P3 Health Partners Sees Major EBITDA Turnaround and Raises Guidance for 2026
Q1 Turnaround: Adjusted EBITDA Surges as Cost Controls and Revenue Grow
P3 Health Partners (NASDAQ: PIII) announced a significant financial milestone for the first quarter of 2026, with adjusted EBITDA reaching $25.8 million. This stands in sharp contrast to a $22.2 million adjusted EBITDA loss in Q1 2025, marking the result of two years of restructuring and operational redesign. Management now projects full-year 2026 adjusted EBITDA to land between $20 million and $60 million, with a new midpoint target of $40 million, up from prior guidance.
Medical Margin Per Member Rises Over 300% Year-Over-Year
The company’s focus on contract quality and patient mix was evident. Despite a 10% reduction in at-risk membership—a deliberate strategy for network and payer rationalization—total revenue rose 4% to $386 million. The standout metric was medical margin per member per month (PMPM), which jumped from $49 in Q1 2025 to $231 in Q1 2026. Even after excluding the benefit of prior-year settlements, medical margin improved to $56.1 million for the quarter.
| Metric | Q1 2026 | Q1 2025 | % Change |
|---|---|---|---|
| Total Revenue (M) | $386 | $373 | +4% |
| Adjusted EBITDA (M) | $25.8 | ($22.2) | — |
| Net Income (M) | $3.0 | ($44.2) | — |
| Medical Margin (M) | $73.7 | $17.2 | +328% |
| Medical Margin PMPM | $231 | $49 | +371% |
| At-risk Members | 106,000 | 117,000 (approx.) | -10% |
2026 Outlook: Company Expects Continued Profitability and Efficiency
Management revised P3’s guidance based on a robust Q1, now expecting total revenues of $1.5–$1.65 billion and medical margin between $190 million and $230 million for the year. At-risk membership is forecast between 103,000 and 110,000, reflecting the company’s continued emphasis on quality over quantity.
| 2026 Guidance (Year-End) | Low | High |
|---|---|---|
| At-risk Members | 103,000 | 110,000 |
| Total Revenues (M) | $1,500 | $1,650 |
| Medical Margin (M) | $190 | $230 |
| Medical Margin PMPM | $149 | $180 |
| Adjusted EBITDA (M) | $20 | $60 |
Balance Sheet: Progress, but Leverage Remains High
P3 ended Q1 with $25.5 million in cash and a total asset base of $674.2 million. However, liabilities remain substantial at $807.3 million, largely driven by long-term and short-term debt. While net income returned to positive territory at $3.0 million (from a $44.2 million loss last year), investors will keep watch on debt and cash flow as the year progresses.
Takeaway: Operational Improvements Are Paying Off, but Execution Must Continue
P3’s results and raised guidance signal that tough strategic decisions made over the past two years are now bearing fruit. The dramatic increase in medical margin per member and return to profitability show momentum. However, with at-risk membership down and substantial leverage still on the books, ongoing operational execution and efficient patient management remain crucial for sustained growth.
Key Dates: Investor Call May 14, 2026
Investors can hear more from management on the Q1 2026 earnings call, scheduled for May 14 at 4:30 PM ET. Details and the webcast are available at the P3 investor relations website.
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