Management to Host Conference Call and Webcast
August 7, 2024 at 4:30 PM ET
P3 Health Partners Inc. (“P3” or the “Company”) (NASDAQ: PIII),
a patient-centered and physician-led population health management
company, today announced its financial results for the second
quarter ended June 30, 2024.
“In the second quarter, we experienced continued growth in our
top line while simultaneously enhancing our balance sheet through a
successful capital raise,” said Aric Coffman, CEO of P3. “Building
on P3’s key strengths, I have identified several initiatives during
my first 90 days as CEO that will further enhance our capabilities
and help achieve sustainable profitability.”
Second Quarter 2024 Financial Results
- Total revenue was $379.2 million, an increase of 15% compared
to $329.1 million in the second quarter of the prior year
- Capitated revenue was $374.3 million, an increase of 15%
compared to $325.6 million in the second quarter of the prior
year
- Gross profit was $14.0 million, as compared to $26.8 million in
the prior year. Gross profit PMPM was $36, compared to $86 PMPM in
the prior year
- Medical margin1 was $41.1 million compared to $50.5 million in
the prior year. Medical margin PMPM1 was $107, compared to a
medical margin PMPM of $161 in the prior year
- Net loss was $28.8 million compared to a net loss of $27.6
million in the second quarter of the prior year. Net loss PMPM was
$75 compared to a net loss PMPM of $88 in the prior year
- Adjusted EBITDA loss1 was $8.8 million compared to Adjusted
EBITDA of $0.2 million in the second quarter of the prior year.
Adjusted EBITDA loss PMPM1 was $23, compared to Adjusted EBITDA
PMPM of $1 in the second quarter of the prior year
Fiscal 2024 Guidance
Year Ended
December 31, 2024
Low
High
At-Risk Members(2)
125,000
135,000
Total Revenues (in millions)
$
1,450
$
1,550
Medical Margin(1)(3) (in millions)
$
230
$
250
Medical Margin(3) PMPM
$
165
$
175
Adjusted EBITDA(3) (in millions)
$
20
$
40
(1) Adjusted EBITDA, Adjusted EBITDA per member, per month
(“PMPM”), medical margin, and medical margin PMPM are non-GAAP
financial measures. For reconciliations of these measures to the
most directly comparable GAAP measures, if applicable, and more
information regarding the Company’s use of non-GAAP financial
measures, please see the section titled “Non-GAAP Financial
Measures.” (2) See “Key Performance Metrics” for additional
information on how the Company defines “at-risk members.”
(3) The Company is not able to provide a quantitative
reconciliation of guidance for Adjusted EBITDA (loss), medical
margin and medical margin PMPM to net income (loss), gross profit
and gross profit PMPM the most directly comparable GAAP measures,
respectively, and has not provided forward-looking guidance for net
income (loss), gross profit (loss) or gross profit (loss) PMPM
because of the uncertainty around certain items that may impact net
income (loss), gross profit (loss) or gross profit (loss) PMPM that
are not within our control or cannot be reasonably predicted
without unreasonable effort. For more information regarding the
non-GAAP financial measures discussed in this press release, please
see “Non-GAAP Financial Measures” below.
The foregoing 2024 outlook statements represent management's
current estimate as of the date of this release. Actual results may
differ materially depending on a number of factors. Investors are
urged to read the “Cautionary Note Regarding Forward-Looking
Statements” included in this release. Management does not assume
any obligation to update these estimates.
Management to Host Conference Call and Webcast on August 7,
2024 at 4:30 PM ET
Title & Webcast
P3 Health Second Quarter Earnings
Conference Call
Date & Time
August 7, 2024, 4:30pm Eastern Time
Conference Call Details
Toll-Free 1-833-316-0546 (US)
International 1-412-317-0692
Ask to be joined into the P3 Health
Partners call
The conference call will also be webcast
live in the "Events & Presentations" section of the Investor
page of the P3 website (ir.p3hp.org). The Company’s press release
will be available at ir.p3hp.org website in advance of the
conference call. An archived recording of the webcast will be
available at ir.p3hp.org for a period of 90 days following the
conference call.
About P3 Health Partners (NASDAQ: PIII):
P3 Health Partners Inc. is a leading population health
management company committed to transforming healthcare by
improving the lives of both patients and providers. Founded and led
by physicians, P3 has an expansive network of more than 2,900
affiliated primary care providers across the country. Our local
teams of health care professionals manage the care of thousands of
patients in 27 counties across five states. P3 supports primary
care providers with value-based care coordination and
administrative services that improve patient outcomes and lower
costs. Through partnerships with these local providers, the P3 care
team creates an enhanced patient experience by navigating,
coordinating, and integrating the patient’s care within the
healthcare system. For more information, visit www.p3hp.org and
follow us on LinkedIn and Facebook.
Non-GAAP Financial Measures
In addition to the financial results prepared in accordance with
accounting principles generally accepted in the U.S. ("GAAP"), this
press release contains certain non-GAAP financial measures as
defined by the SEC rules, including Adjusted EBITDA and Adjusted
EBITDA PMPM, medical margin, and medical margin PMPM. EBITDA is
defined as GAAP net income (loss) before (i) interest, (ii) income
taxes and (iii) depreciation and amortization. Adjusted EBITDA is
defined as EBITDA, further adjusted to exclude the effect of
certain supplemental adjustments, such as (i) mark-to-market
warrant gain/loss, (ii) premium deficiency reserves, (iii)
equity-based compensation expense and (iv) certain other items that
we believe are not indicative of our core operating performances.
Adjusted EBITDA PMPM is defined as Adjusted EBITDA divided by the
number of at-risk Medicare members each month divided by the number
of months in the period. We believe these non-GAAP financial
measures provide an additional tool for investors to use in
evaluating ongoing operating results and trends and in comparing
our financial measures with other similar companies. Medical margin
represents the amount earned from capitated revenue after medical
claims expenses are deducted and medical margin PMPM is defined as
medical margin divided by the number of Medicare members each month
divided by the number of months in the period.
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.
We do not consider these non-GAAP measures in isolation or as an
alternative to financial measures determined in accordance with
GAAP. These non-GAAP financial measures are subject to inherent
limitations as they reflect the exercise of judgments by management
about which expense and income are excluded or included in
determining these non-GAAP financial measures. In addition, other
companies may calculate non-GAAP financial measures differently or
may use other measures to evaluate their performance, all of which
could reduce the usefulness of our non-GAAP financial measures as
tools for comparison. The tables at the end of this press release
present a reconciliation of Adjusted EBITDA to net income (loss)
and Adjusted EBITDA PMPM to net income (loss) PMPM, medical margin
to gross profit, and medical margin PMPM to gross profit PMPM,
which are the most directly comparable financial measures
calculated in accordance with GAAP.
Key Performance Metrics
In addition to our GAAP and non-GAAP financial information, the
Company also monitors “at-risk members” to help us evaluate our
business, identify trends affecting our business, formulate
business plans and make strategic decisions. 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 a particular period.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. We intend such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in Section 27A
of the Securities Act of 1933, as amended, Section 21E of the
Securities Exchange Act of 1934, as amended. Words such as
"anticipate," "believe," "budget," "contemplate," "continue,"
"could," "envision," "estimate," "expect," "guidance," "indicate,"
"intend," "may," "might," "plan," "possibly," "potential,"
"predict," "probably," "pro-forma," "project," "seek," "should,"
"target," or "will," or the negative or other variations thereof,
and similar words or phrases or comparable terminology, are
intended to identify forward-looking statements. These
forward-looking statements address various matters, including the
Company’s future expected growth strategy and operating
performance; outlook as to total revenue, at-risk membership,
medical margin, medical margin PMPM, and Adjusted EBITDA for the
full year 2024; and our ability to enhance our capabilities and
achieve sustainable profitability, all of which reflect the
Company’s expectations based upon currently available information
and data. Because such statements are based on expectations as to
future financial and operating results and are not statements of
fact, actual results may differ materially from those projected or
estimated and you are cautioned not to place undue reliance on
these forward-looking statements. These forward-looking statements
are not guarantees of future performance, conditions or results,
and involve a number of known and unknown risks, uncertainties,
assumptions and other important factors, many of which are outside
the Company's control, that could cause actual results or outcomes
to differ materially from those discussed in the forward-looking
statements.
Important risks and uncertainties that could cause our actual
results and financial condition to differ materially from those
indicated in forward-looking statements include, among others, our
ability to continue as a going concern; our potential need to raise
additional capital to fund our existing operations or develop and
commercialize new services or expand our operations; our ability to
achieve or maintain profitability; our ability to maintain
compliance with our debt covenants in the future, or obtain
required waivers from our lenders if future operating performance
were to fall below current projections, and if there are material
changes to management’s assumptions, we could be required to
recognize non-cash charges to operating earnings for goodwill
and/or other intangible asset impairment; our ability to identify
and develop successful new geographies, physician partners, payors
and patients; changes in market or industry conditions, regulatory
environment, competitive conditions, and receptivity to our
services; our ability to fund our growth and expand our operations;
changes in laws and regulations applicable to our business; our
ability to maintain our relationships with health plans and other
key payors; our ability to establish and maintain effective
internal controls and the impact of the material weaknesses we have
identified; our ability to maintain the listing of our securities
on The Nasdaq Stock Market, LLC; increased labor costs; our ability
to recruit and retain qualified team members and independent
physicians; and the factors described under Part I, Item 1A. “Risk
Factors” and Part II, Item 7. “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in our Annual
Report on Form 10-K for the year ended December 31, 2023, filed
with the SEC on March 28, 2024, and in our subsequent filings with
the SEC.
All information in this press release is as of the date hereof,
and we undertake no duty to update or revise this information
unless required by law. You are cautioned not to place undue
reliance on any forward-looking statements contained in this press
release.
P3 HEALTH PARTNERS INC. and
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except per
share amounts)
(unaudited)
June 30, 2024
December 31, 2023
ASSETS
CURRENT ASSETS:
Cash
$
73,086
$
36,320
Restricted cash
5,116
4,614
Health plan receivable, net of allowance
for credit losses of $150
153,259
118,497
Clinic fees, insurance and other
receivable
2,165
2,973
Prepaid expenses and other current
assets
8,478
3,613
TOTAL CURRENT ASSETS
242,104
166,017
Property and equipment, net
7,537
8,686
Intangible assets, net
624,673
666,733
Other long-term assets
18,445
19,531
TOTAL ASSETS (1)
$
892,759
$
860,967
LIABILITIES,
MEZZANINE EQUITY, AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
7,989
$
8,663
Accrued expenses and other current
liabilities
39,900
36,884
Accrued payroll
3,744
3,506
Health plan settlements payable
22,851
34,992
Claims payable
233,761
178,009
Premium deficiency reserve
11,273
13,670
Accrued interest
31,905
23,648
Short-term debt
831
—
TOTAL CURRENT LIABILITIES
352,254
299,372
Operating lease liability
12,192
13,622
Warrant liabilities
25,455
1,085
Contingent consideration
4,907
4,907
Long-term debt, net
133,124
108,319
TOTAL LIABILITIES (1)
527,932
427,305
COMMITMENTS AND CONTINGENCIES
MEZZANINE EQUITY:
Redeemable non-controlling interest
197,987
291,532
STOCKHOLDERS’ EQUITY:
Class A common stock, $0.0001 par value;
800,000 shares authorized; 161,762 and 116,588 shares issued and
outstanding as of June 30, 2024 and December 31, 2023,
respectively
16
12
Class V common stock, $0.0001 par value;
205,000 shares authorized; 195,957 and 196,569 shares issued and
outstanding as of June 30, 2024 and December 31, 2023,
respectively
20
20
Additional paid in capital
564,868
509,442
Accumulated deficit
(398,064
)
(367,344
)
TOTAL STOCKHOLDERS’ EQUITY
166,840
142,130
TOTAL LIABILITIES, MEZZANINE EQUITY, AND
STOCKHOLDERS’ EQUITY
$
892,759
$
860,967
____________________
(1)
The Company’s condensed consolidated
balance sheets include the assets and liabilities of its
consolidated variable interest entities (“VIEs”). As discussed in
Note 13 “Variable Interest Entities,” P3 LLC is itself a VIE. P3
LLC represents substantially all the assets and liabilities of the
Company. As a result, the language and amounts below refer only to
VIEs held at the P3 LLC level. The condensed consolidated balance
sheets include total assets that can be used only to settle
obligations of P3 LLC’s consolidated VIEs totaling $11.1 million
and $8.6 million as of June 30, 2024 and December 31, 2023,
respectively, and total liabilities of P3 LLC’s consolidated VIEs
for which creditors do not have recourse to the general credit of
the Company totaled $14.3 million and $13.6 million as of June 30,
2024 and December 31, 2023, respectively. These VIE assets and
liabilities do not include $47.0 million and $44.2 million of net
amounts due to affiliates as of June 30, 2024 and December 31,
2023, respectively, as these are eliminated in consolidation and
not presented within the condensed consolidated balance sheets.
P3 HEALTH PARTNERS INC. and
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share amounts)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
OPERATING REVENUE:
Capitated revenue
$
374,306
$
325,616
$
758,440
$
624,320
Other patient service revenue
4,851
3,470
9,205
6,843
TOTAL OPERATING REVENUE
379,157
329,086
767,645
631,163
OPERATING EXPENSE:
Medical expense
365,171
302,271
747,228
587,841
Premium deficiency reserve
(3,397
)
(2,012
)
(2,397
)
3,128
Corporate, general and administrative
expense
26,610
27,223
54,011
64,866
Sales and marketing expense
414
857
736
1,858
Depreciation and amortization
21,693
21,780
43,232
43,320
TOTAL OPERATING EXPENSE
410,491
350,119
842,810
701,013
OPERATING LOSS
(31,334
)
(21,033
)
(75,165
)
(69,850
)
OTHER INCOME (EXPENSE):
Interest expense, net
(5,436
)
(3,851
)
(9,692
)
(7,937
)
Mark-to-market of stock warrants
8,673
(1,731
)
8,889
(1,082
)
Other
291
(741
)
628
(645
)
TOTAL OTHER EXPENSE
3,528
(6,323
)
(175
)
(9,664
)
LOSS BEFORE INCOME TAXES
(27,806
)
(27,356
)
(75,340
)
(79,514
)
PROVISION FOR INCOME TAXES
(968
)
(226
)
(3,040
)
(516
)
NET LOSS
(28,774
)
(27,582
)
(78,380
)
(80,030
)
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE
NON-CONTROLLING INTEREST
(16,754
)
(17,766
)
(47,660
)
(61,015
)
NET LOSS ATTRIBUTABLE TO CONTROLLING
INTEREST
$
(12,020
)
$
(9,816
)
$
(30,720
)
$
(19,015
)
NET LOSS PER SHARE (Note 9):
Basic
$
(0.09
)
$
(0.09
)
$
(0.24
)
$
(0.25
)
Diluted
$
(0.15
)
$
(0.09
)
$
(0.30
)
$
(0.29
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(Note 9):
Basic
136,601
107,454
127,806
74,699
Diluted
141,083
107,454
130,047
276,028
P3 HEALTH PARTNERS INC. and
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended June
30,
2024
2023
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss
$
(78,380
)
$
(80,030
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
43,232
43,320
Equity-based compensation
3,073
2,008
Amortization of original issue discount
and debt issuance costs
(91
)
340
Accretion of contingent consideration
—
113
Mark-to-market adjustment of stock
warrants
(8,889
)
1,082
Premium deficiency reserve
(2,397
)
3,128
Changes in operating assets and
liabilities:
Health plan receivable
(34,762
)
(30,540
)
Clinic fees, insurance, and other
receivable
775
5,563
Prepaid expenses and other current
assets
(4,865
)
139
Other long-term assets
60
(1,289
)
Accounts payable, accrued expenses, and
other current liabilities
30
1,924
Accrued payroll
238
(3,086
)
Health plan settlements payable
(12,141
)
(6,730
)
Claims payable
55,752
7,321
Accrued interest
8,257
4,625
Operating lease liability
(164
)
(452
)
Net cash used in operating activities
(30,272
)
(52,564
)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases of property and equipment
—
(1,652
)
Net cash used in investing activities
—
(1,652
)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from long-term debt, net of
original issue discount
25,000
14,102
Payment of debt issuance costs
—
(173
)
Proceeds from private placement offering,
net of offering costs paid
42,234
87,329
Proceeds from at-the-market sales, net of
offering costs paid
33
—
Deferred offering costs paid
(455
)
—
Payment of tax withholdings upon
settlement of restricted stock unit awards
(103
)
—
Repayment of short-term and long-term
debt
(1,040
)
—
Proceeds from short-term debt
1,871
—
Net cash provided by financing
activities
67,540
101,258
Net change in cash and restricted cash
37,268
47,042
Cash and restricted cash, beginning of
period
40,934
18,457
Cash and restricted cash, end of
period
$
78,202
$
65,499
RECONCILIATION OF NET LOSS TO
ADJUSTED EBITDA (LOSS)
(in thousands, except
PMPM)
(unaudited)
Three Months Ended
Six Months Ended June
30,
June 30, 2024
June 30, 2023
March 31, 2024
2024
2023
Net loss
$
(28,774
)
$
(27,582
)
$
(49,606
)
$
(78,380
)
$
(80,030
)
Interest expense, net
5,436
3,851
4,256
9,692
7,937
Depreciation and amortization
21,693
21,780
21,539
43,232
43,320
Provision for income taxes
968
226
2,072
3,040
516
Mark-to-market of stock warrants
(8,673
)
1,731
(216
)
(8,889
)
1,082
Premium deficiency reserve
(3,397
)
(2,012
)
1,000
(2,397
)
3,128
Equity-based compensation
1,624
1,031
1,449
3,073
2,008
Other(1)
2,276
1,192
(264
)
2,012
3,053
Transaction and other related costs(2)
—
—
—
—
70
Adjusted EBITDA (loss)
$
(8,847
)
$
217
$
(19,770
)
$
(28,617
)
$
(18,916
)
Adjusted EBITDA (loss) PMPM
$
(23
)
$
1
$
(52
)
$
(38
)
$
(31
)
_____________________________________________
(1)
Other during the three and six months
ended June 30, 2024 consisted of (i) interest income offset by (ii)
severance and related expense in connection with our chief
executive officer transition, and (iii) valuation allowance on our
notes receivable. Other during the three and six months ended June
30, 2023 consisted of (i) interest income offset by (ii)
cybersecurity incident loss, (iii) restructuring and other charges,
including severance and benefits paid to employees pursuant to
workforce reduction plans, (iv) the disposition of our Pahrump
operations, (v) expenses for third-party consultants to assist us
with the development, implementation, and documentation of new and
enhanced internal controls and processes for compliance with
Sarbanes-Oxley Section 404(b) with respect to the six months ended
June 30, 2023, (vi) a legal settlement outside of the ordinary
course of business with respect to the six months ended June 30,
2023, and (vii) valuation allowance on our notes receivable.
(2)
Transaction and other related costs during
the six months ended June 30, 2023 consisted of legal fees incurred
related to acquisition-related litigation.
MEDICAL MARGIN
(in thousands, except
PMPM)
(unaudited)
Three Months Ended
Six Months Ended June
30,
June 30, 2024
June 30, 2023
March 31, 2024
2024
2023
Capitated revenue
$
374,306
$
325,616
$
384,134
$
758,440
$
624,320
Less: medical claims expense
(333,217
)
(275,121
)
(347,582
)
(680,799
)
(534,579
)
Medical margin
$
41,089
$
50,495
$
36,552
$
77,641
$
89,741
Medical margin PMPM
$
107
$
161
$
96
$
102
$
145
RECONCILIATION OF GROSS PROFIT
TO MEDICAL MARGIN
(in thousands)
(unaudited)
Three Months Ended
Six Months Ended June
30,
June 30, 2024
June 30, 2023
March 31, 2024
2024
2023
Gross profit
$
13,986
$
26,815
$
6,431
$
20,417
$
43,322
Other patient service revenue
(4,851
)
(3,470
)
(4,354
)
(9,205
)
(6,843
)
Other medical expense
31,954
27,150
34,475
66,429
53,262
Medical margin
$
41,089
$
50,495
$
36,552
$
77,641
$
89,741
RECONCILIATION OF TOTAL
OPERATING EXPENSE TO ADJUSTED OPERATING EXPENSE
(in thousands)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Total operating expense
$
410,491
$
350,119
$
842,810
$
701,013
Medical expense
(365,171
)
(302,271
)
(747,228
)
(587,841
)
Depreciation and amortization
(21,693
)
(21,780
)
(43,232
)
(43,320
)
Premium deficiency reserve
3,397
2,012
2,397
(3,128
)
Equity-based compensation
(1,624
)
(1,031
)
(3,073
)
(2,008
)
Other
(2,541
)
(446
)
(2,593
)
(2,397
)
Transaction and other related costs
—
—
—
(70
)
Adjusted operating expense
$
22,859
$
26,603
$
49,081
$
62,249
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807864847/en/
Ryan Halsted Investor Relations Gilmartin Group ir@p3hp.org
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