• Revenue: Fourth quarter revenue of $371 million, a 7% increase year over year; full-year 2024 revenue of $1.5 billion, representing 18% growth year over year.
• Membership Growth: At-risk membership increased by 14% year over year to 123,800.
• Medical Margin: Fourth quarter medical margin of $7 million; full-year medical margin of $85.5 million, a decrease of approximately 37% year over year.
• Adjusted EBITDA: Fourth quarter adjusted EBITDA loss of $68 million; full-year adjusted EBITDA loss of $167.2 million.
• Operating Expenses: Reduction of operating expenses by $20 million through operational efficiencies.
• Cash Balance: Cash balance of $38.8 million as of December 31, with an additional $15 million received in early January 2025.
• 2025 Revenue Guidance: Reaffirmed revenue range of $1.35 billion to $1.5 billion.
• 2025 Adjusted EBITDA Guidance: Reaffirmed adjusted EBITDA guidance range of $35 million to $5 million positive.
• Medical Margin Guidance for 2025: Expected to be in the range of $174 million to $210 million.

• Warning! GuruFocus has detected 3 Warning Signs with PIII.

Release Date: March 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• P3 Health Partners Inc (NASDAQ:PIII) reported a 13% membership growth and a 7% increase in revenue for the fourth quarter of 2024.
• The company reaffirmed its 2025 revenue guidance of $1.35 billion to $1.5 billion and expects to achieve profitability this year.
• P3 Health Partners Inc (NASDAQ:PIII) has significantly enhanced its senior leadership team with key new hires, bringing substantial industry experience.
• The company is on track to realize a $130 million plus EBITDA improvement opportunity through operational efficiencies, contract rationalization, and operational execution.
• P3 Health Partners Inc (NASDAQ:PIII) has introduced innovative programs like P3 Restore to reduce physician burnout, which is expected to improve patient outcomes and clinician tenure.

Negative Points

• The fourth quarter medical margin decreased year over year due to elevated utilization trends.
• Adjusted EBITDA for the fourth quarter was a loss of $68 million, including unfavorable out-of-period true-ups related to a single payer partner.
• Full-year medical margin decreased by approximately 37% year over year, driven by elevated medical expenses, especially Part D expenses.
• Adjusted EBITDA loss for the full year 2024 was $167.2 million, compared to a loss of $85.5 million in the prior year.
• The company faced increased unit costs and higher utilization of elective or surgical procedures, contributing to overall higher costs.

Q & A Highlights

Q: Can you elaborate on the timing around reaching potential profitability and the key factors influencing this target? A: Leif Pedersen, CFO, explained that the 2025 guidance includes a 7.5% revenue increase driven by burden of illness identification, base rate assumptions, and contracting impacts. Medical costs are expected to improve by $16 PMPM, influenced by inflation adjustments and specific programs like hospice and palliative care. Operational expenses are also a factor in achieving profitability.

Q: What are the expectations for cash flow in 2025 compared to 2024? A: Leif Pedersen, CFO, stated that the cash balance at the end of 2024 was $38.8 million, with an additional $15 million received in early January 2025. Another $30 million was received in February to support the first half of 2025. The company continues to assess liquidity needs and has the board's support for accessing capital markets as needed.

Q: Did the fourth quarter results align with expectations, and what were the deviations? A: Leif Pedersen, CFO, noted that Q4 included $17 million in one-time negative items related to accounting process clean-up. Excluding these, the results were in line with expectations, though unit costs and seasonal factors like COVID and RSV increased costs.

Q: How is the company progressing in reducing Part D risk, and what are the future plans? A: Aric Coffman, CEO, mentioned that about half of the Part D risk has been eliminated, with ongoing efforts to remove the remaining portion. The goal is to complete this by 2026, contingent on successful negotiations with payers.

Q: What are the current utilization trends, and how do they compare to previous quarters? A: Amir Bacchus, CMO, reported slight improvements in utilization trends, with decreases in admissions, emergency department visits, and observation rates. These trends are continuing into Q1 2025, supported by better provider engagement and plan benefit changes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.