Full Press Release Details
Holdings, LLC & Rhode Island Market
| Page | |
| Condensed Combined and Consolidated Financial Statements (Unaudited) | |
| Condensed Combined and Consolidated Balance Sheets | 2 - 3 |
| Condensed Combined and Consolidated Statements of Operations | 4 |
| Condensed Combined and Consolidated Statements of Members' Deficit and Mezzanine Equity | 5 |
| Condensed Combined and Consolidated Statements of Cash Flows | 6 - 7 |
| Notes to Condensed Combined and Consolidated Financial Statements | 8 - 37 |
Holdings, LLC & Rhode Island Market
Combined and Consolidated Balance Sheets
| June 30, 2025 | September 30, 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 147,729 | $ | 151,255 | ||||
| Hospital fee program receivable | 19,923 | 18,385 | ||||||
| Patient accounts receivable, net of allowance for credit losses of $59,513 and $39,468 | 13,671 | 16,043 | ||||||
| Due from government payers | 271 | 228 | ||||||
| Risk pool and other receivables, net | 40,830 | 39,934 | ||||||
| Prepaid expenses and other current assets | 10,455 | 9,244 | ||||||
| Note receivable | 1,458 | 1,375 | ||||||
| Total current assets | 234,337 | 236,464 | ||||||
| Property, improvements and equipment, net | 21,140 | 22,720 | ||||||
| Operating lease right-of use assets | 3,444 | 5,577 | ||||||
| Deferred income taxes, net | 41,754 | - | ||||||
| Deposits and other assets | 4,595 | 374 | ||||||
| Goodwill | 29,666 | 29,587 | ||||||
| Restricted cash | 1,300 | 1,385 | ||||||
| Note receivable, net of current portion | 278 | 500 | ||||||
| Total assets* | $ | 336,514 | $ | 296,607 | ||||
| Liabilities and members' equity | ||||||||
| Current liabilities: | ||||||||
| Accrued medical claims and other healthcare costs payable | $ | 131,864 | $ | 131,182 | ||||
| Accounts payable and other accrued liabilities | 87,954 | 106,666 | ||||||
| Accrued salaries, wages and benefits | 25,287 | 24,960 | ||||||
| Hospital fee program liability | 9,524 | 7,330 | ||||||
| Due to government payers | 2,983 | 5,073 | ||||||
| Income taxes payable | 31,193 | 18,468 | ||||||
| Current portion of long-term debt | 489,039 | 47,579 | ||||||
| Current portion of finance lease liabilities | 712 | 702 | ||||||
| Current portion of operating lease liabilities | 2,247 | 2,461 | ||||||
| Other current liabilities | 254 | 194 | ||||||
| Total current liabilities | 781,057 | 344,615 | ||||||
| Long-term debt, net of current portion | 777,848 | 1,129,595 | ||||||
| Finance lease liabilities, net of current portion | 1,269 | 1,723 | ||||||
| Operating lease liabilities, net of current portion | 1,728 | 3,933 | ||||||
| Malpractice reserves | 2,371 | 2,269 | ||||||
| Other long-term liabilities | 5,665 | 6,764 | ||||||
| Total liabilities* | 1,569,938 | 1,488,899 |
Holdings, LLC & Rhode Island Market
Combined and Consolidated Balance Sheets (Continued)
| June 30, 2025 | September 30, 2024 | |||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Mezzanine equity: | ||||||||
| Redeemable convertible preferred stock | 75,295 | 75,295 | ||||||
| Members' deficit: | ||||||||
| Additional paid-in capital | 151,496 | 151,433 | ||||||
| Accumulated deficit | (1,439,250 | ) | (1,400,560 | ) | ||||
| Due from related parties | (21,110 | ) | (18,605 | ) | ||||
| Total PHP Holdings, LLC's & RI Market members' deficit | (1,308,864 | ) | (1,267,732 | ) | ||||
| Non-controlling interests | 145 | 145 | ||||||
| Total members' deficit | (1,308,719 | ) | (1,267,587 | ) | ||||
| Total liabilities, mezzanine equity and members' deficit | $ | 336,514 | $ | 296,607 |
accompanying notes to the unaudited condensed combined and consolidated financial statements.
The Company's combined consolidated balance sheets include the assets and liabilities of its consolidated VIEs. The combined consolidated
balance sheets include total assets that can be used only to settle obligations of the Company's consolidated VIEs totaling approximately
$103,458 and $131,505 as of June 30, 2025 and September 30, 2024, respectively, and total liabilities of the Company's
consolidated VIEs for which creditors do not have recourse to the general credit of the primary beneficiary of approximately $85,816
and $98,009 as of June 30, 2025 and September 30, 2024, respectively.
Holdings, LLC & Rhode Island Market
Combined and Consolidated Statements of Operations
| Nine Months Ended June 30, | 2025 | 2024 | ||||||
| Operating revenues: | ||||||||
| Capitation | $ | 830,370 | $ | 756,686 | ||||
| Patient services, net | 81,797 | 82,620 | ||||||
| Management fees | 29,061 | 18,292 | ||||||
| Other operating revenues | 20,528 | 19,897 | ||||||
| Total net revenue | 961,756 | 877,495 | ||||||
| Cost of revenues: | ||||||||
| Claims expense | 488,946 | 396,453 | ||||||
| Capitation expense | 189,794 | 177,130 | ||||||
| Other cost of revenues | 44,112 | 54,966 | ||||||
| Total cost of revenues | 722,852 | 628,549 | ||||||
| Gross margin | 238,904 | 248,946 | ||||||
| Operating expenses: | ||||||||
| Salary and benefits | 109,633 | 103,179 | ||||||
| Outside services | 31,663 | 16,091 | ||||||
| Management fees | 11,654 | 8,244 | ||||||
| Professional fees | 4,846 | 3,972 | ||||||
| Marketing | 2,122 | 2,718 | ||||||
| Lease and rental expense | 2,316 | 2,627 | ||||||
| Repair, maintenance and utilities | 4,635 | 3,203 | ||||||
| Software licensing | 7,022 | 5,663 | ||||||
| Taxes, licenses and fees | 5,365 | 5,039 | ||||||
| Insurance | 4,110 | 1,855 | ||||||
| Depreciation and amortization | 2,748 | 3,204 | ||||||
| Other operating expenses | 4,314 | 4,762 | ||||||
| Total operating expenses | 190,428 | 160,557 | ||||||
| Operating income | 48,476 | 88,389 | ||||||
| Operating gain from unconsolidated joint venture | - | 45 | ||||||
| Interest expense, net | (121,832 | ) | (95,087 | ) | ||||
| Other expense | - | (2,500 | ) | |||||
| Loss before income tax provision | (73,356 | ) | (9,153 | ) | ||||
| Income tax (benefit) provision | (34,666 | ) | 34,556 | |||||
| Net loss attributable to PHP Holdings, LLC & RI Market | $ | (38,690 | ) | $ | (43,709 | ) |
Holdings, LLC & Rhode Island Market
Combined and Consolidated Statements of Members' and Mezzanine Equity
| Mezzanine Equity | Additional Paid-in Capital | Accumulated Deficit | Due from related parties | Members' Deficit | Non- controlling Interests | Total Members' Deficit | ||||||||||||||||||||||
| Balance at October 1, 2024 | $ | 75,295 | $ | 151,433 | $ | (1,400,560 | ) | $ | (18,605 | ) | $ | (1,267,732 | ) | $ | 145 | $ | (1,267,587 | ) | ||||||||||
| Contribution of net assets due to restructuring transactions | - | 63 | - | - | 63 | - | 63 | |||||||||||||||||||||
| Due from related parties | - | - | - | (2,505 | ) | (2,505 | ) | - | (2,505 | ) | ||||||||||||||||||
| Net loss | - | - | (38,690 | ) | - | (38,690 | ) | - | (38,690 | ) | ||||||||||||||||||
| Balance at June 30, 2025 | $ | 75,295 | $ | 151,496 | $ | (1,439,250 | ) | $ | (21,110 | ) | $ | (1,308,864 | ) | $ | 145 | $ | (1,308,719 | ) | ||||||||||
| Mezzanine Equity | Additional Paid-in Capital | Accumulated Deficit | Due from related parties | Members' Deficit | Non- controlling Interests | Total Members' Deficit | ||||||||||||||||||||||
| Balance at October 1, 2023 | $ | 75,295 | $ | 151,370 | $ | (1,321,871 | ) | $ | (12,902 | ) | $ | (1,183,403 | ) | $ | 145 | $ | (1,183,258 | ) | ||||||||||
| Contribution of net assets due to restructuring transactions | - | 214 | - | - | 214 | - | 214 | |||||||||||||||||||||
| Due to related parties | - | - | - | 2,384 | 2,384 | - | 2,384 | |||||||||||||||||||||
| Net loss | - | - | (43,709 | ) | - | (43,709 | ) | - | (43,709 | ) | ||||||||||||||||||
| Balance at June 30, 2024 | $ | 75,295 | $ | 151,584 | $ | (1,365,580 | ) | $ | (10,518 | ) | $ | (1,224,514 | ) | $ | 145 | $ | (1,224,369 | ) |
accompanying notes to the unaudited condensed combined and consolidated financial statements.
Holdings, LLC & Rhode Island Market
Combined and Consolidated Statements of Cash Flows
| Nine Months Ended June 30, | 2025 | 2024 | ||||||
| Operating activities: | ||||||||
| Net loss | $ | (38,690 | ) | $ | (43,709 | ) | ||
| Adjustments to reconcile net loss to net cash, cash equivalents and restricted cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | 2,748 | 3,204 | ||||||
| Amortization of deferred financing costs, net | 711 | (2,543 | ) | |||||
| Loan interest on Physician Co Term Loan PIK option and Phase I Convertible Note | 54,129 | 47,966 | ||||||
| Loan interest on Bridge Loan PIK option | 1,038 | - | ||||||
| Loan interest on Mako Robot | 22 | 28 | ||||||
| Deferred income taxes, net | (41,754 | ) | (22,120 | ) | ||||
| Accrued interest on capital leases | 69 | 53 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Patient accounts receivable | 2,372 | 1,356 | ||||||
| Due from government payers | (43 | ) | 751 | |||||
| Hospital fee program receivable | (1,538 | ) | 4,388 | |||||
| Risk pool and other receivables | (896 | ) | 11,656 | |||||
| Prepaid expenses and other current assets | (5,432 | ) | (1,082 | ) | ||||
| Accrued medical claims and other healthcare costs payable | 682 | 339 | ||||||
| Accounts payable and other accrued liabilities | (20,014 | ) | 771 | |||||
| Accrued salaries, wages and benefits | 327 | 1,519 | ||||||
| Hospital fee program liability | 2,194 | 2,118 | ||||||
| Due from government payers | (2,090 | ) | (1,946 | ) | ||||
| Income taxes payable, net | 12,725 | 7,983 | ||||||
| Net cash, cash equivalents and restricted cash (used in) provided by operating activities | (33,440 | ) | 10,732 | |||||
| Investing activities: | ||||||||
| Purchases of property, improvements and equipment | (1,149 | ) | (1,252 | ) | ||||
| Due from related parties | (2,505 | ) | - | |||||
| Proceeds from (issuance) of short-term notes receivable | 83 | (500 | ) | |||||
| Proceeds from long-term note receivable | 55 | - | ||||||
| Net cash, cash equivalents and restricted cash used in investing activities | (3,516 | ) | (1,752 | ) | ||||
| Financing activities: | ||||||||
| Due from related parties | - | 2,386 | ||||||
| Proceeds from incremental borrowings | 34,000 | - | ||||||
| Proceeds from short term debt | - | 48,311 | ||||||
| Payment of debt issuance costs | - | (3,108 | ) | |||||
| Repayment of debt | (185 | ) | (119 | ) | ||||
| Repayment of finance leases | (533 | ) | (442 | ) | ||||
| Capital contribution by physician | 63 | - | ||||||
| Net cash, cash equivalents and restricted cash provided by financing activities | 33,345 | 47,028 |
Holdings, LLC & Rhode Island Market
Combined and Consolidated Statements of Cash Flows (Continued)
| Nine Months Ended June 30, | 2025 | 2024 | ||||||
| (Decrease) increase in cash, cash equivalents and restricted cash | $ | (3,611 | ) | $ | 56,008 | |||
| Cash, cash equivalents and restricted cash, beginning of the period | 152,640 | 90,669 | ||||||
| Cash, cash equivalents and restricted cash, end of the period | $ | 149,029 | $ | 146,677 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | 59,430 | $ | 49,200 | ||||
| Taxes paid | 764 | - | ||||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Contribution of net assets due to restructuring transactions | $ | - | $ | 214 |
accompanying notes to the unaudited condensed combined and consolidated financial statements.
LLC & Rhode Island Market
Combined and Consolidated Statements
(the "Company" or "PHPH") is a Delaware company formed on March 25, 2013. The Company was originally formed
as a Delaware corporation and converted to a limited liability company on October 12, 2022. As of June 30, 2025 (the "Report
Date"), the Company was owned by Prospect Medical Holdings, Inc.("PMH"), a Delaware corporation, and MPT Picasso
Investors TRS, LLC, a Delaware limited liability company ("MPT"). PHPH's subsidiaries consisted of the following four
primary reportable segments as of the Report Date: Medical Group, Global Risk, Hospital Services and Holding companies' segments.
As of the Report Date, Prospect Provider Group RI, LLC ("PPGRI") was a wholly owned subsidiary of Prospect Provider
Groups, LLC, which was a wholly owned subsidiary of Prospect Medical Holdings, Inc. ("PMH" or "Holdings").
Prior to June 24, 2025, Prospect Health Services RI, Inc. ("PHSRI") was a wholly owned subsidiary of PHS Holdings, Inc.
("PHSH"). PHSH was a wholly owned subsidiary of Coordinated Regional Care Group, Inc. ("CRCG"), which
in turn was a wholly owned subsidiary of PMH. Effective June 24, 2025, PHSRI was merged with and into PPGRI, with PPGRI as the surviving
entity. PHSRI and PPGRI, which are collectively referred to herein as the "Rhode Island Market" are the combined portion within
these condensed combined and consolidated financial statements.
The condensed combined
and consolidated balance sheet as of September 30, 2024 was derived from the audited financial statements at that date, but does
not include all the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP").
These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended September 30,
2024. The condensed combined and consolidated financial statements for the nine months ended June 30, 2025 and 2024, in the opinion
of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company's
financial condition and results of operations. The results of operations for the nine months ended June 30, 2025 and 2024, are not
necessarily indicative of the results to be expected for any other interim period or for the entire year.
Company's subsidiaries (collectively, the "Prospect Network") contract with licensed physicians and other health care
providers, and contract with managed care payers. PHPH's subsidiaries include management services organizations that provide medical
management systems and services to the Prospect Network and other third-party clients.
Group, Inc. ("PMG") is a California professional medical corporation and was an affiliated physician organization of
PHPH as of the Report Date. Pursuant to the restructuring described under "Holding Companies" below, PMG became an indirect
subsidiary (through the nominee physician shareholder arrangement discussed below) effective March 30, 2023. As of the Report Date,
PHPH controlled PMG through means other than direct ownership of PMG's voting common stock. As discussed below, control was effectuated
through a nominee physician shareholder.
LLC & Rhode Island Market
Combined and Consolidated Statements (Continued)
In addition to PMG itself, the California
part of the Prospect Network as of the Report Date consisted of the following (each, an "Affiliate"):
Nuestra Familia Medical Group, Inc.
Prospect Health Source Medical
AMVI/Prospect Medical Group
Prospect Professional Care
Prospect NWOC Medical Group, Inc.
StarCare Medical Group, Inc.
Genesis HealthCare of Southern
California, Inc., a Medical Group
Pomona Valley Medical Group, Inc.
Upland Medical Group, a Professional
Medical Corporation ("UMG")
Date, the Affiliates were managed by Prospect Medical Systems, LLC ("PMS") and, prior to March 31, 2023, ProMed Healthcare
Administrators ("PHCA"), which were indirect wholly-owned subsidiaries of PHPH. All of the Affiliates were wholly owned by
PMG as of the Report Date, with the exception of AMVI/Prospect ("AMVI" or "JV"), which was a 50/50 Joint Venture
between AMVI Care Health Network, Inc. and PMG that was terminated and dissolved effective September 30, 2024 as noted in Note
8. As of the Report Date, PMG was owned by Prospect Intermediate Physician Holdings, Inc. ("PIPH"), a California professional
medical corporation that was owned by Prospect Physician Holdings, Inc., another California professional medical corporation ("PPH").
PPH was owned by a nominee physician shareholder pursuant to an assignable option agreement described below. The results of the entire
Prospect Network, with the exception of AMVI/Prospect, are consolidated in the accompanying condensed combined and consolidated financial
into an assignable option agreement with PPH and a nominee physician shareholder. Under the assignable option agreement, PMS acquired
an assignable option for a nominal amount from PPH and the nominee shareholder to designate the purchaser (successor physician) for all
or part of PPH's issued and outstanding stock held by the nominee physician shareholder (the "Stock Option") in its sole
discretion. PMS may also assign the assignable option agreement to any California licensed physician. The assignable option agreement
has a term of 30 years. The Stock Option may be exercised for a purchase price of $1,000. PMS has the unilateral right to establish or
effect a change of the nominee, at will, and without the consent of the nominee, on an unlimited basis and at nominal cost.
Date, PMG's Affiliates have each entered into a MSA and each Affiliate has agreed to pay a management fee to PMS or previously
to PHCA, as applicable (each of which was a wholly-owned subsidiary of PHPH), which was based in part on the costs to the management
company and on a percentage of revenues the Affiliate receives for (i) arranging for the provision of medical services by the Affiliate's
independent contractor physicians and other licensed healthcare providers, and (ii) other services requested by its contracted health
plans. The revenue from which this fee is determined includes medical capitation, sums earned from participation in risk pools, and other
performance fees paid by the health plans. In return for payment of the management fee, PMS, and previously PHCA have agreed to provide
financial management, information systems, marketing, advertising, public relations, risk management, utilization review, quality of
care, and administrative support. The Company and its subsidiaries underwent a restructuring described under "Holding Companies"
below. For tax consolidation purposes, effective March 31, 2023, the rights and obligations of PMS and PHCA under each MSA with
PMG and its Affiliates were assigned to their new parent company, Prospect Intermediate Physician Holdings, Inc. ("PIPH"),
and then subcontracted first to PIPH's parent company, Prospect Physician Holdings, Inc. ("PPH"), and then back
to PMS. Pursuant to such assignments, PCA assigned to PMS its management for PVMG and UMG and PHCA no longer has any operations.
LLC & Rhode Island Market