Last Update 07 Dec 25

PIII: Operational Progress And 2026 Earnings Ramp Will Drive Long-Term Upside

Narrative Update on P3 Health Partners

The analyst price target for P3 Health Partners has been reduced from $20.00 to $12.50 per share, as analysts cite disappointing recent aEBITDA and growing confidence that operational progress will support a stronger 2026 earnings profile.

Analyst Commentary

Recent commentary reflects a mixed but generally constructive view on P3 Health Partners, with the lowered price target framed as a recalibration of expectations rather than a loss of confidence in the long term earnings trajectory.

Bullish Takeaways

Bullish analysts see the reduced price target as aligning valuation with near term execution risk while still implying meaningful upside if the 2026 earnings ramp materializes.
Operational initiatives are viewed as laying the groundwork for improved aEBITDA leverage, supporting a thesis of stronger profitability and multiple expansion over the next two years.
Progress in the underlying business, even if not fully visible in reported metrics yet, is interpreted as evidence that management is executing on its strategic plan.
Expectations for a materially better 2026 earnings profile underpin the decision to maintain positive ratings, suggesting confidence in the company’s medium term growth path.

Bearish Takeaways

Bearish analysts point to the disappointing Q3 aEBITDA as a sign that operating improvements are taking longer than anticipated to translate into financial performance.
The lower price target reflects concern that near term growth and margin expansion may fall short of prior expectations, warranting a more conservative valuation framework.
Limited visibility in current reported results creates uncertainty around the timing and magnitude of the expected earnings inflection, increasing perceived execution risk.
Some caution that if operational progress does not become evident in upcoming quarters, the market could further discount the shares despite longer term potential.

What's in the News

P3 Health Partners formed a joint venture management services organization with Commonwealth Primary Care ACO to expand value based care and support for primary care physicians across five states, while extending P3's footprint into Maricopa County, Arizona (company announcement).
The new P3 Commonwealth Innovation MSO will manage shared services, financial management, compliance, data analytics, and clinical integration for the ACOs. P3 will hold an 80 percent membership interest and majority board control, with potential future redemption rights over Commonwealth's stake (company filing).
On November 21, 2025, P3 received a Nasdaq notice for noncompliance with the minimum stockholders' equity requirement and related alternatives. This triggered a 45 day window to submit a remediation plan, with a possible extension of up to 180 days if the plan is accepted (Nasdaq notice).
The company stated it intends to restore Nasdaq listing compliance and reiterated management's conviction in the long term value creation opportunity and path to profitability (company statement).
P3 revised its 2025 revenue guidance to a range of 1,400 million dollars to 1,450 million dollars, reflecting updated expectations for top line performance (guidance update).

Valuation Changes

Fair Value: Unchanged at 10.25 dollars per share, indicating no revision to the intrinsic value estimate.
Discount Rate: Steady at 12.5 percent, reflecting an unchanged view of the company’s risk profile and required return.
Revenue Growth: Effectively unchanged at approximately 6.1 percent, with only an immaterial numerical refinement in the model.
Net Profit Margin: Fallen slightly from about 5.48 percent to 5.45 percent, indicating a marginally more conservative view on profitability.
Future P/E: Risen slightly from approximately 0.46x to 0.46x, suggesting a modestly higher valuation multiple applied to forward earnings.

Expansion in the Medicare market and shift to value-based care models position the company for sustained membership, revenue growth, and improved profitability.
Technology investments, operational efficiencies, and stronger payer collaborations are creating measurable cost savings, margin expansion, and enhanced revenue opportunities.
Persistent operating losses, declining membership, financial risk, and execution challenges threaten profitability and growth amid a competitive and volatile healthcare environment.

Catalysts

About P3 Health Partners

A patient-centered and physician-led population health management company, provides superior care services in the United States.What are the underlying business or industry changes driving this perspective?

The increasing number of Americans aging into Medicare eligibility is expanding the total addressable market for managed care and value-based solutions, positioning P3 Health Partners for recurring membership growth, especially as they continue strategic joint ventures and market expansion-positively impacting revenue and long-term top-line growth.
The ongoing industry-wide migration from fee-for-service to value-based care models directly aligns with P3's operational focus; their success in risk-based contracts, accelerated clinical quality metrics, and improved care gap closures reinforces the company's ability to capture margin expansion and drive future net earnings.
Contract renegotiations and payer collaborations already completed (and ongoing) are expected to deliver $20 million in EBITDA improvements for 2025 and $120–$170 million additional opportunities in 2026, driven by base rate increases, benefit design changes, and sustained payer partnerships, supporting both revenue and profitability recovery.
Investments in technology-enabled care management (e.g., care enablement model, direct EMR integration, AI automation, addition of specialists to provider support teams) continue to yield measurable reductions in medical costs and utilization, creating operating leverage and improving gross and net margins.
Improved documentation and coding (burden of illness accuracy) and targeted clinical programs (e.g., chronic disease management, oncology, palliative care) have meaningfully increased per-member funding and reduced medical expenses, setting the stage for enhanced PMPM revenue and normalized margin recovery moving into 2026.

P3 Health Partners Earnings and Revenue Growth

P3 Health Partners Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming P3 Health Partners's revenue will grow by 4.6% annually over the next 3 years.
Analysts are not forecasting that P3 Health Partners will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate P3 Health Partners's profit margin will increase from -10.0% to the average US Healthcare industry of 5.4% in 3 years.
If P3 Health Partners's profit margin were to converge on the industry average, you could expect earnings to reach $90.1 million (and earnings per share of $12.87) by about September 2028, up from $-146.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 1.4x on those 2028 earnings, up from -0.2x today. This future PE is lower than the current PE for the US Healthcare industry at 20.9x.
Analysts expect the number of shares outstanding to grow by 0.34% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.88%, as per the Simply Wall St company report.

P3 Health Partners Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent operating losses and negative EBITDA in both Q2 and the full year 2025 guidance (projected adjusted EBITDA loss of $39–$69 million) signal ongoing challenges in achieving profitability, indicating potential continued cash burn that could require further financing or dilution, adversely affecting net earnings and shareholder value.
Membership declined 9% year-over-year due to intentional payer and provider rationalization, with total revenue down 6%-highlighting risks around growth expectations, potential revenue stagnation, and challenges scaling the business model in the face of competitive and strategic pressures.
Heavy reliance on improvement plans and contract renegotiation to drive profitability exposes the company to execution risk; if payer negotiations stall, operational initiatives under-deliver, or market dynamics worsen, expected operational and margin improvements may not materialize, constraining both revenue and net margin expansion.
Limited liquidity ($39 million at quarter end) and the need to amend and extend senior debt indicate ongoing financial risk-suggesting that macroeconomic pressures, increased compliance costs, or unexpected claims exposure could strain cash flow, raising risk of unfavorable financing, impacting net margins and potential for long-term earnings growth.
Ongoing industry challenges-including delayed or inaccurate data exchange with payers, potential for regulatory change in Medicare Advantage reimbursement, and inability to consistently secure favorable RAF scores or quality measures-increase the probability of future revenue volatility, margin compression, and unpredictable earnings, particularly for companies without robust infrastructure or scale advantages like P3 Health Partners.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $14.0 for P3 Health Partners based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $20.0, and the most bearish reporting a price target of just $8.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.7 billion, earnings will come to $90.1 million, and it would be trading on a PE ratio of 1.4x, assuming you use a discount rate of 9.9%.
Given the current share price of $8.53, the analyst price target of $14.0 is 39.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Rising Medicare Eligibility And Value-Based Care Will Expand Markets