P3 Health Partners Inc.

Good day and welcome to the P3 Health Partners second quarter 2025 earnings conference call. All participants will be in the 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. You may press star then one on a touchtone phone. 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 Ryan 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 targets. 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 expenses, 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 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 Hoffman, CEO of P3 Health Partners.

Thanks, Ryan, and thank you for joining us today to hear about our progress. I'll begin with a few highlights from the quarter and by emphasizing that we are nearing full execution on the $130 million EBITDA Improvement Plan that we outlined during our previous calls. Our core business is moving in a positive direction. We are well positioned for continued momentum into 2026. Excluding prior period adjustments and the underperformance of a single payer, our Q2 and first half 2025 results are in line with expectations. Three of our four markets are breakeven or better through the first half of the year. We're seeing strong momentum in our operational execution, as evidenced by our medical cost trends. When excluding prior period adjustments, our year-over-year medical cost trend remains materially flat, highlighting effective cost management and operational performance. Year-over-year, funding has improved by 10% across our membership on a normalized per-member basis, reflecting meaningful gains in operational execution, even as we ramp our solutions. Through close collaboration, we successfully renegotiated a contract with a major payer this quarter, an agreement that extends into the second half of the year and into 2026. This positions us on track to achieve approximately $20 million in contractual improvements. We are near finalization of an amendment and extension of our senior debt with a note originally due at the end of September. And we expect to round out the remaining $40 million on the accordion from May of 2025 to ensure a strong cash position. For the quarter, we reported membership in line with expectations at 115,000 members. Our reported adjusted EBITDA for the quarter was a loss of 17 million. However, our normalized operational performance demonstrates the strength of our core business. When we strip away prior period adjustments of $9 million, our underlying business achieved an EBITDA loss of $8 million, which was a $5 million improvement from our normalized Q1 results. Of the 8 million normalized losses quarter, A significant portion was tied to a single payer and a single market. For 2026, we've limited our exposure with this payer to mitigate downside risk. Our year-to-date adjusted EBITDA loss was $39 million. Excluding prior period adjustments, the loss improves to $22 million for the first half of 2025. However, given the impact of prior period headwinds and the performance of non-core assets, we're revising our full-year guidance to a range of $39 million to $69 million of adjusted EBITDA loss. 2025 marks an inflection point as we transition from a period of structural reset to one of real momentum. To frame where we're headed, I want to highlight a few key points that define our path forward. First, our normalized operational performance demonstrates the strength of our core business. The medical cost trends, improved revenue, and impact from our clinical programs is being seen in our results. This is a testament to the launch of the care enablement model late last year and the programs that have been implemented so far, including high and rising risk patients, COPD, oncology, and palliative care, end-of-life care. The performance is outpacing medical cost trends as reported by others in our sector. Our care enablement model is delivering accelerated results in clinical quality metrics with our field-based physician engagement specialists driving almost three times improvement in care gap closures. This acceleration reflects both the expanding deployment of our clinical programs, point-of-care tools, and the engagement of our provider network. We currently have 65% of our membership with Tier 1 providers across our portfolio. Our care teams are actively supporting clinics with patient scheduling, chart prep, data mining, quality, burden of illness workflows, and support of the high-risk and rising-risk membership. Our programmatic impacts have been strong, with meaningful results not only in field operations, but also with our shared services. We have retooled our utilization management, care management, and payer reconciliation teams to ensure we are capturing the opportunities for improving financial performance and appropriate clinical care. The focus on reworking of our contracts is delivering results in line with our expectations. In an effort to address our single underperforming payer partner, we have executed contract improvements that will reduce downside risk in 2026, eliminating $16 million in headwinds. In addition, we executed on contract terms with another payer partner that created $5 million in EBITDA improvements recognized in Q2. In total, we are on track to hit our 2025 goal of at least $20 million in improvements across our remaining priority payer contracts with 75 percent completed. These improvements include enhanced funding, mitigation of Part B risk exposure, and quality performance triggers aligned with our goals. We have spoken previously about smart growth. We continue to find opportunities to expand our business model, and we are doing so with prudence, patience, and thorough underwriting. Our growth pipeline exceeds 35,000 members, and we anticipate closing a strategic joint venture, adding 13,000 to 14,000 fully accretive lives. which are currently performing with an aggregate surplus above 15%. The historical, clinical, and quality outcomes have been outstanding, and we're excited to expand our network with additional primary care clinicians. As you've heard today on the call, our momentum is strong during this transitional year of 2025, positioning us well for a transformative 2026. We anticipate driving additional EBITDA improvements in the range of $120 to $170 million with the majority of the impact occurring in 2026. Let's talk through the components. The significant base rate increase for 2026, coupled with our in-year performance on burden of illness accuracy and quality, comprise roughly 40 percent of the opportunity. In line with what several payers have publicly stated, many are addressing the structural issues that have challenged the markets in recent years. We expect continued market compression of benefit design and the reduction of PPO offerings. This represents roughly 10 percent of the expected improvements. Operationally, we have identified several levers to drive better Med-X performance based on 2025 experience, including our revamped utilization management, payer reconciliation, and our clinical programs, such as COPD and end-of-life care. These levers represent 30 percent of the improvement. Contractually, the improvements we have negotiated will extend into 2026. and we will continue to exercise prudence in managing our provider network, and this represents the remaining 20% of the opportunity. In summary, we are well positioned to achieve significant profitability in 2026 and beyond. With that, I'll turn it over to Leif for the financial details.