CMS Issues 2027 PFS Proposed Rule, the Shift to Health-Care from Sick-Care Continues

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CMS Issues 2027 PFS Proposed Rule, the Shift to Health-Care from Sick-Care Continues

view is that as value-based risk-bearing models continue along their current growth trajectory, ASTH is well-positioned to step

in as a compelling option for patients, providers, and plans given its strong track-record of delivering high-quality care and

generating substantial cost-savings. We like how the VBC space remains under-penetrated, and we like how there are several

ways for ASTH to grow strategically, whether it be through strengthening its presence in its existing core California markets,

tapping into additional areas within California, or expanding into new states.

Risks: ASTH faces competition from several larger value-based health management companies in the Medicare Advantage

space, including Evolent Health (EVH, Buy, $8 PT) and Agilon Health (AGL, Not Rated), which have larger patient bases andHEALTHCARE

physician networks. It also faces pressure from smaller and recent entrants who want a share of the increasingly attractive

IT MA market. ASTH depends on the financial health of its payer partners, so ASTH would be negatively impacted if the MA

and utilization headwinds that payers are facing result in them limiting or reducing the extent of their partnerships with

ASTH. Changes made by CMS to MA regarding payments could decrease the amount in premiums that payers receive andAND subsequently decrease ASTH's share as well. ASTH is also exposed to the Medicaid market, so if a larger-than-expected number

of members are no longer eligible for Medicaid due to redetermination but are also not recaptured into other plans, ASTH

may experience a material decline in membership. If the gap between ASTH's superior clinical outcomes compared to industry