P3 Health Partners Inc.

Previous wording

We operate in the $1,030 billion Medicare market, which covers more than 68 million eligible lives as of January 2025. Our core focus is the MA market, which makes up approximately 54% of the overall Medicare market, or nearly 33 million Medicare eligible lives in 2024. 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 $1,030 billion Medicare market, which covers more than 69 million eligible lives as of April 2025. Our core focus is the MA market, which makes up approximately 54% of the overall Medicare market, or nearly 33 million Medicare eligible lives in 2024. 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 2,800 physicians, in 27 markets (counties) across five states in over seven full years of operations as of March 31, 2025. As of March 31, 2025, our PCP network served approximately 115,500 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 2,800 physicians, in 24 markets (counties) across four states in over eight full years of operations as of June 30, 2025. As of June 30, 2025, our PCP network served approximately 114,100 at-risk members.

Previous wording

Once established in a market, we have an opportunity to efficiently expand both our provider and payor contracts. Given the benefits PCPs experience from joining our P3 Care Model, which offers providers the teams, tools and technologies to better support their patient base, we often experience growth in our affiliate network after entering a market. Because of the benefits, we have also historically experienced high retention with our affiliate providers. From 2018 through March 31, 2025, we experienced a 95% physician retention rate in our affiliate provider network. By expanding our affiliate provider network and adding new physicians to the P3 network, we can quickly increase the number of contracted at-risk members under our existing health plan arrangements.

Current wording

Once established in a market, we have an opportunity to efficiently expand both our provider and payor contracts. Given the benefits PCPs experience from joining our P3 Care Model, which offers providers the teams, tools and technologies to better support their patient base, we often experience growth in our affiliate network after entering a market. Because of the benefits, we have also historically experienced high retention with our affiliate providers. From 2018 through June 30, 2025, we experienced a 92% physician retention rate in our affiliate provider network. By expanding our affiliate provider network and adding new physicians to the P3 network, we can quickly increase the number of contracted at-risk members under our existing health plan arrangements.

Previous wording

Our medical expense is our largest expense category, representing 90% of our total operating expense for the three months ended March 31, 2025. 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.

Current wording

Our medical expense is our largest expense category, representing 90% of our total operating expense for the six months ended June 30, 2025. 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 months ended March 31, 2025 and 2024 consisted of interest income partially offset by legal settlements and valuation allowance on our notes receivable.

Current wording

(1)Other during the three and six months ended June 30, 2025 consisted of (i) interest income partially offset by (ii) severance expense in connection with reorganization of workforce and (iii) legal settlements and valuation allowance on our notes receivable. Other during the three and six months ended June 30, 2024 consisted of (i) interest income partially offset by (ii) severance and related expense in connection with our chief executive officer transition and (iii) legal settlements and valuation allowance on our notes receivable.

Previous wording

The following table presents our gross profit (loss):

Current wording

The following table presents our gross profit:

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 115,500 and 126,800 at-risk members as of March 31, 2025 and 2024, 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 114,100 and 128,100 at-risk members as of June 30, 2025 and 2024, respectively.

Previous wording

Depreciation and amortization expense. Depreciation expense is associated with our property and equipment, including leasehold improvements, computer equipment and software, furniture and fixtures, and internally developed software. Amortization expense is associated with definite lived intangible assets, including trademarks and tradenames, customer contracts, provider network agreements, and payor contracts.

Current wording

Depreciation and amortization expense. Depreciation expense is associated with our property and equipment, including leasehold improvements, computer equipment and software, furniture and fixtures, medical equipment, and internally developed software. Amortization expense is associated with definite lived intangible assets, including trademarks and tradenames, customer contracts, provider network agreements, and payor contracts.

Previous wording

Capitated revenue was $369.5 million for the three months ended March 31, 2025, a decrease of $14.6 million, or 4%, compared to $384.1 million for the three months ended March 31, 2024. This decrease was primarily driven by a 9% decrease in the total number of at-risk members from 126,800 at March 31, 2024 to 115,500 at March 31, 2025 driven by the strategic termination of underperforming payor contracts and affiliate providers in the current year. Capitated revenue was approximately 99% of total operating revenue for each of the three months ended March 31, 2025 and 2024.

Current wording

Capitated revenue was $351.7 million for the three months ended June 30, 2025, a decrease of $22.6 million, or 6%, compared to $374.3 million for the three months ended June 30, 2024. This decrease was primarily driven by a 11% decrease in the total number of at-risk members from 128,100 at June 30, 2024 to 114,100 at June 30, 2025 driven by the strategic termination of underperforming payor contracts and affiliate providers in the current year. Capitated revenue was approximately 99% of total operating revenue for each of the three months ended June 30, 2025 and 2024.

Previous wording

Other patient service revenue was $3.7 million for the three months ended March 31, 2025, a decrease of $0.6 million, or 15%, compared to $4.4 million for the three months ended March 31, 2024. Other patient service revenue was approximately 1% of total operating revenue for each of the three months ended March 31, 2025 and 2024.

Current wording

Other patient service revenue was $4.1 million for the three months ended June 30, 2025, a decrease of $0.8 million, or 16%, compared to $4.9 million for the three months ended June 30, 2024. Other patient service revenue was approximately 1% of total operating revenue for each of the three months ended June 30, 2025 and 2024.

Previous wording

Medical expense was $372.0 million for the three months ended March 31, 2025, a decrease of $10.0 million, or 3%, compared to $382.1 million for the three months ended March 31, 2024. The decrease was driven primarily by decreased membership in the current period.

Current wording

Medical expense was $351.4 million for the three months ended June 30, 2025, a decrease of $13.8 million, or 4%, compared to $365.2 million for the three months ended June 30, 2024. The decrease was driven primarily by a decrease in the total number of at-risk members year-over-year resulting in part from termination of two health plans.

Previous wording

Premium deficiency reserve was a benefit of $7.0 million for the three months ended March 31, 2025 compared to an expense of $1.0 million for the three months ended March 31, 2024. The change was due to network and contract rationalization that began in 2024 and management’s assessment of the profitability of contracts, wherein increased maturation of our overall contractual arrangements is expected to reduce our future losses.

Current wording

Premium deficiency reserve was a benefit of $6.0 million for the three months ended June 30, 2025, an increase of $2.6 million, or 76%, compared to a benefit of $3.4 million for the three months ended June 30, 2024. 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 $25.0 million for the three months ended March 31, 2025, a decrease of $2.4 million, or 9%, compared to $27.4 million for the three months ended March 31, 2024. The decrease was primarily driven by a decrease in salary and related expense resulting from a reduction in head count including a $1.1 million reduction in employee bonuses.

Current wording

Corporate, general and administrative expense was $23.3 million for the three months ended June 30, 2025, a decrease of $3.3 million, or 12%, compared to $26.6 million for the three months ended June 30, 2024. The decrease was primarily driven by a decrease in salary and related expense resulting from a reduction in head count and sale of the Company’s Florida operations.

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 March 31, 2025, we had $40.1 million of unrestricted cash and cash equivalents available to fund future operations.

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 June 30, 2025, we had $38.6 million of unrestricted cash and cash equivalents available to fund future operations.

Previous wording

We have experienced losses since our inception, and net losses of $44.2 million and $49.6 million for the three months ended March 31, 2025 and 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 in patient enrollment 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 remaining Florida operations, and our ability to raise capital and refinance our indebtedness as it matures. We may need to raise additional capital through a combination of debt and/or equity financing and to the extent we are unsuccessful at doing so, we may need to curtail planned activities, discontinue certain operations, or sell certain assets, which could materially and adversely affect our business, financial condition, results of operations, and prospects.

Current wording

We have experienced losses since our inception, and net losses of $43.7 million and $87.9 million for the three and six months ended June 30, 2025, respectively. 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 and refinance our indebtedness as it matures. We may need to raise additional capital through a combination of debt and/or equity financing and to the extent we are unsuccessful at doing so, we may need to curtail planned activities, discontinue certain operations, or sell certain assets, which could materially and adversely affect our business, financial condition, results of operations, and prospects.

Previous wording

On February 13, 2025, we entered into a financing transaction with VBC Growth SPV 4, LLC (“VGS 4”), consisting of the issuance by P3 LLC of an unsecured promissory note (the “VGS 4 Promissory Note”) to VGS 4 and the entry into a warrant agreement and the VGS 4 Subordination Agreement (defined below). The VGS 4 Promissory Note provides for funding of up to $30.0 million, available for us to draw in (i) a first tranche of $15.0 million, which was drawn on February 18, 2025, and (ii) a second tranche of up to $15.0 million which was drawn on March 14, 2025. In addition, we paid VGS 4 an up-front fee of 1.5% of $30.0 million, the maximum draw amount, in-kind. The VGS 4 Promissory Note matures on August 13, 2028. Interest on the VGS 4 Promissory Note is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning March 31, 2025. We may elect to pay interest 11.5% in-kind and 8.0% in cash, but if the terms of the VGS 4 Subordination Agreement do not permit P3 LLC to pay interest in cash, interest will be paid entirely in-kind.

Current wording

On February 13, 2025, we entered into a financing transaction with VBC Growth SPV 4, LLC (“VGS 4”), consisting of the issuance by P3 LLC of an unsecured promissory note (the “VGS 4 Promissory Note”) to VGS 4 and the entry into a warrant agreement and the VGS 4 Subordination Agreement (defined below). The VGS 4 Promissory Note provides for funding of up to $30.0 million, available for us to draw in (i) a first tranche of $15.0 million, which was drawn on February 18, 2025, and (ii) a second tranche of up to $15.0 million which was drawn on March 14, 2025. In addition, we paid VGS 4 an up-front fee of 1.5% of $30.0 million, the maximum draw amount, in-kind. The VGS 4 Promissory Note matures on August 13, 2028. Interest on the VGS 4 Promissory Note is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning March 31, 2025. We may elect to pay interest 11.5% in-kind and 8.0% in cash, but if the terms of the VGS 4 Subordination Agreement do not permit us to pay interest in cash, interest will be paid entirely in-kind.

Previous wording

In addition, we will pay VBC 4 a back-end fee at the time the loans issued under the VGS 4 Promissory Note are repaid as follows: (i) if repaid prior to March 31, 2025, 2.25% of the aggregate principal amount of the loans advanced to P3 LLC on or prior to such date; (ii) if repaid from April 1, 2025 through June 30, 2025, 4.5% of the aggregate principal amount of the loans advanced to P3 LLC on or prior to such date; (iii) if repaid from July 1, 2025 through September 30, 2025, 6.75% of the aggregate principal amount of the loans advanced to P3 LLC on or prior to such date; and (iv) if repaid on October 1, 2025 or later, 9.0% of the aggregate principal amount of the loans advanced to P3 LLC on or prior to such date.

Current wording

In addition, we will pay VBC 4 a back-end fee at the time the loans issued under the VGS 4 Promissory Note are repaid as follows: (i) if repaid prior to March 31, 2025, 2.25% of the aggregate principal amount of the loans advanced to us on or prior to such date; (ii) if repaid from April 1, 2025 through June 30, 2025, 4.5% of the aggregate principal amount of the loans advanced to us on or prior to such date; (iii) if repaid from July 1, 2025 through September 30, 2025, 6.75% of the aggregate principal amount of the loans advanced to us on or prior to such date; and (iv) if repaid on October 1, 2025 or later, 9.0% of the aggregate principal amount of the loans advanced to us on or prior to such date.

Previous wording

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 the certain default provisions in the agreement, or in the event a mandatory prepayment event occurs.

Current wording

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.

Previous wording

As of March 31, 2025, we were in material compliance with the covenants under our Term Loan Facility, VBC Growth SPV LLC promissory note (“VGS Promissory Note”), VBC Growth SPV 2, LLC unsecured promissory note (“VGS 2 Promissory Note”), VBC Growth SPV 3 LLC unsecured promissory note (“VGS 3 Promissory Note”), and VGS 4 Promissory Note; however, there can be no assurance that we will be able to maintain compliance with these covenants in the future or that the lenders under the Term Loan Facility and unsecured promissory notes or the lenders of any future indebtedness we may incur will grant any waiver or forbearance with respect to such covenants that we may request in the future.

Current wording

As of June 30, 2025, we were in material compliance with the covenants under our Term Loan Facility, VBC Growth SPV LLC promissory note (“VGS Promissory Note”), VBC Growth SPV 2, LLC unsecured promissory note (“VGS 2 Promissory Note”), VBC Growth SPV 3 LLC unsecured promissory note (“VGS 3 Promissory Note”), VGS 4 Promissory Note, and VGS 5 Promissory Note; however, there can be no assurance that we will be able to maintain compliance with these covenants in the future or that the lenders under the Term Loan Facility and unsecured promissory notes or the lenders of any future indebtedness we may incur will grant any waiver or forbearance with respect to such covenants that we may request in the future.

Previous wording

On May 1, 2025, our subsidiary, P3 Health Partners-Florida, LLC (“P3 Florida”), entered into an asset purchase agreement with Invictus Equity Group, LLC (“Invictus”) for the purchase of assets previously held for sale. Pursuant to the asset purchase agreement, P3 Florida sold to Invictus the assets, clinical and non-clinical, exclusively or primarily used by our MA-related business operated out of Clearwater, Florida, for a purchase price of approximately $0.1 million.

Current wording

On May 1, 2025, our subsidiary, P3 Health Partners-Florida, LLC (“P3 Florida”), entered into an asset purchase agreement with Invictus Equity Group, LLC (“Invictus”) for the purchase of the remaining assets previously held for sale. Pursuant to the asset purchase agreement, P3 Florida sold to Invictus the assets, clinical and non-clinical, exclusively or primarily used by our MA-related businesses operated out of Apollo Beach and Clearwater, Florida, for a purchase price of approximately $0.1 million.

Previous wording

Net cash used in operating activities was $33.5 million for the three months ended March 31, 2025, compared to net cash used in operating activities of $20.0 million for the three months ended March 31, 2024. Significant changes impacting net cash used in operating activities during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 were primarily due to changes in working capital.

Current wording

Net cash used in operating activities was $50.1 million for the six months ended June 30, 2025, compared to net cash used in operating activities of $30.3 million for the six months ended June 30, 2024. Significant changes impacting net cash used in operating activities during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 were primarily due to changes in working capital and an increase in net loss.

Previous wording

Net cash provided by financing activities was $30.7 million for the three months ended March 31, 2025, primarily consisting of proceeds from the borrowings on the VGS 4 Promissory Note and short-term financing agreements for the funding of certain insurance policies. Net cash provided by financing activities was $11.4 million for the three months ended March 31, 2024, consisting of proceeds from the issuance of the VGS 2 Promissory Note and short-term financing agreements for the funding of certain insurance policies.

Current wording

Net cash provided by financing activities was $45.3 million for the six months ended June 30, 2025, primarily consisting of proceeds from the borrowings on the VGS 4 Promissory Note, VGS 5 Promissory Note, and short-term financing agreements for the funding of certain insurance policies. Net cash provided by financing activities was $67.5 million for the six months ended June 30, 2024, consisting of proceeds from the sale of Class A common stock and warrants in May 2024 (the “May 2024 Private Placement”) with aggregate proceeds of $39.8 million, net of $2.4 million in offering costs, borrowings on the VGS 2 Promissory Note and short-term financing agreements for the funding of certain insurance policies.