Debt |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt |
Long-term Debt
Long-term debt consisted of the following:
Repurchase Promissory Note
In June 2019, the Company issued a share repurchase promissory note to a former equity investor for $15.0 million, which was subsequently amended in November 2020 (as amended, the “Repurchase Promissory Note”). The Repurchase Promissory Note automatically matures and is due and payable on the earlier of June 30, 2026, a change in control transaction, or an underwritten primary public offering, each as defined in the agreement. The Repurchase Promissory Note accrues paid-in-kind (“PIK”) interest of 11.0% per year. The principal balance, inclusive of PIK interest, and an exit fee of $0.6 million are due at maturity.
Term Loan Facility
In November 2020, the Company entered into a Term Loan Agreement and Security Agreement with a commercial lender (as amended, the “Term Loan Agreement”), which provided funding up to $100.0 million (the “Term Loan Facility”). The Company’s access to additional borrowings under the Term Loan Facility ended upon termination of the commitment period on February 28, 2022. The Term Loan Agreement was amended on December 13, 2022 to provide for certain modifications and to permit the issuance of the VGS Promissory Note (defined below) and related transactions. The Term Loan Agreement was amended on March 22, 2024 to provide for certain modifications and to permit the issuance of the VGS 2 Promissory Note (defined below) and related transactions. The Term Loan Agreement was amended on November 30, 2024 to permit the Company’s sale of the Florida Assets (the “Permitted Florida Disposition”), provide that the mandatory prepayment covenant does not apply to the proceeds of the Permitted Florida Disposition, and remove the ability to elect to pay a portion of the interest in-kind. The Term Loan Agreement was amended on December 12, 2024 to provide for certain modifications and to permit the issuance of the VGS 3 Promissory Note (defined below) and related transactions. The Security Agreement provides the lenders collateral in 100% of the Company’s pledged stock, its subsidiaries (including tangible and intangible personal property), and bank accounts. The Term Loan Agreement was amended on February 13, 2025 to permit the issuance of the VGS 4 Promissory Note (defined below). The Term Loan Agreement was amended on May 29, 2025, to permit the issuance of the VGS 5 Promissory Note (defined below).
The Term Loan Agreement was amended on August 27, 2025 (the “Tenth Amendment”); the Tenth Amendment:
•amends the payment structure of the Term Loan Agreement by extending the interest-only period to June 30, 2026, extending the final maturity date to September 30, 2027, and changing the principal payments to a fixed $5.0 million per payment date;
•changes the interest rate from 12% through maturity to 12% through September 30, 2025 and 15% thereafter;
•includes two separate PIK periods, replacing the previous single PIK period: the first PIK Period measures from closing of the Term Loan Agreement through September 30, 2024 and includes the option to pay 8% cash plus 4% PIK (added to the principal); and the second PIK Period measures from September 30, 2025 through September 30, 2027 and includes the option to pay 12% cash plus 3% PIK; and
•updates board observation rights for lender representatives.
The amendment was accounted for as a troubled debt restructuring as the Company determined it was experiencing financial difficulties and was provided a concession through the deferral of the principal repayment. As the future undiscounted cash flows exceeded the carrying value, the Company did not recognize any gain or loss associated with the troubled debt restructuring.
The maturity date may be accelerated as a remedy under certain default provisions in the agreement or in the event a mandatory prepayment trigger occurs. PIK interest is subject to acceleration in the event certain occurrences in the Term Loan Facility’s agreement are triggered. In addition, P3 LLC will pay a back-end fee of 9.0% when principal repayments occur.
The Term Loan Facility includes certain restrictive covenants, including restrictions on the payment of cash dividends. The Company must remain in compliance with financial covenants such as minimum liquidity of $5.0 million and annual minimum revenue levels. On an annual basis, the Company must post a minimum amount of annual revenue equal to or greater than $585.0 million in 2024 and $650.0 million in 2025. The Company is also subject to certain restrictions that include indebtedness and liens.
The Company was not in compliance with its Term Loan Facility covenants related to issuance of the 2025 financial statements with an audit opinion free of a “going concern” explanatory paragraph. The Term Loan Facility lenders granted a waiver of the covenant under the Term Loan Facility related to the existence of a “going concern” emphasis of matter paragraph in the audit opinion for the Company’s audited financial statements for the fiscal year ended December 31, 2025. The Company was in material compliance with all other covenants under the Term Loan Facility as of December 31, 2025; 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 or the lenders of any future indebtedness the Company may incur will grant any such waiver or forbearance in the future.
VGS 1 2024 Loan (2024) and VGS Promissory Note (2023)
In December 2022, P3 LLC entered into a related party financing transaction (see Note 20 “Related Parties”) with VBC Growth SPV LLC (“VGS”) which included the issuance of an unsecured promissory note (the “VGS Promissory Note”) to VGS; warrant agreement, pursuant to which the Company issued warrants to purchase 8.6 thousand shares of Class A common stock at an exercise price of $213.00 per share to VGS (see Note 13 “Warrants”); and a subordination agreement, pursuant to which VGS agreed to subordinate its right of payment under the VGS Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility. The VGS Promissory Note provided for funding of up to $40.0 million. The Company paid VGS an up-front fee of 1.5%. Interest was payable at 14.0% per annum on a quarterly cycle (in arrears) beginning March 31, 2023. The Company had the option to pay interest of 6.0% in-kind and 8.0% in cash, subject to certain limitations. The VGS Promissory Note had a maturity date of May 19, 2026.
On December 12, 2024, the Company entered into an unsecured promissory note (the “VGS 1 2024 Loan”) with VGS providing for funding of up to approximately $38.1 million, the proceeds from which were used to repay in full all principal, interest, and other amounts owing under the VGS Promissory Note. In connection with the replacement of the VGS Promissory Note with the VGS 1 2024 Loan, VGS waived the 9.0% back-end facility fee that otherwise would have been payable under the VGS Promissory Note. The VGS 1 2024 Loan has a maturity date of June 30, 2028 and an interest rate that is lower than the VGS Promissory Note by 50 basis points, among other things. The VGS 1 2024 Loan did not include the issuance of warrants. All other terms of the VGS 1 2024 Loan are the same as the terms of the VGS Promissory Note. The Company accounted for this transaction as a troubled debt restructuring as the Company was experiencing financial difficulty, and the amended terms resulted in a concession to the Company. As the future undiscounted cash flows
under the modified terms exceeded the carrying amount on the date of modification, the modification was accounted for prospectively.
The Company will pay VGS a back-end fee of 9.0% at the time the VGS 1 2024 Loan is redeemed. The VGS 1 2024 Loan may be prepaid, at the Company’s option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee; provided that prepayments must be in increments of at least 5% of the total loan amount. The VGS 1 2024 Loan provides for mandatory prepayments with the proceeds of certain asset sales, and the lender has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 1 2024 Loan).
The VGS 1 2024 Loan restricts the Company’s ability to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under the certain default provisions in the agreement, or in the event a mandatory prepayment event occurs.
In connection with the issuance of the VGS 1 2024 Loan, the Company also entered into a subordination agreement, dated as of December 12, 2024 (the “VGS 1 2024 Subordination Agreement”) with VGS which subordinates VGS’s right of payment under the VGS 1 2024 Loan to the right of payment and security interests of the lenders under the Term Loan Facility. Under the terms of the VGS 1 2024 Subordination Agreement, the Company is effectively required to pay all interest under the VGS 1 2024 Loan in-kind.
VGS 2 Promissory Note
On March 22, 2024, P3 LLC entered into a related party financing transaction (see Note 20 “Related Parties”) with VBC Growth SPV 2, LLC (“VGS 2”), consisting of the issuance of an unsecured promissory note (the “VGS 2 Promissory Note”) to VGS 2 and a subordination agreement (“VGS 2 Subordination Agreement”), pursuant to which VGS 2 agreed to subordinate its right of payment under the VGS 2 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility. The VGS 2 Promissory Note provided for funding of up to $25.0 million. The Company paid VGS 2 an up-front fee of 1.5% of the aggregate principal amount of the loan in-kind.
The VGS 2 Promissory Note matures on September 30, 2027. Interest is payable at 17.5% per annum on a quarterly cycle (in arrears) beginning June 30, 2024. The Company may elect to pay interest 8.0% in cash and 9.5% in-kind, but if the terms of the VGS 2 Subordination Agreement do not permit the Company to pay interest in cash, interest will be paid entirely in-kind.
The Company will pay VGS 2 a back-end fee of 9.0% at the time the VGS 2 Promissory Note is redeemed. The VGS Promissory Note may be prepaid, at the Company’s option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee; provided that prepayments must be in increments of at least $1.25 million.
The VGS 2 Promissory Note restricts the Company’s ability and the ability of its subsidiaries to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under the certain default provisions in the agreement, or in the event a mandatory prepayment event occurs.
The VGS 2 Promissory Note provides for mandatory prepayments with the proceeds of certain asset sales, and VGS 2 has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 2 Promissory Note).
In connection with the sale of the Florida Assets, on November 30, 2024, the VGS Promissory Note and VGS 2 Promissory Note were amended to permit the Permitted Florida Disposition and provide that the Company was not obligated to use the proceeds of the Permitted Florida Disposition to prepay the loans under the VGS Promissory Note and the VGS 2 Promissory Note.
VGS 3 Promissory Note
On December 12, 2024, P3 LLC entered into a related party financing transaction (see Note 20 “Related Parties”) with VBC Growth SPV 3, LLC (“VGS 3”), consisting of the issuance of an unsecured promissory note (the “VGS 3 Promissory Note”) to VGS 3; warrant agreement, pursuant to which the Company issued warrants to purchase 1.4 million shares of Class A common stock at an exercise price of $10.69 per share to VGS 3 (see Note 13 “Warrants”); and a
subordination agreement (the “VGS 3 Subordination Agreement”), pursuant to which VGS 3 agreed to subordinate its right of payment under the VGS 3 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility. The VGS 3 Promissory Note provides for funding of up to $25.0 million. The Company paid VGS 3 an up-front fee of 1.5% of the aggregate principal amount of the loan in-kind.
The VGS 3 Promissory Note matures on June 30, 2028. Interest is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning June 30, 2025. The Company may elect to pay either interest 8.0% in cash or 11.5% in-kind, but if the terms of the VGS 3 Subordination Agreement do not permit the Company to pay interest in cash, interest will be paid entirely in-kind.
The Company will pay VGS 3 a back-end fee at the time the VGS 3 Promissory Note is redeemed as follows: (i) if paid after January 31, 2025 and on or before April 30, 2025, 4.5%; (ii) if paid after April 30, 2025 and on or before July 31, 2025, 6.75% and (iii) if paid after July 31, 2025, 9.0%. The VGS Promissory Note may be prepaid, at the Company’s option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee; provided that prepayments must be in increments of at least $1.25 million.
The VGS 3 Promissory Note restricts the Company’s ability and the ability of its subsidiaries to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under the certain default provisions in the agreement, or in the event a mandatory prepayment event occurs.
The VGS 3 Promissory Note provides for mandatory prepayments with the proceeds of certain asset sales, and VGS 3 has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 3 Promissory Note).
VGS 4 Promissory Note
On February 13, 2025, P3 LLC entered into a related party financing transaction with VBC Growth SPV 4, LLC (“VGS 4”), consisting of the issuance by P3 LLC of (i) an unsecured promissory note (the “VGS 4 Promissory Note”) to VGS 4 and (ii) a warrant to purchase 1.4 million shares of the Company’s Class A common stock at an exercise price of $10.34 per share to VGS 4, as adjusted for the reverse stock split. The VGS 4 Promissory Note provides for funding of up to $30.0 million, available for draw by P3 LLC in two tranches, as follows: (i) a first tranche of $15.0 million which was drawn on February 18, 2025, and (ii) a second tranche of $15.0 million which was drawn on March 14, 2025. The VGS 4 Promissory Note matures on August 13, 2028. Interest is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning March 31, 2025. P3 LLC may elect to pay either (1) 8.0% cash interest and 11.5% paid in-kind (“PIK”) interest, or (2) 19.5% PIK interest, provided that payment of cash interest will be permitted only to the extent permitted by the Term Loan Agreement and the VGS 4 Subordination Agreement (defined below), and if not so permitted, such interest shall accrue as PIK interest. The VGS 4 Promissory Note provides for mandatory prepayments with the proceeds of certain asset sales, and VGS 4 has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 4 Promissory Note).
The VGS 4 Promissory Note restricts P3 LLC’s ability and the ability of its subsidiaries to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under certain default provisions in the agreement, or in the event a mandatory prepayment event occurs. P3 LLC paid VGS 4 an up-front fee of 1.5% of the aggregate principal amount of the loan in-kind. In addition, P3 LLC will pay VGS 4 a back-end fee at the time the VGS 4 Promissory Note is redeemed as follows: (i) if paid prior to March 31, 2025, 2.25%; (ii) if paid after March 31, 2025 and on or before June 30, 2025, 4.50%; (iii) if paid after June 30, 2025 and on or before September 30, 2025, 6.75% and (iv) if paid after September 30, 2025, 9.00%.
In connection with the transactions described above, P3 LLC entered into a subordination agreement, dated as of February 13, 2025 (the “VGS 4 Subordination Agreement”), with CRG Servicing LLC (“CRG”), as administrative agent under the Term Loan Facility, and VGS 4. Pursuant to the VGS 4 Subordination Agreement, VGS 4 agreed to subordinate its right of payment under the VGS 4 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility. The terms of the VGS 4 Subordination Agreement will effectively require P3 LLC to pay all interest under the VGS 4 Promissory Note in-kind.
VGS 5 Promissory Note
On May 29, 2025, P3 LLC entered into a related party financing transaction with VBC Growth SPV 5, LLC (“VGS 5”), consisting of the issuance by P3 LLC of (i) an unsecured promissory note (the “VGS 5 Promissory Note”) to VGS 5 and (ii) a warrant to purchase 1.4 million shares of the Company’s Class A common stock at an exercise price of $7.39 per share to VGS 5. The VGS 5 Promissory Note provides for funding of up to $70.0 million, available for draw by P3 LLC in three tranches, as follows: (i) a first tranche of $15.0 million which was drawn on May 29, 2025, (ii) a second tranche of up to $15.0 million available at the Company’s sole option in a single draw, on or prior to June 22, 2025, and (iii) a third tranche of $40.0 million available upon mutual agreement of P3 LLC and VGS 5 in one or more draws no later than December 31, 2025. The VGS 5 Promissory Note matures on August 13, 2028. Interest is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning June 30, 2025. P3 LLC may elect to pay either (1) 8.0% cash interest and 11.5% PIK interest, or (2) 19.5% PIK interest, provided that payment of cash interest will be permitted only to the extent permitted by the Term Loan Agreement and the VGS 5 Subordination Agreement (defined below), and if not so permitted, such interest shall accrue as PIK interest. The VGS 5 Promissory Note provides for mandatory prepayments with the proceeds of certain asset sales, and VGS 5 has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 5 Promissory Note).
On June 21, 2025, the Company delivered a request to VGS 5 for $15.0 million in funding related to the second tranche. VGS 5 funded $8.5 million in July 2025 and $6.5 million in August 2025. On October 3, 2025, the Company delivered a request to VGS 5 for $13.0 million in funding related to the third tranche, which was funded on October 7, 2025.
The VGS 5 Promissory Note restricts P3 LLC’s ability and the ability of its subsidiaries to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under certain default provisions in the agreement, or in the event a mandatory prepayment event occurs. P3 LLC paid VGS 5 an up-front fee of 1.5% of the aggregate principal amount of the loan in-kind. In addition, P3 LLC will pay VGS 5 a back-end fee at the time the VGS 5 Promissory Note is redeemed as follows: (i) if paid prior to June 30, 2025, 2.25%; (ii) if paid from July 1, 2025 through September 30, 2025, 4.50%; (iii) if paid after October 1, 2025 through December 31, 2025, 6.75% and (iv) if paid after December 31, 2025, 9.00%.
In connection with the transactions described above, P3 LLC entered into a subordination agreement, dated as of May 29, 2025 (the “VGS 5 Subordination Agreement”), with CRG as administrative agent under the Term Loan Facility, and VGS 5. Pursuant to the VGS 5 Subordination Agreement, VGS 5 agreed to subordinate its right of payment under the VGS 5 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility. The terms of the VGS 5 Subordination Agreement will effectively require P3 LLC to pay all interest under the VGS 5 Promissory Note in-kind.
As of December 31, 2025, long-term debt maturities are as follows (in thousands):
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