P3 Health Partners Inc. Q2 FY2025 earnings call

• Nearing full execution on the $130 million EBITDA improvement plan. • Core business moving positively; 3 of 4 markets breakeven or better through first half. • Medical cost trends flat when excluding prior period adjustments. • Renegotiated contract with major payer for ~$20M improvement, extending into second half 2025 and 2026. • Near finalization of senior debt extension. • Care enablement model driving clinical quality metrics, with field-based physician engagement specialists achieving almost 3x improvement in care gap closures. • Retooled shared services, including utilization management, care management, and payer reconciliation. • Growth pipeline exceeds 35,000 members; strategic joint venture to add 13-14k fully accretive lives.

Membership for Q2 totaled 115,000 members. Capitated revenue for Q2 was $352 million, with total revenue of $356 million. Adjusted EBITDA for the quarter was a loss of $17 million. Excluding prior period adjustments, the underlying business achieved an EBITDA loss of $8 million, a $5 million improvement from normalized Q1 results. Year-to-date adjusted EBITDA loss was $39 million, excluding prior period adjustments it improved to $22 million for the first half of 2025.

• Revised full year 2025 adjusted EBITDA guidance to a range of $39 million to $69 million loss. • Anticipate $120 million to $170 million of EBITDA improvement in 2026 from base rate increases, benefit design rationalization, operational levers (payment integrity, scaling high-impact programs, cost structure optimization), and contract improvements. • 40% of 2026 EBITDA improvement from base rate increases and burden of illness accuracy; 10% from benefit design rationalization; 30% from operational levers; 20% from contractual improvements.

• Prior period adjustments from claims migration and late data from payers. • Impact of a single payer in a market, though exposure limited for 2026. • Variability in benefit design information from payers affecting guidance accuracy.

Q: Could you give the causes of prior year catch-up, specifics of costs, and process around data exchange to prevent future catch-up?

A: One cause was a claims migration hiccup from a plan in 2024; another was late data from a larger national payer. Continually working with payers to improve JOC processes and data exchange.

Q: How confident are you that plan partners have rebid their MA books appropriately for 2026?

A: We'll have final info publicly when others do; plans have intent on benefit design and network shifts, which are positive for our business.

Q: Delta in guidance due to prior period adjustments and noncore asset performance? What are noncore assets?

A: Original guidance midpoint was -$15M; prior period adjustments added ~$18M, plus underperformance in Oregon market and other factors led to revised guidance. Noncore assets not specifically detailed but mentioned as contributing to prior headwinds.

Q: Status of renegotiation efforts to reduce Part D exposure and impact in second half?

A: ~75% complete in renegotiation; changes have 2025 and future impact, with some improvements continuing into back half of 2025.

Q: Nuances within EBITDA opportunities for 2026 and timing?

A: Breakdown includes 40% from base rate and burden of illness; 10% from benefit design; 30% from operational levers; 20% from contractual. Timing varies with some locked in, others dependent on plan bid info and execution.