Good day and welcome to the P3 Health Partners second quarter 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchtone phone. And to withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Mr. William Hoover of Investor Relations. 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 Law, including statements regarding our financial outlook and long-term targets. These forward-looking statements are only predictions and are based largely on our certain 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 risk and uncertainty 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 a periodic report filed with the SEC. The forward-looking statements made during this call speak only as the date and hereof and the company undertakes no obligation to update or revise these forward-looking statements. We will refer to these certain non-GAAP financial measures on this call, including adjusted operating expense, adjusted EBITDA, adjusted EBITDA per member per month, normalized adjusted EBITDA, 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 direct comparable GAAP measures. Information presented on this call is contained in the press release that we issued today in our SEC filings, which may be accessed from the investor page of the P3 Health Partners website. I will now turn the call over to Eric Kaufman, CEO of P3 Health Partners.

Good afternoon, and thank you for joining us today to discuss our second quarter results. Q2 represents a continuation of the positive momentum we have built over the last two years and reflects sustained execution against the plan we shared with you at the outset of my tenure. None of this happens without the work of our teams across the country. Their focus, discipline, and their day-to-day execution are what converts strategy into results, and I want to thank them for their dedication they bring to serving our patients, our providers, and pair of partners. We delivered $54 million of adjusted EBITDA in the second quarter, bringing our first-half total adjusted EBITDA to $80 million, building on the trajectory we established in Q1. Given the strong performance and our confidence in the underlying business, we are raising our full-year 2026 outlook. It has been just over two years since I began leading P3, and the results this quarter reflect how much the structural and operational changes we have made across our contracts, our markets, and our operating model continue to compound. We remain focused on medical cost improvement, quality and burden of illness performance, disciplined growth, and continued operational improvements through people, process, and technology. There are three things to highlight about P3 performance through the first half of 2026. First is operational execution. As we have discussed previously, our operating model is centered around medical cost management, quality execution, provider engagement, and coding accuracy. Across the organization, we are expanding our point-of-care tools ahead of schedule, now reaching greater than 65,000 lives across our portfolio, allowing more accurate burden of illness capture and quality gap closures. These AI-enhanced tools reduce the administrative burden for the clinicians as we are meeting our provider partners where they are to drive adoption and daily practice. Our quality performance is tracking ahead of our internal glide path towards four stars on HEDIS and medication adherence measures. Our impact across utilization management and payment integrity are tracking at or above plan, and we will be expanding these programs as part of our contractual reset with payers. Our clinical and care management programs continue to expand with a focus on high-risk, rising-risk patients, and transitions of care. The impact from our operating model can be seen in our Q2 MA medical expense trend and quality trajectory. The medical cost trend across our MA population for the first half of 2026 was 1.8% lower than full year 2025, which LATE will cover in more detail. This is a significant and sustained differentiator in the sector when compared to peers running 5% to 7% year-over-year. Quality remains one of the most important levers in Medicare Advantage, both for the patients we serve and for the strength of our payer relationships. Strong quality performance is not only linked with better patient outcomes. It directly supports better economic terms and deeper alignment with our payer partners, and is an area where P3 continues to differentiate. Quality is tracking well through the first half of the year, where we are ahead of GLI-PAD to get to four-star on HEDIS and medication adherence measures. We have also improved our process around alternative submissions, driving three times the total submissions at this point compared to the prior year, with total members impacted by quality submissions up close to 20% from Q1. This progress reflects the scale and effectiveness of our improved processes. Second is our payer partnerships and our contract structure design work we began 18 months ago. We focused on redesigning and enhancing our risk profile, funding, and cost accountability with our key payer partners, including enhanced funding mechanisms, revising risk-sharing arrangements, delegation expansion, and improving alignment around medical cost accountability. As you look at the composition of this quarter's results, a portion of our Q2 performance reflects one-time non-recurring items across multiple payer contracts. These settlements are more than a financial event. They reflect the trust our pair partners continue to place in P3 and our shared commitment to taking care of our patients and provider partners. Third is growth. Our engagement in Nebraska that we shared with you earlier this year continues to progress positively. We are executing on our expected trajectory and look forward to sharing more as it matures. We favor a deliberate glide path on geographic expansion, understand the population, build the clinical and operational infrastructure, and validate performance before taking on full risk. This sequencing reduces downside exposure and positions us to enter full risk in a disciplined way. In addition, with our existing partners, we continue to explore growth opportunities in both current and new geographies. Overall, our second quarter was strong, and it reflects the compounding benefit of the work we have done over the past two years. We have two quarters remaining in 2026, and our attention remains on sustaining that execution. These results reinforce our confidence that the business has moved into a phase of durable, more predictable earnings, and that trajectory is what gives us the confidence to raise our outlook for the year. The core economic levers that drive the business, our contract structure, our operating model, and our clinical execution are increasingly within our control. Our work is never finished, but the framework for 2026 is solid, and we remain focused on executing with the same discipline that got us here. Our success is predicated on the engagement of our clinician partners. I'm proud of the work we have established with the P3 Restore program to impact clinician engagement, improve practice sustainability, and bring solutions to help them succeed. To speak more about that and to discuss our clinical performance, I'll turn the call over to Amir.

Thank you, Eric. I want to spend a few minutes on the clinical work driving the financial results we are delivering. The medical expense trend performance we are seeing this quarter is not accidental. It reflects deliberate clinical programs, expanding point-of-care technology, and discipline utilization management and payment integrity execution, all built around the care-enabled model. I will walk through where that work is showing up most clearly this quarter. Our point-of-care technology appointment is ahead of plan, tracking to roughly 110% of our original year-end goal. Where the tool is in use, the results are clear. Providers are addressing nearly 90% of care gaps at the point-of-care, with capture rates running several points ahead of our broader enterprise average. Today, the tool is open in roughly half of eligible visits, and we are closing that gap through the in-office training embedded directly into provider offices rather than relying on remote onboarding. Our provider network and clinical team saw 87% of our patients through the second quarter, two points ahead of our internal glide path, including 99.5% of our highest risk members enterprise-wide, well ahead of the 90% glide path for that population. Seeing members regularly is foundational to how we care for our population. Our care management team and senior wellness centers play a key role in that effort, extending access and creating additional touch points with our highest risk patients beyond the traditional practice setting, helping us reach and see more of our population. Together, this engagement allows us to connect patients to the right clinical programs, monitor chronic conditions proactively, and intervene earlier when care is needed. It is a key driver of both quality outcomes and the overall health of our patients. Our utilization management program is built around a simple principle. Patients should receive care in the right setting, delivered by the right level of provider, at the right time. We have expanded our review of prepaid hospital billing to confirm medical record support to level of care submitted, and broadened our review of appropriate site of care, helping direct patients to home health support rather than a skilled nursing facility when that is the better clinical fit. That work has driven a 17% year-to-date redirect rate from skilled nursing to home, reflecting our commitment to caring for patients in the setting that is best for their recovery and well-being while remaining responsible stewards of the health care resources we are entrusted with. We also continue to invest in our provider community through P3 Restore. our clinician coaching program. In the first half of the year, we expanded the program across four markets, and clinicians completing the program report meaningful improvement across measures like stress management, leadership confidence, and practice satisfaction. This work supports the stability and engagement of the provider network our model depends on. In this quarter, we expanded the offering further to include asynchronous education and CME credit, making it easier for more of our provider community to participate. In total, this work reflects a clinical foundation that is increasingly built for scale, from how we engage patients and support providers to how we manage utilization and ensure payment accuracy. It is the operating discipline that underpins the financial results you're about to hear. With that, I'll turn the call over to Leif to walk you through our financials.

Thank you, Amir, and good afternoon. Q2 was another strong quarter. We delivered $54 million of adjusted EBITDA, including approximately $9 million of underlying adjusted EBITDA, excluding favorable contractual settlements and prior year development. Importantly, the underlying business is profitable and improved quarter over quarter. The settlements recognized in the quarter reflect the constructive resolution of legacy contractual matters and strong alignment with several of our payer partners. More broadly, our results demonstrate the cumulative impact of the foundational changes we have made across the business, including improved payer economics, better medical expense performance, and disciplined clinical and operational execution. This afternoon, I will cover three areas. First, our financial performance for the quarter, including an update on our medical cost trend. Second, our capital position and liquidity. And third, our revised outlook for the remainder of 2026. Starting with membership, total at-risk membership at the end of Q2 was approximately $105,000, compared to $116,000 in Q2 2025. Consistent with what we have shared previously, the year-over-year decline reflects the deliberate portfolio actions we took throughout 2025, including the exit of arrangements that did not meet our economic thresholds. The membership base we are operating from today is more concentrated in relationships where our model performs best. In addition to our at-risk membership, we manage approximately 28,000 lives through management services arrangements, bringing total lives under management to approximately 133,000. We began reporting this metric in Q1 because it provides a more complete view of the scale of the P3 platform and reflects our ability to support payer and provider partners across different levels of risk and service. Moving to revenue, Q2 revenue was $386 million, compared to $356 million in the same period of 2025. Despite a lower membership base, per-member funding for our at-risk population improved approximately 15% year-over-year, reflecting continual success in rate progression, contractual restructuring, and further maturation of our burden of illness documentation across our network. Medical claims expense for the quarter was $269 million. The results include approximately $45 million of favorable payer settlements and prior year development. Year-to-date, our MA medical cost trend is 1.8% below full year 2025 baseline, when fully excluding the favorable payer settlements and adjusting for prior year development. Medical margin for the quarter was $98 million, or $311 PMPM. Medical loss ratio for the quarter was 85.6% when adjusted for the favorable payer settlements and prior development noted above. These results reflect the improved payer economics, clinical execution, and enhanced payment integrity workflows, along with the utilization management progress previously described. Adjusted operating expense for the quarter was $32 million, consistent with cost structure we have established over the prior 18 months. That total includes continued investment in professional fees supporting improved coding and documentation, as well as infrastructure costs associated with standing up our Nebraska market. We continue to direct investment towards frontline capabilities that drive medical costs and quality performance while remaining diligent about cost discipline across the rest of the year. Adjusted EBITDA for Q2 was $54 million compared to a loss of $17 million in the same period of 2025. Of that result, approximately $45 million reflects the favorable, fair settlements and prior developments noted previously. Excluding those items, underlying Q2 adjusted EBITDA was approximately $9 million, reflecting the core operating performance of the business. These Q2 results bring us to adjusted EBITDA of $80 million for the first half of 2026, compared to a loss of $39 million in the first half of 2025. Of the $62 million in favorable payer settlements and prior development recognized across the first half, $17 million was recognized in Q1 and $45 million in Q2. Excluding those items, underlying first half adjusted EBITDA was approximately $18 million. For us, this is an important milestone. It shows the improvement in our economics is not solely dependent on contractual settlements or prior period development. The core business itself is now generating positive adjusted EBITDA. On the balance sheet, we ended the quarter with $21 million in cash and equivalents. Consistent with the liquidity fragment we have communicated, we continue to manage capital with discipline while maintaining focus on operational execution and financial stability. Now moving to our updated 2026 outlook. We are raising our full-year 2026 adjusted EBITDA outlook to a range of $80 million to $110 million, with a midpoint of $95 million. The revision reflects the favorable contractual settlements and prior developments recognized in the first half, as well as continued improvement in our expectations for the remainder of the year. We are also tightening the range as we gain further visibility into the back half. Our confidence is rooted in the improved economics now flowing through our results and the operating discipline we have established across the business. We remain mindful of the typical seasonal build and medical expense trend in the second half of the year, And we are actively managing that dynamic through the same care management, utilization management, and payment integrity programs that we're describing. With that, I'll turn it back to Eric for closing comments.

Thanks, Lace. Before we open the line for questions, I want to leave you with three takeaways from the quarter. First, the structural work we set out to do two years ago is now fully embedded in how we run the business. Contract restructuring, network concentration, and operational redesign continue to translate directly into our economics, and we are seeing that discipline compound quarter after quarter. There is more work ahead of us in the back half of the year, and it remains a top priority. Second, our clinical model, utilization management, and payment integrity processes continue to set us apart. From the growth in our patient scene to our quality performance to the continued scaling of our point-of-care technology, we continue to drive down total cost of care and improve outcomes. These efforts are reflected in our MA medical cost trend this year, running nearly 2% below our 2025 baseline. We expect that gap to remain a meaningful point of differentiation as the year progresses. Third, we head into the back half of the year in a stronger position than where we started it. We are raising our full-year outlook to $80 million to $110 million, and our fundamentals continue to mature. Our results are becoming more predictable. We are proud of the progress this business has made, and we remain focused on executing with the same discipline that got us here. With that, operator, please open the line for questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And our first question for today will come from Brian Langston with TD Cowan. Please go ahead.

Thanks. Good afternoon. On the payer settlement, can you walk us through specifically what that is related to? Is that impacting both revenue and expense? And are you able to explicitly size the settlement in the quarter?

Hey, Ryan. It's Leif. Appreciate the question. I think the easiest way to kind of walk through that is just, I'll just reiterate what that bridge first and foremost. And so Q2 adjusted EBITDA was $54.4 million, less $45 million of favorable prior period development and payer settlements. And just to let you know, Ryan, specifically, the payer settlement amount was $41 million. And that did not affect revenue. That only affected medical claims expense.

Got it. Okay. That's helpful. And then maybe anything, I'm sorry if I missed it. Maybe anything on just sort of seasonality of earnings, you know, medical margin, EBITDA through the back half of this year?

Yeah. So as you think about where we're at year to date, we were at $80 million for the six months ended June 30th for a reported EBITDA number. Underlying that is $18 million of embedded EBITDA and $62 million of prior period settlements that came from Q1 and Q2. The midpoint for guidance in the back half is $95 million. So if you just took where we're at today and you assume that we would get to a midpoint from an underlying EBITDA perspective, that would be about $15 million of additional EBITDA in the back half of the year. That takes into consideration both what we expect there to be some normal traditional industry pressure from the backside of the year in medical expense from utilization, but that is being offset by in-year programatics that are going to drive and offset some of that cost. And just, you know, I'm going to take it a step further for you, Ryan, as well. Just as we think about it, Eric spoke to this in his opening comments, is we are seeing a 1.8 percent reduction in MedEx trend when you look at full year 2025 and you compare that to the six months ended 630 and we are down 1.8%, and that's attributable to a number of things that include the programmatics that we have in place. Also is contributing to that decrease in some of the network curation and specific actions that we took with our membership population exiting 2025, and then there were some other factors as it relates to benefit plan reductions or benefit reductions within our payer partner plans that they offered in 2026.

Okay, got it. Just one last one for me, and then I'll hop back in the queue. I guess any insight into how your plans price benefits for 2027, and then just maybe more specifically, you know, some of the plans have talked about further market exits or further plan exits next year. Any thoughts on if those exits will actually impact your current membership? Thanks.

Yeah, thanks for that. This is Eric. So I think there's some of it's a little bit early to know. You know, we're still in August and some of those factors will get played out as we get more insight into what the benefit design actually looks like. We've seen some of the same notifications on county exits. We don't expect that to have a major impact on our membership overall in terms of the exits from counties. And then in terms of the benefit design, we'll have a much cleaner picture when we get to next earnings call after Q3.

Got it. Thank you. You're welcome.

The next question will come from Benjamin Hainer with Lake Street Capital Markets. Please go ahead.

Good afternoon, gentlemen. but thanks for taking the questions. First off, for you, Leif, if I can kind of summarize what you said, it sounds like the core EBITDA that you've generated in the first half of the year is effectively, if you do the same in the back half of the year, that's what gets you to the kind of the midpoint of the guidance range. Am I hearing you right there?

I think you're directionally correct in that analysis, Ben. I do think that we have factored in some back half pressure that goes into that, as well as risk rating other opportunities inside the second half of the year.

Got it. And then on the Nebraska trajectory, it sounds like that's going well. Can you maybe remind us, you know, how that tracks, what happens in 2027 before you move to at risk in 2028, I believe?

Yeah, thanks for the question. This is Eric. So we will remain in a relationship in 2027 where we are performing services on behalf of our partner in Nebraska. We'll continue to build out and scale the programatics that we put in place there, and we don't move into the full risk arrangement until 2028.

Okay, got it. And then, you know, it sounds like the point-of-care tools have seen, you know, quite the adoption thus far. You know, half of office visits, that's pretty impressive. Where do you think you can get, and is there any kind of additional feedback that you've gotten that you can share on those tools and that program?

Well, we continue to roll out the program, and we get more interest from our providers all the time. You know, really, as we started the program, because, again, as a novel program that we started really a year or so ago, getting the interest as the providers start to talk more about it and understand what it is to actually make the workflow more easy is the key, right? So as we work through our Tier 1 providers and then now looking and expanding into our Tier 2 providers and then talking about the value that it brings to improve their workflow, That's kind of the magic that allows us to get more traction within the tool and then to drive better performance because not only can we show them gaps in care opportunities, but we can show them a better understanding from a diagnostic standpoint and the clinical diagnoses that they've had for suspect diagnoses as well to improve the care of the patients. because you link those with our other team members, whether it's being our high-risk management that we deal with on some of those populations within those practices, as well as our care and management teams.

And is it through all the Tier 1 providers and just rolling out into Tier 2, or how far along in the process is it?

You know, almost all of our Tier 1s, but at the same time we are expanding into Tier 2s. So the Tier 2s are getting more traction every day. And if you want, we can break down those numbers exactly for you as we go. but there's been a number of really good actions that we've had with FQHCs, et cetera, in how they're looking and how they utilize the information. Got it.

Well, congrats on the progress, gentlemen, and thanks for taking the questions. Thanks, Ben.

This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Please go ahead.

Thanks, everyone, for joining, and that will conclude the call.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.