P3 Health Partners Announces Third-Quarter and Year-to-Date 2023 Results

YTD total revenue growth of 16%
Continued strong performance across markets, re-affirming 2023 guidance
Provides preliminary 2024 Full-Year Adjusted EBITDA guidance of +$20 million to +$40 million
Management to Host Conference Call and Webcast November 8, 2023 at 4:30 PM ET

HENDERSON, NV—November 8, 2023—P3 Health Partners Inc. (“P3” or the “Company”) (NASDAQ: PIII), a patient-centered and physician-led population health management company, today announced its financial results for the third quarter ended September 30, 2023.
“Our results for the third quarter show the continued improvement of the business as providers and patients mature on our platform. All key metrics are tracking as expected and net cash used in operating activities has improved to negative $8 million for the quarter. We are re-affirming our existing full-year 2023 guidance and providing preliminary 2024 full-year Adjusted EBITDA guidance of $20 million to $40 million,” said Dr. Sherif Abdou, CEO of P3.

Third-Quarter 2023 Financial Results
•Total revenue was $288.4 million, an increase of 16% compared to $248.3 million in the third quarter of the prior year. Net loss was $37.3 million, an increase of approximately 43% compared to a net loss of $65.3 million in the third quarter of the prior year. Net loss PMPM was $119 compared to a net loss PMPM of $218 the third quarter of the prior year
•Adjusted EBITDA(1) loss was $22.3 million, compared to an Adjusted EBITDA loss of $40.3 million in the third quarter of the prior year. Adjusted EBITDA PMPM(1) was a loss of $71, compared to an Adjusted EBITDA loss PMPM of $135 in the third quarter of the prior year
•Gross profit was $9.1 million, as compared to negative $6.5 million in the prior year. Gross profit PMPM was $29, compared to a loss of $22 PMPM in the prior year
•Medical margin(1) was $36.2 million, an increase of 306.1% compared to $8.9 million in the third quarter of the prior year. Medical margin PMPM(1) was $115, an increase of 286.3% compared to a medical margin PMPM of $30 in the prior year

Key Financial and Operating Metrics as Reported ($ millions):Three Months Ended September 30,Change
2023 2022%YOY
Capitated Revenue$285 $244 17%
Total Revenues$288 $248 16%
Gross Profit$9 ($7) 240%
Medical Margin$36$9306%
Net Loss($37) ($65) 43%
Adjusted EBITDA($22)($40)45%



Year-to-Date 2023 Financial Results
•Total revenue was $919.5 million, an increase of 16% compared to $791.3 million in the same period in the prior year. Net loss was $117.3 million, compared to a net loss of $1,029.2 million in the same period of the prior year. The year-to date results of 2022 were negatively impacted by a goodwill impairment charge of $851 million. Net loss PMPM was $126 compared to a net loss PMPM of $1,148 in the same period of the prior year
•Adjusted EBITDA(1) loss was $41.2 million, compared to an Adjusted EBITDA loss of $87.9 million in the same period of the prior year. Adjusted EBITDA PMPM(1) loss was $44, compared to an Adjusted EBITDA loss of $98 PMPM in the same period of the prior year
•Gross profit was $52.5 million, compared to $3.2 million in the same period of the prior year. Gross profit PMPM was $56, compared to $4 in the same period of the prior year
•Medical margin(1) was $126.0 million, an increase of 127.0% compared to $55.5 million in the same period of the prior year. Medical margin PMPM(1) was $135, an increase of 118.1% compared to a medical margin PMPM of $62 in the same period of the prior year

Key Financial and Operating Metrics as Reported ($ millions):Nine Months Ended September 30,Change
2023 2022%YOY
Capitated Revenue$909 $781 16%
Total Revenues$920$79116%
Gross Profit$52 $3 1533%
Medical Margin$126$56127%
Net Loss($117) ($1,029) 89%
Adjusted EBITDA($41)($88)53%
Full-Year 2023 Guidance
Year Ending December 31, 2023
LowHigh
Medicare Advantage Members115,000120,000
Total Revenues (in millions)$1,200$1,250
Medical margin(2) (in millions)
$155$175
Medical margin(2) PMPM
$120$130
Adjusted EBITDA(2) Loss (in millions)
$(50)$(30)
(1) Adjusted EBITDA, Adjusted EBITDA per member, per month (“PMPM”), medical margin and medical margin PMPM are non-GAAP financial measures. For reconciliations of these measures to the most directly comparable GAAP measures and more information regarding the Company’s use of non-GAAP financial measures, please see the section titled “Non-GAAP Financial Measures” and the tables at the end of this press release.
(2) The Company is not able to provide a quantitative reconciliation of full-year 2023 or 2024 guidance for Adjusted EBITDA loss to net income, or quantitative reconciliations for full-year 2023 guidance for medical margin and medical margin PMPM to net income (loss), gross profit and gross profit PMPM, the most directly comparable GAAP measures, respectively, and has not provided forward-looking guidance for net income (loss), gross profit (loss) or gross profit (loss) PMPM because of the uncertainty around certain items that may impact net income (loss), gross profit (loss) or gross profit (loss) PMPM that are not within our control or cannot be reasonably predicted without unreasonable effort. For more information regarding the non-GAAP financial measures discussed in this press release, please see “Non-GAAP Financial Measures” below.



Title & Webcast
P3 Health Third-Quarter Earnings Conference Call
Date & TimeNovember 8, 2023, 4:30pm Eastern Time
Conference Call Details
Toll-Free 1-833 316 0546 (US)
International 1-412 317 0692
Ask to be joined into the P3 Health Partners call

The conference call will also be webcast live in the “Events & Presentations” section of the Investor page of the P3 website (ir.p3hp.org). The Company’s press release will be available on the Investor page of P3’s website in advance of the conference call. An archived recording of the webcast will be available on the Investor page of P3’s website for a period of 90 days following the conference call.

For supplemental financial information, including certain non-GAAP financial measures, and the reconciliations thereof, please visit the Company’s Investor Relations site (ir.p3hp.org).
About P3 Health Partners (NASDAQ: PIII):
P3 Health Partners Inc. is a leading population health management company committed to transforming healthcare by improving the lives of both patients and providers. Founded and led by physicians, P3 has an expansive network of more than 2,700 affiliated primary care providers across the country. Our local teams of health care professionals manage the care of thousands of patients in 18 counties across five states. P3 supports primary care providers with value-based care coordination and administrative services that improve patient outcomes and lower costs. Through partnerships with these local providers, the P3 care team creates an enhanced patient experience by navigating, coordinating, and integrating the patient’s care within the healthcare system. For more information, visit www.p3hp.org and follow us on LinkedIn and Facebook.com/p3healthpartners.
Non-GAAP Financial Measures
In addition to the financial results prepared in accordance accounting principles generally accepted in the U.S. (“GAAP”), this press release contains certain non-GAAP financial measures as defined by the SEC rules, including Adjusted EBITDA, Adjusted EBITDA PMPM, medical margin and medical margin PMPM. EBITDA is defined as GAAP net income (loss) before (i) interest, (ii) income taxes and (iii) depreciation and amortization. Adjusted EBITDA is defined as EBITDA, further adjusted to exclude the effect of certain supplemental adjustments, such as (i) mark-to-market warrant gain/loss, (ii) premium deficiency reserves, (iii) equity-based compensation expense and (iv) certain other items that we believe are not indicative of our core operating performances. Adjusted EBITDA PMPM is defined as Adjusted EBITDA divided by the number of Medicare Advantage members each month divided by the number of months in the period. We believe these non‐GAAP financial measures provide an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other similar companies. Medical margin represents the amount earned from capitation revenue after medical claims expenses are deducted and medical margin PMPM is defined as medical margin divided by the number of Medicare Advantage members each month divided by the number of months in the period. Medical claims expenses represent costs incurred for medical services provided to our members. As our platform grows and matures over time, we expect medical margin to increase in absolute dollars; however, medical margin PMPM may vary as the percentage of new members brought onto our platform fluctuates. New membership added to the platform is typically dilutive to medical margin PMPM. We do not consider these non‐GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. These non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non‐GAAP financial measures. In addition, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. The tables at the end of this press release present a reconciliation of Adjusted EBITDA to net income (loss) and Adjusted EBITDA PMPM to net income (loss) PMPM, and medical margin to gross profit and medical margin PMPM to gross profit PMPM, which are the most directly comparable financial measures calculated in accordance with GAAP.




Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "anticipate," "believe," "budget," "contemplate," "continue," "could," "envision," "estimate," "expect," "guidance," "indicate," "intend," "may," "might," "plan," "possibly," "potential," "predict," "probably," "pro-forma," "project," "seek," "should," "target," or "will," or the negative or other variations thereof, and similar words or phrases or comparable terminology, are intended to identify forward-looking statements. These forward-looking statements address various matters, including the Company’s future expected growth strategy and operating performance; current expectations regarding the Company’s current cash position and outlook as to revenue, at-risk Medicare Advantage membership, medical margin, medical margin PMPM, Adjusted EBITDA loss for the full year 2023 outlook as to and Adjusted EBITDA for the full-year 2024, all of which reflect the Company’s expectations based upon currently available information and data. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected or estimated and you are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.
Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, our ability to continue as a going concern; our potential need to raise additional capital to fund our existing operations or develop and commercialize new services or expand our operations; our ability to achieve or maintain profitability; our ability to maintain compliance with our debt covenants in the future, or obtain required waivers from our lenders if future operating performance were to fall below current projections of if there are material changes to management’s assumptions, we could be required to recognize non-cash charges to operating earnings for goodwill and/or other intangible asset impairment; our ability to identify and develop successful new geographies, physician partners, payors and patients; changes in market or industry conditions, regulatory environment, competitive conditions, and receptivity to our services; our ability to fund our growth and expand our operations; changes in laws and regulations applicable to our business; our ability to maintain our relationships with health plans and other key payers; the impact of COVID-19, including the impact of new variants of the virus, or another pandemic, epidemic or outbreak of infectious disease on our business and results of operation; increased labor costs; our ability to recruit and retain qualified team members and independent physicians; and other factors discussed in Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 31, 2023, as updated by Part II, Item 1A. “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023 to be filed with the SEC, and in the Company’s other filings with the SEC. All information in this press release is as of the date hereof, and we undertake no duty to update or revise this information unless required by law. You are cautioned not to place undue reliance on any forward-looking statements contained in this press release.

Contacts
Investor Relations

Karen Blomquist
Vice President, Investor Relations
P3 Health Partners
kblomquist@p3hp.org

Kassi Belz
Executive Vice President, Communications
P3 Health Partners
(904) 415-2744
kbelz@p3hp.org



P3 HEALTH PARTNERS INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
September 30, 2023December 31, 2022
ASSETS
CURRENT ASSETS:
Cash$52,562 $17,537 
Restricted cash4,878 920 
Health plan receivable, net of allowance for credit losses of $150 and $0, respectively
117,200 72,092 
Clinic fees, insurance and other receivable2,225 7,500 
Prepaid expenses and other current assets2,799 2,643 
TOTAL CURRENT ASSETS179,664 100,692 
Property and equipment, net9,360 8,839 
Intangible assets, net687,875 751,050 
Other long-term assets19,993 15,990 
TOTAL ASSETS (1)
$896,892 $876,571 
LIABILITIES, MEZZANINE EQUITY and STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$11,630 $11,542 
Accrued expenses and other current liabilities20,957 16,647 
Accrued payroll5,629 8,224 
Health plan settlements payable35,422 13,608 
Claims payable155,497 151,207 
Premium deficiency reserve17,014 26,375 
Accrued interest21,153 14,061 
TOTAL CURRENT LIABILITIES267,302 241,664 
Operating lease liability13,556 11,516 
Warrant liabilities1,844 1,517 
Contingent consideration4,907 4,794 
Long-term debt, net108,252 94,421 
TOTAL LIABILITIES (1)
395,861 353,912 
COMMITMENTS AND CONTINGENCIES (Note 12)
MEZZANINE EQUITY:
Redeemable non-controlling interest313,088 516,805 
STOCKHOLDERS’ EQUITY:
Class A common stock, $.0001 par value; 800,000 shares authorized; 114,249 shares and 41,579 shares issued and outstanding, respectively
11 4 
Class V common stock, $.0001 par value; 205,000 shares authorized; 198,354 shares and 201,592 shares issued and outstanding, respectively
20 20 
Additional paid in capital529,794 315,375 
Accumulated deficit(341,882)(309,545)
TOTAL STOCKHOLDERS’ EQUITY187,943 5,854 
TOTAL LIABILITIES, MEZZANINE EQUITY & STOCKHOLDERS’ EQUITY$896,892 $876,571 
____________________
(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.”



P3 HEALTH PARTNERS INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
OPERATING REVENUE:
Capitated revenue$285,153 $243,988 $909,473 $780,775 
Other patient service revenue3,198 4,272 10,041 10,483 
TOTAL OPERATING REVENUE288,351 248,260 919,514 791,258 
OPERATING EXPENSE:    
Medical expense279,220 254,777 867,061 788,046 
Premium deficiency reserve (12,489)(7,302)(9,361)(10,116)
Corporate, general and administrative expense33,065 37,863 97,931 117,560 
Sales and marketing expense654 1,118 2,512 3,391 
Depreciation and amortization21,721 21,815 65,041 65,287 
Goodwill impairment— — — 851,456 
TOTAL OPERATING EXPENSE322,171 308,271 1,023,184 1,815,624 
OPERATING LOSS(33,820)(60,011)(103,670)(1,024,366)
OTHER INCOME (EXPENSE):    
Interest expense, net(4,002)(2,963)(11,939)(8,418)
Mark-to-market of stock warrants755 (2,568)(327)3,386 
Other190 213 (455)173 
TOTAL OTHER EXPENSE(3,057)(5,318)(12,721)(4,859)
LOSS BEFORE INCOME TAXES(36,877)(65,329)(116,391)(1,029,225)
PROVISION FOR INCOME TAXES (412)— (928)— 
NET LOSS(37,289)(65,329)(117,319)(1,029,225)
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NON-CONTROLLING INTEREST(23,993)(54,156)(85,008)(853,125)
NET LOSS ATTRIBUTABLE TO CONTROLLING INTEREST$(13,296)$(11,173)$(32,311)$(176,100)
NET LOSS PER SHARE (Note 9):
Basic$(0.12)$(0.27)$(0.37)$(4.24)
Diluted$(0.12)$(0.27)$(0.41)$(4.27)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 9):
Basic114,19841,57988,01041,579
Diluted312,679243,036288,379241,263



P3 HEALTH PARTNERS INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30,
20232022
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 amortization65,041 65,287 
Equity-based compensation4,259 17,211 
Goodwill impairment— 851,456 
Amortization of original issue discount and debt issuance costs405 — 
Accretion of contingent consideration113 291 
Mark-to-market adjustment of stock warrants327 (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 receivable5,275 (1,623)
Prepaid expenses and other current assets(429)3,462 
Other long-term assets(1,214)— 
Accounts payable, accrued expenses, and other current liabilities2,758 4,560 
Accrued payroll2,405 1,054 
Health plan settlements payable21,814 (1,922)
Claims payable4,290 32,747 
Accrued interest7,092 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— (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 discount14,101 — 
Proceeds from private placement offering, net of offering costs paid87,244 — 
Repayment of short-term and long-term debt— (3,625)
Payment of debt issuance costs(173)— 
Net cash provided by (used in) financing activities101,172 (3,625)
Net change in cash and restricted cash38,983 (105,473)
Cash and restricted cash, beginning of period18,457 140,834 
Cash and restricted cash, end of period$57,440 $35,361 



RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA LOSS
(in thousands, except PMPM)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
(in thousands)
Net loss$(37,289)$(65,329)$(117,319)$(1,029,225)
Interest expense, net4,002 2,963 11,939 8,418 
Depreciation and amortization expense21,721 21,815 65,041 65,287 
Provision for income taxes412 — 928 — 
Mark-to-market of stock warrants(755)2,568 327 (3,386)
Premium deficiency reserve(12,489)(7,302)(9,361)(10,116)
Equity-based compensation2,251 1,784 4,259 17,211 
Transaction and other related costs(1)
— 1,844 70 10,956 
Other(2)
(185)1,350 — 851,456 
Goodwill impairment— — 2,868 1,499 
Adjusted EBITDA loss$(22,332)$(40,307)$(41,248)$(87,900)
Adjusted EBITDA loss PMPM$(71)$(135)$(44)$(98)
_____________________
(1)Transaction and other related costs during the nine months ended September 30, 2023 consisted of legal fees incurred related to acquisition-related litigation.
(2)Other during the three and nine months ended September 30, 2023 consisted of (i) interest income offset by (ii) cybersecurity incident loss with respect to the nine months ended September 30, 2023, (iii) restructuring and other charges, including severance and benefits paid to employees pursuant to workforce reduction plans with respect to the nine months ended September 30, 2023, (iv) the disposition of our Pahrump operations, (v) expenses for third-party consultants to assist us with the development, implementation, and documentation of new and enhanced internal controls and processes for compliance with Sarbanes-Oxley Section 404(b) with respect to the nine months ended September 30, 2023, (vi) a legal settlement outside of the ordinary course of business with respect to the nine months ended September 30, 2023, and (vii) valuation allowance on our notes receivable.



MEDICAL MARGIN
(in thousands, except PMPM)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in thousands)
Capitated revenue$285,153 $243,988 $909,473 $780,775 
Less: medical claims expenses(248,918)(235,065)(783,497)(725,267)
Medical margin$36,235 $8,923 $125,976 $55,508 
Medical margin PMPM$115 $30 $135 $62 

RECONCILIATION OF GROSS PROFIT TO MEDICAL MARGIN
(in thousands)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in thousands)
Gross profit(1)
$9,131 $(6,517)$52,453 $3,212 
Other patient service revenue(3,198)(4,272)(10,041)(10,483)
Other medical expense30,302 19,712 83,564 62,779 
Medical margin$36,235 $8,923 $125,976 $55,508 
_____________________
(1)Effective for the quarter ended June 30, 2023, we modified the method by which we reconcile medical margin. Previously, we reconciled medical margin to operating loss as the most directly comparable measure calculated in accordance with GAAP. In the current period and on a go-forward basis we will reconcile to gross profit as we have determined that gross profit is the most directly comparable GAAP measure.