P3 Health Partners Inc. Common Stock The ThinkEquity Conference

Morning, everyone. Thank you so much for being here. Excited to talk to you about P3 Health Partners, the journey we've been on, and how we see things evolving into the future a little bit. All the standard disclaimers. Give you a second to look at that. Okay. Enough of that one. I'm Aric Coffman. I'm the CEO for P3 Health Partners, and I've been at the business for about two and a half years. When I arrived two and a half years ago, we laid out a plan on how we'd get to where we are today. Happy to show you that journey, what's happened for us as a business. We serve senior patients. We have about 105,000 senior patients that we serve across five states today.

Most of that is Medicare Advantage, but we also have ACO patients and ACO REACH today that will be moving into LEAD next year. About 2,100 physicians are in our network across those five states. This year, we're going to hit between $1.5 billion and $1.6 billion in top line revenue. You'll see in the story how even though our membership we've contracted on purpose, the revenue has gone slightly up from where we were a couple of years ago. This year, we've guided the street to a $95 million midpoint in terms of our adjusted EBITDA number, and we'll talk through the components of that in just a moment as well.

As we think about the core business underneath there, it's better than $30 million positive this year in terms of our EBITDA positivity, and a lot of great work by the teams to bring that to life. You'll see some of the things that we're most excited about and the outcomes that we get with some of our patient populations and how that's making an impact. As it stands today, I think we're one of the few companies that can report a negative medical margin through the front half of the year. We had a negative 1.8% medical trend. You look at peers in the public sector, and you're not going to find anybody below 5%. We know that some of our programmatics are working, and it's a combination of the platforms that we have and how we're working with the clinicians.

We did some work on the balance sheet as well that you'll see in our public documents. Our CFO, Leif Pedersen, who's here with me this morning, did a great job in helping the balance sheet and moving some of that debt over into the equity side of the table so we could stay in compliance with Nasdaq rules. I'm going to talk through the five levers of the business that we use in order to make the results happen. This is the team. I think the important part to understand is that most of this team is new. We kind of started around the same time. I started mid 2024. Leif was my first hire, and we've added some additional people. Dr. Amir Bacchus is one of the co-founders as the Chief Medical Officer. Aside from that, everyone here has been new.

A lot of good experience in value-based care, and I think that's really important as you think about these kinds of businesses. This is the journey we've been on. If you go back to 2023, negative EBITDA got quite a bit worse in 2024. That little dotted line in the middle you see there is when we started, and then we laid out our plan for how we were going to go about fixing the business. 2025, you didn't see a ton of improvement. There were a lot of structural things that were happening underneath there. The putting in a care model, rolling out new technology, refining processes operationally, establishing new relationships, getting new contracts, and redoing the contracts that we had. There was a lot of work to get done, and you can see the fruits of that labor now as we sit in 2026.

Over that period of time, it's better than a quarter billion dollars improvement in our EBITDA profitability. I would just say that the front half of the year, about $18 million of that was in core business, and then the remainder of the $80 million that we've reported in the front half of the year was from settlements that we had with payers, where we had deficits and we were able to negotiate those down. That happened across multiple payers. It wasn't just one. What that really speaks to is that the payers want us to be successful. They didn't want to see us not be successful. They know that we're providing value to them, especially around quality, which is getting more and more important for the plans in terms of their revenues.

They're shifting in 2027 for quality, where the metrics that we help the clinicians with actually take on a much higher percentage of the overall star score. It's going from 34% to 48% of the entire star score. The difference between a three and a half star plan and a four star plan is about five points a premium. It's pretty significant across a large population. How do we do it? We get money from the plans to manage the entire budget for that population. That's the premium dollar. There are two things that move the premium dollar, how sick the patients are, the burden of illness, or the risk adjustment score, and what your quality scores are. Those are two of the main things that drive the premium number.

When we think about then managing the total cost of care, it's really about identifying the patients that need the most help through a risk stratification model when we put the patients in, so we know who the top 5% are within that top 5%, who's the top 2%, and then we go down from there in terms of our programmatics. Dedicated programs for the sickest patients where we do proactive outreach, and if their primary care clinician can't see them, then we pull them into one of our senior wellness centers in the geographies where we have those. As we move through that, and as long as we have higher premium than we have cost, then there's medical margin.

You can see what's happened to the medical margin over the course of the last three years, going from 57, 25 was down to 17, and so far this year, we're sitting at the midpoint range of guidance at $210 million to $240 million medical margin across the population. The work that Leif Pedersen and team did was really important, regarding changing the balance sheet and moving over about $250 million of debt over into the equity side of the table. We resolved about $100 million total of payer liabilities through that work as well to come off the balance sheet. The way I think about P3, just what is it that we actually do and how does it relate. You have the funding source, the payers, and we serve as a bridge between the payers and the providers.

We help them with the contracts, we help them understand the data that they get, we help train them on the things that they can do to be more successful. We set up incentives with the providers as well. Then if they do really well, they can share in some of the savings whenever we have savings, and it's generated through their work. We also serve as a bridge between the docs and their patients. A lot of the docs don't have the opportunity or time to get out into the world and go see their patients in the home, as an example, or see the patients in the hospital, or have a care management team that can go do that work. So we provide those additional services at no cost to the primary care provider, but just to help them have better outcomes with the patient populations.

The other thing that we do that I think is really important, and not all of our peers do this, are what's called delegated functions. Meaning there are things that the payer does on a typical basis. They pay claims, they have utilization management, they have care management programs, quality, et cetera, payment integrity, those kinds of things. We're delegated for about two-thirds of our population today, just a little bit under. What that allows us to do is have more reps with the clinicians, as well as ensure that we're not paying for things that we shouldn't be paying for. An example would be readmissions into the hospital. There's a lot of times where the payers just pay readmissions, and there are a lot of clinical reasons why those readmissions shouldn't happen. In fact, it's actually a quality measure.

CMS doesn't pay for a lot of these readmissions either, and that doesn't always translate into the Medicare Advantage space. So having programs where you can do it better than the payer brings more margin into the business, and I'll show you how some of those numbers work with one of our new programs that we have. The medical management piece is important. The medical economics function will identify as claims come through, as prior auths come through, what patterns are we seeing in the population, and how do we need to go attack some of those high costs. Sometimes when clinicians are practicing, they don't recognize the cost of some of the things that they do, and if they did, they can make different choices.

Informing them on alternative choices for sites of care, for kinds of medications that they use, for the kinds of people that they want to refer to and what their outcomes are, makes a big difference in the overall outcomes financially, not just for the patient population, but oftentimes for the patient, because sometimes patients have big out-of-pocket costs too. When you can reduce that, you actually get a lot of patient satisfaction from managing that better as well. Then in terms of provider engagement, as we talk about changing care through value-based care and transforming the healthcare system, I'm a huge proponent of the Quadruple Aim, and this is a really important part of this. What that means is lowering the total cost of care, improving quality, improving patient satisfaction, but also improving the provider experience.

Because if you don't have a workforce, it doesn't work. The highest suicide rate of any profession in the U.S. is physicians, and they also have one of the highest burnout rates. When you think about that, the people that are set there to care for us have the highest suicide rate, and in the room, they're not able to empathize with the patient. You don't get very good outcomes with those patients. You don't get a connection. As a result, patients may not take their meds, or they may not go for their follow-up visit, or they may not go see the behavioral health provider.