P3 Health Partners Announces Fourth Quarter and Full-Year 2022 Results
P3 Health Partners Inc. (NASDAQ: PIII) reported its Q4 and full-year 2022 financial results, with a notable 40% increase in capitated revenue to $254.0 million. However, the company faced a substantial net loss of $532.3 million, primarily due to a goodwill impairment charge of $463.5 million. For the full year, P3's at-risk Medicare Advantage membership grew by 50% to 100,400, with total revenues reaching $1.0 billion, a 66% increase from the previous year. Looking forward, P3 anticipates achieving Adjusted EBITDA positivity by early 2024 and has provided fiscal 2023 guidance with total revenues projected between $1.2 billion and $1.25 billion.
- Capitated revenue increased 40% to $254.0 million in Q4 2022.
- Total revenues for 2022 reached $1.0 billion, a 66% year-over-year increase.
- At-risk Medicare Advantage membership rose by 50% to 100,400.
- Full-year medical margin improved by 428% to $62.1 million.
- Introduced new non-GAAP financial metrics for transparency.
- Secured approximately $90 million in financing.
- Net loss for Q4 2022 was $532.3 million, largely due to a $463.5 million goodwill impairment.
- Full-year net loss increased to $1.6 billion, significantly impacting the bottom line.
- Adjusted EBITDA loss widened to $127.9 million for 2022.
Affirming 2023 guidance – introducing year-end medical margin guidance
Anticipates reaching Adjusted EBITDA positive in early 2024
Management to Host Conference Call and Webcast
“Results for 2022 are a testament to the strength of the P3 team and its commitment to improving clinical outcomes,” said Dr.
Fourth Quarter 2022 Financial Results
-
Capitated revenue was
, an increase of$254.0 million 40% compared to in the fourth quarter of the prior year$181.4 million -
Net loss was
compared to a net loss of$532.3 million in the fourth quarter of the prior year, primarily due to a goodwill impairment charge of$118.2 million in the fourth quarter of 2022$463.5 million -
Net loss PMPM was
, compared to a net loss of$1,766 in the prior year, due to a goodwill impairment charge of$587.1 in the fourth quarter of 2022$463.5 million -
Adjusted EBITDA loss(1) was
compared to an Adjusted EBITDA loss of$40.1 million in the fourth quarter of the prior year$35.6 million -
Adjusted EBITDA PMPM(1) loss was
, an improvement of$133 PMPM compared to the fourth quarter of the prior year$44
In order to provide a greater level of insight into our model and comparability with other companies in our industry, we are introducing two additional non-GAAP financial metrics, medical margin and network contribution. For more information regarding the Company’s use of non-GAAP financial measures, please see the section titled “Non-GAAP Financial Measures.”
Full-Year 2022 Financial Results
-
At-risk Medicare Advantage membership at
December 31, 2022 of 100,400, an increase of approximately50% compared to 67,000 in the prior year(2) -
Capitated revenue was
, an increase of$1.0 billion 66% compared to in the prior year$625.0 million -
Operating loss for full-year 2022 was
compared to$1.6 billion in the prior year(1)$187.9 million -
Full-year 2022 medical margin was
, an improvement of$62.1 million 428% compared to the prior year(1) -
Full-year network contribution of
( improved by$7.8) million 65% compared to the prior year(1) -
Net loss was
compared to a net loss of$1.6 billion in the prior year, primarily due to a goodwill impairment charge of$204.3 million in 2022$1.3 billion -
Net loss PMPM was
, an increased loss of$1,296.1 primarily due to a goodwill impairment charge$1,041.9 -
Adjusted EBITDA loss was
compared to an Adjusted EBITDA loss of$127.9 million in the prior year (1)$95.5 million -
Adjusted EBITDA loss PMPM was
, a significant improvement compared to$106 PMPM in the prior year(1)$119
“We announced today that we have secured financing of approximately
Fiscal 2023 Guidance | |||||||
Year Ended |
|||||||
Low | High | ||||||
Medicare Advantage Members |
|
115,000 |
|
|
120,000 |
|
|
Total Revenues (in millions) | $ |
1,200 |
|
$ |
1,250 |
|
|
Medical Margin(3) (in millions) | $ |
155 |
|
$ |
175 |
|
|
Medical Margin(3)PMPM | $ |
120 |
|
$ |
130 |
|
|
Adjusted EBITDA(3) Loss (in millions) | $ |
(60 |
) |
$ |
(40 |
) |
(3)The Company is not able to provide a quantitative reconciliation of guidance for Adjusted EBITDA loss and medical margin to net income (loss) and operating loss the most directly comparable GAAP measures, respectively, and has not provided forward-looking guidance for net income (loss) or operating loss because of the uncertainty around certain items that may impact net income (loss) or operating loss that are not within our control or cannot be reasonably predicted without unreasonable effort. For more information regarding the non-GAAP financial measures discussed in this press release, please see “Non-GAAP Financial Measures” below. |
The foregoing 2023 Outlook statement represents management's current estimate as of the date of this release. Actual results may differ materially depending on a number of factors. Investors are urged to read the Cautionary Note Regarding Forward-Looking Statements included in this release. Management does not assume any obligation to update these estimates.
Conference Call and Webcast
Management will host a conference call and webcast at
Title & Webcast |
P3 Health Fourth-Quarter and Full-Year 2022 Earnings Conference Call |
|
Date & Time |
|
|
Conference Call Details |
Toll-Free 1-877-270-2148 (US) International 1-412-902-6510
Ask to be joined into the |
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The conference call will also be webcast live in the "Events & Presentations" section of the Investor page of the P3 website (ir.p3hp.org). The Company’s press release will be available on the Investor page of P3’s website in advance of the conference call. An archived recording of the webcast will be available on the Investor page of P3’s website for a period of 90 days following the conference call. |
(1) Adjusted EBITDA, Adjusted EBITDA per member, per month (“PMPM”), medical margin and network contribution are non-GAAP financial measures. For reconciliations of these measures to the most directly comparable GAAP measures and more information regarding the Company’s use of non-GAAP financial measures, please see the section titled “Non-GAAP Financial Measures.”
(2) See “Key Performance Metrics” for additional information on how the Company defines “at-risk Medicare Advantage members.”
(3)The Company is not able to provide a quantitative reconciliation of guidance for Adjusted EBITDA loss to net income (loss), the most directly comparable GAAP measure, and has not provided forward-looking guidance for net income (loss), because of the uncertainty around certain items that may impact net income (loss) that are not within our control or cannot be reasonably predicted without unreasonable effort. For more information regarding the non-GAAP financial measures discussed in this press release, please see “Non-GAAP Financial Measures” below.
About
Presentation of Financial Results
As a result of the business combination consummated on
Non-GAAP Financial Measures
In addition to the financial results prepared in accordance with
Key Performance Metrics
In addition to our GAAP and non-GAAP financial information, the Company also monitors “at-risk members” to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. At-risk membership represents the approximate number of Medicare Advantage members for whom we receive a fixed PMPM fee under capitation arrangements as of the end of a particular period.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the
Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, changes in market or industry conditions, regulatory environment, competitive conditions, and receptivity to our services; our ability to fund our growth and expand our operations; changes in laws and regulations applicable to our business; our ability to maintain our relationships with health plans and other key payers; the impact of COVID-19, including the impact of new variants of the virus, or another pandemic, epidemic or outbreak of infectious disease on our business and results of operation; increased labor costs; our ability to recruit and retain qualified team members and independent physicians; and other factors discussed in Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended
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CONSOLIDATED BALANCE SHEETS |
|||||||
(Dollars in thousands, except per share amounts) |
|||||||
|
|||||||
2022 |
2021 |
||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash | $ | 17,537 |
$ | 140,478 |
|||
Restricted cash | 920 |
356 |
|||||
Health plan receivable | 72,092 |
50,251 |
|||||
Clinic fees and insurance receivable, net | 822 |
1,090 |
|||||
Other receivable | 6,678 |
727 |
|||||
Prepaid expenses and other current assets | 2,643 |
6,959 |
|||||
TOTAL CURRENT ASSETS | 100,692 |
199,861 |
|||||
LONG-TERM ASSETS: | |||||||
Property and equipment, net | 8,839 |
8,048 |
|||||
— |
1,309,750 |
||||||
Intangible assets, net | 751,050 |
835,839 |
|||||
Other long-term assets | 15,990 |
10,611 |
|||||
TOTAL LONG-TERM ASSETS | 775,879 |
2,164,248 |
|||||
TOTAL ASSETS (1) | $ | 876,571 |
$ | 2,364,109 |
|||
LIABILITIES, MEZZANINE EQUITY, and STOCKHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 11,542 |
$ | 5,469 |
|||
Accrued expenses and other current liabilities | 16,647 |
12,261 |
|||||
Accrued payroll | 8,224 |
6,304 |
|||||
Health plan settlements payable | 13,608 |
22,549 |
|||||
Claims payable | 151,207 |
101,958 |
|||||
Premium deficiency reserve | 26,375 |
37,836 |
|||||
Accrued interest | 14,061 |
8,771 |
|||||
Current portion of long-term debt | — |
46 |
|||||
Short-term debt | — |
3,579 |
|||||
TOTAL CURRENT LIABILITIES | 241,664 |
198,773 |
|||||
LONG-TERM LIABILITIES: | |||||||
Operating lease liability | 11,516 |
6,297 |
|||||
Warrant liabilities | 1,517 |
11,383 |
|||||
Contingent consideration | 4,794 |
3,487 |
|||||
Long-term debt, net | 94,421 |
80,000 |
|||||
TOTAL LONG-TERM LIABILITIES | 112,248 |
101,167 |
|||||
TOTAL LIABILITIES (1) | 353,912 |
299,940 |
|||||
COMMITMENTS AND CONTINGENCIES (NOTE 17 AND NOTE 21) | |||||||
MEZZANINE EQUITY | |||||||
Redeemable non-controlling interest | 516,805 |
1,790,617 |
|||||
STOCKHOLDERS' EQUITY: | |||||||
Class A common stock, |
4 |
4 |
|||||
Class V common stock, |
20 |
20 |
|||||
Additional paid in capital | 315,375 |
312,946 |
|||||
Accumulated deficit | -309,545 |
-39,418 |
|||||
TOTAL STOCKHOLDERS’ EQUITY | 5,854 |
273,552 |
|||||
TOTAL LIABILITIES, MEZZANINE EQUITY, and STOCKHOLDERS' EQUITY | $ | 876,571 |
$ | 2,364,109 |
Unaudited Consolidated Statements of Operations
|
|||||||||||||||||||
Successor
|
Successor
|
Successor
|
Successor
|
Predecessor
|
Combined
|
||||||||||||||
Operating Revenue: | |||||||||||||||||||
Capitated Revenue | $ |
254.0 |
|
$ |
181.4 |
|
$ |
1,034.8 |
|
$ |
57.2 |
|
$ |
567.7 |
|
$ |
625.0 |
|
|
Other Patient Service Revenue |
|
4.2 |
|
|
3.9 |
|
|
14.7 |
|
|
1.5 |
|
|
10.9 |
|
|
12.4 |
|
|
Total Operating Revenue |
|
258.2 |
|
|
185.3 |
|
|
1,049.5 |
|
|
58.8 |
|
|
578.6 |
|
|
637.4 |
|
|
Operating Expenses (Income): | |||||||||||||||||||
Medical Expenses |
|
269.2 |
|
|
201.0 |
|
|
1,057.2 |
|
|
66.9 |
|
|
592.5 |
|
|
659.3 |
|
|
Premium Deficiency Reserve |
|
(1.3 |
) |
|
33.2 |
|
|
(11.5 |
) |
|
26.3 |
|
|
11.6 |
|
|
37.8 |
|
|
Corporate, General and Administrative Expenses |
|
39.7 |
|
|
63.3 |
|
|
157.3 |
|
|
17.0 |
|
|
100.2 |
|
|
117.2 |
|
|
Sales and Marketing Expenses |
|
1.7 |
|
|
1.1 |
|
|
5.1 |
|
|
0.4 |
|
|
1.8 |
|
|
2.2 |
|
|
Goodwill Impairment |
|
463.5 |
|
|
7.1 |
|
|
1,315.0 |
|
|
7.1 |
|
|
- |
|
|
7.1 |
|
|
Depreciation and Amortization |
|
22.0 |
|
|
0.4 |
|
|
87.3 |
|
|
- |
|
|
1.6 |
|
|
1.6 |
|
|
Total Operating Expenses |
|
794.8 |
|
|
306.2 |
|
|
2,610.4 |
|
|
117.7 |
|
|
707.7 |
|
|
825.3 |
|
|
Operating Loss |
|
(536.5 |
) |
|
(120.9 |
) |
|
(1,560.9 |
) |
|
(58.9 |
) |
|
(129.1 |
) |
|
(187.9 |
) |
|
Other Income (Expenses): | |||||||||||||||||||
Interest Expense, Net |
|
(3.2 |
) |
|
(3.7 |
) |
|
(11.4 |
) |
|
(0.9 |
) |
|
(9.8 |
) |
|
(10.7 |
) |
|
Mark-To-Market Adjustment For Stock Warrants |
|
6.5 |
|
|
6.7 |
|
|
9.9 |
|
|
2.3 |
|
|
(7.7 |
) |
|
(5.4 |
) |
|
Other Expense, Net |
|
2.8 |
|
|
(0.3 |
) |
|
2.8 |
|
|
(0.5 |
) |
|
0.1 |
|
|
(0.3 |
) |
|
Total Other Income (Expenses) |
|
6.1 |
|
|
2.7 |
|
|
1.2 |
|
|
1.0 |
|
|
(17.3 |
) |
|
(16.4 |
) |
|
Loss Before Income Taxes |
|
(530.5 |
) |
|
(118.2 |
) |
|
(1,559.7 |
) |
|
(57.9 |
) |
|
(146.4 |
) |
|
(204.3 |
) |
|
Provision For Income Taxes |
|
(1.9 |
) |
|
- |
|
|
(1.9 |
) |
|
- |
|
|
- |
|
|
- |
|
|
Net Loss |
|
(532.3 |
) |
|
(118.2 |
) |
|
(1,561.6 |
) |
|
(57.9 |
) |
|
(146.4 |
) |
|
(204.3 |
) |
|
Net Loss Attributable To Non-Controlling Interests |
|
(438.3 |
) |
|
(47.9 |
) |
|
(1,291.4 |
) |
|
(47.9 |
) |
|
- |
|
|
(47.9 |
) |
|
Net Loss Attributable To Controlling Interests | ($ |
94.0 |
) |
($ |
70.3 |
) |
($ |
270.1 |
) |
($ |
10.1 |
) |
($ |
146.4 |
) |
($ |
156.5 |
) |
|
NET LOSS PER SHARE (BASIC) | ($ |
2.26 |
) |
($ |
1.69 |
) |
($ |
6.5 |
) |
($ |
0.24 |
) |
NA(1) | NA(1) | |||||
NET LOSS PER SHARE (DILUTED) | ($ |
2,260.23 |
) |
($ |
1,690.16 |
) |
($ |
6.5 |
) |
($ |
0.24 |
) |
NA(1) | NA(1) | |||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (BASIC) |
|
41.6 |
|
|
41.6 |
|
|
41.6 |
|
|
41.6 |
|
NA(1) | NA(1) | |||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (DILUTED) |
|
41.6 |
|
|
41.6 |
|
|
41.6 |
|
|
41.6 |
|
NA(1) | NA(1) | |||||
(1) The Company analyzed the calculation of net loss per member unit for predecessor periods prior to the Business Combinations |
Successor | Predecessor | |||||
Year Ended 2022 |
through 2021 |
through 2021 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net loss | -1,561,557 |
-57,938 |
$ | -146,400 |
||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Depreciation and amortization | 87,289 |
7,150 |
1,575 |
|||
Equity-based compensation | 19,404 |
4,635 |
3,701 |
|||
1,314,952 |
— |
— |
||||
Amortization of original issue discount and debt issuance costs | — |
— |
1,798 |
|||
Accretion of contingent consideration | 400 |
— |
— |
|||
Mark-to-market of stock warrants | -9,865 |
-2,272 |
7,665 |
|||
Premium deficiency reserve | -11,461 |
26,277 |
11,559 |
|||
Changes in operating assets and liabilities: | ||||||
Health plan receivable | -21,841 |
3,236 |
-2,770 |
|||
Clinic fees, insurance, and other receivables | -5,338 |
1,467 |
-1,485 |
|||
Prepaid expenses and other current assets | 4,266 |
-4,704 |
4,254 |
|||
Other long-term assets | 100 |
— |
— |
|||
Accounts payable, accrued expenses, and other current liabilities | 6,082 |
7,732 |
34,224 |
|||
Accrued payroll | 1,920 |
3,158 |
-1,134 |
|||
Health plan settlements payable | -8,941 |
-2,592 |
11,265 |
|||
Claims payable | 49,249 |
-971 |
19,097 |
|||
Accrued interest | 5,290 |
-498 |
5,216 |
|||
Operating lease liability | 4,032 |
-22 |
306 |
|||
Net cash used in operating activities | -126,019 |
-15,342 |
-51,129 |
|||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
Purchases of property and equipment | -2,233 |
-120 |
-3,290 |
|||
Acquisitions, net of cash acquired | -5,500 |
-47,879 |
-4,989 |
|||
Notes receivable | — |
143 |
70 |
|||
Net cash used in investing activities | -7,733 |
-47,856 |
-8,209 |
|||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Proceeds from PIPE, net of issuance costs | — |
195,308 |
— |
|||
Proceeds from long-term debt, net of original issue discount | 15,000 |
— |
25,000 |
|||
Proceeds from short-term debt | — |
3,377 |
351 |
|||
Payment of long-term debt | -46 |
-8 |
-186 |
|||
Payment of debt issuance costs | — |
— |
-375 |
|||
Payment of short-term debt | -3,579 |
— |
— |
|||
Net cash provided by financing activities | 11,375 |
198,677 |
24,790 |
|||
Net change in cash and restricted cash | -122,377 |
135,479 |
-34,548 |
|||
Cash and restricted cash at beginning of period | 140,834 |
5,355 |
39,903 |
|||
Cash and restricted cash at end of period | 18,457 |
140,834 |
$ | 5,355 |
Reconciliation of Non-GAAP Adjusted EBITDA (in millions) |
||||
Three Months Ended |
Three Months Ended |
Year Ended |
Year Ended |
|
Net Loss |
( |
( |
(1,561.6) |
( |
Interest Expense, Net | 3 |
4 |
11.4 |
11 |
Depreciation and Amortization Expense | 22 |
8 |
87.3 |
9 |
Provision for Income Taxes | 2 |
- |
1.9 |
- |
Goodwill Impairment | 464 |
- |
1,315.0 |
- |
Mark-To-Market Adjustment of Stock Warrants | (7) |
(7) |
(9.9) |
5 |
Premium Deficiency Reserve | (1) |
33 |
(11.5) |
38 |
Transaction and Other Related Costs | 3 |
38 |
14.1 |
38 |
Equity-Based Compensation | 2 |
7 |
19.4 |
8 |
Other | 4 |
0 |
6.0 |
0 |
EBITDA, Adjusted |
( |
( |
( |
( |
Reconciliation of Non-GAAP adjusted EBITDA / PMPM (in PMPM $) |
||||
Three Months Ended |
Three Months Ended |
Year Ended |
Year Ended |
|
Net Loss |
( |
( |
( |
( |
Interest Expense, Net | 3 |
4 |
11 |
11 |
Depreciation and Amortization Expense | 22 |
8 |
87 |
9 |
Provision for Income Taxes | 2 |
- |
2 |
- |
Goodwill Impairment | 464 |
- |
1,315 |
- |
Mark-To-Market Adjustment of Stock Warrants | (7) |
(7) |
(10) |
5 |
Premium Deficiency Reserve | (1) |
33 |
(12) |
38 |
Transaction and Other Related Costs | 3 |
38 |
14 |
38 |
Stock-Based Compensation | 2 |
7 |
19 |
8 |
Other | 4 |
0 |
6 |
0 |
EBITDA, Adjusted |
( |
( |
( |
( |
PMPM |
|
|
|
|
Successor |
Predecessor |
|||||||||
Year Ended 2022 |
through December 31, 2021 |
through December 2, 2021 |
||||||||
Capitated revenue | $ | 1,034,800 |
$ | 57,224 |
$ | 567,735 |
||||
Less: medical claims expenses | -972,725 |
-62,344 |
-550,869 |
|||||||
Medical margin | $ | 62,075 |
$ | -5,120 |
$ | 16,866 |
The following table sets forth a reconciliation of our operating loss, the most directly comparable GAAP metric, to medical margin (in thousands):
Successor |
Predecessor |
Combined |
|||||||||||
Year Ended 2022 |
through December 31, 2021 |
through December 2, 2021 |
through December 31, 2021 |
||||||||||
Operating loss | $ | -1,560,913 |
$ | -58,888 |
$ | -129,058 |
$ | -187,946 |
|||||
Other patient service revenue | -14,671 |
-1,538 |
-10,867 |
-12,405 |
|||||||||
Other medical expenses | 84,499 |
4,533 |
41,596 |
46,129 |
|||||||||
Premium deficiency reserve | -11,461 |
26,277 |
11,559 |
37,836 |
|||||||||
Corporate, general and administrative expenses | 157,284 |
16,983 |
100,243 |
117,226 |
|||||||||
Sales and marketing expenses | 5,096 |
364 |
1,818 |
2,182 |
|||||||||
Depreciation and amortization | 87,289 |
7,149 |
1,575 |
8,724 |
|||||||||
1,314,952 |
— |
— |
|||||||||||
Medical margin | $ | 62,075 |
$ | -5,120 |
$ | 16,866 |
$ | 11,746 |
Successor | Predecessor | |||||||||
Year Ended 2022 |
through December 31, 2021 |
through December 2, 2021 |
||||||||
Total operating revenue | $ | 1,049,471 |
$ | 58,762 |
$ | 578,602 |
||||
Less: medical claims expenses | -972,725 |
-62,345 |
-550,869 |
|||||||
Less: other medical expenses | -84,499 |
-4,532 |
-41,596 |
|||||||
Network contribution | $ | -7,753 |
$ | -8,115 |
$ | -13,863 |
The following table presents our network contribution (dollars in thousands):
Successor | Predecessor | Combined | ||||||||||
Year Ended 2022 |
through December 31, 2021 |
through December 2, 2021 |
through December 31, 2021 |
|||||||||
Operating loss | -1,560,913 |
$ | -58,888 |
$ | -129,058 |
$ | -187,946 |
|||||
Premium deficiency reserve | -11,461 |
26,277 |
11,559 |
37,836 |
||||||||
Corporate, general and administrative expenses | 157,284 |
16,983 |
100,243 |
117,226 |
||||||||
Sales and marketing expenses | 5,096 |
364 |
1,818 |
2,182 |
||||||||
Depreciation and amortization | 87,289 |
7,149 |
1,575 |
8,724 |
||||||||
1,314,952 |
— |
— |
||||||||||
Network contribution | -7,753 |
$ | -8,115 |
$ | -13,863 |
$ | -21,978 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230330005878/en/
Investor Relations
Vice President, Investor Relations
kblomquist@p3hp.org
Executive Vice President, Communications
(904) 415-2744
kbelz@p3hp.org
Source:
FAQ
What were P3 Health Partners' 2022 financial results?
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