Good day, and welcome to the P3 Health Partners Second Quarter 2025 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Ryan Halsted. 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 to the P3 Health Partners website. I will now turn the call over to Aric Coffman, 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, and 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 loss this quarter, a significant portion was tied to a single payer in 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 improved to $22 million for the first half of 2025. However, given the impact of prior period headwinds and the performance of noncore assets, we are 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 are 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 3x 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% completed. These improvements include enhanced funding, mitigation of Part D 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 million 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% 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% 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% 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.

Thanks, Aric. I'll start by providing context for our second quarter financial results before turning to our outlook and liquidity position. Let me begin by taking a step back. We are encouraged by the performance of our core business this quarter. We did face some unfavorable prior period headwinds. The results underscore a meaningful improvement in our underlying business fundamentals. These results serve as proof points that the work we've done over the past several quarters is beginning to show up in our financial performance. As I walk through our Q2 performance, I want to emphasize three key points. First, our core business is continuing to perform positively. We continue to believe in the strength of our model and the significant growth opportunity it supports. Second, 2025 is a transitional year, an inflection point where we are shifting from a structural reset towards real momentum. The turnaround is progressing. Though some progress has amassed by prior period dynamics, we are seeing signs of stabilization and importantly, traction in the foundation for future margin recovery. Finally, while near-term headwinds persist, our focus remains firmly on the long-term outlook. We are confident that ongoing efforts in medical cost management, market execution and complete and accurate burden of illness documentation will drive meaningful margin recovery in 2026 and beyond. Turning to Q2 results. Membership for Q2 totaled 115,000 members, down 9% year-over-year. This decline is primarily the result of our intentional rationalization of payer and provider partnerships as we focus on relationships that align more closely with our long-term strategy. Capitated revenue for Q2 was $352 million, with total revenue of $356 million, down 6% year-over-year driven by the decline in membership. Excluding prior period adjustments, per member funding increased by 10% compared to the normalized full year 2024 PMPM. This improvement reflects greater accuracy in burden of illness documentation and impact of stronger terms resulting from our targeted payer contracting efforts. Q2 medical margin, excluding prior period adjustments, was $39 million or $114 PMPM. Of note, operationally, Q2 included significant improvements to our hospice and palliative care program, resulting in approximately a $10 million reduction in medical expenses, which we expect to continue in the second half of the year. Operating expense was down $3 million compared to Q2 of the prior year, a 13% improvement. Our total workforce is down 25% since January 2024, reflecting a strategic reduction in staffing across noncore functions. At the same time, we've reinvested in key areas such as field operations, provider support, utilization management and quality functions that are critical to driving clinical performance and long-term sustainability. Importantly, these changes have resulted in an overall reduction in our operating expense while enhancing our ability to deliver on core clinical and operational priorities. Adjusted EBITDA for the quarter was a loss of $17 million or $50 PMPM. When you adjust for prior year items, Q2 adjusted EBITDA improved to a loss of $8 million or $25 PMPM. We're confident that the prior year headwinds that impacted the first half of 2025 have been effectively addressed. As we look to the second half of the year, we expect continued execution of the core business improvements already underway, supporting the momentum we've built to date. With that, let me transition to our full year outlook. Given the headwinds carried over from the prior year and the underperformance of a single payer, our performance is currently pacing below our initial guidance range. As a result, we believe it is prudent to revise our expectations. We now anticipate full year 2025 adjusted EBITDA to fall within a range of $39 million to $69 million loss. We believe this revised range appropriately addresses the prior headwinds as well as the underperformance of a single payer. I'd like to reiterate two key points regarding the updated guidance. First, we have addressed the prior headwinds and do not expect any further impact in the second half of the year. Second, our core assets are performing at breakeven or better, and we are actively engaged in mitigating the impact of outlier payer performance. Additionally, as we consider our revised midpoint guidance, it's important to note that it reflects a $113 million EBITDA improvement over 2024, positioning us for sustained momentum and expanded profitability heading into 2026. As Aric outlined above, we have a clear path to an additional $120 million to $170 million of EBITDA improvement in 2026. This comes through top line tailwinds from CMS and payer strategies, margin expansion through operational levers, such as payment integrity, scaling high-impact programs, and cost structure optimization, and finally, contract improvements and disciplined provider network management. Now let me transition and give an update on our liquidity position. From a balance sheet perspective, we ended the quarter with $39 million of liquidity and remain disciplined and manage our cash to support our operational priorities and strategic initiatives.

Thank you, Leif. As Aric and Leif described, there are many key initiatives that are working to improve the overall bottom line of the business, and it starts with the care enablement model. As we stated earlier, this was an investment P3 made in the last quarter of '24 to inject staff members directly into our busiest and most engaged providers to improve performance. That staffing enables our clinicians better access to their sickest, costliest and least engaged patients, leading to an improved understanding of their patient's burden of illness and the ability to use key services P3 provides to drive quality gap closures and avoid unnecessary utilization. Technology solutions we've implemented have greatly helped providers to have the most accurate information when reviewing their patient charts and actively be in the clinician's workflow. Programs such as hospital at home for acute illness, improved chronic care management at home for those unable to be seen by their PCP, improved management of COPD, a 43% increase in enrollments from first half '24 versus first half '25 with easier-to-use medication therapies and palliative and hospice services that have been able to increase our average length of stay in hospice by over 30 days while reducing hospice admissions from our acute hospitals have all helped to drive success. Aric has already mentioned the significant improvement in quality gap closures we've seen by our team. And from a utilization metric perspective, we see the following: admits per 1,000 for emergency department and observations were reduced by greater than 10%, and readmissions were reduced by 9.6%. Admits per 1,000 for the hospital have been reduced 15% from Q1 '24 to Q1 '25. Note, Q2 claims for 2025 are not yet complete. And post-acute admissions per 1,000 remained flat with an average length of stay of 14 for all our delegated lives. Overall, and as mentioned earlier, medical expenses have remained flat despite unit cost increases of 6% to 7%, in line with current industry trends. Further clinical initiatives in oncology show a $10 PMPM reduction in cost enterprise-wide, Q2 '24 versus Q2 '25; ophthalmology shows a $650 PMPM reduction for the same time period due to a capitation contract and strong UM directive on injectable medication. Other specialty capitation contracts are in the works to improve medical spending more as our stronger utilization management services for Part A and Part B costs. In late '25 through '26, we're deploying direct EMR integration across our SNF network to more actively manage average length of stay, launching real-time hospital discharge feeds from more facilities for immediate patient updates, and rolling out AI automation for EV follow-up calls and quality metric alerts to reduce staff documentation time. We're also implementing specialized dementia assessment tools and executing targeted provider training protocols to improve care outcomes for this patient population. Another highlight continues to be our P3 Restore program, which is showing to be both inspirational and transformative for our clinicians, helping to further indoctrinate them into the value that value-based care brings to their lifestyle and incomes while they also help us to communicate value-based care to other providers in the markets we serve. With that, let me turn the call back to Aric.

Thanks, Amir. Before we open up for questions, I want to leave you with three key takeaways that underscore why I'm confident in the opportunity ahead of us. First, while the industry has experienced significant medical cost inflation, we've successfully managed our medical trends to remain essentially flat, demonstrating the effectiveness of our clinical programs and care management initiatives. Second, we're encouraged by the improving macro environment for 2026. Based on payer statements and early indicators, we expect continued rationalization of benefit design, along with the shift away from PPO offerings, which will provide meaningful tailwinds to our business. Third and most importantly, we've identified an additional $120 million to $170 million in total EBITDA opportunities as we look toward 2026. These opportunities include the macro tailwinds I just mentioned, benefit design rationalization and rate improvements as well as company-specific initiatives such as expansion of clinical programs that are already showing impact, further improvements to our cost structure, contractual enhancements we've negotiated for 2026, continued execution on our quality initiatives, and improved burden of illness performance. In short, P3 is well positioned to deliver meaningful value creation, sustained profitability and growth into 2026 and beyond. Now let's open it up for your questions.

The first question comes from Josh Raskin with Nephron Research.

I would like to begin by discussing the previous period. Could you explain the reasons behind the catch-up from last year? What were the specific costs involved? Was it widespread or related to just one particular payer? Additionally, what is the process regarding data exchange with the plans? How can we enhance our capabilities to avoid a recurrence of the catch-up in the future?

Josh, thanks for the question. I'll start with the second part first, and then I'll turn it over to Leif to answer the first part of the question. One of the prior period issues came from one of the plans that we spoke about during last quarter who had made a claims migration in 2024 and had a few hiccups with their claims migration. And so that is now well behind us, and that was the main cause of that one that came in the first quarter. The second one was a little bit unexpected. It was a larger national payer that we got some late data from. All in all, it wasn't a huge amount from them, but again, it was a delay. And so we continually work with them to improve our JOC processes. We've been meeting with them much more regularly to iron out some of the things that might be happening between the teams in terms of data exchange. And so that's been revamped in '25 as well. And I'll turn it over to Leif to answer the financial specifics.

Yes. So just as a reiteration, Josh, as we think about what happened in Q2, just as a reminder, it was a net $9 million of out of period that impacted Q2 unfavorably. And that really relates to three factors: one being an adjustment to our 2024 RAF final receivables in '25 based on what we had in '24. And then we had an adjustment of about an equal amount related to a quality measure we did not meet in one of our plans, and that forced us to reduce our revenue. And then we did have a favorable pickup related to one of our plans for an establishment effectively of payment integrity program.

Okay. And then I guess when you're sort of booking your reserves and figuring out what you may be on the hook for, are you just taking planned data? Or are you actually reviewing your primary care data and extrapolating what the referrals and the prescriptions, and that sort of stuff like, or are you just sort of relying on the plans and hoping that they don't have a migration issue next year or something else?

As it relates to that question specifically, it's the latter of those two things, meaning that we're not just taking planned data, where we had this specific adjustment, it was a relationship where I'd say we had the least amount of visibility and potential for the most variability, but we are going through an exercise where we take not only the claims information that comes to us, whether we pay it or receive it, and then we overlay that with our own information to come up with our best estimate. This correction was related to where we had variability in that estimate at the end of the year. And then moving forward, we've got new processes in place, not only with receiving information from that plan more timely to better inform our process as well as operational improvements we've made both to personnel and process to improve that.

All right. And I'll just ask one more. Just how confident are you that your plan partners have rebid their MA books appropriately for 2026? I heard the commentary around public statements and what they're saying. But do you guys have insight into what their bids look like in your specific markets where you have contracts? And again, what gives you confidence that they've corrected some of this?

Yes. So we'll have the final information publicly when other folks do. We don't have the final bid information yet from the plans. But what we've discussed with the plans was intent and directionally where they're headed with not only the bid themselves in terms of benefit design but also some things structured around how they're rethinking the networks and both of those have a positive impact. And that's part of the reason why, as we sit here today, as you look at the guidance for next year and what the values are, and there's a range on there, part of that is we'll have a tighter range once we get all the benefit design information back from the plans.

The next question comes from Ryan Langston with TD Cowen.

I heard the PYD was around $9 million, but I think the guidance was lowered closer to maybe $40 million at the midpoint. I know you talked about some noncore asset issues as well. I guess, is the delta in the guidance just the PYD plus the noncore asset performance? And can you remind us what those assets actually are?

Yes, absolutely. So the way I would think about guidance revision is I would take from a top-level perspective, I would take our original guidance of minus $15 million as the midpoint. Our original guidance we issued was $5 million to negative $35 million, so the midpoint was negative $15 million. When you add those prior period adjustments that weren't in that original guidance, that's an addition of about $18 million, that gets you the $33 million total. And then you think about the underperformance of our Oregon market. And where we have kind of unexpected to what our plan was, that is an additional $20 million to $30 million ballpark roughly. And then there's some other puts and takes that go into that from a back-end perspective as to opportunities we have to go get and still strive to execute on in the back half of the year as well as some potential unfavorability. Those things all mix into it. That gets you to a net position of about $54 million at the midpoint.

Could you provide the total EBITDA profile for the three markets that are performing well? Additionally, is there a possibility in the future, around 2026 or later, to completely exit from the underperforming market? Would that option be available?

This is Aric, Ryan. So first, we don't give market-by-market EBITDA numbers. It's just not something we've done, and I don't think we're going to start at this juncture. But in terms of how we think about that particular market, what we're willing to do is we need all of our businesses to be profitable. We have worked really hard with that particular partner in that market, and we believe that some structural things with the way that the market was set up from a bid and benefit design perspective, as well as network contracting perspective, and then some of the underlying back-end things with UM as one example, we've really put a lot of time into revamping that with them in partnership. And so we have a lot of confidence in what's going to happen in that market in 2026, and we will take further steps if needed.

Next question comes from David Larsen with BTIG.

In terms of prior period adjustments, I heard, number one, you got a batch of data from a plan? And then also, number two, RAF scores and the number three, quality adjustment. Was that batch of data in 1Q? Or was that in 2Q, please?

Yes, David. The batch of data issue you referenced, that was the 1Q issue.

Okay. And then can you just talk a little bit about the RAF score adjustment? Like I think that would be coding, right, that goes into each member and that sets how much money you're receiving from CMS. Can you maybe just talk a little bit about what drove that adjustment and how that will be sort of addressed going forward? I mean, your 8% year-over-year PMPM growth rate looked good to me. Yes.

This was an isolated incident with one of our payers related to our 2024 RAF accrual. I don't believe that this will be an issue moving forward, considering the internal process improvements we've made from both a team perspective and capability standpoint. The underlying issue that caused that miss has now been resolved. Additionally, a component of that miss is related to a county we will no longer be in starting in 2025, which accounted for a significant portion of the miss.

Okay. And then can you maybe just talk a little bit about the conversations that you're having with the plans? Just broadly speaking, I mean, are they friendly discussions? Or are you like, hey, look, we can't continue to operate at losses in these different markets. We're dropping like certain counties. Just any color on the nature of the discussions. I mean, I know sometimes they can be very contentious and sometimes they're not.

Yes. Thanks so much. This is Aric. And what I'd say is that we've had really close collaboration, and the conversations have been very positive in aggregate. We still have one contract that we're still working through that force of negotiation. I spoke about 75% of them roughly being completed that we needed to get done this year, and we're making progress on that one. I think ultimately, that there's a recognition that in some ways, the sector and how things were structured from a benefit design perspective and everything else has had a negative impact on organizations like ours. There's receptivity that's pretty high on how do we correct those things. And we're doing that in partnership. So there's puts and takes, and there's things between them and us that we have to get right, but we have a high degree of collaboration and partnership here.

Can you include a clause in your contract stating that if we don't receive the data within 180 days, we won't be held responsible? Plans have clauses regarding untimely filing in their agreements. If you submit a claim that gets rejected and then resubmit it after 180 days, they say it's untimely. Do you have similar clauses that specify if we don't receive the data within a certain number of quarters, we won't be responsible for it? Can you include clauses like that?

Yes. Those are all things that we would strive to have in any of our contracts. I can't say that all of our contracts have those particular clauses that exist. But what it takes for us to make it work is we have to have a tight collaboration between the teams. So it doesn't get out to a quarter. It's like what were we supposed to get this week, what didn't come in this week, how do we appropriately escalate and get it fixed. And just one more thing just to add to that, just on the back end of that is the other piece is in the places where we're delegated, we have our data. So different than some of the folks that are out there that have no delegation. We do have some delegation for claims, and we have a larger portion of our population has delegation for UM.

The next question comes from Aaron Wukmir with Lake Street.

Aric, you mentioned renegotiation efforts to reduce the Part D exposure, improved funding, and then also continuing to work with the outlier payer partner. I'm just curious if you could talk to how much of that effort is now complete. And should we sort of expect any additional tangible impact as we transition into the second half of this year? Maybe just some additional commentary there would be helpful.

Sure. Yes. Thanks for the question. So we're about 75% complete in the renegotiation. The changes that we've made in the contracts that we've renegotiated this year will have both 2025 impact as well as impact into 2026 and beyond. We'll continue to see some of those improvements as we move forward. As we talked about in earnings for the one that we just finished negotiating, it's roughly a $5 million number that went into the queue. A portion of that was prior period and a portion of that will continue on into the back half of the year, just as an example. What we've also done in some of these contracts is we're further reducing our risk on our remaining Part D. We really are taking a county-by-county network view on how to create the right network in partnership with our payers so that we both do better.

Got it. Okay. That's helpful. And then maybe if you can talk about some of the nuances within the range of EBITDA opportunities you see next year. You did mention some of the main buckets of improvements there that you're sort of taking into consideration. But maybe just talk more about the weight of some of those more significant factors? And maybe if you could add any additional color on timing for those improvements next year? Would these be more back-half weighted? Or how do you sort of think about that opportunity?

Yes. I'll go ahead and start, and then Leif and Amir can fill in anything that I leave out here. But just in the broad buckets, I think about we have a base rate change. And when we think about the base rate change, there is going to be some variation depending on which country you're in to exactly how much you're going to get. We count against that regular medical cost inflation when we think about that 5%. So it has a little bit of a reduction. And then the other one that's coupled with that is continued work on documentation with burden of illness. Those are the two big buckets, and that's about 40% of what we think between those – that range. On benefit design and additional changes within the structure of the contracts, that's another 10% or so of the opportunity. And because we don't have the full benefit design numbers yet back from the plan in terms of their bids and what got approved and everything else, that leaves a little bit of a range in there as well. From an operational standpoint, for the things that we're going to be doing on Med-X and some of the components around our specialty networks, that we're using to help us drive results. That's about 30% of the overall bucket. Finally, on the contractual pieces, that's the remaining 20%, and that includes not only contracts with the payers but also some with our providers, including our specialty networks. And that's kind of how it breaks out. I don't know, Leif or Amir, if you have anything else you want to add.

I would like to emphasize two points. First, these figures represent our opportunity set for 2026. We will go through our budgeting and forecasting process for that year to further refine these estimates, which may adjust slightly up or down. We wanted to ensure you understand the value set and opportunities we see ahead. This aligns with the two-year turnaround cycle we discussed, moving from a $167 million EBITDA loss in 2024 to a loss in the mid-$50 million range in 2025, and then achieving positive EBITDA in 2026. I'm trying to provide context and share some tangible data that shapes our vision and roadmap to EBITDA profitability.

And then maybe just to add on your portion of the question on timing. Some of those things are locked, like the base rate has already been changed. We know that there's going to be some impact on benefit design. We just don't know exactly the quantification of that and how the membership is going to float out. We obviously don't know what our membership is going to be next year at this point in the year. It's not quite close enough which creates a little bit of why we have the range there. As we measure the operational activities that are happening this year that will impact next year's revenue, we're pretty optimistic by what we're seeing from the results that we have seen so far in the year. We still have to continue to execute across our plan for the rest of the year. And so that's why there's a little bit of potential variability there.

We have a follow-up question. It's from the line of David Larsen with BTIG.

Nice work with the cost controls and reducing SG&A costs. Did I hear correctly that the medical trend was essentially flat, excluding prior period adjustments. Was that correct?

Yes. And just so you know, yes, very clearly is the answer to that question. And just so you know what that comparable basis is. It's a full year 2024 normalized number versus the normalized first half of 2025. That is our base.

Okay. And then normalized is defined as excluding prior period adjustments?

Correct. You got it pushing 2025 prior periods back into 2024 and then making any modifications to '24 that had '23 cost today.

One more quick question. The 8% increase in PMPM revenue looks very promising. Great job on that. I don’t think the conversion rates increased at all. So for next year, could we potentially see additional growth from improved coding? Perhaps the PMPM increase could exceed 9%.

Yes. Good question, David. So part of that component that I was talking through with the burden of illness capture as the 40% of the $120 million to $170 million range on the EBITDA opportunities is a part of it, and it's married with the base rate change in that 40%.

This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.