P3 Health Partners Q2 2026 Earnings Call Transcript

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August 10, 2026

Key Takeaways

  • Positive Sentiment: Adjusted EBITDA reached $54 million in Q2, versus a $17 million loss a year earlier, bringing first-half EBITDA to $80 million. However, approximately $45 million of Q2 EBITDA came from favorable payer settlements and prior-year development, with underlying Q2 EBITDA of about $9 million.
  • Positive Sentiment: The company raised its 2026 adjusted EBITDA outlook to $80 million–$110 million, with a $95 million midpoint, citing improved payer economics, medical-cost performance, and greater earnings predictability.
  • Positive Sentiment: First-half Medicare Advantage medical-cost trend was 1.8% below the 2025 baseline, supported by utilization management, payment integrity, care management, quality execution, and expanded AI-enabled point-of-care tools reaching more than 65,000 members.
  • Negative Sentiment: At-risk membership declined to approximately 105,000 from 116,000 a year earlier following portfolio exits, while cash and equivalents stood at only $21 million at quarter-end. Management also expects normal seasonal medical-expense pressure in the second half.
  • Positive Sentiment: The Nebraska market is progressing as planned, with P3 providing services in 2027 before assuming full risk in 2028, reflecting management’s deliberate approach to geographic expansion and risk exposure.
AI Generated. May Contain Errors.
Earnings Conference Call
P3 Health Partners Q2 2026
00:00 / 00:00

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Operator

Please note this event is being recorded. I would now like to turn the conference over to Mr. William Hoover of Investor Relations. Please go ahead.

William Hoover
VP of Investor Relations at Gilmartin Group

Thank you, operator, and thank you for joining us today. Before we proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under the U.S. federal securities law, including statements regarding our financial outlook and long-term target. These forward-looking statements are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in a periodic report filed with the SEC.

William Hoover
VP of Investor Relations at Gilmartin Group

The forward-looking statements made during this call speak only as the date hereof, and the company undertakes no obligation to update or revise these forward-looking statements. We refer to these certain non-GAAP financial measures on this call, including adjusted operating expense, adjusted EBITDA, adjusted EBITDA per member per month, normalized adjusted EBITDA, medical margin, medical margin per member per month, and cash flow. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, the measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures. For example, other companies may calculate similarly titled non-GAAP financial measures differently. Please refer to the appendix of our earnings release for a reconciliation of these non-GAAP financial measures to the most direct comparable GAAP measures.

William Hoover
VP of Investor Relations at Gilmartin Group

Information presented on this call is contained in the press release that we issued today and in our SEC filings, which may be accessed from the investor page of the P3 Health Partners website. I will now turn the call over to Aric Coffman, CEO of P3 Health Partners.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

Good afternoon, and thank you for joining us today to discuss our second quarter results. Q2 represents a continuation of the positive momentum we have built over the last two years and reflects sustained execution against the plan we shared with you at the outset of my tenure. None of this happens without the work of our teams across the country. Their focus, discipline, and their day-to-day execution are what convert strategy into results, and I want to thank them for their dedication they bring to serving our patients, our providers, and payer partners. We delivered $54 million of adjusted EBITDA in the second quarter, bringing our first half total adjusted EBITDA to $80 million, building on the trajectory we established in Q1. Given this strong performance and our confidence in the underlying business, we are raising our full year 2026 outlook.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

It has been just over two years since I began leading P3, and the results this quarter reflect how much the structural and operational changes we have made across our contracts, our markets, and our operating model continue to compound. We remain focused on medical cost improvement, quality, and burden of illness performance, disciplined growth, and continued operational improvements through people, process, and technology. There are three things to highlight about P3 performance through the first half of 2026. First is operational execution. As we have discussed previously, our operating model is centered around medical cost management, quality execution, provider engagement, and coding accuracy. Across the organization, we are expanding our point of care tools ahead of schedule, now reaching greater than 65,000 lives across our portfolio, allowing more accurate burden of illness capture and quality gap closures.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

These AI-enhanced tools reduce the administrative burden for the clinicians as we are meeting our provider partners where they are to drive adoption in daily practice. Our quality performance is tracking ahead of our internal glide path towards four stars on HEDIS and medication adherence measures. Our impact across utilization management and payment integrity are tracking at or above plan, and we will be expanding these programs as part of our contractual reset with payers. Our clinical and care management programs continue to expand with a focus on high risk, rising risk patients, and transitions of care. The impact from our operating model can be seen in our Q2 MA medical expense trend and quality trajectory. Medical cost trend across our MA population for the first half of 2026 was 1.8% lower than full year 2025, which Leif will cover in more detail.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

This is a significant and sustained differentiator in the sector when compared to peers running 5%-7% year-over-year. Quality remains one of the most important levers in Medicare Advantage, both for the patients we serve and for the strength of our payer relationships. Strong quality performance is not only linked with better patient outcomes, it directly supports better economic terms and deeper alignment with our payer partners, and is an area where P3 continues to differentiate. Quality is tracking well for the first half of the year, where we are ahead of glide path to get to four-star on HEDIS and medication adherence measures. We have also improved our process around alternative submissions, driving three times the total submissions at this point compared to the prior year, with total members impacted by quality submissions up close to 20% from Q1.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

This progress reflects the scale and effectiveness of our improved processes. Second is our payer partnerships and our contract structure design work we began 18 months ago. We focused on redesigning and enhancing our risk profile, funding, and cost accountability with our key payer partners, including enhanced funding mechanisms, revising risk-sharing arrangements, delegation expansion, and improving alignment around medical cost accountability. As you look at the composition of this quarter's results, a portion of our Q2 performance reflects one-time non-recurring items across multiple payer contracts. These settlements are more than a financial event. They reflect the trust our payer partners continue to place in P3 and our shared commitment to taking care of our patients and provider partners. Third is growth. Our engagement in Nebraska that we shared with you earlier this year continues to progress positively.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

We are executing on our expected trajectory and look forward to sharing more as it matures. We favor a deliberate glide path on geographic expansion. Understand the population, build the clinical and operational infrastructure, and validate performance before taking on full risk. This sequencing reduces downside exposure and positions us to enter full risk in a disciplined way. In addition, with our existing partners, we continue to explore growth opportunities in both current and new geographies. Overall, our second quarter was strong, and it reflects the compounding benefit of the work we have done over the past two years. We have two quarters remaining in 2026, and our attention remains on sustaining that execution. These results reinforce our confidence that the business has moved into a phase of durable, more predictable earnings, and that trajectory is what gives us the confidence to raise our outlook for the year.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

The core economic levers that drive the business, our contract structure, our operating model, and our clinical execution are increasingly within our control. Our work is never finished, but the framework for 2026 is solid, and we remain focused on executing with the same discipline that got us here. Our success is predicated on the engagement of our clinician partners. I'm proud of the work we have established with the P3 Restore program to impact clinician engagement, improve practice sustainability, and bring solutions to help them succeed. To speak more about that and to discuss our clinical performance, I'll turn the call over to Amir.

Amir Bacchus
Amir Bacchus
Co-Founder, CMO, and Board Director at P3 Health Partners

Thank you, Aric. I want to spend a few minutes on the clinical work driving the financial results we are delivering. The MedEx trend performance we are seeing this quarter is not accidental. It reflects deliberate clinical programs, expanding point-of-care technology, and disciplined utilization management and payment integrity execution, all built around the care enablement model. I will walk through where that work is showing up most clearly this quarter. Our point-of-care technology deployment is ahead of plan, tracking to roughly 110% of our original year-end goal. Where the tool is in use, the results are clear. Providers are addressing nearly 90% of care gaps at the point of care, with capture rates running several points ahead of our broader enterprise average.

Amir Bacchus
Amir Bacchus
Co-Founder, CMO, and Board Director at P3 Health Partners

Today, the tool is open in roughly half of eligible visits, and we are closing that gap through the in-office training embedded directly into provider offices rather than relying on remote onboarding. Our provider network and clinical team saw 87% of our patients through the second quarter, two points ahead of our internal glide path, including 99.5% of our highest-risk members enterprise-wide, well ahead of the 90% glide path for that population. Seeing members regularly is foundational to how we care for our population. Our care management team and senior wellness centers play a key role in that effort, extending access and creating additional touch points with our highest-risk patients beyond the traditional practice setting, helping us reach and see more of our population. Together, this engagement allows us to connect patients to the right clinical programs, monitor chronic conditions proactively, and intervene earlier when care is needed.

Amir Bacchus
Amir Bacchus
Co-Founder, CMO, and Board Director at P3 Health Partners

It is a key driver of both quality outcomes and the overall health of our patients. Our utilization management program is built around a simple principle. Patients should receive care in the right setting, delivered by the right level of provider at the right time. We have expanded our review of prepaid hospital billing to confirm medical records support the level of care submitted and broadened our review of appropriate site of care, helping direct patients to home health support rather than a skilled nursing facility when that is the better clinical fit. That work has driven a 17% year-to-date redirect rate from skilled nursing to home, reflecting our commitment to caring for patients in the setting that is best for their recovery and well-being while remaining responsible stewards of the healthcare resources we are entrusted with.

Amir Bacchus
Amir Bacchus
Co-Founder, CMO, and Board Director at P3 Health Partners

We also continue to invest in our provider community through P3 Restore, our clinician coaching program. In the first half of the year, we expanded the program across four markets, and clinicians completing the program report meaningful improvement across measures like stress management, leadership confidence, and practice satisfaction. This work supports the stability and engagement of the provider network our model depends on.

Amir Bacchus
Amir Bacchus
Co-Founder, CMO, and Board Director at P3 Health Partners

In this quarter, we expanded the offering further to include asynchronous education and CME credit, making it easier for more of our provider community to participate. In total, this work reflects a clinical foundation that is increasingly built for scale, from how we engage patients and support providers to how we manage utilization and ensure payment accuracy. It is the operating discipline that underpins the financial results you are about to hear. With that, I will turn the call over to Leif to walk you through our financials.

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

Thank you, Amir, and good afternoon. Q2 was another strong quarter. We delivered $54 million of adjusted EBITDA, including approximately $9 million of underlying adjusted EBITDA, excluding favorable contractual settlements and prior-year development. Importantly, the underlying business is profitable and improved quarter over quarter. The settlements recognized in the quarter reflect the constructive resolution of legacy contractual matters and strong alignment with several of our payer partners. More broadly, our results demonstrate the cumulative impact of the foundational changes we have made across the business, including improved payer economics, better medical expense performance, and disciplined clinical and operational execution. This afternoon, I will cover three areas. First, our financial performance for the quarter, including an update on our medical cost trend. Second, our capital position and liquidity. Third, our revised outlook for the remainder of 2026.

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

Starting with membership, total at-risk membership at the end of Q2 was approximately 105,000, compared to 116,000 in Q2 2025. Consistent with what we have shared previously, the year-over-year decline reflects the deliberate portfolio actions we took throughout 2025, including the exit of arrangements that did not meet our economic thresholds. The membership base we are operating from today is more concentrated in relationships where our model performs best. In addition to our at-risk membership, we manage approximately 28,000 lives through management services arrangements, bringing total lives under management to approximately 133,000. We began reporting this metric in Q1 because it provides a more complete view of the scale of the P3 platform and reflects our ability to support payer and provider partners across different levels of risk and service. Moving to revenue, Q2 revenue was $386 million, compared to $356 million in the same period of 2025.

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

Despite a lower membership base, per-member funding for our at-risk population improved approximately 15% year-over-year, reflecting continual success in rate progression, contractual restructuring, and further maturation of our burden of illness documentation across our network. Medical claims expense for the quarter was $269 million. The results include approximately $45 million of favorable payer settlements and prior year development. Year to date, our MA medical cost trend is 1.8% below full year 2025 baseline, when fully excluding the favorable payer settlements and adjusting for prior year development. Medical margin for the quarter was $98 million, or $311 PMPM. Medical loss ratio for the quarter was 85.6% when adjusted for the favorable payer settlements and prior year development noted above. These results reflect the improved payer economics, clinical execution, and enhanced payment integrity workflows, along with the utilization management progress previously described.

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

Adjusted operating expense for the quarter was $32 million, consistent with cost structure we have established over the prior 18 months. That total includes continued investment in professional fees supporting improved coding and documentation, as well as infrastructure costs associated with standing up our Nebraska market. We continue to direct investment towards frontline capabilities that drive medical cost and quality performance while remaining diligent about cost discipline across the rest of the organization. Adjusted EBITDA for Q2 was $54 million, compared to a loss of $17 million in the same period of 2025. Of that result, approximately $45 million reflects the favorable payer settlements and prior-year developments noted previously. Excluding those items, underlying Q2 adjusted EBITDA was approximately $9 million, reflecting the core operating performance of the business.

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

These Q2 results bring us to adjusted EBITDA of $80 million for the first half of 2026, compared to a loss of $39 million in the first half of 2025. Of the $62 million in favorable payer settlements and prior year development recognized across the first half, $17 million was recognized in Q1 and $45 million in Q2. Excluding those items, underlying first half adjusted EBITDA was approximately [$18 million]. For us, this is an important milestone. It shows the improvement in our economics is not solely dependent on contractual settlements or prior period development. The core business itself is now generating positive adjusted EBITDA. On the balance sheet, we ended the quarter with $21 million in cash and equivalents. Consistent with the liquidity framework we have communicated, we continue to manage capital with discipline while maintaining focus on operational execution and financial stability.

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

Now moving to our updated 2026 outlook. We are raising our full year 2026 adjusted EBITDA outlook to a range of $80 million-$110 million, with a midpoint of $95 million. The revision reflects the favorable contractual settlements and prior year developments recognized in the first half, as well as continued improvement in our expectations for the remainder of the year.

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

We are also tightening the range as we gain further visibility into the back half of the year. Our confidence is rooted in the improved economics now flowing through our results and the operating discipline we have established across the business. We remain mindful of the typical seasonal build in medical expense trend in the second half of the year, and we are actively managing that dynamic through the same care management, utilization management, and payment integrity programs Amir described. With that, I'll turn it back to Aric for closing comments.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

Thanks, Leif. Before we open the line for questions, I want to leave you with three takeaways from the quarter. First, the structural work we set out to do two years ago is now fully embedded in how we run the business. Contract restructuring, network concentration, and operational redesign continue to translate directly into our economics, and we are seeing that discipline compound quarter after quarter. There is more work ahead of us in the back half of the year, and it remains a top priority. Second, our clinical model, utilization management, and payment integrity processes continue to set us apart. From the growth in our patient scene, to our quality performance, to the continued scaling of our point of care technology, we continue to drive down total cost of care and improve outcomes.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

These efforts are reflected in our MA medical cost trend this year, running nearly 2% below our 2025 baseline. We expect that gap to remain a meaningful point of differentiation as the year progresses. Third, we head into the back half of the year in a stronger position than where we started it. We are raising our full year outlook to $80 million-$110 million, and our fundamentals continue to mature. Our results are becoming more predictable. We are proud of the progress this business has made, and we remain focused on executing with the same discipline that got us here. With that, operator, please open the line for questions.

Operator

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Our first question for today will come from Ryan Langston with TD Cowen. Please go ahead.

Ryan Langston
Ryan Langston
Analyst at TD Cowen

Thanks. Good afternoon. On the payer settlement, can you walk us through specifically what that is related to? Is that impacting both revenue and expense, and are you able to explicitly size the settlement in the quarter?

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

Hey, Ryan, it's Leif. Appreciate the question.

Ryan Langston
Ryan Langston
Analyst at TD Cowen

Hey, Leif.

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

I think the easiest way to kind of walk through that is I'll just reiterate what that bridge is, first and foremost. Q2 adjusted EBITDA was $54.4 million, less $45 million of favorable prior period development and payer settlements. Just to let you know, Ryan, specifically, the payer settlement amount was $41 million, and that did not affect revenue. That only affected medical claims expense.

Ryan Langston
Ryan Langston
Analyst at TD Cowen

Got it. Okay, that's helpful. Then maybe anything, I'm sorry if I missed it, maybe anything on just sort of seasonality of earnings, medical margin, EBITDA through the back half of this year?

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

Yeah. As you think about where we're at year to date, we were at $80 million for the six months ended June 30th, for a reported EBITDA number. Underlying that is $18 million of embedded EBITDA, and $62 million of prior period settlements that came from Q1 and Q2. The midpoint for guidance in the back half is $95 million. If you just took where we're at today and you assume that we would get to a midpoint from an underlying EBITDA perspective, that would be about $15 million of additional EBITDA in the back half of the year. That takes into consideration both what we expect there to be some normal, traditional industry pressure from the backside of the year in medical expense from utilization, but that is being offset by in-year programmatics that are going to drive and offset some of that cost.

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

I'm going to take it a step further for you, Ryan, as well. Just as we think about it, Aric spoke to this in his opening comments, is we are seeing a 1.8% reduction in MedEx trend when you look at full year 2025 and you compare that to the six months ended 6/30, and we are down 1.8%. That's attributable to a number of things that include the programmatics that we have in place, also is contributing to that decrease is some of the network curation and specific actions that we took with our membership population exiting 2025. Then there were some other factors as it relates to benefit plan reductions or benefit reductions within our payer partner plans that they offered in 2026.

Ryan Langston
Ryan Langston
Analyst at TD Cowen

Okay, got it. Just one last one for me, and then I will hop back in the queue. I guess any insight into how your plans price benefits for 2027, and then just maybe more specifically, some of the plans have talked about further market exits or further plan exits next year. Any thoughts on if those exits will actually impact your current membership? Thanks.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

Yeah. Thanks for that. This is Aric. I think some of it is a little bit early to know. We are still in August, and some of those factors will get played out as we get more insight into what the benefit design actually looks like. We have seen some of the same notifications on county exits. We do not expect that to have a major impact on our membership overall in terms of the exits from counties. Then in terms of the benefit design, we will have a much cleaner picture when we get to next earnings call after Q3.

Ryan Langston
Ryan Langston
Analyst at TD Cowen

Got it. Thank you.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

You are welcome.

Operator

Your next question will come from Benjamin Haynor with Lake Street Capital Markets. Please go ahead.

Benjamin Haynor
Analyst at Lake Street Capital Markets

Good afternoon, gentlemen. Thanks for taking the questions. First off, for you, Leif, if I can kind of summarize what you said, it sounds like the core EBITDA that you've generated in the first half of the year is effectively, if you do the same in the back half of the year, that's what gets you to the midpoint of the guidance range. Am I hearing you right there?

Leif Pedersen
Leif Pedersen
CFO at P3 Health Partners

I think you're directionally correct in that analysis, Ben. I do think that we have factored in some back half pressure that goes into that, as well as risk rating other opportunities inside the second half of the year.

Benjamin Haynor
Analyst at Lake Street Capital Markets

Got it. Then on the Nebraska trajectory, it sounds like that's going well. Can you maybe remind us how that tracks, what happens in 2027 before you move to at-risk in 2028, I believe?

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

Yeah, thanks for the question. This is Aric. We will remain in a relationship in 2027, where we are performing services on behalf of our partner in Nebraska. We will continue to build out and scale the programmatics that we put in place there, and we do not move into the full risk arrangement until 2028.

Benjamin Haynor
Analyst at Lake Street Capital Markets

Okay, got it. Then, it sounds like the point-of-care tools have seen quite the adoption thus far. Half of office visits, that is pretty impressive. Where do you think you can get, and is there any kind of additional feedback that you have gotten that you can share on those tools and that program?

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

Well, we continue to roll out the program, and we get more interest from our providers all the time. Really, as we started the program, because again, it is a novel program that we started really a year or so ago. Getting the interest as the providers start to talk more about it and understand what it is to actually make the workflow more easy is the key, right?

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

As we work through our Tier 1 providers and then now looking and expanding into our Tier 2 providers, and them talking about the value that it brings to improve their workflow, that is kind of the magic that allows us to get more traction within the tool, and then to drive better performance, because not only can we show them gaps in care opportunities, but we can show them a better understanding from a diagnostic standpoint and the clinical diagnoses that they have had for suspect diagnoses as well, to improve the care of the patients. Because you link those with our other team members, whether it is our high-risk management that we deal with on some of those populations within those practices, as well as our care management teams.

Benjamin Haynor
Analyst at Lake Street Capital Markets

Is it through all the Tier 1 providers and just rolling out into Tier 2, or how far along in the process is it?

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

Almost all of our Tier 1s, but at the same time, we are expanding into Tier 2s. The Tier 2s are getting more traction every day. Ben, if you want, we can break down those numbers exactly for you as we go, but there's been a number of really good actions that we've had with FQHCs, et cetera, in how they're looking and how they utilize the information.

Benjamin Haynor
Analyst at Lake Street Capital Markets

Okay, got it. Well, congrats on the progress, gentlemen, and thanks for taking the questions.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

Thanks, Ben.

Operator

This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Please go ahead.

Aric Coffman
Aric Coffman
CEO at P3 Health Partners

Thanks, everyone, for joining, and that will conclude the call.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Executives
    • Aric Coffman
      Aric Coffman
      CEO
    • Amir Bacchus
      Amir Bacchus
      Co-Founder, CMO, and Board Director
    • Leif Pedersen
      Leif Pedersen
      CFO
Analysts
    • William Hoover
      VP of Investor Relations at Gilmartin Group
    • Ryan Langston
      Analyst at TD Cowen
    • Benjamin Haynor
      Analyst at Lake Street Capital Markets
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