P3 Health Partners Inc.

Good day and welcome to the P3 Health Partners first quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Brian Halstead. Please go ahead.

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 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 filed 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, and cash flow. These non-GAAP financial measures are in addition to and not a substitute for 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 a 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 investors page of the P3 Health Partners website. I will now turn the call over to Eric Kaufman, CEO of P3 Health Partners.

Thank you, Ryan, and thank you all for joining us today. The quarter was in line with our expectations. I'm going to cover the following topics in my remarks. First, our 2025 guidance. Second, an update on our strategic initiatives that we announced on our Q3 2024 call. And third, a high level view of our quarter. Leif will go into more financial details shortly. First, we are reiterating our guidance for 2025 based on the following facts. Three of our four markets are breakeven or better in Q1, and we expect operating metrics from our most recent initiatives to hit in Q2 and grow sequentially throughout the rest of the year. We have one payer that is an outlier in performance. They have been a collaborative partner helping to contractually resolve the performance issues in 2025 with more improvements ahead in 2026. Given some of the 2025 insurance benefit design changes, We are seeing that start to flow through into better financial performance across our markets. Additionally, we saw increased funding across our markets by 8% on a PMPM basis, indicating more accurate capture of disease burden, even with V28 changes. As we outlined in our prior remarks, we began implementing our programs in the back half of 2024 and are rapidly scaling in 2025, making future performance even brighter. Now on to execution. We are executing our programmatic initiatives ahead of schedule, representing over $130 million of adjusted EBITDA improvements across our three buckets, operating efficiency, contracting, and operational execution. On operating efficiency, we have achieved the goal of a $20 million year-over-year improvement and have identified additional efficiencies that we are executing against in Q2 and throughout the remainder of the year. Operating expenses 1Q25 declined 18% sequentially and 11% year-over-year. This improvement reflects streamlining corporate overhead functions and driving efficiencies in delegated services. At the same time, we've strategically reinvested dollars into our market operating teams to support frontline execution and drive long-term growth. For contracting, we are ahead of schedule on the $35 million in incremental EBITDA improvements and are now working on realizing additional opportunities in our remaining contracts that will impact 2025 and 2026. We have already renegotiated payer contracts to reduce Part D exposure, improve funding, and are continuing to work with our one outlier payer partner on additional opportunities for improvements after addressing some of the issues we saw in 2024 and 2025. In network contracting, we had 20 10s that we disclosed that were on our watch list, and 18 of the 20 have made significant improvements, while two contracts were eliminated based on a comprehensive performance analysis. Demand from payers and primary care providers for strong value-based care partners is high. Growth remains a lever we can control thanks to our consistent track record of achieving utilization rates better than local fee-for-service benchmarks and quality scores nearing or exceeding. On operational execution, the care enablement model is bearing fruit and gaining momentum in reducing medical expense and improving outcomes. The model encompasses enhanced data sharing, improved point-of-care decision-making, and real-time tools supporting more comprehensive evaluations. The highest level of engagement with the deepest deployment of people and tools are what we refer to as Tier 1 providers, and we refer to the percentage based on the number of members in that tier. There has been a steady ramp of converting groups into our Tier 1 category, indicating the highest level of collaboration and engagement. Beginning this year, Oregon lagged the rest of the markets with the percentage of Tier 1 at 20%, And now we are on track to have 60% enrolled by the beginning of Q3. On the medical expense side of the equation, our complex care program, which includes palliative care and hospice care, is on track to deliver over $30 million of savings for 2025 through three primary value creation levers. Increasing clinically appropriate referrals, reducing hospital referring site of care mix, in increasing the 90 to 100 day non-hospital referring site of CareMix. We expect these numbers to begin to show in Q2 and continue through the second half of the year. Next, our quality performance, which is trending positively, saw a nearly 30% improvement in Part C measures when comparing April 2024 to March 2025. Amir will comment further on his section on the impacts across our metrics. For Q1 results, we reported membership and revenue in line with expectation. Total revenue is $373 million, a 4% decrease from the prior year, reflecting our intentional network and payer rationalization. Our Q1 membership decreased by 8% year-over-year, consistent with our prior commentary and guidance range. Our per-member funding increased by 8%. to $1,063 on a PM-PM basis compared to full year 2024, reflecting both improved capture of disease burden and favorable impact of our strategic contract renegotiations. We continue to enhance our ability to more thoroughly and accurately address our members' health conditions, ensuring appropriate care planning and gap closure. In doing so, we are generating more value from our existing membership base even as we've strategically exited certain partnerships and payer plans to optimize our network. I'll add a few comments on ACO REACH as well. Over the past year, our ACO membership has increased by 60% and is now growing profitably. We are confident in our ACO operations contributing $8 million of EBITDA as reflected in our full year guidance. With that, I'll hand it over to Leif to walk through our financial results in more detail.