented in accordance with U.S. generally accepted accounting principles (“GAAP”) is net income. These measures are not in accordance with, or alternatives to, GAAP, and may be calculated differently from similar non-GAAP financial measures used by other companies. The Company uses Adjusted EBITDA as a supplemental performance measure of our operations, for financial and operational decision-making and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization, excluding income or loss from equity method investments, non-recurring and non-cash transactions, stock-based compensation, and APC excluded assets costs. The Company defines Adjusted EBITDA margin as Adjusted EBITDA over total revenue.

The Company believes the presentation of these non-GAAP financial measures provides investors with relevant and useful information, as it allows investors to evaluate the operating performance of the business activities without having to account for differences recognized because of non-core or non-recurring financial information. When GAAP financial measures are viewed in conjunction with non-GAAP financial measures, investors are provided with a more meaningful understanding of the Company’s ongoing operating performance. In addition, these non-GAAP financial measures are among those indicators the Company uses as a basis for evaluating operational performance, allocating resources, and planning and forecasting future periods. Non-GAAP financial measures are not intended to be considered in isolation, or as a substitute for, GAAP financial measures. Other companies may calculate both EBITDA and Adjusted EBITDA differently, limiting the usefulness of these measures for comparative purposes. To the extent this Form 10-Q contains historical or future non-GAAP financial measures, the Company has provided corresponding GAAP financial measures for comparative purposes. The reconciliation between certain GAAP and non-GAAP measures is provided above.

### Liquidity and Capital Resources

Cash, cash equivalents, and investment in marketable securities at March 31, 2024 totaled $337.3 million as compared to $296.3 million at December 31, 2023. Working capital totaled $183.5 million at March 31, 2024, as compared to $242.8 million at December 31, 2023, a decrease of $59.3 million.

We have historically financed our operations primarily through internally generated funds. We generate cash primarily from capitation contracts, risk pool settlements and incentives, fees for medical management services provided to our affiliated physician groups, and FFS reimbursements. We generally invest cash in money market accounts and certificates of deposit, which are classified as cash and cash equivalents. We also have the Amended Credit Agreement, which provides for a five-year revolving credit facility of $400.0 million and a term loan of up to $300.0 million and expires June 2026 and November 2028, respectively. In addition, we have a current shelf registration statement filed with the SEC under which we may issue common stock, preferred stock, debt securities and other securities that may be offered in one or more offerings on terms to be determined at the time of the offering. We believe we have sufficient liquidity to fund our operations through at least the next 12 months and the foreseeable future.

### Cash Flow Activities

Our cash flows are summarized as follows (in thousands):

|  | Three months ended March 31, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net cash provided by operating activities | $5,977 | $7,720 | $(1,743) | (23)% |
| Net cash used in investing activities | (71,039) | (14,035) | (57,004) | 406% |
| Net cash provided by (used in) financing activities | 106,351 | (7,099) | 113,450 | \* |
| Net decrease in cash and cash equivalents and restricted cash | $41,289 | $(13,414) | $54,703 | (408)% |

\* Percentage change of over 500%

#### Operating Activities

Cash provided by operating activities for the three months ended March 31, 2024 was $6.0 million, as compared to cash provided by operating activities of $7.7 million for the three months ended March 31, 2023. The decrease in cash provided by operating activities was primarily driven by changes in net income and working capital. For the three months ended March 31, 2024, net income exclusive of depreciation and amortization, amortization of debt issuance cost, share-based compensation, unrealized gains or losses, income from equity method investments, deferred tax and other was $29.1 million compared to $26.7 million for the three months ended March 31, 2023. Working capital for the three months ended March 31, 2024, decreased operating cash flow by $23.2 million, compared to an $18.9 million decrease in operating cash flow at March 31, 2023. The change in working capital for the three months ended March 31, 2024 was mainly driven by an increase in receivables, net, other receivables and related party receivables primarily due to timing of our receivables including risk pool settlements that occur approximately 18 months after the risk pool performance year is completed, and increase in income tax payable as a result of timing in income tax payments.

#### Investing Activities

Cash used in investing activities during the three months ended March 31, 2024, was $71.0 million, primarily due to payments for business and asset acquisitions, net of cash acquired of $50.6 million, issuance of loan receivable of $20.0 million, and purchases of property and equipment of $0.4 million. Cash used in investing activities during the three months ended March 31, 2023 was $14.0 million, primarily due to a deposit for purchase of property of $8.8 million, purchases of property and equipment of $6.0 million, purchase of marketable securities of $1.0 million, and purchase of an equity method investment of $0.3 million, partially offset by proceeds from the repayment of a loan receivable of $2.1 million.

#### Financing Activities

Cash provided by financing activities during the three months ended March 31, 2024, was $106.4 million, primarily due to borrowings on long-term debt totaling $110.0 million, partially offset by repayment of long term-debt of $3.5 million. Cash used in financing activities during the three months ended March 31, 2023, was primarily due to repurchase of treasury stock of $9.5 million, dividend payments of $0.1 million, repayment of debt of $0.2 million, and repayment of finance lease obligations of $0.2 million, partially offset by borrowings from bank loans totaling $1.6 million and proceeds from the exercise of options of $1.3 million.

### Credit Facilities

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

|  | March 31, 2024 |
| --- | ---: |
| Term Loan | $296,500 |
| Revolver Loan | 94,759 |
| Promissory Note Payable | 2,000 |
| Total debt | 393,259 |
| Less: Current portion of debt | (20,750) |
| Less: Unamortized financing costs | (4,061) |
| Long-term debt | $368,448 |

The following are the future commitments of the Company’s debt for the years ending December 31 (in thousands) below:

|  | Amount |
| --- | ---: |
| 2024 (excluding the three months ended March 31, 2024) | $17,000 |
| 2025 | 16,875 |
| 2026 | 117,259 |
| 2027 | 24,375 |
| 2028 | 217,750 |
| Total | $393,259 |

### Amended Credit Agreement

The Amended Credit Agreement provides for a five-year revolving credit facility to the Company of $400.0 million, which includes a letter of credit sub-facility of up to $50.0 million and a swingline loan sub-facility of $25.0 million, which expires on June 16, 2026. On November 3, 2023, the Company entered into the third amendment to the Amended Credit Agreement, which provided a new term loan to the Company in an aggregate amount of up to $300.0 million. This increased the Company’s facility under the Amended Credit Agreement to $700.0 million, including the existing $400.0 million revolver. Refer to Note 9 — “Credit Facility, Bank Loans, and Lines of Credit” to our condensed consolidated financial statements under Item 1 in this quarterly report on Form 10-Q for additional information.

### Promissory Note Payable

In May 2021, For Your Benefit, Inc. entered into a promissory note agreement with Chinese Community Health Care Association. The principal on the promissory note is $2.0 million with a maturity date of May 9, 2024. Refer to Note 9 — “Credit Facility, Bank Loans, and Lines of Credit” to our condensed consolidated financial statements under Item 1 in this quarterly report on Form 10-Q for additional information.

### Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires our management to make judgments, assumptions, and estimates that affect the amounts of revenue, expenses, income, assets and liabilities reported in our condensed consolidated financial statements and accompanying notes. Actual results and the timing of recognition of such amounts could differ from those judgments, assumptions, and estimates. In addition, judgments, assumptions, and estimates routinely require adjustment based on changing circumstances and the receipt of new or better information. Understanding our accounting policies and the extent to which our management uses judgment, assumptions, and estimates in applying these policies, therefore, is integral to understanding our financial statements. Critical accounting policies and estimates are defined as those that reflect significant judgments and uncertainties, potentially resulting in materially different results under different assumptions and conditions. We summarize our most significant accounting policies in relation to the accompanying condensed consolidated financial statements in Note 2 — “Basis of Presentation and Summary of Significant Accounting Policies” thereto. Please also refer to the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

### Off-Balance Sheet Arrangements

As of March 31, 2024, we had no off-balance sheet arrangements that are or have been reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

## Market risk

As filed, 2,217 characters.

### Interest Rate Risk

Borrowings under the Term Loan provided for under our Amended Credit Agreement, as of March 31, 2024, were $296.5 million. The Term Loan bears interest at an annual rate equal to either, at the Company’s option, (a) the Term SOFR Reference Rate (as defined in the Amended Credit Agreement), adjusted for any Term SOFR Adjustment (as defined in the Amended Credit Agreement), plus a spread from 1.50% to 2.75%, as determined on a quarterly basis based on the Company’s Consolidated Total Net Leverage Ratio, or (b) a base rate, plus a spread of 0.50% to 1.75%, as determined on a quarterly basis based on the Company’s Consolidated Total Net Leverage Ratio. As of March 31, 2024, the Company borrowed $94.8 million under the Revolver Loan. The Revolver Loan bears interest at an annual rate equal to either, at the Company’s option, (a) the Term SOFR Reference Rate (as defined in the Amended Credit Agreement), adjusted for any Term SOFR Adjustment (as defined in the Amended Credit Agreement) plus a spread ranging from 1.25% to 2.50%, as determined on a quarterly basis based on the Company’s Consolidated Total Net Leverage Ratio (as defined in the Amended Credit Agreement), or (b) a base rate, plus a spread ranging from 0.25% to 1.50%, as determined on a quarterly basis based on the Company’s Consolidated Total Net Leverage Ratio. Borrowings under the Promissory Note Payable, as of March 31, 2024, was $2.0 million. The interest rate is defined as the prime rate plus 1.0%. The prime rate is updated annually on the effective date of the note and published by the *Wall Street Journal*. The Company has entered into a collar agreement for its Revolver Loan to effectively convert its floating-rate debt to a fixed-rate basis. The principal objective of the collar agreement is to eliminate or reduce the variability of the cash flows in interest payments associated with the Company’s floating-rate debt, thus reducing the impact of interest rate changes on future interest payment cash flows. A hypothetical 1% change in our interest rates for our outstanding borrowings would have increased or decreased our interest expense for the three months ended March 31, 2024, by $3.9 million.

## Controls and procedures

As filed, 1,816 characters.

### Evaluation of Disclosure Controls and Procedures

The Company maintains “disclosure controls and procedures,” as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act, designed to ensure that information required to be disclosed by a company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.

As of March 31, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial and Operating Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial and Operating Officer, concluded that our disclosure controls and procedures were effective as of March 31, 2024.

### Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 1,459 characters.

Our business, financial condition, and operating results are affected by a number of factors, whether currently known or unknown, including risks specific to us or the healthcare industry, as well as risks that affect businesses in general. In addition to the information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 29, 2024. The risks disclosed in such Annual Report could materially adversely affect our business, financial condition, cash flows, or results of operations and thus our stock price. We believe there have been no material changes in our risk factors from those disclosed in the Annual Report. However, additional risks and uncertainties not currently known or which we currently deem to be immaterial may also materially adversely affect our business, financial condition, or results of operations.

Because of such risk factors, as well as other factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. In addition, the disclosure of any risk factor should not be interpreted to imply that the risk has not already materialized.

Filed May 9, 2024.
Source: SEC EDGAR, the filing index for accession 0001628280-24-022272. Last ingested by Listed: Oct 30, 2026, 13:39 ET. No prices; not investment advice.