11:41 AM EST, 11/08/2024 (MT Newswires) -- Astrana Health ( ASTH ) said Friday it agreed to acquire certain businesses and assets of Prospect Health System for $745 million in a bid to expand its care provider network.

Prospect's network spans nearly 3,000 primary care providers and 10,000 specialists across Southern California, Texas, Arizona, and Rhode Island. The firm helps providers deliver care to roughly 610,000 members across Medicare Advantage, Medicaid, and commercial lines of business, Astrana said.

The deal includes Prospect's California-licensed health care service plan, medical groups in California, Texas, Arizona and Rhode Island, management service organization, pharmacy, and the 177-bed Alta Newport Hospital.

"Prospect's established presence in key markets also opens new opportunities for Astrana, particularly in geographically adjacent Orange County, California," Astrana Chief Executive Brandon Sim said in a statement.

The health care company expects to use cash on hand and a $1.1 billion senior secured bridge commitment to fund the deal. Astrana said it intends to make "significant" investments in Prospect and its infrastructure.

"We believe the strong cultural alignment, cohesive missions, and clear financial and operational synergies between our companies make Astrana the ideal partner for us," said Prospect CEO Jim Brown.

Astrana expects Prospect to generate about $1.2 billion in revenue with adjusted earnings before interest, taxes, depreciation, and amortization of $81 million for the 12 months ending Dec. 31. The deal is expected to close in the middle of 2025, subject to regulatory approval.

Separately, Medical Properties Trust ( MPW ) said it expects to receive about $200 million from the deal, after satisfaction of obligations to the Prospect managed care platform's senior creditor and other liabilities. The real estate investment trust expects the majority of the payment in the first half of next year, while $50 million is expected by 2027.

Late Thursday, Astrana reported that its third-quarter earnings declined to $0.33 a share from $0.47 a year earlier, while revenue jumped 37% to $478.7 million. The results topped a Capital IQ-polled consensus of $0.32 in EPS on revenue of $466 million.

For 2024, the company expects EPS of $1.06 to $1.19, down from its prior range of $1.12 to $1.36, while revenue is pegged between $1.95 billion and $2.03 billion, compared with $1.75 billion to $1.85 billion projected previously. Wall Street is looking for $1.25 and $1.89 billion, respectively.

Astrana shares were down 15% in Friday trade.

Price: 50.18, Change: -8.91, Percent Change: -15.07