P3 Health Partners (NASDAQ:PIII) stock is falling on Tuesday after the company sold shares and warrants to institutional investors in a recent offering. P3 Health Partners reveals in a filing with the Securities and Exchange Commission (SEC) that it issued roughly 67.4 million shares of PIII stock to institutional investors. These were sold at a price of $0.6270 each. Investors will note that each of these shares also comes with one warrant to purchase another share of PIII stock. These warrants have an exe ...

Financial Data and Key Metrics Changes - The company reported a revenue growth of approximately 29% year-over-year, with total revenue reaching $388 million for Q1 2024 [69][77] - Adjusted EBITDA for the quarter was a loss of $19.8 million, which is roughly flat compared to a loss of $19.1 million in Q1 2023 [63][74] - The medical margin was reported at $36.6 million, or $96 on a per member per month (PMPM) basis [77] Business Line Data and Key Metrics Changes - Operating expenses decreased to $26.2 million, down 26% year-over-year from $35.6 million in Q1 2023 [72][54] - Medical expenses improved to $918 PMPM, reflecting a 12% sequential decrease from $1,042 [90] Market Data and Key Metrics Changes - Medicare lives grew to approximately 126,800, representing a 23% year-over-year increase, exceeding the low end of the guidance range [70] - The percentage of persistent lives increased to approximately 90%, up from 86% the previous year [71] Company Strategy and Development Direction - The company is focused on improving utilization management to reduce unnecessary spending while enhancing patient experience [2] - A strategic partnership with Innovaccer was announced to leverage advanced AI capabilities for predictive modeling and care management [75][162] - The company aims to expand its footprint and capitalize on growth opportunities in the Medicare market [98] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full-year guidance of positive $20 million to positive $40 million in adjusted EBITDA despite the current quarter's performance [68][92] - The company noted that it is over-conservative in its reserve estimates, suggesting potential for favorable adjustments in the future [73][159] Other Important Information - The company ended the quarter with approximately $32 million in cash and received an additional $15 million in regular cash capitated premiums [29] - The medical expense in the quarter was approximately 12% lower sequentially, indicating a normalizing utilization trend [72] Q&A Session Summary Question: What gives confidence to reaffirm the full year guidance despite EBITDA coming in below expectations? - Management highlighted the potential for significant reserve release and improvements in claims experience as reasons for confidence in the guidance [22][53] Question: Can you elaborate on the $8 million rebate recognition issue? - Management clarified that the rebate recognition is a timing issue, with expectations for recognition later in the year [39][121] Question: How does the company plan to manage growth in new markets? - Management indicated a cautious approach to growth, focusing on solid underwriting and deepening existing relationships before expanding into new markets [142][116]

[Cautionary Statement Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This statement warns readers about forward-looking information, highlighting risks and uncertainties that could cause actual results to differ [PART I—FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the period [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for P3 Health Partners Inc. and its subsidiaries, including balance sheets, statements of operations, statements of stockholders' equity and mezzanine equity, statements of cash flows, and accompanying notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (in thousands) | Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :------------- | :---------------- | | Total Assets | $855,925 | $860,967 | | Total Liabilities | $470,493 | $427,305 | | Total Stockholders' Equity | $146,596 | $142,130 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%28Unaudited%29) This section details the company's revenues, expenses, and net loss over specific periods Condensed Consolidated Statements of Operations Highlights (in thousands) | Item | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Total Operating Revenue | $388,488 | $302,077 | | Operating Loss | $(43,831) | $(48,817) | | Net Loss | $(49,606) | $(52,448) | | Net Loss Attributable to Controlling Interest | $(18,700) | $(9,199) | [Condensed Consolidated Statements of Stockholders' Equity and Mezzanine Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20and%20Mezzanine%20Equity%20%28Unaudited%29) This section outlines changes in the company's equity and mezzanine equity over specific periods Stockholders' Equity and Mezzanine Equity Highlights (in thousands) | Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------------- | :------------- | :---------------- | | Redeemable Non-controlling Interest | $238,836 | $291,532 | | Total Stockholders' Equity | $146,596 | $142,130 | | Accumulated Deficit | $(386,044) | $(367,344) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) This section summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Item | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net Cash Used in Operating Activities | $(20,030) | $(23,722) | | Net Cash Used in Investing Activities | $0 | $(464) | | Net Cash Provided by Financing Activities | $11,401 | $14,102 | | Cash and Restricted Cash, End of Period | $32,305 | $8,373 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1: Organization](index=12&type=section&id=Note%201:%20Organization) P3 Health Partners Inc. is a patient-centered, physician-led population health management company, operating as the successor to P3 Health Group Holdings, LLC - P3 Health Partners Inc. is a patient-centered and physician-led population health management company[33](index=33&type=chunk) - The company provides at-risk shared savings model services to insurance plans offering medical coverage to Medicare beneficiaries under Medicare Advantage programs[34](index=34&type=chunk)[35](index=35&type=chunk) - P3 also provides primary healthcare services through employed physician clinic locations, reimbursed via FFS contracts and capitated arrangements[37](index=37&type=chunk) [Note 2: Going Concern and Liquidity](index=12&type=section&id=Note%202:%20Going%20Concern%20and%20Liquidity) The Company has incurred significant net losses and negative cash flows since inception, raising substantial doubt about its ability to continue as a going concern within one year - The Company experienced net losses of **$49.6 million** (Q1 2024) and **$52.4 million** (Q1 2023)[38](index=38&type=chunk) - Unrestricted cash and cash equivalents were **$27.3 million** as of March 31, 2024, down from **$36.3 million** at December 31, 2023[39](index=39&type=chunk) - Substantial doubt exists about the Company's ability to continue as a going concern within one year due to ongoing losses and negative cash flows[39](index=39&type=chunk) [Note 3: Significant Accounting Policies](index=12&type=section&id=Note%203:%20Significant%20Accounting%20Policies) This note outlines the basis of presentation, principles of consolidation, comprehensive loss, use of estimates, and revenue recognition policies - The Company consolidates P3 LLC as its primary beneficiary and also consolidates Network VIEs (physician practices)[45](index=45&type=chunk) - Capitated revenue increased by **$7.7 million** for the three months ended March 31, 2024, due to the release of a risk adjustment revenue constraint for 2023 services[49](index=49&type=chunk) Revenue Type Breakdown (in thousands) | Revenue Type | Three Months Ended March 31, 2024 (in thousands) | % of Total (2024) | Three Months Ended March 31, 2023 (in thousands) | % of Total (2023) | | :-------------------------- | :-------------------------------- | :---------------- | :-------------------------------- | :---------------- | | Capitated revenue | $384,134 | 98.9 % | $298,704 | 98.9 % | | Other patient service revenue | $4,354 | 1.1 % | $3,373 | 1.1 % | | Total revenue | $388,488 | 100.0 % | $302,077 | 100.0 % | [Note 4: Recent Accounting Pronouncements](index=14&type=section&id=Note%204:%20Recent%20Accounting%20Pronouncements) The Company adopted ASU 2024-02 and ASU 2020-06 effective January 1, 2024, with no material impact on financial statements - ASU 2024-02 (Codification Improvements) and ASU 2020-06 (Convertible Instruments) were adopted effective January 1, 2024, with no material impact on the Company's consolidated financial statements[51](index=51&type=chunk)[52](index=52&type=chunk) - The Company is evaluating ASU 2023-09 (Income Tax Disclosures), ASU 2023-07 (Segment Reporting), and ASU 2023-06 (Disclosure Improvements), which are not yet adopted[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) [Note 5: Fair Value Measurements and Hierarchy](index=15&type=section&id=Note%205:%20Fair%20Value%20Measurements%20and%20Hierarchy) This note details the fair value measurements of financial liabilities, specifically warrant liabilities, using a three-level hierarchy Warrant Liability Fair Value (in thousands) | Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :------------- | :---------------- | | Warrant liability (Level 3) | $24 | $29 | Key Level 3 Inputs for Warrant Valuation | Input | March 31, 2024 | December 31, 2023 | | :------------------ | :------------- | :---------------- | | Volatility | 88 % | 75 % | | Risk-free interest rate | 4.50 % | 4.01 % | | Exercise price | $11.50 | $11.50 | | Expected term | **2.7 Years** | **2.9 Years** | - The Company recorded gains on changes in the fair value of public warrants of **$0.2 million** (Q1 2024) and **$0.6 million** (Q1 2023)[58](index=58&type=chunk) [Note 6: Property and Equipment](index=17&type=section&id=Note%206:%20Property%20and%20Equipment) The net property and equipment decreased to **$8.1 million** as of March 31, 2024, from **$8.7 million** at December 31, 2023 Property and Equipment, Net (in thousands) | Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :------------- | :---------------- | | Property and equipment, net | $8,121 | $8,686 | - Total depreciation of property and equipment was **$0.5 million** for the three months ended March 31, 2024, compared to **$0.6 million** for the same period in 2023[60](index=60&type=chunk) [Note 7: Intangible Assets](index=18&type=section&id=Note%207:%20Intangible%20Assets) Net intangible assets decreased to **$645.7 million** as of March 31, 2024, from **$666.7 million** at December 31, 2023, primarily due to amortization expense Intangible Assets, Net (in thousands) | Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------- | :------------- | :---------------- | | Intangible assets, net | $645,703 | $666,733 | - Amortization of intangible assets was **$21.0 million** for the three months ended March 31, 2024, consistent with **$20.9 million** in the prior year period[62](index=62&type=chunk) [Note 8: Debt](index=18&type=section&id=Note%208:%20Debt) The Company's total debt increased, primarily due to a new **$25.0 million** VGS 2 Promissory Note and short-term financing Long-term Debt, Net (in thousands) | Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------- | :------------- | :---------------- | | Long-term debt, net | $118,123 | $108,319 | - P3 LLC entered into a new VGS 2 Promissory Note on March 22, 2024, for up to **$25.0 million**, with **$10.0 million** drawn immediately and an additional **$15.0 million** drawn on April 5, 2024[65](index=65&type=chunk)[67](index=67&type=chunk) - The VGS 2 Promissory Note matures on September 30, 2027, with interest at **17.5%** per annum (8.0% cash, 9.5% PIK, or 17.5% PIK)[67](index=67&type=chunk) - The Company was in compliance with its debt covenants under the term loan facility and unsecured promissory notes as of March 31, 2024[72](index=72&type=chunk) [Note 9: Net Loss per Share](index=21&type=section&id=Note%209:%20Net%20Loss%20per%20Share) Basic and diluted net loss per share attributable to controlling interest improved to **$(0.16)** for Q1 2024 from **$(0.22)** in the prior year Net Loss Per Share and Shares Outstanding (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss attributable to controlling interest | $(18,700) (in thousands) | $(9,199) (in thousands) | | Basic Net Loss Per Share | $(0.16) | $(0.22) | | Diluted Net Loss Per Share | $(0.16) | $(0.22) | | Weighted Average Class A Common Shares Outstanding (Basic) | 118,887 (in thousands) | 41,579 (in thousands) | - Potentially dilutive securities totaling **288.7 million** (including stock warrants, options, RSUs, and Class V common stock) were excluded from diluted EPS calculation as their effect would have been anti-dilutive[75](index=75&type=chunk) [Note 10: Redeemable Non-controlling Interest](index=21&type=section&id=Note%2010:%20Redeemable%20Non-controlling%20Interest) Non-controlling interest holders' ownership of Common Units decreased slightly to **62.2%** as of March 31, 2024, from **62.8%** at December 31, 2023 Non-controlling Interest Holders' Ownership of Common Units (in thousands) | Date | Units (in thousands) | Ownership % | | :-------------------- | :---- | :------------ | | March 31, 2024 | 196,494 | 62.2 % | | December 31, 2023 | 196,569 | 62.8 % | - A **$20.6 million** remeasurement adjustment was recorded as of March 31, 2024, due to the fair value of redeemable non-controlling interest being less than its carrying value[78](index=78&type=chunk) [Note 11: Segment Reporting](index=22&type=section&id=Note%2011:%20Segment%20Reporting) The Company operates under a single reportable segment, with the CEO managing operations and reviewing financial information on a consolidated basis - The Company operates under one reportable segment, with the Chief Executive Officer serving as the chief operating decision maker[79](index=79&type=chunk) - All the Company's revenue was earned, and all long-lived assets were located, in the United States for the periods presented[79](index=79&type=chunk) [Note 12: Commitments and Contingencies](index=22&type=section&id=Note%2012:%20Commitments%20and%20Contingencies) The Company has a remaining settlement balance of **$2.4 million** as of March 31, 2024, related to a renegotiated health plan service agreement from 2021 - The remaining settlement balance within health plan settlements payable was **$2.4 million** as of March 31, 2024, down from **$3.0 million** at December 31, 2023, related to a renegotiated service agreement[80](index=80&type=chunk) [Note 13: Variable Interest Entities](index=22&type=section&id=Note%2013:%20Variable%20Interest%20Entities) P3 LLC is the primary beneficiary of several Network VIEs (physician practices) through Management Services Agreements and deficit funding agreements - P3 LLC is identified as the primary beneficiary of several Network VIEs (physician practices) through Management Services Agreements and deficit funding agreements[81](index=81&type=chunk) Network VIEs Financial Summary (in thousands) | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :------------- | :---------------- | | Total Assets | $10,529 | $8,637 | | Total Liabilities | $59,515 | $57,848 | | Members' Deficit | $(48,986) | $(49,211) | | Revenue (Q1) | $9,764 | $10,839 | | Net Loss (Q1) | $(133) | $(2,836) | [Note 14: Subsequent Events](index=23&type=section&id=Note%2014:%20Subsequent%20Events) In April 2024, the Company borrowed the remaining **$15.0 million** from the VGS 2 Promissory Note - In April 2024, the Company borrowed the remaining **$15.0 million** available on the VGS 2 Promissory Note[85](index=85&type=chunk) - On May 2, 2024, the Chief Executive Officer repaid **$0.7 million** in withholding taxes attributable to the vesting of restricted stock units[86](index=86&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of P3 Health Partners' business model, key factors affecting performance, non-GAAP financial measures, and a detailed analysis of financial results [Overview](index=24&type=section&id=Overview) P3 is a patient-centered and physician-led population health management company focused on the Medicare Advantage (MA) market - P3 is a patient-centered and physician-led population health management company focused on the Medicare Advantage (MA) market[90](index=90&type=chunk)[92](index=92&type=chunk) - The company operates predominantly through capitated contracts with health plans, receiving PMPM fees to manage healthcare needs for MA members[93](index=93&type=chunk) - As of March 31, 2024, P3 served approximately **126,800** at-risk members in **27** markets across **five** states, with a network of approximately **2,900** physicians[95](index=95&type=chunk) [Key Factors Affecting our Performance](index=25&type=section&id=Key%20Factors%20Affecting%20our%20Performance) This section details key factors influencing performance, such as membership growth, revenue per member, medical claims, and operating efficiencies - Growth in Medicare Advantage membership is achieved through expanding existing contracts, adding new contracts in existing markets, and entering new/adjacent markets[97](index=97&type=chunk) - Capitated revenue per member is expected to improve as the Company better understands and documents members' health status (acuity)[99](index=99&type=chunk) - Medical claims expense, representing **88%** of total operating expense, is managed by improving access to healthcare and leveraging primary care to avoid costly downstream services[102](index=102&type=chunk) - Operating efficiencies are achieved by leveraging the affiliate model and existing infrastructure, expecting corporate, general, and administrative expenses to decrease as a percentage of revenue over time[104](index=104&type=chunk)[105](index=105&type=chunk) - Operational and financial results are subject to seasonality, with largest member growth in Q1, declining revenue per member over the year, and higher medical expenses in Q1 and Q4 due to seasonal illnesses[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) [Non-GAAP Financial Measures and Key Performance Metrics](index=27&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Key%20Performance%20Metrics) This section defines and reconciles non-GAAP financial measures like Adjusted EBITDA and presents key operational metrics Adjusted EBITDA Loss Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(49,606) | $(52,448) | | Adjusted EBITDA loss | $(19,770) | $(19,133) | Medical Margin (in thousands) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Capitated revenue | $384,134 | $298,704 | | Less: medical claims expense | $(347,582) | $(259,458) | | Medical margin | $36,552 | $39,246 | Gross Profit (in thousands) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Total operating revenue | $388,488 | $302,077 | | Less: medical claims expense | $(347,582) | $(259,458) | | Less: other medical expense | $(34,475) | $(26,112) | | Gross profit | $6,431 | $16,507 | - At-risk membership increased **23%** year-over-year to **126,800** as of March 31, 2024[127](index=127&type=chunk) - Affiliate primary care physicians increased to **2,900** as of March 31, 2024[128](index=128&type=chunk) - Platform support costs decreased from **10.1%** of total operating revenue in Q1 2023 to **5.5%** in Q1 2024[130](index=130&type=chunk) [Key Components of Results of Operations](index=31&type=section&id=Key%20Components%20of%20Results%20of%20Operations) This section describes the primary revenue and expense categories that drive the company's financial performance - Capitated revenue is the primary revenue source, based on fixed per member per month (PMPM) fees from health plans, adjusted by a risk adjustment model for patient acuity[132](index=132&type=chunk)[133](index=133&type=chunk) - Medical expenses, including incurred but not reported (IBNR) claims, are the largest expense, covering costs for services provided by non-P3 employed providers[136](index=136&type=chunk) - Corporate, general and administrative expenses include employee-related costs, technology, occupancy, and public company operational expenses[139](index=139&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance for the three months ended March 31, 2024, compared to the prior year Key Financial Results (Q1 2024 vs Q1 2023, in thousands) | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Change (Amount, in thousands) | Change (%) | | :------------------------------------------ | :------ | :------ | :-------------- | :--------- | | Total Operating Revenue | $388,488 | $302,077 | $86,411 | 29 % | | Capitated Revenue | $384,134 | $298,704 | $85,430 | 29 % | | Medical Expense | $382,057 | $285,570 | $96,487 | 34 % | | Premium Deficiency Reserve | $1,000 | $5,140 | $(4,140) | (81)% | | Corporate, General and Administrative Expense | $27,401 | $37,643 | $(10,242) | (27)% | | Operating Loss | $(43,831) | $(48,817) | $4,986 | (10)% | | Net Loss Attributable to Controlling Interest | $(18,700) | $(9,199) | $(9,501) | 103% | - The **29%** increase in capitated revenue was primarily driven by a **23%** increase in at-risk members (to **126,800**) and a **5%** increase in capitated revenue rates due to higher patient acuity[150](index=150&type=chunk) - The **27%** decrease in corporate, general and administrative expense was mainly due to a **$7.1 million** reduction in professional fees and a **$2.5 million** decrease in salary and related expenses from a **20%** headcount reduction[154](index=154&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its short-term and long-term financial obligations and its sources of funding - P3 Health Partners Inc. is a holding company with no independent means of generating revenue or cash flow, relying on P3 LLC's financial results and distributions[156](index=156&type=chunk) - The Company had **$27.3 million** in unrestricted cash as of March 31, 2024, and has experienced ongoing net losses and negative cash flows, leading to substantial doubt about its ability to continue as a going concern[39](index=39&type=chunk)[160](index=160&type=chunk)[185](index=185&type=chunk) - Shelf Registration on Form S-3 for **$250 million**, with **$75 million** available for at-the-market sales; **$33,000** net proceeds from sales as of March 31, 2024[161](index=161&type=chunk)[162](index=162&type=chunk) - March 2023 Private Placement raised approximately **$86.6 million** net proceeds[163](index=163&type=chunk) - Term Loan Facility: **$65.0 million** outstanding as of March 31, 2024, with **12.0%** interest[167](index=167&type=chunk) - VGS Promissory Note: **$29.1 million** outstanding as of March 31, 2024, with **14.0%** interest[171](index=171&type=chunk) - VGS 2 Promissory Note: **$10.0 million** drawn by March 31, 2024, with an additional **$15.0 million** drawn in April 2024; **17.5%** interest[85](index=85&type=chunk) - The estimated Tax Receivable Agreement (TRA) liability is **$11.0 million** as of March 31, 2024, but no TRA liability has been recorded due to the Company's history of losses making payments not probable[181](index=181&type=chunk) [Cash Flows](index=39&type=section&id=Cash%20Flows) This section provides a detailed analysis of cash generated from or used in operating, investing, and financing activities Summary of Cash Flows (in thousands) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(20,030) | $(23,722) | | Net cash used in investing activities | $0 | $(464) | | Net cash provided by financing activities | $11,401 | $14,102 | | Net change in cash | $(8,629) | $(10,084) | | Cash at end of period | $32,305 | $8,373 | - Net cash used in operating activities decreased by **$3.7 million**, primarily due to changes in working capital[188](index=188&type=chunk) - Net cash provided by financing activities in Q1 2024 was mainly from the issuance of the VGS 2 Promissory Note and short-term financing agreements[190](index=190&type=chunk) [Critical Accounting Estimates](index=40&type=section&id=Critical%20Accounting%20Estimates) This section highlights accounting estimates that require significant judgment and could materially impact financial results - No significant changes to critical accounting estimates were disclosed from the Company's Annual Report on Form 10-K for the year ended December 31, 2023[192](index=192&type=chunk) [Recent Accounting Pronouncements](index=40&type=section&id=Recent%20Accounting%20Pronouncements) This section provides an update on recently adopted and pending accounting standards and their potential impact - For details on recent accounting standards, refer to Note 4 "Recent Accounting Pronouncements" in the unaudited condensed consolidated financial statements[194](index=194&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not required for Smaller Reporting Companies - This section is not required for Smaller Reporting Companies[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of March 31, 2024, due to identified material weaknesses in internal control over financial reporting - Management concluded that disclosure controls and procedures were not effective as of March 31, 2024, due to identified material weaknesses in internal control over financial reporting[197](index=197&type=chunk) - Identified Material Weaknesses include: inadequate policies, procedures, or qualified resources for significant accounts; insufficient risk assessment process; ineffective evaluation of internal control components; ineffective information technology general controls (user access); insufficient segregation of duties; ineffective management review controls; and ineffective controls over estimation of claims expense and payable[199](index=199&type=chunk) - Remediation activities are ongoing and include: engaging an external advisor to enhance controls and provide training; formalizing enhanced policies and procedures; hiring qualified accounting, financial reporting, and IT personnel; implementing a revised IT general controls framework and user access reviews; and designing a segregation of duties risk framework[199](index=199&type=chunk) [PART II—OTHER INFORMATION](index=43&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section contains other information not included in the financial statements, such as legal proceedings and risk factors [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in ongoing legal proceedings, including the consolidated Hudson Action and P3 Action, challenging the 2021 Business Combinations - The Company is involved in ongoing legal proceedings, including the consolidated Hudson Action and P3 Action, challenging the 2021 Business Combinations[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) - While some claims have been dismissed, others, including bad faith breach of contract and tortious interference, are proceeding to a five-day trial scheduled for July 22, 2024[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - Former members of P3 (excluding Hudson) have agreed to indemnify the Company for damages related to the dispute[209](index=209&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's 2023 Form 10-K - There have been no material changes to the risk factors previously disclosed in Part I, Item 1A., "Risk Factors" of the Company's 2023 Form 10-K[214](index=214&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds occurred during the period - No unregistered sales of equity securities or use of proceeds occurred during the three months ended March 31, 2024[215](index=215&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable - This item is not applicable to the Company[216](index=216&type=chunk) [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable - This item is not applicable to the Company[217](index=217&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2024[220](index=220&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including merger agreements, organizational documents, debt agreements, and certifications - The report includes various exhibits such as merger agreements, organizational documents, debt agreements (e.g., Unsecured Promissory Note with VGS 2, Subordination Agreement, Fourth Amendment to Term Loan Agreement), and certifications (31.1, 31.2, 32.1, 32.2)[222](index=222&type=chunk) [SIGNATURES](index=47&type=section&id=SIGNATURES) This section contains the required signatures for the filing, certifying its accuracy and completeness

Exhibit 99.1 P3 Health Partners Announces First Quarter 2024 Results Dr. Aric Cof man joins P3 Health Partners as CEO Total revenue growth of 29% year-over-year Reaf irming 2024 guidance Anticipates reaching Adjusted EBITDA positive in 2024 Management to Host Conference Call and Webcast May 8, 2024 at 4:30 PM ET HENDERSON, NV—May 8, 2024—P3 Health Partners Inc. ("P3" or the "Company") (NASDAQ: PIII), a patient-centered and physician-led population health management company, today announced its financial res ...

P3 Health Partners Inc. (NASDAQ:PIII) Q4 2023 Results Conference Call March 28, 2024 4:30 PM ET Company Participants Ryan Halsted - Gilmartin Group Sherif Abdou - Co-Founder, CEO Atul Kavthekar - CFO Amir Bacchus - CMO Bill Bettermann - COO Conference Call Participants Brooks O'Neil - Lake Street Capital Partners David Larsen - BTIG Jack Senft - William Blair Josh Raskin - Nephron Research Operator Good day, and welcome to the P3 Health Partners Fourth Quarter 2023 Earnings Conference Call. [Operator Instr ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-40033 P3 Health Partners Inc. (Exact name of registrant as specified in its charter) Delaware 85-2992794 (State or other jurisdiction of incorp ...

Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $288 million, a 16% increase year-over-year, with year-to-date revenue of $920 million also growing 16% compared to the prior year [27][47] - Adjusted EBITDA for the quarter was a loss of $22.3 million, an improvement from a loss of $40.3 million in the prior year, with year-to-date adjusted EBITDA loss of $41.2 million compared to a loss of $87.9 million in the previous year, representing a 53% improvement [21][29][52] - Medical margin for Q3 was $36 million, with a year-to-date total of $126 million, on track to meet the annual guidance of $155 million to $175 million [20][54] - Cash burn for Q3 was $8 million, with expectations to reach cash flow breakeven in 2024 [26][55] Business Line Data and Key Metrics Changes - Medical margin per member per month (PMPM) for persistent lives was $241 year-to-date, consistent with mature market ranges [20] - Revenue PMPM growth for the quarter was 11%, with year-to-date revenue PMPM at $985, compared to Agilon's $945 [34] - Gross profit PMPM for the year-to-date was $56, compared to Agilon's $45 PMPM [36] Market Data and Key Metrics Changes - Persistent lives, defined as those on the platform in December 2022 and January 2023, showed a medical claim expense PMPM decrease of approximately negative 2% year-to-date [28] - In California, revenue PMPM increased to $1,134 year-to-date, a 16% increase from the prior year, while medical margin PMPM improved from negative $45 to positive $244 [43] Company Strategy and Development Direction - The company aims to grow its fully delegated lives from 20% to approximately 30%-35% by converting existing contracts and signing new ones [99] - Focus on existing and adjacent markets while leveraging existing infrastructure for capital-efficient growth in 2024 [30] - The company is optimistic about the opportunities for strategic partnerships and joint ventures with payers and providers [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive adjusted EBITDA in 2024, with a preliminary guidance range of $20 million to $40 million [19][57] - The company is on track to meet its 2023 guidance, with strong momentum and improvements in medical costs and margins [25][60] - Management highlighted the importance of physician engagement and patient maturation in driving future performance [68] Other Important Information - The average age of persistent lives is reported to be 73 years old [105] - The company ended the quarter with approximately $58 million in cash, indicating a solid liquidity position [55] Q&A Session Summary Question: What is the expected EBITDA for 2024? - Management expects a positive EBITDA between $20 million and $40 million for 2024, driven by revenue growth and improved medical margins [19][57] Question: How confident is the company in bringing in new lives while maintaining performance? - Management is confident in adding new lives in 2024, leveraging existing infrastructure and seeing shorter timeframes for achieving successful medical margins [68] Question: Can you elaborate on the negotiations with payers for 2024? - The company signed a multiyear contract with SCAN Health and expanded relationships with Aetna and Atrio, with protections in place for medical benefits changes [77][80] Question: What is the current number of affiliated PCPs and at-risk members? - The company has over 2,700 affiliated PCPs and approximately 110,000 Medicare at-risk members [72][74] Question: How does the company plan to manage medical costs moving forward? - Management is focused on improving risk adjustment coding and managing medical costs through better data utilization and care management strategies [70][104]

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q P3 Health Partners Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 2370 Corporate Ci ...

Financial Data and Key Metrics Changes - Adjusted EBITDA was positive at approximately $200,000 for Q2 2023, a significant improvement from a loss of $28.7 million in the same period last year [15][54] - Total revenue for Q2 2023 was $329.1 million, representing a growth of approximately 22% compared to the prior year [13][14] - Medical margin improved to $50.5 million, or $161 PMPM, a 132% increase year-over-year [66] - Operating expenses decreased to $85 PMPM, down approximately 20% from $102 PMPM in the prior year [6] Business Line Data and Key Metrics Changes - The medical cost ratio was 84% in Q2 2023, leading to a medical margin of about $50.5 million [6] - Medical cost trend for Medicare Advantage lives increased by roughly 1% year-over-year, significantly lower than the overall market trend [6][17] - Adjusted EBITDA PMPM was close to breakeven compared to negative $95 PMPM in the same period last year [6] Market Data and Key Metrics Changes - P3 onboarded over 100,000 Medicare risk lives in a short period, indicating effective growth in the market [9] - In Arizona, membership grew from 10,000 in 2018 to approximately 45,500 in Q2 2023, with revenue PMPM increasing from $628 to $921 [12] Company Strategy and Development Direction - The company aims to expand into adjacent counties with minimal costs by leveraging existing infrastructure [8] - P3's model is described as high growth and low capital expenditure, focusing on operational excellence to achieve profitability [62][64] - The company is committed to disciplined growth to reach profitability while managing costs effectively [34][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving adjusted EBITDA profitability in 2024, with an increase in guidance reflecting improved performance [16][33] - The company noted strong demand from payer partners and clinicians, indicating a positive outlook for growth in the second half of the year [41] - Management emphasized the importance of operational discipline and continuous improvement in achieving financial goals [11][67] Other Important Information - The company reported a cybersecurity incident during the quarter, which was deemed immaterial with no ongoing impact expected [40] - The first half of 2023 saw capitated revenue of $624.3 million, an improvement of approximately 16% compared to the prior year [65] Q&A Session Summary Question: What drove the decrease in G&A expenses? - Management indicated that the decrease is sustainable and reflects a solid base for further efficiency improvements [26][27] Question: How does the company plan to expand into new counties? - The company plans to focus on contiguous counties to leverage existing infrastructure and relationships with payers [30] Question: What are the expectations for patient demand in the second half of the year? - Management remains bullish about growth, expecting continued high demand from both payer partners and clinicians [41] Question: Is the improvement in funding sustainable into 2024? - Management expressed optimism about sustaining funding improvements into 2024 due to increased engagement and operational focus [44][46] Question: What is the impact of the cybersecurity incident? - The incident was small and contained, with no expected ongoing impact on operations [40]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-40033 P3 Health Partners Inc. (Exact name of registrant as specified in its charter) Delaware 85-2992794 (State or other jurisdiction of in ...