P3 Health Partners Inc.

Hello and welcome to the P3 HealthPartners first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Please note, this event is being recorded. I would like now to turn the conference over to your host, Mr. Ryan Halstead. You may begin.

Thank you, Operator, and thank you for joining us today. Before we proceed with the call, I would like to remind everyone that certain statements being made during this call are forward-looking statements under the U.S. federal securities laws, including statements regarding our financial outlook and long-term target. These forward-looking statements are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports file with the SEC. The forward-looking statements made during this call speak only as of the date hereof, and the company undertakes no obligation to update or revise these forward-looking statements. We will refer to certain non-GAAP financial measures on this call, including adjusted operating expense, adjusted EBITDA, adjusted EBITDA per member per month, medical margin, medical margin per member per month, medical margin per member per month for persistent lives, and cash use. These non-GAAP financial measures are in addition to and not a substitute or superior to the measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures. For example, other companies may calculate similarly titled non-GAAP financial measures differently. Please refer to the appendix of our earnings release for reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. Information presented on this call is contained in the press release that we issued today and in our SEC filings, which may be accessed from the investor's page of the P3 Health Partners website. I will now turn the call over to Dr. Abdu, CEO and co-founder of P3 Health.

Thank you, Ryan. Good afternoon and welcome, everyone, to our first quarter 2024 earnings conference call. I am joined today by Eric, Amir, Bill, and Atul. We would like to begin by providing an update on the tremendous progress made in the first quarter. We just reported a strong Q1, which exceeded our internal expectation on the top line, but fell short on our adjusted EBITDA target. Overall, we are quite pleased with the start of the year, and therefore, we're reaffirming our previous full year guidance of positive 20 to positive 40 million of adjusted EBITDA for the year. Starting with the top line, our revenue for the first quarter of 2024 grew approximately 29% year over year, supported by a strong pipeline. As we previously indicated, our per member per month funding was up approximately 8% year over year, despite the headwinds of substantial membership growth, along with the V28 and 24 changes and the benchmark reduction. Our Medicare lives have grown to approximately 126,800 lives, or 23% growth year over year. which already exceeds the low end of our guidance range for the full year. This includes approximately 11,000 ACO REACH lives, up from 7,400 at the end of last year. As we said before, our percentage of persistent lives is a key driver of our pathway to profitability in 2024. I'm pleased to report on the success of our member renewal in the new year, Approximately 90% are now persistent, as defined by lives from December 2023 that remained with us in January 2024, up from 86% last year. To date, we have launched in six new counties, adding 8,000 to 10,000 new lives with an existing payer partner, expanding our total number of counties served to 27,000. Operating expenses improved to $26.2 million versus $35.6 million during the first quarter of 2023, representing a 26% year-over-year decrease in robust operational efficiencies. Our medical expense in the quarter were approximately 12% lower sequentially, which reflects our view of a normalizing utilization trend. consistent with the commentary we made on our last quarter call. While we agree with the principle of conservatism in the current environment, we also believe that we are over-conservative to the tune between $20 to $30 PMPM based on the actual claims run out we've experienced year-to-date for 2023 date of service. Atul will go into much more detail but we will continue to work with our actuary and auditor to align our reserve with actual paid claims. With that as a context, our adjusted EBITDA was a loss of $19.8 million, roughly flat to the first quarter of 2023. On a PM-PM basis, we were approximately $86 better than Q4 of last year, and approximately $11 better than the first quarter of 2023. Lastly, we are thrilled to announce our strategic partnership with Innovasor to leverage their advanced AI platform. Through this partnership, we will advance P3 in the areas of predictive modeling, accelerate quality gap closure, and provide our clinicians with actionable data at the point of care. With that, I'd like to turn it over to our CFO, Atul Kaviskar. Atul Kaviskar Thanks, Sharif.