-Capitated revenue increases 11% vs. the same
period in the prior year
-Q1 2023 operating loss improved 7% vs. the
same period in the prior year
-Q1 2023 medical margin improvement of 58% vs.
the same period in the prior year
-Increases Adjusted EBITDA guidance
Management to Host Conference Call and Webcast
May 10, 2023 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 first
quarter ended March 31, 2023.
“We are off to a strong start in 2023. We achieved a medical
margin of $39.2 million or 13.1% as a percentage of capitated
revenue for the quarter, a key metric for validating the
effectiveness of P3’s model. As a result of the first quarter
strength, we are increasing our Adjusted EBITDA guidance today,”
said Dr. Sherif Abdou, CEO of P3.
“It is the mission of P3 to provide every patient with
comprehensive care. We work to ensure each patient has a 360-degree
review of their health when we onboard them. We then engage with
them to provide solutions and proactively address possible health
risks. By improving the health of our patients, we can lower
overall costs of care in a model where we believe the patient,
providers, payors and ultimately our shareholders win,” Dr Abdou
concluded.
First-Quarter 2023 Financial Results
- Capitated revenue was $298.7 million, an increase of 11%
compared to $269.7 million in the first quarter of the prior year,
and an increase of 18% compared to the fourth quarter of 2022
- Net loss was $52.4 million, an improvement of 14% compared to a
net loss of $60.8 million in the first quarter of the prior year,
and an improvement compared to a loss of $532.3 million in the
fourth quarter of the prior year.
- Net loss PMPM was $169 compared to a net loss PMPM of $203 in
the first quarter of the prior year, and a net loss PMPM of $1,766
in fourth quarter of 2022
- Adjusted EBITDA(1) loss was $19.1 million, compared to an
Adjusted EBITDA loss of $18.9 million in the first quarter of the
prior year, and an Adjusted EBITDA loss of $40.1 million in fourth
quarter of the prior year. Adjusted EBITDA loss in the first
quarter of 2023 includes the impact of approximately $3 million in
consulting and other cost which are not expected to be a part of
the ongoing expenses
- Adjusted EBITDA PMPM(1) loss was $62, compared to an Adjusted
EBITDA loss of $63 PMPM in the first quarter of the prior year, and
an Adjusted EBITDA loss of $133 PMPM in the fourth quarter of
2022
- Operating loss was $48.8 million, compared to $52.2 million in
the first quarter of the prior year, and an improvement compared to
$537 million in the fourth quarter of 2022.
- Medical margin(1) was $39.2 million, an increase of 58%
compared to $24.8 million in the first quarter of the prior year,
and $6.6 million in the fourth quarter of 2022
- Network contribution(1) was $16.5 million, an improvement of
114% compared to $7.7 million in the first quarter of the prior
year, and an improvement of 250% compared to fourth quarter of
2022
Full-Year 2023 Guidance
Year Ended December 31,
2023
Low
High
Medicare Advantage Members
115,000
120,000
Total Revenues (in millions)
$
1,200
$
1,250
Medical margin(2) (in millions)
$
155
$
175
Medical margin(2)PMPM
$
120
$
130
Adjusted EBITDA(2) Loss (in millions)
$
(55
)
$
(35
)
(1) Adjusted EBITDA, Adjusted EBITDA per member, per month
(“PMPM”), medical margin and network contribution are non-GAAP
financial measures. For reconciliations of these measures to the
most directly comparable GAAP measures and more information
regarding the Company’s use of non-GAAP financial measures, please
see the section titled “Non-GAAP Financial Measures.”
(2) 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), operating loss and
operating loss PMPM, the most directly comparable GAAP measures,
respectively, and has not provided forward-looking guidance for net
income (loss), operating loss or operating loss PMPM because of the
uncertainty around certain items that may impact net income (loss),
operating loss or operating 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.
Title & Webcast
P3 Health First-Quarter Earnings
Conference Call
Date & Time
May 10, 2023, 4:30pm Eastern Time
Conference Call Details
Toll-Free 1-877-270-2148 (US)
International 1-412-902-6510
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 on the Investor page of P3’s website in advance
of the conference call. An archived recording of the webcast will
be available on the Investor page of P3’s website 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 15 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.com/p3healthpartners.
Non-GAAP Financial Measures
In addition to the financial results prepared in accordance
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 network contribution. 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, (ii)
equity-based compensation expense and (vi) 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 Advantage 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. 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. Furthermore, in light of COVID-19,
we continue to evaluate the ultimate impact of the pandemic on
medical margin. We define network contribution as 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. 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, and medical
margin and network contribution to operating income (loss) which
are the most directly comparable financial measures calculated in
accordance with GAAP.
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; current expectations regarding the Company’s outlook
as to revenue, at-risk Medicare Advantage membership, medical
margin, medical margin PMPM and Adjusted EBITDA loss for the full
year 2023, 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 of 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 March 31, 2023 to be filed with the SEC, 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
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except per
share amounts)
(unaudited)
March 31, 2023
December 31, 2022
ASSETS
CURRENT ASSETS:
Cash
$
7,183
$
17,537
Restricted cash
1,190
920
Health plan receivable, net of allowance
for credit losses of $150 and $0, respectively
93,215
72,092
Clinic fees and insurance receivable, net
of contractual allowances of $5,683 and $5,755, respectively
318
822
Other receivables
4,640
6,678
Prepaid expenses and other current
assets
2,824
2,643
TOTAL CURRENT ASSETS
109,370
100,692
Property and equipment, net
8,947
8,839
Intangible assets, net
730,161
751,050
Other long-term assets
18,944
15,990
TOTAL ASSETS (1)
$
867,422
$
876,571
LIABILITIES,
MEZZANINE EQUITY and STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
15,798
$
11,542
Accrued expenses and other current
liabilities
21,330
16,647
Accrued payroll
7,401
8,224
Health plans settlements payable
12,384
13,608
Claims payable
164,897
151,207
Premium deficiency reserve
31,515
26,375
Accrued interest
16,336
14,061
TOTAL CURRENT LIABILITIES
269,661
241,664
Operating lease liability
12,822
11,516
Warrant liabilities
868
1,517
Contingent consideration
4,907
4,794
Long-term debt, net
108,126
94,421
TOTAL LIABILITIES (1)
396,384
353,912
COMMITMENTS AND CONTINGENCIES (Note
12)
MEZZANINE EQUITY:
Redeemable non-controlling interest
473,723
516,805
STOCKHOLDERS’ (DEFICIT) EQUITY:
Class A common stock, $.0001 par value;
800,000 shares authorized; 41,579 shares issued and outstanding
4
4
Class V common stock, $.0001 par value;
205,000 shares authorized; 201,867 shares and 201,592 shares issued
and outstanding, respectively
20
20
Additional paid in capital
316,061
315,375
Accumulated deficit
(318,770
)
(309,545
)
TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY
(2,685
)
5,854
TOTAL LIABILITIES, MEZZANINE EQUITY &
STOCKHOLDERS’ (DEFICIT) EQUITY
$
867,422
$
876,571
____________________
(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 the P3 LLC’s VIEs totaling $2.0 million and $3.1
million as of March 31, 2023 and December 31, 2022, respectively,
and total liabilities of the P3 LLC’s consolidated VIEs for which
creditors do not have recourse to the general credit of the Company
totaled $16.8 million and $9.9 million as of March 31, 2023 and
December 31, 2022, respectively. These VIE assets and liabilities
do not include $31.4 million and $33.0 million of net amounts due
to affiliates as of March 31, 2023 and December 31, 2022,
respectively, as these are eliminated in consolidation and not
presented within the condensed consolidated balance sheets. See
Note 13 “Variable Interest Entities.”
P3 HEALTH PARTNERS INC. and
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share data)
(unaudited)
Three Months Ended March
31,
2023
2022
OPERATING REVENUE:
Capitated revenue
$
298,704
$
269,685
Other patient service revenue
3,373
3,859
TOTAL OPERATING REVENUE
302,077
273,544
OPERATING EXPENSE:
Medical expense
285,570
265,821
Premium deficiency reserve
5,140
(1,325
)
Corporate, general and administrative
expense
37,643
38,599
Sales and marketing expense
1,001
865
Depreciation and amortization
21,540
21,752
TOTAL OPERATING EXPENSE
350,894
325,712
OPERATING LOSS
(48,817
)
(52,168
)
OTHER INCOME (EXPENSE):
Interest expense, net
(4,086
)
(2,755
)
Mark-to-market of stock warrants
649
(5,861
)
Other
96
(6
)
TOTAL OTHER EXPENSE
(3,341
)
(8,622
)
LOSS BEFORE INCOME TAXES
(52,158
)
(60,790
)
PROVISION FOR INCOME TAXES
(290
)
—
NET LOSS
(52,448
)
(60,790
)
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE
NON-CONTROLLING INTERESTS
(43,249
)
(50,213
)
NET LOSS ATTRIBUTABLE TO CONTROLLING
INTERESTS
$
(9,199
)
$
(10,577
)
NET LOSS PER SHARE (Note 9):
Basic
$
(0.22
)
$
(0.25
)
Diluted
$
(0.22
)
$
(0.25
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(Note 9):
Basic
41,579
41,579
Diluted
41,579
41,579
P3 HEALTH PARTNERS INC. and
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended March
31,
2023
2022
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss
$
(52,448
)
$
(60,790
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
21,540
21,752
Equity-based compensation
977
11,711
Amortization of original issue discount
and debt issuance costs
279
—
Accretion of contingent consideration
113
91
Mark-to-market adjustment of stock
warrants
(649
)
5,861
Premium deficiency reserve
5,140
(1,325
)
Changes in assets and liabilities:
Health plan receivable
(21,273
)
(44,337
)
Clinic fees, insurance, and other
receivable
2,542
805
Prepaid expenses and other current
assets
(454
)
216
Other long-term assets
(1,364
)
—
Accounts payable, accrued expenses, and
other current liabilities
8,316
4,018
Accrued payroll
(823
)
1,382
Health plan settlements payable
(1,224
)
(3,909
)
Claims payable
13,690
35,450
Accrued interest
2,275
1,241
Operating lease liability
(359
)
58
Net cash used in operating activities
(23,722
)
(27,776
)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases of property and equipment
(464
)
(877
)
Notes receivable
—
(272
)
Net cash used in investing activities
(464
)
(1,149
)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from long-term debt, net of
original issuance discount
14,102
—
Repayment of long-term debt
—
(1,207
)
Net cash provided by (used in) financing
activities
14,102
(1,207
)
Net change in cash and restricted cash
(10,084
)
(30,132
)
Cash and restricted cash, beginning of
period
18,457
140,834
Cash and restricted cash, end of
period
$
8,373
$
110,702
RECONCILIATION OF NET LOSS TO
ADJUSTED EBITDA LOSS
(in thousands, except
PMPM)
(unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
December 31, 2022
Net loss
$
(52,448
)
$
(60,790
)
$
(532,332
)
Interest expense, net
4,086
2,755
3,159
Depreciation and amortization expense
21,540
21,752
22,002
Provision for income taxes
290
—
1,862
Mark-to-market of stock warrants
(649
)
5,861
(6,479
)
Premium deficiency reserve
5,140
(1,325
)
(1,345
)
Equity-based compensation
977
11,711
2,193
Transaction and other related costs(1)
70
1,102
3,094
Other(2)
1,861
6
4,336
Goodwill impairment
—
—
463,496
Adjusted EBITDA loss
$
(19,133
)
$
(18,928
)
$
(40,014
)
Adjusted EBITDA loss PMPM
$
(62
)
$
(63
)
$
(133
)
___________
(1)
Transaction and other related costs during
the three months ended March 31, 2023 consisted of legal fees
incurred related to acquisition-related litigation.
(2)
Other during the three months ended March
31, 2023 consisted of (i) interest income offset by (ii)
restructuring and other charges, including severance and benefits
paid to employees pursuant to workforce reduction plans, (iii) the
disposition of our Pahrump operations, (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), (v) a legal settlement outside of the ordinary course of
business, and (vi) valuation allowance on our notes receivable.
MEDICAL MARGIN
(in thousands, except
PMPM)
(unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
December 31, 2022
Capitated revenue
$
298,704
$
269,685
$
254,025
Less: medical claims expenses
(259,458
)
(244,858
)
(247,458
)
Medical margin
$
39,246
$
24,827
$
6,567
Medical margin PMPM
$
127
$
83
$
22
RECONCILIATION OF OPERATING
LOSS TO MEDICAL MARGIN
(in thousands)
(unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
December 31, 2022
Operating loss
$
(48,817
)
$
(52,168
)
$
(536,546
)
Other patient service revenue
(3,373
)
(3,859
)
(4,188
)
Other medical expense
26,112
20,963
21,720
Premium deficiency reserve
5,140
(1,325
)
(1,345
)
Corporate, general and administrative
expense
37,643
38,599
39,724
Sales and marketing expense
1,001
865
1,704
Depreciation and amortization
21,540
21,752
22,002
Goodwill impairment
—
—
463,496
Medical margin
$
39,246
$
24,827
$
6,567
NETWORK CONTRIBUTION
(in thousands)
(unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
December 31, 2022
Total operating revenue
$
302,077
$
273,544
$
258,213
Less: medical claims expense
(259,458
)
(244,858
)
(247,458
)
Less: other medical expense
(26,112
)
(20,963
)
(21,720
)
Network contribution
$
16,507
$
7,723
$
(10,965
)
RECONCILIATION OF OPERATING
LOSS TO NETWORK CONTRIBUTION
(in thousands)
(unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
December 31, 2022
Operating loss
$
(48,817
)
$
(52,168
)
$
(536,546
)
Premium deficiency reserve
5,140
(1,325
)
(1,345
)
Corporate, general and administrative
expense
37,643
38,599
39,724
Sales and marketing expense
1,001
865
1,704
Depreciation and amortization
21,540
21,752
22,002
Goodwill impairment
—
—
463,496
Network contribution
$
16,507
$
7,723
$
(10,965
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005748/en/
Investor Relations
Karen Blomquist Vice President, Investor Relations P3 Health
Partners kblomquist@p3hp.org
Kassi Belz Executive Vice President, Communications P3 Health
Partners (904) 415-2744 kbelz@p3hp.org
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