P3 Health Partners Inc. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis is intended to provide the reader with an understanding of our business, including an overview of our results of operations and liquidity and should be read in conjunction with the consolidated financial statements and related notes to the consolidated financial statements included elsewhere in this Form 10-K. This discussion contains forward-looking statements and involves numerous risks and uncertainties. Our actual results may differ materially from those anticipated in any forward-looking statements as a result of many factors, including those set forth under “ Cautionary Statement Regarding Forward-Looking Statements ,” “Item 1A. Risk Factors.” “Item 3. Legal Proceedings.” and elsewhere in this Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any periods in the future. Overview P3 is a patient-centered and physician-led population health management company. We strive to offer superior care to all those in need. We believe that the misaligned incentives in the FFS healthcare payment model and the fragmentation between physicians and care teams has led to sub-optimal clinical outcomes, limited access, high spending and unnecessary variability in the quality of care. We believe that a platform such as ours, which helps to realign incentives and focuses on treating the full patient, is uniquely positioned to address these healthcare challenges. We have leveraged the expertise of our management team’s substantial experience in population health management, to build our “P3 Care Model.” The key attributes that differentiate P3 include: 1) patient-focused model, 2) physician-led model, and 3) our broad delegated model. Our model operates by entering into arrangements with payors providing for monthly payments to manage the total healthcare needs of members attributed to our primary care physicians. In tandem, we enter into arrangements directly with existing physician groups or independent physicians in the community to join our VBC network. In our model, physicians are able to retain their independence and entrepreneurial spirit, while gaining access to the tools, teams and technologies that are key to success in a VBC model, all while sharing in the savings from successfully improving the quality of patient care and reducing costs. We operate in the $1,118 billion Medicare market, which covers approximately 68 million eligible lives as of July 2025. Our core focus is the MA market, which covers approximately 34 million Medicare eligible lives in 2025. Medicare beneficiaries may enroll in an MA plan, under which payors contract with the CMS to provide a defined range of healthcare services that are comparable to Medicare FFS (which is also referred to as “traditional Medicare”). We predominantly enter into capitated contracts with the nation’s largest health plans to provide holistic, comprehensive healthcare to MA members. Under the typical capitation arrangement, we are entitled to PMPM fees from payors to provide a defined range of healthcare services for MA health plan members attributed to our PCPs. These PMPM fees comprise our capitated revenue and are determined as a percent of the premium (“POP”) payors receive from CMS for these members. Our contracted recurring revenue model offers us highly predictable revenue and rewards us for providing high-quality care rather than driving a high volume of services. In this capitated arrangement, our goals are well-aligned with payors and patients alike—the more we improve health outcomes, the more profitable we will be over time. Under this capitated contract structure, we are generally responsible for all members’ medical costs across the care continuum, including, but not limited to emergency room and hospital visits, post-acute care admissions, prescription drugs, specialist physician spend, and primary care spend. Keeping members healthy is our primary objective. When they need medical care, delivery of the right care in the right setting can greatly impact outcomes. When our members need care outside of our network of PCPs, we utilize a number of tools including network management, utilization management, and claims processing to ensure that the appropriate quality care is provided. Our company was formed in 2017 and our first at-risk contract became effective on January 1, 2018. We have demonstrated an ability to rapidly scale, primarily entering markets with our affiliate physician model, and expanding to a PCP network of approximately 2,400 physicians, in 23 markets (counties) across four states in over eight full years of operations as of December 31, 2025. Our platform has enabled us to grow our revenue by an average of 26% annually from December 31, 2020 to December 31, 2025. As of December 31, 2025, our PCP network served approximately 115,100 at-risk members. We believe we have significant growth opportunities available to us across existing and new markets, with less than 1% of the 544,000 PCPs in the U.S. currently included in our physician network. P3 Health Partners Inc. | 2025 Form 10-K | 56 Table of Contents Reverse Stock Split On April 11, 2025, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation (the "Charter Amendment") with the Secretary of State of Delaware to effect a 1-for-50 reverse stock split (the "Reverse Stock Split") of the Company's outstanding Class A common stock, $0.0001 par value per share, and Class V common stock, $0.0001 par value per share, as of that date. The Reverse Stock Split resulted in 163,159,548 shares of Class A common stock being converted to 3,263,093 shares of Class A common stock and 195,956,984 shares of Class V common stock being converted to 3,919,124 shares of Class V common stock. The Board of Directors of the Company approved the Charter Amendment to meet the share bid price requirements of the Nasdaq Capital Market. The Company’s stockholders approved the Charter Amendment at a special meeting held on March 31, 2025. No fractional shares were issued as a result of the Reverse Stock Split. Each stockholder was entitled to receive a cash payment equal to the fraction of a share to which such stockholder would otherwise have been entitled multiplied by the closing price per share of the Class A common stock as reported by The Nasdaq Capital Market (as adjusted to give effect to the Reverse Stock Split) on the effective date of the Reverse Stock Split. Proportional adjustments were made to the number of shares of Class A common stock underlying the Company’s outstanding equity awards and warrants, as well as the exercise or conversion price, as applicable, and to the number of shares issuable under the Company’s equity incentive plans and other existing agreements. All options and restricted stock awards of the Company outstanding immediately prior to the Reverse Stock Split have been adjusted in accordance with the terms of the plans, agreements or arrangements governing such options and restricted stock awards. Each stockholder’s percentage ownership interest in the Company and proportional voting power remained unchanged by the Reverse Stock Split, except for minor changes and adjustments that resulted from the treatment of fractional shares. The rights and privileges of the holders of shares of the Company’s common stock were substantially unaffected. Unless otherwise noted, all references in the consolidated financial statements and notes to consolidated financial statements to the number of shares, per share data, restricted stock and stock option data have been retroactively adjusted to give effect to the Reverse Stock Split. P3 Commonwealth Innovation MSO, LLC In November 2025, the Company, through its subsidiary, P3 Health Partners REACH ACO, LLC (“P3 ACO”), entered into an agreement with Commonwealth Primary Care ACO, LLC (“CPC ACO”) which resulted in the formation of P3 Commonwealth Innovation MSO, LLC (the “MSO”). The MSO was created to engage in the management, administration, and coordination of activities on behalf of accountable care organizations intended to improve the performance and quality of the parties’ respective ACO programs. To this end, the MSO entered into a Management Services Agreement (“MSA”) with the ACOs that is effective January 1, 2026 that will govern the MSO’s oversight of clinical integration, provider management, data analytics, financial management, strategic planning, shared services, compliance operations, and related administrative and operational support for the benefit of the ACOs. The management fee to be paid by each ACO to the MSO for its services under the MSA is equal to the amount of liabilities incurred by such ACO in connection with its participation in any accountable care organization governmental program assumed and satisfied by the MSO during the term of the MSA plus a margin on such assumed liabilities. Beginning in 2026 and for each year thereafter, the MSO will also be entitled to receive from each ACO a portion of each ACO’s net shared savings as determined under the MSA. The MSA may be terminated after three years without cause. Distributions from the MSO of available net cash flow will be in accordance with the members’ respective percentage interests, with P3 ACO holding an 80% membership interest and CPC ACO holding a 20% membership interest. P3 also controls the board of the MSO. Following the three-year anniversary of the MSO’s formation, or upon termination of the MSA for cause, P3 ACO has the right to cause the MSO to redeem CPC ACO’s membership interests in the MSO. If P3 ACO does not exercise its redemption right within 90 days following the date such right is exercisable, CPC ACO has the right to cause the MSO to redeem its membership interests in the MSO. P3 Health Partners Inc. | 2025 Form 10-K | 57 Table of Contents Key Factors Affecting our Performance Growing Medicare Advantage Membership on Our Platform Membership and revenue are tied to the number of members attributed to our physician network by our payors. We believe we have multiple avenues to serve additional members, including through: • Growth in membership under our existing contracts and existing markets: ◦ Patients who are attributed to our physician network who (a) age into Medicare and elect to enroll in MA or (b) elect to convert from Medicare FFS to MA. • Adding new contracts (either payor contracts or physician contracts) in existing markets. • Adding new contracts (either payor contracts or physician contracts) in adjacent and new markets. Growing Existing Contract Membership As new patients age-in to Medicare and enroll in MA through our payors, they become attributed to our network of physicians with little incremental cost to us. In addition to age-ins, Medicare eligible patients can change their enrollment selections during select periods throughout the year. Our sales and marketing teams actively work with local community partners to connect with Medicare eligible patients and make them aware of their healthcare choices and the services that we offer with our VBC model, including greater access to their physicians and customized care plans catered to their needs. The ultimate effect of our marketing efforts is increased awareness of P3 and additional patients choosing us as their primary care provider. We believe that our marketing efforts also help to grow our payor partners’ membership base as we grow our own patient base and help educate patients about their choices on Medicare, further aligning our model with that of healthcare payors. Growing Membership in Adjacent and New Markets Our affiliate model allows us to quickly and efficiently enter into new and adjacent markets in two ways: (1) partnering with payors and (2) partnering with providers. Because our model honors the existing patient-provider relationship, we are able to deploy our care model around existing physicians in a given market. By utilizing the local healthcare infrastructure, we can quickly build a network of PCPs to serve the healthcare needs of contracted members. We maintain an active pipeline of new partnership opportunities for both providers and payors. These potential opportunities are developed through significant inbound interest and the deep relationships our team has developed with their substantial experience in the VBC space and our proactive assessment of expansion markets. When choosing a market to enter, we make our decision on a county-by-county basis across the United States. We look at various factors including: (i) population size, (ii) payor participants and concentration, (iii) health system participants and concentration, and (iv) competitive landscape. When entering a new market, we supplement the existing physician network with local market leadership teams and support infrastructure to drive the improvement in medical cost and quality. When entering an adjacent market, we are able to leverage the investments we previously made to have a faster impact on our expanded footprint. Growing Membership in Existing Markets Once established in a market, we have an opportunity to efficiently expand both our provider and payor contracts. Given the benefits PCPs experience from joining our P3 Care Model, which offers providers the teams, tools and technologies to better support their patient base, we often experience growth in our affiliate network after entering a market. Because of the benefits, we have also historically experienced high retention with our affiliate providers. For the year ended December 31, 2025, we experienced a physician retention rate of over 88% in our affiliate provider network. By expanding our affiliate provider network and adding new physicians to the P3 network, we can quickly increase the number of contracted at-risk members under our existing health plan arrangements. P3 Health Partners Inc. | 2025 Form 10-K | 58 Table of Contents Additionally, by expanding the number of contracted payors, we can leverage our existing infrastructure to quickly increase our share of patients within our physician network. However, we have and intend to continue to conduct periodic strategic reviews of our provider and payor contracts, as a result of which we may elect to periodically exit underperforming provider and payor contracts from our network. Growing Capitated Revenue Per Member Medicare pays capitation using a risk adjusted model, which compensates payors based on the health status, or acuity, of each individual member. Payors with higher acuity members receive a higher payment and those with lower acuity members receive a lower payment. Moreover, some of our capitated revenue also includes adjustments, which may increase or decrease revenue, for performance incentives or penalties based on the achievement of certain clinical quality metrics as contracted with payors. Given the prevalence of FFS arrangements, our patients often have historically not participated in a VBC model, and therefore their health conditions are poorly documented. Through the P3 Care Model, we determine and assess the health needs of our patients and create an individualized care plan consistent with those needs. We capture and document health conditions as a part of this process. We expect that our PMPM revenue will continue to improve the longer members participate in our care model as we better understand and assess their health status (acuity) and coordinate their medical care. Effectively Managing Member Medical Expense Our medical expense is our largest expense category, representing 88% of our total operating expense for the year ended December 31, 2025. We manage our medical costs by improving our members’ access to healthcare. Our care model focuses on maintaining health and leveraging the primary care setting as a means of avoiding costly downstream healthcare costs, such as emergency department visits and acute hospital inpatient admissions. Achieving Operating Efficiencies As a result of our affiliate model and ability to leverage our existing local and national infrastructure, we aim to generate operating efficiencies at both the market and enterprise level. Our local corporate, general and administrative expense, which includes our local leadership, care management teams and other operating costs to support our markets, is expected to decrease over time as a percentage of revenue as we add members to our existing contracts, grow membership with new payor and physician contracts, and our revenue subsequently increases. Our corporate general and administrative expenses at the enterprise level include resources and technology to support payor contracting, quality, data management, delegated services, finance and legal functions. While we expect our absolute investment in our enterprise resources to increase over time, we expect our investment will decrease as a percentage of revenue when we are able to leverage our infrastructure across a broader group of at-risk members. We expect our corporate, general and administrative expenses to increase in absolute dollars in the future as we continue to invest to support growth of our business, as well as due to the costs required to operate as a public company, including insurance coverage, investments in internal audit, investor relations and financial reporting functions, fees paid to the Nasdaq Stock Market, and increased legal and audit fees. Impact of Seasonality Our operational and financial results reflect some variability depending upon the time of year in which they are measured. This variability is most notable in the following areas: At-Risk Member Growth . While new members are attributed to our platform throughout the year, we experience the largest portion of our at-risk member growth during the first quarter. Contracts with new payors typically begin on January 1, at which time new members become attributed to our network of physicians. Additionally, new members are attributed to our network on January 1, when plan enrollment selections made during the prior Annual Enrollment Period from October 15 through December 7 of the prior year take effect. Revenue Per Member . Our revenue is based on percentage of premium we have negotiated with our payors as well as our ability to accurately and appropriately document the acuity of a member’s health status. We experience some seasonality with respect to our per member revenue as it will generally decline over the course of the year. In January of each year, CMS revises the risk adjustment factor for each patient based upon health conditions documented in the prior year, leading to an overall increase in per-patient revenue. As the year progresses, our per-patient revenue declines as new patients join us typically with less complete or accurate documentation (and therefore lower risk-adjustment scores) and patients with more severe acuity profiles (and, therefore, higher per member revenue rates) expire. P3 Health Partners Inc. | 2025 Form 10-K | 59 Table of Contents Medical Costs . Medical expense is driven by utilization of healthcare services by our attributed membership. Medical expense will vary seasonally depending on a number of factors, including the weather and the number of business days. Certain illnesses, such as the influenza virus, are far more prevalent during colder months of the year, which will result in an increase in medical expenses during these time periods. We would therefore expect to see higher levels of per-member medical expense in the first and fourth quarters. Business days can also create year-over-year comparability issues if one year has a different number of business days compared to another. Non-GAAP Financial Measures and Key Performance Metrics We use certain financial measures, which are not calculated in accordance with accounting principles generally accepted in the U.S. (“GAAP”), as well as key performance metrics, to supplement our consolidated financial statements. The measures set forth below should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures and key performance metrics as used by us may not be comparable to similarly titled measures used by other companies. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. The presentation of non-GAAP financial measures and key performance metrics provides additional information to investors regarding our results of operations that our management believes is useful for identifying trends, analyzing and benchmarking the performance of our business. Non-GAAP Financial Measures Adjusted EBITDA The key non-GAAP metric we utilize to measure our profitability and performance is Adjusted EBITDA. We present Adjusted EBITDA because we believe it helps investors understand underlying trends in our business and facilitates an understanding of our operating performance from period to period because it facilitates a comparison of our recurring core business operating results. By definition, EBITDA consists of net income (loss) before interest, income taxes, depreciation, and amortization. We define Adjusted EBITDA as EBITDA, further adjusted to exclude the effect of certain supplemental adjustments, such as mark-to-market warrant gain/loss, premium deficiency reserves, equity-based compensation expense, and certain other items that we believe are not indicative of our core operating performance. Our definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements. Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with GAAP. It is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, debt principal repayments, and other expenses defined above, which can be significant. As a result, Adjusted EBITDA should not be considered as a measure of our liquidity. Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA on a supplemental basis. You should review the reconciliation of net loss to Adjusted EBITDA set forth below and not rely on any single financial measure to evaluate our business. P3 Health Partners Inc. | 2025 Form 10-K | 60 Table of Contents The following table sets forth a reconciliation of our net loss, the most directly comparable GAAP metric, to Adjusted EBITDA loss: Year Ended December 31, 2025 2024 (in thousands) Net loss $ (323,086) $ (310,378) Interest expense, net 55,034 22,173 Depreciation and amortization 84,163 86,058 Income tax provision (benefit) 2,025 4,387 Mark-to-market of stock warrants (7,850) (22,114) Premium deficiency reserve 18,749 53,698 Equity-based compensation 5,581 5,752 Other (1) 4,108 (6,775) Adjusted EBITDA loss $ (161,276) $ (167,199) _____________________________________________ (1) Other during the year ended December 31, 2025 consisted of (i) interest income, (ii) loss on disposal of certain property and equipment, (iii) severance expense in connection with reorganization of workforce and (iv) legal settlements and valuation allowance on our notes receivable. Other during the year ended December 31, 2024 consisted of (i) interest income, (ii) gain recognized upon the settlement and write-off of contingent consideration related to an acquisition completed in a prior year and (iii) gain recognized on asset sale partially offset by (iv) severance and related expense in connection with our chief executive officer transition, (v) loss on impairment on assets held for sale, and (vi) valuation allowance on our notes receivable. Medical Margin Medical margin is a non-GAAP financial metric. We present medical margin because we believe it helps investors understand underlying trends in our business and facilitates an understanding of our operating performance from period to period by facilitating a comparison of our recurring core business operating results. Medical margin represents the amount earned from capitated revenue after medical claims expenses are deducted. Medical claims expenses represent costs incurred for medical services provided to our members. As our platform grows and matures over time, we expect medical margin to increase in absolute dollars; however, medical margin PMPM may vary as the percentage of new members brought onto our platform fluctuates. New membership added to the platform is typically dilutive to medical margin PMPM. Medical margin should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using medical margin on a supplemental basis. You should review the reconciliation of gross profit to medical margin set forth below and not rely on any single financial measure to evaluate our business. The following table presents our medical margin: Year Ended December 31, 2025 2024 (in thousands) Capitated revenue $ 1,428,979 $ 1,483,602 Less: medical claims expense (1,405,451) (1,398,143) Medical margin $ 23,528 $ 85,459 P3 Health Partners Inc. | 2025 Form 10-K | 61 Table of Contents The following table sets forth a reconciliation of our gross profit, the most directly comparable GAAP metric, to medical margin: Year Ended December 31, 2025 2024 (in thousands) Gross profit (1) $ (60,160) $ (58,917) Other revenue (30,101) (16,853) Other medical expense 113,789 161,229 Medical margin $ 23,528 $ 85,459 _____________________________________________ (1) Gross profit is defined as total revenues less medical services expense and other medical expenses. Key Performance Metrics We monitor the following operating metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. Gross Profit Gross profit represents the amount earned from total operating revenue less the sum of: (i) medical claims expenses and (ii) other medical expenses including physician compensation expense related to surplus sharing and bonuses and other direct medical expenses incurred to improve care for our members. We believe this metric provides insight into the economics of the P3 Care Model, as it includes all medical claims expense associated with our members’ care as well as partner compensation and additional medical costs we incur as part of our aligned partnership model. Other medical expenses are largely variable and proportionate to the level of surplus in each respective market, among other cost factors. The following table presents our gross profit: Year Ended December 31, 2025 2024 (in thousands) Total operating revenue $ 1,459,080 $ 1,500,455 Less: medical claims expense $ (1,405,451) $ (1,398,143) Less: other medical expense $ (113,789) $ (161,229) Gross profit $ (60,160) $ (58,917) At-Risk Membership At-risk membership represents the approximate number of Medicare members for whom we receive a fixed percentage of premium under capitation arrangements as of the end of the reporting period. We had 116,100 and 126,000 average at-risk members for the years ended December 31, 2025 and 2024, respectively. Affiliate Primary Care Physicians Affiliate primary care physicians represent the approximate number of primary care physicians included in our affiliate network, with whom members may be attributed under our capitation arrangements, as of the end of the reporting period. We had 2,400 and 3,100 primary care physicians as of December 31, 2025 and 2024, respectively. Platform Support Costs Our platform support costs, which include regionally-based support personnel and other operating costs to support our markets, are expected to decrease over time as a percentage of revenue as our physician partners add members and our revenue grows. Our operating expenses at the enterprise level include resources and technology to support payor P3 Health Partners Inc. | 2025 Form 10-K | 62 Table of Contents contracting, clinical program development, quality, data management, finance, and legal functions. We exclude costs related to the operations of our owned medical clinics and wellness centers. The table below represents costs to support our markets and enterprise functions, which are included in corporate, general and administrative expenses: Year Ended December 31, 2025 2024 (dollars in thousands) Platform support costs $ 86,067 $ 92,202 % of total operating revenue 5.9 % 6.1 % Key Components of Results of Operations Revenue Capitated revenue. We contract with health plans using an at-risk model. Under the at-risk model, we are responsible for the cost of all covered health care services provided to members assigned by the health plans to the Company in exchange for a fixed payment, which generally is a POP based on health plans’ premiums received from CMS. Through this capitation arrangement, we stand ready to provide assigned MA members all their medical care via our directly employed and affiliated physician/specialist network. The premiums that health plans receive are determined via a competitive bidding process with CMS and are based on the costs of care in local markets and the average utilization of services by enrolled patients. Medicare pays capitation using a “risk adjustment model,” which compensates providers based on the health status (acuity) of each individual patient. MA plans with higher acuity patients receive higher premiums. Conversely, MA plans with lower acuity patients receive lesser premiums. Under the risk adjustment model, capitation is paid on an interim basis based on enrollee data submitted for the preceding year and is adjusted in subsequent periods after final data is compiled. As premiums are adjusted via this risk adjustment model (using a Risk Adjustment Factor, “RAF”), our PMPM payments change commensurately with how our contracted Medicare Advantage plans’ premiums change with CMS. The transaction price for these contracts is variable as it primarily includes PMPM fees, which can fluctuate throughout the course of the year based on the acuity of each individual enrollee. In certain contracts, PMPM fees also include adjustments for items such as performance incentives or penalties based on the achievement of certain clinical quality metrics as contracted with payors. Capitated revenue is recognized based on a PMPM transaction price to transfer the service for a distinct increment of the series and is recognized net of projected acuity adjustments and performance incentives or penalties. We recognize revenue in the month in which attributed members are entitled to receive healthcare benefits during the contract term. The capitation amount is subject to possible retroactive premium risk adjustments based on the member’s individual acuity. Other revenue. Other revenue is comprised primarily of encounter-related fees to treat patients outside of our at-risk arrangements at company owned clinics. Other revenue also includes ancillary fees earned under contracts with certain payors for the provision of certain care coordination and other care management services. These services are provided to patients covered by these payors regardless of whether those patients receive their care from our directly employed or affiliated medical groups. Operating Expense Medical expense. Medical expenses primarily include costs of all covered services provided to members by non-P3 employed providers. This also includes an estimate of the cost of services that have been incurred, but not yet reported (“IBNR”). IBNR is recorded as claims payable on the accompanying consolidated balance sheets. Estimates for incurred claims are based on historical enrollment and cost trends while also taking into consideration operational changes. Future and actual results typically differ from estimates. Differences could result from an overall change in medical expenses per member, changes in member mix or simply due to the addition of new members. IBNR estimates are made on an accrual basis and adjusted in future periods as required. To the extent we revise our estimates of incurred but not reported claims for prior periods up or down, there would be a correspondingly favorable or unfavorable effect on our current period results that may or may not reflect changes in long term trends in our performance. P3 Health Partners Inc. | 2025 Form 10-K | 63 Table of Contents Premium deficiency reserve. Premium deficiency reserves (“PDR”) are recognized when it is probable that expected future health care costs and maintenance costs under a group of existing contracts will exceed anticipated future premiums and stop-loss insurance recoveries on those contracts. PDR represents the advance recognition of a probable future loss in the current period’s financial statements. Corporate, general and administrative expense. Corporate, general and administrative expenses include employee-related expenses, including salaries and related costs and equity-based compensation for our executive, technology infrastructure, operations, clinical and quality support, finance, legal, and human resources departments. In addition, general and administrative expenses include all corporate technology and occupancy costs. Sales and marketing expense. Sales and marketing expenses consist of costs related to patient and provider marketing and community outreach. These expenses capture all costs for both our local and enterprise sales and marketing efforts. Depreciation and amortization expense. Depreciation expense is associated with our property and equipment, including leasehold improvements, computer equipment and software, furniture and fixtures, medical equipment, and internally developed software. Amortization expense is associated with definite lived intangible assets, including trademarks and tradenames, customer contracts, provider network agreements, and payor contracts. Other Income (Expense) Interest expense, net. Interest expense primarily consists of interest on our Term Loan Facility (as defined below) and unsecured promissory notes and amortization of debt issuance costs and original issue discount. Mark-to-market of stock warrants . Mark-to-market of stock warrants consists of the change in the fair value on the revaluation of warrant liabilities associated with our public and private placement Class A common stock warrants. Other . Other consists of gains and losses resulting from other transactions. Income Taxes P3 LLC is treated as a partnership for U.S. federal and most applicable state and local income tax jurisdictions. As a partnership, P3 LLC is generally not subject to taxes, other than entity level state income taxes, such as the Oregon corporate activity tax, a quasi-gross receipts tax that is levied on our Oregon sourced revenue. Any taxable income or loss generated by P3 LLC is passed through to and included within the taxable income or loss of its members, including us, on a pro rata basis. We are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income or loss generated by P3 LLC. Non-controlling Interests We consolidate the financial results of P3 LLC and report non-controlling interest on our consolidated statements of operations, representing the portion of net income or loss attributable to the non-controlling interests. The weighted average ownership percentages during the period are used to calculate the net income or loss attributable to P3 Health Partners Inc. and the non-controlling interests. P3 Health Partners Inc. | 2025 Form 10-K | 64 Table of Contents Results of Operations The following tables set forth our consolidated statements of operations data for the periods indicated. Amounts may not sum due to rounding. Year Ended December 31, 2025 % of Revenue Year Ended December 31, 2024 % of Revenue (dollars in thousands) Operating revenue: Capitated revenue $ 1,428,979 98 % $ 1,483,602 99 % Other revenue 30,101 2 16,853 1 Total operating revenue 1,459,080 100 1,500,455 100 Operating expense: Medical expense 1,519,240 104 1,559,372 104 Premium deficiency reserve 18,749 1 53,698 4 Corporate, general and administrative expense 106,311 7 112,596 8 Sales and marketing expense 918 0 1,331 0 Depreciation and amortization 84,163 6 86,058 6 Impairment of assets held for sale — — 8,058 1 Total operating expense 1,729,381 119 1,821,113 121 Operating loss (270,301) (19) (320,658) (21) Other (expense) income: Interest expense, net (55,034) (4) (22,173) (1) Mark-to-market of stock warrants 7,850 1 22,114 1 Gain (loss) on asset sale, net (162) — 13,269 1 Other (3,414) (0) 1,457 0 Total other (provision) benefit (50,760) (3) 14,667 1 Loss before income taxes (321,061) (22) (305,991) (20) Income tax provision (benefit) (2,025) (0) (4,387) (0) Net loss (323,086) (22) (310,378) (21) Net loss attributable to redeemable non-controlling interest (175,138) (12) (174,529) (12) Net loss attributable to controlling interest $ (147,948) (10) % $ (135,849) (9) % Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024 Revenue Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Capitated revenue $ 1,428,979 $ 1,483,602 $ (54,623) (4) % Other revenue 30,101 16,853 13,248 79 % Total operating revenue $ 1,459,080 $ 1,500,455 $ (41,375) (3) % The decrease in capitated revenue was primarily driven by a (7)% decrease in the total average number of at-risk members from 126,000 at December 31, 2024 to 116,100 at December 31, 2025, which was primarily driven by the strategic termination of underperforming payor contracts and affiliate providers in the current year. Capitated revenue was approximately 98% and 99% of total operating revenue for the years ended December 31, 2025 and 2024, respectively. P3 Health Partners Inc. | 2025 Form 10-K | 65 Table of Contents Other revenue was approximately 2% and 1% of total operating revenue for the years ended December 31, 2025 and 2024, respectively. The increase in other revenue was primarily driven by an increase in revenue from incentive-sharing arrangements related to Part D program incentive initiatives. Medical Expense Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Medical expense $ 1,519,240 $ 1,559,372 $ (40,132) (3) % The decrease in medical expense was driven by a decrease in the total number of at-risk members year-over-year, as described above, driven by the strategic termination of underperforming payor contracts and affiliate providers in the current year. Premium Deficiency Reserve Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Premium deficiency reserve $ 18,749 $ 53,698 $ (34,949) (65) % Premium deficiency reserve was an expense of $18.7 million for the year ended December 31, 2025, compared to $53.7 million for the year ended December 31, 2024. The change was due to management’s assessment of the profitability of contracts, wherein increased medical expense is expected to increase our future losses. Corporate, General and Administrative Expense Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Corporate, general and administrative expense $ 106,311 $ 112,596 $ (6,285) (6) % The decrease in corporate, general and administrative expense was primarily driven by a decrease of $10.6 million in salary and related expense resulting primarily from a reduction in headcount of 11% and a decrease of $1.4 million in non-income based taxes. The decrease was partially offset by a $6.2 million gain recognized in the year ended December 31, 2024 upon the settlement and write-off of contingent consideration related to an acquisition completed in a prior year. Professional expenses increased by $2.5 million, primarily driven by higher consulting expenses during a transition period involving overlapping third-party support, partially offset by lower accounting and legal expenses. Other Income (Expense) Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Other (expense) income: Interest expense, net $ (55,034) $ (22,173) $ (32,861) 148 % Mark-to-market of stock warrants 7,850 22,114 (14,264) (65) % Gain (loss) on asset sale, net (162) 13,269 (13,431) (101) % Other (3,414) 1,457 (4,871) (334) % Total other income (expense) $ (50,760) $ 14,667 $ (65,427) (446) % The increase in interest expense, net was primarily due to the increase in principal amounts outstanding for the Company’s unsecured promissory notes. P3 Health Partners Inc. | 2025 Form 10-K | 66 Table of Contents The Company recorded a gain of $7.9 million related to its liability-classified stock warrants during the year ended December 31, 2025, compared to a gain of $22.1 million for the year ended December 31, 2024. The gain on asset sale, net reflects the sale of the Florida Assets (defined below). Other income (expense) for the year ended December 31, 2025 consisted primarily of losses on the disposal of assets of $3.4 million. Other income for the year ended December 31, 2024 consisted primarily of interest income on our notes receivable of $1.7 million. Liquidity and Capital Resources P3 Health Partners Inc. is a holding company and has no material assets other than its ownership of equity interests in P3 LLC. As such, we have no independent means of generating revenue or cash flow, and our ability to pay taxes, make payments under the Tax Receivable Agreement (“TRA”), and to pay dividends will depend on the financial results and cash flows of P3 LLC and the distributions received from P3 LLC. Deterioration in the financial condition, earnings or cash flow of P3 LLC for any reason could limit or impair P3 LLC’s ability to pay such distributions. Additionally, to the extent that we need funds and P3 LLC is restricted from making such distributions under applicable law or regulation or under the terms of any financing arrangements, or P3 LLC is otherwise unable to provide such funds, it could materially adversely affect our liquidity and financial condition. It is anticipated that the distributions we will receive from P3 LLC may, in certain periods, exceed the actual tax liabilities and obligations to make payments under the TRA. Cash Sources To date, we have financed our operations principally through the cash we obtained as a result of the Business Combinations, private placements of our equity securities, payments from our payors, issuances of promissory notes, borrowings under the Term Loan Facility, and the sale of the Florida Assets (defined below). We generate cash from our operations, generally from our contracts with payors. As of December 31, 2025, we had $25.0 million of unrestricted cash and cash equivalents available to fund future operations. We have experienced losses since our inception and net losses of $323.1 million and $310.4 million for the years ended December 31, 2025 and 2024, respectively. Our future capital requirements will depend on many factors, including the pace of our growth, ability to manage medical costs, the maturity of our members, and our ability to raise capital and refinance our indebtedness as it matures. We may need to raise additional capital through a combination of debt and/or equity financing and to the extent we are unsuccessful at doing so, we may need to curtail planned activities, discontinue certain operations, or sell certain assets, which could materially and adversely affect our business, financial condition, results of operations, and prospects. Asset Sale On November 30, 2024, we and certain of our subsidiaries (the “Sellers”) entered into an asset purchase agreement with certain entities affiliated with an entity in which Chicago Pacific Founders (“CPF”), our principal stockholder, has an ownership interest (the “Buyers”), which was amended on December 30, 2024, effective as of December 5, 2024 (as amended, the “Florida Asset Purchase Agreement”). Pursuant to the Florida Asset Purchase Agreement, the Sellers sold to the Buyers all of the assets, clinical and non-clinical, exclusively or primarily used by our MA-related business operated out of Eagle Park, Florida (the “Florida Assets”) on a cash-free, debt-free basis for a purchase price of approximately $15.0 million less a $0.3 million working capital adjustment, subject to further adjustment, and an adjustment for certain payment obligations totaling $0.2 million. The asset sale closed on November 30, 2024 simultaneously with the execution of the Florida Asset Purchase Agreement. We recognized a $13.3 million net gain on asset sale on the consolidated statement of operations for the year ended December 31, 2024. On May 1, 2025, our subsidiary, P3 Health Partners-Florida, LLC (“P3 Florida”), entered into an asset purchase agreement with Invictus Equity Group, LLC (“Invictus”) for the purchase of the remaining assets previously held for sale. Pursuant to the asset purchase agreement, P3 Florida sold to Invictus the assets, clinical and non-clinical, exclusively or primarily used by our MA-related businesses operated out of Apollo Beach and Clearwater, Florida, for a purchase price of approximately $0.1 million. P3 Health Partners Inc. | 2025 Form 10-K | 67 Table of Contents May 2024 Private Placement On May 24, 2024, pursuant to a securities purchase agreement, dated May 22, 2024, with the purchasers named therein, which included certain affiliated entities of CPF and institutional investors, we issued approximately 1.3 million units at a price of approximately $31.35 per unit. Each unit consisted of one share of Class A common stock and a warrant to purchase one share of Class A common stock at an exercise price of $25.10. Certain institutional investors elected to receive pre-funded warrants to purchase Class A common stock in lieu of a portion of their Class A common stock. In total, we sold (i) an aggregate of 0.8 million shares of Class A common stock, (ii) common warrants to purchase an aggregate of 1.3 million shares of Class A common stock, and (iii) pre-funded warrants to purchase an aggregate of 0.5 million shares of Class A common stock for aggregate proceeds of $39.8 million, net of $2.4 million in offering costs (collectively, the “May 2024 Private Placement”). See Note 15 “Capitalization” to our consolidated financial statements included elsewhere in this Form 10-K for additional information about the May 2024 Private Placement. Shelf Registration On November 9, 2023, we filed a shelf Registration Statement on Form S-3 with a capacity of $250 million (the “Shelf Registration”), which was declared effective by the SEC on November 20, 2023, and entered into an Open Market Sales Agreement (“Sales Agreement”) pursuant to which we may issue and sell, from time to time, through the sales agent, shares of our Class A common stock with an aggregate value of up to $75 million. The sales agent will make commercially reasonable efforts, following our instructions, to sell shares over time, adhering to specified limits. Sales will be conducted through at-the-market offerings as defined by Rule 415(a)(4) under the Securities Act. The aggregate value of shares of Class A common stock that may be offered, issued, and sold under the Sales Agreement is included in the aggregate value of securities that may be offered, issued, and sold by us under the Shelf Registration. Upon termination of the Sales Agreement, any unused portion will be available for sale in other offerings pursuant to the Shelf Registration. As of December 31, 2025, we have sold approximately 540 shares of our Class A common stock under the Sales Agreement for net proceeds of approximately $33,000. Letter Agreement with CPF On April 6, 2023, in connection with entry into the Purchase Agreement for the March 2023 Private Placement, we entered into a letter agreement (as amended from time to time, the “CPF Letter Agreement”) with Chicago Pacific Founders GP, L.P. (“CPF GP I”), Chicago Pacific Founders GP III, L.P., (“CPF GP III”) (on behalf of the funds of which CPF GP I is the general partner, certain funds of which CPF GP III is the general partner) and/or certain of their affiliated entities and funds (collectively, the “CPF Parties”). Pursuant to the CPF Letter Agreement, (i) for as long as the CPF Parties own 40% of the Company’s outstanding Common Stock, CPF will be entitled to designate one additional independent member of the Company’s board of directors, who must be independent and satisfy all applicable requirements regarding service as a director of the Company under applicable law and SEC and stock exchange rules, (ii) for as long as the CPF Parties own 40% of the Company’s outstanding Common Stock, CPF will be entitled to certain information rights and protective provisions, and (iii) subject to the terms of the CPF Letter Agreement, the CPF Parties agreed to a standstill restriction from the date of the closing of the March 2023 Private Placement to June 30, 2024 that limits the ownership of the CPF Parties to 49.99% of the Company’s Class A Common Stock and Class V Common Stock. In connection with the May 2024 Private Placement, we entered into an amended and restated CPF Letter Agreement pursuant to which the CPF Parties agreed to extend the ownership restriction standstill to July 31, 2025. On December 12, 2024, in connection with the issuance of warrants to VGS 3 (defined below), we entered into a second amended and restated CPF Letter Agreement pursuant to which the CPF Parties extended the ownership restriction standstill to January 1, 2026. As of the date of this Form 10-K, CPF has not exercised its right to designate an additional independent director under the terms of the CPF Letter Agreement. Term Loan In November 2020, we entered into a Term Loan and Security Agreement with CRG Servicing, LLC (as amended, the “Term Loan Agreement”) providing for funding of up to $100.0 million (the “Term Loan Facility”). The Term Loan Facility’s initial maturity date was September 30, 2025. As of December 31, 2025, we had $82.9 million of borrowings outstanding under the Term Loan Facility, and remaining availability under the Term Loan Facility ended upon termination of the commitment period on February 28, 2022. Interest is payable at 12.0% per annum on a quarterly cycle (in arrears), which began on March 31, 2021. In March 2021, we elected to pay interest at 8.0% with the remaining interest at 4.0% being added to principal as paid in-kind (“PIK”) for a period of three years (or 12 payments). P3 Health Partners Inc. | 2025 Form 10-K | 68 Table of Contents We are required to remain in compliance with financial covenants such as minimum liquidity of $5.0 million and annual minimum revenue levels. In addition, the Term Loan Agreement restricts our ability and the ability of our subsidiaries to, among other things, incur indebtedness and liens. On an annual basis, we must post a minimum amount of annual revenue equal to $585.0 million in 2024 and $650.0 million in 2025. The maturity date may be accelerated as a remedy under certain default provisions in the Term Loan Agreement, or in the event a mandatory prepayment event occurs. In connection with the issuance of the VGS Promissory Note (defined below) and entry into the 2022 Subordination Agreement (defined below), on December 13, 2022, we entered into an amendment to the Term Loan Agreement to permit the issuance of the VGS Promissory Note and the entry into the 2022 Subordination Agreement. In connection with the issuance of the VGS 2 Promissory Note (defined below) and entry into the 2024 Subordination Agreement (defined below), on March 22, 2024, we entered into the Fourth Amendment to the Term Loan Agreement to permit the issuance of the VGS 2 Promissory Note and the entry into the 2024 Subordination Agreement. In connection with the sale of the Florida Assets, on November 30, 2024, we entered into the Fifth Amendment to the Term Loan Agreement, which permits the sale of the Florida Assets (the “Permitted Florida Disposition”), provided that the mandatory prepayment covenant did not apply to the proceeds of the Permitted Florida Disposition, and removed the ability to elect to pay a portion of the interest in-kind. In connection with the issuance of the VGS 3 Promissory Note (defined below) and entry into the VGS 3 Subordination Agreement (defined below), on December 12, 2024, we entered into the Sixth Amendment to the Term Loan Agreement to permit the issuance of the VGS 3 Promissory Note and the entry into the VGS 3 Subordination Agreement. In connection with the issuance of the VGS 4 Promissory Note (defined below) and entry into the VGS 4 Subordination Agreement (defined below), on February 13, 2025, we entered into the Seventh Amendment to the Term Loan Agreement to permit the issuance of the VGS 4 Promissory Note and the entry into the VGS 4 Subordination Agreement. On May 2, 2025, we entered into the Eighth Amendment to the Term Loan Agreement (the “Eighth Amendment”), 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. The Eighth Amendment amended the Term Loan Agreement to permit the issuance of a surety bond in connection with the Company’s participation in the Accountable Care Organization – Realizing Equity, Access, and Community Health (“ACO REACH”) program and added P3 Health Partners REACH ACO LLC as a subsidiary guarantor. The Eighth Amendment did not modify the principal amount outstanding, maturity date, interest rate, or payment terms under the Term Loan Agreement. In connection with the VGS 5 transactions described below, on May 29, 2025, we entered into the Ninth Amendment to the Term Loan Agreement (the “Ninth Amendment”), 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. The Ninth Amendment permits the issuance of the VGS 5 Promissory Note and the entry into the VGS 5 Subordination Agreement. On August 27, 2025, we entered into the Tenth Amendment to the Term Loan Agreement (the “Tenth Amendment”), 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. The Tenth Amendment • amends the payment structure of the Term Loan Agreement by extending the interest-only period to June 30, 2026, extending the final maturity date to September 30, 2027, and changing the principal payments to a fixed $5,000,000 per payment date; • changes the interest rate from 12% to 12% through September 30, 2025 and 15% thereafter; • includes two separate PIK periods, replacing the previous single PIK period: the first PIK Period measures from closing of the Term Loan Agreement through September 30, 2024 and includes the option to pay 8% cash plus 4% PIK (added to the principal); and the second PIK Period measures from September 30, 2025 through September 30, 2027 and includes the option to pay 12% cash plus 3% PIK; and • updates board observation rights for lender representatives. P3 Health Partners Inc. | 2025 Form 10-K | 69 Table of Contents VGS Promissory Note and VGS 1 2024 Loan On December 13, 2022, we entered into a financing transaction with VBC Growth SPV LLC (“VGS”) which included the issuance of an unsecured promissory note (the “VGS Promissory Note”) to VGS and the entry into a warrant agreement and the 2022 Subordination Agreement (defined below). The VGS Promissory Note provided for funding of up to $40.0 million. We paid VGS an up-front fee of 1.5%. Interest was payable at 14.0% per annum on a quarterly cycle (in arrears) beginning March 31, 2023. We had the option to pay interest of 6.0% in kind and 8.0% in cash, subject to certain limitations. The VGS Promissory Note had a maturity date of May 19, 2026. On December 12, 2024, we entered into a promissory note (the “VGS 1 2024 Loan”) with VGS providing for funding of up to approximately $38.1 million, the proceeds from which were used to repay in full all principal, interest and other amounts owing under the VGS Promissory Note. In connection with the replacement of the VGS Promissory Note with the VGS 1 2024 Loan, VGS waived the 9.0% back-end facility fee that otherwise would have been payable under the VGS Promissory Note. The VGS 1 2024 Loan has a maturity date of June 30, 2028 and an interest rate that is lower than the VGS Promissory Note by 50 basis points, among other things. The VGS 1 2024 Loan did not include the issuance of warrants. All other terms of the VGS 1 2024 Loan are the same as the terms of the VGS Promissory Note. The VGS 1 2024 Loan may be prepaid, at our option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee; provided that prepayments must be in increments of at least 5% of the total loan amount. The VGS 1 2024 Loan provides for mandatory prepayments with the proceeds of certain asset sales, and the Lender has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 1 2024 Loan). The VGS 1 2024 Loan restricts our ability to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under the certain default provisions in the agreement, or in the event a mandatory prepayment event occurs. In connection with the issuance of the VGS 1 2024 Loan, we also entered into a subordination agreement, dated as of December 12, 2024 (the “VGS 1 2024 Subordination Agreement”) with VGS which subordinates VGS’s right of payment under the VGS 1 2024 Loan to the right of payment and security interests of the lenders under the Term Loan Facility. Under the terms of the VGS 1 2024 Subordination Agreement, we are effectively required to pay all interest under the VGS 1 2024 Loan in-kind. VGS 2 Promissory Note On March 22, 2024, we entered into a financing transaction with VBC Growth SPV 2, LLC (“VGS 2”), consisting of the issuance by P3 LLC of an unsecured promissory note (the “VGS 2 Promissory Note”) to VGS 2. The VGS 2 Promissory Note provided for funding of up to $25.0 million. The VGS 2 Promissory Note matures on September 30, 2027. As of December 31, 2025, we had $38.7 million of borrowings outstanding under the VGS 2 Promissory Note, $0.4 million of which consists of an up-front fee of 1.5% of the aggregate principal amount of the loan paid to VGS 2 in-kind. Interest is payable at 17.5% per annum on a quarterly cycle (in arrears) beginning June 30, 2024. We may elect to pay either (1) 8.0% cash interest and 9.5% PIK interest, or (2) 17.5% PIK interest, provided that payment of cash interest will be permitted only to the extent permitted by the Term Loan Agreement and the 2024 Subordination Agreement, and if not so permitted, such interest shall accrue as PIK interest. The VGS 2 Promissory Note may be prepaid, at our option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee; provided that prepayments must be in increments of at least $1.25 million. The VGS 2 Promissory Note provides for mandatory prepayments with the proceeds of certain asset sales, and VGS 2 has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 2 Promissory Note). The VGS 2 Promissory Note restricts P3 LLC’s ability and the ability of its subsidiaries to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under the certain default provisions in the agreement, or in the event a mandatory prepayment event occurs. In connection with the issuance of the VGS 2 Promissory Note, we also entered into a subordination agreement, dated as of March 22, 2024 (the “2024 Subordination Agreement”) with VGS 2 which subordinates VGS 2’s right of payment under the VGS 2 Promissory Note to the right of payment and security interests of the lenders under the Term P3 Health Partners Inc. | 2025 Form 10-K | 70 Table of Contents Loan Facility. Under the terms of the 2024 Subordination Agreement, we will be required to pay all interest under the VGS 2 Promissory Note in-kind. In addition, we will pay VGS 2 a back-end fee at the time the VGS 2 Promissory Note is redeemed as follows: (i) if paid after June 30, 2024 and on or before September 30, 2024, 4.5%; (ii) if paid after September 30, 2024 and on or before December 31, 2024, 6.75% and (iii) if paid after December 31, 2024, 9.0%. In connection with the sale of the Florida Assets, on November 30, 2024, we entered into a first amendment to the VGS Promissory Note and VGS 2 Promissory Note to permit the Permitted Florida Disposition and provide that the Company was not obligated to use the proceeds of the Permitted Florida Disposition to prepay the loans under the VGS Promissory Note and the VGS 2 Promissory Note. VGS 3 Promissory Note On December 12, 2024, we entered into a financing transaction with VBC Growth SPV 3 LLC (“VGS 3”), consisting of the issuance by P3 LLC of an unsecured promissory note (the “VGS 3 Promissory Note”) to VGS 3 and the entry into a warrant agreement and the VGS 3 Subordination Agreement (defined below). The VGS 3 Promissory Note provided for funding of up to $25.0 million. The VGS 3 Promissory Note matures on June 30, 2028. As of December 31, 2025, we had $35.4 million of borrowing outstanding under the VGS 3 Promissory Note, $0.4 million of which consists of an up-front fee of 1.5% of the aggregate principal amount of the loan paid to VGS 3 in-kind. Interest is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning March 31, 2025. We may elect to pay either (1) 8.0% cash interest and 11.5% PIK interest, or (2) 19.5% PIK interest, provided that payment of cash interest will be permitted only to the extent permitted by the Term Loan Agreement and the VGS 3 Subordination Agreement, and if not so permitted, such interest shall accrue as PIK interest. The VGS 3 Promissory Note may be prepaid, at our option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee; provided that prepayments must be in increments of at least $1.25 million. The VGS 3 Promissory Note provides for mandatory prepayments with the proceeds of certain asset sales, and VGS 3 has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 3 Promissory Note). The VGS 3 Promissory Note restricts P3 LLC’s ability and the ability of its subsidiaries to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under the certain default provisions in the agreement, or in the event a mandatory prepayment event occurs. In connection with the issuance of the VGS 3 Promissory Note, we also entered into a subordination agreement, dated as of December 12, 2024 (the “VGS 3 Subordination Agreement”) with VGS 3 which subordinates VGS 3’s right of payment under the VGS 3 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility. Under the terms of the VGS 3 Subordination Agreement, we will be required to pay all interest under the VGS 3 Promissory Note in-kind. In addition, we will pay VGS 3 a back-end fee at the time the VGS 3 Promissory Note is redeemed as follows: (i) if paid after January 31, 2025 and on or before April 30, 2025, 4.5%; (ii) if paid after April 30, 2025 and on or before July 31, 2025, 6.75% and (iii) if paid after July 31, 2025, 9.0%. VGS 4 Promissory Note On February 13, 2025, we entered into a financing transaction with VBC Growth SPV 4 LLC (“VGS 4”), consisting of the issuance by P3 LLC of an unsecured promissory note (the “VGS 4 Promissory Note”) to VGS 4 and the entry into a warrant agreement and the VGS 4 Subordination Agreement (defined below). The VGS 4 Promissory Note provides for funding of up to $30.0 million, available for us to draw in (i) a first tranche of $15.0 million, which was drawn on February 18, 2025, and (ii) a second tranche of up to $15.0 million which was drawn on March 14, 2025. In addition, we paid VGS 4 an up-front fee of 1.5% of $30.0 million, the maximum draw amount, in-kind. The VGS 4 Promissory Note matures on August 13, 2028. As of December 31, 2025, we had $41.1 million of borrowing outstanding under the VGS 4 Promissory Note. Interest on the VGS 4 Promissory Note is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning March 31, 2025. We may elect to pay interest 11.5% in-kind and 8.0% in cash, but if the terms of the VGS 4 Subordination Agreement (as defined below) do not permit us to pay interest in cash, interest will be paid entirely in-kind. P3 Health Partners Inc. | 2025 Form 10-K | 71 Table of Contents The VGS 4 Promissory Note may be prepaid, at our option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee described below; provided that prepayments must be in increments of at least $1.5 million. The VGS 4 Promissory Note provides for mandatory prepayments with the proceeds of certain asset sales, and VGS 4 has the right to demand payment in full upon (i) a change of control of the Company and (ii) certain qualified financings (as defined in the VGS 4 Promissory Note). The VGS 4 Promissory Note restricts our ability to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under the certain default provisions in the agreement, or in the event a mandatory prepayment event occurs. In addition, we will pay VBC 4 a back-end fee at the time the loans issued under the VGS 4 Promissory Note are repaid as follows: (i) if repaid prior to March 31, 2025, 2.25% of the aggregate principal amount of the loans advanced to us on or prior to such date; (ii) if repaid from April 1, 2025 through June 30, 2025, 4.5% of the aggregate principal amount of the loans advanced to us on or prior to such date; (iii) if repaid from July 1, 2025 through September 30, 2025, 6.75% of the aggregate principal amount of the loans advanced to us on or prior to such date; and (iv) if repaid on October 1, 2025 or later, 9.0% of the aggregate principal amount of the loans advanced to us on or prior to such date. In connection with the issuance of the VGS 4 Promissory Note, we also entered into a subordination agreement, dated as of February 13, 2025 (the “VGS 4 Subordination Agreement”), with VGS 4 which subordinates VGS 4’s right of payment under the VGS 4 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility. Under the terms of the VGS 4 Subordination Agreement, we will be effectively required to pay all interest under the VGS 4 Promissory Note in-kind. VGS 5 Promissory Note On May 29, 2025, we entered into a financing transaction with VBC Growth SPV 5, LLC (“VGS 5”), consisting of the issuance by P3 LLC of an unsecured promissory note (the “VGS 5 Promissory Note”) to VGS 5 and the entry into a warrant agreement and the VGS 5 Subordination Agreement (defined below). The VGS 5 Promissory Note provides for funding of up to $70.0 million, available for us to draw in three tranches, as follows: (i) a first tranche of $15.0 million which was drawn on May 29, 2025, (ii) a second tranche of up to $15.0 million available at the Company’s sole option in a single draw, on or prior to June 22, 2025, and (iii) a third tranche of $40.0 million available upon mutual agreement of P3 LLC and VGS 5 in one or more draws no later than December 31, 2025. The VGS 5 Promissory Note matures on August 13, 2028. As of December 31, 2025, we had $55.1 million of borrowing outstanding under the VGS 5 Promissory Note. Interest on the VGS 5 Promissory Note is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning June 30, 2025. We may elect to pay interest 11.5% in-kind and 8.0% in cash, but if the terms of the VGS 5 Subordination Agreement do not permit us to pay interest in cash, interest will be paid entirely in-kind. On June 21, 2025, we delivered a request to VGS 5 for $15.0 million in funding related to the second tranche, and VGS 5 funded $8.5 million in July 2025 and the additional $6.5 million funded on August 12, 2025. On October 3, 2025, we delivered a request to VGS 5 for $13.0 million in funding related to the third tranche, which was funded on October 7, 2025. The VGS 5 Promissory Note may be prepaid, at our option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee described below; provided that prepayments must be in increments of at least $3.5 million. The VGS 5 Promissory Note provides for mandatory prepayments with the proceeds of certain asset sales, and VGS 5 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 5 Promissory Note). The VGS 5 Promissory Note restricts P3 LLC’s ability and the ability of its subsidiaries to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under certain default provisions in the agreement, or in the event a mandatory prepayment event occurs. In addition, we will pay VGS 5 a back-end fee at the time the VGS 5 Promissory Note is redeemed as follows: (i) if paid prior to June 30, 2025, 2.25%; (ii) if repaid from July 1, 2025 through September 30, 2025, 4.50%; (iii) if paid after October 1, 2025 through December 31, 2025, 6.75% and (iv) if paid after December 31, 2025, 9.00%. In connection with the issuance of the VGS 5 Promissory Note, we entered into a subordination agreement, dated as of May 29, 2025 (the “VGS 5 Subordination Agreement”), with VGS 5 which subordinates VGS 5’s right of payment P3 Health Partners Inc. | 2025 Form 10-K | 72 Table of Contents under the VGS 5 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility. Under the terms of the VGS 5 Subordination Agreement, we will be effectively required to pay all interest under the VGS 5 Promissory Note in-kind. We were not in compliance with the covenants in the Term Loan Facility, VGS Promissory Note, VGS 2 Promissory Note, VGS 3 Promissory Note, VGS 4 Promissory Note, and VGS 5 Promissory Note (collectively, the “Loan Documents”) related to issuance of the 2025 financial statements with an audit opinion free of a “going concern” explanatory paragraph. The lenders under the Loan Documents have granted us a waiver of the covenant under the Term Loan Facility related to the existence of a “going concern” explanatory paragraph in the audit opinion for our audited financial statements for the fiscal year ended December 31, 2025. We were in material compliance with all other covenants under the Loan Documents as of December 31, 2025; however, there can be no assurance that we will be able to maintain compliance with these covenants in the future or that the lenders under the Loan Documents, or the lenders of any future indebtedness we may incur will grant any such waiver or forbearance in the future. Repurchase Promissory Note In June 2019, we issued a share repurchase promissory note to a former equity investor for $15.0 million, which was subsequently amended in November 2020 (as amended, the “Repurchase Promissory Note”). 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 PIK interest of 11.0% per year. The principal balance, accrued interest, and an exit fee of $0.6 million are due at maturity. Cash Uses Our primary uses of cash include payments for medical expenses, administrative expenses, cost associated with our care model, and debt service. Final reconciliation and receipts of amounts due from payors are typically settled in arrears. Pursuant to our election under Section 754 of the Internal Revenue Code (the “Code”), we expect to obtain an increase in our share of the tax basis in the net assets of P3 LLC when its units are redeemed or exchanged. We intend to treat any redemptions and exchanges of P3 LLC units as direct purchases of the units for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that we would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent the tax basis is allocated to those capital assets. In connection with the Business Combinations, we entered into a TRA that provides for the payment by us of 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of (i) increases in our share of the tax basis in the net assets of P3 LLC resulting from any redemptions or exchanges of P3 LLC, (ii) tax basis increases attributable to payments made under the TRA, and (iii) deductions attributable to imputed interest pursuant to the TRA (the “TRA Payments”). We expect to benefit from the remaining 15% of any tax benefits that we may actually realize. The estimation of a liability under the TRA is, by its nature, imprecise and subject to significant assumptions regarding a number of factors, including (but not limited to) the amount and timing of taxable income generated by the Company each year as well as the tax rate then applicable. The TRA liability is estimated to be $12.4 million as of December 31, 2025. Due to the Company’s history of losses, the Company has not recorded tax benefits associated with the increase in tax basis as a result of the Business Combinations. As a result, the Company determined that payments to TRA holders are not probable and no TRA liability has been recorded as of December 31, 2025. As non-controlling interest holders exercise their right to exchange their units in P3 LLC, a TRA liability may be recorded based on 85% of the estimated future tax benefits that the Company may realize as a result of increases in the tax basis of P3 LLC. The amount of the increase in the tax basis, the related estimated tax benefits, and the related TRA liability to be recorded will depend on the price of the Company’s Class A common stock at the time of the relevant redemption or exchange. P3 Health Partners Inc. | 2025 Form 10-K | 73 Table of Contents The following table summarizes current and long-term material cash requirements as of December 31, 2025: Material Cash Requirements Total Less than 1 year 1-3 years 3-5 years More than 5 years (in thousands) Unpaid claims (1) $ 287,790 $ 287,790 $ — $ — $ — Long-term debt, principal (2) 243,307 25,000 218,307 — — Long-term debt, interest (3) 183,394 29,628 153,766 — — Long-term debt, back-end/exit fees 34,467 1,500 32,967 — — Operating lease liabilities (4) 18,940 3,932 7,199 5,495 2,314 Total $ 767,898 $ 347,850 $ 412,239 $ 5,495 $ 2,314 ___________________________________________________________________________________________________ (1) Represents unpaid claims due to third parties for health care services provided to members, including estimates for incurred but not reported claims. Estimates for incurred claims are based on historical enrollment and cost trends while also taking into consideration operational changes. Future and actual results typically differ from estimates. Differences could result from an overall change in medical expense per members, changes in member mix or simply due to addition of new members. (2) Represents principal payments only. We will pay interest on outstanding indebtedness based on the rates and terms summarized in Note 11 “Debt” in our consolidated financial statements. (3) Represents interest expected to be incurred on our long-term debt, inclusive of both cash and paid in-kind interest, based on amounts outstanding as of December 31, 2025 as summarized in Note 11 “Debt” in our consolidated financial statements. (4) Represents minimum operating lease payments, excluding potential lease renewals. See Note 14 “Commitments and Contingencies” in our consolidated financial statements. Liquidity and Going Concern As discussed above, we have experienced losses since our inception, and as of December 31, 2025, we had an accumulated deficit of $651.1 million. For the year ended December 31, 2025, we incurred net losses of $323.1 million and used $91.2 million of cash for operating activities. As of December 31, 2025, we had $25.0 million of unrestricted cash and cash equivalents, $336.7 million of outstanding indebtedness, of which $45.0 million is classified as current on our balance sheet, and $287.8 million of unpaid claims. We expect to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future. Based on our currently available cash resources, including aggregate proceeds of $18 million we received from a related party financing transaction in January and February 2026, and assuming no other financing transactions, we believe we will require additional funding in 2026. This belief is based on assumptions that may change as a result of many factors currently unknown to us. We continue to explore raising additional capital through a combination of debt financing and equity issuances and sales of assets. If we raise funds by issuing debt securities or preferred stock, or by incurring loans, these forms of financing would have rights, preferences, and privileges senior to those of holders of our common stock and may involve restrictive covenants which could place significant restrictions on our operations. If we raise capital through the issuance of additional equity, such sales and issuance would dilute the ownership interests of the existing holders of our Class A common stock. There is no assurance that sources of financing will be available on a timely basis, or on satisfactory terms, or at all. If we are unable to raise additional capital or generate cash flows necessary to fund our operations or refinance our indebtedness, we will need to curtail planned activities, discontinue certain operations, or sell certain assets, which could materially and adversely affect our business, financial condition, results of operations, and prospects. As a result of these factors, we have concluded that there is substantial doubt about our ability to continue as a going concern within one year after the date the consolidated financial statements included elsewhere in this Form 10-K are issued. In evaluating our ability to continue as a going concern and meet our obligations, we considered our current projections of future cash flows, current financial condition, sources of liquidity, and debt obligations for at least one year from the date of issuance of this Form 10-K. This evaluation of our cash resources available over the next year from the date of issuance of the consolidated financial statements included elsewhere in this Form 10-K does not take into consideration the potential mitigating effect of our ongoing efforts to raise capital. Future capital raising events cannot be considered probable, as these events depends on factors outside of our control. The audited consolidated financial statements included elsewhere in this Form 10-K have been prepared assuming we will continue as a going concern and do not include any adjustments that might result from the outcome of these uncertainties . P3 Health Partners Inc. | 2025 Form 10-K | 74 Table of Contents Our independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2025, has also expressed substantial doubt about our ability to continue as a going concern. As a result, we were not in compliance with covenants in the Term Loan Facility and the subordinated unsecured promissory notes that required the issuance of the 2025 financial statements with an audit opinion free of a “going concern” explanatory paragraph subject to certain exceptions. The lenders under the Term Loan Facility and subordinated unsecured promissory notes have granted us a waiver of the covenant related to the existence of a “going concern” explanatory paragraph in the audit opinion for our audited financial statements for the fiscal year ended December 31, 2025. Cash Flows The following table summarizes our cash flows: Year Ended December 31, 2025 2024 (in thousands) Net cash used in operating activities $ (91,238) $ (110,128) Net cash provided by investing activities 129 14,525 Net cash provided by financing activities 72,814 98,771 Net change in cash and restricted cash $ (18,295) $ 3,168 Operating Activities Net cash used in operating activities was $91.2 million for the year ended December 31, 2025, compared to net cash used in operating activities of $110.1 million for the year ended December 31, 2024. Significant changes impacting net cash used in operating activities during the year ended December 31, 2025 as compared to the year ended December 31, 2024 were primarily due to (i) increase of claims payable and IBNR of $47.0 million, (ii) decrease of $28.7 million in health plan receivables, and (iii) changes in working capital. Investing Activities Net cash used in investing activities was $0.1 million for the year ended December 31, 2025. Net cash provided by investing activities was $14.5 million for the year ended December 31, 2024, consisting of proceeds from the sale of the Florida Assets. Financing Activities Net cash provided by financing activities was $72.8 million for the year ended December 31, 2025, primarily consisting of proceeds from the VGS 4 Promissory Note and the VGS 5 Promissory Note. Net cash provided by financing activities was $98.8 million for the year ended December 31, 2024, primarily consisting of proceeds from the May 2024 Private Placement, net of offering costs, and borrowings on the VGS 2 Promissory Note, VGS 3 Promissory Note, and VGS 1 2024 Loan, partially offset by the repayment of the VGS Promissory Note. Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires management to use judgment in the application of accounting policies, including making estimates and assumptions that could affect assets and liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. Management bases its estimates on the best information available at the time, its experiences and various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. Below is a discussion of the critical accounting estimates that are particularly important to the portrayal of our financial condition and results of operations and require the application of significant judgment by management. P3 Health Partners Inc. | 2025 Form 10-K | 75 Table of Contents Medical Expense and Claims Payable The cost of healthcare services is recognized in the period services are provided. Medical expense includes costs of all covered services provided to members assigned by the health plans under P3’s at-risk model. Medical expense includes the cost for third-party healthcare service providers, the cost for overseeing the quality of care and programs, and from time to time, remediation of certain claims that might result from periodic reviews conducted by various regulatory agencies. This also includes an estimate of the cost of services that have been incurred, but not yet reported (“IBNR”). We estimate our IBNR by applying standard actuarial methodologies, which utilize historical data, including the period between the date services are rendered and the date claims received (and paid), denied claims activity, expected medical cost inflation, seasonality patterns, and changes in membership mix. Such estimates are subject to impact from changes in both the regulatory and economic environments. Our claims payable represents management’s best estimate of its liability for unpaid medical costs. We have included incurred but not reported claims of $287.8 million and $255.1 million on our consolidated balance sheets as of December 31, 2025 and 2024, respectively. Our consolidated financial statements could be materially impacted if actual claims expense is different from our estimates. If our liability for incurred and not reported claims at December 31, 2025 were to differ by plus or minus 5%, the impact on medical claims expense would be approximately $14.4 million. Premium Deficiency Reserves A PDR is recorded when there is a probable future loss on unearned capitated premiums after estimated expected claim costs and claim adjustment expenses. Losses under prepaid health care services contracts shall be recognized when it is probable that expected future health care costs and maintenance costs under a group of existing contracts will exceed anticipated future premiums and stop-loss insurance recoveries on those contracts. To determine the need to recognize a loss, contracts shall be grouped in a manner consistent with the provider’s method of establishing premium rates, for example, by community rating practices, geographical area, or statutory requirements, to determine whether a loss has been incurred. In our at-risk arrangements, the more we improve health outcomes and lower the overall cost of care, the more profitable we will be over time. We assess the profitability of our at-risk arrangements to identify contracts where current operating results or forecasts indicate probable future losses. Management estimates the Company’s PDR by utilizing estimates of membership growth rates, changes in membership mix, estimated PMPM payments under contracts, historical claims data, seasonality patterns, our ability to lower the overall cost of care and incremental medical costs, such as those related to COVID-19 admissions. Such estimates are subject to impact from changes in both the regulatory and economic environments. The Company’s PDR represents management’s best estimate of its probable future losses. We have included premium deficiency reserve liabilities of $86.1 million and $67.4 million on our accompanying consolidated balance sheets as of December 31, 2025 and 2024, respectively. Recent Accounting Pronouncements See Note 4 “Recent Accounting Pronouncements” to our consolidated financial statements included elsewhere in this Form 10-K for a description of recent accounting standards issued and the anticipated effects on our consolidated financial statements. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Not required for Smaller Reporting Companies. P3 Health Partners Inc. | 2025 Form 10-K | 76 Table of Contents