P3 Health Partners Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Variable Interest Entities

Variable Interest Entities

12 Months Ended

Dec. 31, 2023

Note 22: Variable Interest Entities

P3 LLC has Management Services Agreements (“MSAs”) and deficit funding agreements with the Network VIEs. 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 VIEs. Fees for these services are the excess of the Network VIEs’ revenue over expenses. Per the deficit funding agreements, P3 LLC is obligated to advance funds, as needed, to support the Network VIE’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 VIEs 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 VIEs, 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 VIEs. Practice shareholders, who are employees of P3 LLC, retain equity ownership in the Network VIEs, which represents nominal non-controlling interests; however, the non-controlling interests do not participate in the profit or loss of the Network VIEs.

P3 LLC, directly or indirectly via its wholly owned subsidiaries, may not use or access any net assets of the Network VIEs to settle its obligations or the obligations of its wholly owned subsidiaries. Additionally, the creditors of the Network 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.


	December 31,
	2023		2022
	(in thousands)
ASSETS
Cash	$	6,491	$	1,759
Clinic fees, insurance and other receivable	138		1,178
Health plan receivable	571		—
Prepaid expenses and other current assets	1,261		121
Property and equipment, net	23		44
Other long-term assets	153		—
Due from consolidated entities of P3	—		3,012
TOTAL ASSETS	$	8,637	$	6,114
LIABILITIES AND MEMBERS’ DEFICIT
Accounts payable	$	5,073	$	7,800
Accrued expenses and other current liabilities	515		262
Accrued payroll	3,141		1,885
Claims payable	3,973		—
Other long-term liabilities	946		—
Due to consolidated entities of P3	44,200		36,025
TOTAL LIABILITIES	57,848		45,972
MEMBERS’ DEFICIT	(49,211)		(39,858)
TOTAL LIABILITIES AND MEMBERS’ DEFICIT	$	8,637	$	6,114


	Year Ended December 31,
	2023		2022
	(in thousands)
Revenue	$	39,551	$	55,237
Expense	45,999		69,638
Net loss	$	(6,448)	$	(14,401)