P3 Health Partners Reports $310.4 Million Net Loss and 18% Revenue Growth for Fiscal Year 2024

P3 Health Partners Inc. reported a net loss of $310.4 million for the fiscal year ended December 31, 2024, compared to a net loss of $186.4 million in 2023. Total operating revenue increased by 18% to $1.5 billion, driven primarily by an 18% rise in capitated revenue to $1.48 billion. This increase stemmed from a 14% growth in at-risk members, reaching 123,800, due to expansion into nine new counties. Medical expense increased by 26% to $1.6 billion, reflecting the higher member count and increased demand for medical care. A premium deficiency reserve expense of $53.7 million was recorded in 2024, contrasting with a $12.7 million benefit in 2023, reflecting management's assessment of contract profitability.

The company's corporate, general, and administrative expenses decreased by 8% to $112.6 million, primarily due to a reduction in headcount and a gain from the settlement of contingent consideration from a prior acquisition. Other income (expense) showed a significant increase, primarily due to a $22.1 million gain from the mark-to-market adjustment of stock warrants, compared to a $0.4 million gain in 2023, and a $13.3 million gain on the sale of Florida assets. The company's only significant asset is its minority economic interest in P3 LLC, approximately 45.4% as of December 31, 2024. The company's unrestricted cash and cash equivalents totaled $38.8 million at year-end.

Significant developments during the year included the sale of Florida assets for approximately $15 million, resulting in a net gain of $13.3 million. The company also completed a May 2024 private placement, raising $39.8 million net of offering costs, and continued to explore additional capital raising through debt financing and equity issuances. As of December 31, 2024, the company had approximately 360 full-time employees and a network of approximately 3,100 primary care physicians. The company's physician retention rate from 2018 through December 31, 2024 was 95%.

The company's 10-K filing highlights substantial doubt about its ability to continue as a going concern within one year, citing operating losses, negative cash flows, and significant debt and unpaid claims. The company's ability to secure additional funding is crucial to its continued operations. The filing also details various risks related to its business model, including competition, regulatory compliance, and the potential for significant changes in Medicare reimbursement rates. The company's outlook is contingent upon its success in securing additional funding and managing its operational and financial challenges.

The company's independent registered public accounting firm, BDO USA, P.C., issued an unqualified opinion on the consolidated financial statements but noted substantial doubt about the company's ability to continue as a going concern. Critical audit matters included the estimation of premium deficiency reserve liabilities, the valuation of incurred but not reported claims, and the determination of premium risk adjustment revenue, all of which involved significant judgment and complexity.