Document P3 Health Partners Announces Third-Quarter and Year-to-Date 2023 Results YTD total revenue growth of 16% Continued strong performance across markets, re-affirming 2023 guidance Provides preliminary 2024 Full-Yea

P3 Health Partners Announces Third-Quarter and Year-to-Date 2023 Results

YTD total revenue growth of 16%

Continued strong performance across markets, re-affirming 2023 guidance

Provides preliminary 2024 Full-Year Adjusted EBITDA guidance of +$20 million to +$40 million

Management to Host Conference Call and Webcast November 8, 2023 at 4 30 PM ET

HENDERSON, NV-November 8, 2023-P3 Health Partners Inc. ("P3" or the "Company") (NASDAQ PIII), a patient-centered and physician-led population health management company, today announced its financial results for the third quarter ended September 30, 2023.

"Our results for the third quarter show the continued improvement of the business as providers and patients mature on our platform. All key metrics are tracking as expected and net cash used in operating activities has improved to negative $8 million for the quarter. We are re-affirming our existing full-year 2023 guidance and providing preliminary 2024 full-year Adjusted EBITDA guidance of $20 million to $40 million," said Dr. Sherif Abdou, CEO of P3.

Third-Quarter 2023 Financial Results

Total revenue was $288.4 million, an increase of 16% compared to $248.3 million in the third quarter of the prior year. Net loss was $37.3 million, an increase of approximately 43% compared to a net loss of $65.3 million in the third quarter of the prior year. Net loss PMPM was $119 compared to a net loss PMPM of $218 the third quarter of the prior year

Adjusted EBITDA(1) loss was $22.3 million, compared to an Adjusted EBITDA loss of $40.3 million in the third quarter of the prior year. Adjusted EBITDA PMPM(1) was a loss of $71, compared to an Adjusted EBITDA loss PMPM of $135 in the third quarter of the prior year

Gross profit was $9.1 million, as compared to negative $6.5 million in the prior year. Gross profit PMPM was $29, compared to a loss of $22 PMPM in the prior year

Medical margin(1) was $36.2 million, an increase of 306.1% compared to $8.9 million in the third quarter of the prior year. Medical margin PMPM(1) was $115, an increase of 286.3% compared to a medical margin PMPM of $30 in the prior year

Year-to-Date 2023 Financial Results

Total revenue was $919.5 million, an increase of 16% compared to $791.3 million in the same period in the prior year. Net loss was $117.3 million, compared to a net loss of $1,029.2 million in the same period of the prior year. The year-to date results of 2022 were negatively impacted by a goodwill impairment charge of $851 million. Net loss PMPM was $126 compared to a net loss PMPM of $1,148 in the same period of the prior year

Adjusted EBITDA(1) loss was $41.2 million, compared to an Adjusted EBITDA loss of $87.9 million in the same period of the prior year. Adjusted EBITDA PMPM(1) loss was $44, compared to an Adjusted EBITDA loss of $98 PMPM in the same period of the prior year

Gross profit was $52.5 million, compared to $3.2 million in the same period of the prior year. Gross profit PMPM was $56, compared to $4 in the same period of the prior year

Medical margin(1) was $126.0 million, an increase of 127.0% compared to $55.5 million in the same period of the prior year. Medical margin PMPM(1) was $135, an increase of 118.1% compared to a medical margin PMPM of $62 in the same period of the prior year

Full-Year 2023 Guidance

(1) Adjusted EBITDA, Adjusted EBITDA per member, per month ("PMPM"), medical margin and medical margin PMPM 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" and the tables at the end of this press release.

(2) The Company is not able to provide a quantitative reconciliation of full-year 2023 or 2024 guidance for Adjusted EBITDA loss to net income, or quantitative reconciliations for full-year 2023 guidance for medical margin and medical margin PMPM to net income (loss), gross profit and gross profit PMPM, the most directly comparable GAAP measures, respectively, and has not provided forward-looking guidance for net income (loss), gross profit (loss) or gross profit (loss) PMPM because of the uncertainty around certain items that may impact net income (loss), gross profit (loss) or gross profit (loss) PMPM that are not within our control or cannot be reasonably predicted without unreasonable effort. For more information regarding the non-GAAP financial measures discussed in this press release, please see "Non-GAAP Financial Measures" below.

About P3 Health Partners (NASDAQ PIII)

Non-GAAP Financial Measures

In addition to the financial results prepared in accordance accounting principles generally accepted in the U.S. ("GAAP"), this press release contains certain non-GAAP financial measures as defined by the SEC rules, including Adjusted EBITDA, Adjusted EBITDA PMPM, medical margin and medical margin PMPM. EBITDA is defined as GAAP net income (loss) before (i) interest, (ii) income taxes and (iii) depreciation and amortization. Adjusted EBITDA is defined as EBITDA, further adjusted to exclude the effect of certain supplemental adjustments, such as (i) mark-to-market warrant gain loss, (ii) premium deficiency reserves, (iii) equity-based compensation expense and (iv) certain other items that we believe are not indicative of our core operating performances. Adjusted EBITDA PMPM is defined as Adjusted EBITDA divided by the number of Medicare Advantage members each month divided by the number of months in the period. We believe these non GAAP financial measures provide an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other similar companies. Medical margin represents the amount earned from capitation revenue after medical claims expenses are deducted and medical margin PMPM is defined as medical margin divided by the number of Medicare Advantage members each month divided by the number of months in the period. 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. We do not consider these non GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. These non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non GAAP financial measures. In addition, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. The tables at the end of this press release present a reconciliation of Adjusted EBITDA to net income (loss) and Adjusted EBITDA PMPM to net income (loss) PMPM, and medical margin to gross profit and medical margin PMPM to gross profit PMPM, which are the most directly comparable financial measures calculated in accordance with GAAP.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended. Words such as anticipate, believe, budget, contemplate, continue, could, envision, estimate, expect, guidance, indicate, intend, may, might, plan, possibly, potential, predict, probably, pro-forma, project, seek, should, target, or will, or the negative or other variations thereof, and similar words or phrases or comparable terminology, are intended to identify forward-looking statements. These forward-looking statements address various matters, including the Company's future expected growth strategy and operating performance current expectations regarding the Company's current cash position and outlook as to revenue, at-risk Medicare Advantage membership, medical margin, medical margin PMPM, Adjusted EBITDA loss for the full year 2023 outlook as to and Adjusted EBITDA for the full-year 2024, all of which reflect the Company's expectations based upon currently available information and data. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected or estimated and you are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.

Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, our ability to continue as a going concern our potential need to raise additional capital to fund our existing operations or develop and commercialize new services or expand our operations our ability to achieve or maintain profitability our ability to maintain compliance with our debt covenants in the future, or obtain required waivers from our lenders if future operating performance were to fall below current projections of if there are material changes to management's assumptions, we could be required to recognize non-cash charges to operating earnings for goodwill and or other intangible asset impairment our ability to identify and develop successful new geographies, physician partners, payors and patients changes in market or industry conditions, regulatory environment, competitive conditions, and receptivity to our services our ability to fund our growth and expand our operations changes in laws and regulations applicable to our business our ability to maintain our relationships with health plans and other key payers the impact of COVID-19, including the impact of new variants of the virus, or another pandemic, epidemic or outbreak of infectious disease on our business and results of operation increased labor costs our ability to recruit and retain qualified team members and independent physicians and other factors discussed in Part I, Item 1A. "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 31, 2023, as updated by Part II, Item 1A. "Risk Factors" in the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2023 to be filed with the SEC, and in the Company's other filings with the SEC. All information in this press release is as of the date hereof, and we undertake no duty to update or revise this information unless required by law. You are cautioned not to place undue reliance on any forward-looking statements contained in this press release.

Vice President, Investor Relations

Executive Vice President, Communications

P3 HEALTH PARTNERS INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

____________________

(1)The Company's condensed consolidated balance sheets include the assets and liabilities of its consolidated variable interest entities ("VIEs"). As discussed in Note 13 "Variable Interest Entities," P3 LLC is itself a VIE. P3 LLC represents substantially all the assets and liabilities of the Company. As a result, the language and amounts below refer only to VIEs held at the P3 LLC level. The condensed consolidated balance sheets include total assets that can be used only to settle obligations of the P3 LLC's VIEs totaling $11.1 million and $3.1 million as of September 30, 2023 and December 31, 2022, respectively, and total liabilities of the P3 LLC's consolidated VIEs for which creditors do not have recourse to the general credit of the Company totaled $15.9 million and $9.9 million as of September 30, 2023 and December 31, 2022, respectively. These VIE assets and liabilities do not include $45.9 million and $33.0 million of net amounts due to affiliates as of September 30, 2023 and December 31, 2022, respectively, as these are eliminated in consolidation and not presented within the condensed consolidated balance sheets. See Note 13 "Variable Interest Entities."

P3 HEALTH PARTNERS INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

P3 HEALTH PARTNERS INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA LOSS

(in thousands, except PMPM)

_____________________

(1)Transaction and other related costs during the nine months ended September 30, 2023 consisted of legal fees incurred related to acquisition-related litigation.

(2)Other during the three and nine months ended September 30, 2023 consisted of (i) interest income offset by (ii) cybersecurity incident loss with respect to the nine months ended September 30, 2023, (iii) restructuring and other charges, including severance and benefits paid to employees pursuant to workforce reduction plans with respect to the nine months ended September 30, 2023, (iv) the disposition of our Pahrump operations, (v) expenses for third-party consultants to assist us with the development, implementation, and documentation of new and enhanced internal controls and processes for compliance with Sarbanes-Oxley Section 404(b) with respect to the nine months ended September 30, 2023, (vi) a legal settlement outside of the ordinary course of business with respect to the nine months ended September 30, 2023, and (vii) valuation allowance on our notes receivable.

(in thousands, except PMPM)

RECONCILIATION OF GROSS PROFIT TO MEDICAL MARGIN

_____________________

(1)Effective for the quarter ended June 30, 2023, we modified the method by which we reconcile medical margin. Previously, we reconciled medical margin to operating loss as the most directly comparable measure calculated in accordance with GAAP. In the current period and on a go-forward basis we will reconcile to gross profit as we have determined that gross profit is the most directly comparable GAAP measure.