P3 Health Partners Inc. Q4 FY2024 earnings call

• Entered 2024 focused on strengthening business for near-term profitability, with programmatic initiatives on schedule (over $130 million of adjusted EBITDA opportunity). - Reaffirming 2025 guidance with slight increase in total members; macro environment in Medicare improving. - Enhanced senior leadership team with key new hires. - Fourth quarter 2024: membership up 13%, revenue up 7% to $371 million; annual revenue $1.5 billion, 18% y-o-y growth. - Operational efficiencies: executed $20 million operating expense reduction; $35 million contract rationalization (eliminated ~60 TINs in provider network, completed some payer contracts). - Operational execution: progress on burden of illness program; P3 Restore initiative launched; strong progress on care enablement model and new hires in leadership.

In the fourth quarter, membership grew 13% from 4Q’23 to 4Q’24, and revenue increased 7% to $371 million. Annually, revenues ended 2024 at $1.5 billion, a 18% year-over-year growth. The fourth quarter medical margin was $7 million, down year over year due to elevated utilization. Adjusted EBITDA for the quarter was a loss of $68 million, which included unfavorable out-of-period true-ups; excluding these, adjusted EBITDA was on track with 2024's starting point. On a full-year basis, 2024 adjusted EBITDA loss was $167.2 million, compared to $85.5 million in the prior year.

• 2025 guidance: slightly increase total membership to 109,000–119,000; reaffirm revenue range $1.35 billion–$1.5 billion; medical margin range $174 million–$210 million; adjusted EBITDA range negative $35 million to positive $5 million. - Includes $8 million contribution from ACO operations and $20 million in operating cost efficiencies realized in 2025. - Seasonality: typically lower EBITDA in first and fourth quarters compared to second and third.

Q: Aaron on the line for Brooks asked about timing around reaching potential profitability and cadence towards that target.

A: Leif Pedersen said guidance for 2025 has three major inputs: ~$130 million of operating plan improvements, ~7.5% revenue increase, ~$16 PMPM improvement in medical costs, and OpEx; most of the $130 million plan benefits are in 2025.

Q: Josh Raskin with Nephron asked about fourth quarter results and deviation from prior quarter.

A: Leif Pedersen said Q4 had ~$17 million onetime negative items not related to IBNR; Amir Bacchus added factors like unit cost increase, COVID/RSV seasonality, and poor performance of a plan affected costs.

Q: David Larsen with BTIG asked about improving utilization trends in 4Q and 1Q 2025.

A: Amir Bacchus said 4Q saw slight decreases in [indiscernible] per 1,000, ED per 1,000, and observation rates per 1,000, but unit costs were elevated; 1Q 2025 trends continue to show improvement with some line of sight from census and delegated plans.

Q: Ryan Langston with TD Cowen asked about seasonality and Medicare macro environment improvement.

A: Amir Bacchus said first and fourth quarters are typically more utilized, but 2025 Q1 is showing better trends due to care enablement model and benefit changes; Aric Coffman added benefit design changes from 2024 to 2025 and into 2026 are improving the macro environment.

Q: Jack Senft on for Ryan asked about payer recontracting and specialty contracts.

A: Aric Coffman said payer recontracting is a mutual partnership aiming for mutual benefit; Amir Bacchus said expanding capitation contracts on specialty side, including oncology and muscoskeletal, with expansion starting in 2025 and impacting results going forward.