Quarterly report pursuant to Section 13 or 15(d)

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)
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 
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)
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)