P3 Health Partners (NASDAQ:PIII) announced a strong second-quarter performance for 2026, reporting an adjusted EBITDA of $54 million and raising its full-year outlook. This quarterly result was bolstered by $45 million in favorable payer settlements and prior-year development, marking a significant turnaround from the previous year.
Operational Turnaround and Financial Performance
CEO Aric Coffman attributed the company’s robust Q2 results to disciplined contract restructuring, improved medical-cost management, and streamlined clinical operations. P3 generated $80 million in adjusted EBITDA for the first half of 2026, a sharp contrast to the $39 million loss reported during the same period in 2025.
“The core economic levers that drive the business, our contract structure, our operating model, and our clinical execution are increasingly within our control,” Coffman stated.
Quarterly revenue climbed to $386 million from $356 million in the prior-year period. CFO Leif Pedersen noted that per-member funding for the at-risk population grew by approximately 15% year-over-year, driven by rate progression and enhanced burden-of-illness documentation.
Membership Dynamics and Medical Expenses
At the end of the quarter, P3 reported 105,000 at-risk members, down from 116,000 a year ago. Pedersen explained that this decrease resulted from strategic portfolio actions taken throughout 2025 to exit arrangements that failed to meet the company’s economic thresholds. Including management-services arrangements, the company now oversees approximately 133,000 lives.
Medical claims expenses totaled $269 million, a figure that includes the $45 million in favorable payer settlements. Pedersen clarified that the payer settlement specifically accounted for $41 million of that total and was recorded exclusively within medical claims expense rather than revenue.
Excluding these settlements and prior-year adjustments, the underlying adjusted EBITDA for the second quarter stood at approximately $9 million, while the underlying first-half adjusted EBITDA was roughly negative $18 million.
Clinical Innovation and Efficiency Gains
Chief Medical Officer Amir Bacchus highlighted that the company’s point-of-care technology deployment is currently exceeding expectations, reaching over 65,000 patients. Providers utilizing these tools addressed nearly 90% of care gaps, with adoption continuing to grow through targeted in-office training.
P3’s clinical teams successfully engaged 87% of their patients in Q2, surpassing internal targets. Notably, the company reached 99.5% of its highest-risk members. Additionally, utilization management initiatives led to a 17% year-to-date shift from skilled nursing facilities toward home-based care, which proved to be a more effective clinical setting.
Future Outlook and Strategic Expansion
With $21 million in cash and equivalents at quarter-end, P3 has raised its full-year 2026 adjusted EBITDA guidance to a range of $80 million to $110 million. Management expects the typical seasonal rise in medical expenses during the second half of the year but intends to mitigate this through continued care management and payment-integrity programs.
Regarding regional growth, P3 plans to continue its Nebraska partnership through 2027 while scaling programs, with a move toward a full-risk arrangement expected by 2028. Furthermore, leadership does not anticipate that recent Medicare Advantage county exits by competitors will significantly impact P3’s membership base.