P3 Health Partners (PIII) risk factors, FY2024 10-K

Risks Related to Our Business and Financial Results

1. 01Our 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

Risks Related to Our Operating History

1. 02We have a history of net losses. We expect to continue to incur losses for the foreseeable future and we may never achieve or maintain profitability
2. 03We may need to raise additional capital to fund our existing operations or develop and commercialize new services or expand our operations
3. 04P3 Health Partners Inc. | 2024 Form 10-K | 17
4. 05Our business and the markets in which we operate are rapidly evolving, which makes it difficult to evaluate our future prospects and the risks and challenges we may encounter
5. 06P3 Health Partners Inc. | 2024 Form 10-K | 18
6. 07Our relatively limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter
7. 08We may not be able to maintain compliance with our debt covenants in the future which could result in an event of default
8. 09P3 Health Partners Inc. | 2024 Form 10-K | 19
9. 10We may not recognize the anticipated benefits of recent and future acquisitions or dispositions and any such transactions could disrupt our operations and have a material adverse effect on our business, financial condition and results of operations
10. 11A significant portion of our assets consists of other intangible assets, the value of which may be reduced if we determine that those assets are impaired

Risks Related to Our Business and Industry

1. 12Pandemics or epidemics have impacted, and may in the future impact, our operations and may materially and adversely affect our business and financial results
2. 13We rely on our management team and key employees and our business, financial condition, cash flows and results of operations could be harmed if we are unable to retain qualified personnel
3. 14P3 Health Partners Inc. | 2024 Form 10-K | 20
4. 15Our growth depends in part on our ability to identify and develop successful new geographies, physician partners, payors and patients. If we are not able to successfully execute upon our growth strategies, there may be a material adverse effect on our business, financial condition, cash flows and results of operations
5. 16P3 Health Partners Inc. | 2024 Form 10-K | 21
6. 17Any of these consequences could lower retention rate and have a material adverse effect on our business, financial condition and results of operations
7. 18P3 Health Partners Inc. | 2024 Form 10-K | 22
8. 19We primarily depend on reimbursement by third-party payors, as well as payments by individuals, which could lead to delays, uncertainties and disagreements regarding the timing and process of reimbursement, including any changes or reductions in Medicare reimbursement rates or rules
9. 20P3 Health Partners Inc. | 2024 Form 10-K | 23
10. 21The termination or non-renewal of the Medicare Advantage contracts held by the health plans with which we contract, or the termination or nonrenewal of our contracts with those plans, could have a material adverse effect on our revenue and operations
11. 22We are dependent on our affiliated professional entities and other physician partners and other providers to effectively manage the quality and cost of care and perform obligations under payor contracts
12. 23management of healthcare costs, which could produce results that are inconsistent with our estimates and financial models and negatively impact our growth
13. 24Reductions in the quality ratings of the health plans we serve could have a material adverse effect on our business, results of operations, financial condition and cash flows
14. 25We 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
15. 26grow 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
16. 27Our future growth and the success of our business will depend in large part upon the effectiveness and efficiency of our marketing efforts, and our ability to develop brand awareness cost-effectively
17. 28Developments affecting spending by the healthcare industry could adversely affect our business
18. 29P3 Health Partners Inc. | 2024 Form 10-K | 26
19. 30We and our affiliated professional entities and other physician partners may become subject to medical liability claims, which could cause us to incur significant expenses and may require us to pay significant damages if the claims are not covered by insurance
20. 31If 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
21. 32P3 Health Partners Inc. | 2024 Form 10-K | 27
22. 33Our business and operations would suffer in the event of information technology system failures, security breaches, cyberattacks or other deficiencies in cybersecurity
23. 34P3 Health Partners Inc. | 2024 Form 10-K | 28
24. 35Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, financial condition and results of operations
25. 36P3 Health Partners Inc. | 2024 Form 10-K | 29
26. 37Any future litigation against us could be costly and time-consuming to defend
27. 38Changes in U.S. tax laws, and the adoption of tax reform policies or changes in tax legislation or policies in jurisdictions outside of the United States, could adversely affect our operating results and financial condition
28. 39Our quarterly results may fluctuate significantly, which could adversely impact the value of our Class A common stock and publicly traded warrants
29. 40P3 Health Partners Inc. | 2024 Form 10-K | 31
30. 41Our 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
31. 42Our business could be adversely impacted by climate change, extreme weather conditions and natural disasters
32. 43P3 Health Partners Inc. | 2024 Form 10-K | 32

Risks Related to Our Legal and Regulatory Environment

1. 44P3 Health Partners Inc. | 2024 Form 10-K | 33
2. 45P3 Health Partners Inc. | 2024 Form 10-K | 34
3. 46If our arrangements with our affiliated professional entities and other physician partners are found to constitute the improper rendering of medical services or fee splitting under applicable state laws, our business, financial condition and our ability to operate in those states could be adversely impacted
4. 47We face inspections, reviews, audits and investigations under federal and state government programs and contracts. These audits could have adverse findings that may negatively affect our business, including our results of operations, liquidity, financial condition and reputation
5. 48P3 Health Partners Inc. | 2024 Form 10-K | 35
6. 49Our records and submissions to a health plan may contain inaccurate or unsupportable information regarding risk adjustment scores of members, which could cause us to overstate or understate our revenue and subject us to various penalties
7. 50P3 Health Partners Inc. | 2024 Form 10-K | 36
8. 51The impact of recent healthcare legislation and other changes in the healthcare industry and in healthcare spending is currently unknown, but may adversely affect our business, financial condition and results of operations
9. 52The evolving regulation of value-based reimbursement models and regulation, licensure and oversight by state regulatory authorities as a risk-bearing entity may have a material adverse effect on our operations
10. 53Regulatory proposals directed at containing or lowering the cost of healthcare, including the Direct Contracting Model, and our participation, voluntary or otherwise, in such proposed models, could impact our business, financial condition, cash flows and operations
11. 54P3 Health Partners Inc. | 2024 Form 10-K | 38

Risks Related to Ownership of Our Common Stock

1. 55We cannot predict the impact our dual-class structure may have on the stock price of our Class A common stock
2. 56Delaware law and our certificate of incorporation and bylaws contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
3. 57These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our board of directors or management
4. 58P3 Health Partners Inc. | 2024 Form 10-K | 40
5. 59The provision of our certificate of incorporation requiring exclusive forum in certain courts in the State of Delaware or the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers
6. 60Additionally, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act
7. 61An active, liquid trading market for our Class A common stock may not be sustained
8. 62There 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
9. 63Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a delisting of our securities
10. 64P3 Health Partners Inc. | 2024 Form 10-K | 42

Risks Related to Our Warrants

1. 65Our warrants may have an adverse effect on the market price of our Class A common stock
2. 66We may redeem unexpired Public Warrants prior to their exercise at a time that is disadvantageous to our stockholders, thereby making the Public Warrants worthless to our stockholders
3. 67Certain of our warrants are accounted for as liabilities and the changes in value of these warrants could have a material effect on our financial results

Risks Related to the Tax Receivable Agreement

1. 68Our sole material asset is our interest in P3 LLC, and, accordingly, we depend on distributions from P3 LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement. P3 LLC’s ability to make such distributions may be subject to various limitations and restrictions
2. 69P3 Health Partners Inc. | 2024 Form 10-K | 44
3. 70We 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
4. 71In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the Tax Receivable Agreement
5. 72P3 Health Partners Inc. | 2024 Form 10-K | 45
6. 73We will not be reimbursed for any payments made to P3 Equityholders under the Tax Receivable Agreement in the event that any tax benefits are disallowed
7. 74Certain of the P3 Equityholders may receive payments under the Tax Receivable Agreement, and their interests may conflict with yours
8. 75We may be subject to securities litigation, which is expensive and could divert management attention
9. 76Because we have no current plans to pay cash dividends on our Class A common stock for the foreseeable future, you may not receive any return on investment unless you sell your Class A common stock for a price greater than that which you paid for it
10. 77P3 Health Partners Inc. | 2024 Form 10-K | 46
11. 78The market price and trading volume of our Class A common stock and Public Warrants may be volatile and could decline significantly
12. 79P3 Health Partners Inc. | 2024 Form 10-K | 47
13. 80If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price and trading volume of our securities could decline
14. 81We will continue to incur significantly increased costs and devote substantial management time as a result of operating as a public company
15. 82Our results of operations and financial condition are subject to management’s accounting judgments and estimates, as well as changes in accounting policies
16. 83Scrutiny of, and evolving expectations regarding, sustainability and environmental, social, and governance (“ESG”) matters could increase our costs, harm our reputation and adversely impact our financial results
17. 84P3 Health Partners Inc. | 2024 Form 10-K | 48