Executive Summary

Q1 2025 was operationally in line, with total revenue of $373.2M (-4% YoY) and reaffirmed full-year 2025 guidance; the quarter was impacted by a $23M prior-year claims catch-up at one regional payer, obscuring underlying improvement in MLR to ~89% normalized .
Medical margin declined to $17.2M ($49 PMPM) vs $36.6M ($96 PMPM) YoY due to the prior-year adjustment; excluding this, management cited broad breakeven across three of four markets, with the sole underperforming market tied to that payer .
Adjusted EBITDA loss was $22.2M, including a net $9M drag from prior-year claims/retro adjustments; normalized Adj. EBITDA loss would have been ~$13M, concentrated in the single payer book, while ACO REACH contributed +$2M EBITDA .
2025 guidance maintained: revenue $1.35–$1.50B, medical margin $174–$210M, medical margin PMPM $133–$147, Adjusted EBITDA $(35)M to $5M; management reiterated confidence as benefit designs, contract renegotiations (incl. Part D risk reduction), and clinical programs ramp through 2H25 .

What Went Well and What Went Wrong

What Went Well
- “3 of our 4 markets are breakeven or better in Q1,” with operational initiatives tracking ahead of schedule and sequential benefits expected from Q2 onward .
- Normalized MLR improved to ~89% in Q1 vs full-year 2024 normalized 96%, supported by complex care, hospice/palliative, and UM programs; ACO REACH delivered +$2M EBITDA in Q1 .
- PMPM funding increased ~8% to $1,063, reflecting better disease burden capture and contract terms despite V28; payer collaboration and benefit design rationalization are providing tailwinds .
What Went Wrong
- A single payer’s prior-year claims produced a $23M negative impact to medical margin and a net $9M drag to Adj. EBITDA in Q1, masking underlying performance .
- Medical margin fell to $17.2M ($49 PMPM) from $36.6M ($96 PMPM) YoY, and Adjusted EBITDA loss widened YoY to $22.2M, reflecting the out-of-period effects and still-ramping initiatives .
- Liquidity remains a focus: quarter-end cash was ~$40.1M, with reliance on financing inflows earlier in 2025; management cited multiple levers and investor support but cash burn persists .

Financial Results

Headline metrics vs prior periods and estimates

Metric	Q1 2024	Q4 2024	Q1 2025	Q1 2025 vs S&P Consensus
Total Revenue ($M)	$388.5	$370.7	$373.2	$373.2 vs $362.1* (beat by ~$11.1M)
Medical Margin ($M)	$36.6	$7.3	$17.2	N/A
Medical Margin PMPM ($)	$96	$19	$49	N/A
Adjusted EBITDA ($M)	$(19.8)	$(67.6)	$(22.2)	$(22.2) vs $(19.0)*
Diluted EPS ($)	N/A	N/A	$(6.28)	$(6.28) vs $(7.915)* (beat)

Notes:

EPS comparability: Q1 2025 per-share figures reflect retroactive adjustment for the 1-for-50 reverse split effective Apr 11, 2025; earlier quarters’ releases may not be split-adjusted .
Asterisk (*) indicates values retrieved from S&P Global.

KPIs and operating metrics

KPI	Q1 2024	Q1 2025
Average At-Risk Members	N/A	115,900
PMPM Funding ($)	N/A	$1,063
Adjusted Operating Expense ($M)	$26.2	$23.4
Cash & Restricted Cash ($M, end of period)	$32.3	$41.3
Claims Payable ($M, end of period)	$255.1 (Dec 31, 2024)	$268.7 (Mar 31, 2025)
Normalized MLR (%)	96% (FY 2024)	~89% (Q1 2025, normalized)

Guidance Changes

Metric	Period	Previous Guidance (Mar 27, 2025)	Current Guidance (May 15, 2025)	Change
At-Risk Members	FY 2025	109,000–119,000	109,000–119,000	Maintained
Total Revenues ($B)	FY 2025	$1.35–$1.50	$1.35–$1.50	Maintained
Medical Margin ($M)	FY 2025	$174–$210	$174–$210	Maintained
Medical Margin PMPM ($)	FY 2025	$133–$147	$133–$147	Maintained
Adjusted EBITDA ($M)	FY 2025	$(35) to $5	$(35) to $5	Maintained

Management reiterated confidence based on: three of four markets breakeven/better; programmatic initiatives ($130M+) on track; more payment integrity/complex care opportunities; and improving benefit design tailwinds .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Benefit design/macro (MA)	Q3: Elevated costs, risk adjustment pressure . Q4: Improving macro into 2025; benefit rationalization tailwinds ahead .	Seeing benefit design improvements flow through; ~8% PMPM funding lift despite V28; encouraged by 2026 CMS rate notice (~5%) .	Improving
Contracting & Part D exposure	Q3: Identified >$130M opportunities; pressure from Part D . Q4: 25% of payers recontracted for 1/1/25; ~50% Part D risk reduced; more in 2026 .	Ahead on $35M contracting bucket; further opportunities; continued Part D risk reduction work with payers .	Improving
Clinical ops/quality programs	Q3: Launching programs; upcoming improvements . Q4: Care enablement (P3 Restore), UM, hospice/palliative; utilization indicators stabilizing .	Positive utilization trends: ED/1,000 down 21%, SNF admits/1,000 down 22%, LOS down to 14 days; complex care on track for $30M+ savings .	Improving
Technology/AI tools	Q3: Strategic tech partnerships (Innovaccer earlier in 2024) . Q4: Point-of-care tools improving burden capture .	Innovaccer live in NV; full deployment by mid-summer; point-of-care tool adoption rising .	Improving
Market-level performance	Q3: Significant pressure and retro adjustments . Q4: Exit run-rate affected by one-time items; seasonality pattern persists .	3 of 4 markets breakeven/better; one underperforming market tied to a single payer .	Improving but mixed
Regulatory/legal	Q3–Q4: Standard risk discussion; internal control remediation progress .	Reverse split effectuated (EPS comparability); standard risk language; some law firm inquiries (press) .	Neutral

Management Commentary

“Our turnaround plan is ahead of schedule, with three of four markets already achieving breakeven or better in Q1… We remain committed to our long-term strategic vision…” — Aric Coffman, CEO .
“Q1 2025 included a $23M negative impact from prior claims related to a single regional payer… After normalizing, Q1 2025 MLR was ~89% vs full-year normalized 2024 MLR of 96%.” — Leif Pedersen, CFO .
“Our complex care program… is on track to deliver over $30M of savings for 2025… We expect these numbers to begin to show in Q2 and continue through the second half of the year.” — Amir Bacchus, CMO .
“Despite the V28 changes, we’re experiencing an approximately 8% increase in PMPM funding… Looking ahead to 2026, we are encouraged by the approximately 5% increase in the final rate notice from CMS.” — Aric Coffman .

Q&A Highlights

$130M EBITDA plan cadence: About one-fifth of OpEx savings realized in Q1; contracting benefits flow ratably; larger operational execution benefits are back-half weighted .
Single outlier payer: Prior-year 2024 claims, mostly inpatient, flowed late due to payer claims migration issues; not indicative of 2025 run-rate; no payer >~22% of revenue .
Market underperformance: The one underperforming market coincides with that payer; other payers in that market not showing similar trends .
Utilization trends vs MA headlines: Management is not seeing worsening trends; volumes are declining, though per-unit costs remain elevated; ACO REACH shows similar favorable trend .
Payer contracting/Part D: Renegotiations progressing ahead of schedule; reducing supplemental benefit cost exposure and Part D risk; high collaboration with payers .

Estimates Context

Revenue: $373.2M actual vs $362.1M consensus — beat by ~$11.1M*.
EPS: $(6.28) actual vs $(7.915) consensus — beat*.
EBITDA: Adjusted EBITDA $(22.2)M vs EBITDA consensus $(19.0)M; note consensus tracks EBITDA (not Adjusted), so comparability may differ*.
Forward quarters (directional): Street models sequential progress in 2H25 with Q3 and Q4 revenue in the mid-$300Ms, and narrowing losses into Q1 2026*.

Asterisk (*) indicates values retrieved from S&P Global.

Key Takeaways for Investors

Normalized operations are improving: excluding a late prior-year claims catch-up, MLR improved to ~89% with three of four markets at breakeven or better; clinical and UM programs should increasingly flow through starting Q2 .
Guidance intact with multiple tailwinds: benefit design rationalization, contract renegotiations (including Part D risk reduction), and care enablement/complex care programs support the reaffirmed 2025 outlook .
Execution is back-half weighted: expect sequential EBITDA improvement as operational execution levers (hospice/palliative, oncology, MSK subcaps, payment integrity) scale through 2H25 .
Payer risk appears idiosyncratic: the Q1 drag stems from a single payer and prior-year claims; collaboration and contract fixes are in progress for 2025 with further improvements targeted for 2026 .
Liquidity is actively managed: cash of ~$40M at quarter-end; management cites multiple levers and investor support, but continued focus on cash burn and covenants is warranted .
Near-term trading setup: reaffirmed guidance and visible operational catalysts (Q2+ flow-through, ACO profitability, normalized MLR) are potential positive catalysts; headline risk remains around payer-specific developments and unit cost trends .
Medium-term thesis: If P3 sustains PMPM funding uplift, completes Part D derisking, and scales complex care/payment integrity savings, a path to breakeven and positive EBITDA in 2025–2026 looks attainable .

RELEVANT SOURCE EXHIBITS

Q1 2025 press release (financials, guidance): .
Q1 2025 8-K (Item 2.02, exhibits): .
Q1 2025 earnings call (prepared + Q&A): .
Prior quarters for trend: Q4 2024 press release and call ; Q3 2024 press release .

Footnotes:

Earnings per share comparability: Q1 2025 EPS reflects a 1-for-50 reverse split retroactively; earlier quarters’ reported EPS may not be split-adjusted .
Asterisked estimate values are from S&P Global consensus. Values retrieved from S&P Global.

P3 Health Partners Inc. (PIII)·Q1 2025 Earnings Summary