P3 Health Partners Inc

Previous wording

We operate in the $944 billion Medicare market, which covers approximately 67.2 million eligible lives as of March 2024. Our core focus is the MA market, which makes up approximately 51% of the overall Medicare market, or nearly 31 million Medicare eligible lives in 2023. Medicare beneficiaries may enroll in an MA plan, under which payors contract with the Centers for Medicare and Medicaid Services (“CMS”) to provide a defined range of healthcare services that are comparable to Medicare FFS (which is also referred to as “traditional Medicare”).

Current wording

We operate in the $944 billion Medicare market, which covers approximately 67.5 million eligible lives as of June 2024. Our core focus is the MA market, which makes up approximately 51% of the overall Medicare market, or nearly 31 million Medicare eligible lives in 2023. Medicare beneficiaries may enroll in an MA plan, under which payors contract with the Centers for Medicare and Medicaid Services (“CMS”) to provide a defined range of healthcare services that are comparable to Medicare FFS (which is also referred to as “traditional Medicare”).

Previous wording

Our company was formed in 2017 and our first at-risk contract became effective on January 1, 2018. We have demonstrated an ability to rapidly scale, primarily entering markets with our affiliate physician model, and expanding to a PCP network of approximately 2,900 physicians, in 27 markets (counties) across five states in over six full years of operations as of June 30, 2024. As of June 30, 2024, our PCP network served approximately 128,100 at-risk members.

Current wording

Our company was formed in 2017 and our first at-risk contract became effective on January 1, 2018. We have demonstrated an ability to rapidly scale, primarily entering markets with our affiliate physician model, and expanding to a PCP network of approximately 3,100 physicians, in 27 markets (counties) across five states in over six full years of operations as of September 30, 2024. As of September 30, 2024, our PCP network served approximately 128,900 at-risk members.

Previous wording

Our business development and managed care teams maintain an active pipeline of new partnership opportunities for both providers and payors. These potential opportunities are developed through significant inbound interest and the deep relationships our team has developed with their more than 20 years of experience in the VBC space and our proactive assessment of expansion markets. When choosing a market to enter, we make our decision on a county-by-county basis across the United States. We look at various factors including: (i) population size, (ii) payor participants and concentration, (iii) health system participants and concentration, and (iv) competitive landscape.

Current wording

We maintain an active pipeline of new partnership opportunities for both providers and payors. These potential opportunities are developed through significant inbound interest and the deep relationships our team has developed with their more than 20 years of experience in the VBC space and our proactive assessment of expansion markets. When choosing a market to enter, we make our decision on a county-by-county basis across the United States. We look at various factors including: (i) population size, (ii) payor participants and concentration, (iii) health system participants and concentration, and (iv) competitive landscape.

Previous wording

Additionally, by expanding the number of contracted payors, we can leverage our existing infrastructure to quickly increase our share of patients within our physician network.

Current wording

Additionally, by expanding the number of contracted payors, we can leverage our existing infrastructure to quickly increase our share of patients within our physician network. However, we have and intend to continue to conduct periodic strategic reviews of our provider and payor contracts, as a result of which we may elect to periodically exit underperforming provider and payor contracts from our network.

Previous wording

Our medical claims expense is our largest expense category, representing 89% of our total operating expense for the six months ended June 30, 2024. We manage our medical costs by improving our members access to healthcare. Our care model focuses on maintaining health and leveraging the primary care setting as a means of avoiding costly downstream healthcare costs, such as emergency department visits and acute hospital inpatient admissions. The power of our model is reflected in the relative performance of our network when compared to local FFS benchmarks.

Current wording

Our medical expense is our largest expense category, representing 88% of our total operating expense for the nine months ended September 30, 2024. We manage our medical costs by improving our members access to healthcare. Our care model focuses on maintaining health and leveraging the primary care setting as a means of avoiding costly downstream healthcare costs, such as emergency department visits and acute hospital inpatient admissions.

Previous wording

(1)Other during the three and six months ended June 30, 2024 consisted of (i) interest income offset by (ii) severance and related expense in connection with our chief executive officer transition, and (iii) valuation allowance on our notes receivable. Other during the three and six months ended June 30, 2023 consisted of (i) interest income offset by (ii) cybersecurity incident loss, (iii) restructuring and other charges, including severance and benefits paid to employees pursuant to workforce reduction plans, (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 six months ended June 30, 2023, (vi) a legal settlement outside of the ordinary course of business with respect to the six months ended June 30, 2023, and (vii) valuation allowance on our notes receivable.

Current wording

(1)Other during the three and nine months ended September 30, 2024 consisted of (i) interest income and (ii) gain recognized upon the settlement and write-off of contingent consideration related to an acquisition completed in a prior year partially offset by (iii) severance and related expense in connection with our chief executive officer transition and (iv) valuation allowance on our notes receivable. 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.

Previous wording

(2)Transaction and other related costs during the six months ended June 30, 2023 consisted of legal fees incurred related to acquisition-related litigation.

Current wording

(2)Transaction and other related costs during the nine months ended September 30, 2023 consisted of legal fees incurred related to acquisition-related litigation.

Previous wording

The following table presents our gross profit:

Current wording

The following table presents our gross profit (loss):

Previous wording

At-risk membership represents the approximate number of Medicare members for whom we receive a fixed percentage of premium under capitation arrangements as of the end of the reporting period. We had 128,100 and 104,100 at-risk members as of June 30, 2024 and 2023, respectively.

Current wording

At-risk membership represents the approximate number of Medicare members for whom we receive a fixed percentage of premium under capitation arrangements as of the end of the reporting period. We had 128,900 and 105,600 at-risk members as of September 30, 2024 and 2023, respectively.

Previous wording

Affiliate primary care physicians represent the approximate number of primary care physicians included in our affiliate network, with whom members may be attributed under our capitation arrangements, as of the end of the reporting period. We had 2,900 and 2,600 primary care physicians as of June 30, 2024 and 2023, respectively.

Current wording

Affiliate primary care physicians represent the approximate number of primary care physicians included in our affiliate network, with whom members may be attributed under our capitation arrangements, as of the end of the reporting period. We had 3,100 and 2,700 primary care physicians as of September 30, 2024 and 2023, respectively.

Previous wording

Capitated revenue was $374.3 million for the three months ended June 30, 2024, an increase of $48.7 million, or 15%, compared to $325.6 million for the three months ended June 30, 2023. This increase was primarily driven by a 23% increase in the total number of at-risk members from 104,100 at June 30, 2023 to 128,100 at June 30, 2024, which was primarily due to an increase of nine counties under contract with our health plans, effective January 1, 2024, partially offset by a decrease of $18.7 million of risk adjustment revenue as a portion of the constraint applied in previous periods related to dates of service in 2022 was released during the fourth quarter of 2023. During the three months ended June 30, 2023, the constraint applied in previous periods related to dates of service in 2021 was released during the second quarter of 2023. Capitated revenue was approximately 99% of total operating revenue for each of the three months ended June 30, 2024 and 2023.

Current wording

Capitated revenue was $357.7 million for the three months ended September 30, 2024, an increase of $72.6 million, or 25%, compared to $285.2 million for the three months ended September 30, 2023. This increase was primarily driven by a 22% increase in the total number of at-risk members from 105,600 at September 30, 2023 to 128,900 at September 30, 2024, which was primarily due to an increase by nine counties under contract with our health plans, effective January 1, 2024. Capitated revenue was approximately 99% of total operating revenue for each of the three months ended September 30, 2024 and 2023.

Previous wording

Other patient service revenue was $4.9 million for the three months ended June 30, 2024, an increase of $1.4 million, or 40%, compared to $3.5 million for the three months ended June 30, 2023. Other patient service revenue was approximately 1% of total operating revenue for each of the three months ended June 30, 2024 and 2023.

Current wording

Other patient service revenue was $4.4 million for the three months ended September 30, 2024, an increase of $1.2 million, or 38%, compared to $3.2 million for the three months ended September 30, 2023. Other patient service revenue was approximately 1% of total operating revenue for each of the three months ended September 30, 2024 and 2023.

Previous wording

Medical expense was $365.2 million for the three months ended June 30, 2024, an increase of $62.9 million, or 21%, compared to $302.3 million for the three months ended June 30, 2023. The increase was primarily driven by an increase in the total number of at-risk members year-over-year, as described above, resulting from an increase of nine counties under contract with our health plans, effective January 1, 2024.

Current wording

Medical expense was $401.9 million for the three months ended September 30, 2024, an increase of $122.7 million, or 44%, compared to $279.2 million for the three months ended September 30, 2023. The increase was driven by an increase in the total number of at-risk members year-over-year, as described above, resulting from the addition of nine counties under contract with our health plans, effective January 1, 2024, and elevated costs from increased demand for medical care in the current period.

Previous wording

Premium deficiency reserve was a benefit of $2.4 million for the six months ended June 30, 2024 compared to an expense of $3.1 million for the six months ended June 30, 2023. The change was due to management’s assessment of the profitability of contracts, wherein increased membership and the maturation of our overall contractual arrangements are expected to reduce our future losses.

Current wording

Premium deficiency reserve was an expense of $18.2 million for the three months ended September 30, 2024 compared to a benefit of $12.5 million for the three months ended September 30, 2023. The change was due to management’s assessment of the profitability of contracts, wherein increased medical expense is expected to increase our future losses.

Previous wording

Corporate, general and administrative expense was $26.6 million for the three months ended June 30, 2024, a decrease of $0.6 million, or 2%, compared to $27.2 million for the three months ended June 30, 2023. The decrease was primarily driven by a decrease of $1.6 million in professional fees supporting our operations as a public company, partially offset by an increase of $0.6 million in equity-based compensation expense.

Current wording

Corporate, general and administrative expense was $27.2 million for the three months ended September 30, 2024, a decrease of $5.8 million, or 18%, compared to $33.1 million for the three months ended September 30, 2023. The decrease was primarily driven by a decrease of $6.7 million in salary and related expense resulting from a reduction in head count and a $6.2 million gain recognized upon the settlement and write-off of contingent consideration related to an acquisition completed in a prior year, partially offset by increases of $5.2 million in professional fees supporting our operations as a public company and $1.7 million in non-income based taxes.

Previous wording

Capitated revenue was $758.4 million for the six months ended June 30, 2024, an increase of $134.1 million, or 21%, compared to $624.3 million for the six months ended June 30, 2023. This increase was primarily driven by a 23% increase in the total number of at-risk members from 104,100 at June 30, 2023 to 128,100 at June 30, 2024, which was primarily due to an increase of nine counties under contract with our health plans, effective January 1, 2024. Capitated revenue was approximately 99% of total operating revenue for each of the six months ended June 30, 2024 and 2023.

Current wording

Capitated revenue was $1,116.1 million for the nine months ended September 30, 2024, an increase of $206.7 million, or 23%, compared to $909.5 million for the nine months ended September 30, 2023. This increase was primarily driven by a 22% increase in the total number of at-risk members from 105,600 at September 30, 2023 to 128,900 at September 30, 2024, which was primarily due to an increase by nine counties under contract with our health plans, effective January 1, 2024. Capitated revenue was approximately 99% of total operating revenue for each of the nine months ended September 30, 2024 and 2023.

Previous wording

Other patient service revenue was $9.2 million for the six months ended June 30, 2024, an increase of $2.4 million, or 35%, compared to $6.8 million for the six months ended June 30, 2023. Other patient service revenue was approximately 1% of total operating revenue for each of the six months ended June 30, 2024 and 2023.

Current wording

Other patient service revenue was $13.6 million for the nine months ended September 30, 2024, an increase of $3.6 million, or 36%, compared to $10.0 million for the nine months ended September 30, 2023. Other patient service revenue was approximately 1% of total operating revenue for each of the nine months ended September 30, 2024 and 2023.

Previous wording

Medical expense was $747.2 million for the six months ended June 30, 2024, an increase of $159.4 million, or 27%, compared to $587.8 million for the six months ended June 30, 2023. The increase was primarily driven by an increase in the total number of at-risk members year-over-year, as described above, resulting from an increase of nine counties under contract with our health plans, effective January 1, 2024.

Current wording

Medical expense was $1,149.1 million for the nine months ended September 30, 2024, an increase of $282.1 million, or 33%, compared to $867.1 million for the nine months ended September 30, 2023. The increase was driven by an increase in the total number of at-risk members year-over-year, as described above, resulting from the addition of nine counties under contract with our health plans, effective January 1, 2024, and elevated costs from increased demand for medical care in the current period.

Previous wording

Premium deficiency reserve was a benefit of $3.4 million for the three months ended June 30, 2024, an increase of $1.4 million, or 69%, compared to a benefit of $2.0 million for the three months ended June 30, 2023. The change was due to management’s assessment of the profitability of contracts, wherein increased membership and the maturation of our overall contractual arrangements are expected to reduce our future losses.

Current wording

Premium deficiency reserve was an expense of $15.8 million for the nine months ended September 30, 2024 compared to a benefit of $9.4 million for the nine months ended September 30, 2023. The change was due to management’s assessment of the profitability of contracts, wherein increased medical expense is expected to increase our future losses.

Previous wording

Corporate, general and administrative expense was $54.0 million for the six months ended June 30, 2024, a decrease of $10.9 million, or 17%, compared to $64.9 million for the six months ended June 30, 2023. The decrease was driven by decreases of $8.7 million in professional fees supporting our operations as a public company and $2.2 million in salary and related expense.

Current wording

Corporate, general and administrative expense was $81.2 million for the nine months ended September 30, 2024, a decrease of $16.7 million, or 17%, compared to $97.9 million for the nine months ended September 30, 2023. The decrease was primarily driven by a decrease of $8.9 million in salary and related expense resulting primarily from a reduction in head count, a $6.2 million gain recognized upon the settlement and write-off of contingent consideration related to an acquisition completed in a prior year, and a decrease of $3.5 million in professional fees supporting our operations as a public company, partially offset by an increase of $1.6 million in non-income based taxes.

Previous wording

To date, we have financed our operations principally through the cash we obtained as a result of the Business Combinations, private placements of our equity securities, payments from our payors, issuances of promissory notes, and borrowings under the Term Loan Facility. We generate cash from our operations, generally from our contracts with payors. As of June 30, 2024, we had cash and restricted cash of $78.2 million.

Current wording

To date, we have financed our operations principally through the cash we obtained as a result of the Business Combinations, private placements of our equity securities, payments from our payors, issuances of promissory notes, and borrowings under the Term Loan Facility. We generate cash from our operations, generally from our contracts with payors. As of September 30, 2024, we had cash and restricted cash of $68.1 million, which includes a $15 million refundable good faith deposit for the sale of our Florida operations, which we received in advance of the proposed sale (as described below).

Previous wording

We have experienced losses since our inception and net losses of $28.8 million and $78.4 million for the three and six months ended June 30, 2024, respectively. We expect to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future due to the strong growth we have experienced over the last seven years and the investments we are making in expanding our business, which require up-front expenses. Our future capital requirements will depend on many factors, including the pace of our growth, ability to manage medical costs, the maturity of our members, and our ability to raise capital. We may need to raise additional capital through a combination of debt financing, other non-dilutive financing and/or equity financing and to the extent we are unsuccessful at doing so, we may need to adjust our growth trajectory to accommodate our capital needs and look for additional ways to generate cost efficiencies.

Current wording

We have experienced losses since our inception and net losses of $102.9 million and $181.2 million for the three and nine months ended September 30, 2024, respectively. We expect to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future due to the strong growth we have experienced over the last seven years and the investments we are making in expanding our business, which require up-front expenses. Our future capital requirements will depend on many factors, including the pace of our growth, ability to manage medical costs, the maturity of our members, our ability to complete the sale of our Florida operations, and our ability to raise capital. We may need to raise additional capital through a combination of debt financing, other non-dilutive financing and/or equity financing and to the extent we are unsuccessful at doing so, we may need to adjust our growth trajectory to accommodate our capital needs and look for additional ways to generate cost efficiencies.

Previous wording

Promissory Note provided for funding of up to $25.0 million. The VGS 2 Promissory Note matures on September 30, 2027. As of June 30, 2024, we had $25.4 million of borrowings outstanding under the VGS 2 Promissory Note, $0.4 million of which consists of an up-front fee of 1.5% of the aggregate principal amount of the loan paid to VGS 2 in-kind. Interest is payable at 17.5% per annum on a quarterly cycle (in arrears) beginning June 30, 2024. We may elect to pay either (1) 8.0% cash interest and 9.5% PIK interest, or (2) 17.5% PIK interest, provided that payment of cash interest will be permitted only to the extent permitted by the Term Loan Agreement and the 2024 Subordination Agreement, and if not so permitted, such interest shall accrue as PIK interest. 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).

Current wording

On March 22, 2024, we entered into a financing transaction with VBC Growth SPV 2, LLC (“VGS 2”), consisting of the issuance by P3 LLC of an unsecured promissory note (the “VGS 2 Promissory Note”) to VGS 2. The VGS 2 Promissory Note provided for funding of up to $25.0 million. The VGS 2 Promissory Note matures on September 30, 2027. As of September 30, 2024, we had $25.4 million of borrowings outstanding under the VGS 2 Promissory Note, $0.4 million of which consists of an up-front fee of 1.5% of the aggregate principal amount of the loan paid to VGS 2 in-kind. Interest is payable at 17.5% per annum on a quarterly cycle (in arrears) beginning June 30, 2024. We may elect to pay either (1) 8.0% cash interest and 9.5% PIK interest, or (2) 17.5% PIK interest, provided that payment of cash interest will be permitted only to the extent permitted by the Term Loan Agreement and the 2024 Subordination Agreement, and if not so permitted, such interest shall accrue as PIK interest. 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).

Previous wording

In connection with the issuance of the VGS 2 Promissory Note, we also entered into a subordination agreement, dated as of March 22, 2024 (the “2024 Subordination Agreement”) with VGS 2 which subordinates VGS 2’s 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. Under the terms of the 2024 Subordination Agreement, we will be required to pay all interest under the VGS 2 Promissory Note in-kind.

Current wording

In connection with the issuance of the VGS 2 Promissory Note, we also entered into a subordination agreement, dated as of March 22, 2024 (the “2024 Subordination Agreement”) with VGS 2 which subordinates VGS 2’s right of payment under the VGS 2 Promissory Note to the right of payment and security interests of the lenders under the Term

Previous wording

The estimation of a liability under the TRA is, by its nature, imprecise and subject to significant assumptions regarding a number of factors, including (but not limited to) the amount and timing of taxable income generated by the Company each year as well as the tax rate then applicable. The TRA liability is estimated to be $11.1 million as of June 30, 2024. Due to the Company’s history of losses, the Company has not recorded tax benefits associated with the increase in tax basis as a result of the Business Combinations. As a result, the Company determined that payments to TRA holders are not probable and no TRA liability has been recorded as of June 30, 2024.

Current wording

The estimation of a liability under the TRA is, by its nature, imprecise and subject to significant assumptions regarding a number of factors, including (but not limited to) the amount and timing of taxable income generated by the Company each year as well as the tax rate then applicable. The TRA liability is estimated to be $11.0 million as of September 30, 2024. Due to the Company’s history of losses, the Company has not recorded tax benefits associated with the increase in tax basis as a result of the Business Combinations. As a result, the Company determined that payments to TRA holders are not probable and no TRA liability has been recorded as of September 30, 2024.

Previous wording

Outside of the aforementioned, and any routine transactions made in the ordinary course of business, there have been no material changes to our primary short-term and long-term requirements for liquidity and capital as disclosed in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our 2023 Form 10-K.

Current wording

Outside of the aforementioned, and any routine transactions made in the ordinary course of business, there have been no material changes to our primary short-term and long-term requirements for liquidity and capital as disclosed in Part

Previous wording

As of the date of this Form 10-Q, we believe that our existing cash resources are not sufficient to support planned operations for at least the next year from the issuance of the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q. As a result, we have concluded that there is substantial doubt about our ability to continue as a going concern within one year after the date the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q are issued. In evaluating our ability to continue as a going concern, we considered our current projections of future cash flows, current financial condition, sources of liquidity, and debt obligations for at least one year from the date of issuance of this Form 10-Q in considering whether we have the ability to meet our obligations. This evaluation of our cash resources available over the next year from the date of issuance of the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q does not take into consideration the potential mitigating effect of our ongoing efforts to raise capital or our plans that have not been fully implemented or the many factors that determine our capital requirements, including the pace of our growth, ability to manage medical costs and the maturity of our members. We continue to explore raising additional capital through a combination of debt financing and equity issuances. If we raise funds by issuing debt securities or preferred stock, or by incurring loans, these forms of financing would have rights, preferences, and privileges senior to those of holders of our common stock. If we raise capital through the issuance of additional equity, such sales and issuance would dilute the ownership interests of the existing holders of our Class A common stock. The availability and the terms under which we may be able to raise additional capital could be disadvantageous, and the terms of debt financing or other non-dilutive financing may involve restrictive covenants and dilutive financing instruments, which could place significant restrictions on our operations. Macroeconomic conditions and credit markets could also impact the availability and cost of potential future debt financing. There can be no assurances that any additional debt, other non-dilutive and/or equity financing would be available to us on favorable terms, or potentially at all. We expect to continue to incur net losses, comprehensive losses, and negative cash flows from operating activities in accordance with our operating plan. If we are unable to obtain additional funding when needed, we will need to curtail planned activities in order to reduce costs, which will likely have an unfavorable effect on our ability to execute on our business plan, and have an adverse effect on our business, results of operations, and future prospects.

Current wording

As of the date of this Form 10-Q, we believe that our existing cash resources are not sufficient to support planned operations for at least the next year from the issuance of the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q. As a result, we have concluded that there is substantial doubt about our ability to continue as a going concern within one year after the date the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q are issued. In evaluating our ability to continue as a going concern and meet our obligations, we considered our current projections of future cash flows, current financial condition, sources of liquidity, and debt obligations for at least one year from the date of issuance of this Form 10-Q. This evaluation of our cash resources available over the next year from the date of issuance of the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q does not take into consideration the potential mitigating effect of our ongoing efforts to raise capital or our plans that have not been fully implemented or the many factors that determine our capital requirements, including the pace of our growth, ability to manage medical costs and the maturity of our members. We continue to explore raising additional capital through a combination of debt financing and equity issuances. If we raise funds by issuing debt securities or preferred stock, or by incurring loans, these forms of financing would have rights, preferences, and privileges senior to those of holders of our common stock. If we raise capital through the issuance of additional equity, such sales and issuance would dilute the ownership interests of the existing holders of our Class A common stock. The availability and the terms under which we may be able to raise additional capital could be disadvantageous, and the terms of debt financing or other non-dilutive financing may involve restrictive covenants and dilutive financing instruments, which could place significant restrictions on our operations. Macroeconomic conditions and credit markets could also impact the availability and cost of potential future debt financing. There can be no assurances that any additional debt, other non-dilutive and/or equity financing would be available to us on favorable terms, or potentially at all. We expect to continue to incur net losses, comprehensive losses, and negative cash flows from operating activities in accordance with our operating plan. If we are unable to obtain additional funding when needed, we will need to curtail planned activities, divest certain operations, sell certain assets or reduce our costs, which will likely have an unfavorable effect on our ability to execute on our business plan, and have an adverse effect on our business, results of operations, and future prospects.

Previous wording

Net cash used in operating activities was $30.3 million for the six months ended June 30, 2024, compared to net cash used in operating activities of $52.6 million for the six months ended June 30, 2023. Significant changes impacting net cash used in operating activities during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 were primarily due to changes in working capital.

Current wording

Net cash used in operating activities was $52.9 million for the nine months ended September 30, 2024, compared to net cash used in operating activities of $60.2 million for the nine months ended September 30, 2023. Significant changes impacting net cash used in operating activities during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 were primarily due to changes in working capital.

Previous wording

Net cash used in investing activities was zero for the six months ended June 30, 2024. Net cash used in investing activities was $1.7 million for the six months ended June 30, 2023, consisting of purchases of property and equipment.

Current wording

Net cash provided by investing activities was $15.0 million for the nine months ended September 30, 2024, consisting of purchase price received in advance of the sale of our Florida operations. Net cash used in investing activities was $2.0 million for the nine months ended September 30, 2023, consisting of purchases of property and equipment.

Previous wording

Net cash provided by financing activities was $67.5 million for the six months ended June 30, 2024, consisting of proceeds from the May 2024 Private Placement, net of offering costs, borrowings on the VGS 2 Promissory Note, and short-term financing agreements for the funding of certain insurance policies. Net cash provided by financing activities was $101.3 million for the six months ended June 30, 2023, consisting of proceeds from the March 2023 Private Placement, net of offering costs, and borrowings on the VGS Promissory Note.

Current wording

Net cash provided by financing activities was $65.1 million for the nine months ended September 30, 2024, primarily consisting of proceeds from the May 2024 Private Placement, net of offering costs, borrowings on the VGS 2 Promissory Note, and short-term financing agreements for the funding of certain insurance policies. Net cash provided by financing activities was $101.2 million for the nine months ended September 30, 2023, primarily consisting of proceeds from the March 2023 Private Placement, net of offering costs, and borrowings on the VGS Promissory Note.