P3 Health Partners Inc. Q3 FY2025 earnings call

• The business is in a transitional year focusing on stability, operating discipline, and clinical foundation.
• Capitated revenue up ~6%, normalized medical cost trend flat despite industry rises.
• Operational improvement plan embedded, achieving over $100M EBITDA improvement year-over-year.
• Strategic joint venture adding ~13,000 ACO members, 25,000 Medicare Advantage lives in pipeline for 2026.
• Rationalizing provider network to improve margin.
• Care Enablement Model driving progress: improving documentation, quality, care coordination; strengthening utilization and care management; deepening provider alignment with Tier 1 providers outperforming others.
• Advancing payment integrity and contract hygiene.

Total capitated revenue for the quarter was $341.6 million, approximately $982 per member per month. Medical margin for the quarter was $4.4 million or $13 PMPM, with year-to-date medical margin at $52.2 million or $50 PMPM. On a normalized basis, adjusted for prior year items, year-to-date medical margin was $80.8 million or $78 per member per month. Operating expense for the quarter was $21.1 million, a $10.4 million (33%) improvement from the prior year period. Adjusted EBITDA for the quarter was a loss of $45.9 million, with year-to-date adjusted EBITDA loss at $85.2 million. On a normalized basis, year-to-date adjusted EBITDA loss was approximately $70.1 million.

• Revised full year adjusted EBITDA guidance to a range of minus $110 million to minus $95 million.
• $120 million to $170 million EBITDA expansion opportunity for 2026 driven by improved alignment, scaling clinical/operational programs, contractual improvements, and product/benefit environment stabilization.

• Midyear settlements less than expected, with new process controls implemented.
• Back half assumptions on medical cost initiatives pushed to 2026.
• Noncore assets and single market/payor impacts.
• Potential for miscommunications or late communications with payors affecting visibility.

Q: Joshua Raskin on renegotiation efforts and payor participation A: Aric Coffman on payor motivation, partnership, and accountability in renegotiations Q: Ryan Langston on guidance reduction breadth A: Leif Pedersen on midyear settlements, process controls, and medical cost initiatives Q: David Larsen on prior period adjustments, PMPM revenue growth A: Leif Pedersen and Aric Coffman on settlements, coding improvement, rate increases, and cost trend