P3 Health Partners Q2 Earnings Call Highlights

Key Points

• P3 Health Partners reported $54 million in second-quarter adjusted EBITDA, up from a $17 million loss a year earlier, but the result included $45 million from favorable payer settlements and prior-year development. Excluding those items, underlying quarterly EBITDA was approximately $9 million.
• The company said medical-cost trends remained favorable, with first-half Medicare Advantage costs running 1.8% below the 2025 baseline. Clinical initiatives also expanded, including point-of-care tools reaching more than 65,000 lives and strong engagement with high-risk members.
• P3 raised its 2026 adjusted EBITDA outlook to $80 million-$110 million, with a midpoint of $95 million. At-risk membership declined to about 105,000, while the company plans to continue its Nebraska partnership in 2027 and delay full-risk operations there until 2028.

P3 Health Partners NASDAQ: PIII reported second-quarter adjusted EBITDA of $54 million and raised its full-year 2026 outlook, while noting that the quarterly result included $45 million of favorable payer settlements and prior-year development.

Chief Executive Officer Aric Coffman said the company’s second-quarter performance reflected continued execution on contract restructuring, network concentration, medical-cost management and clinical operations. P3 reported $80 million in adjusted EBITDA for the first half of 2026, compared with a $39 million loss in the first half of 2025.

“The core economic levers that drive the business, our contract structure, our operating model, and our clinical execution are increasingly within our control,” Coffman said.

Quarterly Results Include Settlement Benefit

Revenue for the second quarter was $386 million, up from $356 million in the prior-year period, despite a lower at-risk membership base. Chief Financial Officer Leif Pedersen said per-member funding for the at-risk population increased about 15% year over year, which he attributed to rate progression, contract restructuring and improved burden-of-illness documentation.

At-risk membership totaled about 105,000 at the end of the quarter, down from 116,000 a year earlier. Pedersen said the decline reflected portfolio actions taken during 2025, including exits from arrangements that did not meet P3’s economic thresholds. The company also managed approximately 28,000 lives through management-services arrangements, bringing total lives under management to about 133,000.

Medical claims expense totaled $269 million. The result included approximately $45 million in favorable payer settlements and prior-year development. During the question-and-answer session, Pedersen said the payer settlement itself totaled $41 million, did not affect revenue and was recorded solely in medical claims expense.

• Medical margin was $98 million, or $311 per member per month.
• Medical loss ratio was 85.6% after adjusting for favorable settlements and prior-year development.
• Adjusted operating expense was $32 million, including investments in coding and documentation support as well as Nebraska-market infrastructure.
• Adjusted EBITDA was $54 million, versus a $17 million loss in the second quarter of 2025.

Excluding the $45 million of favorable payer settlements and prior-year development, Pedersen said underlying second-quarter adjusted EBITDA was approximately $9 million. Across the first half, P3 recognized $62 million of favorable payer settlements and prior-year development, including $17 million in the first quarter and $45 million in the second quarter. The company said underlying first-half adjusted EBITDA was approximately negative $18 million.

Medical-Cost Trend and Clinical Programs

Management said Medicare Advantage medical-cost trend for the first half of 2026 was 1.8% below the full-year 2025 baseline, excluding favorable payer settlements and adjusting for prior-year development. Coffman contrasted that result with what he described as peers experiencing 5% to 7% year-over-year trends.

Chief Medical Officer Amir Bacchus said P3’s point-of-care technology deployment was ahead of plan and on track for roughly 110% of the company’s original year-end goal. The tools had reached more than 65,000 lives across the portfolio, according to Coffman.

Bacchus said providers using the tools addressed nearly 90% of care gaps at the point of care, while capture rates were several points above the broader enterprise average. The tools were open in roughly half of eligible visits, and P3 was seeking to expand adoption through in-office provider training.

P3’s provider network and clinical teams saw 87% of patients through the second quarter, two percentage points ahead of the company’s internal target, Bacchus said. The company also saw 99.5% of its highest-risk members, exceeding its 90% glide path for that population.

In utilization management, P3 expanded reviews of prepaid hospital billing and appropriate sites of care. Bacchus said the work resulted in a 17% year-to-date redirect rate from skilled nursing facilities to home-based care where that setting was deemed the better clinical fit.

The company said quality performance was ahead of its internal glide path toward four-star HEDIS and medication-adherence measures. It also reported three times as many alternative quality submissions as at the same point a year earlier, with members affected by quality submissions up nearly 20% from the first quarter.

Outlook Raised; Nebraska Program Continues

P3 ended the quarter with $21 million in cash and equivalents. The company raised its full-year 2026 adjusted EBITDA outlook to a range of $80 million to $110 million, from its prior outlook, with a midpoint of $95 million.

Pedersen said the updated outlook reflects settlements and prior-year developments recognized in the first half, as well as improved expectations for the remainder of the year. He added that the company expects the usual seasonal increase in medical expenses during the second half but plans to offset some of that pressure through care management, utilization management and payment-integrity programs.

Regarding its Nebraska expansion, Coffman said P3 will continue providing services for its partner during 2027 while building and scaling its programs. The company does not expect to enter a full-risk arrangement in Nebraska until 2028.

Coffman said P3 does not currently expect announced county exits by some Medicare Advantage plans to have a major impact on its membership. He said the company expects to have a clearer view of 2027 benefit design following its third-quarter results.

About P3 Health Partners (NASDAQ:PIII)

P3 Health Partners is a healthcare technology and services company that delivers data-driven solutions to support health plans in improving quality measures, risk adjustment accuracy and operational efficiency. The company's platform integrates advanced analytics, reporting capabilities and workflow automation to help clients optimize performance across value-based care programs and regulatory requirements.

The company's core offerings include quality measurement and reporting for HEDIS, STAR and other performance frameworks, risk adjustment coding and audit services, and population health analytics.

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