Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 01, 2023 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-40033 | |
Entity Registrant Name | P3 Health Partners Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 85-2992794 | |
Entity Address, Address Line One | 2370 Corporate Circle, Suite 300 | |
Entity Address, City or Town | Henderson | |
Entity Address, State or Province | NV | |
Entity Address, Postal Zip Code | 89074 | |
City Area Code | 702 | |
Local Phone Number | 910–3950 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001832511 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Class A Common Stock | ||
Title of 12(b) Security | Class A common stock, par value $0.0001 per share | |
Trading Symbol | PIII | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 115,242,028 | |
Warrants | ||
Title of 12(b) Security | Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 | |
Trading Symbol | PIIIW | |
Security Exchange Name | NASDAQ | |
Class V Common Stock | ||
Entity Common Stock, Shares Outstanding | 197,846,771 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | |
CURRENT ASSETS: | |||
Cash | $ 52,562 | $ 17,537 | |
Restricted cash | 4,878 | 920 | |
Health plan receivable, net of allowance for credit losses of $150 and $0, respectively | 117,200 | 72,092 | |
Clinic fees, insurance and other receivable | 2,225 | 7,500 | |
Prepaid expenses and other current assets | 2,799 | 2,643 | |
TOTAL CURRENT ASSETS | 179,664 | 100,692 | |
Property and equipment, net | 9,360 | 8,839 | |
Intangible assets, net | 687,875 | 751,050 | |
Other long-term assets | 19,993 | 15,990 | |
TOTAL ASSETS | [1] | 896,892 | 876,571 |
CURRENT LIABILITIES: | |||
Accounts payable | 11,630 | 11,542 | |
Accrued expenses and other current liabilities | 20,957 | 16,647 | |
Accrued payroll | 5,629 | 8,224 | |
Health plan settlements payable | 35,422 | 13,608 | |
Claims payable | 155,497 | 151,207 | |
Premium deficiency reserve | 17,014 | 26,375 | |
Accrued interest | 21,153 | 14,061 | |
TOTAL CURRENT LIABILITIES | 267,302 | 241,664 | |
Operating lease liability | 13,556 | 11,516 | |
Warrant liabilities | 1,844 | 1,517 | |
Contingent consideration | 4,907 | 4,794 | |
Long-term debt, net | 108,252 | 94,421 | |
TOTAL LIABILITIES | [1] | 395,861 | 353,912 |
COMMITMENTS AND CONTINGENCIES (Note 12) | |||
Redeemable non-controlling interest | 313,088 | 516,805 | |
STOCKHOLDERS’ EQUITY: | |||
Additional paid in capital | 529,794 | 315,375 | |
Accumulated deficit | (341,882) | (309,545) | |
TOTAL STOCKHOLDERS’ EQUITY | 187,943 | 5,854 | |
TOTAL LIABILITIES, MEZZANINE EQUITY & STOCKHOLDERS’ EQUITY | 896,892 | 876,571 | |
Class A Common Stock | |||
STOCKHOLDERS’ EQUITY: | |||
Common stock | 11 | 4 | |
Class V Common Stock | |||
STOCKHOLDERS’ EQUITY: | |||
Common stock | $ 20 | $ 20 | |
[1]The Company’s condensed consolidated balance sheets include the assets and liabilities of its consolidated variable interest entities (“VIEs”). As discussed in Note 13 “Variable Interest Entities,” P3 LLC is itself a VIE. P3 LLC represents substantially all the assets and liabilities of the Company. As a result, the language and amounts below refer only to VIEs held at the P3 LLC level. The condensed consolidated balance sheets include total assets that can be used only to settle obligations of the P3 LLC’s VIEs totaling $11.1 million and $3.1 million as of September 30, 2023 and December 31, 2022, respectively, and total liabilities of the P3 LLC’s consolidated VIEs for which creditors do not have recourse to the general credit of the Company totaled $15.9 million and $9.9 million as of September 30, 2023 and December 31, 2022, respectively. These VIE assets and liabilities do not include $45.9 million and $33.0 million of net amounts due to affiliates as of September 30, 2023 and December 31, 2022, respectively, as these are eliminated in consolidation and not presented within the condensed consolidated balance sheets. See Note 13 “Variable Interest Entities.” |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Health plan receivable, allowance for credit loss | $ 150 | $ 0 |
Related Party | ||
Accounts payable, other | 45,900 | 33,000 |
Variable Interest Entity, Primary Beneficiary | ||
Assets to settle obligations | 11,100 | 3,100 |
Liabilities without recourse to company assets | $ 15,900 | $ 9,900 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 800,000,000 | 800,000,000 |
Common stock, shares issued (in shares) | 114,249,000 | 41,579,000 |
Common stock, shares outstanding (in shares) | 114,249,000 | 41,579,000 |
Class V Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 205,000,000 | 205,000,000 |
Common stock, shares issued (in shares) | 198,354,000 | 201,592,000 |
Common stock, shares outstanding (in shares) | 198,354,000 | 201,592,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
OPERATING REVENUE: | ||||
TOTAL OPERATING REVENUE | $ 288,351 | $ 248,260 | $ 919,514 | $ 791,258 |
OPERATING EXPENSE: | ||||
Medical expense | 279,220 | 254,777 | 867,061 | 788,046 |
Premium deficiency reserve | (12,489) | (7,302) | (9,361) | (10,116) |
Corporate, general and administrative expense | 33,065 | 37,863 | 97,931 | 117,560 |
Sales and marketing expense | 654 | 1,118 | 2,512 | 3,391 |
Depreciation and amortization | 21,721 | 21,815 | 65,041 | 65,287 |
Goodwill impairment | 0 | 0 | 0 | 851,456 |
TOTAL OPERATING EXPENSE | 322,171 | 308,271 | 1,023,184 | 1,815,624 |
OPERATING LOSS | (33,820) | (60,011) | (103,670) | (1,024,366) |
OTHER INCOME (EXPENSE): | ||||
Interest expense, net | (4,002) | (2,963) | (11,939) | (8,418) |
Mark-to-market of stock warrants | 755 | (2,568) | (327) | 3,386 |
Other | 190 | 213 | (455) | 173 |
TOTAL OTHER EXPENSE | (3,057) | (5,318) | (12,721) | (4,859) |
LOSS BEFORE INCOME TAXES | (36,877) | (65,329) | (116,391) | (1,029,225) |
PROVISION FOR INCOME TAXES | (412) | 0 | (928) | 0 |
NET LOSS | (37,289) | (65,329) | (117,319) | (1,029,225) |
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NON-CONTROLLING INTEREST | (23,993) | (54,156) | (85,008) | (853,125) |
NET LOSS ATTRIBUTABLE TO CONTROLLING INTEREST | $ (13,296) | $ (11,173) | $ (32,311) | $ (176,100) |
NET LOSS PER SHARE (Note 9): | ||||
Basic (in dollars per share) | $ (0.12) | $ (0.27) | $ (0.37) | $ (4.24) |
Diluted (in dollars per share) | $ (0.12) | $ (0.27) | $ (0.41) | $ (4.27) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 9): | ||||
Basic (in shares) | 114,198 | 41,579 | 88,010 | 41,579 |
Diluted (in shares) | 312,679 | 243,036 | 288,379 | 241,263 |
Capitated revenue | ||||
OPERATING REVENUE: | ||||
TOTAL OPERATING REVENUE | $ 285,153 | $ 243,988 | $ 909,473 | $ 780,775 |
Other patient service revenue | ||||
OPERATING REVENUE: | ||||
TOTAL OPERATING REVENUE | $ 3,198 | $ 4,272 | $ 10,041 | $ 10,483 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY - USD ($) $ in Thousands | Total | Cumulative adjustment due to adoption of new credit loss standard | Class A Common Stock | Class V Common Stock | Redeemable Non-controlling Interest | Redeemable Non-controlling Interest Cumulative adjustment due to adoption of new credit loss standard | Common Stock Class A Common Stock | Common Stock Class V Common Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Deficit Cumulative adjustment due to adoption of new credit loss standard |
Increase (Decrease) in Stockholders' Equity | |||||||||||
Beginning balance | $ 273,552 | $ 4 | $ 20 | $ 312,946 | $ (39,418) | ||||||
Beginning balance at Dec. 31, 2021 | $ 1,790,617 | ||||||||||
Increase (Decrease) in Temporary Equity | |||||||||||
Equity-based compensation | 11,711 | ||||||||||
Net loss | (50,213) | ||||||||||
Ending balance at Mar. 31, 2022 | 1,752,115 | ||||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 41,579,000 | 196,554,000 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Vesting of Class V common stock awards (in shares) | 549,000 | ||||||||||
Net loss | (10,577) | (10,577) | |||||||||
Ending balance at Mar. 31, 2022 | 262,975 | $ 4 | $ 20 | 312,946 | (49,995) | ||||||
Ending balance (in shares) at Mar. 31, 2022 | 41,579,000 | 197,103,000 | |||||||||
Beginning balance at Dec. 31, 2021 | 1,790,617 | ||||||||||
Increase (Decrease) in Temporary Equity | |||||||||||
Fair value adjustment to redeemable non-controlling interest | 19,400 | ||||||||||
Ending balance at Sep. 30, 2022 | 974,078 | ||||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 41,579,000 | 196,554,000 | |||||||||
Ending balance at Sep. 30, 2022 | $ 78,076 | $ 4 | $ 20 | 293,571 | (215,519) | ||||||
Ending balance (in shares) at Sep. 30, 2022 | 41,579,000 | 201,530,000 | |||||||||
Beginning balance at Dec. 31, 2021 | 1,790,617 | ||||||||||
Ending balance at Dec. 31, 2022 | 516,805 | $ (124) | |||||||||
Increase (Decrease) in Temporary Equity | |||||||||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2016-13 [Member] | ||||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 41,579,000 | 196,554,000 | |||||||||
Ending balance at Dec. 31, 2022 | $ 5,854 | $ (26) | $ 4 | $ 20 | 315,375 | (309,545) | $ (26) | ||||
Ending balance (in shares) at Dec. 31, 2022 | 41,579,000 | 201,592,000 | 41,579,000 | 201,592,000 | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Beginning balance | 262,975 | $ 4 | $ 20 | 312,946 | (49,995) | ||||||
Beginning balance at Mar. 31, 2022 | 1,752,115 | ||||||||||
Increase (Decrease) in Temporary Equity | |||||||||||
Equity-based compensation | 3,716 | ||||||||||
Net loss | (748,756) | ||||||||||
Ending balance at Jun. 30, 2022 | 1,007,075 | ||||||||||
Beginning balance (in shares) at Mar. 31, 2022 | 41,579,000 | 197,103,000 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Vesting of Class V common stock awards (in shares) | 4,320,000 | ||||||||||
Equity-based compensation | 0 | ||||||||||
Net loss | (154,350) | (154,350) | |||||||||
Ending balance at Jun. 30, 2022 | 108,625 | $ 4 | $ 20 | 312,946 | (204,345) | ||||||
Ending balance (in shares) at Jun. 30, 2022 | 41,579,000 | 201,423,000 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Beginning balance | 108,625 | $ 4 | $ 20 | 312,946 | (204,345) | ||||||
Equity-based compensation | 1,784 | ||||||||||
Fair value adjustment to redeemable non-controlling interest | 19,375 | ||||||||||
Net loss | (54,156) | ||||||||||
Ending balance at Sep. 30, 2022 | 974,078 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Vesting of Class V common stock awards (in shares) | 107,000 | ||||||||||
Fair value adjustment to redeemable non-controlling interests | (19,375) | (19,375) | |||||||||
Net loss | (11,174) | (11,174) | |||||||||
Ending balance at Sep. 30, 2022 | 78,076 | $ 4 | $ 20 | 293,571 | (215,519) | ||||||
Ending balance (in shares) at Sep. 30, 2022 | 41,579,000 | 201,530,000 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Beginning balance | 78,076 | $ 4 | $ 20 | 293,571 | (215,519) | ||||||
Beginning balance | 5,854 | $ (26) | $ 4 | $ 20 | 315,375 | (309,545) | $ (26) | ||||
Beginning balance at Dec. 31, 2022 | 516,805 | $ (124) | |||||||||
Increase (Decrease) in Temporary Equity | |||||||||||
Equity-based compensation | 291 | ||||||||||
Net loss | (43,249) | ||||||||||
Ending balance at Mar. 31, 2023 | 473,723 | ||||||||||
Beginning balance (in shares) at Dec. 31, 2022 | 41,579,000 | 201,592,000 | 41,579,000 | 201,592,000 | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Vesting of Class V common stock awards (in shares) | 275,000 | ||||||||||
Equity-based compensation | 686 | 686 | |||||||||
Net loss | (9,199) | (9,199) | |||||||||
Ending balance at Mar. 31, 2023 | (2,685) | $ 4 | $ 20 | 316,061 | (318,770) | ||||||
Ending balance (in shares) at Mar. 31, 2023 | 41,579,000 | 201,867,000 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Beginning balance | (2,685) | $ 4 | $ 20 | 316,061 | (318,770) | ||||||
Equity-based compensation | 291 | ||||||||||
Fair value adjustment to redeemable non-controlling interest | 330,617 | ||||||||||
Remeasurement adjustment to redeemable non-controlling interest resulting from ownership changes | (119,630) | ||||||||||
Net loss | (17,766) | ||||||||||
Ending balance at Jun. 30, 2023 | 667,235 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Exchanges of redeemable non-controlling interests for Class A common stock (in shares) | 3,362,000 | (3,362,000) | |||||||||
Equity-based compensation | 740 | 740 | |||||||||
Fair value adjustment to redeemable non-controlling interest | (330,617) | (330,617) | |||||||||
Remeasurement adjustment to redeemable non-controlling interest resulting from ownership changes | 119,630 | 119,630 | |||||||||
Private placement, net of offering costs | 86,582 | $ 7 | 86,575 | ||||||||
Private placement, net of offering costs (in shares) | 69,157,000 | ||||||||||
Net loss | (9,816) | (9,816) | |||||||||
Ending balance at Jun. 30, 2023 | (136,166) | $ 11 | $ 20 | 192,389 | (328,586) | ||||||
Ending balance (in shares) at Jun. 30, 2023 | 114,098,000 | 198,505,000 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Beginning balance | (136,166) | $ 11 | $ 20 | 192,389 | (328,586) | ||||||
Equity-based compensation | 105 | ||||||||||
Fair value adjustment to redeemable non-controlling interest | (330,617) | ||||||||||
Remeasurement adjustment to redeemable non-controlling interest resulting from ownership changes | 358 | ||||||||||
Net loss | (23,993) | ||||||||||
Ending balance at Sep. 30, 2023 | $ 313,088 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Exchanges of redeemable non-controlling interests for Class A common stock (in shares) | 151,000 | (151,000) | |||||||||
Equity-based compensation | 2,146 | 2,146 | |||||||||
Restricted stock unit awards issued in satisfaction of executive transaction bonuses | 5,000 | 5,000 | |||||||||
Fair value adjustment to redeemable non-controlling interest | 330,617 | 330,617 | |||||||||
Remeasurement adjustment to redeemable non-controlling interest resulting from ownership changes | (358) | (358) | |||||||||
Net loss | (13,296) | (13,296) | |||||||||
Ending balance at Sep. 30, 2023 | 187,943 | $ 11 | $ 20 | 529,794 | (341,882) | ||||||
Ending balance (in shares) at Sep. 30, 2023 | 114,249,000 | 198,354,000 | 114,249,000 | 198,354,000 | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Beginning balance | $ 187,943 | $ 11 | $ 20 | $ 529,794 | $ (341,882) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
NET LOSS | $ (117,319) | $ (1,029,225) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 65,041 | 65,287 |
Equity-based compensation | 4,259 | 17,211 |
Goodwill impairment | 0 | 851,456 |
Amortization of original issue discount and debt issuance costs | 405 | 0 |
Accretion of contingent consideration | 113 | 291 |
Mark-to-market adjustment of stock warrants | 327 | (3,386) |
Premium deficiency reserve | (9,361) | (10,116) |
Changes in assets and liabilities: | ||
Health plan receivable | (45,258) | (31,247) |
Clinic fees, insurance, and other receivable | 5,275 | (1,623) |
Prepaid expenses and other current assets | (429) | 3,462 |
Other long-term assets | (1,214) | 0 |
Accounts payable, accrued expenses, and other current liabilities | 2,758 | 4,560 |
Accrued payroll | 2,405 | 1,054 |
Health plan settlements payable | 21,814 | (1,922) |
Claims payable | 4,290 | 32,747 |
Accrued interest | 7,092 | 3,885 |
Operating lease liability | (348) | 3,501 |
Net cash used in operating activities | (60,150) | (94,065) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (2,039) | (2,283) |
Acquisitions, net of cash acquired | 0 | (5,500) |
Net cash used in investing activities | (2,039) | (7,783) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from long-term debt, net of original issuance discount | 14,101 | 0 |
Proceeds from private placement offering, net of offering costs paid | 87,244 | 0 |
Repayment of short-term and long-term debt | 0 | (3,625) |
Payment of debt issuance costs | (173) | 0 |
Net cash provided by (used in) financing activities | 101,172 | (3,625) |
Net change in cash and restricted cash | 38,983 | (105,473) |
Cash and restricted cash, beginning of period | 18,457 | 140,834 |
Cash and restricted cash, end of period | $ 57,440 | $ 35,361 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Note 1: Organization Description of Business P3 Health Partners Inc. (“P3”), f/k/a Foresight Acquisition Corp., is a patient-centered and physician-led population health management company and, for accounting purposes, the successor to P3 Health Group Holdings, LLC and its subsidiaries (collectively, “P3 LLC,” and together with P3, the “Company”). P3 LLC was founded on April 12, 2017 and began commercial operations on April 20, 2017 to provide population health management services on an at-risk basis to insurance plans offering medical coverage to Medicare beneficiaries under Medicare Advantage programs. Medicare Advantage programs are insurance products created solely for Medicare beneficiaries. Insurance plans contract directly with the Centers for Medicare and Medicaid Services (“CMS”) to offer Medicare beneficiaries benefits that replace traditional Medicare Fee for Service (“FFS”) coverage. On December 3, 2021, (the “Closing Date”), P3 and P3 LLC consummated a series of business combinations pursuant to which, among other things, P3 LLC merged with and into FAC Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Merger Sub”) (the “P3 Merger”), with Merger Sub as the surviving company, which was renamed P3 LLC, and FAC-A Merger Sub Corp., a Delaware corporation and a wholly owned subsidiary of P3, FAC-B Merger Sub Corp., a Delaware corporation and a wholly owned subsidiary of the P3 (together with FAC-A Merger Sub Corp., the “Merger Corps”) merged with and into CPF P3 Blocker-A, LLC, a Delaware limited liability company, CPF P3 Blocker-B, LLC a Delaware limited liability company (together with CPF P3 Blocker-A, LLC, the “Blockers”), with the Blockers as the surviving entities and wholly owned subsidiaries of P3 (collectively, the “Business Combinations”). Upon completion of the Business Combinations (the “Closing”), the Company was organized in an “Up-C” structure in which P3 directly owned approximately 17.1% of the common units of P3 LLC (“Common Units”) and became the sole manager of P3 LLC. Following the Closing, substantially all of the Company’s assets are held and operations are conducted by P3 LLC, and P3’s only assets are equity interests in P3 LLC. The Company’s contracts with health plans are based on an at-risk shared savings model. Under this model, the Company is financially responsible for the cost of all contractually covered services provided to members assigned to the Company by health plans in exchange for a fixed monthly “capitation” payment, which is generally a percentage of the payment health plans receive from CMS. Under this arrangement, Medicare beneficiaries generally receive all their healthcare coverage through the Company’s network of employed and affiliated physicians and specialists (except for emergency situations). The services provided to health plans’ members vary by contract. These may include utilization management, care management, disease education, and maintenance of a quality improvement and quality management program for members assigned to the Company. The Company is also responsible for the credentialing of its providers, processing and payment of claims, and the establishment of a provider network for certain health plans. In addition to the Company’s contracts with health plans, the Company provides primary healthcare services through its employed physician clinic locations. These primary care clinics are reimbursed for services provided under FFS contracts with various payers and through capitated – per member, per month (“PMPM”) arrangements. |
Going Concern and Liquidity
Going Concern and Liquidity | 9 Months Ended |
Sep. 30, 2023 | |
Going Concern and Liquidity | |
Going Concern and Liquidity | Note 2: Going Concern and Liquidity The accompanying unaudited interim condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has experienced losses since its inception and had net losses of $37.3 million and $65.3 million for the three months ended September 30, 2023 and 2022, respectively, and $117.3 million and $1,029.2 million for the nine months ended September 30, 2023 and 2022, respectively. Such losses were primarily the result of goodwill impairment loss with respect to the nine months ended September 30, 2022, net increases in certain noncash expenses including equity-based compensation and mark-to-market adjustments for warrants and premium deficiency reserves, as well as costs incurred in adding new members, building relationships with physician partners and payors, and developing new services. The Company anticipates operating losses and negative cash flows to continue for the foreseeable future as it continues to grow membership. As of September 30, 2023 and December 31, 2022, the Company had $52.6 million and $17.5 million, respectively, in unrestricted cash and cash equivalents available to fund future operations. The Company’s capital requirements will depend on many factors, including the pace of the Company’s growth, its ability to manage medical |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 3: Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of the U.S. Securities and Exchange Commission (“SEC”) Regulation S-X. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2022. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations dealing with interim financial statements. Management believes the accompanying condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of periods presented. The consolidated operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or for any other future annual or interim period. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and all significant intercompany transactions and balances have been eliminated. The Company periodically evaluates entities for consolidation either through ownership of a majority voting interest, or through means other than voting interest, in accordance with the Variable Interest Entity (“VIE”) accounting model. This evaluation includes a qualitative review of the design of the entity, its organizational structure, including decision making ability and financial agreements, as well as a quantitative review. The Company consolidates a VIE when it has a variable interest that provides it with a controlling financial interest in the VIE, referred to as the primary beneficiary of the VIE. As the sole managing member of P3 LLC, P3 has the right to direct the most significant activities of P3 LLC and the obligation to absorb losses and receive benefits. The rights of the non-managing members of P3 LLC are limited and protective in nature and do not give substantive participation rights over the sole managing member. Accordingly, P3 identifies itself as the primary beneficiary of P3 LLC and began consolidating P3 LLC as of the Closing Date resulting in a non-controlling interest related to the Common Units held by members other than P3. Additionally, as more fully described in Note 13 “Variable Interest Entities,” P3 LLC is the primary beneficiary of the following physician practices (collectively, the “Network”): • Kahan, Wakefield, Abdou, PLLC • Bacchus, Wakefield, Kahan, PC • P3 Health Partners Professional Services P.C. • P3 Medical Group, P.C. • P3 Health Partners California, P.C. (f/k/a Omni IPA Medical Group, Inc.) Comprehensive Loss Comprehensive loss includes net loss to common stockholders as well as other changes in equity that result from transactions and economic events other than those with stockholders. There was no difference between comprehensive loss and net loss to common stockholders for the periods presented. Use of Estimates The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that could affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to allowance for credit losses, revenue recognition, the liability for unpaid claims, equity-based compensation, premium deficiency reserves (“PDR”), fair value and impairment recognition of long-lived assets (including intangibles), fair value of liability classified instruments, and judgments related to deferred income taxes. The Company bases its estimates on the best information available at the time, its experiences, and various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates. Significant Accounting Policies A description of the Company’s significant accounting policies is included in the audited consolidated financial statements within Annual Report on Form 10-K for the year ended December 31, 2022. No changes to significant accounting policies have occurred since December 31, 2022, with the exception of those detailed below. Revenue Recognition The Company categorizes revenue based on various factors such as the nature of contracts as follows: Revenue Type Three Months Ended % of Total Three Months Ended % of Total (dollars in thousands) Capitated revenue $ 285,153 98.9 % $ 243,988 98.3 % Other patient service revenue: Clinic fees and insurance 1,246 0.4 1,957 0.8 Care coordination / management fees 1,784 0.6 1,730 0.7 Incentive fees 168 0.1 585 0.2 Total other patient service revenue 3,198 1.1 4,272 1.7 Total revenue $ 288,351 100.0 % $ 248,260 100.0 % Revenue Type Nine Months Ended % of Total Nine Months Ended % of Total (dollars in thousands) Capitated revenue $ 909,473 98.9 % $ 780,775 98.7 % Other patient service revenue: Clinic fees and insurance 3,890 0.4 4,103 0.5 Shared risk — — 55 — Care coordination / management fees 5,699 0.6 4,413 0.6 Incentive fees 452 0.1 1,912 0.2 Total other patient service revenue 10,041 1.1 10,483 1.3 Total revenue $ 919,514 100.0 % $ 791,258 100.0 % During the three months ended September 30, 2023 and 2022, four health plan customers each accounted for 10% or more of total revenue and collectively comprised 58% and 65% of the Company’s total revenue, respectively. During each of the nine months ended September 30, 2023 and 2022, four health plan customers each accounted for 10% or more of total revenue and collectively comprised 61% and 67% of the Company’s total revenue, respectively. Three health plan customers accounted for 10% or more of total health plan receivable each as of September 30, 2023 and December 31, 2022. Reclassifications Certain amounts in the accompanying condensed consolidated financial statements and accompanying notes have been reclassified to be consistent with the current period presentation. These reclassifications had no impact on the Company’s financial condition, results of operations, or net cash flows. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Note 4: Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) Accounting Standards Update (“ASU”) 2016-13 introduced a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The new current expected credit losses model generally calls for the immediate recognition of all expected credit losses and applies to loans, accounts and trade receivables as well as other financial assets measured at amortized cost, loan commitments and off-balance sheet credit exposures, debt securities and other financial assets measured at fair value through other comprehensive income, and beneficial interests in securitized financial assets. The new guidance replaced the current incurred loss model for measuring expected credit losses, requires expected losses on available for sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements. In April 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-04, which, among other amendments, allowed for certain policy elections and practical expedients related to accrued interest on financial instruments. In May 2019, the FASB issued ASU 2019-05, which granted targeted transition relief by allowing entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost. In November 2019, the FASB issued ASU 2019-10 and ASU 2019-11, which addressed certain aspects of the guidance related to effective dates, expected recoveries, troubled debt restructurings, accrued interest receivables, and financial assets secured by collateral. ASU 2016‑13 is effective for fiscal years beginning after December 15, 2022. The Company adopted ASU 2016-13 and related amendments as of January 1, 2023 on a modified retrospective basis. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements and related disclosures. Recent Accounting Pronouncements Not Yet Adopted ASU 2023-06, Disclosure Improvements: Codification Amendments In Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”) ASU 2023-06 clarifies or improves disclosure and presentation requirements on a variety of topics and aligns the requirements in the FASB accounting standards codification (the “Codification”) with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The amendments in this update should be applied prospectively. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The Company is evaluating the effect ASU 2023-06 will have on its financial statements and related disclosures. ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) ASU 2021-08 requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts as if it had originated the contracts. The amendments in this update are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. Upon adoption, the Company will apply this guidance to future business combinations. ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) ASU 2020-06 eliminates two of the three models in ASC 470-20 that require issuers to separately account for embedded conversion features and eliminates some of the requirements for equity classification in ASC 815-40-25 for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and generally requires them to include the effect of potential share settlement for instruments that may be settled in cash or shares. It is effective for annual periods beginning after December 15, 2023, and interim periods therein. Early adoption is permitted, but the Company must adopt the guidance as of the beginning of a fiscal year. The Company is evaluating the effect ASU 2020-06 will have on its financial statements and related disclosures. |
Fair Value Measurements and Hie
Fair Value Measurements and Hierarchy | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Hierarchy | Note 5: Fair Value Measurements and Hierarchy Information about the Company’s financial liabilities measured at fair value on a recurring basis is presented below: Level 1 Level 2 Level 3 Total (in thousands) Warrant liability as of September 30, 2023 $ 1,793 $ — $ 51 $ 1,844 Warrant liability as of December 31, 2022 $ 1,477 $ — $ 40 $ 1,517 The key Level 3 inputs into the option pricing model related to the private placement warrants to purchase Class A common stock were as follows: September 30, 2023 December 31, 2022 Volatility 80.0% 55.0% Risk-free interest rate 4.8% 4.1% Exercise price $ 11.50 $ 11.50 Expected term 3.2 years 3.9 years The following tables set forth a summary of changes in the fair value of the Company’s private placement warrants to purchase Class A common stock, which are considered to be Level 3 fair value measurements: Nine Months Ended September 30, 2023 2022 (in thousands) Beginning balance $ 40 $ 502 Mark-to-market adjustment 11 (280) Ending balance $ 51 $ 222 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 6: Property and Equipment The Company’s property and equipment balances consisted of the following: September 30, 2023 December 31, 2022 (in thousands) Leasehold improvements $ 1,658 $ 1,810 Furniture and fixtures 1,164 1,262 Computer equipment and software 3,694 3,206 Medical equipment 1,102 1,067 Software (development in process) 3,877 3,460 Vehicles 654 618 Other 1,557 37 13,706 11,460 Less: accumulated depreciation (4,346) (2,621) Property and equipment, net $ 9,360 $ 8,839 Total depreciation of property and equipment was $0.5 million and $0.7 million for the three months ended September 30, 2023 and 2022, respectively, and $1.8 million for each of the nine months ended September 30, 2023 and 2022. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Assets | |
Intangible Assets | Note 7: Intangible Assets Intangible assets, net consisted of the following: September 30, 2023 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in thousands) Indefinite lived intangible assets: Medical licenses $ 700 $ — $ 700 $ 700 $ — $ 700 Definite lived intangible assets: Customer relationships 684,000 (125,400) 558,600 684,000 (74,100) 609,900 Trademarks 148,635 (27,866) 120,769 148,635 (16,704) 131,931 Payor contracts 4,700 (823) 3,877 4,700 (470) 4,230 Provider network 4,800 (871) 3,929 4,800 (511) 4,289 Total $ 842,835 $ (154,960) $ 687,875 $ 842,835 $ (91,785) $ 751,050 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Note 8: Debt Long-term debt consisted of the following: September 30, 2023 December 31, 2022 (in thousands) Repurchase promissory note, interest paid at 11.0%, due June 2026 $ 15,000 $ 15,000 Term loan facility, interest paid at 12.0%, due December 2025 65,000 65,000 Unsecured promissory note, interest paid at 14.0%, due May 2026 29,102 15,000 Long-term debt, gross 109,102 95,000 Less: unamortized debt issuance costs and original issue discount (850) (579) 108,252 94,421 Less: current portion of long-term debt — — Long-term debt, net $ 108,252 $ 94,421 The Company was in compliance with its covenants under the term loan facility and the unsecured promissory note as of September 30, 2023; however, there can be no assurance that the Company will be able to maintain compliance with these covenants in the future or that the lenders under the term loan facility and the unsecured promissory note or the lenders of any future indebtedness the Company may incur will grant any waiver or forbearance with respect to such covenants that we may request in the future. |
Net Loss per Share
Net Loss per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Loss per Share | Note 9: Net Loss per Share The following table provides the computation of basic and diluted net loss per share: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands, except per share data) Numerator–basic: Net loss attributable to Class A common stockholders–basic $ (13,296) $ (11,173) $ (32,311) $ (176,100) Numerator–diluted: Net loss attributable to Class A common stockholders–basic $ (13,296) $ (11,173) $ (32,311) $ (176,100) Effective of dilutive securities: Shares of Class V common stock (23,993) (54,156) (85,008) (853,125) Net loss attributable to Class A common stockholders–diluted $ (37,289) $ (65,329) $ (117,319) $ (1,029,225) Denominator–basic: Weighted average Class A common shares outstanding–basic 114,198 41,579 88,010 41,579 Net loss per share attributable to Class A common stockholders–basic $ (0.12) $ (0.27) $ (0.37) $ (4.24) Denominator–diluted: Weighted average Class A common shares outstanding–basic 114,198 41,579 88,010 41,579 Weighted average effect of dilutive securities: Shares of Class V common stock 198,481 201,457 200,369 199,684 Weighted average shares outstanding–diluted 312,679 243,036 288,379 241,263 Net loss per share attributable to Class A common stockholders–diluted $ (0.12) $ (0.27) $ (0.41) $ (4.27) Shares of Class V common stock do not share in the earnings or losses of P3 Health Partners, Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted net income per share for Class V common stock under the two-class method is not required. The following table presents potentially dilutive securities excluded from the computation of diluted net loss per share for the periods presented because their effect would have been anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) Stock warrants (1) 81,938 10,819 81,938 10,819 Stock options (1) 5,867 2,134 5,867 2,134 Restricted stock units (1) 4,690 — 4,690 — Restricted stock awards (1) 250 — 250 — Shares of Class V common stock (2) — 494 — 494 Total 92,745 13,447 92,745 13,447 ____________________ (1) Represents the number of instruments outstanding at the end of the period. Application of the treasury stock method would reduce this amount if they had a dilutive effect and were included in the computation of diluted net loss per share. (2) Shares of Class V common stock at the end of the period, including shares tied to unvested Common Units, are considered potentially dilutive shares of Class A common stock under the application of the if-converted method. |
Redeemable Non-controlling Inte
Redeemable Non-controlling Interest | 9 Months Ended |
Sep. 30, 2023 | |
Noncontrolling Interest [Abstract] | |
Redeemable Non-controlling Interest | Note 10: Redeemable Non-controlling Interest Non-controlling interest represents the portion of P3 LLC that the Company controls and consolidates but does not own (i.e., the Common Units held directly by the equity holders other than the Company). The ownership of the Common Units is summarized as follows: September 30, 2023 December 31, 2022 Units (in thousands) Ownership % Units (in thousands) Ownership % P3 Health Partners Inc. ’ s ownership of Common Units 114,249 36.5 % 41,579 17.1 % Non-controlling interest holders ’ ownership of Common Units 198,354 63.5 % 201,592 82.9 % Total Common Units 312,603 100.0 % 243,171 100.0 % During the nine months ended September 30, 2023, there were an aggregate of 3.5 million shares of Class A common stock issued to P3 LLC members in connection with such members’ redemptions of an equivalent number of Common Units and corresponding cancellation and retirement of an equivalent number of Class V common stock. Such retired shares of Class V common stock may not be reissued. The redemptions occurred pursuant to the terms of the P3 LLC Amended & Restated Limited Liability Agreement dated as of the Closing Date (“P3 LLC A&R LLC Agreement”). There was no Common Unit exchange or redemption activity during the nine months ended September 30, 2022. As of September 30, 2023, there was no remeasurement adjustment recorded as the fair value of redeemable non-controlling interest (i.e., based on the five-day volume weighted average price of a share of Class A common stock) was lower than the carrying value. As of September 30, 2022, a remeasurement adjustment of $19.4 million was recorded as the fair value of redeemable non-controlling interest was higher than the carrying value. The offset of the fair value adjustment was recorded to additional paid in capital. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 11: Segment Reporting The Company’s operations are organized under one reportable segment. The Chief Executive Officer, who is the Company’s CODM, manages the Company’s operations and reviews financial information on a consolidated basis. Decisions regarding resource allocation and assessment of profitability are based on the Company’s responsibility to deliver high quality primary medical care services to its patient population. For the periods presented, all the Company’s revenue was earned in the United States. Likewise, all the Company’s long-lived assets were located in the United States. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12: Commitments and Contingencies In 2021, a discrepancy was identified in the service agreement with one of the Company’s health plans resulting in a renegotiation of the agreement. In January 2023, the renegotiation was settled and the Company reflected the known settlement of $5.0 million within health plan settlements payable as of December 31, 2022. The remaining settlement balance of $3.5 million is recorded within health plan settlements payable as of September 30, 2023. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2023 | |
Variable Interest Entities | |
Variable Interest Entities | Note 13: Variable Interest Entities P3 LLC has Management Services Agreements (“MSAs”) and deficit funding agreements with the Network. The MSAs provide that the P3 LLC will furnish administrative personnel, office supplies and equipment, general business services, contract negotiation, and billing and collection services to the Network. Fees for these services are the excess of the Network’s revenue over expenses. Per the deficit funding agreements, P3 LLC is obligated to advance funds, as needed, to support the Network’s working capital needs to the extent operating expenses exceed gross revenue. These advances accrue interest at a rate of prime plus 2%. Net advances made to the Network and accrued interest on those advances are presented within due to consolidated entities of P3 in the table below. Additionally, P3 LLC entered into stock transfer restriction agreements with the practice shareholders of the Network, which, by way of a call option, unequivocally permit P3 LLC to appoint successor physicians if a practice shareholder vacates their ownership position. Accordingly, P3 LLC identifies itself as the primary beneficiary of the Network. Practice shareholders, who are employees of P3 LLC, retain equity ownership in the Network, which represents nominal non-controlling interests; however, the non-controlling interests do not participate in the profit or loss of the Network. P3 LLC, directly or indirectly via its wholly owned subsidiaries, may not use or access any net assets of these VIEs to settle its obligations or the obligations of its wholly owned subsidiaries. Additionally, the creditors of the VIEs do not have recourse to the net assets of P3 LLC. Since P3 LLC represents substantially all the assets and liabilities of the Company, the following tables provide a summary of the assets, liabilities, and operating performance of only VIEs held at the P3 LLC level. September 30, 2023 December 31, 2022 (in thousands) ASSETS Cash $ 9,313 $ 1,759 Clinic fees, insurance and other receivable 201 1,178 Prepaid expenses and other current assets 1,424 121 Property and equipment, net 16 44 Other long-term assets 98 — Due from consolidated entities of P3 — 3,012 TOTAL ASSETS $ 11,052 $ 6,114 LIABILITIES AND MEMBERS’ DEFICIT Accounts payable $ 5,103 $ 7,800 Accrued expenses and other current liabilities 916 262 Accrued payroll 2,862 1,885 Claims payable 6,109 — Other long-term liabilities 886 — Due to consolidated entities of P3 46,049 36,025 TOTAL LIABILITIES 61,925 45,972 MEMBERS’ DEFICIT (50,873) (39,858) TOTAL LIABILITIES AND MEMBERS’ DEFICIT $ 11,052 $ 6,114 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) Revenue $ 9,024 $ 13,594 $ 29,374 $ 39,463 Expense 11,364 15,732 36,886 46,709 Net loss $ (2,340) $ (2,138) $ (7,512) $ (7,246) |
Capitalization
Capitalization | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Capitalization | Note 14: Capitalization March 2023 Private Placement On April 6, 2023, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), dated March 30, 2023 with the purchasers named therein (the “Purchasers”), which included certain affiliated entities of Chicago Pacific Founders GP, L.P., a Delaware limited partnership (“CPF”), and the Company’s Chief Medical Officer and member of the Company’s board of directors, the Company issued 79.9 million units at a price of approximately $1.12 per unit for institutional investors, and a purchase price of approximately $1.19 per unit for employees and consultants. Each unit consists of one share of Class A common stock and 0.75 of a warrant to purchase one share of Class A common stock at an exercise price of $1.13. Certain institutional investors elected to receive pre-funded warrants to purchase Class A common stock in lieu of a portion of their Class A common stock. In total, the Company sold (i) an aggregate of 69.2 million shares of its Class A common stock (the “Shares”), (ii) warrants to purchase an aggregate of 59.9 million shares of Class A common stock (the “Common Warrants”), and (iii) pre-funded warrants to purchase an aggregate of 10.8 million shares of Class A common stock (the “Pre-Funded Warrants” and, together with the Common Warrants, the “Warrants”) for aggregate proceeds of $86.6 million, net of $2.9 million in offering costs (collectively, the “March 2023 Private Placement”). The Warrants were recorded as equity-classified financial instruments. Registration Rights Agreement On April 6, 2023, in connection with the Purchase Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Purchasers. Pursuant to the Registration Rights Agreement, the Company agreed to prepare a registration statement for purposes of registering the resale of the Shares and shares of common stock issuable upon exercise of the Warrants, which was filed with the SEC on May 2, 2023 and declared effective by the SEC on June 14, 2023. The Registration Rights Agreement also contains certain shelf takedown and piggyback rights. The Company has also agreed, among other things, to indemnify the Purchasers, their officers, directors, members, employees and agents, successors and assigns under the registration statement from certain liabilities and to pay all fees and expenses incident to the Company’s obligations under the Registration Rights Agreement. Letter Agreement with CPF On April 6, 2023, in connection with the Purchase Agreement, the Company entered into a letter agreement (the “Letter Agreement”) with CPF, Chicago Pacific Founders GP III, L.P., a Delaware limited partnership (“CPF GP III”) (on behalf of the funds of which CPF is the general partner, certain funds of which CPF GP III is the general partner) and/or certain of their affiliated entities and funds (collectively, the “CPF Parties”). The Letter Agreement provides, pursuant to certain stipulations, that CPF will be entitled to designate one additional independent member of the Company’s board of directors and that CPF will be entitled to certain information rights and protective provisions. As of the date of the issuance of these condensed consolidated financial statements, CPF has not exercised its right to designate a director under the terms of the Letter Agreement. CPF Parties also agreed to a standstill restriction from the date of the closing of the March 2023 Private Placement to June 30, 2024 that limits the ownership of the CPF Parties to 49.99% of the Company’s Class A common stock and Class V common stock. RSU Transaction Bonuses In August 2023, the Company granted an aggregate of 2.5 million restricted stock units (“RSUs”) pursuant to the P3 Health Partners Inc. 2021 Incentive Award Plan to the Company’s Chief Executive Officer and Chief Medical Officer (collectively, the “Executives”) in full satisfaction of the “Second Bonus” earned by each Executive during the year ended December 31, 2022 pursuant to the terms of the Transaction Bonus Agreements, dated May 2022, entered into between each Executive and the Company and P3 Health Group Management, LLC in connection with the consummation of the Business Combinations (together, the “RSU Transaction Bonuses”). The Second Bonus of $5.0 million in the aggregate was recorded within accrued payroll on the condensed consolidated balance sheet as of December 31, 2022. The RSUs were fully vested at the time of grant. The fair value of the RSUs granted was $5.6 million based on the closing price of one share of Class A common stock of $2.22 on the grant date, $0.6 million of which was recorded in equity-based compensation during the three and nine months ended September 30, 2023. Each RSU represents a right to receive one share of Class A common stock. The RSUs will be settled in Class A common stock on the earlier of (i) December 31, 2023 and (ii) the closing of the Company’s first underwritten offering and sale of common stock. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15: Subsequent Events During October 2023, an aggregate of 0.6 million shares of Class A common stock were issued to P3 LLC members in connection with such members’ redemptions of an equivalent number of Common Units and corresponding cancellation and retirement of an equivalent number of Class V common stock. Such retired shares of Class V common stock may not be reissued. The redemptions occurred pursuant to the terms of the P3 LLC A&R LLC Agreement. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of the U.S. Securities and Exchange Commission (“SEC”) Regulation S-X. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2022. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations dealing with interim financial statements. Management believes the accompanying condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of periods presented. The consolidated operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or for any other future annual or interim period. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and all significant intercompany transactions and balances have been eliminated. The Company periodically evaluates entities for consolidation either through ownership of a majority voting interest, or through means other than voting interest, in accordance with the Variable Interest Entity (“VIE”) accounting model. This evaluation includes a qualitative review of the design of the entity, its organizational structure, including decision making ability and financial agreements, as well as a quantitative review. The Company consolidates a VIE when it has a variable interest that provides it with a controlling financial interest in the VIE, referred to as the primary beneficiary of the VIE. As the sole managing member of P3 LLC, P3 has the right to direct the most significant activities of P3 LLC and the obligation to absorb losses and receive benefits. The rights of the non-managing members of P3 LLC are limited and protective in nature and do not give substantive participation rights over the sole managing member. Accordingly, P3 identifies itself as the primary beneficiary of P3 LLC and began consolidating P3 LLC as of the Closing Date resulting in a non-controlling interest related to the Common Units held by members other than P3. Additionally, as more fully described in Note 13 “Variable Interest Entities,” P3 LLC is the primary beneficiary of the following physician practices (collectively, the “Network”): • Kahan, Wakefield, Abdou, PLLC • Bacchus, Wakefield, Kahan, PC • P3 Health Partners Professional Services P.C. • P3 Medical Group, P.C. • P3 Health Partners California, P.C. (f/k/a Omni IPA Medical Group, Inc.) |
Comprehensive Loss | Comprehensive Loss Comprehensive loss includes net loss to common stockholders as well as other changes in equity that result from transactions and economic events other than those with stockholders. There was no difference between comprehensive loss and net loss to common stockholders for the periods presented. |
Use of Estimates | Use of Estimates The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that could affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to allowance for credit losses, revenue recognition, the liability for unpaid claims, equity-based compensation, premium deficiency reserves (“PDR”), fair value and impairment recognition of long-lived assets (including intangibles), fair value of liability classified instruments, and judgments related to deferred income taxes. The Company bases its estimates on the best information available at the time, its experiences, and various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates. |
Recently Adopted Accounting Pronouncements/ Recent Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) Accounting Standards Update (“ASU”) 2016-13 introduced a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The new current expected credit losses model generally calls for the immediate recognition of all expected credit losses and applies to loans, accounts and trade receivables as well as other financial assets measured at amortized cost, loan commitments and off-balance sheet credit exposures, debt securities and other financial assets measured at fair value through other comprehensive income, and beneficial interests in securitized financial assets. The new guidance replaced the current incurred loss model for measuring expected credit losses, requires expected losses on available for sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements. In April 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-04, which, among other amendments, allowed for certain policy elections and practical expedients related to accrued interest on financial instruments. In May 2019, the FASB issued ASU 2019-05, which granted targeted transition relief by allowing entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost. In November 2019, the FASB issued ASU 2019-10 and ASU 2019-11, which addressed certain aspects of the guidance related to effective dates, expected recoveries, troubled debt restructurings, accrued interest receivables, and financial assets secured by collateral. ASU 2016‑13 is effective for fiscal years beginning after December 15, 2022. The Company adopted ASU 2016-13 and related amendments as of January 1, 2023 on a modified retrospective basis. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements and related disclosures. Recent Accounting Pronouncements Not Yet Adopted ASU 2023-06, Disclosure Improvements: Codification Amendments In Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”) ASU 2023-06 clarifies or improves disclosure and presentation requirements on a variety of topics and aligns the requirements in the FASB accounting standards codification (the “Codification”) with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The amendments in this update should be applied prospectively. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The Company is evaluating the effect ASU 2023-06 will have on its financial statements and related disclosures. ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) ASU 2021-08 requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts as if it had originated the contracts. The amendments in this update are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. Upon adoption, the Company will apply this guidance to future business combinations. ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) ASU 2020-06 eliminates two of the three models in ASC 470-20 that require issuers to separately account for embedded conversion features and eliminates some of the requirements for equity classification in ASC 815-40-25 for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and generally requires them to include the effect of potential share settlement for instruments that may be settled in cash or shares. It is effective for annual periods beginning after December 15, 2023, and interim periods therein. Early adoption is permitted, but the Company must adopt the guidance as of the beginning of a fiscal year. The Company is evaluating the effect ASU 2020-06 will have on its financial statements and related disclosures. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregation of Revenue | The Company categorizes revenue based on various factors such as the nature of contracts as follows: Revenue Type Three Months Ended % of Total Three Months Ended % of Total (dollars in thousands) Capitated revenue $ 285,153 98.9 % $ 243,988 98.3 % Other patient service revenue: Clinic fees and insurance 1,246 0.4 1,957 0.8 Care coordination / management fees 1,784 0.6 1,730 0.7 Incentive fees 168 0.1 585 0.2 Total other patient service revenue 3,198 1.1 4,272 1.7 Total revenue $ 288,351 100.0 % $ 248,260 100.0 % Revenue Type Nine Months Ended % of Total Nine Months Ended % of Total (dollars in thousands) Capitated revenue $ 909,473 98.9 % $ 780,775 98.7 % Other patient service revenue: Clinic fees and insurance 3,890 0.4 4,103 0.5 Shared risk — — 55 — Care coordination / management fees 5,699 0.6 4,413 0.6 Incentive fees 452 0.1 1,912 0.2 Total other patient service revenue 10,041 1.1 10,483 1.3 Total revenue $ 919,514 100.0 % $ 791,258 100.0 % |
Fair Value Measurements and H_2
Fair Value Measurements and Hierarchy (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Hierarchy for Financial Liabilities | Information about the Company’s financial liabilities measured at fair value on a recurring basis is presented below: Level 1 Level 2 Level 3 Total (in thousands) Warrant liability as of September 30, 2023 $ 1,793 $ — $ 51 $ 1,844 Warrant liability as of December 31, 2022 $ 1,477 $ — $ 40 $ 1,517 |
Schedule of Fair Value Measurement Inputs and Valuation Techniques | The key Level 3 inputs into the option pricing model related to the private placement warrants to purchase Class A common stock were as follows: September 30, 2023 December 31, 2022 Volatility 80.0% 55.0% Risk-free interest rate 4.8% 4.1% Exercise price $ 11.50 $ 11.50 Expected term 3.2 years 3.9 years |
Schedule of Changes in the Fair Value | The following tables set forth a summary of changes in the fair value of the Company’s private placement warrants to purchase Class A common stock, which are considered to be Level 3 fair value measurements: Nine Months Ended September 30, 2023 2022 (in thousands) Beginning balance $ 40 $ 502 Mark-to-market adjustment 11 (280) Ending balance $ 51 $ 222 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | The Company’s property and equipment balances consisted of the following: September 30, 2023 December 31, 2022 (in thousands) Leasehold improvements $ 1,658 $ 1,810 Furniture and fixtures 1,164 1,262 Computer equipment and software 3,694 3,206 Medical equipment 1,102 1,067 Software (development in process) 3,877 3,460 Vehicles 654 618 Other 1,557 37 13,706 11,460 Less: accumulated depreciation (4,346) (2,621) Property and equipment, net $ 9,360 $ 8,839 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Assets | |
Schedule of Finite-Lived Intangible Assets | Intangible assets, net consisted of the following: September 30, 2023 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in thousands) Indefinite lived intangible assets: Medical licenses $ 700 $ — $ 700 $ 700 $ — $ 700 Definite lived intangible assets: Customer relationships 684,000 (125,400) 558,600 684,000 (74,100) 609,900 Trademarks 148,635 (27,866) 120,769 148,635 (16,704) 131,931 Payor contracts 4,700 (823) 3,877 4,700 (470) 4,230 Provider network 4,800 (871) 3,929 4,800 (511) 4,289 Total $ 842,835 $ (154,960) $ 687,875 $ 842,835 $ (91,785) $ 751,050 |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets, net consisted of the following: September 30, 2023 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in thousands) Indefinite lived intangible assets: Medical licenses $ 700 $ — $ 700 $ 700 $ — $ 700 Definite lived intangible assets: Customer relationships 684,000 (125,400) 558,600 684,000 (74,100) 609,900 Trademarks 148,635 (27,866) 120,769 148,635 (16,704) 131,931 Payor contracts 4,700 (823) 3,877 4,700 (470) 4,230 Provider network 4,800 (871) 3,929 4,800 (511) 4,289 Total $ 842,835 $ (154,960) $ 687,875 $ 842,835 $ (91,785) $ 751,050 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt consisted of the following: September 30, 2023 December 31, 2022 (in thousands) Repurchase promissory note, interest paid at 11.0%, due June 2026 $ 15,000 $ 15,000 Term loan facility, interest paid at 12.0%, due December 2025 65,000 65,000 Unsecured promissory note, interest paid at 14.0%, due May 2026 29,102 15,000 Long-term debt, gross 109,102 95,000 Less: unamortized debt issuance costs and original issue discount (850) (579) 108,252 94,421 Less: current portion of long-term debt — — Long-term debt, net $ 108,252 $ 94,421 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Net Loss Per Share | The following table provides the computation of basic and diluted net loss per share: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands, except per share data) Numerator–basic: Net loss attributable to Class A common stockholders–basic $ (13,296) $ (11,173) $ (32,311) $ (176,100) Numerator–diluted: Net loss attributable to Class A common stockholders–basic $ (13,296) $ (11,173) $ (32,311) $ (176,100) Effective of dilutive securities: Shares of Class V common stock (23,993) (54,156) (85,008) (853,125) Net loss attributable to Class A common stockholders–diluted $ (37,289) $ (65,329) $ (117,319) $ (1,029,225) Denominator–basic: Weighted average Class A common shares outstanding–basic 114,198 41,579 88,010 41,579 Net loss per share attributable to Class A common stockholders–basic $ (0.12) $ (0.27) $ (0.37) $ (4.24) Denominator–diluted: Weighted average Class A common shares outstanding–basic 114,198 41,579 88,010 41,579 Weighted average effect of dilutive securities: Shares of Class V common stock 198,481 201,457 200,369 199,684 Weighted average shares outstanding–diluted 312,679 243,036 288,379 241,263 Net loss per share attributable to Class A common stockholders–diluted $ (0.12) $ (0.27) $ (0.41) $ (4.27) |
Schedule of Potentially Dilutive Securities Excluded from the Computation of Diluted Net Loss Per Share | The following table presents potentially dilutive securities excluded from the computation of diluted net loss per share for the periods presented because their effect would have been anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) Stock warrants (1) 81,938 10,819 81,938 10,819 Stock options (1) 5,867 2,134 5,867 2,134 Restricted stock units (1) 4,690 — 4,690 — Restricted stock awards (1) 250 — 250 — Shares of Class V common stock (2) — 494 — 494 Total 92,745 13,447 92,745 13,447 ____________________ (1) Represents the number of instruments outstanding at the end of the period. Application of the treasury stock method would reduce this amount if they had a dilutive effect and were included in the computation of diluted net loss per share. (2) Shares of Class V common stock at the end of the period, including shares tied to unvested Common Units, are considered potentially dilutive shares of Class A common stock under the application of the if-converted method. |
Redeemable Non-controlling In_2
Redeemable Non-controlling Interest (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Noncontrolling Interest [Abstract] | |
Schedule of Ownership of Common Units | The ownership of the Common Units is summarized as follows: September 30, 2023 December 31, 2022 Units (in thousands) Ownership % Units (in thousands) Ownership % P3 Health Partners Inc. ’ s ownership of Common Units 114,249 36.5 % 41,579 17.1 % Non-controlling interest holders ’ ownership of Common Units 198,354 63.5 % 201,592 82.9 % Total Common Units 312,603 100.0 % 243,171 100.0 % |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Variable Interest Entities | |
Schedule of Balance Sheet and Income Statement of VIEs | Since P3 LLC represents substantially all the assets and liabilities of the Company, the following tables provide a summary of the assets, liabilities, and operating performance of only VIEs held at the P3 LLC level. September 30, 2023 December 31, 2022 (in thousands) ASSETS Cash $ 9,313 $ 1,759 Clinic fees, insurance and other receivable 201 1,178 Prepaid expenses and other current assets 1,424 121 Property and equipment, net 16 44 Other long-term assets 98 — Due from consolidated entities of P3 — 3,012 TOTAL ASSETS $ 11,052 $ 6,114 LIABILITIES AND MEMBERS’ DEFICIT Accounts payable $ 5,103 $ 7,800 Accrued expenses and other current liabilities 916 262 Accrued payroll 2,862 1,885 Claims payable 6,109 — Other long-term liabilities 886 — Due to consolidated entities of P3 46,049 36,025 TOTAL LIABILITIES 61,925 45,972 MEMBERS’ DEFICIT (50,873) (39,858) TOTAL LIABILITIES AND MEMBERS’ DEFICIT $ 11,052 $ 6,114 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) Revenue $ 9,024 $ 13,594 $ 29,374 $ 39,463 Expense 11,364 15,732 36,886 46,709 Net loss $ (2,340) $ (2,138) $ (7,512) $ (7,246) |
Organization (Details)
Organization (Details) | Dec. 03, 2021 |
P3 LLC | |
Business Acquisition | |
Ownership percentage (as a percent) | 17.10% |
Going Concern and Liquidity (De
Going Concern and Liquidity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Going Concern and Liquidity | |||||
Net loss | $ 37,289 | $ 65,329 | $ 117,319 | $ 1,029,225 | |
Cash | $ 52,562 | $ 52,562 | $ 17,537 |
Significant Accounting Polici_4
Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue | ||||
Total revenue | $ 288,351 | $ 248,260 | $ 919,514 | $ 791,258 |
Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue | ||||
Percentage of total revenue (as a percent) | 100% | 100% | 100% | 100% |
Capitated revenue | ||||
Disaggregation of Revenue | ||||
Total revenue | $ 285,153 | $ 243,988 | $ 909,473 | $ 780,775 |
Capitated revenue | Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue | ||||
Percentage of total revenue (as a percent) | 98.90% | 98.30% | 98.90% | 98.70% |
Clinic fees and insurance | ||||
Disaggregation of Revenue | ||||
Total revenue | $ 1,246 | $ 1,957 | $ 3,890 | $ 4,103 |
Clinic fees and insurance | Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue | ||||
Percentage of total revenue (as a percent) | 0.40% | 0.80% | 0.40% | 0.50% |
Shared risk | ||||
Disaggregation of Revenue | ||||
Total revenue | $ 0 | $ 55 | ||
Shared risk | Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue | ||||
Percentage of total revenue (as a percent) | 0% | 0% | ||
Care coordination / management fees | ||||
Disaggregation of Revenue | ||||
Total revenue | $ 1,784 | $ 1,730 | $ 5,699 | $ 4,413 |
Care coordination / management fees | Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue | ||||
Percentage of total revenue (as a percent) | 0.60% | 0.70% | 0.60% | 0.60% |
Incentive fees | ||||
Disaggregation of Revenue | ||||
Total revenue | $ 168 | $ 585 | $ 452 | $ 1,912 |
Incentive fees | Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue | ||||
Percentage of total revenue (as a percent) | 0.10% | 0.20% | 0.10% | 0.20% |
Total other patient service revenue | ||||
Disaggregation of Revenue | ||||
Total revenue | $ 3,198 | $ 4,272 | $ 10,041 | $ 10,483 |
Total other patient service revenue | Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue | ||||
Percentage of total revenue (as a percent) | 1.10% | 1.70% | 1.10% | 1.30% |
Significant Accounting Polici_5
Significant Accounting Policies - Narratives (Details) - Customer Concentration - customer | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Four Health Plan Customer | Revenue | |||||
Concentration Risk | |||||
Number of customers (cusotmer) | 4 | 4 | 4 | 4 | |
Percentage of total revenue (as a percent) | 58% | 67% | 61% | 65% | |
Three Health Plan Customer | Accounts Receivable | |||||
Concentration Risk | |||||
Number of customers (cusotmer) | 3 | 3 |
Fair Value Measurements and H_3
Fair Value Measurements and Hierarchy - Fair value Hierarchy for Financial Liabilities (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant liability | $ 1,844 | $ 1,517 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant liability | 1,793 | 1,477 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant liability | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant liability | $ 51 | $ 40 |
Fair Value Measurements and H_4
Fair Value Measurements and Hierarchy - Fair Value Measurement Inputs and Valuation Techniques (Details) - Private Placement Warrants - Level 3 | Sep. 30, 2023 $ / shares yr | Dec. 31, 2022 yr $ / shares |
Volatility | ||
Warrants | ||
Warrants, measurement input | 80 | 55 |
Risk-free interest rate | ||
Warrants | ||
Warrants, measurement input | 4.8 | 4.1 |
Exercise price | ||
Warrants | ||
Warrants, measurement input | $ / shares | 11.50 | 11.50 |
Expected term | ||
Warrants | ||
Warrants, measurement input | yr | 3.2 | 3.9 |
Fair Value Measurements and H_5
Fair Value Measurements and Hierarchy - Changes in Fair Value (Details) - Private Placement Warrants - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | ||
Beginning balance | $ 40 | $ 502 |
Mark-to-market adjustment | 11 | (280) |
Ending balance | $ 51 | $ 222 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment, Net, by Type | ||
Property and equipment, gross | $ 13,706 | $ 11,460 |
Less: accumulated depreciation | (4,346) | (2,621) |
Property and equipment, net | 9,360 | 8,839 |
Leasehold improvements | ||
Property, Plant and Equipment, Net, by Type | ||
Property and equipment, gross | 1,658 | 1,810 |
Furniture and fixtures | ||
Property, Plant and Equipment, Net, by Type | ||
Property and equipment, gross | 1,164 | 1,262 |
Computer equipment and software | ||
Property, Plant and Equipment, Net, by Type | ||
Property and equipment, gross | 3,694 | 3,206 |
Medical equipment | ||
Property, Plant and Equipment, Net, by Type | ||
Property and equipment, gross | 1,102 | 1,067 |
Software (development in process) | ||
Property, Plant and Equipment, Net, by Type | ||
Property and equipment, gross | 3,877 | 3,460 |
Vehicles | ||
Property, Plant and Equipment, Net, by Type | ||
Property and equipment, gross | 654 | 618 |
Other | ||
Property, Plant and Equipment, Net, by Type | ||
Property and equipment, gross | $ 1,557 | $ 37 |
Property and Equipment - Narrat
Property and Equipment - Narratives (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 0.5 | $ 0.7 | $ 1.8 | $ 1.8 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Definite lived intangible assets: | ||
Accumulated Amortization | $ (154,960) | $ (91,785) |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Intangible assets, gross (excluding goodwill) | 842,835 | 842,835 |
Intangible assets, net | 687,875 | 751,050 |
Customer relationships | ||
Definite lived intangible assets: | ||
Gross Carrying Amount | 684,000 | 684,000 |
Accumulated Amortization | (125,400) | (74,100) |
Net Carrying Amount | 558,600 | 609,900 |
Trademarks | ||
Definite lived intangible assets: | ||
Gross Carrying Amount | 148,635 | 148,635 |
Accumulated Amortization | (27,866) | (16,704) |
Net Carrying Amount | 120,769 | 131,931 |
Payor contracts | ||
Definite lived intangible assets: | ||
Gross Carrying Amount | 4,700 | 4,700 |
Accumulated Amortization | (823) | (470) |
Net Carrying Amount | 3,877 | 4,230 |
Provider network | ||
Definite lived intangible assets: | ||
Gross Carrying Amount | 4,800 | 4,800 |
Accumulated Amortization | (871) | (511) |
Net Carrying Amount | 3,929 | 4,289 |
Medical License | ||
Indefinite lived intangible assets: | ||
Indefinite-lived intangible assets | $ 700 | $ 700 |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Intangible Assets | ||||
Amortization of intangible assets | $ 21.1 | $ 21.1 | $ 63.2 | $ 63.4 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument | ||
Long-term debt, gross | $ 109,102 | $ 95,000 |
Less: unamortized debt issuance costs and original issue discount | (850) | (579) |
Long term debt including current maturities | 108,252 | 94,421 |
Less: current portion of long-term debt | 0 | 0 |
Long-term debt, net | $ 108,252 | 94,421 |
Repurchase promissory note, interest paid at 11.0%, due June 2026 | ||
Debt Instrument | ||
Interest rate (as a percent) | 11% | |
Long-term debt, gross | $ 15,000 | 15,000 |
Term loan facility, interest paid at 12.0%, due December 2025 | ||
Debt Instrument | ||
Interest rate (as a percent) | 12% | |
Long-term debt, gross | $ 65,000 | 65,000 |
Unsecured promissory note, interest paid at 14.0%, due May 2026 | ||
Debt Instrument | ||
Interest rate (as a percent) | 14% | |
Long-term debt, gross | $ 29,102 | $ 15,000 |
Net Loss per Share - Schedule o
Net Loss per Share - Schedule of Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Denominator–basic: | ||||
Weighted average Class A common shares outstanding–basic (in shares) | 114,198 | 41,579 | 88,010 | 41,579 |
Net loss per share attributable to Class A common stockholders–basic (in dollars per share) | $ (0.12) | $ (0.27) | $ (0.37) | $ (4.24) |
Weighted average shares outstanding–diluted (in shares) | 312,679 | 243,036 | 288,379 | 241,263 |
Net loss per share attributable to Class A common stockholders– diluted (in dollars per share) | $ (0.12) | $ (0.27) | $ (0.41) | $ (4.27) |
Class A Common Stock | ||||
Numerator–basic: | ||||
Net loss attributable to Class A common stockholders–basic | $ (13,296) | $ (11,173) | $ (32,311) | $ (176,100) |
Net loss attributable to Class A common stockholders–diluted | $ (37,289) | $ (65,329) | $ (117,319) | $ (1,029,225) |
Denominator–basic: | ||||
Weighted average Class A common shares outstanding–basic (in shares) | 114,198 | 41,579 | 88,010 | 41,579 |
Net loss per share attributable to Class A common stockholders–basic (in dollars per share) | $ (0.12) | $ (0.27) | $ (0.37) | $ (4.24) |
Net loss per share attributable to Class A common stockholders– diluted (in dollars per share) | $ (0.12) | $ (0.27) | $ (0.41) | $ (4.27) |
Class V Common Stock | ||||
Numerator–basic: | ||||
Shares of Class V common stock | $ (23,993) | $ (54,156) | $ (85,008) | $ (853,125) |
Denominator–basic: | ||||
Shares of Class V common stock (in shares) | 198,481 | 201,457 | 200,369 | 199,684 |
Net Loss per Share - Schedule_2
Net Loss per Share - Schedule of Potentially Dilutive Securities Excluded from the Computation of Diluted Net Loss Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Potentially dilutive securities excluded from the computation of diluted net loss per share (in shares) | 92,745 | 13,447 | 92,745 | 13,447 |
Stock warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Potentially dilutive securities excluded from the computation of diluted net loss per share (in shares) | 81,938 | 10,819 | 81,938 | 10,819 |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Potentially dilutive securities excluded from the computation of diluted net loss per share (in shares) | 5,867 | 2,134 | 5,867 | 2,134 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Potentially dilutive securities excluded from the computation of diluted net loss per share (in shares) | 4,690 | 0 | 4,690 | 0 |
Restricted stock awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Potentially dilutive securities excluded from the computation of diluted net loss per share (in shares) | 250 | 0 | 250 | 0 |
Shares of Class V common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Potentially dilutive securities excluded from the computation of diluted net loss per share (in shares) | 0 | 494 | 0 | 494 |
Redeemable Non-controlling In_3
Redeemable Non-controlling Interest - Ownership of Common Units (Details) - shares shares in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
P3 Health Group, LLC | ||
Noncontrolling Interest | ||
Common unit outstanding (in shares) | 312,603 | 243,171 |
P3 Health Group, LLC | ||
Noncontrolling Interest | ||
Common unit outstanding (in shares) | 114,249 | 41,579 |
Non-controlling interests, ownership percentage by noncontrolling owners (as a percent) | 36.50% | 17.10% |
P3 Health Group, LLC | Non Controlling Interest Holders | ||
Noncontrolling Interest | ||
Common unit outstanding (in shares) | 198,354 | 201,592 |
Non-controlling interests, ownership percentage by noncontrolling owners (as a percent) | 63.50% | 82.90% |
Redeemable Non-controlling In_4
Redeemable Non-controlling Interest - Narrative (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Noncontrolling Interest [Abstract] | ||
Common unit exchange or redemption (in shares) | 3,500,000 | 0 |
Re-measurement adjustment recorded against fair value of redeemable noncontrolling interest | $ 0 | |
Fair value adjustment to redeemable non-controlling interest | $ 19,400,000 |
Segment Reporting (Details)
Segment Reporting (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments (segment) | 1 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 plan | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Loss Contingencies | |||
Number of health plans results in renegotiation | plan | 1 | ||
Renegotiation of Health Plan Agreement Due to Discrepancy | |||
Loss Contingencies | |||
Settlement amount | $ | $ 3.5 | $ 5 |
Variable Interest Entities - Na
Variable Interest Entities - Narratives (Details) | Sep. 30, 2023 |
Prime Rate | |
Variable Interest Entity | |
Management service fee (as a percent) | 2% |
Variable Interest Entities - Ba
Variable Interest Entities - Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | |
ASSETS | |||
Cash | $ 52,562 | $ 17,537 | |
Clinic fees, insurance and other receivable | 2,225 | 7,500 | |
Prepaid expenses and other current assets | 2,799 | 2,643 | |
Property and equipment, net | 9,360 | 8,839 | |
Other long-term assets | 19,993 | 15,990 | |
TOTAL ASSETS | [1] | 896,892 | 876,571 |
LIABILITIES AND MEMBERS’ DEFICIT | |||
Accounts payable | 11,630 | 11,542 | |
Accrued expenses and other current liabilities | 20,957 | 16,647 | |
Accrued payroll | 5,629 | 8,224 | |
Claims payable | 155,497 | 151,207 | |
TOTAL LIABILITIES | [1] | 395,861 | 353,912 |
TOTAL LIABILITIES, MEZZANINE EQUITY & STOCKHOLDERS’ EQUITY | $ 896,892 | $ 876,571 | |
Accounts Payable, Noncurrent, Related Party, Type [Extensible Enumeration] | Affiliated Entity [Member] | Affiliated Entity [Member] | |
Variable Interest Entity, Primary Beneficiary | |||
ASSETS | |||
Cash | $ 9,313 | $ 1,759 | |
Clinic fees, insurance and other receivable | 201 | 1,178 | |
Prepaid expenses and other current assets | 1,424 | 121 | |
Property and equipment, net | 16 | 44 | |
Other long-term assets | 98 | 0 | |
Due from consolidated entities of P3 | 0 | 3,012 | |
TOTAL ASSETS | 11,052 | 6,114 | |
LIABILITIES AND MEMBERS’ DEFICIT | |||
Accounts payable | 5,103 | 7,800 | |
Accrued expenses and other current liabilities | 916 | 262 | |
Accrued payroll | 2,862 | 1,885 | |
Claims payable | 6,109 | 0 | |
Other long-term liabilities | 886 | 0 | |
Due to consolidated entities of P3 | 46,049 | 36,025 | |
TOTAL LIABILITIES | 61,925 | 45,972 | |
MEMBERS’ DEFICIT | (50,873) | (39,858) | |
TOTAL LIABILITIES, MEZZANINE EQUITY & STOCKHOLDERS’ EQUITY | $ 11,052 | $ 6,114 | |
[1]The Company’s condensed consolidated balance sheets include the assets and liabilities of its consolidated variable interest entities (“VIEs”). As discussed in Note 13 “Variable Interest Entities,” P3 LLC is itself a VIE. P3 LLC represents substantially all the assets and liabilities of the Company. As a result, the language and amounts below refer only to VIEs held at the P3 LLC level. The condensed consolidated balance sheets include total assets that can be used only to settle obligations of the P3 LLC’s VIEs totaling $11.1 million and $3.1 million as of September 30, 2023 and December 31, 2022, respectively, and total liabilities of the P3 LLC’s consolidated VIEs for which creditors do not have recourse to the general credit of the Company totaled $15.9 million and $9.9 million as of September 30, 2023 and December 31, 2022, respectively. These VIE assets and liabilities do not include $45.9 million and $33.0 million of net amounts due to affiliates as of September 30, 2023 and December 31, 2022, respectively, as these are eliminated in consolidation and not presented within the condensed consolidated balance sheets. See Note 13 “Variable Interest Entities.” |
Variable Interest Entities - In
Variable Interest Entities - Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Variable Interest Entity | ||||
Revenue | $ 288,351 | $ 248,260 | $ 919,514 | $ 791,258 |
Expense | 322,171 | 308,271 | 1,023,184 | 1,815,624 |
Net loss | (37,289) | (65,329) | (117,319) | (1,029,225) |
Variable Interest Entity, Primary Beneficiary | ||||
Variable Interest Entity | ||||
Revenue | 9,024 | 13,594 | 29,374 | 39,463 |
Expense | 11,364 | 15,732 | 36,886 | 46,709 |
Net loss | $ (2,340) | $ (2,138) | $ (7,512) | $ (7,246) |
Capitalization - March 2023 Pri
Capitalization - March 2023 Private Placement (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
Apr. 06, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Subsidiary, Sale of Stock [Line Items] | |||
Proceeds from private placement offering, net of offering costs paid | $ 87,244 | $ 0 | |
Maximum amount of shares allowed to be owned by related party (as a percent) | 49.99% | ||
Securities Purchase Agreement | |||
Subsidiary, Sale of Stock [Line Items] | |||
Shares issued (in shares) | 79,900,000 | ||
Sales of stock (in dollars per share) | $ 1.12 | ||
Class of warrants issued (in dollars per share) | $ 0.75 | ||
Securities Purchase Agreement | Class A Common Stock | |||
Subsidiary, Sale of Stock [Line Items] | |||
Shares issued (in shares) | 69,200,000 | ||
Shares issued per transaction (in shares) | 1 | ||
Warrant to purchase (in shares) | 1 | ||
Exercise price (in dollars per share) | $ 1.13 | ||
Warrant issued for securities (in shares) | 59,900,000 | ||
Securities Purchase Agreement | Class A Common Stock | Pre-Funded Warrants | |||
Subsidiary, Sale of Stock [Line Items] | |||
Warrant issued for securities (in shares) | 10,800,000 | ||
Securities Purchase Agreement | Employees And Consultants | |||
Subsidiary, Sale of Stock [Line Items] | |||
Sales of stock (in dollars per share) | $ 1.19 | ||
Private Placement | Class A Common Stock | Pre-Funded Warrants | |||
Subsidiary, Sale of Stock [Line Items] | |||
Proceeds from private placement offering, net of offering costs paid | $ 86,600 | ||
Net of offering costs | $ 2,900 |
Capitalization - RSU Transactio
Capitalization - RSU Transaction Bonuses (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Aug. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Class A Common Stock | ||||
Share-Based Compensation | ||||
Share price (in dollars per share) | $ 2.22 | |||
Class A Common Stock | Second Bonus | ||||
Share-Based Compensation | ||||
Fair value of RSUs granted | $ 5.6 | |||
Restricted stock units | Second Bonus | ||||
Share-Based Compensation | ||||
Granted (in shares) | 2.5 | |||
Restricted stock units transaction bonus | $ 5 | |||
Equity-based compensation | $ 0.6 | $ 0.6 |
Subsequent Events (Details)
Subsequent Events (Details) | 1 Months Ended |
Oct. 31, 2023 shares | |
Subsequent Event | Class A Common Stock | |
Subsequent Event | |
Shares issued (in shares) | 600,000 |