Q4 2024 P3 Health Partners Inc Earnings Call
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone, and to withdraw your question, please press star, then two.
After todays presentation, there will be an opportunity to ask questions to ask a question. You May Press Star then one on you touched home phone and to withdraw. Your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr. Ryan How's that I've Investor Relations. Please go ahead Sir.
Operator: Please note, this event is being recorded.
Ryan Halsted: I would now like to turn the conference over to Mr. Ryan Halsted of Investor Relations. Please go ahead, sir.
Ryan Halsted: 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 targets. 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.
Ryan How's: 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 that are based largely.
Ryan How's: Lay 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.
Ryan Halsted: Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports file with the SEC.
Ryan How's: 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 <unk>.
Ryan Halsted: forward-looking statements made during this call speak only as of 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 used. 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.
Ryan How's: As of the date hereof, and the company undertakes no obligation to update or revise these forward looking statements.
Ryan How's: We will refer to certain non-GAAP financial measures on this call including adjusted.
Ryan How's: Operating expense adjusted EBITDA adjusted EBITDA per member per month medical margin medical margin per member per month in cash.
These non-GAAP financial measures are in addition to and not a substitute for or superior to the measures of by financial performance prepared in accordance with GAAP.
Ryan How's: There are a number of limitations related to the use of these non-GAAP financial measures.
Ryan Halsted: For example, other companies may calculate similarly titled non gap finance financial measures.
Ryan How's: For example, other companies may calculate similarly, titled non-GAAP financial measures differently.
Ryan Halsted: 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.
Ryan How's: Please refer to the appendix of our earnings release for 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 was issued today and in our SEC filings, which may be accessed from the investors page of the P. Three health partners.
Ryan Halsted: 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 of the P3 Health Prtnrs website.
Aric Coffman: I will now turn the call over to Aric Coffman, CEO of P3 Health Prtnrs. Thank you for joining us today. I'd like to begin with three key headlines. First, we entered this year focused on strengthening our business for near-term profitability. Our programmatic initiatives, which we have previously quantified as representing over $130 million of adjusted EBITDA opportunity, are on schedule. Second, we are reaffirming our 2025 guidance on all metrics except for total members, which we are slightly raising. Third, the macro environment is improving in the Medicare sector following years of pressure due to factors like V28, cost trends, rich benefit designs, and higher quality bonus thresholds.
Ryan How's: Website, I will now turn the call over to Eric Hep C E O P. Three health partners.
Ryan How's: Thank you for joining us today.
Ryan How's: Like to begin with three key headlines first we entered this year focused on strengthening our business for near term profitability, our programmatic initiatives, which we have previously quantified as representing over $130 million of adjusted EBIT opportunity are on schedule.
Ryan How's: Second we are reaffirming our 2025 guidance on all metrics, except for total members, which we are slightly raising.
Ryan How's: Third the macro environment is improving in the Medicare sector. Following years of pressure due to factors like V 28 cost trends rich benefit designs and higher quality bonus thresholds are early indicators for 2025 are showing positive trends and we are seeing flow through on benefit design changes and.
Aric Coffman: Our early indicators for 2025 are showing positive trends, and we are seeing a flow through on benefit design changes and utilization. Further, the improved payer bids and CMS's 2026 advance notice signal a more favorable trajectory for 2026. And as payer benefit design changes are expected to rationalize, they will contribute an estimated $30 to $35 per member per month of incremental medical margin benefit.
Ryan How's: Utilization.
Ryan How's: Further the improved payor bids in Cms's 'twenty 'twenty six advanced notice signal a more favorable trajectory for 2026.
Ryan How's: And as payer benefit design changes are expected to rationalize they will contribute an estimated 30 to $35 per member per month of incremental medical margin benefit.
Aric Coffman: Finally, we have significantly enhanced our senior leadership team with the addition of multiple key new hires with substantial industry experience. Turning now to fourth quarter results, we reported membership growth from 4Q23 to 4Q24 of 13% with revenue growing 7% to $371 million. On an annual basis, we ended 2024 with revenues of $1.5 billion or 18% growth year-over-year. Our fourth quarter medical margin of $7 million decreased year-over-year due to the elevated utilization trends which persisted through the quarter. Adjusted EBITDA for the quarter was a loss of $68 million, which included unfavorable out-of-period true-ups related to a single-payer partner.
Finally, we have significantly enhanced our senior leadership team with the addition of multiple key new hires with substantial industry experience.
Ryan How's: Turning now to fourth quarter results, we reported membership growth from <unk> 23 to <unk>, 24% to 13% with revenue growing 7% to $371 million on an annual basis. We ended 2024 with revenues of $1 5 billion or 18% growth year over year, our fourth quarter.
Ryan How's: Medical margin up $7 million decrease year over year due to the elevated utilization trends, which persisted through the quarter adjusted EBITDA for the quarter was a loss of $68 million, which included unfavorable out of period true ups related to a single payer partner. Excluding these costs adjusted EBITDA results are on track with.
Aric Coffman: Excluding these costs, adjusted EBITDA results are on track with our 2024 jumping-off point. As benefit design changes rationalize over the coming months and years, these network expenses will normalize, serving as a tailwind to adjusted EBITDA.
Ryan How's: 2020 for jumping off point.
Ryan How's: As benefit design changes rationalized over the coming months and years. These network expenses will normalize serving as a tailwind to adjusted EBITDA.
Aric Coffman: Now, moving on to our full year 2025 guidance. We have reaffirmed our 2025 outlook for revenues of $1.35 to $1.5 billion and adjusted EBITDA between negative $35 million and $5 million positive. Our growth strategy moving forward is deliberate, with a focus on growing profitably, and we expect to achieve profitability this year. We are encouraged by the early trends so far in the first few months of the year that gives us further confidence in our targets.
Ryan How's: Now moving on to our full year 2025 guidance we.
Ryan How's: We have reaffirmed our 2025 outlook for revenues of 1.35 to $1 5 billion and adjusted EBITDA between negative $35 million and 5 million positive our growth strategy moving forward is deliberate with a focus on growing profitably and we expect to achieve profitability. This year. We are encouraged by the early <unk>.
So far in the first few months of the year that gives us further confidence in our targets.
Aric Coffman: Leif will walk through the building blocks of our full year 2025 guidance, and Amir will share some initial utilization trends. Building on the programmatic initiative set forth in 2024, we are carrying strong momentum into Q1 of 2025. We remain on track to realize our $130 million plus EBITDA improvement opportunity comprised of $20 million in operational efficiencies, $35 million in contract rationalization, and $75 million in operational execution. Starting off with operational efficiencies, we executed on our objective of reducing operating expenses by $20 million. As we said in the latter half of 2024, we executed on our planned contract rationalization with both provider network and payers to yield $35 million of EBITDA improvement.
Speaker Change: Later, we'll walk through the building blocks of our full year 2025 guidance and a mirror will share some initial utilization trends.
Speaker Change: Building on the programmatic initiatives set forth in 2024, we are carrying strong momentum into <unk>.
Speaker Change: Q1 of 2025.
Speaker Change: We remain on track to realize our $130 million plus EBIT improvement opportunity comprised of $20 million in operational efficiencies $35 million in contract rationalization and $75 million in operational execution.
Speaker Change: Starting off with operational efficiencies, we executed on our objective of reducing operating expenses by $20 million.
Speaker Change: As we said in the latter half of 'twenty 'twenty four we executed on our planned contract rationalization with both provider network and Payors to your $35 million of EBIT improvement. This included the elimination of roughly 60 pins in the provider network in a handful of payer contracts that have already been completed.
Aric Coffman: This included the elimination of roughly 60 TINs in the provider network and a handful of payer contracts that have already been completed. Additionally, we are on track for incremental EBITDA improvements of another $25 to $30 million in our remaining contracts through renegotiation and ongoing network hygiene.
Speaker Change: Additionally, we are on track for incremental EBIT improvements of another $25 million to $30 million and our remaining contracts through renegotiation and ongoing network hygiene.
Aric Coffman: Now I'll pivot to operational execution. Annually evaluating the patients is a cornerstone of high quality and successful medical management. To that end, we are making strong progress on our Burden of Illness Program and are on track in Q1. By engaging our physician network with a combination of new processes and tools, we are assessing our patients more thoroughly and earlier in the year, reflecting their unique disease burden, building care plans, which then allows more time in the year for needed treatment and support, and closure of quality gaps. As an example, P3's medical group and affiliates, where we have deployed new tools with the largest patient population, achieved a 20% year-over-year improvement in assessing burden of illness through improved point-of-care tools and processes.
Speaker Change: Now I'll pivot to operational execution.
Speaker Change: Annually evaluating to patients is a cornerstone of high quality and successful medical management to that end, we are making strong progress on our burden of illness program and are on track in Q1.
Speaker Change: By engaging our physician network with a combination of new processes and tools, we are assessing our patients more thoroughly than earlier in the year, reflecting their unique disease burden building care plans, which then allows more time in the year for needed treatment and support and closure of quality gas.
Speaker Change: As an example, <unk> medical group and affiliates, where we have deployed new tools with the largest patient population.
Speaker Change: <unk>, the 20% year over year improvement in assessing burden of illness through improved point of care tools and processes.
Aric Coffman: In addition, because of these programs, we are also seeing positive trends on our medical expense initiative.
Speaker Change: In addition, because of these programs. We are also seeing positive trends on our medical expense initiatives.
Aric Coffman: We made significant investments in field operations for 2025, and I'm very pleased by the reception to our care enablement model from the providers across our market. Additionally, we've introduced P3 Restore, an innovative program now available in all of our markets. This initiative offers personalized one-on-one sessions with a physician coach aimed at reducing physician burnout, which is a crucial part of our strategy to transform healthcare and improve engagement, yielding better patient outcomes and longer clinician tenure.
Speaker Change: We made significant.
Speaker Change: <unk> investments in field operations for 2025, and I'm very pleased by the reception to our care enablement model from the providers across our markets. Additionally, we've introduced P. Three restore and innovative program now available in all of our markets. This initiative offers personalized one on one sessions.
Speaker Change: With a physician coach aimed at reducing physician burnout, which is a crucial part of our strategy to transform health care and improve engagement, yielding better patient outcomes and longer clinician tenure.
Aric Coffman: Also serving as a testament to the strength of the P3 platform is our ability to attract world-class talent.
Speaker Change: Also serving as a testament to the strength of the P. Three platform is our ability to attract world class talent Shelly.
Aric Coffman: Shelly Martin joins us as Regional Market President. Shelly's track record of building high-performing teams and scaling innovative care models, as demonstrated at OptumCare Utah and Kaiser, will be invaluable as we continue to expand our market presence.
Speaker Change: Shelley Martin joins us as regional market President.
Speaker Change: Shelley track record of building high performing teams and scaling innovative care models as demonstrated at Optum care, Utah, and Kaiser will be invaluable as we continue to expand our market presence.
Aric Coffman: Equally exciting is the appointment of Todd Smith as our new Chief Legal and Compliance Officer. Todd's extensive experience in health care law, regulatory compliance, and risk management at Elevans Health, Bright Health Group, and Optum places him at center stage to guide our legal and compliance strategies. Both Shelly and Todd have proven their ability to navigate the intricacies of value-based and risk-bearing models, which aligns perfectly with P3's mission.
Speaker Change: Equally exciting is the appointment of Todd Smith, as our new Chief legal and compliance officer, Todd has extensive experience in health care law regulatory compliance and risk management at element Health Bright Health group and Optum places him at center stage to guide, our legal and compliance strategies.
Speaker Change: Shelley and Todd have proven their ability to navigate the intricacies of value based and risk bearing models, which aligns perfectly with P. Threes mission with that I'll pass the call to life.
Leif Pedersen: With that, I'll pass the call to Leif. Thanks, Eric. At-risk membership was $123,800, an increase of 14% year-over-year. Top line results in 2024 were strong as the team executed on and delivered revenue of $1.5 billion, representing 18% year-over-year growth. On a PM-PM basis, capitated revenue increased 2.5% year-over-year. When adjusting for the one-time change in accounting for the recognition of revenue associated with our delegated health plans and their final payment. impacting approximately $21 PM PM in 2023. Fourth quarter 2024 revenue was $371 million, a 7% increase over fourth quarter of 2023, or a 16% increase year over year after adjusting for the one time change of accounting in Q4 2023.
Life: Thanks, Eric at risk membership was 123800, an increase of 14% year over year.
Life: Top line results in 2024 were strong as the team executed on and.
Life: <unk> delivered revenue of $1 5 billion, representing 18% year over year growth on a P. M. P. M basis capital revenue increased two 5% year over year when adjusting for the onetime change in the accounting for the recognition of revenue associated with our delegated.
Life: Plans and their final payment.
Life: Impacting approximately $21 P. M P M in 2023.
Life: Fourth quarter 2024 revenue was $371 million, a 7% increase over fourth quarter of 2023, or a 16% increase year over year. After adjusting for the onetime change of accounting in Q4 2023.
Leif Pedersen: On a PM PM basis revenue increased 3% quarter over prior year quarter when adjusted for the change in account. Growth was primarily driven by sustained organic expansion in our established markets and partially tempered by reduced PMPM funding. Full year medical margin of $85.5 million decreased by approximately 37% year over year, or $70 on a p.m. p.m. basis. The full year compression was driven by elevated medical expenses, especially Part D. We reduced our Part D expense in Q4 2024 and have made progress in reducing in half our membership with Part D risk. Our platform support costs as a percentage of operating revenue are 6.1% in 2024, which is down from 7.7% in 2023.
Life: On a P. M P M basis revenue increased 3% quarter over prior year quarter when adjusted for the change in accounting growth was primarily driven by sustained organic expansion in our established markets and partially tempered by reduced P. M. P M funding.
Life: Full year medical margin of $85 5 million decreased by approximately 37% year over year or $70 on a <unk> basis. The full year compression was driven by elevated medical expenses, especially part D expenses, we reduced our part D expense in Q4 2024.
Life: And have made progress in reducing in half our membership with part D risk.
Life: Our platform support costs as a percentage of operating revenue or six 1% in 2024, which is down from seven 7% in 2023.
Leif Pedersen: Adjusted EBITDA loss for the full year was $167.2 million for 2024, compared to a loss of $85.5 million in the prior year. On a per member, per month basis, 2024 adjusted EBITDA loss was $147, a $45 change from the prior year. Adjusted EBITDA loss for the fourth quarter of 2024 was $67.6 million, or approximately $175, PM, PM basis. Our fourth quarter prior period development associated with IB&R were relatively small, reflecting stability in our reserving practices as we are now adequately positioned. Additionally, our new reserving process introduced in Q1 2024 has now been in place for three quarters, making it an established framework that provides us with stronger visibility.
Life: Adjusted EBITDA loss for the full year was $167 2 million for 2024 compared to a loss of $85 5 million in the prior year on a per member per month basis 2024, adjusted EBITDA loss was $147 a $45 change from the prior year.
Life: <unk> EBITDA loss for the fourth quarter of 2024 was 67 6 million or approximately $175 million P. M. P M basis.
Life: Our fourth quarter prior period development associated with IV and are we're relatively small reflecting stability in our reserving practices. As we are now adequately positioned. Additionally, our new reserving process induce introduced in Q1 2024 has now been in place for three quarters, making it.
Life: <unk> framework that provides us with stronger visibility, we feel confident in the accuracy of the data exiting 2024, including any associated legs, which further supports our ability to manage reserves effectively.
Leif Pedersen: We feel confident in the accuracy of the data exiting 2024. including any associated lags, which further supports our ability to manage reserves effectively.
Leif Pedersen: From an internal control standpoint, a key achievement over the past year was the successful remediation of seven previously identified material weaknesses. Looking ahead to 2025, our primary focus is maintaining the strong control environment established in 2024, while also driving execution of our clinical and operational initiatives. I am confident in the meaningful progress P3 is making towards long-term, sustainable growth.
From an internal control standpoint, a key achievement over the past year was the successful remediation of seven previously identified material weaknesses.
Life: Looking ahead to 2025, our primary focus has maintained a strong control environment and established in 2024, while also driving execution of our clinical and operational initiatives.
Life: Confident in the meaningful progress <unk> is making towards long term sustainable growth.
Leif Pedersen: Turning to our 2025 guidance. We are slightly increasing our total membership expectation to $109,000 to $119,000 in 2025 due to the growth of our ACO membership. For the full year, we are reaffirming our revenue range of $1.35 billion to $1.5 billion. Our revenue guidance includes MA funding increases of 3.1%. In addition, the revenue guide includes reductions in overall membership as a result of network rationalization, which is partially offset by favorable premium increases, including the benefit of renegotiated payer contracts and member mix shifts. As a reminder, we recontracted 25% of our payer partners effective January 1, 2025, and expect to recontract 50% in 2025, effective for plan year 2026, with the remainder being executed effective 2027.
Life: Turning to our 2025 guidance, we are slightly increasing our total membership expectation to 109000 to 119000 in 2025 due to the growth of our ACO membership.
Life: For the full year, we are reaffirming our revenue range of 135 billion to $1 5 billion.
Life: Our revenue guidance includes MA funding increases of three 1% and in addition, the revenue guide includes reductions in overall membership as a result of network rationalization, which is partially offset by favorable premium increases, including the benefit of renegotiated payer contracts and member mix.
Life: Shift.
Life: As a reminder, we re contracted 25% of our payer partners effective January one 2025, and expect to re contract 50% of in 2025 effective for plan year 2026, with the remainder being executed effective 2027.
Leif Pedersen: We are issuing guidance for medical margin to be in the range of $174 million to $210 million in 2025, and our medical margin, PMPM, in the range of $133 to $147. Our medical margin guidance includes a benefit from rationalizing underperforming provider and payer contracts, improving execution across affordability programs, including hospice and palliative care, and positive changes from benefit plan design. including reducing total Part D risk membership by 50% offset by regional medical cost inflation in 2025. We are reaffirming our adjusted EBITDA guidance range of negative $35 million to $5 million positive for the fiscal year.
Life: We are issuing guidance for medical margin to be in the range of 174 million to $210 million in 2025, and our medical margin P. M. P. M. In the range of $1 33 to $1 47.
Life: Our medical margin guidance includes a benefit from rationalizing underperforming provider and payer contracts improving execution across affordability programs, including hospice and palliative care and positive changes from benefit plan designs.
Life: Including reducing total part D risk membership by 50%.
Life: Offset by regional medical cost inflation in 2025.
Life: We are reaffirming our adjusted EBITDA guidance range of negative 35 million to 5 million positive for the fiscal year. This guidance incorporates an expected 8 million contribution from our ACO operations. Additionally, we've realized nearly $20 million and operating cost efficiencies, which will be reflected.
Leif Pedersen: This guidance incorporates an expected $8 million contribution from our ACO operations. Additionally, we've realized nearly $20 million in operating cost efficiencies, which will be reflected throughout the remainder of 2025. It's important to note that due to the seasonal utilization patterns, we typically see lower EBITDA as a proportion of full year guidance in the first and fourth quarters compared to the second and third quarters. Turning to our balance sheet at December 31, our cash balance was $38.8 million. Noting an additional $15 million of capitation revenue was received in the first week of January 2025.
Life: Throughout the remainder of 2025 it is important to note that due to the seasonal utilization patterns, we typically see lower EBITDA as a proportion of full year guidance in the first and fourth quarters compared to the second and third quarters.
Life: Turning to our balance sheet at December 31, our cash balance was $38 $8 million.
Life: Noting an additional $15 million of capitation revenue was received in the first week of January 2025, with that I'll turn it over to Omer.
Amir Bacchus: With that, I'll turn it over to Amir. Thanks, Leif. As Aric and Leif described, there have been many factors leading to the current 24 medical expense trends, many of which were due to either health plan benefit changes with increasing pass-through costs, increased facility unit costs, whether from hospitals, dialysis centers, or higher utilization of elective or surgical procedures and higher Part B drug utilization.
Omer: Thanks Blake.
Omer: Eric can leave described there have been many factors leading to the current 24 medical expense trend menu.
Omer: Many of which were due to either health plans benefit changes with increasing pass through costs increased facility unit cost whether from hospital dialysis centers or higher utilization of elective or surgical procedures and higher part b drug utilization despite.
Amir Bacchus: Despite these trends leading to overall higher costs, our utilization trends actually showed slight improvements in admittance per thousand, emergency department per thousand, and observation rates per thousand at 0.5 percent, 1 percent, and 3 percent, respectively, in quarter 424. We did see, however, increased SNF average length of stay from 17 to 19 days in our markets. And as Aric and Leif mentioned, we reduced our Part D exposure from certain plants.
Omer: Despite these trends leading to overall higher cost our utilization trends actually showed slight improvement in admits per thousand emergency department per thousand and observation rates per thousand at 0.5%, 1% and 3% respectively in quarter $4 24.
Omer: We did see however increased.
Omer: <unk> average length of stay from 17 to 19 days in our markets and as Eric and Leif mentioned, we reduced our part D exposure from certain plant.
Amir Bacchus: Before I go on to discuss 2025, let me start by saying as the co-founder and the chief medical officer of P3 Health. There has been a palpable reinvigoration of our staff from our new leadership driving improved morale and a strong sense of purpose to our mission for both our providers and the patients. As mentioned earlier, U425 is an investment in our care enablement model to put more resources, people, and point-of-care tools in our affiliate provider offices to aid them with improved scheduling, especially on our high-risk, rising-risk, and high-cost patients, ensuring better access and improved visit volumes and other administrative tasks necessary to perform well in value-based care.
Speaker Change: Before I go on to discuss 2025, let me start by saying as the co founder and Chief Medical Officer P. Three there has been a palpable reinvigoration of our staff from our new leadership driving improved morale.
Speaker Change: And a strong sense of purpose to our mission for both our providers and the patient.
Speaker Change: As mentioned earlier, Newport 25, using the investment in our care enablement model to go to <unk>.
Speaker Change: Put more resources people and point of care tools, and our affiliate provider offices to aid them with improved scheduling, especially on our high risk rising risk and high cost patients, ensuring better access and improved visit volumes and other administrative costs necessary to perform well in value based care.
Amir Bacchus: From this initiative, we have already seen improved interest in our PCPs from all markets, leading to improved documentation for burden of illness, as Eric described, improved quality Part C measures from 28.6% when looking at April of 24 versus March of 25, early utilization trends on par with Quarter 4 of 24, and significantly improved SNF average length of stay, now trending at 14 days. In addition, in both our California and Nevada markets, where we are delegated for utilization management, high-cost selective cases are trending down by 25% in California and 12.5% in Nevada.
Speaker Change: From this initiative, we have already seen improving interest in our PCP from all markets, leading to improved documentation for burden of illness as Eric described.
Speaker Change: <unk> quality part C measures from 28, 6% when looking at April 24 versus March of 'twenty five.
Speaker Change: Early utilization trends on par with quarter four of 24 and significantly improve Smith average length of stay now trending at 14 days.
Speaker Change: In addition, in both our California, and Nevada markets, where we are delegated for utilization management high cost elective cases are trending down by 25% in California to 12, 5% in Nevada.
Amir Bacchus: Subjectively, but also very important, we're seeing tremendous provider appreciation with the P3 Restore Program, which is something unique and a differentiator compared to others in the provider enablement platform. Driving a greater sense of purpose and getting back to the why of becoming a physician allows for a different mindset and a better foundation to perform well in value-based care. P3 has also contracted and is in the process of expanding new capitation and UM contracts for oncology as well as creating sub-caps for things like titer management of musculoskeletal conditions. Many of our health plan contracts are already showing decreased medical expense pass-throughs and a reduction in Part D exposure.
Speaker Change: Subjectively, but also very important we're seeing tremendous provider appreciation with the Petri restore program, which is something unique and a differentiator compared to others in the provider enablement platform.
Speaker Change: Driving a greater sense of purpose and getting back to the why of becoming a position allows for a different mindset and a better foundation to perform well in value based care Peter.
Speaker Change: <unk> is also contracted and is in the process of expanding new capitation in U M contracts for oncology as well as creating sub caps for things like tighter management of musculoskeletal conditions.
Speaker Change: Many of our health plan contracts are already showing decreased medical expense pass throughs and a reduction in part D exposure.
Amir Bacchus: The Care Enablement Model is also creating more direct opportunities with our PCPs to drive more appropriate referrals to more cost-effective in-network specialists, plus improve referrals to palliative care and hospice for improved care of our sickest patients.
Speaker Change: The care enablement model is also creating more direct opportunities with our PCP to drive more appropriate referrals to more cost effective in network specialist plus improve referrals to palliative care and hospice for improved care of our six patient.
Amir Bacchus: This is a key directive of ours, increasing the number of patients enrolled in hospice from 2.3% in 24 to 4% in 25. Of course, we will continue to drive performance on our successful COPD program and begin new ones like focusing on our patients with polypharmacy to reduce potential utilization expense and comorbidity. P3 understands the market dynamics that Aric described above and we are strengthening our model where care happens, at the point of care, within the offices of our primary care.
Speaker Change: This is a key directive of ours, increasing the number of patients enrolled in hospice from two 3% and 20, 424% and 25.
Speaker Change: Of course, we will continue to drive performance on our successful COPD program and begin new ones like focusing on our patients with polypharmacy to reduce potential utilization expense and comorbidity Petri understands the market dynamics that Eric described above and we are strengthening our model where care happens at the point of care within the offices of our <unk>.
Speaker Change: Mary care physicians.
Operator: And with that, I'm going to turn it back to the operator to open the floor to questions. Operator? Thank you.
Speaker Change: And with that I'm going to turn it back to the operator to open the floor to questions.
Speaker Change: Operator, thank you.
Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, 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 two.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: Youre using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: Anytime you question has been addressed and you would like to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
Operator: And at this time, we'll pause momentarily to assemble our roster.
Aaron: And the first question will come from Brooks O'Neill with Lake Street Capital Markets. Please go ahead. Hey, good afternoon, guys. This is Aaron on the line for Brooks. Are you able to hear me okay? Yeah, we hear you great. How are you? I'm doing well, thanks. And so I appreciate the added color on the guidance there.
Speaker Change: And your first question will come from Brooks O'neil with Lake Street Capital markets. Please go ahead.
Aaron: Hey, Good afternoon, guys. This is Aaron on the line for Brooks are you able to hear me okay.
Speaker Change: Yes, we hear you great how are you.
Speaker Change: Yes.
Speaker Change: I'm doing well, thanks, and so I appreciate the added color on the guidance. There I was wondering if you could maybe elaborate on maybe the timing around reaching the potential profitability you know understanding that.
Leif Pedersen: I was wondering if you could maybe elaborate on, you know, maybe the timing around reaching the potential profitability, you know, understanding the commentary in the call around the reduction in membership and makeshift dynamics. But if you could maybe add a little bit of the key puts and takes that led you to the range you provided and how we should maybe think about the cadence towards that profitability target.
Speaker Change: The commentary in the call around the reduction in membership and mix shift dynamics.
Speaker Change: But if you could maybe add a little bit on the key puts and takes that led you to the range you provided and how we should maybe think about the cadence towards that profitability target.
Leif Pedersen: Yeah, this is Leif. Let me take a stab at answering the question for you. So, as we think about guidance for 2025, you know, we have our three major inputs. One, which we've outlined in the 130 of operating plan improvements is on the revenue side of things. And the way we're thinking about this for 2025 is we're thinking about getting about a seven and a half percent increase in revenue year over year as a result of our identification of burden of illness our base rate assumptions as to the increase in revenue year over year, and then some impacts related to contract.
Speaker Change: Yes. This is <unk>, let me take a stab at answering that question for you.
Speaker Change: So as we think about guidance for 2025.
Speaker Change: Our three major inputs.
Speaker Change: Which we've outlined.
Speaker Change: In the 130.
Speaker Change: Operating plan improvements as on the revenue side of things and the way we're thinking about this for 2025 and as we're thinking about getting about seven 5%.
Speaker Change: Increase in revenue year over year as a result of.
Speaker Change: Our identification of burden of illness.
Speaker Change: Our base rate assumptions as to the increase in revenue year over year.
Speaker Change: And then some impacts related to contracting.
Leif Pedersen: Those all three of those parties go into that seven and a half percent. And then you think about medical costs as another major driver of our opportunity for improvement from an EBITDA perspective in 2025. And we're looking at about a $16 PMPM improvement year over year. And how we came to that conclusion was we increased our run rate for normal course inflation of medical costs, year over year inflationary costs, in addition to added an additional amount for the second half of 2024, where we saw elevated costs across Part A and Part B. And then we offset that by some specific programs that we have across hospice and palliative care that we think are going to be really influential in 2025, as well as some chronic condition programs. And then the last and not least, but the TIN rationalization and payer rationalization that we performed at the end of 2024.
Speaker Change: Those all three of those parties go into that seven 5% increase.
Speaker Change: And then you think about medical cost is another major driver of our opportunity for improvement from an EBITDA perspective in 2025, and we're looking at about $16 <unk> improvement year over year and how it came to that.
Speaker Change: Our conclusion was we increased our run rate for normal course inflation of <unk>.
Speaker Change: Medical costs year over year inflationary costs in addition to.
Speaker Change: Added an additional amount for the second half of 2024, where we saw elevated cost across part a and part b.
Speaker Change: And then we offset that by some specific programs that we have across hospice and palliative care that we think are going to be really influential in 2025.
Speaker Change: As well as some chronic condition programs.
Speaker Change: And then the last and that lease, but the 10 rationalization of payer rationalization that we performed at the end of 2024.
Leif Pedersen: And then the last piece, obviously, is our OPEX, which is pretty straightforward. Got it. Thanks for that color.
Speaker Change: And then the last piece, obviously is our opex, which is pretty straightforward.
Speaker Change: Got it thanks for that color and then I guess on the cash then so I think on the euro.
Leif Pedersen: And then, I guess from the cash stance, I think you ended around $39 million to end the year.
Speaker Change: Around $39 million in the year.
Leif Pedersen: You know, expectations, maybe you can talk a little bit about, you know, comparative to 2024, what you're expecting for 2025 on the cash front as you're sort of beginning to implement these new initiatives. Thanks for taking the question. Yeah, absolutely. Yeah, you hit the nail on the head. We at December 31st, 2024, we were at $38.8 million of cash. What's not reflected as of that date is we received $15 million of additional capitation revenue in early January. That brings that total effective starting cash position to about $54 million. And so that's just to kind of level set.
Speaker Change: Expectations, maybe you can talk a little bit about.
Speaker Change: Compare that to 2020 for what Youre expecting for 2025 on the cash front as you sort of beginning to implement these new initiatives. Thanks for taking the questions.
Speaker Change: Yes, absolutely, yes, you hit the nail on the head.
Speaker Change: At December 31, 2024, we were at $38 $8 million of cash what's not reflected as of that date is we received $15 million of additional capitation revenue in early January that brings that total effective starting cash position to about $54 million.
Speaker Change: And so.
That's just kind of level set in addition in February we received an additional $30 million to help fund our first half 2025 operating cash needs.
Leif Pedersen: In addition, in February, we received an additional $30 million to help fund our first half-year half 2025 operating cash needs. As you guys well know, we're regularly assessing kind of our liquidity requirements through our cash forecasting processes and scenario planning. We continue to have full support and backing of our board, and we will continue to access capital markets as cash needs arise, as we think about that in 2025.
Speaker Change: As you guys well know we're regularly assessing kind of our liquidity requirements through our cash forecasting processes and scenario planning.
Speaker Change: We continue to have full support and backing of our board and.
Speaker Change: And we will continue to access capital markets as cash needs arise as we think about that in 2025.
Leif Pedersen: Great. Appreciate all that, caller. Thanks, guys.
Speaker Change: Great I appreciate all that color thanks, guys.
Josh Raskin: The next question will come from Josh Raskin with NEPRON, please go ahead. Hi, thanks. Good afternoon, guys. You hear me okay? Yeah, Josh. Thank you. Perfect, perfect.
Speaker Change: Thank you next question will come from Josh Raskin with Nephron. Please go ahead.
Speaker Change: Yes.
Josh Raskin: Hi, Thanks. Good afternoon, guys can you hear me okay.
Josh Raskin: Yes, Josh Thank you.
Josh Raskin: So I just to start, maybe we start with the fourth quarter results. You know, I was sort of thinking of stepping off point, I think we talked about last quarter, about 30 million when you adjusted, you know, 3Q for some of the one time items. And then I thought I heard the primary care reserve development wasn't significant in the quarter. So did 4Q come in line with your expectations? Or kind of what was the deviation relative to even 3Q, just in terms of sort of that underlying run rate? Yeah Josh, good question and you did hit the commentary from our Q3 release about the $30 million exit run rate of Q4.
Speaker Change: Alright, perfect. So I guess just to start maybe we start with the fourth quarter results.
Speaker Change: Sort of thinking of stepping off point I think we talked about last quarter of about $30 million when you adjust it for me.
Speaker Change: For some of the onetime items and then I thought I heard the prior period care development wasn't significant in the quarter. So did <unk> come in line with your expectations or kind of what was a deviation relative to <unk> just in terms of sort of that underlying run rate.
Josh Raskin: Yes, Josh Good question and you hit you did hit the commentary from our Q3.
Josh Raskin: Release about $30 million kind of exit run rate of Q4 in Q4, we did have a couple of onetime things.
Leif Pedersen: In Q4 we did have a couple of one time things hit the P&L and they were negative in nature and they were to the tune of about $17 million. They weren't related to IB&R, they were related to some other items that were part of the cleanup of, I'll just say the accounting processes as I came in and transitioned over from my predecessor and so those would be one time in nature and should be excluded from the total Q4 EBITDA. But it still sounds like 20 million, even if you exclude the 17, you're still about 20 million worse than 3Q.
Josh Raskin: P&L.
Josh Raskin: And they were negative in nature and they were to the tune of about $17 million, they werent related to IBM.
Josh Raskin: They were related to some other items that were part of the cleanup.
Josh Raskin: I'll, just say the accounting processes as I came in and transitioned over from my predecessor, and so those would be onetime in nature.
Josh Raskin: And should be excluded from the total Q4 EBITDA numbers.
Josh Raskin: But it still sounds like $20 million, even if you exclude the 2017, you still have about 20 million worse than <unk> was there or is that just seasonality I know when Q4. If you were typically lower but is there anything else deteriorate in terms of utilized.
Leif Pedersen: Is that just seasonality? I know 1Q, 4Q are typically lower, but did anything else deteriorate in terms of, you know, utilization trends or anything like that?
Josh Raskin: Utilization trends or anything like that.
Amir Bacchus: Hey, Josh, this is Amir. Sorry for the delay. Yeah, we did see, you know, increasing unit costs, we did have COVID RSV, the typical things you'd see in that seasonality, that did increase some of those costs there as well.
Amir: Hey, Josh this is amir sorry for the delay.
Speaker Change: Yes, we did see increase in unit costs, we did have COVID-19 RSV. The typical things you would see in that seasonality that did.
Speaker Change: <unk> increased some of those costs there as well we did have a plan of ours one of our plans debt.
Amir Bacchus: We did have a plan of ours, one of our plans that had some poor performance, as far as how they were looking at and working with some of their payment methodologies with their underlying providers, which we also had to take in that quarter. For more information, visit www.fema.gov Okay, okay.
Speaker Change: <unk> had some poor performance as far as how they were looking at.
Speaker Change: And working with some of their payment methodologies.
Speaker Change: With their underlying providers, which we also had to take in that quarter.
Josh Raskin: And then now moving to 2025. So you know, it's an improvement any bit of about 153 million just using your midpoint. So we've talked about the 130 million that you guys have already made up.
Speaker Change: Okay. Okay, and then now moving to 2025, so it's an improvement in EBITDA of about $153 million just using your midpoint. So we've talked about the $130 million that you guys have already made up. So one is I think you've talked about potentially getting some of the $130 million and fork and so did any of that come through.
Josh Raskin: So one is, I think you talked about potentially getting some of the 130 million in four queues. So did any of that come through? And then what makes up that incremental sort of, you know, 23 million above and beyond the 130?
Speaker Change: And then what makes up that incremental sort of $23 million above and beyond the $130 million.
Aric Coffman: So, Josh, this is Eric, and most of the 130, you know, aside from some of the OPEX that we took care of in Q4, that we should have seen some benefit from there, most of it's coming in 2025 out of the 130 plan, and just to state that we were intentional about calling it a 130 plus plan, so there's a few things probably to mention that are within our commentary today. One is around our partnership with the payers, and so we found some opportunities with the payers beyond what was in our original $130 million improvement plan that we're working through with them right now.
Speaker Change: So Josh this is Eric.
Speaker Change: Most of the 130.
Ryan How's: Aside from some of the Opex that we took care of in Q4 that we should have seen some benefit from there most of it is coming in 2025 130 plan and just to state that we were.
Ryan How's: Intentional about calling it a 130 plus plan so theres, a few things probably dimension that or.
Ryan How's: Within our commentary today one is around.
Ryan How's: Our partnership with the payers and so we've found some opportunities with the bears beyond what was in our original 130.
Ryan How's: Improvement plan that we're working through with them right now we're quantifying that.
Aric Coffman: We're quantifying that, you know, in the $25 million range in terms of additional improvements we expect to get, and that would also include, Josh, some of the network changes that we talked about last quarter as well. We have about 20 TINs that we put on what I call kind of a watch list to look at their performance overall, and we're continuing to monitor that performance, and by the end of this quarter, we will make some determinations after we have enough run out to see if we need to action those as well, like we did last year.
Ryan How's: $25 million range in terms of additional improvements we expect to get.
Josh Raskin: And that would also include Josh some of the.
Josh Raskin: Some of the network changes that we talked about last quarter as well we have about 2000 tens that we put on what I call kind of a.
Josh Raskin: Our watch list to look at their performance overall, and we're continuing to monitor that performance.
Josh Raskin: And by the end of this quarter, we will make some determinations. After we have enough run out to see if we need to action those as well like we did last year.
Josh Raskin: Okay, gotcha.
Leif Pedersen: And then the last one I heard, I heard a couple of numbers in the Part D and I just don't think I got it down right. But where are you in terms of getting out of Part D risk? Your 25% of your contracts have already been adjusted. And then did you say 50% this year, and then the remaining 75 for 2027? No, so about half of our Part D risk is gone at this point. And then, you know, we're working with the other payers this year to see if we're able to get the other portion of the Part D out.
Speaker Change: Okay got you and then just last one I heard I heard a couple of hours and the part D and I just don't think I got it down right, but we're.
Speaker Change: Or are you in terms of getting out of heart Derisk. Your 25% of your contracts have already been adjusted and then did you say, 50%. This year and then the remaining 75 for 2027.
Speaker Change: No it's about half of our part D risk is gone at this point and then we're working with the other payers of this year to see if we're able to get the other portion of the part D.
Leif Pedersen: So we expect that to be a 1-1-26 if we're.
So we expect that to be a 126, if we're successful.
Josh Raskin: Hey, Josh, just one other question. Did that answer your question? Sorry. Yeah, that's what I was looking for.
Speaker Change: Just one other question.
Speaker Change: Perfect.
Speaker Change: Does that answer your question sorry.
Speaker Change: Yeah, Yeah, that's right. That's what I was looking for just how much what percentage of your members are you at risk for it sounds like you're halfway there.
Josh Raskin: Just what percentage of your members are you at risk for? It sounds like you're halfway there. Yeah. All right, perfect.
Speaker Change: Yes.
David Larson: Thanks.
Speaker Change: Alright, perfect. Thanks, guys.
David Larson: The next question will come from David Larson with BTIG, please go ahead. Hi. I think you mentioned some improving trends in utilization, Amir. There were three areas. Can you just sort of repeat those? And were those in 4Q or is that what you are currently seeing in 1Q of 25? And then, like, how complete is the 1Q data? We're only sort of three months into the year. It's my understanding it takes time to basically collect all that data. What gives you that visibility? Thanks.
Speaker Change: The next question will come from David Larsen with BTG. Please go ahead.
David Larsen: Hi, I think you mentioned some improving trends in utilization.
David Larsen: There were three areas can you just sort of repeat those and where those into <unk> or is that what you are currently seeing in <unk> of 25, and then like how complete is the <unk> data, we're only three months into the year.
David Larsen: Minus you can take time to basically collect all that data, but what gives you that visibility. Thanks.
Amir Bacchus: Yeah, hey Dave. So for going back to quarter four. So quarter four, although we started to see some trends in admit-per-K, ER-per-K, OBS-per-K showing slight decreases in that trend, which was great, we still saw unit costs being elevated as well as increasing surgical costs and things like that overall. So we end up having a higher cost structure in quarter four as we described earlier. However, those trends still seem to be continuing in quarter one as we look into the first six weeks of the year. So we do have some line of sight, you're right, we don't have all the claims as of yet, but it's a good indicator from what we see from a census perspective and things like that.
David Larsen: Yeah, Hey, Dave so for going back to quarter four so quarter four although we started to see some trends in admits per K E. Abra K, obviously per K showing slight decreases in that trend, which was great. We still saw unit costs being elevated as well as increasing surgical costs and things like that overall, so we ended up having a higher cost struck.
David Larsen: In quarter four as we described earlier however.
David Larsen: Those trends still seem to be continuing in quarter, one as we look into the first six weeks of the year. So we do have some line of sight, you're right. We don't have all the claims as of yet, but it's a good indicator for what we see from a census perspective perspective and things like that the other thing is where were delegated as you know we are in for a number of our plans.
Amir Bacchus: The other thing is where we're delegated. As you know, we are for a number of our plans. We were able to start to see as well high-cost procedures, surgical procedures, things like that were actually decreased from what we saw from quarter one of 24, which is also a good harbinger for, hey, we're sort of on the right track as we're looking forward to going further down the road into 25. So those are the signs we wanted to make sure we mentioned to the street and to people like yourselves to show that, hey, things have been better, which could be due to not only in our efforts, but we've also helped to affect, or I should say effectuate, lower utilization of starting a job.
David Larsen: We were able to start to see as well.
David Larsen: High cost procedures surgical procedures things like that we're actually decrease from what we saw from quarter. One of 2004, which is also good.
David Larsen: Harbinger for Hey, we're sort of on the right track as we're looking forward to going.
David Larsen: Further down the road into 25. So those are the signs we wanted to make sure we mentioned to the street and to people like yourselves to show that hey, things have been better which could be due to not only in our conversations with our providers, but also in regards to planned benefit changes things like that that may have also helped to affect our <unk>.
David Larsen: They effectuate.
David Larsen: Lower utilization starting in 'twenty.
Amir Bacchus: Okay, and did you have a medical trend, a percent number that you reported for the fourth quarter and how that compares to last year? I did not. What we described was what we were looking at from the 1%, the 0.5%, the 1%, and the 3% was... Indeed what we are seeing as a trend for the whole year in comparison for 24 versus 23. Let me say it that way. Okay.
Speaker Change: Okay and did you have a medical trend a percent number that you reported for the fourth quarter and how that compares to last year.
Speaker Change: I did not I did what I. What we described was what we were looking at from the quarter from the 1% <unk>, 5%, the 1% and the 3% was.
Speaker Change: Indeed, what we're seeing is a trend for the whole year in comparison and for 24 versus 23 that is true let.
Speaker Change: Let me say it that way.
Amir Bacchus: Thanks.
Amir Bacchus: Thanks very much. Appreciate it. Sure.
Speaker Change: Okay. Okay. Thanks, Thanks, very much I appreciate it.
Speaker Change: Sure.
Ryan Langston: The next question will come from Ryan Langston with TD Cowen, please go ahead. Hi, thanks. Good afternoon. I guess just in the context of talking about some positive trends in Q1, how do we think about seasonality through the year, you know, obviously, with some of the changes in Part D kind of upending the quarterly dynamic? So, you know, we typically see seasonality, obviously, the first quarter, fourth quarters are usually the quarters that we see the most utilization, just in general. That's why it seems positive we're seeing some of the utilization trends, even though early, that are looking better for quarter one of 25.
Speaker Change: The next question will come from Ryan Linkedin with TD Cowen. Please go ahead.
Ryan: Hi, Thanks, Good afternoon, I guess just in the context of you talking about some positive trends in Q1, how do we think about seasonality through the year, obviously with some of the changes in part D kind of up ending the quarterly dynamics.
Speaker Change: Okay.
Speaker Change: So we typically see seasonality obviously, the first quarter fourth quarters are usually are the quarters that we see the most utilization just in general.
Speaker Change: That's why it seems positive we're seeing some of the utilization trends.
Speaker Change: Even though early that are looking better for for quarter one of 25.
Ryan Langston: And like I said earlier, it's probably due to a number of confluent things, whether, you know, what we're doing to meeting with our providers and how we're working the care enablement model that we described earlier, but also in regards to benefit changes that have also helped, meaning increasing ER copays, things like that, we've seen some from certain plans to defer some of that utilization. So these things, you know, working together are actually helping us to see a better quarter one than we've seen in the past. And then I think I, oh sorry, go ahead. No, I was going to say, I just wanted to make sure that helps, that was clear.
Speaker Change: And like I said earlier, it's probably due to a number of confluent things whether.
Speaker Change: What we're doing to meeting with our providers and how we're working to care enablement model that we described earlier, but also in regards to benefit changes that are also help meaning increasing co pays and things like that we've seen some from certain plans to defer some of that utilization. So these things working together are actually helping us to see a better quarter one.
Speaker Change: Than we've seen in the past.
Speaker Change: And then I think.
Speaker Change: Oh I'm sorry go ahead.
Speaker Change: No I would just say I just wanted to make sure that helps them make that was clear.
Eric: Yeah, it does. Thank you. And I guess just last thing for me, I thought I caught in your prepared remarks saying that, you know, Medicare, the macro environment for 2025 was improving. I guess, can you just elaborate on that? Is that just more kind of you carving out Part D? Or is there something you think structurally changing in 25? Maybe just some of the benefit changes and things like that? Thanks. Thanks, Ryan.
Speaker Change: Yes. It does thank you and I guess just last one for me I thought I caught in your prepared remarks, saying that.
Speaker Change: Medicare or the macro environment for 2025 was improving I guess can you just elaborate on that is that just more kind of view carving out part D or is there something you think structurally changing in 25, maybe to some of the benefit changes and things like that thanks.
Eric: This is Eric. And I think the biggest thing is really looking at at the benefit design change that happened from 24 to 25. And what we expect will continue to happen from 25 to 26. And that's a combination of base benefits as well as supplemental benefits, things like flex cards and those kinds of things going away, and other reductions that are moving utilization down. So it's kind of a nice spot to see and to be in because we are seeing those things start to flow through.
Speaker Change: Thanks, Brian This is Eric and I think the biggest thing is really looking at the benefit design change that happened from $24 to 25, and what we expect will continue to happen from $25 26.
Speaker Change: And that's a combination of.
Speaker Change: Base benefits as well as supplemental benefits things like flex cards, and those kinds of things going away and other reductions that are moving utilization down so.
Speaker Change: It's kind of a nice spot to see and to be in.
Speaker Change: Because we are seeing those things start to flow through.
Jack Senft: The next question will come from Ryan Daniels with William Blair. Please go ahead. Yeah, hey guys, this is Jack Senft. I'm for Ryan. Thanks for taking the questions. I think most of my questions have been answered already. But you noted that you're looking to recontract the 50% of the payer partners this year and more next year. I'm curious if you can comment on how those conversations have gone thus far. You know, is this something where you are seeing a good amount of pushback, or maybe it's fairly expected, and it's a fairly easy conversation. Just kind of curious if you can give us any insights into kind of what what you're seeing there.
Speaker Change: The next question will come from Ryan Daniels with William Blair. Please go ahead.
Speaker Change: Yeah, Hey, guys. This is Jack stamped on for Brian. Thanks for taking the questions I think most of my questions have been answered already but.
Speaker Change: You noted that Youre looking to re contract that 50% of the payer partners. This year and more next year I'm curious if you can comment on how those conversations have gone thus far.
Speaker Change: Is it something where you are seeing a good amount of pushback or maybe it's fairly expected and it's a fairly easy conversation just kind of curious if you can give us any insights into kind of what you're seeing there. Thanks.
Amir Bacchus: Thanks. I think we're, thanks for the question, and I think we're really fortunate that we have good partnerships with our payer partners. We're in this together in a lot of ways. And what that means for their performance is when we do well, they get to do well, and there are things that we provide that they're not able to do. And so when you think about things like quality numbers for the plans, they need the help that we can provide. When you think about the shift with the primary care providers and the networks in their markets, they need help there too.
Speaker Change: I think we're thanks for the question and I think we're really fortunate that we have good partnerships with our payer partners.
Speaker Change: We're in this together and a lot of ways.
Speaker Change: And what that means for their performance is when we do well they get to do well and there are things that we provide that they're not able to do.
Speaker Change: And so when you think about things like quality numbers for the plans they need the help that we can provide when you think about the shift with the primary care providers and the networks and their markets. They need help there too and they recognize that we can provide that to them. So it's a.
Amir Bacchus: And they recognize that we can provide that to them.
Amir Bacchus: So it's a mutual partnership, and that doesn't always mean that they're always easy conversations, but we try to strive to land in a place that's mutually beneficial.
It's a mutual partnership and that doesn't always mean that theyre always easy conversations, but we try to strive to land in a place that's mutually beneficial.
Speaker Change: Okay understood. Thanks, maybe just as a follow up to I think you noted in your.
Speaker Change: Prepared remarks that youre, expanding new capitation contract and it sounded like it was on the specialty side is this something that's rolled out like through a pilot program or.
Speaker Change: Maybe if you can just dive into that a little bit and just kind of comment on the demand youre seeing from the specialty side and then maybe just as a follow up is that something that could impact results. This year next year I'm just kind of curious how that plays into P. Threes overall positioning kind of going forward. Thanks.
Amir Bacchus: Sure, so yeah, definitely, this is Amir. There's a number of things happening this year. We've had certain partners that have done some CAP with us that are gonna be expanding their capitation agreements with us, which is great for things like oncology. We're looking at sub-CAPs as well to help control certain spend. I mentioned musculoskeletal in my remarks, but there are opportunities that we're seeing with certain providers that we can actually help control some of the costs in regards to some of the utilization we're seeing with key specialties, as well as even looking at Part B drugs.
Amir: Sure. So so yes definitely this is amir.
Amir: A number of things happening. This year, we've had certain partners that have done some cap with us that are going to be expanding their competition.
Amir: Agreements with us, which is great for things like oncology.
Amir: We're looking at sub caps as well to help control certain spend I mentioned musculoskeletal.
Amir: In my remarks, but there are opportunities that we're seeing with certain providers that we can actually help control some of the costs in regards to some of the utilization, we're seeing with key specialties as.
Amir: As well as even looking at part B drugs to some extent so all these things will be seem to stop.
Amir Bacchus: So all these things will be seen starting in 2025 for sure, some probably starting in the middle of 2025 and going into 2025. Okay, perfect. Thanks for taking the question.
Amir: Starting in 'twenty five for sure some probably starting in the middle of year of 'twenty, five and going into 'twenty six.
Okay perfect. Thanks for taking the questions.
Amir Bacchus: Sure, you're welcome.
Amir: Sure you're welcome.
Operator: This concludes our question and answer session as well as our conference call for today. Thank you for attending today's presentation.
Amir: This concludes our question and answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.
Operator: You may now disconnect. Tulsi Gibbs, Ehress, Sarah Rosenblum, David Larson.
Amir: Okay.
Amir: [music].
Amir: Okay.
Amir: [music].
Amir: Yeah.