P3 Health Partners(PIII) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Capitated revenue increased by approximately 6% year-over-year, with total capitated revenue for the quarter at $341.6 million, or about $982 per member per month [5][15] - Adjusted EBITDA loss for the quarter was $45.9 million, with a year-to-date adjusted EBITDA loss of $85.2 million [8][18] - The company revised its full-year adjusted EBITDA guidance to a range of a $110 million loss to a $95 million loss, reflecting current performance expectations [9][20] Business Line Data and Key Metrics Changes - Membership for the quarter was approximately 116,000 members, aligning with expectations [8] - Medical margin for the quarter was $4.4 million, or $13 per member per month, compared to $500,000 or $1 per member per month in the prior period [16] - Year-to-date medical margin was $52.2 million, or $50 per member per month, with normalized medical margin at $80.8 million, or $78 per member per month [17] Market Data and Key Metrics Changes - The normalized adjusted EBITDA loss year-to-date was approximately $70 million, providing a clearer reflection of underlying business performance [8][18] - The operational improvement plan has achieved over $100 million in EBITDA improvement year-over-year [7] Company Strategy and Development Direction - The company is focused on improving stability, strengthening operating discipline, and maturing its clinical foundation [5] - A strategic joint venture is expected to add approximately 13,000 fully accredited ACO members, enhancing profitability and cash flow [7] - The company is rationalizing its provider network to improve margin performance, exiting groups that do not align clinically or economically [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core operating model, highlighting stable medical cost trends and improved provider alignment [22] - The company anticipates favorable macro tailwinds heading into 2026, with expected improvements in the rate environment communicated by CMS [22] - Management believes the foundation is in place for meaningful profitability in 2026, supported by disciplined execution and alignment of the network [22] Other Important Information - The company has identified $120 million to $170 million in EBITDA expansion opportunities for 2026 [11][21] - The operational improvements are expected to lead to a more stable and scalable operating platform [10] Q&A Session Summary Question: What convinces the plans to cede margin in their MA books? - Management indicated that payers are motivated by the need for investment in high-risk patient management and quality metrics, which drives renegotiation conversations [25][26] Question: Was the guidance reduction driven by a single payer or more broadly? - The guidance reduction was primarily related to mid-year settlements coming in less than expected and some medical cost initiatives being pushed out [36][37] Question: What was the prior period dollar amount in the third quarter? - The prior period amount was a $3 million decrement, with a total unfavorable impact of $24 million in Q3 due to mid-year true-ups [42][44] Question: What are the PMPM revenue growth expectations in 2026? - The aggregate expectation for PMPM revenue growth is about a 5% net improvement in premium, with further guidance on coding improvements expected in the next quarter [48][49]