What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-28 compared with 2024-03-28 · 560 added, 364 removed, 942 unchanged (50% of the section changed)

18 unchanged sentences

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 28, 2024 expressed an adverse opinion thereon.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and has working capital deficiencies that raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 2.

3 unchanged sentences

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

1 unchanged sentence

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

5 unchanged sentences

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit

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matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Estimate of the Premium Deficiency Reserve

As described in Note 3 to the consolidated financial statements, the Company’s consolidated premium deficiency reserve (“PDR”) balance was approximately $13.7 million at December 31, 2023.

The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Estimate of the Premium Deficiency Reserve Liabilities

As described in Note 3 to the consolidated financial statements, the Company’s consolidated premium deficiency reserve liabilities (“PDR”) balance was approximately $67.4 million on December 31, 2024.

PDR is established when it is probable that expected future health care costs and maintenance costs under a group of contracts will exceed future premium and stop-loss insurance recoveries on those contracts.

The Company assesses if a PDR is needed through review of current results and forecasts.

For purposes of determining premium deficiency losses, contracts are grouped consistent with the Company’s method of acquiring, servicing, and measuring the profitability of such contracts based on the expected medical loss ratio.

For purposes of determining premium deficiency losses, contracts are grouped consistent

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with the Company’s method of acquiring, servicing, and measuring the profitability of such contracts based on the expected medical loss ratio (“MLR”).

We identified the estimate of PDR as a critical audit matter.

The principal consideration for this determination was the significant judgment used in developing certain assumptions used in the medical loss ratio (“MLR”).

Auditing this element involved subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skills or knowledge needed.

The principal consideration for this determination was the significant judgment used in developing certain assumptions in the expected MLR.

Auditing these elements involved subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skills or knowledge needed.

The primary procedures we performed to address this critical audit matter included:

• Assessing the reasonableness of certain assumptions used in the expected MLR by evaluating these assumptions through comparison to the historical performance of the Company and its peers to determine if contradictory evidence existed.

• Utilizing personnel with specialized knowledge and skills in actuarial methods to assess the healthcare claims trend assumption in the expected MLR.

• Assessing the reasonableness of certain assumptions used in the expected MLR by comparing them to historical performance of the Company and its peers to determine if contradictory evidence existed.

• Utilizing personnel with specialized knowledge and skills in actuarial methods to assess the reasonableness of the healthcare claims trend assumption in the expected MLR.

Valuation of Incurred but Not Reported Claims

As described in Notes 3 and 10 to the consolidated financial statements, the Company’s consolidated claims payable balance was approximately $178.0 million at December 31, 2023.

As described in Notes 3 and 8 to the consolidated financial statements, the Company’s claims payable balance was approximately $255.1 million on December 31, 2024.

The Company’s claims payables primarily consist of the Company’s estimate for claims that have been incurred but have either not yet been received, processed, or paid and as such, not reported (“IBNR”).

As discussed in Note 3 to the consolidated financial statements, management develops its IBNR liability estimate using standard actuarial methodologies, which utilize historical data, including the period between the date services are rendered and the date claims are received and paid (the completion factor), per member per month healthcare cost trends, denied claims activity, expected medical cost inflation, seasonality patterns, changes in membership mix, and a provision for adverse deviation (“PAD”).

We identified the valuation of IBNR claims as a critical audit matter.

Management develops its IBNR liability estimate using standard actuarial methodologies, which utilize historical data, including the period between the date services are rendered and the date claims are received and paid (the completion factor), per member per month healthcare cost trends, denied claims activity, expected medical cost inflation, seasonality patterns, changes in membership mix, and a provision for adverse deviation (“PAD”).

We identified the valuation of IBNR liability as a critical audit matter.

The principal considerations for this determination were the significant judgments involved in:

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• Utilizing personnel with specialized knowledge and skills in actuarial methods to assist in:

(i) evaluating the appropriateness and consistency of the actuarial methodologies used, (ii) evaluating the reasonableness of the completion factors, per member per month healthcare cost trends factors, and the PAD used by the Company’s management and its actuarial specialist by comparing our independently determined IBNR estimate to management’s recorded IBNR liability, and (iii) reviewing prior period estimates using subsequent claims development.

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(i) evaluating the appropriateness and consistency of the actuarial methodologies used, (ii) evaluating the reasonableness of the completion factors, per member per month healthcare cost trends factors, and the PAD used by the Company’s management and its actuarial specialist by comparing our independently determined IBNR estimate to management’s recorded IBNR liability, and (iii) evaluating the reasonableness of management’s prior period estimates using subsequent claims development.

Determination of the Premium Risk Adjustment Revenue

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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 (using a Risk Adjustment Factor or “RAF”).

We identified the determination of Medicare Advantage RAF revenue as a critical audit matter.

The principal considerations for this determination were the significant complexities involved in determining the HCC and the corresponding risk adjustment factor revenue.

We identified the determination of Medicare Advantage premium risk adjustment revenue as a critical audit matter.

The principal considerations for this determination were the significant complexities involved in determining the HCC and the corresponding RAF.

Auditing these elements involved especially challenging and complex calculations due to the nature and extent of audit effort required to address these matters, including the extent of specialized skills or knowledge needed.

The primary procedures we performed to address this critical audit matter included:

• Assessing the reasonableness and accuracy of the underlying data used in the determination of the HCC by vouching samples to underlying support.

• Assessing the accuracy of the underlying data used in the determination of the HCC by vouching a selection of encounter data to underlying support.

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• Utilizing personnel with specialized knowledge and skills in actuarial methods to assist in determining the HCC and the corresponding risk adjustment revenue.

12 unchanged sentences

Restricted cash 5,286 4,614

Health plan receivable, net of allowance for credit losses of $ 150 and $ 0 , respectively

Health plan receivable, net of allowance for credit losses of $ 150

121,266 118,497

1 unchanged sentence

Prepaid expenses and other current assets 14,422 3,613

Assets held for sale 403 —

TOTAL CURRENT ASSETS 184,140 166,017

13 unchanged sentences

Accrued interest 12,460 23,648

Current portion of long-term debt 65,000 —

Liabilities held for sale 353 —

TOTAL CURRENT LIABILITIES 496,415 299,372

3 unchanged sentences

Long-term debt, net 89,824 108,319

Other Long-Term Liabilities 26,001 —

TOTAL LIABILITIES (1)

633,891 427,305

COMMITMENTS AND CONTINGENCIES (Note 16 and Note 20)

COMMITMENTS AND CONTINGENCIES (Note 13)

MEZZANINE EQUITY:

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(1) The Company’s consolidated balance sheets include the assets and liabilities of its consolidated variable interest entities (“VIEs”).

As discussed in Note 22:

Variable Interest Entities, P3 LLC is itself a VIE.

As discussed in Note 20 “Variable Interest Entities,” P3 LLC is itself a VIE.

P3 LLC represents substantially all the assets and liabilities of the Company.

As a result, the language and numbers below refer only to VIEs held at the P3 LLC level.

As a result, the language and amounts below refer only to VIEs held at the P3 LLC level.

The consolidated balance sheets include total assets that can be used only to settle obligations of P3 LLC’s consolidated VIEs totaling $ 9.3 million and $ 8.6 million as of December 31, 2024 and 2023, respectively, and total liabilities of P3 LLC’s consolidated VIEs for which creditors do not have recourse to the general credit of the Company totaled $ 14.9 million and $ 13.6 million as of December 31, 2024 and 2023, respectively.

18 unchanged sentences

Depreciation and amortization 86,058 86,675

Goodwill impairment — 1,314,952

Impairment of assets held for sale 8,058 —

TOTAL OPERATING EXPENSE 1,821,113 1,434,305

3 unchanged sentences

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

Gain on asset sale, net 13,269 —

Other 1,457 ( 249 )

TOTAL OTHER (EXPENSE) INCOME ( 15,801 ) 1,218

TOTAL OTHER INCOME (EXPENSE) 14,667 ( 15,801 )

LOSS BEFORE INCOME TAXES ( 305,991 ) ( 183,731 )

PROVISION FOR INCOME TAXES ( 2,695 ) ( 1,862 )

INCOME TAX PROVISION ( 4,387 ) ( 2,695 )

NET LOSS ( 310,378 ) ( 186,426 )

19 unchanged sentences

STOCKHOLDERS’ EQUITY, December 31, 2022 $ 516,805 41,579 $ 4 201,592 $ 20 $ 315,375 $ ( 309,545 ) $ 5,854

Cumulative adjustment due to adoption of new credit loss standard ( 124 ) — — — — — ( 26 ) ( 26 )

Exchanges of redeemable non-controlling interest for Class A common stock — 5,371 1 ( 5,371 ) ( 1 ) — — —

Vesting of Class V common stock awards — — — 348 1 ( 1 ) — —

Issuance of Class A common stock upon settlement of restricted stock units, net of shares withheld for tax — 204 — — — ( 16 ) — ( 16 )

Issuance of restricted stock awards — 250 — — — — — —

At-the-market sales, net of offering costs — 27 — — — 33 — 33

Equity-based compensation 785 — — — — 5,194 — 5,194

Class A common stock warrants issued — — — — — 643 — 643

Restricted stock unit awards issued in satisfaction of executive transaction bonuses — — — — — 5,000 — 5,000

Fair value adjustment to redeemable non-controlling interest 20,579 — — — — ( 20,579 ) — ( 20,579 )

Remeasurement adjustment to redeemable non-controlling interest resulting from ownership changes ( 117,860 ) — — — — 117,860 — 117,860

Private placement, net of offering costs — 69,157 7 — — 86,576 — 86,583

Net loss ( 128,653 ) — — — — — ( 57,773 ) ( 57,773 )

STOCKHOLDERS’ EQUITY, December 31, 2023 291,532 116,588 12 196,569 20 509,442 ( 367,344 ) 142,130

Cumulative adjustment due to adoption of new credit loss standard ( 124 ) — — — — — ( 26 ) ( 26 )

Private placement, net of offering costs — 69,157 7 — — 86,576 — 86,583

At-the-market sales, net of offering costs — 27 — — — 33 — 33

Exchanges of redeemable non-controlling interest for Class A common stock — 612 — ( 612 ) — — — —

Issuance of Class A common stock upon settlement of restricted stock units, net of shares withheld for tax — 4,066 — — — ( 103 ) — ( 103 )

Restricted stock unit awards issued in satisfaction of executive transaction bonuses — — — — — 5,000 — 5,000

Issuance of restricted stock awards — 250 — — — — — —

Vesting of Class V common stock awards — — — 348 1 ( 1 ) — —

Equity-based compensation — — — — — 5,752 — 5,752

Exchanges of redeemable non-controlling interest for Class A common stock — 5,371 1 ( 5,371 ) ( 1 ) — — —

Remeasurement adjustment to redeemable non-controlling interest resulting from ownership changes ( 117,860 ) — — — — 117,860 — 117,860

Fair value adjustment to redeemable non-controlling interest ( 20,579 ) — — — — 20,579 — 20,579

Remeasurement adjustment to redeemable non-controlling interest resulting from ownership changes ( 22,831 ) — — — — 22,831 — 22,831

Private placement, net of offering costs — 41,604 4 — — 8,465 — 8,469

Class A common stock warrants issued — — — — — 12,127 — 12,127

Net loss ( 174,529 ) — — — — — ( 135,849 ) ( 135,849 )

13 unchanged sentences

Equity-based compensation 5,752 5,979

Goodwill impairment — 1,314,952

Amortization of original issue discount and debt issuance costs 87 472

Accretion of contingent consideration — 113

Gain on write off of contingent consideration ( 4,907 ) —

Gain on asset sale ( 13,269 ) —

Deferred income taxes ( 1,090 ) —

Impairment of assets held for sale 8,058 —

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

10 unchanged sentences

Accrued interest 7,895 9,587

Other long-term liabilities 5,897 —

Operating lease liability 53 ( 450 )

2 unchanged sentences

Purchases of property and equipment — ( 1,827 )

Acquisitions, net of cash acquired — ( 5,500 )

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

Proceeds from asset sale 14,525 —

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

CASH FLOWS FROM FINANCING ACTIVITIES:

1 unchanged sentence

Payment of debt issuance costs ( 103 ) ( 173 )

Proceeds from private placement offering, net of offering costs paid 86,595 —

Proceeds from liability-classified warrants and private placement offering, net of offering costs paid 40,496 86,595

Proceeds from at-the-market sales, net of offering costs paid 33 —

Deferred offering costs paid ( 507 ) ( 175 )

1 unchanged sentence

Repayment of short-term and long-term debt ( 30,973 ) —

Proceeds from short-term debt 1,871 —

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

Net change in cash and restricted cash 3,168 22,477

Cash and restricted cash at beginning of year 18,457 140,834

Cash and restricted cash at end of year $ 40,934 $ 18,457

Cash and restricted cash, beginning of year 40,934 18,457

Cash and restricted cash, end of year $ 44,102 $ 40,934

P3 Health Partners Inc.

10 unchanged sentences

Operating lease liabilities arising from obtaining new right-of-use assets $ 617 $ 7,222

Operating lease liabilities and right-of-use assets reduced due to lease modification or termination $ ( 92 ) $ —

Increase in accrued expenses related to debt issuance costs and original issue discount $ 307 $ 212

25 unchanged sentences

Claims Payable 98

Retirement Plan 98

Income Taxes 101

Commitments and Contingencies 107

Capitalization 108

1 unchanged sentence

Net Loss per Share 115

Retirement Plan 108

Redeemable Non-controlling Interest 115

Segment Reporting 116

Commitments and Contingencies 109

Related Parties 117

4 unchanged sentences

P3 Health Partners Inc.

(“P3”) is a patient-centered and physician-led population health management company and, for accounting purposes, the successor to P3 Health Group Holdings, LLC and its subsidiaries (collectively, “P3 LLC,” and together with P3, the “Company”) after the consummation of a series of business combinations in 2021 with Foresight Acquisition Corp.

(the “Business Combinations”).

As the sole manager of P3 LLC, P3 operates and controls all of the business and affairs of P3 LLC.

As the sole manager of P3 LLC, P3 operates and controls all of the business and affairs of P3 LLC and P3’s only assets are equity interests in P3 LLC.

P3 LLC was founded on April 12, 2017 and began commercial operations on April 20, 2017 to provide population health management services on an at-risk basis to insurance plans offering medical coverage to Medicare beneficiaries under Medicare Advantage programs.

Medicare Advantage programs are insurance products created solely for Medicare beneficiaries.

Medicare Advantage (“MA”) programs are insurance products created solely for Medicare beneficiaries.

Insurance plans contract directly with the Centers for Medicare and Medicaid Services (“CMS”) to offer Medicare beneficiaries benefits that replace traditional Medicare fee-for-service (“FFS”) coverage.

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The Company has experienced losses since its inception and had net losses of $ 310.4 million and $ 186.4 million for the years ended December 31, 2024 and 2023, respectively.

Such losses were primarily the result of goodwill impairment charges with respect to the year ended December 31, 2022, and costs incurred in adding new members, building relationships with physician partners and payors, and developing new services.

The Company anticipates operating losses and negative cash flows to continue for the foreseeable future due to the strong growth the Company has experienced over the last six years and the investments the Company is making in expanding its business, which require up-front expenses.

Such losses were primarily the result of costs incurred in adding new members and adverse claims experience, partly driven by general market conditions for MA plans.

The Company anticipates operating losses and negative cash flows to continue for the foreseeable future as it continues to grow membership.

As of December 31, 2024 and 2023, the Company had $ 38.8 million and $ 36.3 million, respectively, in unrestricted cash and cash equivalents available to fund future operations.

The Company’s capital requirements will depend on many factors, including the pace of the Company’s growth, ability to manage medical costs, the maturity of its members, and its ability to raise capital.

The Company may need to use available capital resources and/or raise additional capital earlier than currently anticipated.

When the Company pursues additional debt and/or equity financing, there can be no assurance that such financing will be available on terms commercially acceptable to the Company.

If the Company is unable to obtain additional funding when needed, it will need to curtail planned activities in order to reduce costs, which will likely have an unfavorable effect on the Company’s ability to execute on its business plan, and have an adverse effect on its business, results of operations, and future prospects.

The Company has a working capital deficit of $ 312.3 million as of December 31, 2024.

The Company’s capital requirements will depend on many factors, including the pace of the Company’s growth, ability to manage medical costs, the maturity of its members, its ability to complete the sale of its remaining Florida operations, and its ability to raise capital.

The Company continues to explore raising additional capital through a combination of debt financing and equity issuances and sales of assets.

When the Company pursues additional debt and/or equity financing, there can be no assurance that such financing will be available on terms commercially acceptable to the Company or at all.

If the Company is unable to raise additional capital or generate cash flows necessary to fund its operations or refinance its indebtedness, it will need to curtail planned activities, discontinue certain operations, or sell certain assets, which could materially and adversely affect its business, financial condition, results of operations, and prospects.

As a result of these matters, substantial doubt exists about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

5 unchanged sentences

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company.

All intercompany accounts and transactions have been eliminated.

All intercompany transactions and balances have been eliminated.

The Company periodically evaluates entities for consolidation either through ownership of a majority voting interest, or through means other than voting interest, in accordance with the Variable Interest Entity (“VIE”) accounting model.

40 unchanged sentences

The Company categorizes revenue based on various factors, such as the nature of contracts, as follows:

Revenue Type Year Ended

2023 % of Total Year Ended

2022 % of Total

Revenue Type Year Ended December 31, 2024 % of Total Year Ended December 31, 2023 % of Total

(dollars in thousands)

2 unchanged sentences

Clinical fees & insurance revenue 5,934 0.4 5,192 0.3

Shared risk revenue — — 351 0

Care coordination / management fees 10,563 0.7 8,301 0.7

2 unchanged sentences

Total revenue $ 1,500,455 100.0 % $ 1,266,375 100.0 %

During the years ended December 31, 2023 and 2022, four health plan customers each accounted for 10% or more of total revenue and collectively comprised 60 % and 66 %, respectively, of the Company’s total revenue.

During the years ended December 31, 2024 and 2023, four and four health plan customers each accounted for 10% or more of total revenue and collectively comprised 59 % and 60 % of the Company’s total revenue, respectively.

Capitated Revenue

3 unchanged sentences

Since the Company controls and provides medical care to its assigned members, the Company acts as a principal in these capitation arrangements.

As of December 31, 2023 and 2022, the Company had at-risk contracts in effect with 23 health plans and 24 health plans, respectively, across five states.

As of December 31, 2024 and 2023, the Company had at-risk contracts in effect with 23 health plans across five states.

The capitated revenue the Company receives is determined via a competitive bidding process with CMS and is based on the costs of care in local markets and the average utilization of services by patients enrolled.

Medicare pays capitation using a “risk adjustment model,” which compensates providers based on the health status (acuity) of each

Medicare pays capitation using a “risk adjustment model,” which compensates providers based on the health status (acuity) of each individual patient, also known as hierarchal condition categories (“HCC”).

Medicare Advantage plans with higher acuity

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individual patient, also known as hierarchal condition categories (“HCC”).

Medicare Advantage plans with higher acuity patients receive higher premiums.

patients receive higher premiums.

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

6 unchanged sentences

The capitation amount is subject to possible retroactive premium risk adjustments based on the member’s individual acuity.

Premium risk adjustments recorded in 2023 which relate to prior years were $ 20.3 million.

Premium risk adjustments recorded in 2022 related to prior years were $ 3.3 million.

In the fourth quarter of 2023, the Company released a portion of the constraint applied in previous periods with respect to risk adjustment revenue for dates of service in 2022, which resulted in an increase to capitation revenue in the amount of $ 27.7 million for the year ended December 31, 2023.

Premium risk adjustments recorded in 2024 and 2023, which increased capitation revenue, were $33.5 million and $27.7 million, respectively.

As the period between the time of service and time of payment is typically one year or less, the Company elected the practical expedient not to adjust for the effects of a significant financing component.

7 unchanged sentences

An annual settlement reconciliation and distribution occur within the period specified by the individual health plan’s contract (which can be up to 21 months following each year-end).

Revenue recognized from the balance of deferred revenue as of December 31, 2023 was $ 12.7 million during the year ended December 31, 2024.

Three health plan customers accounted for 10% or more of total health plan receivable each as of December 31, 2024 and 2023.

23 unchanged sentences

The Company has elected the practical expedient not to adjust the transaction price for any financing components as those were deemed to be insignificant and to expense all incremental customer contract acquisition costs as incurred as such costs are not material and would be amortized over a period less than one year.

Health Plan Receivables/Payables

Receivables or payables primarily consist of amounts the Company expects to receive or pay under at-risk capitation contracts with various health plans.

These contracts involve a payment model where contracted health plans receive a fixed capitation amount per patient, per service year, regardless of service usage, from CMS.

Whereas a portion of the payment is then allocated to the Company if capitation payments surpass the health plan's incurred medical expenses.

A receivable is recorded for contracts in a surplus, while payable is recognized for contracts in a deficit position.

Final amounts due to/from health plans are based upon settlement reports from the health plans, which outline covered lives, capitation rates, and medical costs.

As such, these amounts are updated as the company receives revised information from the health plans.

Receivables are recorded at the anticipated collection amount as reported by the health plans.

The total health plan receivable for December 31, 2024 and 2023 respectively are $ 121.3 million and $ 118.5 million.

The total health plan playable for December 31, 2024 and 2023 respectively are $ 55.6 million and $ 35.0 million.

Other Patient Service Revenue – Care Coordination Fees and Management Fees

12 unchanged sentences

Patient fees receivable of $ 2.8 million and $ 0.7 million are included in clinic fees, insurance and other receivable in the Company’s consolidated balance sheets as of December 31, 2024 and 2023, respectively, and are recorded net of contractual allowances.

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Property and Equipment

4 unchanged sentences

Any such gains or losses are included as a component of operations.

The Company records depreciation using the straight-line method over the estimated useful lives

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of the respective assets.

The Company records depreciation using the straight-line method over the estimated useful lives of the respective assets.

The following table summarizes the estimated useful lives of the Company’s property and equipment:

2 unchanged sentences

lease term) 1 to 10 years

Furniture and fixtures 7 Years

Furniture and fixtures 2 to 7 years

Vehicles 5 years

7 unchanged sentences

All costs associated with internally developed technology following deployment, or that otherwise do not meet capitalization criteria, are expensed as incurred.

Assets Held for Sale

The Company classifies assets and related liabilities as held for sale when:

(i) management has committed to a plan to sell the net assets, (ii) the net assets are available for immediate sale, (iii) there is an active program to locate a buyer, (iv) the sale and transfer of the net assets is probable within one year, (v) the net assets are being actively marketed for sale at price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes will be made to the plan to sell the net assets.

Assets and liabilities held for sale are presented separately on our consolidated balance sheets at the lower of cost or fair value, less costs to sell.

Depreciation and amortization expense for long-lived assets are not recorded while these assets are classified as held for sale.

For each period that assets are classified as being held for sale, they are tested for recoverability.

Fair Value Measurements

8 unchanged sentences

Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

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Impairment of Long-Lived Assets

3 unchanged sentences

Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Goodwill represents the excess of the purchase price over the fair value assigned to tangible and identifiable intangible assets acquired and liabilities assumed.

Goodwill is tested for impairment at the reporting unit level on an annual basis in the fourth quarter, or more frequently if events or changes in circumstances indicate the carrying value of goodwill may not be recoverable (a “triggering event”).

On the occurrence of a triggering event, an entity has the option to first assess qualitative factors to determine whether a quantitative impairment test is necessary.

If it is more likely than not that goodwill is impaired, the fair value of the reporting unit is compared with its carrying value.

An impairment charge is

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recognized for the amount by which the carrying amount exceeds the fair value, provided, the loss recognized cannot exceed the total amount of goodwill.

Intangible Assets

19 unchanged sentences

The Company does not have significant residual value guarantees or restrictive covenants in its lease portfolio.

Business Combinations

The price tendered in business combinations is allocated using the acquisition method of accounting among the identifiable tangible and intangible assets and assumed liabilities and non-controlling interests, all of which are based on estimates of corresponding fair value as of the acquisition date.

The Company applies valuation methods which are ultimately used in the Company’s purchase price allocations.

Goodwill is recorded based on the difference between the fair value of consideration exchanged and the fair value of the net assets and liabilities assumed.

Such fair values that are not finalized for reporting periods following the acquisition date are estimated and recorded as provisional amounts.

Adjustments to these provisional amounts during the measurement period (defined as the date through which all information required to identify and measure the consideration transferred, the assets acquired, the liabilities assumed, and the non-controlling interests obtained, limited to one year from the acquisition date) are recorded when identified.

During the year ended December 31, 2022, the Company acquired two medical practices in separate transactions.

The total cash purchase price was $ 5.5 million, net of cash acquired, and was allocated primarily to goodwill.

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Equity-Based Compensation

4 unchanged sentences

The Company accounts for forfeitures as they occur.

The Company uses the Black-Sholes option-pricing model to determine the fair value of the Company’s stock option awards.

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The Company uses the Black-Scholes option-pricing model to determine the fair value of the Company’s stock option awards.

The risk-free interest rate estimate was based on constant maturity, which is the theoretical value of a U.S.

24 unchanged sentences

The Company assesses if a PDR liability is needed through review of current results and forecasts.

For purposes of determining premium deficiency losses, contracts are grouped consistent with our method of acquiring, servicing, and

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measuring the profitability of such contracts based on the expected medical loss ratio.

For purposes of determining premium deficiency losses, contracts are grouped consistent with our method of acquiring, servicing, and measuring the profitability of such contracts based on the expected medical loss ratio.

The Company grouped its Medicare Advantage health plan contracts together as a single group as it operates in one line of business.

The Company further concluded that the costs to administer these contracts are based on centralized and shared service functions.

As of December 31, 2023 and 2022, the PDR liability was $ 13.7 million and $ 26.4 million, respectively, which represented its estimate of probable contract losses expected to be generated by the Company’s health plans.

As of December 31, 2024 and 2023, the PDR liability was $ 67.4 million and $ 13.7 million, respectively, which represented an estimate of probable contract losses expected to be generated by the Company’s health plans.

Medical Expense and Claims Payable

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Medical expense also includes costs for overseeing the quality of care and programs, which focus on patient wellness.

Additionally, medical expense can include, from time to time, remediation of certain claims that might result from periodic reviews conducted by various regulatory agencies.

Additionally, medical expense can include,

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from time to time, remediation of certain claims that might result from periodic reviews conducted by various regulatory agencies.

Management estimates the Company’s IBNR by applying standard actuarial methodologies, which utilize historical data, including the period between the date services are rendered and the date claims are received and paid, the completion factor, per member per month healthcare trends, denied claims activity, expected medical cost inflation, seasonality patterns, changes in membership mix, and a provision for adverse deviation.

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Advertising expense totaled $ 1.3 million and $ 3.2 million for the years ended December 31, 2024 and 2023, respectively.

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Reclassifications

Certain amounts in the accompanying consolidated financial statements and accompanying notes have been reclassified to be consistent with the current period presentation.

These reclassifications had no impact on the Company’s financial condition, results of operations, or net cash flows.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”)

Accounting Standards Update (“ASU”) 2021-08 requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

At the acquisition date, an acquirer should account for the related revenue contracts as if it had originated the contracts.

In the fourth quarter of 2023, the Company adopted ASU 2021-08 effective January 1, 2023.

The guidance will be applied to future business combinations.

ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”)

ASU 2016-13 introduced a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses.

The new current expected credit losses model generally calls for the immediate recognition of all expected credit losses and applies to loans, accounts and trade receivables as well as other financial assets measured at amortized cost, loan commitments and off-balance sheet credit exposures, debt securities and other financial assets measured at fair value through other comprehensive income, and beneficial interests in securitized financial assets.

The new guidance replaced the current incurred loss model for measuring expected credit losses, requires expected losses on available for sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements.

In April 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-04, which, among other amendments, allowed for certain policy elections and practical expedients related to accrued interest on financial instruments.

In May 2019, the FASB issued ASU 2019-05, which granted targeted transition relief by allowing entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost.

In November 2019, the FASB issued ASU 2019-10 and ASU 2019-11, which addressed certain aspects of the guidance related to effective dates, expected recoveries, troubled debt restructurings, accrued interest receivables, and financial assets secured by collateral.

The Company adopted ASU 2016-13 and related amendments as of January 1, 2023 on a modified retrospective basis.

The adoption of this standard did not have a material effect on the Company’s consolidated financial statements and related disclosures.

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”)

Accounting Standards Update (“ASU”) 2023-07 improves the disclosures about a public entity’s reportable segments and addresses requests from investors for additional, more detailed information about a reportable segment’s expenses.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The amendments require retrospective application to all prior periods presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed

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in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

In the fourth quarter of 2024, the Company adopted ASU 2023-07 effective January 1, 2024 on a retrospective basis, which did not impact the Company’s financial condition and results of operations, but did result in expanded reportable segment disclosures.

See Note 18 “Segment Reporting” for further information.

ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements (“ASU 2024-02”)

ASU 2024-02 removes references to various Financial Accounting Standards Board (“FASB”) Concepts Statements from the FASB accounting standards codification (the “Codification”) to simplify and clarify the accounting guidance.

The ASU aims to distinguish between authoritative and nonauthoritative literature and to address unintended applications of guidance.

The Company adopted ASU 2024-02 effective January 1, 2024.

The guidance will be applied prospectively to all new transactions recognized on or after January 1, 2024.

ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”)

ASU 2020-06 eliminates two of the three models in ASC 470-20 that require issuers to separately account for embedded conversion features and eliminates some of the requirements for equity classification in ASC 815-40-25 for contracts in an entity’s own equity.

The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and generally requires them to include the effect of potential share settlement for instruments that may be settled in cash or shares.

The Company adopted ASU 2020-06 effective January 1, 2024 using the modified retrospective method.

The Company’s liability-classified stock warrants remained classified as liabilities under the amended guidance.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”)

ASU 2024-03 enhances transparency and decision-usefulness of expense disclosures in response to investors’ requests for more detailed, disaggregated expense information, enabling a clearer understanding of a public business entity’s performance and cost structure.

The amendments improve disclosure requirements in financial statement notes for specific expense categories, including inventory purchases, employee compensation, depreciation, amortization, and depletion, as well as qualitative descriptions of other expenses.

The amendments are effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted and can be applied prospectively or retrospectively at the option of the Company.

The Company is evaluating the effect ASU 2024-03 will have on its consolidated financial statements and related disclosures.

ASU 2023-09, Income Taxes (Topic 740):

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The amendments in this update are effective for annual periods beginning after December 15, 2024 and should be applied prospectively.

Early adoption and retrospective application is permitted.

Retrospective application is permitted.

The Company is evaluating the effect ASU 2023-09 will have on its consolidated financial statements and related disclosures.

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”)

ASU 2023-07 improves the disclosures about a public entity’s reportable segments and addresses requests from investors for additional, more detailed information about a reportable segment’s expenses.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The amendments require retrospective application to all prior periods presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on

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the significant segment expense categories identified and disclosed in the period of adoption.

The Company is evaluating the effect ASU 2023-07 will have on its financial statements and related disclosures.

ASU 2023-06, Disclosure Improvements:

Codification Amendments In Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”)

ASU 2023-06 clarifies or improves disclosure and presentation requirements on a variety of topics and aligns the requirements in the FASB accounting standards codification (the “Codification”) with the SEC’s regulations.

ASU 2023-06 clarifies or improves disclosure and presentation requirements on a variety of topics and aligns the requirements in the Codification with the SEC’s regulations.

The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The amendments in this update should be applied prospectively.

If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.

If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment

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will be removed from the Codification and will not become effective for any entity.

The Company is evaluating the effect ASU 2023-06 will have on its consolidated financial statements and related disclosures.

As a smaller reporting company, the amendments in this update are effective for annual periods beginning after December 15, 2023, and interim periods therein.

The Company does not expect the adoption of ASU 2020-06 to have a material impact on its consolidated financial statements and related disclosures.

Fair Value Measurements and Hierarchy

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Warrant liability as of December 31, 2023 $ 1,056 $ — $ 29 $ 1,085

The key Level 3 inputs into the option pricing model related to the private placement warrants to purchase Class A common stock were as follows:

The key Level 3 weighted average inputs into the option pricing model related to the private placement warrants to purchase Class A common stock were as follows:

Volatility 91.7 % 75.0 %

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The Company has not, and does not plan to, declare dividends on its common stock and, as such, there is no change in the estimated fair value of the warrant liabilities due to the dividend assumption.

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The following table sets forth a summary of changes in the fair value of the Company’s private placement warrants to purchase Class A common stock, which are considered to be Level 3 fair value measurements:

1 unchanged sentence

Beginning balance $ 29 $ 40

Issuance of May 2024 Common Warrants (see Note 12)

Mark-to-market adjustment of stock warrants ( 21,185 ) ( 11 )

Ending balance $ 10,185 $ 29

The Company recorded gains on the changes in the fair value of public warrants of $ 0.4 million and $ 9.4 million during the years ended December 31, 2023 and 2022, respectively.

The Company recorded gains of $ 22.1 million and $ 0.4 million from changes in the fair value of stock warrants for the years ended December 31, 2024 and 2023, respectively.

The book value of cash;

2 unchanged sentences

and accrued expenses and other current liabilities approximate fair value because of the short maturity and high liquidity of these instruments.

During the year ended December 31, 2024, the Company recorded a gain of $ 6.2 million reflecting the write-off and settlement of contingent consideration related to the Company’s 2021 acquisition of Medcore HP, a Level 3 fair value measurement, upon resolution with the sellers of the assumed claims payable and risk adjustment factor.

The gain is included in corporate, general, and administrative expense in the consolidated statement of operations.

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Property and Equipment

The Company’s property and equipment balances consisted of the following:

The Company’s property and equipment balances consisted of the following as of:

(in thousands)

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Total depreciation of property and equipment recognized on the consolidated statements of operations was $ 2.4 million and $ 2.3 million for the years ended December 31, 2024 and 2023, respectively.

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The following table provides a reconciliation of goodwill and accumulated goodwill impairment losses as of (in thousands):

Balance at December 31, 2021

Goodwill $ 1,309,750

Accumulated goodwill impairment losses —

Acquisitions 5,202

Impairment losses ( 1,314,952 )

Balance at December 31, 2022

Goodwill 1,314,952

Accumulated goodwill impairment losses ( 1,314,952 )

In the second quarter of 2022, the Company identified indicators of impairment related to goodwill due to a significant deterioration in the overall market and a sustained decrease in the price of the Company’s Class A common stock.

As a result, the Company performed an interim assessment for impairment as of June 30, 2022 and noted that the Company’s share price (i) was significantly lower than its opening price on December 2, 2021, (ii) had not surpassed its opening price since December 15, 2021, and (iii) had steadily declined through the end of the second quarter of 2022, which did not follow the overall rebound pattern in the healthcare industry.

Management concluded that, given the macroeconomic and financial market conditions, industry-specific considerations, the decline in the Company’s performance as a result of higher than expected medical expenses due to the COVID-19 pandemic, and the sustained decrease in share price, it was more likely than not that the Company’s fair value was less than its carrying amount at June 30, 2022.

Accordingly, management performed the impairment test by estimating the Company’s fair value using a weighted combination of (i) discounted cash flows, using Level 3 inputs such as revenue, profit margin, and discount rate and (ii) market-based approach, using Level 3 inputs such as comparable companies’ market multiples.

Based on management’s comparison of the Company’s weighted estimated fair value to its carrying amount, an $ 851.5 million goodwill impairment charge was recorded for the three months ended June 30, 2022.

In the fourth quarter of 2022, the Company identified indicators of impairment related to goodwill due to the Company’s overall financial performance and a sustained decrease in the price of the Company’s Class A common stock.

As a result, the Company performed an assessment for impairment as of December 31, 2022 and noted that the Company’s share price closed at its lowest price in its trading history and had steadily declined through the end of December 31, 2022, which was not consistent or was significantly worse when compared to the performance of its peers and the healthcare industry as a whole.

Management concluded that, given the decline in the Company’s performance and the sustained decrease in its share price, it was more likely than not that the Company’s fair value was less than its carrying amount at December 31, 2022.

and (ii) market-based approach, using Level 3 inputs such as comparable companies’ market multiples.

Based on management’s comparison of the Company’s weighted estimated fair value to its carrying amount, a $ 463.5 million goodwill impairment charge was recorded for the three months ended December 31, 2022.

On November 30, 2024, the Company and certain of its subsidiaries (the “Sellers”) entered into an asset purchase agreement with certain entities affiliated with an entity in which CPF, the Company’s 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 the Company’s 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 asset purchase agreement.

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

The major classes of assets and liabilities disposed of as part of the Florida Assets sale are summarized as follows (in thousands):

Prepaid expenses and other current assets $ 25

Property and equipment, net 41

Intangible assets, net 232

Other long-term assets 1,202

Total assets disposed $ 1,500

Operating lease liability $ 243

Total liabilities disposed $ 243

Net assets disposed

The Company expects to close on the sale of the remaining Florida assets during the first half of fiscal year 2025.

As of December 31, 2024, the Company determined that the carrying value of the assets was less than the fair value and a loss on impairment of assets held for sale was recognized on the consolidated statement of operations for the year ended December 31, 2024.

The fair value was determined based on a quoted market price less costs to sell.

Net assets classified as

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held for sale for the Company’s remaining Florida operations are summarized as follows as of December 31, 2024 (in thousands):

Property and equipment, net $ 571

Intangible assets, net 7,576

Other long-term assets 314

Impairment ( 8,058 )

Total assets $ 403

Accrued expenses and other current liabilities $ 56

Operating lease liability 297

Total liabilities $ 353

Net assets $ 50

Intangible Assets

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Amount Gross Carrying

Amount Accumulated Amortization Net Carrying

Amount Accumulated

Amortization Net Carrying

(in thousands)

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Estimated future amortization of intangible assets is $ 82.0 million for each of the years 2025 through 2029.

As of December 31, 2023 and 2022, there were an aggregate of 81.9 million and 11.2 million warrants outstanding, respectively, which include the public warrants, private placement warrants, VGS Warrants (as defined below), and the March 2023 Warrants.

No warrants were exercised during the years ended December 31, 2023 and 2022.

Liability-classified

Public and Private Placement Warrants

Each public and private placement warrant entitles the holder to purchase one share of Class A common stock at a price of $ 11.50 per share.

The public warrants will expire five years after the completion of the Business Combinations.

The Company has the right to redeem the public warrants when the price per share of Class A common stock equals or exceeds $ 18.00 for 20 days within a 30-day trading period.

The private placement warrants are identical to the public warrants, except that the private placement warrants are subject to certain transfer restrictions, are not redeemable by the Company if they are held by sponsors, and are exercisable on a cashless basis.

The public and private placement warrants are recorded as a liability on the consolidated balance sheets with a balance of $ 1.1 million and $ 1.5 million as of December 31, 2023 and 2022, respectively.

The Company recorded gains of $ 0.4 million and $ 9.9 million from the change in fair value of the warrants during the years ended December 31, 2023 and 2022, respectively.

Equity-classified

In connection with the Unsecured Promissory Note issued in December 2022 (see Note 11 “Debt”), the Company and VGS entered into a warrant agreement (the “VGS Warrant Agreement”) pursuant to which the Company issued warrants to purchase 0.4 million shares of Class A common stock of the Company at an exercise price of $ 4.26 per share to VGS (the “VGS Warrants”).

The number of shares of common stock for which the VGS Warrants is exercisable and the exercise price may be adjusted upon any event involving subdivisions, combinations, distributions, recapitalizations, and similar transactions.

Pursuant to the VGS Warrant Agreement, the warrants and the right to purchase securities upon the exercise of the warrants will terminate upon the earliest to occur of the following:

(a) December 13, 2027;

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consummation of (i) a sale, conveyance, consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50 % of the voting power of which the Company or P3 LLC is disposed.

The Company recorded the fair value of the VGS Warrants of $ 0.6 million as an increase to additional paid in capital during the year ended December 31, 2022.

The key Level 3 inputs into the option pricing model related to the VGS Warrants were as follows:

Volatility 49 %

Risk-free interest rate 3.80 %

Exercise price $ 4.26

Expected term 5.0 Years

March 2023 Warrants

In connection with the Purchase Agreement dated March 2023 (see Note 13 “Capitalization”), the Company issued warrants to purchase an aggregate of 59.9 million shares of Class A common stock (the “Common Warrants”), and pre-funded warrants to purchase an aggregate of 10.8 million shares of Class A common stock (the “Pre-Funded Warrants” and, together with the Common Warrants, the “March 2023 Warrants”) to the Purchasers (as defined in Note 13 “Capitalization”).

Pursuant to the warrant agreements, the March 2023 Warrants and the right to purchase securities upon the exercise of the March 2023 Warrants will terminate upon the earliest to occur of the following:

(a) April 5, 2028, with respect to the Common Warrants only;

and (b) the consummation of (i) a sale, conveyance, disposal, or encumbrance of all or substantially all of the Company’s property or business or the Company’s merger into or consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50 % of the voting power of which the Company is disposed and the proceeds thereof are paid to the then-existing stockholders of the Company.

Claims Payable

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Claims unpaid, end of period $ 255,089 $ 178,009

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Retirement Plan

The Company maintains a retirement savings 401(k) Plan (the “401(k) Plan”) for full-time employees.

Participants may elect to contribute to the 401(k) Plan, through payroll deductions, subject to Internal Revenue Service limitations.

At its discretion, the Company can make a matching contribution to the 401(k) Plan.

The Company recognized expense related to its contributions to the 401(k) Plan of $ 1.1 million and $ 1.2 million during the years ended December 31, 2024 and 2023, respectively.

Long-term Debt

Long-term debt consisted of the following:

2 unchanged sentences

Term Loan Facility 65,000 65,000

VGS 1 2024 Loan (2024) / VGS Promissory Note (2023) 38,057 29,102

VGS 2 Promissory Note 25,375 —

29,102 15,000

VGS 3 Promissory Note 25,375 —

Long-term debt, gross 168,807 109,102

unamortized debt issuance costs and original issue discount ( 13,983 ) ( 783 )

154,824 108,319

current portion of long-term debt ( 65,000 ) —

Long-term debt, net $ 89,824 $ 108,319

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The Repurchase Promissory Note automatically matures and is due and payable on the earlier of June 30, 2026, a change in control transaction, or an underwritten primary public offering, each as defined in the agreement.

The Repurchase Promissory Note accrues paid-in-kind (“PIK”) interest of 11.0 % per year.

The Repurchase

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Promissory Note accrues paid-in-kind (“PIK”) interest of 11.0 % per year.

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

5 unchanged sentences

The Term Loan Agreement was amended on December 21, 2021 to provide for certain modifications and to permit the consummation of an acquisition in a prior year and related transactions.

The Term Loan Agreement was amended on December 13, 2022 to provide for certain modifications and to permit the issuance of the Unsecured Promissory Note (defined below) and related transactions.

The Term Loan Agreement was amended on December 13, 2022 to provide for certain modifications and to permit the issuance of the VGS Promissory Note (defined below) and related transactions.

The Term Loan Agreement was amended on March 22, 2024 to provide for certain modifications and to permit the issuance of the VGS 2 Promissory Note (defined below) and related transactions.

The Term Loan Agreement was amended on November 30, 2024 to permit the Company’s sale of the Florida Assets (the “Permitted Florida Disposition”), provide that the mandatory prepayment covenant does not apply to the proceeds of the Permitted Florida Disposition, and remove the ability to elect to pay a portion of the interest in-kind.

The Term Loan Agreement was amended on December 12, 2024 to provide for certain modifications and to permit the issuance of the VGS 3 Promissory Note (defined below) and related transactions.

The Security Agreement provides the lenders collateral in 100 % of the Company’s pledged stock, its subsidiaries (including tangible and intangible personal property), and bank accounts.

1 unchanged sentence

This maturity date may be accelerated as a remedy under certain default provisions in the agreement or in the event a mandatory prepayment trigger occurs.

Interest is payable at 12.0 % per annum on a quarterly cycle (in arrears).

The Company has elected to pay interest of 8.0 % per annum in cash with the remaining 4.0 % per annum being added to principal as PIK interest for a period of three years (or 12 payments).

The PIK is subject to acceleration in the event certain occurrences in the Term Loan Facility’s agreement are triggered.

Effective November 30, 2024, interest is payable at 12.0 % per annum on a quarterly cycle (in arrears).

PIK interest is subject to acceleration in the event certain occurrences in the Term Loan Facility’s agreement are triggered.

Accrued interest was $ 12.5 million and $ 7.9 million as of December 31, 2024 and 2023, respectively.

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The Company must remain in compliance with financial covenants such as minimum liquidity of $ 5.0 million and annual minimum revenue levels.

On an annual basis, the Company must post a minimum amount of annual revenue equal to or greater than $ 525.0 million in 2023, $ 585.0 million in 2024, and $ 650.0 million in 2025.

On an annual basis, the Company must post a minimum amount of annual revenue equal to or greater than $ 585.0 million in 2024 and $ 650.0 million in 2025.

The Company is also subject to certain restrictions that include indebtedness and liens.

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

The Term Loan Facility lenders granted 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,

As of December 31, 2024, the Company was not in compliance with its Term Loan Facility covenants related to issuance of the 2024 financial statements with an audit opinion free of a “going concern” explanatory paragraph.

The Term Loan Facility lenders granted a waiver of the covenant under the Term Loan Facility related to the existence of a “going concern” explanatory paragraph in the audit opinion for the Company’s audited financial statements for the fiscal year ended December 31, 2024.

The Company was in material compliance with all other covenants under the Term Loan Facility as of December 31, 2024;

however, there can be no assurance that the Company will be able to maintain compliance with these covenants in the future or that the lenders under the Term Loan Facility or the lenders of any future indebtedness the Company may incur will grant any such waiver or forbearance in the future.

VGS 1 2024 Loan (2024) and VGS Promissory Note (2023)

In December 2022, P3 LLC entered into a related party financing transaction (see Note 19 “Related Parties”) with VBC Growth SPV LLC (“VGS”) which included the issuance of an unsecured promissory note (the “VGS Promissory Note”) to VGS;

warrant agreement, pursuant to which the Company issued warrants to purchase 0.4 million shares of Class A common stock at an exercise price of $ 4.26 per share to VGS (see Note 12 “Warrants”);

and a subordination agreement, pursuant to which VGS agreed to subordinate its right of payment under the VGS Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility.

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

The Company paid VGS an up-front fee of 1.5 %.

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

The Company had the option to pay interest of 6.0 % in-kind and 8.0 % in cash, subject to certain limitations.

The VGS Promissory Note had a maturity date of May 19, 2026.

As of December 31,

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The Company was in compliance with all other covenants under the Term Loan Facility as of December 31, 2023;

2023, $ 29.1 million had been drawn on the VGS Promissory Note and the Company had recorded debt issuance costs and original issue discount of $ 0.8 million.

Accrued interest was $ 4.0 million as of December 31, 2023.

On December 12, 2024, the Company entered into an unsecured promissory note (the “VGS 1 2024 Loan”) with VGS providing for funding of up to approximately $ 38.1 million, the proceeds from which were used to repay in full all principal, interest, and other amounts owing under the VGS Promissory Note.

In connection with the replacement of the VGS Promissory Note with the VGS 1 2024 Loan, VGS waived the 9.0 % back-end facility fee that otherwise would have been payable under the VGS Promissory Note.

The VGS 1 2024 Loan has a maturity date of June 30, 2028 and an interest rate that is lower than the VGS Promissory Note by 50 basis points, among other things.

The VGS 1 2024 Loan did not include the issuance of warrants.

All other terms of the VGS 1 2024 Loan are the same as the terms of the VGS Promissory Note.

The Company accounted for this transaction as a troubled debt restructuring as the Company was experiencing financial difficulty, and the amended terms resulted in a concession to the Company.

As the future undiscounted cash flows under the modified terms exceeded the carrying amount on the date of modification, the modification was accounted for prospectively.

As of December 31, 2024, the Company had $ 38.1 million of borrowings outstanding under the VGS 1 2024 Loan and recorded debt issuance costs and original issuance discount of $ 0.7 million.

Accrued interest was $ 0.3 million as of December 31, 2024.

The Company will pay VGS a back-end fee of 9.0 % at the time the VGS 1 2024 Loan is redeemed.

The VGS 1 2024 Loan may be prepaid, at the Company’s option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee;

provided that prepayments must be in increments of at least 5% of the total loan amount.

The VGS 1 2024 Loan provides for mandatory prepayments with the proceeds of certain asset sales, and the lender has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 1 2024 Loan).

The VGS 1 2024 Loan restricts the Company’s ability to, among other things, incur indebtedness and liens, and make investments and restricted payments.

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

In connection with the issuance of the VGS 1 2024 Loan, the Company also entered into a subordination agreement, dated as of December 12, 2024 (the “VGS 1 2024 Subordination Agreement”) with VGS which subordinates VGS’s right of payment under the VGS 1 2024 Loan to the right of payment and security interests of the lenders under the Term Loan Facility.

Under the terms of the VGS 1 2024 Subordination Agreement, the Company is effectively required to pay all interest under the VGS 1 2024 Loan in-kind.

VGS 2 Promissory Note

In December 2022, the Company entered into a related party financing transaction (see Note 21 “Related Parties”) with VBC Growth SPV LLC (“VGS”) which included the issuance of an unsecured promissory note (the “VGS Promissory Note”) to VGS;

On March 22, 2024, P3 LLC entered into a related party financing transaction (see Note 19 “Related Parties”) with VBC Growth SPV 2, LLC (“VGS 2”), consisting of the issuance of an unsecured promissory note (the “VGS 2 Promissory Note”) to VGS 2 and a subordination agreement (“VGS 2 Subordination Agreement”), pursuant to which VGS 2 agreed to subordinate its right of payment under the VGS 2 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility.

The VGS 2 Promissory Note provided for funding of up to $ 25.0 million.

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

As of December 31, 2024, $ 25.4 million had been drawn on the VGS 2 Promissory Note and the Company had recorded debt issuance costs and original issue discount of $ 0.5 million.

The VGS 2 Promissory Note matures on September 30, 2027.

Interest is payable at 17.5 % per annum on a quarterly cycle (in arrears) beginning June 30, 2024.

The Company may elect to pay interest 8.0 % in cash and 9.5 % in-kind, but if the terms of the VGS 2 Subordination Agreement do not permit the Company to pay interest in cash, interest will be paid entirely in-kind.

Accrued interest was $ 3.6 million as of December 31, 2024.

The Company will pay VGS 2 a back-end fee of 9.0 % at the time the VGS 2 Promissory Note is redeemed.

The VGS Promissory Note may be prepaid, at the Company’s option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee;

provided that prepayments must be in increments of at least $ 1.25 million.

The VGS 2 Promissory Note restricts the Company’s ability and the ability of its subsidiaries to, among other things, incur indebtedness and liens, and make investments and restricted payments.

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

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The VGS 2 Promissory Note provides for mandatory prepayments with the proceeds of certain asset sales, and VGS 2 has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 2 Promissory Note).

In connection with the sale of the Florida Assets, on November 30, 2024, the VGS Promissory Note and VGS 2 Promissory Note were amended to permit the Permitted Florida Disposition and provide that the Company was not obligated to use the proceeds of the Permitted Florida Disposition to prepay the loans under the VGS Promissory Note and the VGS 2 Promissory Note.

VGS 3 Promissory Note

On December 12, 2024, P3 LLC entered into a related party financing transaction (see Note 19 “Related Parties”) with VBC Growth SPV 3, LLC (“VGS 3”), consisting of the issuance of an unsecured promissory note (the “VGS 3 Promissory Note”) to VGS 3;

warrant agreement, pursuant to which the Company issued warrants to purchase 71.4 million shares of Class A common stock at an exercise price of $ 0.21 per share to VGS 3 (see Note 12 “Warrants”);

and a subordination agreement (the “2022 Subordination Agreement”), pursuant to which VGS agreed to subordinate its right of payment under the VGS Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility.

The VGS Promissory Note provided for funding of up to $ 40.0 million, which ended upon the termination of the commitment period on February 3, 2023.

The Company paid VGS an up-front fee of 1.5 % at the time of each draw.

As of December 31, 2023 and 2022, $ 29.1 million and $ 15.0 million had been drawn on the VGS Promissory Note, respectively, and the Company had recorded debt issuance costs and original issue discount of $ 0.8 million and $ 0.6 million, respectively.

The VGS Promissory Note matures on May 19, 2026.

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

The Company may elect to pay interest 6.0 % in kind and 8.0 % in cash, but if the terms of the 2022 Subordination Agreement do not permit the Company to pay interest in cash, interest will be paid entirely in-kind.

Accrued interest was $ 4.0 million and $ 0.1 million as of December 31, 2023 and 2022, respectively.

The Company will pay VGS a back-end fee of 9.0 % at the time the VGS Promissory Note is paid.

and a subordination agreement (the “VGS 3 Subordination Agreement”), pursuant to which VGS 3 agreed to subordinate its right of payment under the VGS 3 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility.

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

The Company paid VGS 3 an up-front fee of 1.5 % of the aggregate principal amount of the loan in-kind.

As of December 31, 2024, $ 25.4 million had been drawn on the VGS 3 Promissory Note and the Company had recorded debt issuance costs, comprising the fair value of the warrants issued to VGS 3 and other costs incurred related to this financing, and original issue discount of $ 12.8 million.

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

Interest is payable at 19.5 % per annum on a quarterly cycle (in arrears) beginning June 30, 2025.

The Company may elect to pay either interest 8.0 % in cash or 11.5 % in-kind, but if the terms of the VGS 3 Subordination Agreement do not permit the Company to pay interest in cash, interest will be paid entirely in-kind.

Accrued interest was $ 0.1 million as of December 31, 2024.

The Company will pay VGS 3 a back-end fee at the time the VGS 3 Promissory Note is redeemed as follows:

(i) if paid after January 31, 2025 and on or before April 30, 2025, 4.5 %;

(ii) if paid after April 30, 2025 and on or before July 31, 2025, 6.75 % and (iii) if paid after July 31, 2025, 9.0 %.

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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.

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).

As of December 31, 2024, long-term debt maturities are as follows (in thousands):

2025 $ 65,000

unamortized debt issuance costs and original issue discount ( 13,983 )

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

Any taxable income or loss generated by P3 LLC is passed through to and included within the taxable income or loss of its members in accordance with the terms of the P3 LLC Amended & Restated Limited Liability Agreement dated as of the Closing Date (“P3 LLC A&R LLC Agreement”).

Any taxable income or loss generated by P3 LLC

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is passed through to and included within the taxable income or loss of its members in accordance with the terms of the P3 LLC Amended & Restated Limited Liability Agreement dated as of the Closing Date (“P3 LLC A&R LLC Agreement”).

Prior to the Business Combinations, the income and losses of P3 LLC were passed through to its members and nontaxable to P3 LLC.

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As a result, the income tax burden on the earnings taxed on the non-controlling interests is not reported by the Company in its consolidated financial statements.

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The components of loss before income taxes were as follows:

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Deferred income taxes:

Federal ( 835 ) —

State ( 255 ) —

Total deferred income taxes ( 1,090 ) —

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Effective tax rate ( 1.4 ) % ( 1.5 ) %

The Company’s tax rate is affected primarily by the recognition of a valuation allowance and the portion of income and expense allocated to the non-controlling interest.

It is also affected by discrete items that may occur in any given year such as benefits from changes in the fair value of private placement and public warrants.

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The Company’s tax rate is affected primarily by the recognition of a valuation allowance and the portion of income and expense allocated to the non-controlling interest.

Deferred Income Taxes

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net deferred tax assets until sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance.

The Company has recognized no deferred taxes in connection with its subsidiary, Medcore Health Plan Inc.

As of December 31, 2024, the Company has recognized a net deferred tax liability of $ 1.1 million in connection with its subsidiary, Medcore HP (“MHP”).

Because MHP does not file a consolidated corporate income tax return with the Company, the deferred tax assets of MHP are separately assessed for realizability.

Based on the weight of all available evidence as of December 31, 2023, including cumulative losses in recent years, the Company believes that it is more likely than not that the tax benefits of the deferred tax assets of MHP will not be realized.

Accordingly, the Company has recorded a valuation allowance against the tax benefits of the related deferred tax assets.

The Company has recognized no deferred taxes in connection with the Network VIEs.

Based on the weight of all available evidence as of December 31, 2024, the Company believes that it is more likely than not that the tax benefits of the deferred tax assets of MHP will be realized.

As of December 31, 2024, the Company has recognized a net deferred tax asset of $ 2.0 million in connection with certain of the Network VIEs.

Because the Network VIEs do not file a consolidated corporate income tax return with the Company, the deferred tax assets are separately assessed for realizability.

Based on the weight of all available evidence as of December 31, 2024, including cumulative losses in recent years, the Company believes that it is more likely than not that the tax benefits of the deferred tax assets of certain of the Network VIEs will not be realized.

Accordingly, the Company has recorded a valuation allowance against the tax benefits of the related deferred tax assets.

As of December 31, 2023, the Company has recognized a deferred tax asset with an offsetting valuation allowance in connection with its investment in P3 LLC.

During 2023, the Company adjusted the deferred taxes on the investment in P3 LLC for changes in methodology and other adjustments recognized through entity.

As of December 31, 2024, the Company has U.S.

federal income tax net operating loss carryforwards of $ 88.4 million available to offset future taxable income, all of which will be carried forward indefinitely, but utilization is limited to 80% of taxable income in any given year.

The Company also has state net operating loss carryforwards of $ 33.9 million,

The Company also has state net operating loss carryforwards of $ 36.1 million, of which $ 1.5 million will expire in 2033, $ 4.5 million will expire in 2034, $ 7.6 million will expire in 2035, $ 5.5 million will expire in 2039, $ 4.5 million will expire in 2043, and $ 12.5 million will be carried forward indefinitely.

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of which $ 1.5 million will expire in 2033, $ 4.5 million will expire in 2034, $ 6.5 million will expire in 2035, $ 5.5 million will expire in 2039, $ 0.1 million will expire in 2041, $ 2.3 million will expire in 2042, $ 0.5 million will expire in 2043, and $ 13.0 million will be carried forward indefinitely.

The federal and state net operating loss carryforwards may be subject to limitations under Section 382 and Section 383 of the Internal Revenue Code of 1986 (the “Code”) and similar provisions under state law.

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federal income tax net operating losses, no such carryforwards have been derecognized.

The Company did not record any penalties or interest related to income taxes or uncertain tax positions, as management has concluded that no such positions exist, on the consolidated balance sheets as of December 31, 2023 and 2022.

In addition, the Company did not record any penalties or interest related to income taxes on the consolidated statements of comprehensive income during the years ended December 31, 2023 and 2022.

Uncertain Tax Positions

The Company is subject to examination for tax years beginning with the year ended December 31, 2020.

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federal or state income tax audits for any tax year.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)

Balance at January 1 $ — $ —

Additions based on tax positions related to the current year 4,285 —

Balance at December 31 $ 4,285 $ —

As of December 31, 2024, there are $ 4.3 million unrecognized tax benefits related to state tax filing positions that if recognized would affect the annual effective tax rate.

Events that could impact the liability include expiration of the statute of limitations or settlement with the state tax authority.

Over the next 12 months, the Company does not expect a significant increase or decrease in the unrecognized tax benefits recorded at December 31, 2024.

The Company recorded interest and penalties of $ 1.6 million related to uncertain tax positions within the income tax provision on the consolidated statement of comprehensive loss during the year ended December 31, 2024.

As of December 31, 2024, accrued interest and penalties related to uncertain tax positions of $ 1.6 million were recorded within other long-term liabilities on the consolidated balance sheet.

No such amounts were recorded during the year ended or as of December 31, 2023.

Tax Receivable Agreement

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The payment obligation under the TRA is an obligation of the Company and not of P3 LLC.

The payments that the Company will be required to make will generally reduce the amount of the overall cash flow that might have otherwise been available, but the Company expects the cash tax savings realized from the utilization of the related tax benefits will exceed the amount of any required payments.

The payments that the Company will be required to make will generally reduce the amount of the overall cash flow that might have otherwise

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been available, but the Company expects the cash tax savings realized from the utilization of the related tax benefits will exceed the amount of any required payments.

As of December 31, 2024 and 2023, the TRA liability is estimated to be $ 11.5 million and $ 11.0 million, respectively;

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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 a share of the Company’s Class A common stock at the time of the relevant redemption or exchange.

As of December 31, 2024 and 2023, there were an aggregate of 246.5 million and 81.9 million warrants outstanding, respectively, which include the 2021 Public Warrants, 2021 Private Placement Warrants, VGS Warrants, VGS 3 Warrants, March 2023 Warrants, May 2024 Common Warrants, and May 2024 Pre-Funded Warrants (each as defined below).

No warrants were exercised during the years ended December 31, 2024 and 2023.

Liability-classified

Public Offering and Private Placement

The 2021 Public Warrants and 2021 Private Placement Warrants entitle the holders to purchase an aggregate of 10.8 million shares of Class A common stock at a price of $ 11.50 per share.

The 2021 Public Warrants will expire five years after the completion of the Business Combinations.

The Company has the right to redeem the 2021 Public Warrants when the price per share of Class A common stock equals or exceeds $ 18.00 for 20 days within a 30-day trading period.

The 2021 Private Placement Warrants are identical to the 2021 Public Warrants, except that the 2021 Private Placement Warrants are subject to certain transfer restrictions, are not redeemable by the Company if they are held by sponsors, and are exercisable on a cashless basis.

May 2024 Common Warrants

In connection with the May 2024 Private Placement (see Note 14 “Capitalization”), the Company issued warrants to purchase an aggregate of 67.4 million shares of Class A common stock at a price of $ 0.5020 per share (the “May 2024 Common Warrants”).

Pursuant to the warrant agreements, the May 2024 Common Warrants and the right to purchase securities upon the exercise of the May 2024 Warrants will terminate upon the earliest to occur of the following:

(a) May 22, 2031;

and (b) the consummation of (i) a sale, conveyance, disposal, or encumbrance of all or substantially all of the Company’s property or business or the Company’s merger into or consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50% of the voting power of which the Company is disposed and the proceeds thereof are paid to the then-existing stockholders of the Company.

The May 2024 Common Warrants were recorded as liability-classified financial instruments for an initial amount of $ 31.3 million.

The key Level 3 inputs into the option pricing model related to the May 2024 Warrants at inception were as follows:

Volatility 95.0 %

Risk-free interest rate 4.5 %

Exercise price $ 0.50

Expected term 7.0 years

The 2021 Public Warrants, 2021 Private Placement Warrants, and May 2024 Warrants are recorded as liabilities on the consolidated balance sheets with a balance of $ 10.3 million and $ 1.1 million as of December 31, 2024 and 2023, respectively.

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Equity-classified

In connection with the VGS Promissory Note issued in December 2022 (see Note 10 “Debt”), the Company and VGS entered into a warrant agreement (the “VGS Warrant Agreement”) pursuant to which the Company issued warrants to purchase 0.4 million shares of Class A common stock of the Company at an exercise price of $ 4.26 per share to VGS (the “VGS Warrants”).

Pursuant to the VGS Warrant Agreement, the warrants and the right to purchase securities upon the exercise of the warrants will terminate upon the earliest to occur of the following:

(a) December 13, 2027;

and (b) the consummation of (i) a sale, conveyance, consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50 % of the voting power of which the Company or P3 LLC is disposed.

VGS 3 Warrants

In connection with the VGS 3 Promissory Note issued in December 2024 (see Note 10 “Debt”), the Company and VGS 3 entered into a warrant agreement (the “VGS 3 Warrant Agreement”) pursuant to which the Company issued warrants to purchase 71.4 million shares of Class A common stock of the Company at an exercise price of $ 0.21 per share to VGS 3 (the “VGS 3 Warrants”).

The number of shares of common stock for which the VGS 3 Warrants is exercisable and the exercise price may be adjusted upon any event involving subdivisions, combinations, distributions, recapitalizations, and similar transactions.

Pursuant to the VGS 3 Warrant Agreement, the warrants and the right to purchase securities upon the exercise of the warrants will terminate upon the earliest to occur of the following:

(a) December 12, 2031;

The Company recorded the fair value of the VGS 3 Warrants of $ 12.1 million as an increase to additional paid in capital during the year ended December 31, 2024.

The key Level 3 inputs into the option pricing model related to the VGS 3 Warrants were as follows:

Volatility 91.6 %

Risk-free interest rate 4.2 %

Exercise price $ 0.21

Expected term 6.8 years

May 2024 Pre-Funded Warrants

In connection with the May 2024 Private Placement (see Note 14 “Capitalization”), the Company issued pre-funded warrants to purchase an aggregate of 25.8 million shares of Class A common stock at a price of $ 0.0001 per share (the “May 2024 Pre-Funded Warrants”).

Pursuant to the warrant agreements, the May 2024 Pre-Funded Warrants and the right to purchase securities upon the exercise of the May 2024 Pre-Funded Warrants will terminate upon the consummation of (i) a sale, conveyance, disposal, or encumbrance of all or substantially all of the Company’s property or business or the Company’s merger into or consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50% of the voting power of which the Company is disposed and the proceeds thereof are paid to the then-existing stockholders of the Company.

The May 2024 Pre-Funded Warrants were recorded as equity-classified financial instruments totaling $ 6.6 million.

March 2023 Warrants

In connection with the March 2023 Private Placement (see Note 14 “Capitalization”), the Company issued warrants to purchase an aggregate of 59.9 million shares of Class A common stock at a price of $ 1.13 per share (the “March 2023 Common Warrants”), and pre-funded warrants to purchase an aggregate of 10.8 million shares of Class A common stock at a price of $ 0.0001 per share (the “March 2023 Pre-Funded Warrants” and, together with the March 2023 Common Warrants, the “March 2023 Warrants”).

(a) April 5, 2028, with respect to the March 2023 Common Warrants only;

and (b) the consummation of (i) a

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sale, conveyance, disposal, or encumbrance of all or substantially all of the Company’s property or business or the Company’s merger into or consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50 % of the voting power of which the Company is disposed and the proceeds thereof are paid to the then-existing stockholders of the Company.

Commitments and Contingencies

The Company is a party to various claims, legal and regulatory proceedings, lawsuits, and administrative actions arising in the ordinary course of business.

The Company carries general and professional liability insurance coverage to mitigate the Company’s risk of potential loss in such cases.

The Company believes that disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, net loss or cash flows.

In June 2024, we received a CID from the DOJ pursuant to the False Claims Act in the course of the government’s investigation concerning our arrangements with insurance agents and brokers.

The CID requests documentation and information relating to the marketing of our broker programs and our arrangements with, and remuneration paid to, MA brokers, agents and agencies, as well as our arrangements with third parties relating to these programs.

We are cooperating with the investigation and providing the requested information.

No assurance can be given as to the timing or outcome of the government’s investigation.

Uncertainties

The healthcare industry is subject to numerous laws and regulations of Federal, state, and local governments.

These laws and regulations include, but are not limited to, matters of licensure, accreditation, government healthcare program participation requirements, reimbursement for patient services, and Medicare / Medicaid Fraud, Waste and Abuse Prevention.

Recently, government activity has increased with respect to investigations and allegations concerning possible violations of Fraud, Waste and Abuse statutes and regulations by healthcare providers.

Violations of these laws and regulations could result in expulsion from government healthcare programs together with imposition of significant fines and penalties as well as significant repayment for patient services billed.

Management believes the Company is compliant with Fraud, Waste and Abuse regulations as well as other applicable government laws.

While no regulatory inquiries have been made, compliance with such laws and regulations is subject to government review and interpretation, as well as other regulatory actions which might be unknown at this time.

Healthcare reform legislation at both the Federal and state levels continues to evolve.

Changes continue to impact existing and future laws and rules.

Such changes may impact the manner in which the Company conducts business, restrict the Company’s revenue growth in certain eligibility categories, slow down revenue growth rates for certain eligibility categories, increase certain medical, administrative and capital costs, and expose the Company to increased risk of loss or further liabilities.

As a result, the Company’s consolidated financial position could be impacted by such changes.

The Company leases real estate in the form of corporate office space and operating facilities.

The Company’s real estate leases have noncancelable terms expiring in 2025 to 2033, certain of which have one to two renewal options of five to 10 years.

Operating lease right-of-use assets of $ 12.9 million and $ 15.3 million were included within other long-term assets on the Company’s consolidated balance sheets as of December 31, 2024 and 2023, respectively.

Operating lease costs are included within operating expenses on the consolidated statements of operations and were $ 4.6 million and $ 4.5 million for the years ended December 31, 2024 and 2023, respectively.

Lease terms and discount rates consisted of the following as of:

Weighted average remaining lease term (years) 4.8 5.8

Weighted average discount rate 12.4 % 11.4 %

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Maturities of operating lease liabilities as of December 31, 2024 are as follows (in thousands):

Year Ending December 31,

Thereafter 2,793

Total undiscounted future cash flows 19,612

interest ( 5,781 )

Present value of operating lease liabilities $ 13,831

The current portions of operating right-of-use liabilities of $ 2.5 million and $ 2.7 million are included in accrued expenses and other current liabilities in the Company’s consolidated balance sheets as of December 31, 2024 and 2023, respectively.

Supplemental cash flows and other information related to leases are as follows:

Year Ended December 31,

(in thousands)

Operating cash flows paid for operating leases $ 4,551 $ 4,204

Capitalization

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The Company’s Board of Directors has not declared any cash dividends during the years ended December 31, 2024 or 2023.

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 Chicago Pacific Founders GP, L.P., a Delaware limited partnership (“CPF”), and the Company’s Chief Medical Officer and member of the Company’s board of directors, the Company 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 consists 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 .

May 2024 Private Placement

On May 24, 2024, pursuant to a Securities Purchase Agreement (the “May 2024 Purchase Agreement”), dated May 22, 2024 with the purchasers named therein (the “May 2024 Purchasers”), which included certain affiliated entities of Chicago Pacific Founders GP, L.P., a Delaware limited partnership (“CPF GP”), and institutional investors, the Company issued approximately 67.4 million units at a price of approximately $ 0.6270 per unit.

Each unit consists 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, the Company sold (i) an aggregate of 69.2 million shares of its Class A common stock (the “Shares”), (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 $ 86.6 million, net of $ 2.9 million in offering costs (collectively, the “March 2023 Private Placement”).

Registration Rights Agreement

On April 6, 2023, in connection with the Purchase Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Purchasers.

Pursuant to the Registration Rights Agreement, the Company agreed to prepare a registration statement for purposes of registering the resale of the Shares and shares of common stock issuable upon exercise of the March 2023 Warrants, which was filed with the SEC on May 2, 2023 and declared effective by the SEC on June 14, 2023.

The Registration Rights Agreement also contains certain shelf takedown and piggyback rights.

The Company has also agreed, among other things, to indemnify the Purchasers, their officers, directors, members, employees and agents, successors and assigns under the registration statement from certain liabilities and to pay all fees and expenses incident to the Company’s obligations under the Registration Rights Agreement.

Letter Agreement with CPF

On April 6, 2023, in connection with the Purchase Agreement, the Company entered into a letter agreement (the “Letter Agreement”) with CPF, Chicago Pacific Founders GP III, L.P., a Delaware limited partnership (“CPF GP III”) (on behalf of the funds of which CPF 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”).

The Letter Agreement provides, pursuant to certain stipulations, that CPF will be entitled to designate one additional independent member of the Company’s board of directors and that CPF will be entitled to certain information rights and protective provisions.

As of the date of the issuance of these consolidated financial statements, CPF has not exercised its right to designate a director under the terms of the Letter Agreement.

CPF Parties also 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 Class A common stock and Class V common stock.

In total, the Company sold (i) an aggregate of 41.6 million shares of its Class A common stock, (ii) warrants to purchase an aggregate of 67.4 million shares of Class A common stock, and (iii) 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”).

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Registration Rights Agreement

On May 24, 2024, in connection with the May 2024 Private Placement, the Company entered into a Registration Rights Agreement (the “May 2024 Registration Rights Agreement”) with the May 2024 Purchasers.

Pursuant to the May 2024 Registration Rights Agreement, the Company agreed to prepare and file a registration statement with the SEC for purposes of registering the resale of the shares and shares of common stock issuable upon exercise of the warrants, which was filed with the SEC on June 18, 2024 and declared effective by the SEC on June 27, 2024.

The May 2024 Registration Rights Agreement also contains certain shelf takedown and piggyback rights.

The Company has also agreed, among other things, to indemnify the May 2024 Purchasers, their officers, directors, members, employees and agents, successors and assigns under the registration statement from certain liabilities and to pay all fees and expenses incident to the Company’s obligations under the May 2024 Registration Rights Agreement.

Amended and Restated Letter Agreement with CPF

On May 24, 2024, in connection with entry into the Purchase Agreement, the Company entered into an amended and restated letter agreement (the “Amended and Restated Letter Agreement”) with CPF GP, and Chicago Pacific Founders GP III, L.P., a Delaware limited partnership (“CPF GP III,” and together with CPF GP, “CPF”) (on behalf of the funds of which CPF GP 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”)).

The Amended and Restated Letter Agreement provides that for as long as the CPF Parties own 40 % of the Company’s outstanding common stock, (i) CPF will be entitled to designate one additional independent member of the Company’s board of directors, and (ii) CPF will be entitled to certain information rights and protective provisions.

As of the date of the issuance of these financial statements, CPF has not exercised its right to designate a director under the terms of the Amended and Restated Letter Agreement.

The CPF Parties also agreed to extend a standstill restriction that limits the ownership of the CPF Parties to 49.99 % of the Company’s Class A common stock and Class V common stock from the date of the closing of the May 2024 Private Placement to July 31, 2025.

Shelf Registration

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

March 2023 Private Placement

On April 6, 2023, pursuant to a Securities Purchase Agreement (the “March 2023 Purchase Agreement”), dated March 30, 2023 with the purchasers named therein (the “March 2023 Purchasers”), which included certain affiliated entities of CPF GP, and the Company’s Chief Medical Officer and member of the Company’s board of directors, the Company 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 consists 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, the Company sold (i) an aggregate of 69.2 million shares of its 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 $ 86.6 million, net of $ 2.9 million in offering costs (collectively, the “March 2023 Private Placement”).

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| 2024 Form 10-K | 109

Registration Rights Agreement

On April 6, 2023, in connection with the March 2023 Purchase Agreement, the Company entered into a Registration Rights Agreement (the “April 2023 Registration Rights Agreement”) with the Purchasers.

Pursuant to the April 2023 Registration Rights Agreement, the Company agreed to prepare a registration statement for purposes of registering the resale of the shares and shares of common stock issuable upon exercise of the warrants, which was filed with the SEC on May 2, 2023 and declared effective by the SEC on June 14, 2023.

The Registration Rights Agreement also contains certain shelf takedown and piggyback rights.

The Company has also agreed, among other things, to indemnify the March 2023 Purchasers, their officers, directors, members, employees and agents, successors and assigns under the registration statement from certain liabilities and to pay all fees and expenses incident to the Company’s obligations under the April 2023 Registration Rights Agreement.

Letter Agreement with CPF

On April 6, 2023, in connection with the March 2023 Purchase Agreement, the Company entered into a letter agreement (the “Letter Agreement”) with the CPF Parties.

As of the date of the issuance of these consolidated financial statements, CPF has not exercised its right to designate a director under the terms of the Letter Agreement.

CPF Parties also agreed to a standstill restriction from the date of the closing of the March 2023 Private Placement to June 30, 2024 that limited the ownership of the CPF Parties to 49.99 % of the Company’s Class A common stock and Class V common stock.

Equity-Based Compensation

2 unchanged sentences

If a forfeiture of unvested Common Units occurred, the associated shares of Class V common stock were also forfeited.

The following summarizes Common Unit award activity for the year ended December 31, 2023:

Fair Value Number of

(in thousands)

Non-vested as of December 31, 2022 $ 9.20 380

Granted $ — —

Vested $ 9.20 ( 349 )

Forfeited $ 9.20 ( 31 )

Non-vested as of December 31, 2023 —

Total fair value of Common Unit awards vested during the years ended December 31, 2023 and 2022 was $ 0.5 million and $ 17.6 million, respectively.

During the year ended December 31, 2023, there were no Common Unit awards granted and the total fair value of Common Unit awards vested was $ 0.5 million.

As of December 31, 2023, all Common Unit awards had vested.

The Common Unit awards vested ratably over a period between one month and two years , so long as the grantee stayed employed.

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The term of each option award shall be no more than 10 years from the date of grant.

Options exercised under the 2021 Plan provide the purchaser with full rights

The Company’s policy for issuing shares upon stock option exercise is to issue new shares of Class A common stock.

The P3 LLC A&R LLC Agreement states that P3 LLC will maintain at all times a

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| 2024 Form 10-K | 110

equivalent to those of existing Class A common stockholders and holders as of the date of exercise.

The Company’s policy for issuing shares upon stock option exercise is to issue new shares of Class A common stock.

Additionally, the P3 LLC A&R LLC Agreement states that P3 LLC will maintain at all times a one -to- one ratio between the number of Common Units owned by the Company and the number of outstanding shares of Class A common stock, including, but not limited to, those issued as result of stock option exercises and vesting of RSU awards.

The 2021 Plan also provides for dividend equivalent units based on the value of the dividends per share paid on the Company’s Class A common stock, which are accumulated on RSUs during the vesting period.

The following table summarizes time-based stock option activity for the year ended December 31, 2023:

one -to- one ratio between the number of Common Units owned by the Company and the number of outstanding shares of Class A common stock, including, but not limited to, those issued as result of stock option exercises and settlement of RSU awards granted under the 2021 Plan.

The 2021 Plan also permits the grant of dividend equivalent units that entitle the holder to an amount based on the value of the dividends per share paid on the Company’s Class A common stock, which are accumulated on RSUs during the vesting period.

The following table summarizes time-based stock option activity under the 2021 Plan for the year ended December 31, 2024:

Stock Options

5 unchanged sentences

Granted 4,686 $ 0.53

Cancelled ( 249 ) $ 3.12

Forfeited ( 1,957 ) $ 1.86

5 unchanged sentences

Weighted average grant date fair value $ 0.34 $ 0.81

The following table summarizes performance-based stock option activity for the year ended December 31, 2023:

The following table summarizes performance-based stock option activity under the 2021 Plan for the year ended December 31, 2024:

Stock Options

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Granted — $ —

Forfeited ( 900 ) $ 4.30

Outstanding as of December 31, 2024 750 $ 4.95 7.95 $ —

4 unchanged sentences

Weighted average grant date fair value $ — $ 0.77

The vesting criteria for 0.1 million performance-based stock option awards has not yet been achieved;

therefore, no expense has been recorded.

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| 2024 Form 10-K | 111

The vesting criteria for 0.1 million performance-based stock option awards has not yet been achieved;

therefore, no expense has been recorded.

There were no stock options exercised during the years ended December 31, 2024 and 2023.

6 unchanged sentences

Time-based stock options vest ratably over a period between two and five years , so long as the optionee continues to provide services to the Company.

As of December 31, 2023, there was $ 4.2 million and $ 4.8 million of unrecognized equity-based compensation cost related to time-based and performance-based stock options, respectively, which is expected to be recognized over a weighted-average period of 2.9 years and 9.0 years, respectively.

The following table summarizes RSU activity for the year ended December 31, 2023:

As of December 31, 2024, there was $ 1.9 million and $ 2.1 million of unrecognized equity-based compensation cost related to unvested time-based and performance-based stock options under the 2021 Plan, respectively, which is expected to be recognized over a weighted-average period of 2.0 years and 8.0 years, respectively.

The following table summarizes RSU activity under the 2021 Plan for the year ended December 31, 2024:

Fair Value Number of

3 unchanged sentences

Vested $ 1.96 ( 1,695 )

Forfeited $ 1.99 ( 663 )

Non-vested as of December 31, 2024 $ 0.95 3,687

The following additional disclosures are provided for RSU awards:

Year Ended December 31,

Weighted average grant date fair value $ 0.59 $ 1.80

Total fair value of shares vested (in thousands) $ 2,680 $ 5,826

In August 2023, the Company granted an aggregate of 2.5 million RSUs pursuant to the 2021 Plan to the Company’s Chief Executive Officer and Chief Medical Officer (collectively, the “Executives”) in full satisfaction of the “Second Bonus” earned by each Executive during the year ended December 31, 2022 pursuant to the terms of the transaction bonus agreements, dated May 2022, entered into between each Executive and the Company and P3 Health Group Management, LLC in connection with the consummation of the Business Combinations (together, the “RSU Transaction Bonuses”).

The Second Bonus of $ 5.0 million in the aggregate was recorded within accrued payroll on the consolidated balance sheet as of December 31, 2022.

In August 2023, the Company granted an aggregate of 2.5 million RSUs pursuant to the 2021 Plan to the Company’s then Chief Executive Officer, Dr.

Abdou, and Chief Medical Officer, Dr.

Bacchus (collectively, the “Executives”), in full satisfaction of the “Second Bonus” earned by each Executive during the year ended December 31, 2022 pursuant to the terms of the transaction bonus agreements, dated May 2022, entered into between each Executive and the Company and P3 Health Group Management, LLC in connection with the consummation of the Business Combinations (together, the “RSU Transaction Bonuses”).

The RSUs were fully vested at the time of grant.

The fair value of the RSUs granted was $ 5.6 million, $ 0.6 million of which was recorded in equity-based compensation during the year ended December 31, 2023.

The RSUs were settled in Class A common stock on January 9, 2024.

RSUs vest ratably over a period between two and four years , so long as the grantee continues to provide services to the Company.

As of December 31, 2023, total equity-based compensation cost related to all unvested RSUs was $ 6.8 million, which is expected to be recognized over a weighted average period of 2.81 years.

The RSUs were settled in Class A common stock and the Company timely paid $ 0.7 million in withholding taxes attributable to the vesting of the RSUs to the Internal Revenue Service on behalf of Dr.

Abdou on January 10, 2024.

Abdou repaid such sum to the Company on May 2, 2024.

RSUs typically vest ratably over a period between two and four years , so long as the grantee continues to provide services to the Company.

As of December 31, 2024, total equity-based compensation cost related to all unvested RSUs under the 2021 Plan was $ 3.5 million, which is expected to be recognized over a weighted average period of 2.1 years.

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| 2024 Form 10-K | 112

The following table summarizes RSA activity for the year ended December 31, 2023:

2024 Employee Inducement Incentive Award Plan

On May 7, 2024, the Board of Directors adopted the Company’s 2024 Employment Inducement Incentive Award Plan (the “2024 Plan”), effective on its adoption date.

The 2024 Plan provides for the grant of non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents and other stock or cash-based awards to prospective employees, and contains terms and conditions intended to comply with the inducement award exception under the Nasdaq Listing Rules.

The Board of Directors has reserved 16.5 million shares of the Class A common stock for issuance pursuant to awards granted under the 2024 Plan.

In accordance with Nasdaq Stock Market Rule 5635(c)(4), awards under the 2024 Plan may only be made to individuals not previously employed by the Company or individuals being rehired following a bona fide period of interruption of employment, as an inducement material to such individuals’ entering into employment with the Company.

As of December 31, 2024, there were no shares of Class A common stock reserved and available for issuance under the 2024 Plan.

The term of each option award shall be no more than 10 years from the date of grant.

The Company’s policy for issuing shares upon stock option exercise is to issue new shares of Class A common stock.

The P3 LLC A&R LLC Agreement states that P3 LLC will maintain at all times a one-to-one ratio between the number of Common Units owned by the Company and the number of outstanding shares of Class A common stock, including, but not limited to, those issued as result of stock option exercises and settlement of RSU awards granted under the 2024 Plan.

The following table summarizes stock option activity under the 2024 Plan for the year ended December 31, 2024:

Stock Options

(in thousands) Weighted

Price Weighted

(in years) Aggregate

(in thousands)

Outstanding as of December 31, 2023 — $ — — $ —

Granted 12,100 $ 0.73

Outstanding as of December 31, 2024 12,100 $ 0.73 9.36 $ —

Fully vested and expected to vest as of December 31, 2024 12,100 $ 0.73 9.36 $ —

Exercisable as of December 31, 2024 — $ — — $ —

The following additional disclosures are provided for stock options:

December 31, 2024

Weighted average grant date fair value $ 0.47

The weighted average assumptions used in estimating the grant date fair value of stock options are listed in the table below:

December 31, 2024

Expected volatility 66.5 %

Risk-free interest rate 4.5 %

Expected term 6.3 years

Dividend rate 0.0 %

As of December 31, 2024, there was $ 4.8 million of unrecognized equity-based compensation cost related to unvested stock options under the 2024 Plan, which is expected to be recognized over a weighted-average period of 3.4 years.

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| 2024 Form 10-K | 113

The following table summarizes RSU activity under the 2024 Plan for the year ended December 31, 2024:

Fair Value Number of

2 unchanged sentences

Granted $ 0.73 4,400

Vested $ 1.82 ( 250 )

Non-vested as of December 31, 2024 $ 0.73 4,400

The following additional disclosures are provided for RSAs:

The following additional disclosures are provided for RSU awards:

December 31, 2024

Weighted average grant date fair value $ 0.73

Total fair value of shares vested (in thousands) $ 598

The RSU award will be subject to both service-vesting and performance-vesting conditions, such that both conditions must be satisfied for the RSUs to vest.

The applicable vesting date will be the later of the date on which the applicable “service-vesting condition” is satisfied and the date on which the “performance-vesting condition” is satisfied.

The service-vesting condition will be satisfied (i) with respect to 25% of the underlying shares on the first anniversary of the effective date of employment, and (ii) as to the remaining 75% of the underlying shares, in substantially equal installments on each quarterly anniversary over the three-year period thereafter.

The performance-vesting condition will be satisfied upon the closing of the first underwritten offering and sale of the Company’s Class A common stock following the effective date of employment, subject to continued employment through such date.

As of December 31, 2024, total equity-based compensation cost related to all unvested RSUs under the 2024 Plan was $ 2.7 million, which is expected to be recognized over a weighted average period of 3.4 years.

Compensation Expense

1 unchanged sentence

The Company did not recognize any tax benefits related to equity-based compensation for the years ended December 31, 2024 and 2023.

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Net Loss per Share

8 unchanged sentences

Shares of Class V common stock — ( 128,653 )

Liability-classified warrants ( 23,078 ) —

Net loss attributable to Class A common stockholders–diluted $ ( 158,927 ) $ ( 186,426 )

6 unchanged sentences

Shares of Class V common stock — 199,701

Liability-classified warrants 1,823 —

Weighted average shares outstanding–diluted 146,998 294,590

Net loss per share attributable to Class A common stockholders–diluted $ ( 1.08 ) $ ( 0.63 )

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Shares of Class V common stock do not share in the earnings or losses of P3 Health Partners, Inc.

and are therefore not participating securities.

Shares of Class V common stock do not share in the earnings or losses of P3 and are therefore not participating securities.

As such, separate presentation of basic and diluted net income per share for Class V common stock under the two-class method is not required.

5 unchanged sentences

Stock options (1)

Restricted stock units (1)

Shares of Class V common stock (2)

3 unchanged sentences

Application of the treasury stock method would reduce this amount if they had a dilutive effect and were included in the computation of diluted net loss per share

(2) Shares of Class V common stock at the end of the period, including shares tied to unvested Common Units, are considered potentially dilutive shares of Class A common stock under application of the if-converted method.

The Company leases real estate, in the form of corporate office space and operating facilities, and certain office equipment.

The Company’s real estate leases have noncancelable terms expiring in 2024 to 2033, certain of which have one to two renewal options of five to 10 years.

The Company’s equipment leases have noncancelable terms expiring in 2024 to 2025.

Operating lease right-of-use assets of $ 15.3 million and $ 11.7 million were included within other long-term assets on the Company’s consolidated balance sheets as of December 31, 2023 and 2022, respectively.

Operating lease costs are included within operating expenses on the consolidated statements of operations and were $ 4.5 million and $ 3.1 million for the years ended December 31, 2023 and 2022, respectively.

Lease terms and discount rates consisted of the following as of:

Weighted average remaining lease term (years) 5.8 6.2

Weighted average discount rate 11.4 % 11.7 %

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Maturities of operating lease liabilities as of December 31, 2023 are as follows (in thousands):

Year Ending December 31,

Thereafter 5,244

Total undiscounted future cash flows 23,720

interest ( 7,375 )

Present value of operating lease liabilities $ 16,345

The current portions of operating right-of-use liabilities of $ 2.7 million and $ 1.6 million are included in accrued expenses and other current liabilities in the Company’s consolidated balance sheets as of December 31, 2023 and 2022, respectively.

Supplemental cash flows and other information related to leases are as follows:

Year Ended December 31,

(in thousands)

Operating cash flows paid for operating leases $ 4,204 $ 3,339

Retirement Plan

The Company maintains a retirement savings 401(k) Plan (the “401(k) Plan”) for full-time employees.

Participants may elect to contribute to the 401(k) Plan, through payroll deductions, subject to Internal Revenue Service limitations.

At its discretion, the Company can make a matching contribution to the 401(k) Plan.

The Company recognized expense related to its contributions to the 401(k) Plan of $ 1.2 million and $ 0.8 million during the years ended December 31, 2023 and 2022, respectively.

(2) Shares of Class V common stock at the end of the period are considered potentially dilutive shares of Class A common stock under application of the if-converted method in 2023 and antidilutive in 2024.

Redeemable Non-controlling Interest

Non-controlling interest represents the portion of P3 LLC that the Company controls and consolidates but does not own (i.e., the Common Units held directly by equity holders other than the Company).

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The ownership of the Common Units is summarized as follows:

8 unchanged sentences

Common Units participate in net income or loss allocations and distributions and entitle their holder to the right, subject to the terms set forth in the limited liability company agreement, to require the Company to redeem all or a portion of the Common Units held by such participant, together with a corresponding number of shares of Class V common stock, in exchange for Class A common stock or at the Company’s option, and subject to certain limitations, in cash.

As the non-controlling interest holders had an approximate 63 % and 83 % voting interest in the Company through their Class V common stock as of December 31, 2023 and 2022, respectively, and appointed most of the members to the Board of

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Directors, the ability to elect cash settlement upon redemption is outside of the control of the Company.

As the non-controlling interest holders had an approximate 55 % and 63 % voting interest in the Company through their Class V common stock as of December 31, 2024 and 2023, respectively, and appointed most of the members to the Board of Directors, the ability to elect cash settlement upon redemption is outside of the control of the Company.

As a result, the Common Units held by outside shareholders have been classified as redeemable non-controlling interest and presented as temporary equity in the Company’s consolidated balance sheets.

3 unchanged sentences

The offset of any fair value adjustment is recorded to additional paid in capital, with no impact to net income or loss.

As of December 31, 2023, there was a $ 20.6 million remeasurement adjustment recorded as the fair value of redeemable non-controlling interest was greater than the carrying value.

As of December 31, 2022, there was no remeasurement adjustment recorded as the fair value of redeemable non-controlling interest was less than the carrying value.

During the year ended December 31, 2023, there were an aggregate of 5.4 million shares of Class A common stock issued to P3 LLC members in connection with such members’ redemptions of an equivalent number of Common Units and corresponding cancellation and retirement of an equivalent number of Class V common stock.

As of December 31, 2024, there was a $ 20.6 million remeasurement adjustment recorded as the fair value of redeemable non-controlling interest (i.e., based on the five-day volume-weighted average price of a share of Class A common stock) was less than the carrying value.

As of December 31, 2023, there was $ 20.6 million remeasurement adjustment recorded as the fair value of redeemable non-controlling interest was greater than the carrying value.

During the years ended December 31, 2024 and 2023, there were an aggregate of 0.6 million shares and 5.4 million shares, respectively, of Class A common stock issued to P3 LLC members in connection with such members’ redemptions of an equivalent number of Common Units and corresponding cancellation and retirement of an equivalent number of Class V common stock.

Such retired shares of Class V common stock may not be reissued.

The redemptions occurred pursuant to the terms of the P3 LLC A&R LLC Agreement.

There was no Common Unit exchange or redemption activity during the year ended December 31, 2022.

As the P3 LLC A&R LLC Agreement states that P3 LLC will maintain at all times a one -to- one ratio between the number of Common Units owned by the Company and the number of outstanding shares of Class A common stock, there were an aggregate of 69.2 million Common Units issued to the Company resulting from the March 2023 Private Placement during the year ended December 31, 2023.

The redemptions occurred pursuant to the terms of the P3 LLC Amended and Restated Limited Liability Agreement (the “P3 LLC A&R LLC Agreement”).

As the P3 LLC A&R LLC Agreement states that P3 LLC will maintain at all times a one -to- one ratio between the number of Common Units owned by the Company and the number of outstanding shares of Class A common stock, there were an aggregate of 41.6 million and 69.2 million Common Units issued to the Company resulting from the May 2024 Private Placement and March 2023 Private Placement during the years ended December 31, 2024 and 2023, respectively.

Segment Reporting

The Company’s operations are organized under one reportable segment.

The Chief Executive Officer, who is the Company’s chief operating decision maker, manages the Company’s operations and reviews financial information on a consolidated basis.

Decisions regarding resource allocation and assessment of profitability are based on the Company’s responsibility to deliver high quality primary medical care services to its patient population.

For the periods presented, all the Company’s revenue was earned in the United States.

The Chief Executive Officer, who is the Company’s chief operating decision maker, is responsible for the general supervision, direction, and control of the business and officers of the Company and manages the Company’s operations, reviews financial information on a consolidated basis, and uses net income or loss to assess performance and allocate resources.

Decisions regarding resource allocation and assessment of profitability are based on the Company’s responsibility to deliver value-based care coordination and health management to its patient population.

The Company’s segment assets relate to health plan receivables.

The Company’s segment generates revenue by providing population health management services on an at-risk basis to insurance plans offering medical coverage to Medicare beneficiaries under Medicare Advantage programs.

For the periods presented, all of the Company’s revenue was earned in the United States.

Likewise, all the Company’s long-lived assets were located in the United States.

Commitments and Contingencies

The Company is a party to various claims, legal and regulatory proceedings, lawsuits, and administrative actions arising in the ordinary course of business and associated with the Business Combinations.

The Company carries general and professional liability insurance coverage to mitigate the Company’s risk of potential loss in such cases.

The Company believes that disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, net loss or cash flows.

In 2021, a discrepancy was identified in the service agreement with one of the Company’s health plans resulting in a renegotiation of the agreement.

In January 2023, the renegotiation was settled and the Company reflected the known settlement of $ 5.0 million within health plan settlements payable as of December 31, 2022.

The remaining settlement balance of $ 3.0 million is recorded within health plan settlements payable as of December 31, 2023.

Uncertainties

The healthcare industry is subject to numerous laws and regulations of Federal, state, and local governments.

Recently, government activity has increased with respect to investigations and allegations concerning possible violations of Fraud, Waste and Abuse statutes and regulations by healthcare providers.

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| 2024 Form 10-K | 116

Management believes the Company is compliant with Fraud, Waste and Abuse regulations as well as other applicable government laws.

Healthcare reform legislation at both the Federal and state levels continues to evolve.

Changes continue to impact existing and future laws and rules.

As a result, the Company’s consolidated financial position could be impacted by such changes.

The following tables present information about the Company’s reportable segment:

Year Ended December 31,

(in thousands)

Operating revenue $ 1,500,455 $ 1,266,375

Medical claims expense ( 1,398,143 ) ( 1,117,258 )

Other medical expense (1)

( 161,229 ) ( 117,482 )

Depreciation and amortization ( 86,058 ) ( 86,675 )

Other segment items (2)

( 140,532 ) ( 114,069 )

Interest expense, net ( 22,173 ) ( 15,985 )

Interest income 1,689 1,363

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

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

Net loss $ ( 310,378 ) $ ( 186,426 )

(in thousands)

Segment assets $ 121,266 $ 118,497

Other assets (3)

662,154 742,470

Total assets $ 783,420 $ 860,967

__________________

(1) Other medical expense includes subcapitation expense, affiliate provider compensation expense, and other non-claim costs.

(2) Other segment items include premium deficiency reserve, corporate, general and administrative expense, sales and marketing expense, impairment of asset held for sale, and miscellaneous income and expense.

(3) Other assets consists of cash, restricted cash, prepaid expenses and other current assets, other receivables, assets held for sale, and other long-term assets not allocated to the reportable segment.

Related Parties

2 unchanged sentences

The Company has a full-risk capitation agreement in place with Atrio whereby the Company is delegated to perform services on behalf of Atrio’s members assigned to the Company.

These delegated services include but are not limited to provider network credentialing, patient authorizations, and medical management (care management, quality management and utilization management).

These delegated services include but are not limited to provider

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| 2024 Form 10-K | 117

network credentialing, patient authorizations, and medical management (care management, quality management and utilization management).

The following tables summarize the Company’s transactions with Atrio:

11 unchanged sentences

(1) Amount is included within accrued expenses and other current liabilities on the Company’s consolidated balance sheet.

VGS Promissory Note

As described in Note 11, in December 2022, the Company issued an unsecured promissory note to VGS, an entity managed by CPF and whose equity holders consist of two members of the Company’s Board of Directors and the Company’s Chief Executive Officer and Chief Medical Officer, among others.

The following tables summarize the Company’s transactions with VGS:

VGS Promissory Notes

As described in Note 10, in December 2023, the Company issued an unsecured promissory note to VGS, an entity managed by CPF and whose equity holders consist of three members of the Company’s Board of Directors and the Company’s Chief Medical Officer, among others.

In March 2024 and December 2024, the Company issued unsecured promissory notes to VGS 2 and VGS 3, respectively, both of which are also managed by CPF.

The following tables summarize the Company’s transactions with VGS, VGS 2, and VGS 3:

Year Ended December 31,

1 unchanged sentence

Interest expense, net $ 9,025 $ 3,905

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(in thousands)

2 unchanged sentences

Accrued expenses $ 437 $ 331

Florida Asset Sale

As described in Note 6, on November 30, 2024, the Company sold its Florida Assets to Buyers which are affiliated with the Company’s principal stockholder.

Variable Interest Entities

4 unchanged sentences

These advances accrue interest at a rate of prime plus 2 %.

Net advances made to the Network VIEs and accrued interest on those advances are presented within due to consolidated entities of P3 in the table below.

Net advances made to the Network VIEs and accrued

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interest on those advances are presented within due to consolidated entities of P3 in the table below.

Additionally, P3 LLC entered into stock transfer restriction agreements with the practice shareholders of the Network VIEs, which, by way of a call option, unequivocally permit P3 LLC to appoint successor physicians if a practice shareholder vacates their ownership position.

12 unchanged sentences

Other long-term assets 1,116 153

Due from consolidated entities of P3 — 3,012

TOTAL ASSETS $ 9,256 $ 8,637

9 unchanged sentences

TOTAL LIABILITIES AND MEMBERS’ DEFICIT $ 9,256 $ 8,637

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Year Ended December 31,

5 unchanged sentences

VGS 4 Promissory Note

On March 22, 2024, P3 LLC entered into a related party 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.

On February 13, 2025, P3 LLC entered into a related party financing transaction with VBC Growth SPV 4, LLC (“VGS 4”), consisting of the issuance by P3 LLC of (i) an unsecured promissory note (the “VGS 4 Promissory Note”) to VGS 4 and (ii) a warrant to purchase 71.4 million shares of the Company’s Class A stock at an exercise price of $ 0.21 per share to VGS 4.

The VGS 4 Promissory Note provides for funding of up to $ 30.0 million, available for draw by P3 LLC in two tranches, as follows:

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

The VGS 2 Promissory Note matures on September 30, 2027.

Interest is payable at 17.5 % per annum on a quarterly cycle (in arrears) beginning June 30, 2024.

P3 LLC 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 (defined below), and if not so permitted, such interest shall accrue as PIK interest.

(i) a first tranche of $ 15.0 million which was drawn on February 18, 2025, and (ii) a second

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tranche of $ 15.0 million which was drawn on March 14, 2025.

The VGS 4 Promissory Note matures on August 13, 2028.

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

P3 LLC may elect to pay either (1) 8.0 % cash interest and 11.5 % PIK interest, or (2) 19.5 % PIK interest, provided that payment of cash interest will be permitted only to the extent permitted by the Term Loan Agreement and the VGS 4 Subordination Agreement (defined below), and if not so permitted, such interest shall accrue as PIK interest.

The VGS 4 Promissory Note provides for mandatory prepayments with the proceeds of certain asset sales, and VGS 4 has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 4 Promissory Note).

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In addition, P3 LLC will pay VGS 4 a back-end fee at the time the VGS 4 Promissory Note is redeemed as follows:

(i) if paid prior to 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 %.

2024 Subordination Agreement

In connection with the transactions described above, P3 LLC entered into a subordination agreement, dated as of March 22, 2024 (the “2024 Subordination Agreement”), by and among the Company, CRG Servicing LLC (“CRG”), as administrative agent under the Term Loan Facility and VGS 2.

Pursuant to the 2024 Subordination Agreement, VGS 2 agreed to subordinate its right of payment under the VGS 2 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility.

The terms of the 2024 Subordination Agreement will effectively require P3 LLC to pay all interest under the VGS 2 Promissory Note in-kind.

(i) if paid prior to March 31, 2025, 2.25 %;

(ii) if paid after March 31, 2025 and on or before June 30, 2025, 4.50 %;

(iii) if paid after June 30, 2025 and on or before September 30, 2025, 6.75 % and (iv) if paid after December 31, 2025, 9.00 %.

VGS 4 Subordination Agreement

In connection with the transactions described above, P3 LLC entered into a subordination agreement, dated as of February 13, 2025 (the “VGS 4 Subordination Agreement”), by and among the Company, CRG Servicing LLC (“CRG”), as administrative agent under the Term Loan Facility and VGS 4.

Pursuant to the VGS 4 Subordination Agreement, VGS 4 agreed to subordinate its right of payment under the VGS 4 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility.

The terms of the VGS 4 Subordination Agreement will effectively require P3 LLC to pay all interest under the VGS 4 Promissory Note in-kind.

Amendment to Term Loan Agreement and Consent

In connection with the transactions described above, P3 LLC entered into that certain (1) Fourth Amendment to Term Loan Agreement (the “Term Loan Amendment”), dated as of the March 22, 2024, by and among P3 LLC, as borrower, the subsidiary guarantors party thereto, the lenders from time to time party thereto and CRG, as administrative agent and collateral agent and (2) Consent (the “Consent”), dated as of the March 22, 2024, by and between P3 LLC, as borrower, and VGS, as holder.

The Term Loan Amendment and Consent collectively permit the issuance of the VGS 2 Promissory Note and the entry into the 2024 Subordination Agreement.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

In connection with the transactions described above, P3 LLC entered into that certain (1) Seventh Amendment to Term Loan Agreement (the “Term Loan Amendment”), dated as of the February 13, 2025, by and among P3 LLC, as borrower, the subsidiary guarantors party thereto, the lenders from time to time party thereto and CRG, as administrative agent and collateral agent and (2) Consent (the “Consent”), dated as of the February 13, 2025, by and between P3 LLC, as borrower, and VGS, as holder.

The Term Loan Amendment and Consent collectively permit the issuance of the VGS 4 Promissory Note and the entry into the VGS 4 Subordination Agreement.

P3 Health Partners Inc.

| 2024 Form 10-K | 120

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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What changed 10-K

Item 8. Financial Statements and Supplementary Data