Total revenue growth of 21% year-over-year,
beating our 2023 guidance
Affirming 2024 guidance
Anticipates reaching Adjusted EBITDA
positive in 2024
Management to Host Conference Call and Webcast
March 28, 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 fourth
quarter and full year ended December 31, 2023, and affirmed its
2024 guidance.
“Top line results for 2023 were strong as the team executed and
delivered with revenue of approximately $1.27 billion, representing
21% growth and exceeding the top end of our guidance range. We are
reaffirming our 2024 outlook based on several key observations in
the early part of the year including strong growth in membership,
increased funding, and stabilized medical cost trends,” said Dr.
Sherif Abdou, CEO of P3. “We believe that demand for the P3 model
is as high as ever and that our demonstrated ability to bend the
cost curve is driving this demand.”
Fourth Quarter 2023 Financial Results
- Total revenue was $346.9 million, an increase of 34% compared
to $258.2 million in the fourth quarter of the prior year
- Capitated revenue was $342.8 million, an increase of 35%
compared to $254.0 million in the fourth quarter of the prior
year
- Gross profit was negative $20.8 million, as compared to
negative $11.0 million in the prior year. Gross profit PMPM was a
loss of $65, compared to a loss of $36 PMPM in the prior year
- Medical margin(1) was $9.1 million, an increase of 38% compared
to $6.6 million in the prior year. Medical margin PMPM(1) was $28,
an increase of 27% compared to a medical margin PMPM of $22 in the
prior year
- Net loss was $69.1 million compared to a net loss of $532.3
million in the fourth quarter of the prior year
- Adjusted EBITDA loss(1) was $44.3 million compared to an
Adjusted EBITDA loss of $40.0 million in the fourth quarter of the
prior year. Adjusted EBITDA PMPM(1) loss was $138, compared to a
loss of $133 in the prior year
Full-Year 2023 Financial Results
- At-risk membership of 108,900, an increase of approximately 8%
compared to 100,400 in the prior year(2)
- Total revenue was $1.27 billion, an increase of 21% compared to
$1.05 billion in the prior year
- Capitated revenue was $1.25 billion, an increase of 21%
compared to $1.03 billion in the prior year
- Gross profit was $31.6 million, as compared to negative $7.8
million in the prior year. Gross profit PMPM was $25, compared to a
loss of $6 PMPM in the prior year
- Medical margin(1) was $135.1 million, an increase of 118%
compared to $62.1 million in the prior year. Medical margin PMPM(1)
was $108, an increase of 108% compared to a medical margin PMPM of
$52 in the prior year
- Net loss was $186.4 million compared to a net loss of $1.56
billion in the prior year
- Adjusted EBITDA loss(1) was $85.5 million compared to an
Adjusted EBITDA loss(1) of $127.9 million in the prior year.
Adjusted EBITDA loss PMPM(1) was $68 compared to $107 PMPM(1) in
the prior year
“P3, like many of our peers in the value-based care space,
experienced higher medical expenses in December due primarily to
increased hospital admissions with the combination of COVID-19 and
flu exacerbations,” said Dr. Amir Bacchus, P3’s Chief Medical
Officer. “Beginning in January 2024, we have seen a return to a
more normalized seasonally adjusted utilization.”
Fiscal 2024 Guidance
Year Ended December 31,
2024
Low
High
At-Risk Members
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,
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), 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 statement represents 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 March 28, 2024
at 4:30 PM ET
Title & Webcast
P3 Health Fourth Quarter and Full Year
2023 Earnings Conference Call
Date & Time
March 28, 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 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 2,800
affiliated primary care providers across the country. Our local
teams of health care professionals manage the care of thousands of
patients in 23 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 @p3healthpartners and
Facebook.com/p3healthpartners.
Non-GAAP Financial Measures
In addition to the financial results prepared in accordance with
U.S. Generally Accepted Accounting Principles (“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 expenses,
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 performance. Adjusted EBITDA PMPM is defined as
Adjusted EBITDA divided by the number of at-risk 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
capitation revenue after medical claims expenses are deducted and
medical margin PMPM is defined as medical margin divided by the
number of at-risk 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 expectation to achieve Adjusted EBITDA
profitability in 2024, 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 payers; the impact of COVID-19, including the impact of new
variants of the virus, or another pandemic, epidemic or outbreak of
infectious disease on our business and results of operation;
increased labor costs; our ability to recruit and retain qualified
team members and independent physicians; and other factors
discussed in Part I, Item 1A. “Risk Factors” of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2022
filed with the SEC on March 31, 2023, as updated by Part II, Item
1A. “Risk Factors” in the Company’s Quarterly Report on Form 10-Q
for the period ended September 30, 2023, and in the Company’s other
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
CONSOLIDATED BALANCE
SHEETS
(in thousands, except per
share amounts)
(unaudited)
December 31,
2023
2022
ASSETS
CURRENT ASSETS:
Cash
$
36,320
$
17,537
Restricted cash
4,614
920
Health plan receivable, net of allowance
for credit losses of $150 and $0, respectively
118,497
72,092
Clinic fees, insurance and other
receivable
2,973
7,500
Prepaid expenses and other current
assets
3,613
2,643
TOTAL CURRENT ASSETS
166,017
100,692
Property and equipment, net
8,686
8,839
Intangible assets, net
666,733
751,050
Other long-term assets
19,531
15,990
TOTAL ASSETS (1)
$
860,967
$
876,571
LIABILITIES,
MEZZANINE EQUITY, and STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
8,663
$
11,542
Accrued expenses and other current
liabilities
36,884
16,647
Accrued payroll
3,506
8,224
Health plan settlements payable
34,992
13,608
Claims payable
178,009
151,207
Premium deficiency reserve
13,670
26,375
Accrued interest
23,648
14,061
TOTAL CURRENT LIABILITIES
299,372
241,664
Operating lease liability
13,622
11,516
Warrant liabilities
1,085
1,517
Contingent consideration
4,907
4,794
Long-term debt, net
108,319
94,421
TOTAL LIABILITIES (1)
427,305
353,912
COMMITMENTS AND CONTINGENCIES (Note 16 and
Note 20)
MEZZANINE EQUITY:
Redeemable non-controlling interest
291,532
516,805
STOCKHOLDERS’ EQUITY:
Class A common stock, $0.0001 par value;
800,000 shares authorized; 116,588 and 41,579 shares issued and
outstanding as of December 31, 2023 and 2022, respectively
12
4
Class V common stock, $0.0001 par value;
205,000 shares authorized; 196,569 and 201,592 shares issued and
outstanding as of December 31, 2023 and 2022, respectively
20
20
Additional paid in capital
509,442
315,375
Accumulated deficit
(367,344
)
(309,545
)
TOTAL STOCKHOLDERS’ EQUITY
142,130
5,854
TOTAL LIABILITIES, MEZZANINE EQUITY, and
STOCKHOLDERS’ EQUITY
$
860,967
$
876,571
____________________
(1)
The Company’s consolidated balance sheets
include the assets and liabilities of its consolidated variable
interest entities (“VIEs”). As discussed in Note 22: Variable
Interest Entities, P3 LLC is itself a VIE. P3 LLC represents
substantially all the assets and liabilities of the Company. As a
result, the language and numbers below refer only to VIEs held at
the P3 LLC level. The consolidated balance sheets include total
assets that can be used only to settle obligations of P3 LLC’s
consolidated VIEs totaling $8.6 million and $3.1 million as of
December 31, 2023 and 2022, 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 $13.6 million and $9.9
million as of December 31, 2023 and 2022, respectively. These VIE
assets and liabilities do not include $44.2 million and $33.0
million of net amounts due to affiliates as of December 31, 2023
and 2022, respectively, as these are eliminated in consolidation
and not presented within the consolidated balance sheets.
P3 HEALTH PARTNERS INC. and
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per
share amounts)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
OPERATING REVENUE:
Capitated revenue
$
342,836
$
254,025
$
1,252,309
$
1,034,800
Other patient service revenue
4,025
4,188
14,066
14,671
TOTAL OPERATING REVENUE
346,861
258,213
1,266,375
1,049,471
OPERATING EXPENSE:
Medical expense
367,679
269,178
1,234,740
1,057,224
Premium deficiency reserve
(3,344
)
(1,345
)
(12,705
)
(11,461
)
Corporate, general and administrative
expense
24,431
39,724
122,362
157,284
Sales and marketing expense
721
1,705
3,233
5,096
Depreciation and amortization
21,634
22,002
86,675
87,289
Goodwill impairment
—
463,496
—
1,314,952
TOTAL OPERATING EXPENSE
411,121
794,760
1,434,305
2,610,384
OPERATING LOSS
(64,260
)
(536,547
)
(167,930
)
(1,560,913
)
OTHER INCOME (EXPENSE):
Interest expense, net
(4,046
)
(2,986
)
(15,985
)
(11,404
)
Mark-to-market of stock warrants
760
6,479
433
9,865
Other
206
2,584
(249
)
2,757
TOTAL OTHER (EXPENSE) INCOME
(3,080
)
6,077
(15,801
)
1,218
LOSS BEFORE INCOME TAXES
(67,340
)
(530,470
)
(183,731
)
(1,559,695
)
PROVISION FOR INCOME TAXES
(1,767
)
(1,862
)
(2,695
)
(1,862
)
NET LOSS
(69,107
)
(532,332
)
(186,426
)
(1,561,557
)
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE
NON-CONTROLLING INTEREST
(43,645
)
(438,305
)
(128,653
)
(1,291,430
)
NET LOSS ATTRIBUTABLE TO CONTROLLING
INTEREST
$
(25,462
)
$
(94,027
)
$
(57,773
)
$
(270,127
)
NET LOSS PER SHARE (Note 15):
Basic
$
(0.22
)
$
(2.26
)
$
(0.61
)
$
(6.50
)
Diluted
$
(0.22
)
$
(2.26
)
$
(0.63
)
$
(6.50
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(Note 15):
Basic
115,303
41,579
94,889
41,579
Diluted
115,303
41,579
294,590
41,579
P3 HEALTH PARTNERS INC. and
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(unaudited)
Year Ended December
31,
2023
2022
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss
$
(186,426
)
$
(1,561,557
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
86,675
87,289
Equity-based compensation
5,979
19,404
Goodwill impairment
—
1,314,952
Amortization of original issue discount
and debt issuance costs
472
—
Accretion of contingent consideration
113
400
Mark-to-market adjustment of stock
warrants
(433
)
(9,865
)
Premium deficiency reserve
(12,705
)
(11,461
)
Changes in operating assets and
liabilities:
Health plan receivable
(46,555
)
(21,841
)
Clinic fees, insurance, and other
receivable
4,560
(5,338
)
Prepaid expenses and other current
assets
(1,243
)
4,266
Other long-term assets
(58
)
100
Accounts payable, accrued expenses, and
other current liabilities
15,988
6,082
Accrued payroll
282
1,920
Health plan settlements payable
21,384
(8,941
)
Claims payable
26,802
49,249
Accrued interest
9,587
5,290
Operating lease liability
(450
)
4,032
Net cash used in operating activities
(76,028
)
(126,019
)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases of property and equipment
(1,827
)
(2,233
)
Acquisitions, net of cash acquired
—
(5,500
)
Net cash used in investing activities
(1,827
)
(7,733
)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from long-term debt, net of
original issue discount
14,101
15,000
Payment of debt issuance costs
(173
)
—
Proceeds from private placement offering,
net of offering costs paid
86,595
—
Deferred offering costs paid
(175
)
—
Payment of tax withholdings upon
settlement of restricted stock unit awards
(16
)
—
Repayment of short-term and long-term
debt
—
(3,625
)
Net cash provided by financing
activities
100,332
11,375
Net change in cash and restricted cash
22,477
(122,377
)
Cash and restricted cash at beginning of
year
18,457
140,834
Cash and restricted cash at end of
year
$
40,934
$
18,457
RECONCILIATION OF NET LOSS TO
ADJUSTED EBITDA LOSS
(in thousands, except
PMPM)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net loss
$
(69,107
)
$
(532,332
)
$
(186,426
)
$
(1,561,557
)
Interest expense, net
4,046
2,986
15,985
11,404
Depreciation and amortization
21,634
22,002
86,675
87,289
Provision for income taxes
1,767
1,862
2,695
1,862
Mark-to-market of stock warrants
(760
)
(6,479
)
(433
)
(9,865
)
Premium deficiency reserve
(3,344
)
(1,345
)
(12,705
)
(11,461
)
Equity-based compensation
1,720
2,193
5,979
19,404
Transaction and other related costs(1)
—
3,094
70
14,050
Other(2)
(212
)
4,509
2,656
6,008
Goodwill impairment
—
463,496
—
1,314,952
Adjusted EBITDA loss
$
(44,256
)
$
(40,014
)
$
(85,504
)
$
(127,914
)
Adjusted EBITDA loss PMPM
$
(138
)
$
(133
)
$
(68
)
$
(107
)
_____________________
(1)
Transaction and other related costs during
the year ended December 31, 2023 consisted of legal fees incurred
related to acquisition-related litigation and during the year ended
December 31, 2022 consisted of accounting, legal, and advisory fees
related to transactions that were completed, pending, or
abandoned.
(2)
Other during the year ended December 31,
2023 consisted of (i) interest income offset by (ii) cybersecurity
incident loss, (iii) restructuring and other charges, including
severance and benefits paid to employees pursuant to workforce
reduction plans, (iv) the disposition of our Pahrump operations,
(v) expenses for third-party consultants to assist us with the
development, implementation, and documentation of new and enhanced
internal controls and processes for compliance with Sarbanes-Oxley
Section 404(b), (vi) a legal settlement outside of the ordinary
course of business, and (vii) valuation allowance on our notes
receivable. Other during the year ended December 31, 2022 consisted
of (i) income related to the release of indemnity funds previously
escrowed as part of an acquisition in a prior year and (ii)
interest income, offset by (iii) accounting, legal, and
professional services expenses incurred related to the restatement
of our consolidated financial statements for the years ended
December 31, 2020, 2019, and 2018 and the condensed consolidated
financial statements for the quarterly periods ended March 31,
2021, June 30, 2021, September 30, 2021, March 31, 2020, June 30,
2020, and September 30, 2020, (iv) expenses for third-party
consultants to assist us with the development, implementation, and
documentation of new and enhanced internal controls and processes
for compliance with Sarbanes-Oxley Section 404(b), and (v)
severance expense.
MEDICAL MARGIN
(in thousands, except
PMPM)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Capitated revenue
$
342,836
$
254,025
$
1,252,309
$
1,034,800
Less: medical claims expenses
(333,761
)
(247,458
)
(1,117,258
)
(972,725
)
Medical margin
$
9,075
$
6,567
$
135,051
$
62,075
Medical margin PMPM
$
28
$
22
$
108
$
52
RECONCILIATION OF GROSS PROFIT
TO MEDICAL MARGIN
(in thousands)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Gross profit(1)
$
(20,818
)
$
(10,965
)
$
31,635
$
(7,753
)
Other patient service revenue
(4,025
)
(4,188
)
(14,066
)
(14,671
)
Other medical expense
33,918
21,720
117,482
84,499
Medical margin
$
9,075
$
6,567
$
135,051
$
62,075
_____________________
(1)
Effective for the quarter ended June 30,
2023, we modified the method by which we reconcile medical margin.
Previously, we reconciled medical margin to operating loss as the
most directly comparable measure calculated in accordance with
GAAP. In the current period and on a go-forward basis we will
reconcile to gross profit as we have determined that gross profit
is the most directly comparable GAAP measure.
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version on businesswire.com: https://www.businesswire.com/news/home/20240328679531/en/
Ryan Halsted Investor Relations Gilmartin Group ir@p3hp.org
P3 Partners (NASDAQ:PIII)
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