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What changed in P3 Health Partners Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of P3 Health Partners Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+460 added−397 removedSource: 10-K (2026-03-26) vs 10-K (2025-03-28)

Top changes in P3 Health Partners Inc.'s 2025 10-K

460 paragraphs added · 397 removed · 332 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

79 edited+36 added−10 removed107 unchanged
Biggest changeWe believe we have structured our management services agreements with the our affiliated professional entities to comply with the corporate practice of medicine and fee-splitting laws of Nevada, and we expect to enter into similar agreements with affiliated professional entities in California and other states where we may operate in the future, where all clinical decisions and other business and management decisions that result in control over a physician’s practice of medicine or a licensed professional’s clinical decisions remain exclusively with the affiliated professional entities, their physician shareholders and the physicians and licensed professionals employed and contracted by such entities.
Biggest changeIn our affiliated practices, all clinical decisions and other business and management decisions that result in control over a physician’s practice of medicine or a licensed professional’s clinical decisions remain exclusively with the affiliated professional entities, their physician shareholders and the physicians and licensed professionals employed and contracted by such entities.
The Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (collectively, “HIPAA”), also established federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
The Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (collectively, “HIPAA”), also established federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Our ability to operate profitably will depend in part on the ability of P3 owned and managed clinics and its providers to obtain and maintain all necessary licenses and other approvals, and maintain updates to their enrollment in the Medicare and Medicaid programs, including the addition of new clinic locations, providers and other enrollment information.
Our ability to operate profitably will depend in part on the ability of P3 owned and managed clinics and their providers to obtain and maintain all necessary licenses and other approvals, and maintain updates to their enrollment in the Medicare and Medicaid programs, including the addition of new clinic locations, providers and other enrollment information.
Department of Health and Human Services (“HHS”) Office of Inspector General emphasizes, however, that this exception should only be used occasionally to address special financial needs of a particular patient.
Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) emphasizes, however, that this exception should only be used occasionally to address special financial needs of a particular patient.
Further, the Civil Monetary Penalties Statute authorizes the imposition of civil monetary penalties, assessments and exclusion against an individual or entity based on a variety of prohibited conduct, including, but not limited to offering remuneration to a federal health care program beneficiary that the individual or entity knows or should know is likely to influence the beneficiary to order or receive health care items or services from a particular provider.
Further, the Civil Monetary Penalties Law authorizes the imposition of civil monetary penalties, assessments and exclusion against an individual or entity based on a variety of prohibited conduct, including, but not limited to offering remuneration to a federal health care program beneficiary that the individual or entity knows or should know is likely to influence the beneficiary to order or receive health care items or services from a particular provider.
These teams provide wraparound services to our patients and collaborate with the patients’ caregivers to ensure patients have the tools to successfully navigate their healthcare journey across the care continuum. We have made significant investments in P3 Health Partners Inc. | 2024 Form 10-K | 5 Table of Contents technology to customize patient care management plans.
These teams provide wraparound services to our patients and collaborate with the patients’ caregivers to ensure patients have the tools to successfully navigate their healthcare journey across the care continuum. We have made significant investments in P3 Health Partners Inc. | 2025 Form 10-K | 5 Table of Contents technology to customize patient care management plans.
P3 Health Partners Inc. | 2024 Form 10-K | 10 Table of Contents People join P3 because of our mission: to ensure providers and their patients get the healthcare they deserve. Together with our employees and physician partners, we have defined our core values as: • People: Our attitude is respecting and valuing everyone. Our community is strong and safe.
P3 Health Partners Inc. | 2025 Form 10-K | 10 Table of Contents People join P3 because of our mission: to ensure providers and their patients get the healthcare they deserve. Together with our employees and physician partners, we have defined our core values as: • People: Our attitude is respecting and valuing everyone. Our community is strong and safe.
P3 Health Partners Inc. | 2024 Form 10-K | 6 Table of Contents Robust care teams. We staff dedicated care managers and care navigators to help ensure end-to-end patient care across the full continuum. Care navigators are responsible for day-to-day patient care (e.g., scheduling appointments, assisting with check-ins, etc.).
P3 Health Partners Inc. | 2025 Form 10-K | 6 Table of Contents Robust care teams. We staff dedicated care managers and care navigators to help ensure end-to-end patient care across the full continuum. Care navigators are responsible for day-to-day patient care (e.g., scheduling appointments, assisting with check-ins, etc.).
Finally, by taking on P3 Health Partners Inc. | 2024 Form 10-K | 7 Table of Contents responsibility for processing and paying claims, we are able to ensure the appropriate payment for the appropriate care. Ownership over claims creates value and helps to accelerate the reduction of unnecessary medical costs.
Finally, by taking on P3 Health Partners Inc. | 2025 Form 10-K | 7 Table of Contents responsibility for processing and paying claims, we are able to ensure the appropriate payment for the appropriate care. Ownership over claims creates value and helps to accelerate the reduction of unnecessary medical costs.
The traditional FFS model values quantity over quality, which has been shown to lead to physician burnout and jeopardizes the long-term sustainability of the independent primary care business model. According to a 2024 Physicians Foundation report, six in 10 physicians show signs of burnout, compared to four in 10 in 2018.
The traditional FFS model values quantity over quality, which has been shown to lead to physician burnout and jeopardizes the long-term sustainability of the independent primary care business model. According to a 2025 Physicians Foundation report, six in 10 physicians show signs of burnout, compared to four in 10 in 2018.
In some states, statutes, regulations and/or formal guidance explicitly address whether and in what manner the state regulates the transfer of risk by a payor to a downstream entity. However, the majority of states do not explicitly address the issue, and in such states, regulators may nonetheless interpret statutes and regulations to regulate such activity.
In some states, statutes, regulations and/or formal guidance explicitly address whether and in what manner the state regulates the transfer of risk by a payor to a downstream entity. However, the majority of states do not explicitly address the issue, and in such states, regulators may nonetheless interpret statutes and regulations to regulate such activity without predictable guidance.
Our model allows us to “do well” while also “doing good.” We contract with health plans to P3 Health Partners Inc. | 2024 Form 10-K | 4 Table of Contents provide capitated care services with respect to certain of their MA members.
Our model allows us to “do well” while also “doing good.” We contract with health plans to P3 Health Partners Inc. | 2025 Form 10-K | 4 Table of Contents provide capitated care services with respect to certain of their MA members.
Additionally, the Center for Medicare and Medicaid Innovation continues to test an array of value-based alternative payment models, including the Global and Professional Direct Contracting Model to allow Direct Contracting Entities to negotiate directly with the government to manage traditional Medicare beneficiaries and share in the savings and risks generated from managing such beneficiaries.
Additionally, the CMS Innovation Center continues to test an array of value-based alternative payment models, including the Global and Professional Direct Contracting Model to allow Direct Contracting Entities to negotiate directly with the government to manage traditional Medicare beneficiaries and share in the savings and risks generated from managing such beneficiaries.
The FFS model unintentionally incentivizes the volume of patients and services performed rather than the quality of services and care—resulting in a deprioritization of preventative services and overall health of the patient. • PCP burnout and dissatisfaction.
The FFS model unintentionally incentivizes the volume of patients and services performed rather than the quality of services and care—resulting in a deprioritization of preventive services and overall health of the patient. • PCP burnout and dissatisfaction.
Sanctions for failure to comply with applicable state and federal licensing, certification and other regulatory requirements include suspension, revocation or limitation of the applicable authorization, significant fines and penalties and/or an inability to receive reimbursement from government healthcare programs and other third-party payors.
Sanctions for failure to comply with applicable state and federal licensing, certification and other regulatory requirements include suspension of licensure or payment eligibility, revocation or limitation of the applicable authorization, significant fines and penalties and/or an inability to receive reimbursement from government healthcare programs and other third-party payors.
MA has been well received since it was introduced, with penetration among Medicare beneficiaries increasing from 19% in 2007 to 54% in 2024 and is projected to increase to 64% by 2034. This trend reflects the understanding that MA plans are financially and clinically valuable to Medicare eligible patients. Our Market Opportunity We believe there is significant white space opportunity.
MA has been well received since it was introduced, with penetration among Medicare beneficiaries increasing from 19% in 2007 to 54% in 2025 and is projected to increase to 64% by 2035. This trend reflects the understanding that MA plans are financially and clinically valuable to Medicare eligible patients. Our Market Opportunity We believe there is significant white space opportunity.
For example, on April 5, 2021, healthcare providers and certain other entities became subject to information blocking restrictions pursuant to the Cures Act that prohibit practices that are likely to interfere with the access, exchange or use of electronic health information, except as required by law or specified by the HHS as a reasonable and necessary activity.
For example, on April 5, 2021, healthcare providers and certain other entities became subject to information blocking restrictions pursuant to the 21st Century Cures Act (the “Cures Act”) that prohibit practices that are likely to interfere with the access, exchange or use of electronic health information, except as required by law or specified by the HHS as a reasonable and necessary activity.
The Medicare shared savings program allows for providers, physicians and other designated health care professionals and suppliers to form ACOs and voluntarily work together to invest in infrastructure and redesign delivery processes to give coordinated high quality care to their Medicare patients, avoid unnecessary duplication of services and prevent medical errors.
The MSSP allows for providers, physicians and other designated health care professionals and suppliers to form ACOs and voluntarily work together to invest in infrastructure and redesign delivery processes to give coordinated high quality care to their Medicare patients, avoid unnecessary duplication of services and prevent medical errors.
Under the investor relations page of the Company’s website, ir.p3hp.org, we make available free of charge a variety of information for investors, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Proxy Statements on Schedule 14A and any amendments to those materials filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as P3 Health Partners Inc. | 2024 Form 10-K | 15 Table of Contents reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission (“SEC”).
Under the investor relations page of the Company’s website, ir.p3hp.org, we make available free of charge a variety of information for investors, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Proxy Statements on Schedule 14A and any amendments to those materials filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission (“SEC”).
Violation of any of these laws or any other governmental regulations that apply may result in significant penalties, including, without limitation, administrative civil and criminal penalties, damages, disgorgement, fines, additional reporting requirements and compliance oversight obligations, in the event that a corporate integrity agreement or other agreement is required to resolve allegations of noncompliance with these laws, the curtailment or restructuring of operations, exclusion from participation in governmental healthcare programs and/or individual imprisonment.
Violation of any of these laws or any other governmental regulations that apply may result in significant penalties, including, without limitation, administrative, civil, and criminal penalties, damages, disgorgement, fines, restation, treble damages if pursued under the FCA, additional reporting requirements and compliance oversight obligations, in the event that a corporate integrity agreement or other agreement is required to resolve allegations of noncompliance with these laws, the curtailment or restructuring of operations, exclusion from participation in governmental healthcare programs, and/or individual imprisonment.
Our executive team has a track record of more than 20 years in the healthcare industry. These years of experience have fostered strong relationships in the managed care, physician and payor segments. This is paired with a deep understanding of physicians, patients, technology, payments and branding.
Our executive team has a proven track record in the healthcare industry. These years of experience have fostered strong relationships in the managed care, physician and payor segments. This is paired with a deep understanding of physicians, patients, technology, payments and branding.
We believe our total addressable market is represented by the approximately 68 million Americans (approximately 17% of the total population) who were enrolled in either traditional Medicare or MA nationally in 2024, which represented $1,030 billion of annual spend.
We believe our total addressable market is represented by the approximately 68 million Americans (approximately 17% of the total population) who were enrolled in either traditional Medicare or MA nationally in 2025, which represented $1,118 billion of annual spend.
Our more than 20 years of experience in the population health management space has allowed us to build the capabilities to better control and manage the delivery of services across the full care continuum. Our team has the ability to take on additional services from our payor partners, including networking, credentialing, utilization management and claims processing.
Our substantial experience in the population health management space has allowed us to build the capabilities to better control and manage the delivery of services across the full care continuum. Our team has the ability to take on additional services from our payor partners, including networking, credentialing, utilization management and claims processing.
The Stark Law also prohibits the entity from billing for any such prohibited referral. Unlike the AKS, the Stark Law is violated if the financial arrangement does not meet an applicable exception, regardless of any intent by the parties to induce or reward referrals or the reasons for the financial relationship and the referral.
The Stark Law also prohibits the entity from billing for any such prohibited referral. Unlike the AKS, the Stark Law is a civil, strict-liability statute and violated if the financial arrangement does not meet an applicable exception, regardless of any intent by the parties to induce or reward referrals or the reasons for the financial relationship and the referral.
Following the Business Combinations, we are organized in an “Up-C” structure, in which P3 Health Partners Inc. is the sole manager of P3 Health Group, LLC and directly owns approximately 45% of P3 Health Group, LLC as of December 31, 2024.
Following the Business Combinations, we are organized in an “Up-C” structure, in which P3 Health Partners Inc. is the sole manager of P3 Health Group, LLC and directly owns approximately 46% of P3 Health Group, LLC as of December 31, 2025.
The information found on our website is not part of this or any other report we file with, or furnish to, the SEC. P3 Health Partners Inc. | 2024 Form 10-K | 16 Table of Contents
The information found on our website is not part of this or any other report we file with, or furnish to, the SEC. P3 Health Partners Inc. | 2025 Form 10-K | 17 Table of Contents
We believe our leadership team’s more than 20 years of experience in VBC and population health management, combined with our strong payor relationships, large community-based physician networks and custom technology platform uniquely position us to empower physicians, align incentives for healthcare providers and payors and improve the clinical outcomes for the communities we serve.
We believe our leadership team’s substantial experience in VBC and population health management, combined with our strong payor relationships, large community-based physician networks and custom technology platform uniquely position us to empower physicians, align incentives for healthcare providers and payors and improve the clinical outcomes for the communities we serve.
Our primary competitors in the population health management space include Oak Street Health, Astrana Health and agilon health, in addition to numerous local provider networks, hospitals and health systems.
Our primary competitors in the population health management space include Aledade, Astrana Health and agilon health, in addition to numerous local provider networks, hospitals and health systems.
Standards for testing under CLIA are based on the complexity of the tests performed by the laboratory, with tests classified as “high complexity,” “moderate complexity,” or “waived.” P3 owned and managed clinics hold CLIA Certificates of Waiver and perform certain CLIA-waived tests, which subjects such clinics to certain CLIA requirements.
Standards for testing under CLIA are based on the complexity of the tests performed by the laboratory, with tests classified as “high complexity,” “moderate complexity,” or “waived.” P3 owned and managed clinics hold CLIA Certificates of Waiver and perform certain CLIA-waived tests, which subject such clinics to certain CLIA requirements, as well as applicable state law requirements.
Data Privacy and Security Laws We are subject to a number of federal and state laws and regulations that govern the collection, use, disclosure, and protection of health-related and other personal information, including health information privacy and security laws, data breach notification laws, and consumer protection laws and regulations.
Data Privacy and Security Laws We are subject to a number of federal and state laws and regulations that govern the collection, use, disclosure, and protection of health-related and other personal information, including health information privacy and security laws, data breach notification laws, and consumer protection laws and regulations, including HIPAA, 42 C.F.R.
As of December 31, 2024, we have contracted with 3,100 primary care physicians. This represents less than 1% of the total number of PCPs in the U.S. of approximately 535,000. We believe the industry is primed for a platform like ours, which allows physicians to remain independent while accessing financial resources and infrastructure to support a VBC model.
As of December 31, 2025, we have contracted with 2,400 primary care physicians. This represents less than 1% of the total number of PCPs in the U.S. of approximately 544,000. We believe the industry is primed for a platform like ours, which allows physicians to remain independent while accessing financial resources and infrastructure to support a VBC model.
The ACA required, among other things, CMS to establish a Medicare shared savings program that promotes accountability and coordination of care through the creation of Accountable Care Organizations (“ACOs”).
The ACA required, among other things, CMS to establish a Medicare shared savings program (“MSSP”) to promote accountability and coordination of care through the creation of Accountable Care Organizations (“ACOs”).
By way of example, P3 recently acquired Medcore HP, a licensed health plan under the Knox Keene Act, which subjects the entity to certain capital requirements, licensing or certification, governance controls, utilization review, grievance procedures, and reporting requirements among others.
For example, P3 acquired Medcore HP, a licensed health plan under California’s Knox Keene Act, which subjects the entity to certain capital requirements, licensing or certification, governance controls, utilization review, grievance procedures, and reporting requirements among others.
P3 Health Partners Inc. | 2024 Form 10-K | 9 Table of Contents See the section titled “ Risk Factors—Risks Related to Our Business and Industry—We operate in a competitive industry, and if we are not able to compete effectively, our business, financial condition and results of operations will be harmed .” The principal competitive factors in our business include the nature and caliber of relationships with physicians; patient healthcare quality, outcomes and cost; the strength of relationships with payors; the quality of the physician experience; local geography leadership position; and the strength of the underlying economic model.
See the section titled “ Risk Factors—Risks Related to Our Business and Industry—We operate in a competitive industry, and if we are not able to compete effectively, our business, financial condition and results of operations will be harmed .” The principal competitive factors in our business include the nature and caliber of relationships with physicians; patient healthcare quality, outcomes and cost; the strength of relationships with payors; the quality of the physician experience; local geography leadership position; and the strength of the underlying economic model.
These laws vary from state to state, including those where the Company does business, and are subject to broad interpretation and enforcement by state regulators. For example, the corporate practice of medicine prohibition in Nevada has only been established through attorney general opinions and there is no statutory or regulatory fee-splitting prohibition in the state.
These laws vary from state to state, including those where the Company does business, and are subject to broad interpretation and enforcement by state regulators. For example, the corporate practice of medicine prohibition in Nevada has only been established through intermittent attorney general opinions with limited guidance and no statutory or regulatory standards.
P3 Health Partners Inc. | 2024 Form 10-K | 11 Table of Contents State Corporate Practice of Medicine and Fee-Splitting Laws Our arrangements with our affiliated professional entities and other physician partners are subject to various state laws, commonly referred to as corporate practice of medicine and fee-splitting laws, which are intended to prevent unlicensed persons from interfering with or influencing the physician’s professional judgment, and prohibiting the sharing of professional service fees with non-professional or business interests.
State Corporate Practice of Medicine and Fee-Splitting Laws Our arrangements with our affiliated professional entities and other physician partners are subject to various state laws, commonly referred to as corporate practice of medicine and fee-splitting laws, which are intended to prevent unlicensed persons from interfering with or influencing the physician’s professional judgment, and prohibiting the sharing of professional service fees with non-professional or business interests.
Human Capital As of December 31, 2024, we had approximately 360 full-time employees. We consider our relationship with our employees to be good. None of our employees are currently represented by a labor union or party to a collective bargaining agreement. Our human capital resources objectives include sourcing, recruiting, developing, retaining, rewarding, recognizing and integrating our existing and prospective employees.
We consider our relationship with our employees to be good. None of our employees are currently represented by a labor union or party to a collective bargaining agreement. Our human capital resources objectives include sourcing, recruiting, developing, retaining, rewarding, recognizing and integrating our existing and prospective employees.
National health expenditures are projected to grow 5.6% per year from 2023 to 2032, according to CMS. While representing only 17% of the United States population, the 65 and older age group accounted for 21% of all healthcare spending in 2023, with an average spend of approximately $14,570 per person.
National health expenditures are projected to grow 5.8% per year from 2024 to 2033, according to CMS. While representing only 17% of the United States population, the 65 and older age group accounted for 21% of all healthcare spending in 2024, with an average spend of approximately $15,474 per person.
Taken as a whole, our P3 Care Model is designed to help facilitate enhanced clinical outcomes for our key stakeholders, resulting in a 95% physician retention rate from 2018 through December 31, 2024. We are led by one of the most experienced management teams in population health.
Taken as a whole, our P3 Care Model is designed to help facilitate enhanced clinical outcomes for our key stakeholders, resulting in a physician retention rate of over 88% for the year ended December 31, 2025. We are led by one of the most experienced management teams in population health.
The U.S. healthcare system is ripe for change and disruption, and we believe that the P3 Care Model is distinctly situated to address several pain points, including: • Unsustainable and rising healthcare costs. The United States spent $4.9 trillion, representing 17.6% of GDP, on healthcare in 2023.
The U.S. healthcare system is ripe for change and disruption, and we believe that the P3 Care Model is distinctly situated to address several pain points, including: • Unsustainable and rising healthcare costs. The United States spent $5.3 trillion, representing 18.0% of GDP, on healthcare in 2024.
Several courts have interpreted the AKS’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the AKS has been violated. The AKS includes statutory exceptions and regulatory safe harbors that protect certain arrangements.
Several courts have interpreted the AKS’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of healthcare business reimbursable by a federal healthcare program, AKS has been violated. The AKS includes statutory exceptions and regulatory safe harbors that, if complied with, protect certain arrangements from constituting a violation of the law.
Most MA plans also offer Part D, vision, hearing, dental and other benefits. Typically, the out-of-pocket costs are lower for MA plans than traditional Medicare, but patients are limited to seeing physicians within the plan’s network and some coverage of certain specialty services may require PCPs’ referrals and plan authorizations.
Typically, the out-of-pocket costs are lower for MA plans than traditional Medicare, but patients are limited to seeing physicians within the plan’s network and some coverage of certain specialty services may require PCPs’ referrals and plan authorizations.
Penalties for a violation of the FCA include fines for each false claim, plus up to three times the amount of damages caused by each false claim.
Penalties for a violation of the FCA include fines of up to $0.1 million for each false claim (adjusted annually for inflation), plus up to three times the amount of damages caused by each false claim.
Violations may result in penalties or other disincentives. It is unclear at this time what the costs of compliance with the new rules will be and what additional risks there may be to our business.
It is unclear at this time what the costs of compliance with the new rules will be and what additional risks there may be to our business.
Furthermore, we offer a broad delegated care model in which we take on the responsibility to reshape the local healthcare market to provide high quality care for patients throughout the care continuum. We operate in the $1,029.8 billion Medicare market, which covers approximately 68 million eligible lives as of November 2024.
Furthermore, we offer a broad delegated care model in which we take on the responsibility to reshape the local healthcare market to provide high quality care for patients throughout the care continuum. We operate in the $1,118.0 billion Medicare market, which covers more than 68 million eligible lives as of July 2025.
Private individuals also have the ability to bring actions under these false claims laws in the name of the government alleging false and fraudulent claims presented to or paid by the government (or other violations of the statutes) and to share in any amounts paid by the entity to the government in fines or settlement.
Private individuals also have the ability to bring actions under these false claims laws in the name of the government alleging false and fraudulent claims presented to or paid by P3 Health Partners Inc. | 2025 Form 10-K | 13 Table of Contents the government (or other violations of the statutes) and to share in any amounts paid by the entity to the government in fines or settlement.
Our growth strategy and our business could be adversely affected if we are not able to continue to access existing geographies, successfully expand into new geographies or maintain or establish new relationships with payors and physician partners.
Our growth strategy and our business could be adversely affected if we are not able to continue to access existing P3 Health Partners Inc. | 2025 Form 10-K | 9 Table of Contents geographies, successfully expand into new geographies or maintain or establish new relationships with payors and physician partners.
By way of P3 Health Partners Inc. | 2024 Form 10-K | 13 Table of Contents example, in the United States, the Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”), substantially changed the way healthcare is financed by both governmental and private insurers.
By way of example, in the United States, the Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”), substantially changed the way healthcare is financed by both governmental and private insurers.
The Stark Law prohibits a physician who has a financial relationship, or who has an immediate family member who has a financial relationship, with entities providing designated health services (“DHS”) from referring Medicare and Medicaid patients to such entities for the furnishing of DHS, unless an exception applies.
The federal prohibition on physician self-referral, commonly referred to as the “Stark Law,” prohibits a physician who has a financial relationship, or who has an immediate family member who has a financial relationship, with entities providing designated health services (“DHS”) from referring Medicare and Medicaid patients to such entities for the furnishing of DHS, unless a statutory or regulatory exception applies.
Our contracts with four health plans to provide capitated care services for their members collectively accounted for approximately 59% and 60% of our capitated revenue for the years ended December 31, 2024 and 2023, respectively.
Our contracts with four health plans to provide capitated care services for their members collectively accounted for approximately 75% of our total revenue for the year ended December 31, 2025, compared to contracts with four health plans which collectively accounted for approximately 59% of our total revenue for the year ended December 31, 2024.
If downstream risk-sharing arrangements are not regulated directly in a particular state, the state regulatory agency may nonetheless require oversight by the licensed payor as the party to such a downstream risk-sharing arrangement. Such oversight is accomplished via contract and may include the imposition of reserve requirements, as well as reporting obligations.
If downstream risk-sharing arrangements are not regulated directly in a particular state, the state regulatory agency may nonetheless require oversight by the licensed payor as the party to such a downstream risk-sharing arrangement.
Provider Portal is also used by our internal certified coders to review and reconcile claims data with electronic medical record and charts data. This provides P3 an opportunity to capture dropped or missed codes documented in the patient’s medical record that were not properly converted during the initial submission of claims by our physician partner offices.
This provides P3 an opportunity to capture dropped or missed codes documented in the patient’s medical record that were not properly converted during the initial submission of claims by our physician partner offices.
It is possible that the federal or state governments will implement additional reductions, increases, or changes in reimbursement in the future under government programs that may adversely affect us or increase the cost of providing our services.
These updates have included, and may continue to include in the future, risk-sharing, bundled payment and other innovative approaches. It is possible that the federal or state governments will implement additional reductions, increases, or changes in reimbursement in the future under government programs that may adversely affect us or increase the cost of providing our services.
As 10,000 seniors age into Medicare each day and prevalence of chronic conditions increases, the need for lower healthcare spend leads the push towards VBC and additional offerings such as MA. VBC and MA MA serves as an alternative to traditional Medicare. MA is an integrated plan that includes both Part A and Part B coverage.
Beyond sub-optimal clinical outcomes, FFS results in significant healthcare spend. As 10,000 seniors age into Medicare each day and prevalence of chronic conditions increases, the need for lower healthcare spend leads the push towards VBC and additional offerings such as MA. VBC and MA MA serves as an alternative to traditional Medicare.
Rather, the government may evaluate P3 Health Partners Inc. | 2024 Form 10-K | 12 Table of Contents such arrangements on a case-by-case basis, taking into account all facts and circumstances, including the parties’ intent and the arrangement’s potential for abuse, and may be subject to greater scrutiny by enforcement agencies.
Rather, the government may evaluate such arrangements on a case-by-case basis, taking into account all facts and circumstances, including the parties’ intent and the arrangement’s potential for abuse, extent and degree of compliance with the applicable safe harbor factors, and such arrangements may be subject to greater scrutiny by enforcement agencies.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue or attain growth, any of which could have a material impact on our business. Further, healthcare providers and industry participants are also subject to a growing number of requirements intended to promote the interoperability and exchange of patient health information.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue or attain growth, any of which could have a material impact on our business.
Lastly, our contracts with physicians include confidentiality and non-disclosure provisions. We may be unable to obtain, maintain and enforce our intellectual property rights, and assertions by third parties that we violate their intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.
We may be unable to obtain, maintain and enforce our intellectual property rights, and assertions by third parties that we violate their intellectual property rights could have a material adverse effect on our business, financial condition and results of operations. Human Capital As of December 31, 2025, we had approximately 320 full-time employees.
P3 Health Partners Inc. | 2024 Form 10-K | 14 Table of Contents Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.
Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation, including class actions.
In addition, there likely will continue to be regulatory proposals directed at containing or lowering the cost of healthcare, as government healthcare programs and other third-party payors transition from FFS to value-based reimbursement models, which can include risk-sharing, bundled payment and other innovative approaches.
In addition, there likely will continue to be regulatory proposals directed at containing or lowering the cost of healthcare, adopt new payment models that rely on the data-gathering and reporting capacities of new technology to assess the quality of care provided to patients, and other changes as government healthcare programs and other third-party payors transition from FFS to value-based reimbursement models.
Our employee agreements also require relevant employees to assign to us all rights to any inventions made or conceived during their employment with us in accordance with applicable law. In addition, we have a policy of requiring individuals and entities with which we discuss potential business relationships to sign non-disclosure agreements.
For instance, we have a policy of requiring all employees and consultants to execute confidentiality agreements upon the commencement of an employment or consulting relationship with us. Our employee agreements also require relevant employees to assign to us all rights to any inventions made or conceived during their employment with us in accordance with applicable law.
Arizona’s corporate practice of medicine was established under older case law, and more recent legislation suggests that the prohibition may not be strictly enforced in the state. Oregon prohibits the corporate practice of medicine but has an exception for professional corporations with majority physician ownership where a non-licensed person or entity may hold minority ownership interest in such professional corporation.
Oregon currently prohibits the corporate practice of medicine but has an exception for professional corporations with majority physician ownership where a non-licensed person or entity may hold minority ownership interest in such professional corporation. California’s corporate practice of medicine doctrine has been developed through statutes, case law and state attorney general opinions.
With this in mind, we built our model to consider the whole patient rather than individual illnesses as they arise.
The P3 Care Model Patient-Centric Patient wellness, not sickness. The VBC model rewards superior clinical outcomes and value delivered to the patient. With this in mind, we built our model to consider the whole patient rather than individual illnesses as they arise.
Within this, we believe our core addressable market to be the Medicare Advantage market, specifically within moderate-to-highly populated MA eligible dense counties, which we define as having greater than 10,000 Medicare eligible lives.
Within this, we believe our core addressable market to be the MA market, specifically within moderate-to-highly populated MA-eligible dense counties, which we define as having greater than 10,000 Medicare eligible lives. By multiplying these approximately 34 million MA members by an average $1,000 PMPM spend, we estimate this represents a core addressable market size of over $300 billion.
The FFS model unintentionally incentivizes the volume of patients and services performed rather than the quality of services and care—resulting in a deprioritization of preventative services and overall health of the patient. Beyond sub-optimal clinical outcomes, FFS results in significant healthcare spend.
The FFS model unintentionally incentivizes the volume of patients and services performed rather than the quality of services and care—resulting in a deprioritization of preventative services and overall health of the patient, and further reflected in laws regulating healthcare by scrutinizing the volume or value of claims processed in the FFS model.
Although we currently do not participate in these pilot payment models, we may choose to do so in the future. Additional changes that may affect our business include the expansion of new programs such as Medicare payment for performance initiatives for physicians under the Medicare Access and CHIP Reauthorization Act of 2015, which first affected physician payment in 2019.
Additional changes that may affect our business include the expansion of new programs such as Medicare payment for performance initiatives for physicians under the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), which first affected physician payment in 2019 based on physician participation in the Merit-Incentive Based Program (“MIPS”), or other eligible alternative payment model.
Aligning physician incentives with performance on growth, quality, patient disease documentation, and medical expense creates better economics within their practices. Broad Delegated Care Model Reshaping local healthcare.
These contracts were built with the physician in mind, which is reflected in our results—an annual physician retention rate of over 88% for 2025. Aligning physician incentives with performance on growth, quality, patient disease documentation, and medical expense creates better economics within their practices. Broad Delegated Care Model Reshaping local healthcare.
It helps our administrative teams deliver a data driven approach for a better, more engaged physician experience and act as a support system to their practices.
It helps our administrative teams deliver a data driven approach for a better, more engaged physician experience and act as a support system to their practices. This tool combines data management with data analysis to evaluate and transform complex data sets into meaningful, actionable information used to support effective strategic, tactical and operational insights.
First, as physicians join our network, we continue to pay them on an FFS basis per visit, or structure a contract to offer a monthly, fixed, capitated payment for each patient paneled to their practice. Additionally, we provide quality incentive payments to our physician partners as they close quality gaps in care, enable patient access and improve documentation.
First, as physicians join our network, we continue to pay them based on their prior FFS practice model, or structure a contract to offer a monthly, fixed, capitated payment for each patient paneled to their practice.
ACOs that achieve quality performance standards established by CMS are eligible to share in a portion of the Medicare program’s cost savings. ACO program methodologies and participation requirements are updated by CMS for each performance year and participants are expected to comply with such program requirements and required to report on performance after the close of the year.
ACOs that achieve quality performance standards established by CMS are eligible to share in a portion of the Medicare program’s cost savings.
These changes included aggregate reductions to Medicare payments to providers, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through the first six months of fiscal year 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken.
These changes included aggregate reductions to Medicare payments to providers by 2%, commonly known as “sequestration.” Sequestration was legislated to take effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through the first six months of fiscal year 2032.
With respect to P3’s providers participating in its network, P3 providers must meet minimum requirements to apply for participation or continued participation with P3 through a credentialing process, including, without limitation, having a valid, current medical license and Drug Enforcement Administration registration, if required for the provider’s scope of practice, the absence of any debarment, suspension, exclusion or other restriction from receiving payments from any government or other third-party payor program, and clearing National Practitioner Data Bank of any reports and/or disciplinary actions.
With respect to P3’s providers participating in its network, P3 providers must meet minimum requirements to apply for participation or continued participation with P3 through a credentialing process, including, without limitation, having a valid, current medical license and registration with the U.S.
Medical costs will vary seasonally depending on a number of factors, including the weather and the number of calendar working days in a given period. Certain illnesses, such as the influenza virus, are far more prevalent during colder months of the year, which will result in an increase in medical expenses during these time periods.
Certain illnesses, such as the influenza virus, are far more prevalent during colder months of the year, which will result in an increase in medical expenses during these time periods. We therefore expect to see higher levels of per member medical costs in the first and fourth quarters. See Part II, Item 7.
This platform provides comprehensive physician profiles, cost analysis, and quality metrics, allowing management to identify trends, uncover improvement opportunities, and optimize resource utilization. Additionally, its embedded Risk Adjustment engine helps quantify burden of illness, offering clinical risk stratification data that supports targeted care coordination for high-risk patient populations.
This platform provides comprehensive physician profiles, cost analysis, and quality metrics, allowing management to identify trends, uncover improvement opportunities, and optimize resource utilization.
The scope of these laws and the interpretations of them vary from state to state and are enforced by state courts and regulatory authorities, each with broad discretion. Some state fraud and abuse laws apply to items or services reimbursed by any payor, including patients and commercial insurers, not just those reimbursed by a federally funded healthcare program.
Some state fraud and abuse laws apply to items or services reimbursed by any payor, including patients and commercial insurers, and not just those reimbursed by a federally funded healthcare program, while other states have laws against kickbacks and self-referral that apply solely to Medicare or Medicaid funds.
Our core focus is the MA market, which makes up approximately 54% of the overall Medicare market, or nearly 33 million Medicare eligible lives in 2024.
Our core focus is the Medicare Advantage (“MA”) market, which covers approximately 34 million Medicare eligible lives in 2025.
Small physician practices deliver the majority of care in the U.S.—with 51.8% of physicians working in practices with 10 or fewer physicians, per a 2023 American Medical Association report.
Small physician practices deliver the majority of care in the U.S.—with 47% of physicians working in practices with 10 or fewer physicians, per a 2025 American Medical Association report. That report also found that 42% of PCPs worked in a practice in 2024 that was wholly owned by physicians (e.g., private practice) representing an 18% point drop since 2012.
We are “family” and we take care of each other with the same intensity as we take care of our patients. • Passion: Our heart is our patients. Our soul is our clinicians. Our strength is our people and culture. • Purpose: Our core is fixing health care. Our mindset is disciplined purposeful growth.
We are “family” and we take care of each other with the same intensity as we take care of our patients. ◦ Collaboration “ We achieve more when we work as one. ” ◦ Service: “We serve others with empathy, purpose, and a commitment to excellence.” • Passion: Our heart is our patients. Our soul is our clinicians.
Although we do not currently hold a patent for P3 Technology/Health Hub, we have filed provisional patent applications relating to the P3 Technology/Health Hub, and we continue to regularly assess the most appropriate methods of protecting our intellectual property and may decide to pursue available protections in the future.
Our internally developed technology is continuously refined to support the needs of our platform and partners. We continue to regularly assess the most appropriate methods of protecting our intellectual property and may decide to pursue available protections in the future. We maintain our intellectual property and confidential business information in a number of ways.
The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare. In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare. In July of 2025, congress passed and the President signed into law the One Big Beautiful Bill Act of 2025 (“OBBBA”), which affected certain provisions of the ACA.
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That report also found that 46.7% of PCPs worked in a practice that was wholly owned by physicians (e.g., private practice) representing a continued decline since 2020 (49.1%), the first year in which the share of physicians in private practice became a minority.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks and challenges include our ability to: • attract new members and partner physicians to our platform and position our platform as a convenient and accepted way to access and deliver healthcare; P3 Health Partners Inc. | 2024 Form 10-K | 18 Table of Contents • retain our current members, affiliated professional entities and other physician partners and encourage them to continue to utilize our platform and services; • gain market acceptance of our services and products with members and physicians and maintain and expand such relationships; • comply with existing and new laws and regulations applicable to our business and in our industry; • anticipate and respond to changes in Medicare reimbursement rates and the markets in which we operate; • react to challenges from existing and new competitors; • maintain and enhance our reputation and brand; • effectively manage our growth and business operations, including new geographies; • forecast our revenue, which includes reimbursements, and budget for, and manage, our expenses, including our medical expense amounts, and capital expenditures; • hire and retain talented individuals at all levels of our organization; • maintain and improve the infrastructure underlying our platform, including our data protection, intellectual property and cybersecurity; and • successfully update our platform and services, including expanding our services into different healthcare products and services, develop and update our software, offerings and services to benefit our members.
Biggest changeThese risks and challenges include our ability to: • attract new members and partner physicians to our platform and position our platform as a convenient and accepted way to access and deliver healthcare; • retain our current members, affiliated professional entities and other physician partners and encourage them to continue to utilize our platform and services; • gain market acceptance of our services and products with members and physicians and maintain and expand such relationships; • comply with existing and new laws and regulations applicable to our business and in our industry; • anticipate and respond to changes in Medicare reimbursement rates and the markets in which we operate, including rule changes that may limit the reimbursement we can obtain from Medicare; • react to challenges from existing and new competitors; • maintain and enhance our reputation and brand; • effectively manage our growth and business operations, including new geographies; • forecast our revenue, which includes reimbursements, and budget for, and manage, our expenses, including our medical expense amounts, and capital expenditures; • hire and retain talented individuals at all levels of our organization; • maintain and improve the infrastructure underlying our platform, including our data protection, implementation of artificial intelligence for appropriate functions to the extent permitted by applicable law, intellectual property and cybersecurity; and P3 Health Partners Inc. | 2025 Form 10-K | 19 Table of Contents • successfully update our platform and services, including expanding our services into different healthcare products and services, develop and update our software, offerings and services to benefit our members.
We have in the past experienced low-threat attacks by hackers or breaches due to employee error, malfeasance or other malicious or inadvertent disruptions. For example, in April 2023 we were the target of a type of wire transfer fraud known as business email compromise (“BEC”) scam.
We have in the past experienced low-threat attacks by hackers or breaches due to employee error, malfeasance or other malicious or inadvertent disruptions. For example, in April 2023 we were the target of a type of wire transfer fraud known as a business email compromise (“BEC”) scam.
Moreover, our inability to maintain our agreements with health plans, in particular with key payors such as Centene Corporation, Atrio Health Plans, United Healthcare and Aetna, with respect to their MA members or to negotiate favorable terms for those agreements in the future, could result in the loss of patients and could have a material adverse effect on our profitability and business.
Moreover, our inability to maintain our agreements with health plans, in particular with key payors such as Centene Corporation, Atrio Health Plans, United Healthcare, Humana and Aetna, with respect to their MA members or to negotiate favorable terms for those agreements in the future, could result in the loss of patients and could have a material adverse effect on our profitability and business.
Under the terms of the P3 LLC Amended and Restated Limited Liability Agreement (the “P3 LLC A&R LLC Agreement”), and the Tax Receivable Agreement, P3 LLC is obligated to make tax distributions or payments to holders of its P3 LLC units, including us, except to the extent such distributions or payments would render P3 LLC insolvent or are otherwise prohibited by law or the terms of any credit facility.
Under the terms of the P3 LLC Amended and Restated Limited Liability Company Agreement (the “P3 LLC A&R LLC Agreement”), and the Tax Receivable Agreement, P3 LLC is obligated to make tax distributions or payments to holders of its P3 LLC units, including us, except to the extent such distributions or payments would render P3 LLC insolvent or are otherwise prohibited by law or the terms of any credit facility.
A determination of non-compliance, or the termination of or failure to successfully restructure these relationships could result in disciplinary action, penalties, damages, fines, and/or a loss of revenue, any of which could have a material and adverse effect on our business, financial condition and results of operations.
A determination of non-compliance, or the termination of or failure to successfully restructure these relationships could result in professional disciplinary action, penalties, damages, fines, and/or a loss of revenue, any of which could have a material and adverse effect on our business, financial condition and results of operations.
As a result of (i) potential differences in the amount of net taxable income allocable to us and to P3 LLC’s other equityholders, (ii) the lower tax rates currently applicable to corporations as opposed to individuals, and (iii) the favorable tax benefits that we anticipate from any purchase of P3 Existing Units in connection with the Business Combinations and future redemptions or exchanges by the P3 Equityholders of P3 LLC Units for Class A common stock or cash pursuant to the P3 LLC A&R LLC Agreement, tax distributions payable to us may be in amounts that exceed our actual tax liabilities with respect to the relevant taxable year, including our obligations under the Tax Receivable Agreement.
As a result of (i) potential differences in the amount of net taxable income allocable to us and to P3 LLC’s other equityholders, (ii) the lower tax rates currently applicable to corporations as opposed to individuals, and (iii) the favorable tax benefits that we anticipate from any purchase of P3 LLC Units in connection with the Business Combinations and future redemptions or exchanges by the holders of P3 LLC Units for Class A common stock or cash pursuant to the P3 LLC A&R LLC Agreement, tax distributions payable to us may be in amounts that exceed our actual tax liabilities with respect to the relevant taxable year, including our obligations under the Tax Receivable Agreement.
Notice of breaches may be required to be made to affected individuals or other state or federal regulators, and for extensive breaches, notice may need to be made to the media or State Attorneys General. Such a notice could harm our reputation and our ability to compete.
Notice of breaches may be required to be made to affected individuals, HHS, or other state or federal regulators; for extensive breaches, notice may need to be made to the media or State Attorneys General. Such a notice could harm our reputation and our ability to compete.
The value received upon exercise of the Public Warrants (1) may be less than the value the holders would have received if they had exercised their Public Warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the Public Warrants, including because the number of shares of Class A common stock received in connection with such an exercise is capped at 0.361 shares of Class A common stock per whole Public Warrant (subject to adjustment) irrespective of the remaining life of the Public Warrants.
The value received upon exercise of the Public Warrants (1) may be less than the value the holders would have received if they had exercised their Public Warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the Public Warrants, including because the number of shares of Class A common stock received in connection with such an exercise is capped at 0.00722 shares of Class A common stock per whole Public Warrant (subject to adjustment) irrespective of the remaining life of the Public Warrants.
We have hired additional legal and accounting personnel and may in future need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and may need to establish an internal audit function.
We have hired additional legal and accounting personnel and may in the future need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and may need to establish an internal audit function.
If regulations change to restrict our ability to or prohibit us from delivering care through telehealth modalities, our financial condition and results of operations may be adversely affected.
If laws or regulations change to restrict our ability to or prohibit us from delivering care through telehealth modalities, our financial condition and results of operations may be adversely affected.
As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly, based on factors, which are outside of its control.
As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly, based on factors, which are outside of our control.
The government may also assert that a claim including items or services resulting from a violation of the AKS or Stark Law constitutes a false or fraudulent claim for purposes of the FCA; • the Civil Monetary Penalties Statute, which prohibits, among other things, an individual or entity from offering remuneration to a federal healthcare program beneficiary that the individual or entity knows or should know is likely to influence the beneficiary to order or receive healthcare items or services from a particular provider; P3 Health Partners Inc. | 2024 Form 10-K | 33 Table of Contents • the criminal healthcare fraud provisions of HIPAA and related rules that prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying, concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
The government may also assert that a claim including items or services resulting from a violation of the AKS or Stark Law constitutes a false or fraudulent claim for purposes of the FCA; • the Civil Monetary Penalties Statute, which prohibits, among other things, an individual or entity from offering remuneration to a federal healthcare program beneficiary that the individual or entity knows or should know is likely to influence the beneficiary to order or receive healthcare items or services from a particular provider; P3 Health Partners Inc. | 2025 Form 10-K | 35 Table of Contents • the criminal healthcare fraud provisions of HIPAA and related rules that prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying, concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Unfavorable ratings or scores of us or our industry may lead to negative investor sentiment, the exclusion of our stock into ESG-oriented investment funds, and the diversion of investment to other companies or industries, which could have a negative impact on our stock price and our access to and cost of capital.
Unfavorable ratings or scores of us or our industry may lead to negative investor sentiment, the exclusion of our stock from ESG-oriented investment funds, and the diversion of investment to other companies or industries, which could have a negative impact on our stock price and our access to and cost of capital.
Moreover, there is no assurance that any actions that we take will be successful in restoring our compliance with the Bid Price Rule or will prevent future non-compliance therewith. There is also no assurance that we will maintain compliance with the other listing requirements of The Nasdaq Capital Market.
Moreover, there is no assurance that any actions that we take will be successful in restoring our compliance with the Listing Rule or will prevent future non-compliance therewith. There is also no assurance that we will maintain compliance with the other listing requirements of The Nasdaq Capital Market.
Despite our implementation of a variety of security measures, our information technology systems could be subject to physical or electronic break-ins, and similar disruptions from unauthorized tampering or any weather-related disruptions where our headquarters is located.
Despite our implementation of a variety of security measures, our information technology systems have been and could be subject to physical or electronic break-ins, and similar disruptions from unauthorized tampering or any weather-related disruptions where our headquarters is located.
We have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Public Warrant if, among other things, the last reported sales price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of such redemption to the Public Warrant holders.
We have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.50 per Public Warrant if, among other things, the last reported sales price of our Class A common stock equals or exceeds $900.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of such redemption to the Public Warrant holders.
Unlike the AKS, the Stark Law is violated if the financial arrangement does not meet an applicable exception, regardless of any intent by the parties to induce or reward referrals or the reasons for the financial relationship and the referral; • the federal False Claims Act (the “FCA”), which imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly make, or cause to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits.
Unlike the AKS, the Stark Law is violated if the financial arrangement does not meet an applicable exception, regardless of any intent by the parties to induce or reward referrals or the reasons for the financial relationship and the referral; • the FCA, which imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly make, or cause to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits.
As a result, as we continue to grow and enter new geographies, it may be difficult for us to hire additional qualified personnel with the necessary skills. We continued to experience labor shortages in 2024.
As a result, as we continue to grow and enter new geographies, it may be difficult for us to hire additional qualified personnel with the necessary skills. We continued to experience labor shortages in 2025.
Further, certain states have also adopted comparable privacy and security laws and regulations which govern the privacy, processing and protection of health-related and other personal information. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
Further, certain states have also adopted comparable privacy and security laws and regulations which govern the privacy, processing and protection of health-related and other personal information. Such laws and regulations are subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
Our certificate of incorporation provides that subject to certain exceptions, the Sponsor and its affiliates and any of their respective principals, members, directors, partners, stockholders, officers, employees or other representatives, or any director or stockholder of the Company who is not employed by us or our subsidiaries, would not be restricted from P3 Health Partners Inc. | 2024 Form 10-K | 40 Table of Contents owning assets or engaging in businesses that compete directly or indirectly with us or any of our subsidiaries.
Our certificate of incorporation provides that subject to certain exceptions, the Sponsor and its affiliates and any of their respective principals, members, directors, partners, stockholders, officers, employees or other representatives, or any director or stockholder of the Company who is not employed by us or our subsidiaries, would not be restricted from P3 Health Partners Inc. | 2025 Form 10-K | 43 Table of Contents owning assets or engaging in businesses that compete directly or indirectly with us or any of our subsidiaries.
In addition, we may redeem the Public Warrants commencing 90 days after they become exercisable and prior to their expiration, at a price of $0.10 per Public Warrant if, among other things, the last reported sale price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which we send the notice of redemption to the Public Warrant holders.
In addition, we may redeem the Public Warrants commencing 90 days after they become exercisable and prior to their expiration, at a price of $5.00 per Public Warrant if, among other things, the last reported sale price of our Class A common stock equals or exceeds $500.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which we send the notice of redemption to the Public Warrant holders.
P3 Health Partners Inc. | 2024 Form 10-K | 34 Table of Contents If any of our affiliated professional entities, other physician partners or owned or managed clinics lose their regulatory licenses, permits, accreditations and/or registrations, as applicable, or become ineligible to receive reimbursement under Medicare, Medicaid or other third-party payors, there may be a material adverse effect on our business, financial condition, cash flows, or results of operations.
P3 Health Partners Inc. | 2025 Form 10-K | 36 Table of Contents If any of our affiliated professional entities, other physician partners or owned or managed clinics lose their regulatory licenses, permits, accreditations and/or registrations, as applicable, or become ineligible to receive reimbursement under Medicare, Medicaid or other third-party payors, there may be a material adverse effect on our business, financial condition, cash flows, or results of operations.
As a result, included on our consolidated balance sheet as of December 31, 2024 contained elsewhere in this Form 10-K are derivative liabilities related to embedded features contained within the warrants.
As a result, included on our consolidated balance sheet as of December 31, 2025 contained elsewhere in this Form 10-K are derivative liabilities related to embedded features contained within the warrants.
Risks Related to Ownership of Our Common Stock Failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, financial condition, results of operations, and stock price and may adversely affect investor confidence in our company and, as a result, the value of our Class A common stock and your investment.
Failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, financial condition, results of operations, and stock price and may adversely affect investor confidence in our company and, as a result, the value of our Class A common stock and your investment.
Factors affecting the trading price of our securities may include: • actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • changes in the market’s expectations about our operating results; • success of competitors; • our operating results failing to meet the expectation of securities analysts or investors in a particular period; • changes in financial estimates and recommendations by securities analysts concerning us or the health population management industry in general; • short sales of our stock or trading phenomena such as “short squeezes;” • operating and stock price performance of other companies that investors deem comparable to us; • our ability to market new and enhanced products on a timely basis; • changes in laws and regulations affecting our business; • our ability to meet compliance requirements; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of our Class A common stock available for public sale; • any major change in our board of directors or management; • sales of substantial amounts of Class A common stock by our directors, executive officers or significant stockholders or the perception that such sales have or could occur; and • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations, public health crises, and acts of war or terrorism.
Factors affecting the trading price of our securities may include: • actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • changes in the market’s expectations about our operating results; • success of competitors; • our operating results failing to meet the expectation of securities analysts or investors in a particular period; • changes in financial estimates and recommendations by securities analysts concerning us or the health population management industry in general; • short sales of our stock or trading phenomena such as “short squeezes;” • operating and stock price performance of other companies that investors deem comparable to us; • our ability to market new and enhanced products on a timely basis; P3 Health Partners Inc. | 2025 Form 10-K | 49 Table of Contents • changes in laws and regulations affecting our business; • our ability to meet compliance requirements; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of our Class A common stock available for public sale; • any major change in our board of directors or management; • sales of substantial amounts of Class A common stock by our directors, executive officers or significant stockholders or the perception that such sales have or could occur; and • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations, public health crises, and acts of war or terrorism.
Of particular importance are: • the federal Anti-Kickback Statute (the “AKS”), which prohibits the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback, rebate or other remuneration for referring an individual, in return for ordering, leasing, purchasing or recommending or arranging for or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by any federal healthcare program, such as Medicare and Medicaid.
Of particular importance are: • the AKS, which prohibits the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback, rebate or other remuneration for referring an individual, in return for ordering, leasing, purchasing or recommending or arranging for or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by any federal healthcare program, such as Medicare and Medicaid.
Our Term Loan Facility (as defined herein) with CRG Partners (the “Lender”), the VGS Promissory Note, the VGS 2 Promissory Note and the VGS 3 Promissory Note (each as defined herein) contain affirmative and negative covenants which, among other things, require us to maintain minimum liquidity and annual minimum revenue levels that increase over time and restrict P3 LLC’s ability and the ability of its subsidiaries from, among other things, incurring certain indebtedness and liens, and making certain restricted payments.
Our Term Loan Facility (as defined herein) with CRG Partners (the “Lender”), the VGS Promissory Note, the VGS 2 Promissory Note, the VGS 3 Promissory Note, VGS 4 Promissory Note, and VGS 5 Promissory Note (each as defined herein and collectively, the “Loan Documents”) contain affirmative and negative covenants which, among other things, require us to maintain minimum liquidity and annual minimum revenue levels that increase over time and restrict P3 LLC’s ability and the ability of its subsidiaries from, among other things, incurring certain indebtedness and liens, and making certain restricted payments.
While the codes subject to changes represent only a fraction of the total number of conditions considered for purposes of risk adjustment, this change and any future changes to CMS’s risk adjustment methodology could impact the revenue we record from Medicare Advantage plans.
While the codes subject to changes represent only a fraction of the total number of conditions considered for purposes of risk adjustment, this change and any future changes to CMS’s risk adjustment methodology could impact the revenue we record from MA plans.
Principal assumptions relating to our market opportunity include estimates of the total number and average length of relationships between MA patients and their physicians, historical MA patient growth rates, amount of revenue and medical expenses associated with MA members expected to be attributed to our affiliated professional entities and other physician partners and historical experience that such physician partners have with a similar platform.
Principal assumptions relating to our market opportunity include estimates of the total number and average length of relationships between MA patients and their physicians, the ratings of the MA patients within the target market’s population, historical MA patient growth rates, amount of revenue and medical expenses associated with MA members expected to be attributed to our affiliated professional entities and other physician partners and historical experience that such physician partners have with a similar platform.
Since December 2022, in various private placement transactions and in connection with our issuance of our outstanding promissory notes (see Note 10 “Debt” to the consolidated financial statements included elsewhere in this Form 10-K), we have issued warrants and pre-funded warrants to purchase an aggregate of 307.1 million shares of Class A common stock.
Since December 2022, in various private placement transactions and in connection with our issuance of our outstanding promissory notes (see Note 11 “Debt” to the consolidated financial statements included elsewhere in this Form 10-K), we have issued warrants and pre-funded warrants to purchase an aggregate of 8.2 million shares of Class A common stock.
Our failure to comply with any applicable rules or regulations could lead to penalties and adversely impact our reputation, customer attraction and retention, access to capital and employee retention. Such ESG matters may also impact our suppliers and customers, which may augment or cause additional impacts on our business, financial condition or results of operations. Item 1B. Unresolved Staff Comments.
Our failure to comply with any applicable rules or regulations could lead to penalties and adversely impact our reputation, customer attraction and retention, access to capital and employee retention. Such ESG matters may also impact our suppliers and customers, which may augment or cause additional impacts on our business, financial condition or results of operations.
P3 Health Partners Inc. | 2024 Form 10-K | 41 Table of Contents There may be sales of a substantial amount of our Class A common stock in future by our stockholders, and these sales could cause the price of our Class A common stock to fall.
P3 Health Partners Inc. | 2025 Form 10-K | 44 Table of Contents There may be sales of a substantial amount of our Class A common stock in future by our stockholders, and these sales could cause the price of our Class A common stock to fall.
Entities that are found to be in violation of HIPAA as the result of a breach of unsecured PHI, a complaint about privacy practices or an audit by HHS may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.
Entities that are found to be in violation of HIPAA as the result of a breach of unsecured PHI, a complaint about privacy practices (including refusal of access to PHI) or an audit by HHS may be subject to significant civil and administrative fines and penalties, and may even face criminal penalties, in addition to potential additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.
The Federal Trade Commission (the “FTC”) also has authority to initiate enforcement actions against entities that mislead customers about HIPAA compliance, make deceptive statements about privacy and data sharing in privacy policies, fail to limit third-party use of personal health information, fail to implement policies to protect personal health information or engage in other unfair practices that harm customers or that may violate Section 5(a) of the FTC Act.
The Federal Trade Commission (the “FTC”) also has authority to initiate enforcement actions against entities that mislead customers about HIPAA compliance, make deceptive statements about privacy and data sharing in privacy policies, fail to limit third-party use of personal health information, fail to implement policies to protect personal health information or engage in other unfair practices that harm customers or that may violate Section 5(a) of the FTC Act, including for healthcare-related information that is beyond the scope of HIPAA.
Additionally, new geographies may be characterized by stakeholder preferences for, and experience with, rates of MA enrollment, MA reimbursement rates, payor concentration and rates of unnecessary variability in and utilization of medical care that differ from those in the geographies where our existing operations are located.
Additionally, new geographies may be characterized by stakeholder preferences for, and experience with, rates of MA enrollment, MA reimbursement rates, the characteristics of the populations eligible for or covered by MA, payor concentration and rates of unnecessary variability in and utilization of medical care that differ from those in the geographies where our existing operations are located.
Our failure to make any payment required under the Tax Receivable Agreement (including any accrued and unpaid interest) within 90 calendar days of the date on which the payment is required to be made will constitute a material breach of a material obligation under the Tax Receivable Agreement, which will terminate the Tax Receivable Agreement and accelerate future payments thereunder, unless the applicable payment is not made because (i) P3 Health Partners Inc. | 2024 Form 10-K | 44 Table of Contents P3 LLC is prohibited from making such payment under the terms of the Tax Receivable Agreement or the terms governing certain of its indebtedness or (ii) P3 LLC does not have, and despite using commercially reasonable efforts cannot obtain, sufficient funds to make such payment.
Our failure to make any payment required under the Tax Receivable Agreement (including any accrued and unpaid interest) within 90 calendar days of the date on which the payment is required to be made will constitute a material breach of a material obligation under the Tax Receivable Agreement, which will terminate the Tax Receivable Agreement and accelerate future payments thereunder, unless the applicable payment is not made because (i) P3 LLC is prohibited from making such payment under the terms of the Tax Receivable Agreement or the terms governing certain of its indebtedness or (ii) P3 LLC does not have, and despite using commercially reasonable efforts cannot obtain, sufficient funds to make such payment.
For example, the ASTP/ONC rule, which went into effect on April 5, 2021, prohibits healthcare providers, health IT developers of certified health IT, and HIEs/HINs from engaging in practices that are likely to interfere with, prevent, materially discourage, or otherwise inhibit the access, exchange or use of electronic health information (“EHI”), also known as “information blocking.” To further support access and exchange of EHI, the ASTP/ONC rule identifies eight “reasonable and necessary activities” as exceptions to information blocking activities, as long as specific conditions are met.
For example, this rule prohibits healthcare providers, health IT developers of certified health IT, and HIEs/HINs from engaging in practices that are likely to interfere with, prevent, materially discourage, or otherwise inhibit the access, exchange or use of electronic health information (“EHI”), also known as “information blocking.” To further support access and exchange of EHI, the ASTP/ONC rule identifies eight “reasonable and necessary activities” as exceptions to information blocking activities, as long as specific conditions are met.
Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, including, without limitation, the following: • our ability to maintain and grow the number of members on our platform; • the demand for and types of services that are offered on our platform by providers; • the timing of recognition of revenue, including possible delays in the recognition of revenue due to sometimes unpredictable implementation timelines; • the timing of cash sweeps for prior rendered services; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; • our ability to effectively manage the size and composition of our network of healthcare providers relative to the level of demand for services from our members and our clients’ members and patients; P3 Health Partners Inc. | 2024 Form 10-K | 31 Table of Contents • our ability to respond to competitive developments, including pricing changes and the introduction of new products and services by our competitors; • client and member renewal rates and the timing and terms of client and member renewals; • changes to our pricing model; • our ability to introduce new features and services and enhance our existing platform and our ability to generate significant revenue from new features and services; • the impact of outages of our platform and associated reputational harm; • security or data privacy breaches and associated remediation costs; • impairment charges; • the timing of expenses related to the development or acquisition of technologies or businesses; and • pandemic or epidemics.
Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, including, without limitation, the following: • our ability to maintain and grow the number of members on our platform; • the demand for and types of services that are offered on our platform by providers; • the timing of recognition of revenue, including possible delays in the recognition of revenue due to sometimes unpredictable implementation timelines; • the timing of cash sweeps for prior rendered services; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; • our ability to effectively manage the size and composition of our network of healthcare providers relative to the level of demand for services from our members and our clients’ members and patients; • our ability to respond to competitive developments, including pricing changes and the introduction of new products and services by our competitors; • client and member renewal rates and the timing and terms of client and member renewals; • changes to our pricing model, including due to lack of growth or reductions in MA reimbursement levels; • our ability to introduce new features and services and enhance our existing platform and our ability to generate significant revenue from new features and services; • the impact of outages of our platform and associated reputational harm; • security or data privacy breaches and associated remediation costs; • impairment charges; • the timing of expenses related to the development or acquisition of technologies or businesses; and • pandemics or epidemics.
Our primary competitors include Oak Street Health, Inc., Astrana Health, Inc. and agilon health, inc., in addition to numerous local provider networks, hospitals and health systems.
Our primary competitors include Aledade, Astrana Health, Inc. and agilon health, inc., in addition to numerous local provider networks, hospitals and health systems.
Based on our currently available cash resources, including the aggregate proceeds of $30.0 million we received from a related party financing transaction in February and March 2025, and assuming no other financing transactions, we believe we will require additional funding in 2025.
Based on our currently available cash resources, including the aggregate proceeds of $18.0 million we received from a related party financing transaction in January and February 2026, and assuming no other financing transactions, we believe we will require additional funding in 2026.
We will be required to make payments under the Tax Receivable Agreement for certain tax benefits we may claim, and the amounts of such payments could be significant. We are party to the Tax Receivable Agreement with certain of the P3 Equityholders and P3 LLC.
We will be required to make payments under the Tax Receivable Agreement for certain tax benefits we may claim, and the amounts of such payments could be significant. We are party to the Tax Receivable Agreement with certain holders of P3 LLC Units (the “P3 Equityholders”) and P3 LLC.
The amount of the cash payments that we may be required to make under the Tax Receivable Agreement could be significant and is dependent upon significant future events and assumptions, including the timing of the exchanges of P3 LLC units, the price of our Class A common stock at the time of each exchange, the extent to which such exchanges are taxable transactions and the amount of the exchanging P3 Equityholder’s tax basis in its P3 LLC units at the time of the relevant exchange.
The amount of the cash payments that we may be required to make under the Tax Receivable Agreement could be significant and is dependent upon significant future events and assumptions, including the timing of the exchanges of P3 LLC units, the price of our Class A common stock at the time of each exchange, the extent to which such exchanges are taxable transactions and the amount of the exchanging P3 Equityholder’s tax basis in its P3 LLC units at the time of the P3 Health Partners Inc. | 2025 Form 10-K | 47 Table of Contents relevant exchange.
Further, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the federal physician self-referral law (the “Stark Law”), which, subject to limited exceptions, prohibits physicians from referring Medicare or Medicaid patients to an entity for the provision of certain designated health services (“DHS”), if the physician or a member of such physician’s immediate family has a direct or indirect financial relationship (including an ownership interest or a compensation arrangement) with the entity, and prohibits the entity from billing Medicare or Medicaid for such DHS.
Further, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the Stark Law, which, subject to limited exceptions, prohibits physicians from referring Medicare or Medicaid patients to an entity for the provision of DHS, if the physician or a member of such physician’s immediate family has a direct or indirect financial relationship (including an ownership interest or a compensation arrangement) with the entity, and prohibits the entity from billing Medicare or Medicaid for such DHS.
An adverse inspection, review, audit or investigation could result in: • refunding amounts we have been paid pursuant to the Medicare or Medicaid programs or from payors; P3 Health Partners Inc. | 2024 Form 10-K | 35 Table of Contents • state or federal agencies imposing fines, penalties and other sanctions on us; • temporary suspension of payment for new patients to the facility or agency; • decertification or exclusion from participation in the Medicare or Medicaid programs or one or more payor networks; • self-disclosure of violations to applicable regulatory authorities; • damage to our reputation; • the revocation of a facility’s or agency’s license; • criminal penalties; • a corporate integrity agreement with HHS’s Office of Inspector General; and • loss of certain rights under, or termination of, our contracts with payors.
An adverse inspection, review, audit or investigation could result in: • refunding amounts we have been paid pursuant to the Medicare or Medicaid programs or from payors; • state or federal agencies imposing fines, penalties and other sanctions on us; • temporary suspension of payment for new patients to the facility or agency; • decertification or exclusion from participation in the Medicare or Medicaid programs or one or more payor networks; • self-disclosure of violations to applicable regulatory authorities; • damage to our reputation; • the revocation of a facility’s or agency’s license; • criminal penalties; • a corporate integrity agreement with HHS’s OIG; and • loss of certain rights under, or termination of, our contracts with payors.
Based upon management’s assessment of the P3 Health Partners Inc. | 2024 Form 10-K | 17 Table of Contents Company’s ability to continue as a going concern as described above in the risk factor entitled “ Our management has performed an analysis of our ability to continue as a going concern and has identified substantial doubt about our ability to continue as a going concern ,” absent additional funding, we believe that our existing cash, cash equivalents and restricted cash are not sufficient to fund our operating and capital needs for at least the next 12 months.
Based upon management’s assessment of the Company’s ability to continue as a going concern as described above in the risk factor entitled “ Our management has performed an analysis of our ability to continue as a going concern and has identified substantial doubt about our ability to continue as a going concern ,” absent additional funding, we believe that our existing cash, cash equivalents and restricted cash are not sufficient to fund our operating and capital needs for at least the next 12 months.
We have no direct operations and no significant assets other than the ownership of a minority of the economic interests in P3 LLC. As of December 31, 2024, we owned approximately 45.4% of the economic interests in P3 LLC.
We have no direct operations and no significant assets other than the ownership of a minority of the economic interests in P3 LLC. As of December 31, 2025, we owned approximately 46% of the economic interests in P3 LLC.
As of December 31, 2024, there were approximately 162.9 million shares of Class A common stock outstanding and an additional approximately 196.0 million shares of Class V common stock, which are exchangeable, together with P3 LLC units, for an equivalent number of shares of Class A common stock.
As of December 31, 2025, there were approximately 3.3 million shares of Class A common stock outstanding and an additional approximately 3.9 million shares of Class V common stock, which are exchangeable, together with P3 LLC units, for an equivalent number of shares of Class A common stock.
Redemption of the outstanding Public Warrants could force our stockholders (i) to exercise their Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so, (ii) to sell their Public Warrants at the then-current market price when you might otherwise wish to hold your Public Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than the market value of your Public Warrants.
Redemption of the outstanding Public Warrants could force our stockholders (i) to exercise their Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so, (ii) to sell their Public Warrants at the then-current market price when you might P3 Health Partners Inc. | 2025 Form 10-K | 45 Table of Contents otherwise wish to hold your Public Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than the market value of your Public Warrants.
As of December 31, 2024, approximately 58.7% of the outstanding shares of Class A common stock (on an as-converted and as-exchanged basis) were held by entities affiliated with us and our executive officers and directors.
As of December 31, 2025, approximately 50.4% of the outstanding shares of Class A common stock (on an as-converted and as-exchanged basis) were held by entities affiliated with us and our executive officers and directors.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources .” If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, intellectual property, or future revenue streams or grant licenses on terms that may not be favorable to us.
“ Management’s Discussion and Analysis of Financial Condition P3 Health Partners Inc. | 2025 Form 10-K | 21 Table of Contents and Results of Operations—Liquidity and Capital Resources .” If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, intellectual property, or future revenue streams or grant licenses on terms that may not be favorable to us.
For example, the P3 Equityholders may have different tax positions from us which could influence their decisions regarding whether and when to dispose of assets, whether and when to incur new or refinance existing indebtedness, especially in light of the existence of the Tax Receivable Agreement, and whether and when we should terminate the Tax Receivable Agreement and accelerate our obligations thereunder.
For example, the P3 Equityholders may have different tax positions from us which could influence their decisions regarding whether and when to dispose of assets, whether and when to incur new or refinance existing P3 Health Partners Inc. | 2025 Form 10-K | 48 Table of Contents indebtedness, especially in light of the existence of the Tax Receivable Agreement, and whether and when we should terminate the Tax Receivable Agreement and accelerate our obligations thereunder.
For example, since December 2022, in various private placement transactions and in connection with the issuance of unsecured promissory notes (see Note 10 “Debt” to the consolidated financial statements included elsewhere in this Form 10-K), we have issued an aggregate of 110.8 million shares of Class A common stock and warrants and pre-funded warrants to purchase an aggregate of 307.1 million shares of Class A common stock.
For example, from December 2022 through December 2025, in various private placement transactions and in connection with the issuance of unsecured promissory notes (see Note 11 “Debt” to the consolidated financial statements included elsewhere in this Form 10-K), we have issued an aggregate of 14.7 million shares of Class A common stock and warrants and pre-funded warrants to purchase an aggregate of 8.2 million shares of Class A common stock.
It is possible that new laws and regulations will be adopted in the United States, or that existing laws and regulations, including competition and antitrust laws, may be interpreted in ways that would limit our ability to use AI Technologies for our business, or require us to change the way we use AI Technologies in a manner that negatively affects the performance of our products, services, and business and the way in which we use AI Technologies.
It is possible that new laws and regulations will be adopted in the United States, or that existing laws and regulations, including competition and antitrust laws, may be interpreted in ways that would limit our ability to use AI Technologies for our business, or require us to change the way we use AI Technologies in a manner that negatively affects P3 Health Partners Inc. | 2025 Form 10-K | 34 Table of Contents the performance of our products, services, and business and the way in which we use AI Technologies.
Delisting from the Nasdaq Capital Market would cause us to pursue eligibility for trading of our securities on other markets or exchanges, or on the “pink sheets.” In such case, our stockholders’ ability to trade, or obtain quotations of the market value of our Class A common stock would be severely limited because of lower trading volumes and transaction delays.
P3 Health Partners Inc. | 2025 Form 10-K | 41 Table of Contents Delisting from the Nasdaq Capital Market would cause us to pursue eligibility for trading of our securities on other markets or exchanges, or on the “pink sheets.” In such case, our stockholders’ ability to trade, or obtain quotations of the market value of our Class A common stock would be severely limited because of lower trading volumes and transaction delays.
The extent to which any pandemic, epidemic, or outbreak of an infectious disease may directly or indirectly impact our operations and results of operations will depend on multiple factors, including, but not limited to the ultimate geographic spread of the disease, the duration and scope of the outbreak, the emergence of variants, the availability and efficacy of vaccines, and government, social, business and other actions that are taken in response to the pandemic or outbreak.
The extent to which any pandemic, epidemic, or outbreak of an infectious disease may directly or indirectly impact our operations and results of operations will depend on multiple factors, including, but not limited to the ultimate geographic spread of the disease, the duration and scope of the outbreak, the emergence of variants, the availability and efficacy of vaccines, and government, social, business and other actions that are taken in response to the pandemic or outbreak, including federal designation as a public health emergency (“PHE”) and the federal regulatory and legislative response to addressing that PHE.
In addition, any claims may adversely affect our business or reputation. If we or our affiliated professional entities or other physician partners fail to comply with applicable data interoperability and information blocking rules, our consolidated results of operations could be adversely affected.
In addition, any claims may adversely affect our business or reputation. If we or our affiliated professional entities or other physician partners fail to comply with applicable data interoperability and information blocking rules, our consolidated results of operations could be adversely affected. The Cures Act included many provisions related to data interoperability, information blocking and patient access.
In addition, implementing changes to mitigate risks associated with such events may result in substantial short- and long-term additional operational expenses, which could have a material adverse effect on our business, results of operations or financial condition.
In addition, implementing changes to mitigate risks associated with such events may result in substantial short- and long-term additional operational expenses, which could have a material adverse effect on our business, results of operations or financial condition. Changes in laws and regulations related to AI Technologies could adversely affect our products, services, and results of operations.
Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a delisting of our securities. We are required to meet the continued listing requirements of the Nasdaq Capital Market and if we fail to satisfy such continued listing requirements, Nasdaq may take steps to delist our securities.
We are required to meet the continued listing requirements of the Nasdaq Capital Market and if we fail to satisfy such continued listing requirements, Nasdaq may take steps to delist our securities.
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if P3 Health Partners Inc. | 2024 Form 10-K | 30 Table of Contents unfounded, could result in additional cost and liability to us, damage our reputation, and adversely affect our business and results of operations.
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation, and adversely affect our business and results of operations.
Foresight issued 10.8 million warrants to purchase shares of our Class A common stock (the “Public Warrants”) as part of the units offered in its initial public offering and, simultaneously with the closing of its initial public offering, Foresight issued in a private placement an aggregate of 0.8 million units, including (i) an aggregate of 0.3 million private placement warrants, each exercisable to purchase one share of Class A common stock at $11.50 per share, subject to adjustment (the “Private Placement Warrants”), and (ii) an aggregate of 0.8 million shares of Class A common stock.
Foresight issued 0.2 million warrants to purchase shares of our Class A common stock (the “Public Warrants”) as part of the units offered in its initial public offering and, simultaneously with the closing of its initial public offering, Foresight issued in a private placement an aggregate of 16,650 units, including (i) an aggregate of 5,550 private placement warrants, each exercisable to purchase one share of Class A common stock at $575.00 per share, subject to adjustment (the “Private Placement Warrants”), and (ii) an aggregate of 16,650 shares of Class A common stock.
This discrepancy resulted in a contract dispute and a renegotiation of the service agreement. In January 2023, the renegotiation was settled and we reflected the known settlement of $5.0 million within health plan settlements payable on our consolidated balance sheet as of December 31, 2022.
In January 2023, the renegotiation was settled and we reflected the known settlement of $5.0 million within health plan settlements payable on our consolidated balance sheet as of December 31, 2022.
The Term Loan Facility, VGS Promissory Note, VGS 2 Promissory Note and VGS 3 Promissory Note lenders have granted us a waiver of the covenant under the Term Loan Facility related to the existence of a “going concern” explanatory paragraph in the audit opinion for our audited financial statements for the fiscal year ended December 31, 2024.
The lenders under the Loan Documents have granted us a waiver of the covenant under the Term Loan Facility related to the existence of a “going concern” explanatory paragraph in the audit opinion for our audited financial statements for the fiscal year ended December 31, 2025.
Factors that may cause medical expenses to exceed estimates include: • the health status of our members; • higher levels of hospitalization among our members; • higher than expected utilization of new or existing healthcare services or technologies; • an increase in the cost of healthcare services and supplies, whether as a result of inflation or otherwise; • changes to mandated benefits or other changes in healthcare laws, regulations and practices; • increased costs attributable to specialist physicians, hospitals and ancillary providers; • changes in the demographics of our members and medical trends; • contractual or claims disputes with providers, hospitals or other service providers within and outside a health plan’s network; • the occurrence of catastrophes, major epidemics or pandemics, or acts of terrorism; and • the reduction of health plan premiums.
Factors that may cause medical expenses to exceed estimates include: • the health status of our members, including changes to that status and ability to adjust MA reimbursement to reflect that risk, including due to changes in MA measurement of risk and reimbursement; • higher levels of hospitalization among our members; • higher than expected utilization of new or existing healthcare services or technologies; • an increase in the cost of healthcare services and supplies, whether as a result of inflation, labor competition, or otherwise; • changes to mandated benefits or other changes in healthcare laws, regulations and practices; • increased costs attributable to specialist physicians, hospitals and ancillary providers; • changes in the demographics of our members and medical trends; P3 Health Partners Inc. | 2025 Form 10-K | 24 Table of Contents • contractual or claims disputes with providers, hospitals or other service providers within and outside a health plan’s network; • the occurrence of catastrophes, major epidemics or pandemics, or acts of terrorism; and • the reduction of health plan premiums.
Our only significant asset is the ownership of a minority of the economic interest in P3 LLC, and such ownership may not be sufficient to generate the funds necessary to meet our financial obligations or to pay any dividends on our Class A common stock.
P3 Health Partners Inc. | 2025 Form 10-K | 33 Table of Contents Our only significant asset is the ownership of a minority of the economic interest in P3 LLC, and such ownership may not be sufficient to generate the funds necessary to meet our financial obligations or to pay any dividends on our Class A common stock.
Accordingly, Foresight reevaluated the accounting treatment of the Public Warrants to purchase 10.8 million shares of Class A common stock and Private Placement Warrants to purchase 0.3 million shares of Class A common stock, and determined to classify all of the warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
Accordingly, Foresight reevaluated the accounting treatment of the Public Warrants to purchase 216.4 thousand shares of Class A common stock and Private Placement Warrants to purchase 5.6 thousand shares of Class A common stock, and determined to classify all of the warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
We were in material compliance with all other covenants under the Term Loan Facility, VGS Promissory Note, VGS 2 Promissory Note and VGS 3 Promissory Note as of December 31, 2024; however, there can be no assurance that we will be able to maintain compliance with these covenants in the future or that the lenders under the Term Loan Facility, VGS Promissory Note, VGS 2 Promissory Note and VGS 3 Promissory Note or the lenders of any future indebtedness we may incur will grant any such waiver or forbearance in the future.
We were in material compliance with all other covenants under the Loan Documents as of December 31, 2025; however, there can be no assurance that we will be able to maintain compliance with these covenants in the future or that the lenders under the Loan Documents or the lenders of any future indebtedness we may incur will grant any such waiver or forbearance in the future.
Delisting from the Nasdaq Capital Market, or even the issuance of a notice of potential delisting, would also result in P3 Health Partners Inc. | 2024 Form 10-K | 42 Table of Contents negative publicity, make it more difficult for us to raise additional capital, adversely affect the market liquidity of our securities, decrease securities analysts’ coverage of us or diminish investor confidence.
Delisting from the Nasdaq Capital Market, or even the issuance of a notice of potential delisting, would also result in negative publicity, make it more difficult for us to raise additional capital, adversely affect the market liquidity of our securities, decrease securities analysts’ coverage of us or diminish investor confidence.
We may need to spend significant amounts to fund our existing operations, including expansion into new geographies, to improve our platform and to develop new services.
We may need to raise additional capital to fund our existing operations or develop and commercialize new services or expand our operations. We may need to spend significant amounts to fund our existing operations, including expansion into new geographies, to improve our platform and to develop new services.
Additional factors that could affect our ability to sell products and services include, but are not limited to: • price, performance and functionality of our solution; • availability, price, performance and functionality of competing solutions; • our ability to develop and sell complementary services; • stability, performance and security of our hosting infrastructure and hosting services; and • changes in healthcare laws, regulations or trends.
P3 Health Partners Inc. | 2025 Form 10-K | 23 Table of Contents Additional factors that could affect our ability to sell products and services include, but are not limited to: • price, performance and functionality of our solution; • availability, price, performance and functionality of competing solutions; • our ability to develop and sell complementary services; • stability, performance and security of our hosting infrastructure and hosting services; and • changes in healthcare laws, regulations or trends.
In particular, changes in presidential, congressional, state and local administrations in the United States could result in significant changes in, and uncertainty with respect to, tax legislation, regulation and government policy directly affecting our business or indirectly affecting us because of impacts on our members, providers and vendors.
In P3 Health Partners Inc. | 2025 Form 10-K | 32 Table of Contents particular, changes in presidential, congressional, state and local administrations in the United States could result in significant changes in, and uncertainty with respect to, tax legislation, regulation and government policy directly affecting our business or indirectly affecting us because of impacts on our members, providers and vendors.
Further, our physician partners may not engage with our platform to assist in improving overall quality of care and P3 Health Partners Inc. | 2024 Form 10-K | 24 Table of Contents management of healthcare costs, which could produce results that are inconsistent with our estimates and financial models and negatively impact our growth.
Further, our physician partners may not engage with our platform to assist in improving overall quality of care and management of healthcare costs, which could produce results that are inconsistent with our estimates and financial models and negatively impact our growth.
If we breach these or other financial covenants and fail to secure a waiver or forbearance from the lenders, such breach or failure could result in an event of default and accelerate the repayment of the outstanding or the exercise of other rights or remedies that our lenders may have under P3 Health Partners Inc. | 2024 Form 10-K | 19 Table of Contents applicable law.
If we breach these or other financial covenants and fail to secure a waiver or forbearance from the lenders, such breach or failure could result in an event of default and accelerate the repayment of the outstanding debt or the exercise of other rights or remedies that our lenders may have under applicable law.
Developments affecting spending by the healthcare industry could adversely affect our business. The U.S. healthcare industry has changed significantly in recent years, and we expect that significant changes will continue to occur, including as a result the recent change in U.S. Presidential administration.
Developments affecting spending by the healthcare industry could adversely affect our business. The U.S. healthcare industry has changed significantly in recent years, and we expect that significant changes will continue to occur, including as a result of the current U.S. Presidential administration. Future changes are expected as a result of the upcoming midterm Congressional elections in 2026.
Any decision to declare and pay dividends will be made at the P3 Health Partners Inc. | 2024 Form 10-K | 46 Table of Contents discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant.
Any decision to declare and pay dividends will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant.
For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations implemented thereunder (collectively, “HIPAA”), imposes privacy, security and breach notification obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities, and their covered subcontractors.
For example, HIPAA imposes privacy, security and breach notification obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities, and their covered subcontractors.
Our operations are dependent on a concentrated number of payors with whom we contract to provide services to members. Our contracts with four health plans to provide capitated care services for their members collectively accounted for approximately 59% and 60% of our capitated revenue for the years ended December 31, 2024 and 2023, respectively.
Our operations are dependent on a concentrated number of payors with whom we contract to provide services to members. Our contracts with four health plans to provide capitated care services for their members collectively accounted for approximately 75% of our total revenue for the year ended December 31, 2025.
This may result in a more competitive environment and increased challenges to P3 Health Partners Inc. | 2024 Form 10-K | 25 Table of Contents grow at the rates we have projected. We expect that competition will continue to increase as a result of consolidation in the healthcare industry and increased demand for its services.
This may result in a more competitive environment and increased challenges to grow at the rates we have projected. We expect that competition will continue to increase as a result of consolidation in the healthcare industry and increased demand for its services.
The amount due and payable in those circumstances is determined based on certain assumptions, including an P3 Health Partners Inc. | 2024 Form 10-K | 45 Table of Contents assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement.
The amount due and payable in those circumstances is determined based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement.
P3 Health Partners Inc. | 2024 Form 10-K | 47 Table of Contents A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial condition or results of operations.
A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial condition or results of operations.
As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements and may have the ability to initiate or withstand substantial benefits structure and premium competition.
As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements and may have the ability to initiate or withstand substantial benefits P3 Health Partners Inc. | 2025 Form 10-K | 27 Table of Contents structure and premium competition.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeKey elements of our cybersecurity risk management program include but are not limited to: P3 Health Partners Inc. | 2024 Form 10-K | 49 Table of Contents • risk assessments designed to help identify material risks from cybersecurity threats to our critical systems and information; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes; • cybersecurity awareness training of our employees, including incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for key service providers based on our assessment of their criticality to our operations and respective risk profile.
Biggest changeKey elements of our cybersecurity risk management program include but are not limited to: • risk assessments designed to help identify material risks from cybersecurity threats to our critical systems and information; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes; • cybersecurity awareness training of our employees, including incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for key service providers based on our assessment of their criticality to our operations and respective risk profile.
Our Director of Information Systems Governance Risk and Compliance’s experiences includes over 25 years in IT audit and security governance, establishing and leading IT GRC programs, directing IT security initiatives, and maintaining relevant certifications including CDPSE, CRISC, and CISA.
Our Director of Information Systems Governance Risk and Compliance’s experiences includes over 25 years in IT audit and security governance, establishing and leading IT GRC programs, directing IT security initiatives, and maintaining relevant certifications including CDPSE, CRISC, CISM, and GRC/P/A.
Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security P3 Health Partners Inc. | 2024 Form 10-K | 50 Table of Contents personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment.
Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment.
Our management team, including our Senior Vice President of Technology, Director of Information Systems Security, and Director of Information Systems Governance Risk and Compliance, is responsible for assessing and managing our material risks from cybersecurity threats.
P3 Health Partners Inc. | 2025 Form 10-K | 52 Table of Contents Our management team, including our Senior Vice President of Technology, Director of Information Systems Security, and Director of Information Systems Governance Risk and Compliance, is responsible for assessing and managing our material risks from cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. As of December 31, 2024, our principal executive office is located in Henderson, NV, where we occupy facilities totaling approximately 35,000 square feet, primarily under a lease that expires in July 2030. We use this facility principally for corporate activities. We also lease offices in Tucson, AZ; Las Vegas, NV; Salem, OR; Stockton, CA; and the St.
Biggest changeItem 2. Properties. As of December 31, 2025, our principal executive office is located in Henderson, NV, where we occupy facilities totaling approximately 35,000 square feet, primarily under a lease that expires in July 2030. We use this facility principally for corporate activities. We also lease offices in Tucson, AZ; Las Vegas, NV; Salem, OR; and Stockton, CA.
Petersburg/Tampa areas, FL. We believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion of our operations.
We believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion of our operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeCivil Investigative Demand In June 2024, we received a civil investigative demand (“CID”) from the DOJ pursuant to the False Claims Act in the course of the government’s investigation concerning our arrangements with insurance agents and brokers.
Biggest changeIt is the Company’s policy to expense costs associated with loss contingencies, including any related legal fees, as they are incurred. Civil Investigative Demand In June 2024, we received a civil investigative demand (“CID”) from the DOJ pursuant to the False Claims Act in the course of the government’s investigation concerning our arrangements with insurance agents and brokers.
No assurance can be given as to the timing or outcome of the government’s investigation.
No assurance can be given as to the timing or outcome of the government’s investigation. See Item 1A.
Mine Safety Disclosures. Not applicable. P3 Health Partners Inc. | 2024 Form 10-K | 52 Table of Contents PART II
Item 4. Mine Safety Disclosures. Not applicable. P3 Health Partners Inc. | 2025 Form 10-K | 53 Table of Contents PART II
See “— We conduct business in a heavily regulated industry and if we fail to adhere to all of the complex government laws and regulations that apply to our business, we could incur fines or penalties or be required to make changes to our operations or experience adverse publicity, any or all of which could have a material adverse effect on our business, results of operations, financial condition, cash flows, and reputation.” P3 Health Partners Inc. | 2024 Form 10-K | 51 Table of Contents Item 4.
“ Risk Factors — We conduct business in a heavily regulated industry and if we fail to adhere to all of the complex government laws and regulations that apply to our business, we could incur fines or penalties or be required to make changes to our operations or experience adverse publicity, any or all of which could have a material adverse effect on our business, results of operations, financial condition, cash flows, and reputation,” for more information.
Removed
It is the Company’s policy to expense costs associated with loss contingencies, including any related legal fees, as they are incurred. Hudson Class D Dispute On June 11, 2021, Hudson Vegas Investment SPV, LLC (“Hudson”), a holder of P3’s Class D Units, filed an action in the Delaware Court of Chancery captioned Hudson Vegas Investments SPV, LLC v.
Removed
Chicago Pacific Founders Fund, L.P., et al., C.A. No. 2021-0518-JTL (the “Hudson Action”), in which it challenged the Business Combinations.
Removed
Specifically, Hudson purported to assert claims against P3, certain managers that were on the P3 Board of Managers, certain of its officers, and Chicago Pacific Founders Fund, L.P. for breach of P3’s then-existing LLC agreement (the “LLC Agreement”) (against P3 and Chicago Pacific Founders Fund, L.P.), breach of fiduciary duty (against certain of P3’s officers) and breach of contract claims related to the then-existing LLC Agreement (against the P3 Board of Managers) in connection with the process leading up to, and approval of, the Business Combinations.
Removed
In the Hudson Action, Hudson sought to enjoin the consummation of the Business Combinations and seeks a declaration that the Business Combinations violate its rights under the P3 then-existing LLC Agreement, a declaration that certain managers on the P3 Board of Managers and certain of P3’s officers breached their fiduciary duties, and money damages including attorneys’ fees.
Removed
On June 13, 2021, P3 filed an action in the Delaware Court of Chancery captioned P3 Health Group Holdings, L.L.C. v. Hudson Vegas Investment SPV, LLC, C.A. No. 2021-0519-JTL (the “P3 Action”).
Removed
In the P3 Action, P3 sought: (i) a declaration that the Business Combinations do not violate Section 3.10 of P3’s Existing LLC Agreement; and (ii) reformation of a provision of P3’s Existing LLC Agreement. The P3 Action was consolidated with the Hudson Action. The combined cases are captioned In re P3 Health Group Holdings, L.L.C, C.A. No. 2021-0518-JTL (the “Action”).
Removed
On August 22, 2024, the parties to the Action executed a Confidential Settlement and Mutual Release Agreement, pursuant to which the parties to the Action agreed to jointly file a Stipulation of Dismissal with Prejudice relating to the Action. On October 9, 2024, the Action was dismissed with prejudice.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 52 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 53 Item 6. [Reserved] 54 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 55 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 74 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 53 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 54 Item 6. [Reserved] 55 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 56 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 76 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of our Common Stock As of March 13, 2025, there were 27 holders of record of our Class A common stock and 36 holders of Class V common stock.
Biggest changeHolders of our Common Stock As of March 23, 2026, there were 28 holders of record of our Class A common stock and 33 holders of Class V common stock.
Stock Performance Graph The following graph and related information provide a comparison of the cumulative total return for our Class A common stock, the S&P 500 Index and the S&P 500 Healthcare Index between April 6, 2021 (the date our common stock commenced trading on Nasdaq) through December 31, 2024.
Stock Performance Graph The following graph and related information provide a comparison of the cumulative total return for our Class A common stock, the S&P 500 Index and the S&P 500 Healthcare Index between April 6, 2021 (the date our common stock commenced trading on Nasdaq) through December 31, 2025.
P3 Health Partners Inc. | 2024 Form 10-K | 53 Table of Contents Recent Sales of Unregistered Securities There were no unregistered sales of our equity securities during the fiscal year ended December 31, 2024, that were not otherwise disclosed in a Current Report on Form 8-K. Purchases of Equity Securities by the Issuer and Affiliated Purchaser None.
P3 Health Partners Inc. | 2025 Form 10-K | 54 Table of Contents Recent Sales of Unregistered Securities There were no unregistered sales of our equity securities during the fiscal year ended December 31, 2025, that were not otherwise disclosed in a Current Report on Form 8-K. Purchases of Equity Securities by the Issuer and Affiliated Purchaser None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended December 31, 2024 % of Revenue Year Ended December 31, 2023 % of Revenue (dollars in thousands) Operating revenue: Capitated revenue $ 1,483,602 99 % $ 1,252,309 99 % Other patient service revenue 16,853 1 14,066 1 Total operating revenue 1,500,455 100 1,266,375 100 Operating expense: Medical expense 1,559,372 104 1,234,740 98 Premium deficiency reserve 53,698 4 (12,705) (1) Corporate, general and administrative expense 112,596 8 122,362 10 Sales and marketing expense 1,331 0 3,233 0 Depreciation and amortization 86,058 6 86,675 7 Impairment of assets held for sale 8,058 1 — — Total operating expense 1,821,113 121 1,434,305 113 Operating loss (320,658) (21) (167,930) (13) Other (expense) income: Interest expense, net (22,173) (1) (15,985) (1) Mark-to-market of stock warrants 22,114 1 433 0 Gain on asset sale, net 13,269 1 — — Other 1,457 0 (249) (0) Total other income (expense) 14,667 1 (15,801) (1) Loss before income taxes (305,991) (20) (183,731) (15) Income tax provision (4,387) (0) (2,695) (0) Net loss (310,378) (21) (186,426) (15) Net loss attributable to redeemable non-controlling interest (174,529) (12) (128,653) (10) Net loss attributable to controlling interest $ (135,849) (9) % $ (57,773) (5) % Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 Revenue Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Capitated revenue $ 1,483,602 $ 1,252,309 $ 231,293 18 % Other patient service revenue 16,853 14,066 2,787 20 % Total operating revenue $ 1,500,455 $ 1,266,375 $ 234,080 18 % Capitated revenue was $1.5 billion for the year ended December 31, 2024, an increase of $231.3 million, or 18%, compared to $1.3 billion for the year ended December 31, 2023.
Biggest changeYear Ended December 31, 2025 % of Revenue Year Ended December 31, 2024 % of Revenue (dollars in thousands) Operating revenue: Capitated revenue $ 1,428,979 98 % $ 1,483,602 99 % Other revenue 30,101 2 16,853 1 Total operating revenue 1,459,080 100 1,500,455 100 Operating expense: Medical expense 1,519,240 104 1,559,372 104 Premium deficiency reserve 18,749 1 53,698 4 Corporate, general and administrative expense 106,311 7 112,596 8 Sales and marketing expense 918 0 1,331 0 Depreciation and amortization 84,163 6 86,058 6 Impairment of assets held for sale — — 8,058 1 Total operating expense 1,729,381 119 1,821,113 121 Operating loss (270,301) (19) (320,658) (21) Other (expense) income: Interest expense, net (55,034) (4) (22,173) (1) Mark-to-market of stock warrants 7,850 1 22,114 1 Gain (loss) on asset sale, net (162) — 13,269 1 Other (3,414) (0) 1,457 0 Total other (provision) benefit (50,760) (3) 14,667 1 Loss before income taxes (321,061) (22) (305,991) (20) Income tax provision (benefit) (2,025) (0) (4,387) (0) Net loss (323,086) (22) (310,378) (21) Net loss attributable to redeemable non-controlling interest (175,138) (12) (174,529) (12) Net loss attributable to controlling interest $ (147,948) (10) % $ (135,849) (9) % Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024 Revenue Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Capitated revenue $ 1,428,979 $ 1,483,602 $ (54,623) (4) % Other revenue 30,101 16,853 13,248 79 % Total operating revenue $ 1,459,080 $ 1,500,455 $ (41,375) (3) % The decrease in capitated revenue was primarily driven by a (7)% decrease in the total average number of at-risk members from 126,000 at December 31, 2024 to 116,100 at December 31, 2025, which was primarily driven by the strategic termination of underperforming payor contracts and affiliate providers in the current year.
Growing Membership in Adjacent and New Markets Our affiliate model allows us to quickly and efficiently enter into new and adjacent markets in two ways: (1) partnering with payors and (2) partnering with providers. Because our model honors the existing patient-provider relationship, we are able to deploy our care model around existing physicians in a given a market.
Growing Membership in Adjacent and New Markets Our affiliate model allows us to quickly and efficiently enter into new and adjacent markets in two ways: (1) partnering with payors and (2) partnering with providers. Because our model honors the existing patient-provider relationship, we are able to deploy our care model around existing physicians in a given market.
Pursuant to the CPF Letter Agreement, (i) for as long as the CPF Parties own 40% of the Company’s outstanding Common Stock, CPF will be entitled to designate one additional independent member of the Company’s board of directors, who must be independent and satisfy all applicable requirements regarding service as a director of the Company under applicable law and SEC and stock exchange rules, (ii) for as long as the CPF Parties own 40% of the Company’s outstanding Common Stock, CPF will be entitled to certain information rights and protective provisions, and (iii) subject to the terms of the CPF Letter Agreement, the CPF Parties agreed to a standstill restriction from the date of the closing of the March 2023 Private Placement to June 30, 2024 that limits the ownership of the CPF Parties to 49.99% of the Company’s Common Stock and Class V Common Stock.
Pursuant to the CPF Letter Agreement, (i) for as long as the CPF Parties own 40% of the Company’s outstanding Common Stock, CPF will be entitled to designate one additional independent member of the Company’s board of directors, who must be independent and satisfy all applicable requirements regarding service as a director of the Company under applicable law and SEC and stock exchange rules, (ii) for as long as the CPF Parties own 40% of the Company’s outstanding Common Stock, CPF will be entitled to certain information rights and protective provisions, and (iii) subject to the terms of the CPF Letter Agreement, the CPF Parties agreed to a standstill restriction from the date of the closing of the March 2023 Private Placement to June 30, 2024 that limits the ownership of the CPF Parties to 49.99% of the Company’s Class A Common Stock and Class V Common Stock.
Financing Activities Net cash provided by financing activities was $98.8 million for the year ended December 31, 2024, primarily consisting of proceeds from the May 2024 Private Placement, net of offering costs, and borrowings on the VGS 2 Promissory Note, VGS 3 Promissory Note, and VGS 1 2024 Loan, partially offset by the repayment of the VGS Promissory Note.
Net cash provided by financing activities was $98.8 million for the year ended December 31, 2024, primarily consisting of proceeds from the May 2024 Private Placement, net of offering costs, and borrowings on the VGS 2 Promissory Note, VGS 3 Promissory Note, and VGS 1 2024 Loan, partially offset by the repayment of the VGS Promissory Note.
Through this capitation arrangement, we stand ready to provide assigned MA members all their medical care via our directly employed and affiliated physician/specialist network. The premiums health plans receive are determined via a competitive bidding process with CMS and are based on the costs of care in local markets and the average utilization of services by patients enrolled.
Through this capitation arrangement, we stand ready to provide assigned MA members all their medical care via our directly employed and affiliated physician/specialist network. The premiums that health plans receive are determined via a competitive bidding process with CMS and are based on the costs of care in local markets and the average utilization of services by enrolled patients.
Depreciation expense is associated with our property and equipment, including leasehold improvements, computer equipment and software, furniture and fixtures, and internally developed software. Amortization expense is associated with definite lived intangible assets, including trademarks and tradenames, customer contracts, provider network agreements, and payor contracts. Other Income (Expense) Interest expense, net.
Depreciation expense is associated with our property and equipment, including leasehold improvements, computer equipment and software, furniture and fixtures, medical equipment, and internally developed software. Amortization expense is associated with definite lived intangible assets, including trademarks and tradenames, customer contracts, provider network agreements, and payor contracts. Other Income (Expense) Interest expense, net.
The preparation of these consolidated financial statements requires management use judgment in the application of accounting policies, including making estimates and assumptions that could affect assets and liabilities, revenue and expenses and related disclosures of contingent assets and liabilities.
The preparation of these consolidated financial statements requires management to use judgment in the application of accounting policies, including making estimates and assumptions that could affect assets and liabilities, revenue and expenses and related disclosures of contingent assets and liabilities.
Other patient service revenue also includes ancillary fees earned under contracts with certain payors for the provision of certain care coordination and other care management services. These services are provided to patients covered by these payors regardless of whether those patients receive their care from our directly employed or affiliated medical groups. Operating Expense Medical expense.
Other revenue also includes ancillary fees earned under contracts with certain payors for the provision of certain care coordination and other care management services. These services are provided to patients covered by these payors regardless of whether those patients receive their care from our directly employed or affiliated medical groups. Operating Expense Medical expense.
Asset Sale O n November 30, 2024, we and certain of our subsidiaries (the “Sellers”) entered into an asset purchase agreement with certain entities affiliated with an entity in which Chicago Pacific Founders (“CPF”), our principal stockholder, has an ownership interest (the “Buyers”), which was amended on December 30, 2024, effective as of December 5, 2024 (as amended, the “Florida Asset Purchase Agreement”).
Asset Sale On November 30, 2024, we and certain of our subsidiaries (the “Sellers”) entered into an asset purchase agreement with certain entities affiliated with an entity in which Chicago Pacific Founders (“CPF”), our principal stockholder, has an ownership interest (the “Buyers”), which was amended on December 30, 2024, effective as of December 5, 2024 (as amended, the “Florida Asset Purchase Agreement”).
The VGS 4 Promissory Note restricts P3 LLC’s ability and the ability of its subsidiaries to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under the certain default provisions in the agreement, or in the event a mandatory prepayment event occurs.
The VGS 5 Promissory Note restricts P3 LLC’s ability and the ability of its subsidiaries to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under certain default provisions in the agreement, or in the event a mandatory prepayment event occurs.
Our local corporate, general and administrative expense, which includes our local leadership, care management teams and other operating costs to support our markets, are expected to decrease over time as a percentage of revenue as we add members to our existing contracts, grow membership with new payor and physician contracts, and our revenue subsequently increases.
Our local corporate, general and administrative expense, which includes our local leadership, care management teams and other operating costs to support our markets, is expected to decrease over time as a percentage of revenue as we add members to our existing contracts, grow membership with new payor and physician contracts, and our revenue subsequently increases.
In addition, we will pay VBC 4 a back-end fee at the time the loans issued under the VGS 4 Promissory Note are repaid as follows: (i) if repaid prior to March 31, 2025, 2.25% of the aggregate principal amount of the loans advanced to P3 LLC on or prior to such date; (ii) if repaid from April 1, 2025 through June 30, 2025, 4.5% of the aggregate principal amount of the loans advanced to P3 LLC on or prior to such date; (iii) if repaid from July 1, 2025 through September 30, 2025, 6.75% of the aggregate principal amount of the loans advanced to P3 LLC on or prior to such date; and (iv) if repaid on October 1, 2025 or later, 9.0% of the aggregate principal amount of the loans advanced to P3 LLC on or prior to such date.
In addition, we will pay VBC 4 a back-end fee at the time the loans issued under the VGS 4 Promissory Note are repaid as follows: (i) if repaid prior to March 31, 2025, 2.25% of the aggregate principal amount of the loans advanced to us on or prior to such date; (ii) if repaid from April 1, 2025 through June 30, 2025, 4.5% of the aggregate principal amount of the loans advanced to us on or prior to such date; (iii) if repaid from July 1, 2025 through September 30, 2025, 6.75% of the aggregate principal amount of the loans advanced to us on or prior to such date; and (iv) if repaid on October 1, 2025 or later, 9.0% of the aggregate principal amount of the loans advanced to us on or prior to such date.
The lenders under the Term Loan Facility and subordinated unsecured promissory notes have granted us a waiver of the covenant related to the existence of a “going concern” explanatory paragraph in the audit opinion for our audited financial statements for the fiscal year ended December 31, 2024.
The lenders under the Term Loan Facility and subordinated unsecured promissory notes have granted us a waiver of the covenant related to the existence of a “going concern” explanatory paragraph in the audit opinion for our audited financial statements for the fiscal year ended December 31, 2025.
We manage our medical costs by improving our members access to healthcare. Our care model focuses on maintaining health and leveraging the primary care setting as a means of avoiding costly downstream healthcare costs, such as emergency department visits and acute hospital inpatient admissions.
We manage our medical costs by improving our members’ access to healthcare. Our care model focuses on maintaining health and leveraging the primary care setting as a means of avoiding costly downstream healthcare costs, such as emergency department visits and acute hospital inpatient admissions.
The capitation amount is subject to possible retroactive premium risk adjustments based on the member’s individual acuity. Other patient service revenue. Other patient service revenue is comprised primarily of encounter-related fees to treat patients outside of our at-risk arrangements at company owned clinics.
The capitation amount is subject to possible retroactive premium risk adjustments based on the member’s individual acuity. Other revenue. Other revenue is comprised primarily of encounter-related fees to treat patients outside of our at-risk arrangements at company owned clinics.
As of December 31, 2024, we had $25.4 million of borrowing outstanding under the VGS 3 Promissory Note, $0.4 million of which consists of an up-front fee of 1.5% of the aggregate principal amount of the loan paid to VGS 3 in-kind. Interest is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning March 31, 2025.
As of December 31, 2025, we had $35.4 million of borrowing outstanding under the VGS 3 Promissory Note, $0.4 million of which consists of an up-front fee of 1.5% of the aggregate principal amount of the loan paid to VGS 3 in-kind. Interest is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning March 31, 2025.
P3 Health Partners Inc. | 2024 Form 10-K | 68 Table of Contents In connection with the issuance of the VGS 2 Promissory Note, we also entered into a subordination agreement, dated as of March 22, 2024 (the “2024 Subordination Agreement”) with VGS 2 which subordinates VGS 2’s right of payment under the VGS 2 Promissory Note to the right of payment and security interests of the lenders under the Term Loan Facility.
In connection with the issuance of the VGS 2 Promissory Note, we also entered into a subordination agreement, dated as of March 22, 2024 (the “2024 Subordination Agreement”) with VGS 2 which subordinates VGS 2’s right of payment under the VGS 2 Promissory Note to the right of payment and security interests of the lenders under the Term P3 Health Partners Inc. | 2025 Form 10-K | 70 Table of Contents Loan Facility.
We believe we have significant growth opportunities available to us across existing and new markets, with less than 1% of the 535,000 PCPs in the U.S. currently included in our physician network.
We believe we have significant growth opportunities available to us across existing and new markets, with less than 1% of the 544,000 PCPs in the U.S. currently included in our physician network.
To the extent we revise our estimates of incurred but not reported claims for prior periods up or down, there would be a correspondingly favorable or unfavorable effect on our current period results that may or may not reflect changes in long term trends in our performance. Premium deficiency reserve.
To the extent we revise our estimates of incurred but not reported claims for prior periods up or down, there would be a correspondingly favorable or unfavorable effect on our current period results that may or may not reflect changes in long term trends in our performance.
The VGS 4 Promissory Note may be prepaid, at our option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee described below; provided that prepayments must be in increments of at least $1.5 million.
The VGS 5 Promissory Note may be prepaid, at our option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee described below; provided that prepayments must be in increments of at least $3.5 million.
Moreover, some of our capitated revenue also includes adjustments for performance incentives or penalties based on the achievement of certain clinical quality metrics as contracted with payors. Given the prevalence of FFS arrangements, our patients often have historically not participated in a VBC model, and therefore their health conditions are poorly documented.
Moreover, some of our capitated revenue also includes adjustments, which may increase or decrease revenue, for performance incentives or penalties based on the achievement of certain clinical quality metrics as contracted with payors. Given the prevalence of FFS arrangements, our patients often have historically not participated in a VBC model, and therefore their health conditions are poorly documented.
See Note 14 “Capitalization” to our consolidated financial statements included elsewhere in this Form 10-K for additional information about the May 2024 Private Placement.
See Note 15 “Capitalization” to our consolidated financial statements included elsewhere in this Form 10-K for additional information about the May 2024 Private Placement.
As the year progresses, our per-patient revenue declines as new patients join us typically with less complete or accurate documentation (and therefore lower risk-adjustment scores) and patients with more severe acuity profiles (and, therefore, higher per member revenue rates) expire. P3 Health Partners Inc. | 2024 Form 10-K | 57 Table of Contents Medical Costs .
As the year progresses, our per-patient revenue declines as new patients join us typically with less complete or accurate documentation (and therefore lower risk-adjustment scores) and patients with more severe acuity profiles (and, therefore, higher per member revenue rates) expire. P3 Health Partners Inc. | 2025 Form 10-K | 59 Table of Contents Medical Costs .
As a result, the Company determined that payments to TRA holders are not probable and no TRA liability has been recorded as of December 31, 2024.
As a result, the Company determined that payments to TRA holders are not probable and no TRA liability has been recorded as of December 31, 2025.
We expect that our PMPM revenue will continue to improve the longer members participate in our care model as we better understand and assess their health status (acuity) and coordinate their medical care. Effectively Managing Member Medical Expense Our medical expense is our largest expense category, representing 86% of our total operating expense for the year ended December 31, 2024.
We expect that our PMPM revenue will continue to improve the longer members participate in our care model as we better understand and assess their health status (acuity) and coordinate their medical care. Effectively Managing Member Medical Expense Our medical expense is our largest expense category, representing 88% of our total operating expense for the year ended December 31, 2025.
We may elect to pay interest 11.5% in-kind and 8.0% in cash, but if the terms of the VGS 4 Subordination Agreement (as defined below) do not permit P3 LLC to pay interest in cash, interest will be paid entirely in-kind.
We may elect to pay interest 11.5% in-kind and 8.0% in cash, but if the terms of the VGS 4 Subordination Agreement (as defined below) do not permit us to pay interest in cash, interest will be paid entirely in-kind.
We had 3,100 and 2,750 primary care physicians as of December 31, 2024 and 2023, respectively. Platform Support Costs Our platform support costs, which include regionally-based support personnel and other operating costs to support our markets, are expected to decrease over time as a percentage of revenue as our physician partners add members and our revenue grows.
We had 2,400 and 3,100 primary care physicians as of December 31, 2025 and 2024, respectively. Platform Support Costs Our platform support costs, which include regionally-based support personnel and other operating costs to support our markets, are expected to decrease over time as a percentage of revenue as our physician partners add members and our revenue grows.
Upon termination of the Sales Agreement, any unused portion will be available for sale in other offerings pursuant to the Shelf Registration. As of December 31, 2024, we have sold approximately 27,000 shares of our Class A common stock under the Sales Agreement for net proceeds of approximately $33,000.
Upon termination of the Sales Agreement, any unused portion will be available for sale in other offerings pursuant to the Shelf Registration. As of December 31, 2025, we have sold approximately 540 shares of our Class A common stock under the Sales Agreement for net proceeds of approximately $33,000.
As a result, as of December 31, 2024, we were not in compliance with covenants in the Term Loan Facility and the subordinated unsecured promissory notes that required the issuance of the 2024 financial statements with an audit opinion free of a “going concern” explanatory paragraph subject to certain exceptions.
As a result, we were not in compliance with covenants in the Term Loan Facility and the subordinated unsecured promissory notes that required the issuance of the 2025 financial statements with an audit opinion free of a “going concern” explanatory paragraph subject to certain exceptions.
On December 12, 2024, in connection with the issuance of warrants to VGS 3 (defined below), we entered into a second amended and restated CPF Letter Agreement pursuant to which the CPF Parties agreed to further extend the ownership restriction standstill to January 1, 2026.
On December 12, 2024, in connection with the issuance of warrants to VGS 3 (defined below), we entered into a second amended and restated CPF Letter Agreement pursuant to which the CPF Parties extended the ownership restriction standstill to January 1, 2026.
These potential opportunities are developed through significant inbound interest and the deep relationships our team has developed with their more than 20 years of experience in the VBC space and our proactive assessment of expansion markets. When choosing a market to enter, we make our decision on a county-by-county basis across the United States.
These potential opportunities are developed through significant inbound interest and the deep relationships our team has developed with their substantial experience in the VBC space and our proactive assessment of expansion markets. When choosing a market to enter, we make our decision on a county-by-county basis across the United States.
As of December 31, 2024, we had $65.0 million of borrowings outstanding under the Term Loan Facility, and remaining availability under the Term Loan Facility ended upon termination of the commitment period on February 28, 2022. Interest is payable at 12.0% per annum on a quarterly cycle (in arrears), which began on March 31, 2021.
As of December 31, 2025, we had $82.9 million of borrowings outstanding under the Term Loan Facility, and remaining availability under the Term Loan Facility ended upon termination of the commitment period on February 28, 2022. Interest is payable at 12.0% per annum on a quarterly cycle (in arrears), which began on March 31, 2021.
P3 Health Partners Inc. | 2024 Form 10-K | 55 Table of Contents Key Factors Affecting our Performance Growing Medicare Advantage Membership on Our Platform Membership and revenue are tied to the number of members attributed to our physician network by our payors.
P3 Health Partners Inc. | 2025 Form 10-K | 57 Table of Contents Key Factors Affecting our Performance Growing Medicare Advantage Membership on Our Platform Membership and revenue are tied to the number of members attributed to our physician network by our payors.
This discussion contains forward-looking statements and involves numerous risks and uncertainties. Our actual results may differ materially from those anticipated in any forward-looking statements as a result of many factors, including those set forth under “ Cautionary Statement Regarding Forward-Looking Statements ,” “ Item 1A. Risk Factors ” and elsewhere in this Form 10-K.
This discussion contains forward-looking statements and involves numerous risks and uncertainties. Our actual results may differ materially from those anticipated in any forward-looking statements as a result of many factors, including those set forth under “ Cautionary Statement Regarding Forward-Looking Statements ,” “Item 1A. Risk Factors.” “Item 3. Legal Proceedings.” and elsewhere in this Form 10-K.
Premium deficiency reserves (“PDR”) are recognized when it is probable that expected future health care costs and maintenance costs under a group of existing contracts will exceed anticipated future P3 Health Partners Inc. | 2024 Form 10-K | 61 Table of Contents premiums and stop-loss insurance recoveries on those contracts.
P3 Health Partners Inc. | 2025 Form 10-K | 63 Table of Contents Premium deficiency reserve. Premium deficiency reserves (“PDR”) are recognized when it is probable that expected future health care costs and maintenance costs under a group of existing contracts will exceed anticipated future premiums and stop-loss insurance recoveries on those contracts.
Such estimates are subject to impact from changes in both the regulatory and economic environments. The Company’s PDR represents management’s best estimate of its probable future losses. We have included premium deficiency reserve liabilities of $67.4 million and $13.7 million on our accompanying consolidated balance sheets as of December 31, 2024 and 2023, respectively.
Such estimates are subject to impact from changes in both the regulatory and economic environments. The Company’s PDR represents management’s best estimate of its probable future losses. We have included premium deficiency reserve liabilities of $86.1 million and $67.4 million on our accompanying consolidated balance sheets as of December 31, 2025 and 2024, respectively.
P3 Health Partners Inc. | 2024 Form 10-K | 56 Table of Contents Additionally, by expanding the number of contracted payors, we can leverage our existing infrastructure to quickly increase our share of patients within our physician network.
P3 Health Partners Inc. | 2025 Form 10-K | 58 Table of Contents Additionally, by expanding the number of contracted payors, we can leverage our existing infrastructure to quickly increase our share of patients within our physician network.
Based on our currently available cash resources, including aggregate proceeds of $30 million we received from a related party financing transaction in February and March 2025, and assuming no other financing transactions, we believe we will require additional funding in 2025. This belief is based on assumptions that may change as a result of many factors currently unknown to us.
Based on our currently available cash resources, including aggregate proceeds of $18 million we received from a related party financing transaction in January and February 2026, and assuming no other financing transactions, we believe we will require additional funding in 2026. This belief is based on assumptions that may change as a result of many factors currently unknown to us.
The VGS 2 Promissory Note matures on September 30, 2027. As of December 31, 2024, we had $25.4 million of borrowings outstanding under the VGS 2 Promissory Note, $0.4 million of which consists of an up-front fee of 1.5% of the aggregate principal amount of the loan paid to VGS 2 in-kind.
The VGS 2 Promissory Note matures on September 30, 2027. As of December 31, 2025, we had $38.7 million of borrowings outstanding under the VGS 2 Promissory Note, $0.4 million of which consists of an up-front fee of 1.5% of the aggregate principal amount of the loan paid to VGS 2 in-kind.
Each unit consisted of one share of Class A common stock and a warrant to purchase one share of Class A common stock at an exercise price of $0.5020. Certain institutional investors elected to receive pre-funded warrants to purchase Class A common stock in lieu of a portion of their Class A common stock.
Each unit consisted of one share of Class A common stock and a warrant to purchase one share of Class A common stock at an exercise price of $25.10. Certain institutional investors elected to receive pre-funded warrants to purchase Class A common stock in lieu of a portion of their Class A common stock.
We have leveraged the expertise of our management team’s more than 20 years of experience in population health management, to build our “P3 Care Model.” The key attributes that differentiate P3 include: 1) patient-focused model, 2) physician-led model, and 3) our broad delegated model.
We have leveraged the expertise of our management team’s substantial experience in population health management, to build our “P3 Care Model.” The key attributes that differentiate P3 include: 1) patient-focused model, 2) physician-led model, and 3) our broad delegated model.
Our future capital requirements will depend on many factors, including the pace of our growth, ability to manage medical costs, the maturity of our members, our ability to complete the sale of our remaining Florida operations, and our ability to raise capital and refinance our indebtedness as it matures.
Our future capital requirements will depend on many factors, including the pace of our growth, ability to manage medical costs, the maturity of our members, and our ability to raise capital and refinance our indebtedness as it matures.
The TRA liability is estimated to be $11.5 million as of December 31, 2024. Due to the Company’s history of losses, the Company has not recorded tax benefits associated with the increase in tax basis as a result of the Business Combinations.
The TRA liability is estimated to be $12.4 million as of December 31, 2025. Due to the Company’s history of losses, the Company has not recorded tax benefits associated with the increase in tax basis as a result of the Business Combinations.
Term Loan In November 2020, we entered into a Term Loan and Security Agreement with CRG Servicing, LLC (as amended, the “Term Loan Agreement”) providing for funding of up to $100.0 million (the “Term Loan Facility”). The Term Loan Facility’s maturity date is December 31, 2025.
Term Loan In November 2020, we entered into a Term Loan and Security Agreement with CRG Servicing, LLC (as amended, the “Term Loan Agreement”) providing for funding of up to $100.0 million (the “Term Loan Facility”). The Term Loan Facility’s initial maturity date was September 30, 2025.
In total, we sold (i) an aggregate of 41.6 million shares of Class A common stock, (ii) common warrants to purchase an aggregate of 67.4 million shares of Class A common stock, and (iii) pre-funded warrants to purchase an aggregate of 25.8 million shares of Class A common stock for aggregate proceeds of $39.8 million, net of $2.4 million in offering costs (collectively, the “May 2024 Private Placement”).
In total, we sold (i) an aggregate of 0.8 million shares of Class A common stock, (ii) common warrants to purchase an aggregate of 1.3 million shares of Class A common stock, and (iii) pre-funded warrants to purchase an aggregate of 0.5 million shares of Class A common stock for aggregate proceeds of $39.8 million, net of $2.4 million in offering costs (collectively, the “May 2024 Private Placement”).
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.
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 generate cash from our operations, generally from our contracts with payors. As of December 31, 2024, we had $38.8 million of unrestricted cash and cash equivalents available to fund future operations. We have experienced losses since our inception and net losses of $310.4 million and $186.4 million for the years ended December 31, 2024 and 2023, respectively.
We generate cash from our operations, generally from our contracts with payors. As of December 31, 2025, we had $25.0 million of unrestricted cash and cash equivalents available to fund future operations. We have experienced losses since our inception and net losses of $323.1 million and $310.4 million for the years ended December 31, 2025 and 2024, respectively.
We may need to raise additional capital through a combination of debt and/or P3 Health Partners Inc. | 2024 Form 10-K | 65 Table of Contents equity financing and to the extent we are unsuccessful at doing so, we may need to curtail planned activities, discontinue certain operations, or sell certain assets, which could materially and adversely affect our business, financial condition, results of operations, and prospects.
We may need to raise additional capital through a combination of debt and/or equity financing and to the extent we are unsuccessful at doing so, we may need to curtail planned activities, discontinue certain operations, or sell certain assets, which could materially and adversely affect our business, financial condition, results of operations, and prospects.
We intend to treat any redemptions and exchanges of P3 LLC units as direct purchases of the units for U.S. federal income tax purposes. P3 Health Partners Inc. | 2024 Form 10-K | 70 Table of Contents These increases in tax basis may reduce the amounts that we would otherwise pay in the future to various tax authorities.
We intend to treat any redemptions and exchanges of P3 LLC units as direct purchases of the units for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that we would otherwise pay in the future to various tax authorities.
VGS Promissory Note and VGS 1 2024 Loan On December 13, 2022, we entered into a financing transaction with VBC Growth SPV LLC (“VGS”) which included the issuance of an unsecured promissory note (the “VGS Promissory Note”) to VGS and the entry into a warrant agreement and the 2022 Subordination Agreement (defined below).
P3 Health Partners Inc. | 2025 Form 10-K | 69 Table of Contents VGS Promissory Note and VGS 1 2024 Loan On December 13, 2022, we entered into a financing transaction with VBC Growth SPV LLC (“VGS”) which included the issuance of an unsecured promissory note (the “VGS Promissory Note”) to VGS and the entry into a warrant agreement and the 2022 Subordination Agreement (defined below).
As of December 31, 2024, we had $38.8 million of unrestricted cash and cash equivalents, $154.8 million of outstanding indebtedness, of which $65.0 million is classified as current on our balance sheet, and $255.1 million of unpaid claims. We expect to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future.
As of December 31, 2025, we had $25.0 million of unrestricted cash and cash equivalents, $336.7 million of outstanding indebtedness, of which $45.0 million is classified as current on our balance sheet, and $287.8 million of unpaid claims. We expect to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future.
Each of the Term Loan Facility, VGS Promissory Note, VGS 2 Promissory Note, and VGS 3 Promissory Note lenders have granted us a waiver of the covenant under the Term Loan Facility related to the existence of a “going concern” explanatory paragraph in the audit opinion for our audited financial statements for the fiscal year ended December 31, 2024.
The lenders under the Loan Documents have granted us a waiver of the covenant under the Term Loan Facility related to the existence of a “going concern” explanatory paragraph in the audit opinion for our audited financial statements for the fiscal year ended December 31, 2025.
From 2018 through December 31, 2024, we experienced a 95% physician retention rate in our affiliate provider network. By expanding our affiliate provider network and adding new physicians to the P3 network, we can quickly increase the number of contracted at-risk members under our existing health plan arrangements.
For the year ended December 31, 2025, we experienced a physician retention rate of over 88% in our affiliate provider network. By expanding our affiliate provider network and adding new physicians to the P3 network, we can quickly increase the number of contracted at-risk members under our existing health plan arrangements.
The following table presents our gross profit (loss): Year Ended December 31, 2024 2023 (in thousands) Total operating revenue $ 1,500,455 $ 1,266,375 Less: medical claims expense (1,398,143) (1,117,258) Less: other medical expense (161,229) (117,482) Gross profit (loss) $ (58,917) $ 31,635 At-Risk Membership 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 the reporting period.
The following table presents our gross profit: Year Ended December 31, 2025 2024 (in thousands) Total operating revenue $ 1,459,080 $ 1,500,455 Less: medical claims expense $ (1,405,451) $ (1,398,143) Less: other medical expense $ (113,789) $ (161,229) Gross profit $ (60,160) $ (58,917) At-Risk Membership 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 the reporting period.
As of December 31, 2024, we were not in compliance with the Term Loan Facility and VGS Promissory Note, VGS 2 Promissory Note, and VGS 3 Promissory Note covenants related to issuance of the 2024 financial statements with an audit opinion free of a “going concern” explanatory paragraph.
We were not in compliance with the covenants in the Term Loan Facility, VGS Promissory Note, VGS 2 Promissory Note, VGS 3 Promissory Note, VGS 4 Promissory Note, and VGS 5 Promissory Note (collectively, the “Loan Documents”) related to issuance of the 2025 financial statements with an audit opinion free of a “going concern” explanatory paragraph.
Our operating expenses at the enterprise level include resources and technology to support payor contracting, clinical program development, quality, data management, finance, and legal functions. We exclude costs related to the operations of our owned medical clinics and wellness centers.
Our operating expenses at the enterprise level include resources and technology to support payor P3 Health Partners Inc. | 2025 Form 10-K | 62 Table of Contents contracting, clinical program development, quality, data management, finance, and legal functions. We exclude costs related to the operations of our owned medical clinics and wellness centers.
Our platform has enabled us to grow our revenue by an average of 74% annually from December 31, 2020 to December 31, 2024. As of December 31, 2024, our PCP network served approximately 123,800 at-risk members.
Our platform has enabled us to grow our revenue by an average of 26% annually from December 31, 2020 to December 31, 2025. As of December 31, 2025, our PCP network served approximately 115,100 at-risk members.
We have demonstrated an ability to rapidly scale, primarily entering markets with our affiliate physician model, and expanding to a PCP network of approximately 3,100 physicians, in 27 markets (counties) across five states in over six full years of operations as of December 31, 2024.
We have demonstrated an ability to rapidly scale, primarily entering markets with our affiliate physician model, and expanding to a PCP network of approximately 2,400 physicians, in 23 markets (counties) across four states in over eight full years of operations as of December 31, 2025.
P3 Health Partners Inc. | 2024 Form 10-K | 66 Table of Contents Letter Agreement with CPF On April 6, 2023, in connection with entry into the Purchase Agreement for the March 2023 Private Placement, we entered into a letter agreement (as amended from time to time, the “CPF Letter Agreement”) with Chicago Pacific Founders GP, L.P.
Letter Agreement with CPF On April 6, 2023, in connection with entry into the Purchase Agreement for the March 2023 Private Placement, we entered into a letter agreement (as amended from time to time, the “CPF Letter Agreement”) with Chicago Pacific Founders GP, L.P.
In connection with the issuance of the VGS 4 Promissory Note (defined below) and entry into the VGS 4 Subordination Agreement (defined below), on February 13, 2025, we entered into the Seventh Amendment to the Term P3 Health Partners Inc. | 2024 Form 10-K | 67 Table of Contents Loan Agreement to permit the issuance of the VGS 4 Promissory Note and the entry into the VGS 4 Subordination Agreement.
In connection with the issuance of the VGS 4 Promissory Note (defined below) and entry into the VGS 4 Subordination Agreement (defined below), on February 13, 2025, we entered into the Seventh Amendment to the Term Loan Agreement to permit the issuance of the VGS 4 Promissory Note and the entry into the VGS 4 Subordination Agreement.
Our independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2024, has also expressed substantial doubt about our ability to continue as a going concern.
P3 Health Partners Inc. | 2025 Form 10-K | 74 Table of Contents Our independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2025, has also expressed substantial doubt about our ability to continue as a going concern.
We had 123,800 and 108,900 at-risk members as of December 31, 2024 and 2023, respectively. Affiliate Primary Care Physicians Affiliate primary care physicians represent the approximate number of primary care physicians included in our affiliate network, with whom members may be attributed under our capitation arrangements, as of the end of the reporting period.
We had 116,100 and 126,000 average at-risk members for the years ended December 31, 2025 and 2024, respectively. Affiliate Primary Care Physicians Affiliate primary care physicians represent the approximate number of primary care physicians included in our affiliate network, with whom members may be attributed under our capitation arrangements, as of the end of the reporting period.
May 2024 Private Placement On May 24, 2024, pursuant to a securities purchase agreement, dated May 22, 2024, with the purchasers named therein, which included certain affiliated entities of CPF and institutional investors, we issued approximately 67.4 million units at a price of approximately $0.6270 per unit.
P3 Health Partners Inc. | 2025 Form 10-K | 67 Table of Contents May 2024 Private Placement On May 24, 2024, pursuant to a securities purchase agreement, dated May 22, 2024, with the purchasers named therein, which included certain affiliated entities of CPF and institutional investors, we issued approximately 1.3 million units at a price of approximately $31.35 per unit.
P3 Health Partners Inc. | 2024 Form 10-K | 60 Table of Contents The table below represents costs to support our markets and enterprise functions, which are included in corporate, general and administrative expenses: Year Ended December 31, 2024 2023 (dollars in thousands) Platform support costs $ 92,202 $ 96,937 % of total operating revenue 6.1 % 7.7 % Key Components of Results of Operations Revenue Capitated revenue.
The table below represents costs to support our markets and enterprise functions, which are included in corporate, general and administrative expenses: Year Ended December 31, 2025 2024 (dollars in thousands) Platform support costs $ 86,067 $ 92,202 % of total operating revenue 5.9 % 6.1 % Key Components of Results of Operations Revenue Capitated revenue.
In March 2021, we elected to pay interest at 8.0% with the remaining interest at 4.0% being added to principal as paid in-kind (“PIK”) for a period of three years (or 12 payments). We are required to remain in compliance with financial covenants such as minimum liquidity of $5.0 million and annual minimum revenue levels.
In March 2021, we elected to pay interest at 8.0% with the remaining interest at 4.0% being added to principal as paid in-kind (“PIK”) for a period of three years (or 12 payments).
We present medical margin because we believe it helps investors understand underlying trends in our business and facilitates an understanding of our operating performance from period to period by facilitating a comparison of our recurring core business operating results. Medical margin represents the amount earned from capitated revenue after medical claims expenses are deducted.
Medical Margin Medical margin is a non-GAAP financial metric. We present medical margin because we believe it helps investors understand underlying trends in our business and facilitates an understanding of our operating performance from period to period by facilitating a comparison of our recurring core business operating results.
Cash Flows The following table summarizes our cash flows: Year Ended December 31, 2024 2023 (in thousands) Net cash used in operating activities $ (110,128) $ (76,028) Net cash provided by (used in) investing activities 14,525 (1,827) Net cash provided by financing activities 98,771 100,332 Net change in cash $ 3,168 $ 22,477 Operating Activities Net cash used in operating activities was $110.1 million for the year ended December 31, 2024, compared to net cash used in operating activities of $76.0 million for the year ended December 31, 2023.
Cash Flows The following table summarizes our cash flows: Year Ended December 31, 2025 2024 (in thousands) Net cash used in operating activities $ (91,238) $ (110,128) Net cash provided by investing activities 129 14,525 Net cash provided by financing activities 72,814 98,771 Net change in cash and restricted cash $ (18,295) $ 3,168 Operating Activities Net cash used in operating activities was $91.2 million for the year ended December 31, 2025, compared to net cash used in operating activities of $110.1 million for the year ended December 31, 2024.
Under the terms of the VGS 4 Subordination Agreement, we will be effectively required to pay all interest under the VGS 4 Promissory Note in-kind. Repurchase Promissory Note In June 2019, we issued a share repurchase promissory note to a former equity investor for $15.0 million, which was subsequently amended in November 2020 (as amended, the “Repurchase Promissory Note”).
Repurchase Promissory Note In June 2019, we issued a share repurchase promissory note to a former equity investor for $15.0 million, which was subsequently amended in November 2020 (as amended, the “Repurchase Promissory Note”).
Non-controlling Interest We consolidate the financial results of P3 LLC and report a non-controlling interest on our consolidated statements of operations, representing the portion of net income or loss attributable to the non-controlling interest.
Non-controlling Interests We consolidate the financial results of P3 LLC and report non-controlling interest on our consolidated statements of operations, representing the portion of net income or loss attributable to the non-controlling interests. The weighted average ownership percentages during the period are used to calculate the net income or loss attributable to P3 Health Partners Inc. and the non-controlling interests.
We were in material compliance with all other covenants under the Term Loan Facility, VGS Promissory Note, VGS 2 Promissory Note, and VGS 3 Promissory Note as of December 31, 2024; however, there can be no assurance that we will be able to maintain compliance with these covenants in the future or that the lenders under the Term Loan Facility, VGS Promissory Note, VGS 2 Promissory Note, VGS 3 P3 Health Partners Inc. | 2024 Form 10-K | 69 Table of Contents Promissory Note or the lenders of any future indebtedness we may incur will grant any such waiver or forbearance in the future.
We were in material compliance with all other covenants under the Loan Documents as of December 31, 2025; however, there can be no assurance that we will be able to maintain compliance with these covenants in the future or that the lenders under the Loan Documents, or the lenders of any future indebtedness we may incur will grant any such waiver or forbearance in the future.
Premium Deficiency Reserve Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Premium deficiency reserve $ 53,698 $ (12,705) $ 66,403 (523) % Premium deficiency reserve was an expense of $53.7 million for the year ended December 31, 2024 compared to a benefit of $12.7 million for the year ended December 31, 2023.
Premium Deficiency Reserve Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Premium deficiency reserve $ 18,749 $ 53,698 $ (34,949) (65) % Premium deficiency reserve was an expense of $18.7 million for the year ended December 31, 2025, compared to $53.7 million for the year ended December 31, 2024.
P3 Health Partners Inc. | 2024 Form 10-K | 71 Table of Contents We continue to explore raising additional capital through a combination of debt financing and equity issuances and sales of assets.
We continue to explore raising additional capital through a combination of debt financing and equity issuances and sales of assets.
P3 Health Partners Inc. | 2024 Form 10-K | 72 Table of Contents Investing Activities Net cash provided by investing activities was $14.5 million for the year ended December 31, 2024, consisting of proceeds from the sale of the Florida Assets.
Investing Activities Net cash used in investing activities was $0.1 million for the year ended December 31, 2025. Net cash provided by investing activities was $14.5 million for the year ended December 31, 2024, consisting of proceeds from the sale of the Florida Assets.
We operate in the $1,030 billion Medicare market, which covers approximately 68 million eligible lives as of November 2024. Our core focus is the MA market, which makes up approximately 54% of the overall Medicare market, or nearly 33 million Medicare eligible lives in 2024.
We operate in the $1,118 billion Medicare market, which covers approximately 68 million eligible lives as of July 2025. Our core focus is the MA market, which covers approximately 34 million Medicare eligible lives in 2025.
All other terms of the VGS 1 2024 Loan are the same as the terms of the VGS Promissory Note. As of December 31, 2024, we had $38.1 million of borrowings outstanding under the VGS 1 2024 Loan.
All other terms of the VGS 1 2024 Loan are the same as the terms of the VGS Promissory Note.
Net cash provided by financing activities was $100.3 million for the year ended December 31, 2023, primarily consisting of proceeds from the March 2023 Private Placement, net of offering costs, and borrowings on the VGS Promissory Note.
Financing Activities Net cash provided by financing activities was $72.8 million for the year ended December 31, 2025, primarily consisting of proceeds from the VGS 4 Promissory Note and the VGS 5 Promissory Note.
In addition, we paid VGS 4 an up-front fee of 1.5% of $30.0 million, the maximum draw amount, in-kind. The VGS 4 Promissory Note matures on August 13, 2028. Interest on the VGS 4 Promissory Note is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning March 31, 2025.
In addition, we paid VGS 4 an up-front fee of 1.5% of $30.0 million, the maximum draw amount, in-kind. The VGS 4 Promissory Note matures on August 13, 2028. As of December 31, 2025, we had $41.1 million of borrowing outstanding under the VGS 4 Promissory Note.
Below is a discussion of the critical accounting estimates that are particularly important to the portrayal of our financial condition and results of operations and require the application of significant judgment by management. Capitated Revenue The transaction price for our capitated payor contracts is variable as it primarily includes PMPM fees associated with unspecified membership.
Below is a discussion of the critical accounting estimates that are particularly important to the portrayal of our financial condition and results of operations and require the application of significant judgment by management.
Significant changes impacting net cash used in operating activities during the year ended December 31, 2024 as compared to the year ended December 31, 2023 were primarily due to (i) increase of claims payable and IBNR of $77.1 million, (ii) increase of $10.8 million in prepaid and other current assets due to new and additional lines of credit for contractual obligations, and (iii) changes in working capital.
Significant changes impacting net cash used in operating activities during the year ended December 31, 2025 as compared to the year ended December 31, 2024 were primarily due to (i) increase of claims payable and IBNR of $47.0 million, (ii) decrease of $28.7 million in health plan receivables, and (iii) changes in working capital.
Medical expense includes costs of all covered services provided to members assigned by the health plans under P3’s at-risk model. Medical expense includes the cost for third-party healthcare service providers, the cost for overseeing the quality of care and programs, and from time to time, remediation of certain claims that might result from periodic reviews conducted by various regulatory agencies.
Medical expense includes the cost for third-party healthcare service providers, the cost for overseeing the quality of care and programs, and from time to time, remediation of certain claims that might result from periodic reviews conducted by various regulatory agencies. This also includes an estimate of the cost of services that have been incurred, but not yet reported (“IBNR”).

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