P3 Health Posts Third Straight Positive EBITDA Quarter, Lifts 2026 Floor

P3 Health Partners (NASDAQ:PIII) swung to third-quarter adjusted EBITDA of $21 million (a profitability measure excluding interest, taxes, depreciation and one-offs), from a loss of roughly $46 million a year earlier — its third consecutive quarter of positive adjusted earnings. The healthcare company also raised the low end of its 2026 guidance, even as medical costs crept up and at-risk membership kept shrinking.

Revenue climbed 15% to approximately $396 million from $345 million year over year. But a chunk of the quarter's earnings wasn't from operations. Chief Financial Officer Leif Pedersen said two items carried meaningful weight: about $7 million in favorable medical margin from a 2025 Centers for Medicare & Medicaid Services accountable care organization reconciliation (a settlement truing up prior-year performance), and roughly $5 million in noncash income from a liability release tied to an ACO joint venture.

Strip out those and other prior-period items, and underlying third-quarter adjusted EBITDA was about $10 million, Pedersen said. The takeaway: the reported number flatters, but the core business still made money.

How did the first nine months shape up?

Reported adjusted EBITDA for the first nine months of 2026 reached $101 million, against a loss of approximately $85 million in the same period of 2025. On an underlying basis, after exclusions, the figure was roughly $29 million.

Medical claims expense came in near $322 million for the quarter. Normalized Medicare Advantage Part A and B medical expense for the nine months ran about 0.7% below the full-year 2025 level — yet costs rose in the third quarter versus the first half of 2026. In short: the cost trend bent the wrong way late in the year.

What drove the cost increase?

Chief Medical Officer Amir Bacchus said outpatient and professional services were the primary drivers, with cardiovascular procedures the largest contributor within outpatient care. Inpatient costs tracked in line with expectations.

Geography mattered too. Bacchus said some costs appeared to rise more in Nevada than in other markets, particularly outpatient utilization and professional services, and the company is examining those trends.

Management's toolkit includes:

• Utilization management and care management;
• Payment integrity;
• Medical economics analysis;
• A high-utilizer model flagging members with repeated hospital, emergency and observation visits so clinicians and care managers can intervene earlier.

Third-quarter medical margin was approximately $44 million, or $140 per member per month. The medical loss ratio (the share of premium revenue spent on care) ran about 90.6% after adjustment for favorable prior-period items. Thin is the operative word.

What changed in guidance?

P3 raised the low end of full-year adjusted EBITDA guidance to $90 million from $80 million, keeping the high end at $110 million. That lifts the midpoint to $100 million from $95 million.

Pedersen said the outlook includes favorable prior-period items recognized during the year and incorporates the higher medical cost run rate from the third quarter. It also assumes continued execution on clinical, utilization management, payment integrity and cost initiatives. In plain terms: they raised the floor anyway, betting on their own cost programs.

What happened to membership?

At-risk membership ended the quarter at roughly 105,000, down from about 116,000 a year earlier. Pedersen attributed the decline primarily to decisions in 2025 and early 2026 to exit or reduce exposure to arrangements that didn't meet the company's economic thresholds. Deliberate shrinkage, in other words.

Capitated revenue per at-risk member (fixed per-member payments) rose approximately 18% year over year, reflecting rate progression, improved payer economics and maturing burden-of-illness documentation performance, Pedersen said. P3 also managed about 28,000 lives under management-services arrangements, bringing total lives under management to approximately 133,000.

Adjusted operating expense was roughly $35 million, up from about $32 million in the prior quarter, reflecting investment in data and clinical capabilities and Nebraska infrastructure. The company ended the quarter with approximately $44 million in cash and cash equivalents.

Where's the growth?

Chief Executive Officer Aric Coffman said P3 is pursuing growth in existing markets and new geographies, beginning with delegated operations for health-plan partners before expanding services and potentially moving to full-risk arrangements. Nebraska, where the company launched in May, is the template: utilization management, payment integrity, coding and quality programs are in place, along with clinical programs including Senior Wellness Centers.

Coffman said P3 has identified more than $200 million in potential value creation across clinical execution, payer economics and operating efficiency within its existing membership base. Pedersen cautioned that realization would occur over multiple years and depend on execution, with clinical initiatives representing the largest portion of the opportunity.

Coffman said P3 expects to give more detail on timing and earnings contribution early in 2027, with better visibility into next year's membership after the current open enrollment period. A raised floor, a smaller book and a $200 million promise — 2027 will show whether the math holds.