Hello, everyone, thank you for joining us this afternoon. My name is Steven Tuch, and I'm an associate with J.P. Morgan Healthcare Investment Banking team. Before we start, just the usual reminder that we'll have a Q&A session right after the presentation to the extent time allows. Today, I am pleased to introduce to you P3 Health Partners, a patient-centered, physician-led healthcare company. We have two wonderful speakers, Dr. Sherif Abdou, Chief Executive Officer, and Atul Kavthekar, Chief Financial Officer. I'm sure they're excited to tell you more about the company and the work your team has been doing to lead healthcare in a new direction by cultivating wellness and not just managing illness. With that, I'll pass it over to Dr. Abdou.
Thanks, Steve. Thank you everybody for your time today. It's very exciting to be here in person, finally. Hopefully everyone's safe and enjoyed the conference so far. I'm gonna get right to the point, since I'm between you and the drinks, so I won't take too much time of you today. What we're gonna talk about today is three things. Number one, I'm gonna share with you the exciting opportunity of investing in P3 and why is P3 is a great opportunity for everyone to be part of the success and the growth.
Number two, I'm gonna show you the data that support the continued growth and continued improvement of the unit economics of the cohort and the patient results that we'll share with all of you today, including a case study of market entry. Definitely, at the end, I will share with you our updated guidance for 2022 and 2023 as well. In the opportunity, I'm gonna split it into 5 categories. It is the tremendous level of demand and request that we're getting from patients, from providers, definitely from payers as well. That is fueling our growth and our pipeline moving forward.
I'm gonna share with you the cohort study with the proven, continuous, consistent, repeatable, sustainable, unit economic and improvement in the outcome. We're also gonna share with you the data that you will notice, and unapologetically, I'm gonna compare it with our peers and friends. They're not competitors. They're peers and friends in the space, and I'll tell you why the feeling are mutual. The reason that we have the receiving the significant demand, and so is agilon, so is Oak Street Health, is because of one another. We are spreading the word value-based contract.
You will see in the data, if you add P3, agilon, Oak Street Health, CareMax, Privia Health, Cano Health will constitute less than 5%-10% of the space in the Medicare Advantage. They're peers. They're spreading the words to us. When I go to any place, "Oh, yeah, we heard about Cano Health, we heard about Oak Street Health, or we heard about agilon, or we heard about you." There is a level of acceptance. We're paving the road for one another, so they're peers, they're friends. I like all of them. We're gonna share with the data and share with you the comparison as well. We're gonna talk about the Adjusted EBITDA and cash flow and the meaningful growth moving forward.
Finally, we're gonna share with you the strong financial outlook, and I'm gonna leave you with the concept that there is an embedded EBITDA of over $200 million in the mature population that we're dealing with today. In P3, we like to look at the solution rather than the problem, but when the first step of solving any problem is realizing that there is one. The next step is having a solution for it, not hanging on to a problem. The independent physicians are in trouble. P3 is here to help. We have sustained. If you go back in Tucson in 2018 when we started there, the rate of moving from independent physician to staff employed physicians is double what it is today.
The reason we believe, we proudly believe that it's P3 helping those physicians to remain independent in improving the economics of providing care for the patient that we're privileged and honored to serve together. The payers are very important part and partner in our growth. We started with one contract in Arizona. We have six in Arizona today. We have 20 in the five states that we're in. The payers are extremely important part to partner with. As you know, most of the payer, if not all of them, had a demand from their boards and their directors to increase the value-based contract contribution in the population that they serve. We can help with that, and that's why we partner with our payers. Health system.
We thought in the past these are off-limits. The health system in the past lived with their medical groups as a loss leader and move on. We have demonstrated and we're working with multiple health system today to take over the management of their medical group and move it from a cost center to a profit center. Move the hospital dependency on heads and beds to actually like a larger population with lower admits per thousand. We have shared with the hospital system, now they're coming to the party to see that there is a clear path between just heads and beds and a population per thousand that can improve the unit's economics and overall income in the hospital while reducing the population utilization and cost as well.
We've dealt with a lot of local market that's highly inefficient, and because of our network and ability to, Once we mature in the market, we're able to steer and share the data with the primary care physicians since we're delegated to the network and credentialing, we are able to reduce the number of cardiologists or pair them into the to spearhead toward a more efficiency and more better outcome and more cost effectiveness and quality indicator, cost indicator, and utilization indicator as well. These are the element of P3 models. We partner with the independent physician and improve their economics. We partner with the payer and improve the star rating, medical cost, and benefits that they can share with the patient and help them grow this.
We partner with the health system to move medical groups from loss leaders to a profit leader and maintaining the higher quality and the low-cost economics that can produce to improving the economics that can produce for the health system overall. Finally, the network flexibility, ability to identify, grow, and direct, and steer the patient to the right doctor in the right time and the right place, and improving the quality and the cost overall, and time as well. Our market entry, the map indicates where we are today. The map indicates where we're gonna be in the future. If you look at, on the right-hand side on that slide, it's really the most exciting part.
We grew from 300 primary care physician when we entered in the first market, and we ended up with 2,600 this year. We have a CAGR of 72%. With all due respect and admiration that we have for agilon health and their model, their CAGR of physician improvement is on the right-hand side. That's an important piece of our growth is the primary care growth. We're very proud to share that 98% retention rate that we are having in the physician that joined us from 2018. 92% of them still with us, or 98% is still with us today. How do you translate that into the model? Let's talk membership.
2018 was 10 actually, started the year. End of the year at 50. In 2019, 15,000. Today, we're over 100,000. 500 and plus in growth. In revenue, we ended the year, first year, 2018, $88 million, and we're gonna end up 2022 over $1 billion. That is 600% CAGR. The markets that we're in are defined as counties. By 2019, we were in 5 counties. As we sit here today, we're in 15 counties. It's 200% CAGR. I love the cohort study as a scientist in the background. You wanna prove everything through cohort, identify, move the bias and then follow it through over time.
As a population health management enthusiast, I like the market analysis and the market case study first because that's what looks like in life. Patients are gonna come in and gonna leave. You're gonna add more payers. You're gonna add more population. You're gonna add more HMO. You're gonna add more PPO. You're gonna add more. What are you gonna do at the end? What does the economics looks like after all these changes? Let me share it with you, and this is gonna be posted and available to everybody online as well. 2018 in Arizona, 10,000 lives. Today, almost 50,000 lives. And we have another 20,000 or 30,000 in our platform ready to be transformed into full risk. Today we have 10,000.
I mean, it started 10,000 in Arizona, today 50,000 lives. Revenue, we ended up the year, as I shared with you, 2018, $88 million. It's the only market that we were in. Today, Arizona alone is almost half a billion dollar in revenue. We started the revenue per member per month at $628. Today, we're on about $824 on an average while growing, and almost 400+% in the membership and the revenue. The medical margin, this is the story, ladies and gentlemen. We started the first year -$54. Last year, annualized 2022, $148 PMPM positive while growing the population four times. That is the real world.
You're gonna grow it four time, and what are you gonna do about the medical margin? The medical margin went from -$54 to 148%. $148 PMPM. Apology. Number of providers started with 300 and now is almost 1,600 over the same period of time. Have lost much, less than 2%. They are fueling our growth as well. Number of health plans. The payers care about you. Do the payers sign up with you starting with one? Blue Cross Blue Shield of Arizona. Today, we have Blue Cross Blue Shield of Arizona. We have Aetna. We have Anthem. We have United. We have Humana. We have Centene.
Pretty much all the payers in Tucson and the surrounding county have signed contract with us in Arizona. I'm gonna just frame it one more time to remind you. We started with 10,000 lives. Today it's 50,000 lives. We started with $88 million. Today it's at half a billion dollars. We started with $628 PMPM. Today we're at $824 PMPM in funding. We started with a negative $54, $53 PMPM negative medical margin. Today at $146 PMPM medical margin. We started with 300 provider in our first hour network. Today we're at 1,600.
We started with one health plan, and today we have every major health plans in Pima County and the surrounding county that have partnered with us as well. Great case study. Big picture. What happened with the cohort? I wanna see the cohort. Here comes the cohort. You can tell in 2019 and 2020 and 2021, what we did is picked up the people that came at 1/1 2019, followed them through the three years. The one that came in 1/1 2020, followed them through 2020, 2021, 2022 annualized. Same thing with 2020 and 2021 and end of 2021 to 2022, the mid-year 2022.
You can see in the first cohort, we had a 5% improvement from the benchmark. In the second cohort, we had a 7% improvement in the benchmark. The final cohort or the longest cohort, we have an 8% improvement from the benchmark. These are real patient. These are consistent patients over a period of time. This is true defined cohorts, and that's what we consistently improve comparing to the benchmark. That is how you get a medical margin from -$54 - $146 over four years in Arizona while you're growing it from 10,000 to 50,000 lives, is by consistently producing a better outcome to the maturing cohort from within. This compares one more time to agilon.
Again, cohorts over time, the dip of COVID, and then it lands almost in the same field in the clinical margin for the population that we both are having the privilege and honor to serve. One asked me actually when I'm preparing the presentation, "Why you compare yourself to agilon so much?" I think because of the similarity of the models and independent physicians and not building clinics or whatever, more into the affiliate network model. I think similarity of the results and the outcome is compelling. They're valued at $7 billion, and we're not.
I wanna share with you that we should by tomorrow have the same market value as agilon. I showed you the results. Just kidding. The utilization. How do you improve the medical margin? How do you improve? It's improving utilization. From the benchmark, I can repeat it to you, it's 30%-40% reduction in admits per 1,000, SNF per 1,000, and in ER visits per 1,000. One more than the other cannot ignore the COVID impact and cannot ignore the fact that we've never had a single year where we had more continuing persistent patient than new patients. We always had, every year, more new patient than old continuing patients. That's why I'm gonna talk about the inflection point moving forward on this.
The inflection point is this. For the first time in 2023 and 2024, we're gonna have more continuing persistent population than a new population from the growth. That's an important point. That is the inflection point. That is why we drive into break even unprofitability in 2024, because for the first time, our mature cohort that performing as you saw, is gonna be the majority of the population that we're gonna serve for 2023 and 2024. Like I said, in average margin in the cohort over the years, $68 in year one, $162, like I showed you, very similar to where agilon health might be running a little a year behind or so, but it's very similar to agilon health.
Stated increase in EBITDA, we're gonna improve our EBITDA almost 50% or more next year, as we will share with you in a minute. What drives the EBITDA and the cash flow? Maturation of the cohort and the population that we're serving for over a period to the consistent growth, not over growth, but it's consistent where we will have more population that mature and persistent with us than the other. There is a significant one-time expense last year. I can go tell you when in details, but the reality is there is a $10 million-$30 million that basically related to either one time adjustment or one time expense over the last year.
I think engaging into fully delegated contracts where we get to pay the claim, receive the premium upfront, that's gonna allow us a more positive cash flow into the operation and earlier cash receiving in the settlement. If we receive the payment, we retain the saving immediately. We don't have to wait till we settle with the health plan. Let me let me give you the serious stuff that the lawyers give us a lecture how to talk about. 2022 guidance, we're gonna reaffirm all the numbers that we shared with you at the end of the year today, including the revenue membership and EBITDA investment. 2023 numbers, we're expecting 115,000-120,000 Medicare risk membership.
That's 15%-20% more than the end membership. Remember, we have an attrition rate of about 10%, which is half of the national average. So we're gonna add on an average 20%-25% new patients in the population that we're gonna have the privilege and honor to serve in 2023. Our revenue guidance is $1.2 billion-$1.25 billion, up about 14%-20% from 2022 full year revenue. Our Adjusted EBITDA is between 40 and 60 or 60 and 40, depends on your methodology of calculation, will remain negative, but will be an improvement of EBITDA by 50% from last year.
We expecting and continue to be bullish, consistent, and believer that we're going to be in a break even to a positive EBITDA in 2024. I'm going to leave you with that. If you're an investor interested in P3, there is a long-term embedded EBITDA in our unit economics of the population that exists today of about $200 million. We still remain bullish and consistent on our prediction of long-term 20%+ long-term EBITDA. The if you calculate that will give us a much bigger picture of the investment opportunity in P3. With that, I thank all of you for your attendance today.
I'm excited to be here presenting on behalf of P3, and I'm excited to be in person and be safe and happy new year. Thank you, everyone. If you have a question, feel free to raise your hand. You all have a mic that we are passing around.
Have some few questions that have been submitted online. I can start with those in the meantime. First question, what are the levers you pull to align incentives with physicians?
This is a great question. Thanks, Steven. It's actually we get asked that a lot. There's economics. We usually talk about social, moral, and economic incentive, but I'd like to split it into a little bit more. Let me get the economics out of the way. It's important. It's a. Consistently, we see an evidence of 50% increase of the physician compensation from the average market income in the markets that we're lucky to serve with them. Number 2, it's the workflow. The, we accommodate our model into the workflow. We don't ask the provider to change their workflow to fit in our model.
In a very few occasion that we've talked to the doctors, not even in a competitive way, but just talk to them about as you talk to any other models or any other MSOs, a lot of the other MSOs require the doctors to change their workflow to fit in their model. We don't. We actually. Because being physician ourselves, being primary care ourselves, we have sat down in the back room with an architect, and they design multiple workflows for the physician, try to create that, so they like us because we fit in our workflow. We don't ask them to fit in ours.
Finally, I think the clear purpose and the team surrounding them that we put in place that allow them to be able to serve their patient better and get a better outcome to their patient, it's exciting, and I would love to share with you some video, testimonial video from our doctors from Oregon and Arizona that voluntarily, in an independent interviews in their local TVs, they went and just converted the conversation from talking about them to how P3 helped them, helped their patient, helped their family, and so forth. It's an exciting opportunity to partner with the physician, improve outcome to their patients.
Thank you. Okay, I'll go to the next question. Technology obviously plays a big part in your business. Can you talk a little bit about your tech stack? Is it internally developed? Is it off-the-shelf?
Very early on, we sat down and debated the role of the tech in our population health management. We have determined a few things. Number one, we're not a tech company. We're a healthcare company. Number two, we're gonna be tech-enabled company. We're not gonna be tech-dependent or tech-driven company. We're gonna be tech-enabled. Number three, we determined that what we really need to do is to get an effective, efficient, actionable data to the providers at the point of care. You know, going back and meeting with the doctors, yeah, it's helpful and create a competition a month or a quarter later and say, "You didn't do great. Your admits were not that great." Okay, well, you made me feel guilty.
Of course, it's a sense of competition, and it works a lot of the time. Going at the point of care and telling them, "Here's the five things that you can do today that can improve the outcome tomorrow or by Friday or next weekend," that is what they wanna do. Tell me what to do now. No, don't tell me I didn't do well last month or last quarter. Yes, I like to get that report, but it's not as helpful. We determined we are not a tech company. We're tech-enabled, not tech-dependent, and we're gonna get the data to the doctor at the time, at the point of care, but it's gonna be actionable, timely data to use as well.
Thank you.
I didn't answer the question, if it's off-the-shelf or whatever. It's a mix. Our data analytics is proprietary, and we build it, but EHR is athenahealth. The accounting is this. Anything that we find off the shelf that's easy to use, we do it.
Yeah.
Our analytics is proprietary.
Proprietary.
We build it ourselves.
Sounds good. Okay.
Yes, sir.
Can you provide a breakdown of your membership by product type? Like what % is MA, MSSP, ACO REACH?
The population that we have today, 100% are MA. They're full risk patients, 100%. We have in the neighborhood of 8,000-10,000 MSSP that will be converting to ACO Reach effective this year. In the past, we did not have any DCE or risk in regular Medicare, but we will starting in 1/1/2023. We have about 20,000+ commercial lives on shared savings in our platform. We have about 8,000-20,000 of Medicaid and commercial on a capitation and shared saving, but not risk at all. The full risk patient, 100% of them are MA, as we sit here today. 98% of our revenue
Okay. There's obviously a big focus on profitability in your industry. Can you talk a little bit about the key levers you will pull to achieve it? Profitability. Yeah.
Sure.
Well-
Yeah, you know, I'll let him-.
Sure.
Answer.
Let me try. Thanks for the question. I think it's an important thing and something we're definitely focused on. There's a couple of key drivers that are gonna take us from 2022 to 2024, where we're expecting to become profitable on an adjusted EBITDA basis. First of all, is continued growth in the member side. Secondly, it's gonna be harvesting greater revenue in terms of on a PMPM basis. The medical expenses, we're gonna continue driving down, and you'll see some data in the presentation materials that Sherif had just presented, and I think they're quite compelling and I think we expect those to continue. Lastly, it's really around our operating expenses.
I think the company has incurred a lot of one-time expenses that we saw this year.
Mm-hmm
...as a result of some things that were a bit out of the control and part of being a new public company. We expect them not to recur going forward, number one. Number two, I think there's a greater emphasis and a greater focus on managing those costs much more actively going forward. All of those things combined are gonna be the real important drivers, and it's gonna be kind of a continued emphasis, you know, not just for a few quarters, but that's really gonna be the new way we run the business.
Thank you. Okay, maybe one more question. Can you quickly comment on the audit? I know it's been, you know-
Right
...another big focus.
Sure
...the past few quarters, so.
Yeah, no, it's. Thanks for the question as well. I think that's also important to address. I'm still relatively new here, but as you can imagine, that's something that I was thinking about even before I joined. The short answer is yes, I think that all the challenges are generally behind us. I really like what I see. I think there's been a lot of focus that the company has put into its infrastructure before I joined, and I think there's going to be continued investment in strengthening-
Mm-hmm
... not just the accounting, but more broadly the finance, the data analytics capabilities the company has. I think that's gonna be really critical as we are more effective at telling our story. But to answer your question, absolutely, I think we're in pretty good shape.
Great. Thank you. Okay. If no further questions, Dr. Abdou , do you have any closing remarks maybe?
No, thank you very much. Really appreciate the opportunity. Thanks, J.P. Morgan and its team in putting this together and inviting us to present and a great team to work with. Thanks everyone for your time and attendance, and hopefully we'll see you in person next year.
Awesome. Thank you very much.
Thank you.