Why P3 Healthcare Shares Jumped Wednesday

What happened

Shares of P3 Health Partners (PIII -4.08%) were up 10% Wednesday morning after rising as much as 16.2% in early trading. The shares were buoyed when investors noticed the CEO purchased a large amount of the company's stock. Shares of P3 Health are up more than 84% this year.

So what

P3 Health Partners is a physician-led health management company that provides primary care, chronic-care management, and other services to Medicare Advantage and commercial patients. The healthcare company has a network of more than 2,800 affiliated primary care providers in the U.S.

CEO Sherif Abdou bought 100,000 shares of his company's stock at $2.62 a share on May 12, as reported in a Securities and Exchange Commission filing on May 16. The insider buy was seen as a positive sign.

On top of that, the company reported improved revenue on May 10. It said it had first-quarter revenue of $298.7 million, up 18% sequentially and 11%, year over year. The quarterly net loss of $52.4 million was an improvement compared to the $60.8 million it lost same period last year and a huge improvement from the $532.3 million in net losses it reported last quarter.

The company also issued improved guidance for full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). It now expects to lose $35 million to $55 million in adjusted EBITDA, compared to earlier expectations of a loss of $40 million to $60 million. It also kept 2023 revenue guidance at $1.2 billion to $1.25 billion, up from the $1 billion in revenue it reported in 2022. 

Now what

It's likely to be awhile before P3 Health Partners turns a profit, so this stock is only for long-term investors who can handle a healthy dose of risk. The company's shares are showing some momentum, but while insider buying is a better sign than insider selling, it doesn't mean the stock is right for everyone.

The company has done a solid job of increasing Medicare Advantage members; it had 104,000 in 2022, up 50% from 2021, and expects to have between 115,000 to 120,000 this year.