P3 Health Partners (NASDAQ:PIII) outlined a sharp expected improvement in profitability for 2026 while detailing steps taken in 2025 to reset contracting economics, tighten operating discipline, and expand its provider alignment model, according to management’s remarks on the company’s fourth-quarter 2025 earnings call.
2026 outlook centers on large EBITDA swing
Chief Executive Officer Aric Coffman said the company is guiding to 2026 Adjusted EBITDA at a midpoint of $10 million, compared with a $161 million Adjusted EBITDA loss in 2025. The company’s 2026 Adjusted EBITDA guidance range is -$20 million to $40 million.
- $125 million (about 75%) from contracting and revenue-related actions
- $35 million (about 20%) from operational execution, including “MedEx initiatives” and network contracting
- $10 million (about 5%) from payer benefit design, collaboration, and membership profile
In the Q&A, CFO Leif said about 75% of the $170 million improvement is “run-rated starting in January,” driven by revenue and contract updates executed in late 2025 that began at the start of 2026, along with a year-over-year benchmark increase from CMS. He characterized the remaining portion as more operationally dependent, including initiatives the company is still executing, plus a smaller element tied to benefit design and membership mix that was still settling following open enrollment.
New partnership adds members under management with a glide path to risk
Management also highlighted a newly announced partnership expanding P3 into a new Medicare Advantage geography. Coffman said the deal adds 29,000 new members under management and represents 25% year-over-year growth, contributing roughly $27 million of revenue in 2026. With the new arrangement, the company expects approximately 140,000 total lives under management in 2026.
Responding to an analyst question, Coffman clarified that the company’s 2026 at-risk membership guidance—107,000 to 117,000 members—is separate from the new 29,000 lives, describing the 112,000 midpoint as “full risk members,” while the new lives are “lives under management.”
Coffman described the arrangement as a “multi-year glide path to risk,” adding that at current membership levels it would equate to more than $300 million in revenue once it moves to full risk. The company emphasized that it expects to take on delegated functions early in the glide path, before assuming full risk, with the intent of reducing volatility and creating a “structured pathway” to long-term risk alignment.
In a later exchange, Coffman said the contract includes a two-year fee-for-service glide path and is set to convert to risk in 2028 on a contractual timeline, with the transition described as converting on “1-1-28.” He added that while the conversion is contractual rather than dependent on specific conversion metrics, the agreement includes performance metrics related to the value created for the client.
Clinical priorities: expanding Tier 1 providers and care management programs
Chief Medical Officer Amir discussed execution of the company’s “Care Enablement Model,” which he said embeds care coordination, utilization management, and quality support within its most engaged provider practices. He said the company continues to increase the share of members attributed to its Tier 1 provider network, which management described as higher-performing practices with stronger documentation accuracy, improved quality performance, and more effective management of chronic and complex patients.
Amir highlighted ongoing clinical programs focused on:
- Post-acute management
- Chronic care management
- Special utilization oversight for high-cost specialty services
He also said P3 expanded its complex care program, which includes dedicated care teams and a 24/7 clinical hotline, with the goal of intervening earlier to prevent avoidable emergency department visits and hospitalizations.
Coffman said the company achieved Four-Star status across 70% of its priority Medicare Advantage plans, which he framed as strengthening the value proposition with payer partners and supporting growth.
2025 financial results: higher PMPM, weaker reported medical margin, lower operating expense
For 2025, the company reported an Adjusted EBITDA loss of $161.3 million. On what it called a normalized basis “aligning results to performance year,” Adjusted EBITDA was -$149.1 million, which management said was a $44 million improvement over 2024.
In the fourth quarter, total revenue was $384.8 million, up from $370.7 million in the prior-year quarter. Capitated revenue per member per month (PMPM) was $1,060 versus $971 in Q4 2024, which the company described as a 9% improvement.
For the full year, revenue was $1.46 billion compared to $1.50 billion in 2024. Full-year capitated revenue PMPM was $1,026, up from $981 in the prior year, which management described as a 5% improvement. Leif attributed the PMPM increase to improved burden-of-illness documentation, strengthened contractual economics, and membership mix.
Medical margin in the fourth quarter was -$28.7 million (or -$83 PMPM), compared with $7.3 million (or $19 PMPM) in the prior-year quarter. For the full year, medical margin was $23.5 million (or $17 PMPM), down from $85.4 million (or $56 PMPM) in 2024. On a normalized basis, full-year medical margin was $52.3 million (or $38 PMPM), compared with $51.4 million (or $34 PMPM) in 2024.
Operating expense for the fourth quarter was $35.1 million compared with $28.7 million in the prior-year period, though management noted Q4 included a $10 million reclassification of network expense to operating expense tied to third-party vendor costs. Full-year operating expense (including the reclassification) was $101.8 million versus $111.8 million in 2024, a $10 million reduction.
Leif said the operating expense decline reflected reductions in duplicate corporate infrastructure, tighter discretionary spending controls, and improved market-level accountability, while the company also reinvested selectively in market operations, provider support, utilization management, and care coordination functions.
Liquidity and contract renegotiations remain key themes
Leif said P3 ended 2025 with $25 million of cash on hand, and management emphasized continued focus on working capital discipline as it executes through what it called a stabilization phase.
On contracting, Coffman said payer partners were receptive to updates, describing changes that included adjustments to premium levels and to charges passed through from payers to P3, particularly where the company was already providing services and sought to avoid duplicative vendor costs. He also noted that improved Stars performance was important to plan revenue and that some contracts included adjustments related to Stars.
Looking to 2026, management said execution timing—particularly around medical cost management initiatives and additional evaluation or renegotiation of underperforming contract arrangements—will influence where results land within the company’s guidance range.
About P3 Health Partners (NASDAQ:PIII)
P3 Health Partners is a healthcare technology and services company that delivers data-driven solutions to support health plans in improving quality measures, risk adjustment accuracy and operational efficiency. The company’s platform integrates advanced analytics, reporting capabilities and workflow automation to help clients optimize performance across value-based care programs and regulatory requirements.
The company’s core offerings include quality measurement and reporting for HEDIS, STAR and other performance frameworks, risk adjustment coding and audit services, and population health analytics.
-american-depositary-shares-logo-1200x675.png){kind=logo}