P3 Health Partners(PIII) - 2025 Q2 - Quarterly Results

Executive Summary & Business Highlights P3's Q2 2025 saw revenue decline and revised full-year guidance, despite core business strengthening and improved per-member funding Second Quarter 2025 Performance Overview P3's Q2 2025 saw a 9% membership and 6% revenue decrease, yet per-member funding improved by 10% and medical margin reached $30.6 million - Core business continues to strengthen, executing on a $130 million EBITDA improvement plan[2] - Successfully managed medical cost trends to remain flat while improving funding across membership on a per-member basis[2] - Identified an additional $120 to $170 million in EBITDA opportunities for 2026[2] - Three of four markets are already EBITDA positive or breakeven, positioning P3 for sustained profitability in 2026 and beyond[2] Q2 2025 Performance Highlights (in thousands, except membership and PMPM) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :-------- | :-------- | :----------- | | Average at-risk membership (members) | 115,000 | 126,374 | -9% | | Total Revenue (Thousands USD) | $355,800 | $379,157 | -6% | | Medical Margin (Thousands USD) | $30,600 | $41,089 | -25.49% | | Medical Margin PMPM (USD) | $89 | $107 | -16.82% | | Adjusted EBITDA Loss (Thousands USD) | $(17,100) | $(8,847) | +93.40% | | Adjusted EBITDA Loss PMPM (USD) | $(50) | $(23) | +117.39% | - Decrease in membership reflects previously disclosed network and payer rationalization[6] - On a per-member basis, funding improved 10% from prior year, when adjusted for prior-period items[6] Revised Fiscal 2025 Guidance P3 revised its full-year 2025 guidance, projecting 109,000-119,000 at-risk members and $1.35-$1.5 billion in revenue Revised Fiscal 2025 Guidance (in millions, except members and PMPM) | Metric | Low | High | | :---------------------- | :-------- | :-------- | | At-risk Members (members) | 109,000 | 119,000 | | Total Revenues (Millions USD) | $1,350 | $1,500 | | Medical Margin (Millions USD) | $124 | $154 | | Medical Margin PMPM (USD) | $90 | $111 | | Adjusted EBITDA (Millions USD) | $(69) | $(39) | - Adjusted full year guidance reflects impact from prior-period adjustments and underperformance of a single payer[6] Company Overview P3 Health Partners is a patient-centered, physician-led population health management company focused on value-based care Company Description P3 Health Partners is a patient-centered, physician-led population health management company with over 2,800 affiliated primary care providers - P3 Health Partners Inc. is a patient-centered and physician-led population health management company[9] - Has an expansive network of more than 2,800 affiliated primary care providers across 24 counties in four states[9] - Supports primary care providers with value-based care coordination and administrative services to improve patient outcomes and lower costs[9] Financial Results P3's Q2 2025 financial results show decreased assets, increased liabilities, and widened operating and net losses Condensed Consolidated Balance Sheets As of June 30, 2025, P3's total assets decreased to $731.6 million, liabilities increased, and stockholders' equity declined Condensed Consolidated Balance Sheets (Selected Items, in thousands) | Metric | June 30, 2025 (Thousands USD) | December 31, 2024 (Thousands USD) | Change (Thousands USD) | | :-------------------------------- | :------------ | :---------------- | :------- | | ASSETS | | | | | Total Current Assets | $156,531 | $184,140 | $(27,609) | | Health plan receivable, net | $93,463 | $121,266 | $(27,803) | | Restricted cash | $746 | $5,286 | $(4,540) | | Total Assets | $731,585 | $783,420 | $(51,835) | | LIABILITIES | | | | | Total Current Liabilities | $504,998 | $496,415 | $8,583 | | Accrued interest | $26,923 | $12,460 | $14,463 | | Current portion of long-term debt | $80,000 | $65,000 | $15,000 | | Claims payable | $256,037 | $255,089 | $948 | | Total Liabilities | $644,407 | $633,891 | $10,516 | | EQUITY | | | | | Total Stockholders' Equity | $44,459 | $75,936 | $(31,477) | - All periods presented have been retroactively adjusted to reflect the 1-for-50 reverse stock split effected on April 11, 2025[19] Condensed Consolidated Statements of Operations P3's Q2 2025 operating revenue decreased by 6.16% to $355.8 million, with operating and net losses significantly widening Condensed Consolidated Statements of Operations (Selected Items, in thousands) | Metric | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | Change (YoY) | YTD 2025 (Thousands USD) | YTD 2024 (Thousands USD) | Change (YoY) | | :-------------------------------- | :-------- | :-------- | :----------- | :--------- | :--------- | :----------- | | Total Operating Revenue | $355,788 | $379,157 | -6.16% | $729,013 | $767,645 | -4.90% | | Medical expense | $351,350 | $365,171 | -3.78% | $723,393 | $747,228 | -3.19% | | Total Operating Expense | $389,912 | $410,491 | -5.01% | $801,225 | $842,810 | -4.93% | | Operating Loss | $(34,124) | $(31,334) | +8.91% | $(72,212) | $(75,165) | -3.93% | | Net Loss | $(43,665) | $(28,774) | +51.75% | $(87,911) | $(78,380) | +12.16% | | Basic Net Loss Per Share | $(6.23) | $(4.40) | +41.59% | $(12.52) | $(12.02) | +4.16% | - Capitated revenue decreased by 6.03% YoY for Q2 2025 and 4.90% YoY for YTD 2025[21] - Interest expense, net, significantly increased to $(10.1) million in Q2 2025 from $(5.4) million in Q2 2024[21] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $(50.1) million for YTD 2025, while financing cash flow decreased Condensed Consolidated Statements of Cash Flows (Selected Items, in thousands) | Metric | YTD 2025 (Thousands USD) | YTD 2024 (Thousands USD) | Change (Thousands USD) | | :-------------------------------- | :--------- | :--------- | :------- | | Net cash used in operating activities | $(50,099) | $(30,272) | $(19,827) | | Net cash provided by investing activities | $50 | $0 | $50 | | Net cash provided by financing activities | $45,274 | $67,540 | $(22,266) | | Net change in cash and restricted cash | $(4,775) | $37,268 | $(42,043) | | Cash and restricted cash, end of period | $39,327 | $78,202 | $(38,875) | - Health plan receivable change was a $27.8 million inflow in YTD 2025, compared to a $(34.8) million outflow in YTD 2024[23] - Proceeds from long-term debt, net of original issue discount, were $45.0 million in YTD 2025, up from $25.0 million in YTD 2024[23] Non-GAAP Financial Measures & Reconciliations This section defines and reconciles key non-GAAP measures, including Adjusted EBITDA and medical margin, for evaluating P3's performance Non-GAAP Definitions and Use This section defines and reconciles non-GAAP financial measures, such as Adjusted EBITDA and medical margin, for evaluating P3's operating results - Non-GAAP financial measures include Adjusted EBITDA, Adjusted EBITDA PMPM, medical margin, medical margin PMPM, and adjusted operating expense[10] - Adjusted EBITDA is defined as GAAP net income (loss) before interest, income taxes, depreciation and amortization, further adjusted for items like mark-to-market warrant gain/loss, premium deficiency reserves, and equity-based compensation[10] - Medical margin represents the amount earned from capitation revenue after medical claims expenses are deducted[10] - These non-GAAP measures provide an additional tool for investors to evaluate ongoing operating results and trends and compare with similar companies, but are not alternatives to GAAP measures and are subject to inherent limitations[10][12] Adjusted EBITDA Reconciliation P3's Adjusted EBITDA loss significantly increased to $(17.1) million in Q2 2025 and to $(39.3) million for YTD 2025 Adjusted EBITDA Loss (in thousands, except PMPM) | Metric | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | Change (YoY) | YTD 2025 (Thousands USD) | YTD 2024 (Thousands USD) | Change (YoY) | | :-------------------- | :-------- | :-------- | :----------- | :--------- | :--------- | :----------- | | Net loss | $(43,665) | $(28,774) | +51.75% | $(87,911) | $(78,380) | +12.16% | | Adjusted EBITDA loss | $(17,110) | $(8,847) | +93.40% | $(39,300) | $(28,617) | +37.33% | | Adjusted EBITDA loss PMPM (USD) | $(50) | $(23) | +117.39% | $(57) | $(38) | +50.00% | - Reconciliation from net loss to Adjusted EBITDA includes adjustments for interest expense, depreciation and amortization, income tax provision, mark-to-market of stock warrants, premium deficiency reserve, and equity-based compensation[25] Medical Margin Reconciliation Medical margin decreased by 25.5% to $30.6 million in Q2 2025 and by 38.5% to $47.8 million for YTD 2025 Medical Margin (in thousands, except PMPM) | Metric | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | Change (YoY) | YTD 2025 (Thousands USD) | YTD 2024 (Thousands USD) | Change (YoY) | | :-------------------- | :-------- | :-------- | :----------- | :--------- | :--------- | :----------- | | Capitated revenue | $351,724 | $374,306 | -6.03% | $721,241 | $758,440 | -4.90% | | Medical claims expense | $(321,109) | $(333,217) | -3.63% | $(673,426) | $(680,799) | -1.08% | | Medical margin | $30,615 | $41,089 | -25.49% | $47,815 | $77,641 | -38.44% | | Medical margin PMPM (USD) | $89 | $107 | -16.82% | $69 | $102 | -32.35% | - Medical margin is derived from capitated revenue less medical claims expense[27] - Reconciliation from gross profit (loss) includes adjustments for other patient service revenue and other medical expense[29] Adjusted Operating Expense Reconciliation Adjusted operating expense decreased by 5% to $21.7 million in Q2 2025 and by 8% to $45.2 million for YTD 2025 Adjusted Operating Expense (in thousands) | Metric | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | Change (YoY) | YTD 2025 (Thousands USD) | YTD 2024 (Thousands USD) | Change (YoY) | | :------------------------ | :-------- | :-------- | :----------- | :--------- | :--------- | :----------- | | Total operating expense | $389,912 | $410,491 | -5.01% | $801,225 | $842,810 | -4.93% | | Adjusted operating expense | $21,739 | $22,859 | -4.90% | $45,173 | $49,081 | -7.96% | - Adjustments include subtracting medical expense, depreciation and amortization, and equity-based compensation, and adding back premium deficiency reserve[31] Key Performance Metrics "At-risk members" is a crucial metric for evaluating P3's business performance and informing strategic decisions At-Risk Members "At-risk members" is a key metric representing Medicare members under capitation, used for business evaluation and strategic decisions - "At-risk members" is a key metric used to evaluate the business, identify trends, formulate business plans, and make strategic decisions[13] - Represents the approximate number of Medicare members for whom P3 receives a fixed percentage of premium under capitation arrangements[13] Additional Information This section provides Q2 2025 earnings conference call details and a cautionary note on forward-looking statements Conference Call and Webcast Details P3 Health Partners will host a conference call and webcast on August 14, 2025, to discuss its Second Quarter 2025 earnings Conference Call Details | Event | P3 Health Second Quarter 2025 Earnings Conference Call | | :---- | :----------------------------------------------------- | | Date & Time | August 14, 2025, 4:30 PM Eastern Time | | Toll-Free (US) | 1-833-316-0546 | | International | 1-412-317-0692 | | Webcast | Live and archived on ir.p3hp.org (Events & Presentations section) | Cautionary Note Regarding Forward-Looking Statements Forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from projections - The press release contains forward-looking statements subject to risks, uncertainties, assumptions, and other important factors[14] - Actual results may differ materially from those projected or estimated, and investors are cautioned not to place undue reliance on these statements[14][16] - Important risks include the ability to continue as a going concern, raise additional capital, achieve or maintain profitability, maintain debt covenants, identify new geographies/partners, changes in market/regulatory conditions, and increased labor/medical costs[15]