Item 4.02 Non-Reliance on Previously Issued Financial Statements
or a Related Audit Report or Completed Interim Review.
In connection with the audit of the annual financial statements
of P3 Health Partners Inc. (the “Company”) as of and for the year ended December 31, 2021, the Company reviewed its
previous presentation of net loss attributable to non-controlling interests associated with certain medical practices not owned by
the Company, but that have been consolidated in the Company’s financial results as variable interest entities. In the
Company's current judgement, the Company should not have historically assigned the net loss of these medical practices as net loss
attributable to non-controlling interests. The correction will result in a decrease in net loss attributable to non-controlling
interests and an increase in net loss attributable to controlling interests on the Company’s Consolidated Statements of
Operations and a decrease in retained loss from non-controlling interests and an increase in accumulated loss from controlling interests on the
Company’s Consolidated Balance Sheet. The Company does not currently anticipate the restatement related to the presentation of
net loss attributable to non-controlling interests will impact the Company's historical revenue, EBITDA, cash from operations, cash
position, or its 2022 guidance previously issued on March 9, 2022.
On
April 22, 2022, the Audit Committee of the Board of Directors of the Company, in consultation with management and KPMG LLP
(“KPMG”), which served as the Company’s independent registered public accounting firm for the Company’s
audited consolidated financial statements as of December 31, 2020 and 2019 and for the fiscal years ended December 31, 2020, 2019
and 2018; unaudited condensed consolidated financial statements as of and for each of
the quarterly periods ended March 31, 2021, June 30, 2021, September 30, 2021, March 31, 2020, June 30, 2020 and
September 30, 2020; the unaudited pro forma condensed combined financial statements as of June 30, 2021 and September 30,
2021 and for the year ended December 31, 2020 and the six and nine month periods ended June 30, 2021 and September 30, 2021,
respectively (collectively, the “Affected Periods”), after considering the recommendations of management, concluded
that, in light of the errors outlined above, the Company’s financial statements for the Affected Periods included in or
incorporated by reference in each of the Company’s
Definitive Proxy Statement on Schedule 14A, filed with the U.S. Securities and Exchange Commission (the “SEC”) on
November 29, 2021, the
Company’s Current Report on Form 8-K, filed with the SEC on December 9, 2021 and the Company’s
Registration Statement on Form S-1 (File No. 333-261904), filed with the SEC on December 28, 2021 (the “Registration
Statement”), should no longer be relied upon.
Based on the foregoing, the Company is working to complete the restatement
of its audited consolidated financial statements as of and for the fiscal years ended December 31, 2020 and 2019. The Company anticipates
filing its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Form 10-K”), including such restated
financial statements as soon as practicable. Following the filing of its 2021 Form 10-K, the Company will release its financial results
for the fourth quarter and full year ended December 31, 2021 and host a conference call and webcast to provide a corporate and financial
update.
Management previously reported certain material weaknesses in the Company’s
internal control over financial reporting. Management is assessing the effect of the restatement on the Company’s internal control
over financial reporting and its disclosure controls and procedures. Management will not reach a final conclusion on the restatement’s
effect on the Company’s internal control over financial reporting and disclosure controls and procedures until completion of the
restatement process.
The Company’s management has discussed the matters disclosed
in this Current Report on Form 8-K pursuant to this Item 4.02 with BDO USA, LLP and KPMG.