P3 Health Partners Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

Variable Interest Entities

Variable Interest Entities

12 Months Ended

Dec. 31, 2025

Note 21: Variable Interest Entities

P3 LLC has Management Services Agreements (“MSAs”) and deficit funding agreements with the Network VIEs. The MSAs provide that 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 VIEs’ 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 the Network VIEs held at the P3 LLC level.


	December 31,
	2025		2024
	(in thousands)
ASSETS
Cash	$	4,776	$	5,216
Clinic fees, insurance and other receivable	785		2,440

Prepaid expenses and other current assets	487		447
Property and equipment, net	32		37
Intangible assets, net	660		—
Other long-term assets	1,433		1,116

TOTAL ASSETS	$	8,173	$	9,256
LIABILITIES AND MEMBERS’ DEFICIT
Accounts payable	$	394	$	4,521
Accrued expenses and other current liabilities	241		677
Accrued payroll	887		3,795
Claims payable	4,199		5,004
Other long-term liabilities	922		919
Due to consolidated entities of P3	46,774		40,264
TOTAL LIABILITIES	53,417		55,180
MEMBERS’ DEFICIT	(45,244)		(45,924)
TOTAL LIABILITIES AND MEMBERS’ DEFICIT	$	8,173	$	9,256


	Year Ended December 31,
		2025		2024
		(in thousands)
Revenue		$	27,644	$	36,187
Expense		27,465		39,520
Net income (loss)		$	179	$	(3,333)

In November 2025, the Company, through its subsidiary P3 Health Partners REACH ACO, LLC (“P3 ACO”), entered into an agreement with Commonwealth Primary Care ACO, LLC (“CPC ACO”), which resulted in the formation of P3 Commonwealth Innovation MSO, LLC (the “MSO”). The MSO was created to engage in the management, administration, and coordination of activities on behalf of accountable care organizations intended to improve the performance and quality of the parties’ respective ACO programs. To this end, the MSO entered into an MSA with the ACOs that will govern the MSO’s oversight of clinical integration, provider management, data analytics, financial management, strategic planning, shared services, compliance operations, and related administrative and operational support for the benefit of the ACOs.

The management fee to be paid by each ACO to the MSO for its services under the MSA is equal to the amount of liabilities incurred by such ACO in connection with its participation in any accountable care organization governmental program assumed and satisfied by the MSO during the term of the MSA plus a margin on such assumed liabilities. Beginning in 2026 and for each year thereafter, the MSO will also be entitled to receive from each ACO a portion of each ACO’s net shared savings as determined under the MSA. P3 LLC is obligated to fund any working capital needs to the extent operating expenses exceed gross revenue and to assume any obligations related to CPC ACO’s contracts with CMS and CMMI. The MSA may be terminated after three years without cause.

Distributions from the MSO of available net cash flow and upon liquidation will be in accordance with the members’ respective percentage interests, with P3 ACO holding an 80% membership interest and CPC ACO holding a 20% membership interest. P3 also controls the board of the MSO. The Company determined that the MSO is a VIE. The Company has the right to direct the most significant activities of the MSO through its control of the MSO Board; accordingly, P3 LLC identifies itself as the primary beneficiary of the MSO. CPC ACO’s ownership interest in the MSO represents a redeemable non-controlling interest which participates only in the profit of the MSO and distributions of any net assets upon liquidation, because of the Company’s obligation to fund losses and assume specific obligations. The non-controlling interest was measured at its fair value upon the formation date.

Following the three-year anniversary of the MSO’s formation, or upon termination of the MSA for cause, P3 ACO has the right to cause the MSO to redeem CPC ACO’s membership interests in the MSO. If P3 ACO does not exercise its redemption right within 90 days following the date such right is exercisable, CPC ACO has the right to cause the MSO to redeem its membership interests in the MSO.

As of December 31, 2025, the carrying value of variable interest assets and liabilities of the MSO were $6.1 million and $5.1 million, respectively.

The Company also determined that upon the effective date of the MSA on January 1, 2026, the Company will become the primary beneficiary of and control CPC ACO pursuant to the MSA contract. The Company is still obtaining the information required to determine the fair values of the assets, liabilities, and non-controlling interests of CPC ACO.