P3 Health Partners Inc. Q1 FY2025 earnings call

2025 Guidance: Reiterated 2025 guidance; 3 of 4 markets breakeven or better in Q1; operating metrics from initiatives to hit in Q2 and grow; one payer collaborating to resolve 2025 issues with improvements in 2026; 8% increase in PMPM funding due to better disease burden capture. ### Strategic Initiatives: Executing $130 million adjusted EBITDA improvements across operating efficiency, contracting, and operational execution. Operating expenses down 18% QoQ and 11% YoY. Contracting ahead of schedule for $35 million incremental EBITDA. Operational execution with care enablement model reducing medical expense and improving outcomes; Oregon on track to have 60% Tier 1 enrolled by Q3; complex care program on track for $30M savings in 2025. ### Quality Performance: Nearly 30% improvement in Part C measures from April 2024 to March 2025. ### ACO REACH: Membership up 60% over past year, growing profitably, contributing $8M EBITDA as per full year guidance.

Total revenue for Q1 2025 was $373 million, a 4% decrease from the prior year. Average membership in Q1 2025 was approximately $116,000, a 8% year-over-year decline. Capitated revenue totaled $370 million. Per member funding increased by 8% to $1,063 on a PMPM basis. Medical margin in Q1 2025 was approximately $17 million or $49 PMPM, down from $37 million or $96 PMPM in Q1 2024 due to a $23 million negative impact from prior year claims. Adjusted operating expenses decreased by $3 million, a 11% year-over-year improvement. Adjusted EBITDA for the quarter was a loss of $22 million, but normalizing for an outlier payer, it was a loss of $13 million. ACO REACH contributed $2 million of positive EBITDA in Q1 2025.

Reiterated 2025 guidance; markets performing at breakeven or better excluding one payer; $130 million operating improvement plan on schedule; additional opportunities in payment integrity, end-of-life care, and payer reconciliations; positive clinical initiatives impact on utilization.

One payer partner underperforming, but collaborative efforts to resolve issues; potential impact of industry headwinds on overall performance; risks related to non-GAAP financial measure limitations and differences in calculation by other companies.

Q: About the $130 million EBITDA initiative, how much materialized in Q1 and expectations for rest of year?

A: Leif said some OpEx savings initiated in Q1, full run rate in Q2-Q4; contract rationalization impacts ratable across quarters; back-end weighting of operational execution benefits in back half.

Q: Engagement and satisfaction trends with P3 Restore program?

A: Amir said P3 Restore program has key providers going through, 9 physicians graduated, expected to see more as program disseminated.

Q: Outlier payer details, percentage of revenues, cost drivers?

A: Aric said no single payer over 22% of top line; Leif said costs related to 2024 inpatient claims; Aric mentioned claims migration difficulties caused delay.

Q: Medicare Advantage trends, impact on 2Q?

A: Amir said seeing improvement in utilization, costs high but volume utilization down; Aric noted ACO REACH membership up QoQ.

Q: Details on the underperforming market?

A: Leif said one payer in one market is underperforming, other markets near breakeven; Aric said other payers in that market not showing same trend.