What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-28 compared with 2024-03-28 · 201 added, 126 removed, 434 unchanged (43% of the section changed)

14 unchanged sentences

In our model, physicians are able to retain their independence and entrepreneurial spirit, while gaining access to the tools, teams and technologies that are key to success in a VBC model, all while sharing in the savings from successfully improving the quality of patient care and reducing costs.

We operate in the $944 billion Medicare market, which covers approximately 66 million eligible lives as of October 2023.

We operate in the $1,030 billion Medicare market, which covers approximately 68 million eligible lives as of November 2024.

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.

10 unchanged sentences

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 2,750 physicians, in 18 markets (counties) across five states in six full years of operations as of December 31, 2023.

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 December 31, 2024.

Our platform has enabled us to grow our revenue by an average of 74% annually from December 31, 2020 to December 31, 2024.

23 unchanged sentences

By utilizing the local healthcare infrastructure, we can quickly build a network of PCPs to serve the healthcare needs of contracted members.

Our business development and managed care teams maintain an active pipeline of new partnership opportunities for both providers and payors.

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.

4 unchanged sentences

When entering an adjacent market, we are able to leverage the investments we previously made to have a faster impact on our expanded footprint.

As of December 31, 2023, we operate in 18 markets, markets being counties, across five states.

Growing Membership in Existing Markets

7 unchanged sentences

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.

Growing Capitated Revenue Per Member

7 unchanged sentences

Effectively Managing Member Medical Expense

Our medical claims expense is our largest expense category, representing 86% of our total operating expenses for the year ended December 31, 2023.

Our medical expense is our largest expense category, representing 86% of our total operating expense for the year ended December 31, 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.

Achieving Operating Efficiencies

As a result of our affiliate model and ability to leverage our existing local and national infrastructure, we generate operating efficiencies at both the market and enterprise level.

As a result of our affiliate model and ability to leverage our existing local and national infrastructure, we aim to generate operating efficiencies at both the market and enterprise level.

Our local corporate, general and administrative expense, which includes our local leadership, care management teams and other operating costs to support our markets, are expected to decrease over time as a percentage of revenue as we add members to our existing contracts, grow membership with new payor and physician contracts, and our revenue subsequently increases.

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The following table sets forth a reconciliation of our net loss, the most directly comparable GAAP metric, to Adjusted EBITDA:

The following table sets forth a reconciliation of our net loss, the most directly comparable GAAP metric, to Adjusted EBITDA loss:

Year Ended December 31,

2 unchanged sentences

Interest expense, net 22,173 15,985

Depreciation and amortization expense 86,675 87,289

Provision for income taxes 2,695 1,862

Depreciation and amortization 86,058 86,675

Income tax provision 4,387 2,695

Mark-to-market of stock warrants (22,114) (433)

1 unchanged sentence

Equity-based compensation 5,752 5,979

(6,775) 2,656

Transaction and other related costs (2)

Goodwill impairment — 1,314,952

Adjusted EBITDA loss $ (167,199) $ (85,504)

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(1) Transaction and other related costs during the year ended December 31, 2023 consisted of legal fees incurred related to acquisition-related litigation and during the year ended December 31, 2022 consisted of accounting, legal, and advisory fees related to transactions that were completed, pending, or abandoned.

(1) Other during the year ended December 31, 2024 consisted of (i) interest income, (ii) gain recognized upon the settlement and write-off of contingent consideration related to an acquisition completed in a prior year and (iii) gain recognized on asset sale partially offset by (iv) severance and related expense in connection with our chief executive officer transition (v) loss on impairment on assets held for sale, and (vi) valuation allowance on our notes receivable.

Other during the year ended December 31, 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), (vi) a legal settlement outside of the ordinary course of business, and (vii) valuation allowance on our notes receivable.

Other during the year ended December 31, 2022 consisted of (i) income related to the release of indemnity funds previously escrowed as part of an acquisition in a prior year and (ii) interest income, offset by (iii) accounting, legal, and professional services expenses incurred related to the restatement of our consolidated financial statements for the years ended December 31, 2020, 2019, and 2018 and the condensed consolidated financial statements for the quarterly periods ended March 31, 2021, June 30, 2021, September 30, 2021, March 31, 2020, June 30, 2020, and September 30, 2020, (iv) 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), and (v) severance expense.

(2) Transaction and other related costs during the year ended December 31, 2023 consisted of legal fees incurred related to acquisition-related litigation.

Medical Margin

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We present medical margin because we believe it helps investors understand underlying trends in our business and facilitates an understanding of our operating performance from period to period by facilitating a comparison of our recurring core business operating results.

Medical margin represents the amount earned from capitation revenue after medical claims expenses are deducted.

Medical margin represents the amount earned from capitated revenue after medical claims expenses are deducted.

Medical claims expenses represent costs incurred for medical services provided to our members.

5 unchanged sentences

You should review the reconciliation of gross profit to medical margin set forth below and not rely on any single financial measure to evaluate our business.

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The following table presents our medical margin:

4 unchanged sentences

Medical margin $ 85,459 $ 135,051

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The following table sets forth a reconciliation of our gross profit, the most directly comparable GAAP metric, to medical margin:

1 unchanged sentence

(in thousands)

Gross profit $ 31,635 $ (7,753)

Gross profit (loss) $ (58,917) $ 31,635

Other patient service revenue (16,853) (14,066)

7 unchanged sentences

Other medical expenses are largely variable and proportionate to the level of surplus in each respective market, among other cost factors.

The following table presents our gross profit:

The following table presents our gross profit (loss):

Year Ended December 31,

3 unchanged sentences

other medical expense (161,229) (117,482)

Gross profit $ 31,635 $ (7,753)

Gross profit (loss) $ (58,917) $ 31,635

At-Risk Membership

1 unchanged sentence

We had 123,800 and 108,900 at-risk members as of December 31, 2024 and 2023, respectively.

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Affiliate Primary Care Physicians

5 unchanged sentences

We exclude costs related to the operations of our owned medical clinics and wellness centers.

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The table below represents costs to support our markets and enterprise functions, which are included in corporate, general and administrative expenses:

23 unchanged sentences

These services are provided to patients covered by these payors regardless of whether those patients receive their care from our directly employed or affiliated medical groups.

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Operating Expense

9 unchanged sentences

Premium deficiency reserve.

Premium deficiency reserves (“PDR”) are recognized when it is probable that expected future health care costs and maintenance costs under a group of existing contracts will exceed anticipated future premiums and stop-loss insurance recoveries on those contracts.

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premiums and stop-loss insurance recoveries on those contracts.

PDR represents the advance recognition of a probable future loss in the current period’s financial statements.

8 unchanged sentences

Amortization expense is associated with definite lived intangible assets, including trademarks and tradenames, customer contracts, provider network agreements, and payor contracts.

Goodwill impairment.

During the year ended December 31, 2022, we recorded a $1,315.0 million goodwill impairment charge due to the presence of certain macroeconomic and financial market conditions, industry-specific considerations, our performance, and the sustained decrease in the price of our Class A common stock.

We do not have any goodwill as of December 31, 2022.

Other Income (Expense)

Interest expense, net.

Interest expense primarily consists of interest on our term loan facility and unsecured promissory note and amortization of debt issuance costs and original issue discount.

Interest expense primarily consists of interest on our Term Loan Facility (as defined below) and unsecured promissory notes and amortization of debt issuance costs and original issue discount.

Mark-to-market of stock warrants .

3 unchanged sentences

federal and most applicable state and local income tax jurisdictions.

As a partnership, P3 LLC is generally not subject to taxes, other than entity level state income taxes.

As a partnership, P3 LLC is generally not subject to taxes, other than entity level state income taxes, such as the Oregon corporate activity tax, a quasi-gross receipts tax that is levied on our Oregon sourced revenue.

Any taxable income or loss generated by P3 LLC is passed through to and included within the taxable income or loss of its members, including us, on a pro rata basis.

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We consolidate the financial results of P3 LLC and report a non-controlling interest on our consolidated statements of operations, representing the portion of net income or loss attributable to the non-controlling interest.

The weighted average ownership percentages during the period are used to calculate the net income or loss attributable to P3 Health Partners Inc.

and the non-controlling interest.

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weighted average ownership percentages during the period are used to calculate the net income or loss attributable to P3 Health Partners Inc.

and the non-controlling interest.

Results of Operations

The following table sets forth our consolidated statements of operations data for the periods indicated.

The following tables set forth our consolidated statements of operations data for the periods indicated.

Amounts may not sum due to rounding.

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Year Ended December 31, 2023 % of Revenue Year Ended December 31, 2022 % of Revenue

December 31, 2024 % of Revenue Year Ended

December 31, 2023 % of Revenue

(dollars in thousands)

8 unchanged sentences

Sales and marketing expense 1,331 0 3,233 0

Goodwill impairment — — 1,314,952 125

Depreciation and amortization 86,058 6 86,675 7

Impairment of assets held for sale 8,058 1 — —

Total operating expense 1,821,113 121 1,434,305 113

3 unchanged sentences

Mark-to-market of stock warrants 22,114 1 433 0

Gain on asset sale, net 13,269 1 — —

Other 1,457 0 (249) (0)

Total other (expense) income (15,801) (1) 1,218 —

Total other income (expense) 14,667 1 (15,801) (1)

Loss before income taxes (305,991) (20) (183,731) (15)

Provision for income taxes (2,695) — (1,862) —

Income tax provision (4,387) (0) (2,695) (0)

Net loss (310,378) (21) (186,426) (15)

1 unchanged sentence

Net loss attributable to controlling interest $ (135,849) (9) % $ (57,773) (5) %

Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023

Year Ended December 31, Change

4 unchanged sentences

Total operating revenue $ 1,500,455 $ 1,266,375 $ 234,080 18 %

Capitated revenue was $1,252.3 million for the year ended December 31, 2023, an increase of $217.5 million, or 21%, compared to $1,034.8 million for the year ended December 31, 2022.

This increase was primarily driven by a 12% increase in capitated revenue rates, due to increased premiums from patients with a higher average level of acuity, and an 8% increase in the total number of at-risk members from 100,400 at December 31, 2022 to 108,900 at December 31, 2023, which was in part a result of our participation in the Accountable Care Organization Realizing Equity, Access, and

Capitated revenue was $1.5 billion for the year ended December 31, 2024, an increase of $231.3 million, or 18%, compared to $1.3 billion for the year ended December 31, 2023.

This increase was primarily driven by a 14% increase in the total number of at-risk members from 108,900 at December 31, 2023 to 123,800 at December 31, 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 years ended December 31, 2024 and 2023.

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Community Health (“ACO REACH”) model, which began January 1, 2023.

Capitated revenue was approximately 99% of total operating revenue for each of the years ended December 31, 2023 and 2022.

Other patient service revenue was $14.1 million for the year ended December 31, 2023, a decrease of $0.6 million, or 4%, compared to $14.7 million for the year ended December 31, 2022.

Other patient service revenue was $16.9 million for the year ended December 31, 2024, an increase of $2.8 million, or 20%, compared to $14.1 million for the year ended December 31, 2023.

Other patient service revenue was approximately 1% of total operating revenue for each of the years ended December 31, 2024 and 2023.

Operating Expense

Medical Expense

3 unchanged sentences

Medical expense $ 1,559,372 $ 1,234,740 $ 324,632 26 %

Medical expense was $1,234.7 million for the year ended December 31, 2023, an increase of $177.5 million, or 17%, compared to $1,057.2 million for the year ended December 31, 2022.

The increase was primarily driven by an increase in the total number of at-risk members year-over-year resulting from our participation in the ACO REACH Model, which began January 1, 2023, and a new health plan contract as of April 1, 2023, partially offset by the termination and conversion of certain health plans from at-risk to upside-only risk.

Medical expense was $1.6 billion for the year ended December 31, 2024, an increase of $324.6 million, or 26%, compared to $1.2 billion for the year ended December 31, 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.

Premium Deficiency Reserve

3 unchanged sentences

Premium deficiency reserve $ 53,698 $ (12,705) $ 66,403 (523) %

Premium deficiency reserve was a benefit of $12.7 million for the year ended December 31, 2023, an increase of $1.2 million, or 11%, compared to a benefit of $11.5 million for the year ended December 31, 2022.

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.

Premium deficiency reserve was an expense of $53.7 million for the year ended December 31, 2024 compared to a benefit of $12.7 million for the year ended December 31, 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.

Corporate, General and Administrative Expense

4 unchanged sentences

Corporate, general and administrative expense was $112.6 million for the year ended December 31, 2024, a decrease of $9.8 million, or 8%, compared to $122.4 million for the year ended December 31, 2023.

The decrease was primarily driven by decreases in equity-based compensation expense of $13.4 million, salary and related expense of $9.4 million as headcount decreased 33% from December 31, 2022 to December 31, 2023, and professional fees of $8.1 million supporting our operations as a public company and the absence of restatement-related costs.

The decrease was primarily driven by a decrease of $8.6 million in salary and related expense resulting primarily from a reduction in head count of 10%, 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 an increase of $1.9 million in non-income based taxes.

P3 Health Partners Inc.

7 unchanged sentences

Mark-to-market of stock warrants 22,114 433 21,681 5,007 %

Gain on asset sale, net 13,269 — 13,269 NM

Other 1,457 (249) 1,706 (685) %

Total other (expense) income $ (15,801) $ 1,218 $ (17,019) (1,397) %

Total other income (expense) $ 14,667 $ (15,801) $ 30,468 (193) %

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NM — not meaningful

Interest expense, net was $22.2 million for the year ended December 31, 2024, compared to $16.0 million for the year ended December 31, 2023.

This increase was primarily due to interest associated with the Company’s unsecured promissory note issued in December 2022.

Other expense was $0.2 million for the year ended December 31, 2023, which consisted primarily of a cybersecurity incident loss of $1.0 million offset by an increase in interest income on our notes receivable of $0.7 million.

Other income during the year ended December 31, 2022 primarily consisted of income from the release of indemnity funds previously escrowed as part of an acquisition in a prior year totaling $2.5 million.

This increase was primarily due to interest associated with the Company’s unsecured promissory notes issued in December 2022 and March 2024.

Mark-to-market of stock warrants was a gain of $22.1 million for the year ended December 31, 2024, compared to a gain of $0.4 million for the year ended December 31, 2023.

This increase was primarily due to the issuance of common warrants in our May 2024 private placement offering.

The gain on asset sale, net, of $13.3 million for the year ended December 31, 2024 reflects the sale of the Florida Assets (defined below).

Other income was $1.5 million for the year ended December 31, 2024, which consisted primarily of interest income on our notes receivable of $1.7 million.

The increase from other expense of $0.2 million for the year ended December 31, 2023, consisted primarily of $1.0 million cybersecurity loss, increase of $0.3 million interest income and $0.4 million of other income.

Liquidity and Capital Resources

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It is anticipated that the distributions we will receive from P3 LLC may, in certain periods, exceed the actual tax liabilities and obligations to make payments under the TRA.

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 (as defined below).

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, borrowings under the Term Loan Facility, and the sale of the Florida Assets (defined below).

We generate cash from our operations, generally from our contracts with payors.

As of December 31, 2023, we had cash and restricted cash of $40.9 million.

As of December 31, 2024, we had $38.8 million of unrestricted cash and cash equivalents available to fund future operations.

We have experienced losses since our inception and net losses of $310.4 million and $186.4 million for the years ended December 31, 2024 and 2023, 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 six 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.

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 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

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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.

O n November 30, 2024, we and certain of our subsidiaries (the “Sellers”) entered into an asset purchase agreement with certain entities affiliated with an entity in which Chicago Pacific Founders (“CPF”), our principal stockholder, has an ownership interest (the “Buyers”), which was amended on December 30, 2024, effective as of December 5, 2024 (as amended, the “Florida Asset Purchase Agreement”).

Pursuant to the Florida Asset Purchase Agreement, the Sellers sold to the Buyers all of the assets, clinical and non-clinical, exclusively or primarily used by our MA-related business operated out of Eagle Park, Florida (the “Florida Assets”) on a cash-free, debt-free basis for a purchase price of approximately $15.0 million less a $0.3 million working capital adjustment, subject to further adjustment, and an adjustment for certain payment obligations totaling $0.2 million.

The asset sale closed on November 30, 2024 simultaneously with the execution of the Florida Asset Purchase Agreement.

We recognized a $13.3 million net gain on asset sale on the consolidated statement of operations for the year ended December 31, 2024.

May 2024 Private Placement

On May 24, 2024, pursuant to a securities purchase agreement, dated May 22, 2024, with the purchasers named therein, which included certain affiliated entities of CPF and institutional investors, we issued approximately 67.4 million units at a price of approximately $0.6270 per unit.

Each unit consisted of one share of Class A common stock and a warrant to purchase one share of Class A common stock at an exercise price of $0.5020.

Certain institutional investors elected to receive pre-funded warrants to purchase Class A common stock in lieu of a portion of their Class A common stock.

In total, we sold (i) an aggregate of 41.6 million shares of Class A common stock, (ii) common warrants to purchase an aggregate of 67.4 million shares of Class A common stock, and (iii) pre-funded warrants to purchase an aggregate of 25.8 million shares of Class A common stock for aggregate proceeds of $39.8 million, net of $2.4 million in offering costs (collectively, the “May 2024 Private Placement”).

See Note 14 “Capitalization” to our consolidated financial statements included elsewhere in this Form 10-K for additional information about the May 2024 Private Placement.

Shelf Registration

On November 9, 2023, we filed a shelf Registration Statement on Form S-3 with a capacity of $250 million (the “Shelf Registration”), which was declared effective by the SEC on November 20, 2023, and entered into an Open Market Sales Agreement (“Sales Agreement”) pursuant to which we may issue and sell, from time to time, through the sales agent, shares of our Class A common stock, par value $0.0001 per share, with an aggregate value of up to $75 million.

The sales agent will make commercially reasonable efforts, following our instructions, to sell shares over time, adhering to specified limits.

Sales will be conducted through at-the-market offerings as defined by Rule 415(a)(4) under the Securities Act.

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aggregate value of shares of Class A common stock that may be offered, issued, and sold under the Sales Agreement is included in the aggregate value of securities that may be offered, issued, and sold by us under the Shelf Registration.

The aggregate value of shares of Class A common stock that may be offered, issued, and sold under the Sales Agreement is included in the aggregate value of securities that may be offered, issued, and sold by us under the Shelf Registration.

Upon termination of the Sales Agreement, any unused portion will be available for sale in other offerings pursuant to the Shelf Registration.

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March 2023 Private Placement

On April 6, 2023, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), dated March 30, 2023 with the purchasers named therein (the “Purchasers”), which included certain affiliated entities of CPF and our Chief Medical Officer and member of our board of directors, we issued 79.9 million units at a price of approximately $1.12 per unit for institutional investors, and a purchase price of approximately $1.19 per unit for employees and consultants.

On April 6, 2023, pursuant to a securities purchase agreement, dated March 30, 2023, with the purchasers named therein, which included certain affiliated entities of CPF and our Chief Medical Officer and member of our board of directors, we issued 79.9 million units at a price of approximately $1.12 per unit for institutional investors, and a purchase price of approximately $1.19 per unit for employees and consultants.

Each unit consisted of one share of Class A common stock and 0.75 of a warrant to purchase one share of Class A common stock at an exercise price of $1.13.

Certain institutional investors elected to receive pre-funded warrants to purchase Class A common stock in lieu of a portion of their Class A common stock.

In total, we sold (i) an aggregate of 69.2 million shares of our Class A common stock, (ii) Common Warrants to purchase an aggregate of 59.9 million shares of Class A common stock, and (iii) Pre-Funded Warrants to purchase an aggregate of 10.8 million shares of Class A common stock to the Purchasers for aggregate proceeds of approximately $86.6 million, net of offering costs of approximately $2.9 million (collectively, the “March 2023 Private Placement”).

See Note 13 “Capitalization” to our consolidated financial statements included elsewhere in this Form 10-K for additional information about the March 2023 Private Placement.

In total, we sold (i) an aggregate of 69.2 million shares of our Class A common stock, (ii) warrants to purchase an aggregate of 59.9 million shares of Class A common stock, and (iii) pre-funded warrants to purchase an aggregate of 10.8 million shares of Class A common stock for aggregate proceeds of approximately $86.6 million, net of offering costs of approximately $2.9 million (collectively, the “March 2023 Private Placement”).

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Letter Agreement with CPF

On April 6, 2023, in connection with entry into the Purchase Agreement for the March 2023 Private Placement, we entered into a letter agreement (as amended from time to time, the “CPF Letter Agreement”) with Chicago Pacific Founders GP, L.P.

(“CPF GP I”), Chicago Pacific Founders GP III, L.P., (“CPF GP III”) (on behalf of the funds of which CPF GP I is the general partner, certain funds of which CPF GP III is the general partner) and/or certain of their affiliated entities and funds (collectively, the “CPF Parties”).

Pursuant to the CPF Letter Agreement, (i) for as long as the CPF Parties own 40% of the Company’s outstanding Common Stock, CPF will be entitled to designate one additional independent member of the Company’s board of directors, who must be independent and satisfy all applicable requirements regarding service as a director of the Company under applicable law and SEC and stock exchange rules, (ii) for as long as the CPF Parties own 40% of the Company’s outstanding Common Stock, CPF will be entitled to certain information rights and protective provisions, and (iii) subject to the terms of the CPF Letter Agreement, the CPF Parties agreed to a standstill restriction from the date of the closing of the March 2023 Private Placement to June 30, 2024 that limits the ownership of the CPF Parties to 49.99% of the Company’s Common Stock and Class V Common Stock.

In connection with the May 2024 Private Placement, we entered into an amended and restated CPF Letter Agreement pursuant to which the CPF Parties agreed to extend the ownership restriction standstill to July 31, 2025.

On December 12, 2024, in connection with the issuance of warrants to VGS 3 (defined below), we entered into a second amended and restated CPF Letter Agreement pursuant to which the CPF Parties agreed to further extend the ownership restriction standstill to January 1, 2026.

As of the date of this Form 10-K, CPF has not exercised its right to designate an additional independent director under the terms of the CPF Letter Agreement.

In November 2020, we entered into a Term Loan and Security Agreement with CRG Servicing, LLC (as amended, the “Term Loan Agreement”) providing for funding of up to $100.0 million (the “Term Loan Facility”).

5 unchanged sentences

In addition, the Term Loan Agreement restricts our ability and the ability of our subsidiaries to, among other things, incur indebtedness and liens.

On an annual basis, we must post a minimum amount of annual revenue equal to $525.0 million in 2023;

$585.0 million in 2024 and $650.0 million in 2025.

On an annual basis, we must post a minimum amount of annual revenue equal to $585.0 million in 2024 and $650.0 million in 2025.

The maturity date may be accelerated as a remedy under the certain default provisions in the Term Loan Agreement, or in the event a mandatory prepayment event occurs.

1 unchanged sentence

In connection with the issuance of the VGS 2 Promissory Note (defined below) and entry into the 2024 Subordination Agreement (defined below), on March 22, 2024, we entered into the Fourth Amendment to the Term Loan Agreement to permit the issuance of the VGS 2 Promissory Note and the entry into the 2024 Subordination Agreement.

VGS Promissory Note

On December 13, 2023, we entered into a financing transaction with VBC Growth SPV LLC (“VGS”) which included the issuance of an unsecured promissory note (the “VGS Promissory Note”) to VGS and the entry into a warrant agreement and the 2022 Subordination Agreement (defined below).

The VGS Promissory Note provided for funding of up to $40.0 million.

The maturity date of the VGS Promissory Note is May 19, 2026.

As of December 31, 2023, we had $29.1 million of borrowings outstanding under the VGS Promissory Note, and remaining availability under the VGS Promissory Note ended upon termination of the commitment period on February 3, 2023.

We paid VGS an up-front fee of 1.5% and will pay a back-end fee of 9.0% at the time the VGS Promissory Note is paid.

Interest is payable at 14.0% per annum on a quarterly cycle (in arrears) beginning March 31, 2023.

We may elect to pay interest of 6.0% in kind and 8.0% in cash, subject to certain limitations.

In connection with the sale of the Florida Assets, on November 30, 2024, we entered into the Fifth Amendment to the Term Loan Agreement, which permits the sale of the Florida Assets (the “Permitted Florida Disposition”), provided that the mandatory prepayment covenant did not apply to the proceeds of the Permitted Florida Disposition, and removed the ability to elect to pay a portion of the interest in-kind.

In connection with the issuance of the VGS 3 Promissory Note (defined below) and entry into the VGS 3 Subordination Agreement (defined below), on December 12, 2024, we entered into the Sixth Amendment to the Term Loan Agreement to permit the issuance of the VGS 3 Promissory Note and the entry into the VGS 3 Subordination Agreement.

In connection with the issuance of the VGS 4 Promissory Note (defined below) and entry into the VGS 4 Subordination Agreement (defined below), on February 13, 2025, we entered into the Seventh Amendment to the Term

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The VGS Promissory Note may be prepaid, at our 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 $2.0 million.

The VGS Promissory Note 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 Promissory Note).

The VGS Promissory Note restricts our ability to, among other things, incur indebtedness and liens, and make investments and restricted payments.

Loan Agreement to permit the issuance of the VGS 4 Promissory Note and the entry into the VGS 4 Subordination Agreement.

VGS Promissory Note and VGS 1 2024 Loan

On December 13, 2022, we entered into a financing transaction with VBC Growth SPV LLC (“VGS”) which included the issuance of an unsecured promissory note (the “VGS Promissory Note”) to VGS and the entry into a warrant agreement and the 2022 Subordination Agreement (defined below).

The VGS Promissory Note provided for funding of up to $40.0 million.

We 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.

We 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, we entered into a 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.

As of December 31, 2024, we had $38.1 million of borrowings outstanding under the VGS 1 2024 Loan.

The VGS 1 2024 Loan may be prepaid, at our 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 our 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 Promissory Note, we also entered into a subordination agreement, dated as of December 13, 2022 (the “2022 Subordination Agreement”) with VGS which subordinates VGS’s right of payment under the VGS Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility.

Under the terms of the 2022 Subordination Agreement, we will be required to pay all interest under the VGS Promissory Note in-kind.

The VGS Promissory Note may be prepaid, at our option, either in whole or in part, without penalty or premium subject to certain conditions.

As of December 31, 2023, we were not in compliance with its Term Loan Facility and VGS Promissory Note covenants related to issuance of the 2023 financial statements with an audit opinion free of a “going concern” qualification.

The Term Loan Facility and VGS Promissory Note lenders have granted us a waiver of the covenant under the Term Loan Facility related to the existence of a “going concern” qualification in the audit opinion for our audited financial statements for the fiscal year ended December 31, 2023.

We were in compliance with all other covenants under the Term Loan Facility and VGS Promissory Note as of December 31, 2023;

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, VGS Promissory Note or the lenders of any future indebtedness we may incur will grant any such waiver or forbearance in the future.

In connection with the issuance of the VGS 1 2024 Loan, we 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, we are effectively required to pay all interest under the VGS 1 2024 Loan in-kind.

VGS 2 Promissory Note

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 provides for funding of up to $25.0 million, available for draw by P3 LLC in two tranches, as follows:

(i) a first tranche of $10.0 million which was immediately drawn on March 22, 2024, and (ii) a second tranche of $15.0 million available at our sole option in a single draw, on or around March 29, 2024, but no later than April 5, 2024.

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 December 31, 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 may be prepaid, at our 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 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).

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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.

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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.

We paid VGS 2 an up-front fee of 1.5% of the aggregate principal amount of the loan in-kind.

In addition, we will pay VBC 2 a back-end fee at the time the VGS 2 Promissory Note is redeemed as follows:

(i) if paid prior to June 30, 2024, 2.25%;

(ii) if paid after June 30, 2024 and on or before September 30, 2024, 4.5%;

(iii) if paid after September 30, 2024 and on or before December 31, 2024,6.75% and (iv) if paid after December 31, 2024, 9.0%.

In addition, we will pay VGS 2 a back-end fee at the time the VGS 2 Promissory Note is redeemed as follows:

(i) if paid after June 30, 2024 and on or before September 30, 2024, 4.5%;

(ii) if paid after September 30, 2024 and on or before December 31, 2024, 6.75% and (iii) if paid after December 31, 2024, 9.0%.

In connection with the sale of the Florida Assets, on November 30, 2024, we entered into a first amendment to the VGS Promissory Note and VGS 2 Promissory Note 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, we entered into a financing transaction with VBC Growth SPV 3 LLC (“VGS 3”), consisting of the issuance by P3 LLC of an unsecured promissory note (the “VGS 3 Promissory Note”) to VGS 3 and the entry into a warrant agreement and the VGS 3 Subordination Agreement (defined below).

The VGS 3 Promissory Note provided for funding of up to $25.0 million.

The VGS 3 Promissory Note matures on June 30, 2028.

As of December 31, 2024, we had $25.4 million of borrowing outstanding under the VGS 3 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 3 in-kind.

Interest is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning March 31, 2025.

We 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 3 Subordination Agreement, and if not so permitted, such interest shall accrue as PIK interest.

The VGS 3 Promissory Note may be prepaid, at our 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 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).

The VGS 3 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.

In connection with the issuance of the VGS 3 Promissory Note, we also entered into a subordination agreement, dated as of December 12, 2024 (the “VGS 3 Subordination Agreement”) with VGS 3 which subordinates VGS 3’s 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.

Under the terms of the VGS 3 Subordination Agreement, we will be required to pay all interest under the VGS 3 Promissory Note in-kind.

In addition, we 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%.

As of December 31, 2024, we were not in compliance with the Term Loan Facility and VGS Promissory Note, VGS 2 Promissory Note, and VGS 3 Promissory Note covenants related to issuance of the 2024 financial statements with an audit opinion free of a “going concern” explanatory paragraph.

Each of the Term Loan Facility, VGS Promissory Note, VGS 2 Promissory Note, and VGS 3 Promissory Note lenders have granted us a waiver of the covenant under the Term Loan Facility related to the existence of a “going concern” explanatory paragraph in the audit opinion for our audited financial statements for the fiscal year ended December 31, 2024.

We were in material compliance with all other covenants under the Term Loan Facility, VGS Promissory Note, VGS 2 Promissory Note, and VGS 3 Promissory Note as of December 31, 2024;

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Promissory Note or the lenders of any future indebtedness we may incur will grant any such waiver or forbearance in the future.

VGS 4 Promissory Note

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 (as defined below) do not permit P3 LLC to pay interest in cash, interest will be paid entirely in-kind.

The VGS 4 Promissory Note may be prepaid, at our 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 described below;

provided that prepayments must be in increments of at least $1.5 million.

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

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.

In connection with the issuance of the VGS 4 Promissory Note, we also entered into a subordination agreement, dated as of February 13, 2025 (the “VGS 4 Subordination Agreement”), with VGS 4 which subordinates VGS 4’s 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.

Under the terms of the VGS 4 Subordination Agreement, we will be effectively required to pay all interest under the VGS 4 Promissory Note in-kind.

Repurchase Promissory Note

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The principal balance, accrued interest, and an exit fee of $0.6 million are due at maturity.

Our primary uses of cash include payments for medical expenses, administrative expenses, cost associated with our care model, debt service, and capital expenditures.

Our primary uses of cash include payments for medical expenses, administrative expenses, cost associated with our care model, and debt service.

Final reconciliation and receipts of amounts due from payors are typically settled in arrears.

2 unchanged sentences

federal income tax purposes.

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These increases in tax basis may reduce the amounts that we would otherwise pay in the future to various tax authorities.

8 unchanged sentences

The amount of the increase in the tax basis, the related estimated tax benefits, and the related TRA liability to be recorded will depend on the price of the Company’s Class A common stock at the time of the relevant redemption or exchange.

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The following table summarizes current and long-term material cash requirements as of December 31, 2024:

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Future and actual results typically differ from estimates.

Differences could result from an overall change in medical expenses per members, changes in member mix or simply due to addition of new members.

Differences could result from an overall change in medical expense per members, changes in member mix or simply due to addition of new members.

(2) Represents principal payments only.

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(4) Represents minimum operating lease payments, excluding potential lease renewals.

See Note 16 “Leases” in our consolidated financial statements.

See Note 13 “Commitments and Contingencies” in our consolidated financial statements.

Liquidity and Going Concern

As of the date of this Form 10-K, management believes that our existing cash resources are not sufficient to support planned operations for at least the next year from the issuance of this Form 10-K.

As a result, management has concluded that there is substantial doubt about our ability to continue as a going concern within one year after the date the consolidated financial statements contained elsewhere in this Form 10-K are issued.

In evaluating the Company’s ability to continue as a going concern, management considered the Company’s 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-K in considering whether it has the ability to meet its obligations.

This evaluation of our cash resources available over the next year from the date of issuance of this Form 10-K does not take into consideration the potential mitigating effect of our ongoing efforts to raise capital or management’s plans that have not been fully implemented or the many factors that determine the Company’s capital requirements, including the pace of our growth, ability to manage medical costs and the maturity of our members.

Management continues to explore raising additional capital through a combination of debt financing and equity issuances.

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.

The audited consolidated financial statements included elsewhere in this Form 10-K have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result from the outcome of these uncertainties.

Our independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2023, has also expressed substantial doubt about our ability to continue as a going concern.

As discussed above, we have experienced losses since our inception, and as of December 31, 2024, we had an accumulated deficit of $503.2 million.

For the year ended December 31, 2024, we incurred net losses of $310.4 million and used $110.1 million of cash for operating activities.

As of December 31, 2024, we had $38.8 million of unrestricted cash and cash equivalents, $154.8 million of outstanding indebtedness, of which $65.0 million is classified as current on our balance sheet, and $255.1 million of unpaid claims.

We expect to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future.

Based on our currently available cash resources, including aggregate proceeds of $30 million we received from a related party financing transaction in February and March 2025, and assuming no other financing transactions, we believe we will require additional funding in 2025.

This belief is based on assumptions that may change as a result of many factors currently unknown to us.

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We continue to explore raising additional capital through a combination of debt financing and equity issuances and sales of assets.

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 and may involve restrictive covenants which could place significant restrictions on our operations.

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.

There is no assurance that sources of financing will be available on a timely basis, or on satisfactory terms, or at all.

If we are unable to raise additional capital or generate cash flows necessary to fund our operations or refinance our indebtedness, we will 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.

As a result of these factors, we have concluded that there is substantial doubt about our ability to continue as a going concern within one year after the date the consolidated financial statements included elsewhere in this Form 10-K 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-K.

This evaluation of our cash resources available over the next year from the date of issuance of the consolidated financial statements included elsewhere in this Form 10-K does not take into consideration the potential mitigating effect of our ongoing efforts to raise capital.

Future capital raising events cannot be considered probable, as these events depends on factors outside of our control.

The audited consolidated financial statements included elsewhere in this Form 10-K have been prepared assuming we will continue as a going concern and do not include any adjustments that might result from the outcome of these uncertainties .

Our independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2024, has also expressed substantial doubt about our ability to continue as a going concern.

As a result, as of December 31, 2024, we were not in compliance with covenants in the Term Loan Facility and the subordinated unsecured promissory notes that required the issuance of the 2024 financial statements with an audit opinion free of a “going concern” explanatory paragraph subject to certain exceptions.

The lenders under the Term Loan Facility and subordinated unsecured promissory notes have granted us a waiver of the covenant related to the existence of a “going concern” explanatory paragraph in the audit opinion for our audited financial statements for the fiscal year ended December 31, 2024.

The following table summarizes our cash flows:

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Net cash used in operating activities $ (110,128) $ (76,028)

Net cash used in investing activities (1,827) (7,733)

Net cash provided by (used in) investing activities 14,525 (1,827)

Net cash provided by financing activities 98,771 100,332

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Net cash used in operating activities was $110.1 million for the year ended December 31, 2024, compared to net cash used in operating activities of $76.0 million for the year ended December 31, 2023.

Significant changes impacting net cash used in operating activities during the year ended December 31, 2023 as compared to the year ended December 31, 2022 were primarily due to (i) cash sweeps of $30.8 million received in 2023, $20.3 million of which related to dates of service prior to 2023, (ii) $2.5 million in cash received in 2023 related to the release of indemnity funds previously escrowed as part of an acquisition in a prior year, and (iii) changes in working capital.

As previously disclosed, cash sweeps of $12.3 million were received in the comparative period in 2022, but were recognized in 2021 in accordance with our revenue recognition policy resulting from the extended reporting period related to the delayed 2021 audit.

Significant changes impacting net cash used in operating activities during the year ended December 31, 2024 as compared to the year ended December 31, 2023 were primarily due to (i) increase of claims payable and IBNR of $77.1 million, (ii) increase of $10.8 million in prepaid and other current assets due to new and additional lines of credit for contractual obligations, and (iii) changes in working capital.

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Investing Activities

Net cash used in investing activities was $1.8 million for the year ended December 31, 2023, primarily consisting of purchases of property and equipment.

Net cash used in investing activities was $7.7 million for the year ended December 31, 2022, primarily consisting of the acquisition of two medical practices, net of cash acquired, and purchases of property and equipment.

Net cash provided by investing activities was $14.5 million for the year ended December 31, 2024, consisting of proceeds from the sale of the Florida Assets.

Net cash used in investing activities was $1.8 million for the year ended December 31, 2023, consisting of purchases of property and equipment.

Financing Activities

Net cash provided by financing activities was $100.3 million for the year ended December 31, 2023, consisting of proceeds from the March 2023 Private Placement, net of offering costs, and borrowings on the VGS Promissory Note.

Net cash provided by financing activities was $11.4 million for the year ended December 31, 2022, consisting of proceeds from the issuance of the VGS Promissory Note, offset by debt repayments.

Net cash provided by financing activities was $98.8 million for the year ended December 31, 2024, primarily consisting of proceeds from the May 2024 Private Placement, net of offering costs, and borrowings on the VGS 2 Promissory Note, VGS 3 Promissory Note, and VGS 1 2024 Loan, partially offset by the repayment of the VGS Promissory Note.

Net cash provided by financing activities was $100.3 million for the year ended December 31, 2023, primarily consisting of proceeds from the March 2023 Private Placement, net of offering costs, and borrowings on the VGS Promissory Note.

Critical Accounting Estimates

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Conversely, Medicare Advantage plans with lower acuity patients receive lesser premiums.

Under the risk adjustment model, capitation is paid on an interim basis based on enrollee data submitted for the preceding year and is

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adjusted in subsequent periods after final data is compiled.

Under the risk adjustment model, capitation is paid on an interim basis based on enrollee data submitted for the preceding year and is adjusted in subsequent periods after final data is compiled.

As premiums are adjusted via this risk adjustment model (via a RAF), our PMPM payments will change commensurately with how our contracted Medicare Advantage plans’ premiums change with CMS.

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Such estimates are subject to impact from changes in both the regulatory and economic environments.

Our claims payable represents management’s best estimate of its liability for unpaid medical costs.

Our claims payable represents management’s best estimate of

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its liability for unpaid medical costs.

We have included incurred but not reported claims of $255.1 million and $178.0 million on our consolidated balance sheets as of December 31, 2024 and 2023, respectively.

12 unchanged sentences

Recent Accounting Pronouncements

See Note 4 “Recent Accounting Pronouncements” in our consolidated financial statements included elsewhere in this Form 10-K for a description of recent accounting standards issued and the anticipated effects on our consolidated financial statements.

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See Note 4 “Recent Accounting Pronouncements” to our consolidated financial statements included elsewhere in this Form 10-K for a description of recent accounting standards issued and the anticipated effects on our consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk.

Not required for Smaller Reporting Companies.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis