P3 Health Partners, Inc. (“P3” or the “Company”) (NASDAQ: PIII), a
patient-centered and physician-led population health management
company, today announced its select preliminary unaudited financial
results and business updates for the fourth quarter and full year
ended December 31, 2021, along with its full year 2022 outlook in
advance of the Company’s upcoming participation at several investor
conferences in March.
“Our preliminary results for 2021 demonstrate continued progress
on our strategic objectives, which we believe provides a solid
foundation for P3 Health Partners in 2022,” said Dr. Sherif Abdou,
CEO of P3 Health Partners. “Our 2021 revenue is expected to be $642
million, an increase of 32% from the prior year, exceeding our
full-year guidance as we grew our at-risk Medicare Advantage
members to 67,000 at year-end. We also continued our national
expansion with our entry into California announced earlier this
year, and we’re now operating in 5 states and 18 markets as of
January 2022.”
Dr. Abdou continued, “We anticipate 2022 revenue to reach up to
approximately $1 billion, a 56% increase over the prior year and
well ahead of our previous estimate of $825 million, driven by up
to 95,000 at-risk Medicare Advantage members by year-end,
representing a 42% increase over the prior year. On the bottom
line, we expect a 50% improvement in adjusted EBITDA per member per
month (PMPM) at the midpoint of our guidance. Our balance sheet
remains strong, with approximately $140 million in cash at the end
of December 2021, providing ample capital until we achieve
profitable adjusted EBITDA in 2024.”
Select Preliminary Unaudited Financial
ResultsFourth Quarter 2021:
- Revenue is expected to increase 46% to approximately $183
million compared to $125 million in the prior year.
- Net loss is expected to range between approximately $90 million
and $95 million compared to a net loss of $14.2 million in the
prior year.
- Adjusted EBITDA loss (a non-GAAP number defined herein) is
expected to range between approximately $35 million and $30 million
compared to an adjusted EBITDA loss of $30 million in the prior
year.(1)
Full Year 2021 vs. 2020:
- At-risk Medicare Advantage members at December 31, 2021,
increased approximately 32% to 67,000 compared to 51,000 in the
prior year. (2)
- Revenue is expected to increase 32% to approximately $642
million compared to $486 million in the prior year.
- Net loss is expected to range between approximately $176
million and $181 million compared to a net loss of $45.4 million in
the prior year.
- Net loss PMPM is expected to range between $248 and $242.
- Adjusted EBITDA loss is expected to range between $88 million
and $83 million compared to an adjusted EBITDA loss of $55 million
in the prior year. (1)
- Adjusted EBITDA loss PMPM is expected to range between $120 and
$115. (1)
(1) Adjusted EBITDA and Adjusted EBITDA 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.”(2) See “Key
Performance Metrics” for additional information on how the Company
defines “at-risk Medicare Advantage members.”Full
Year 2022 Outlook:The Company expects
full year 2022 revenue between $950 million and $1.0 billion,
representing a 48% to 56% increase over the prior year. The Company
expects at-risk Medicare Advantage members between 90,000 and
95,000, at December 31, 2022, representing a 34% to 42% increase
over the prior year. P3 also expects adjusted EBITDA loss to range
between $80 million and $50 million reflecting our expected high
growth rate and the underlying improving operating performance,
offset by incremental labor expenses related to front line staff,
such as nurses, and continued expenses related to COVID-19. On a
PMPM basis, full year 2022 adjusted EBITDA loss is expected to
improve to $75 PMPM to $45 PMPM compared to an expected range of
$120 PMPM to $115 PMPM in the prior year, representing a 35% to 63%
improvement versus the prior year.
While the Company expects the impact of COVID-19 on our future
results to be transitory, P3 expects to incur additional COVID-19
related costs in full year 2022 given the volume of positive cases
and “breakthrough” cases (positive cases in vaccinated patients)
present in the Company’s markets. COVID-19 disproportionately
impacts older adults, especially those with chronic illnesses,
which describes many of P3’s patients. The full extent to which
COVID-19 will directly or indirectly impact P3’s full year 2022
results of operations and financial condition will depend on
multiple factors, including, but not limited to new and emerging
information from the impact of new variants of the virus. Because
of these factors, management may not be able to fully estimate the
length or severity of the impact of the pandemic on P3’s business
and results of operations.
Dr. Abdou added, “In 2022, we will continue to focus on
operational excellence, delivering improved patient outcomes and
executing on our disciplined, purposeful growth strategy. We
believe P3 is now in an excellent position to achieve our vision to
lead the transformation of healthcare with our proven,
capital-efficient, scalable model.”The Company currently
anticipates filing a Form 12b-25, Notification of Late Filing, no
later than April 1, 2022, which will provide the Company with a
15-calendar day extension to file its Form 10-K. The Company
expects to report fourth quarter and audited full year 2021
financial results on or before April 15, 2022, the expiration date
of the extension period. The Company began publicly trading on the
Nasdaq on December 3, 2021, and the Company and its independent
auditor, BDO LLP, anticipate needing additional time to finalize
the Company’s initial Form 10-K filing. The Company does not expect
future delays in subsequent regulatory filings.
About P3 Health PartnersP3 is a
patient-centered and physician-led population health management
company. Founded and led by physicians, P3 is a team of doctors,
clinicians and support service professionals with a shared passion
for delivering value-based care. We leverage our deeply integrated
and capital efficient care model, data and technology, physician
leadership and community outreach tools to create enhanced patient
outcomes and experiences, greater satisfaction for providers and
caregivers and lower care costs. For more information, visit
p3hp.org.
Business Combination and Presentation of Financial
ResultsAs a result of the business combination consummated
on December 3, 2021, the Company was deemed to be the acquirer and
successor for accounting purposes, and P3 Health Group Holdings,
LLC, which is the business conducted prior to the closing of the
business combination, was deemed to be the acquiree and accounting
predecessor. The Company’s financial results are distinguished
between two distinct periods, the period prior to the business
combination closing date (the “Predecessor” period) and the period
after the closing date (the “Successor” period), which reflects a
new basis of accounting that is based on the fair value of net
assets acquired. The preliminary financial results for the quarter
and year ended December 31, 2021, presented in this release combine
these two periods.
Non-GAAP Financial MeasuresThis press release
contains certain non-GAAP financial measures as defined by the SEC
rules. Adjusted EBITDA has not been prepared in accordance with
United States generally accepted accounting principles (“GAAP”).
EBITDA is defined as GAAP net income (loss) before (i) interest
expense, (ii) income taxes and (iii) depreciation and amortization.
Adjusted EBITDA is defined as EBITDA, further adjusted to add back
the effect of certain expenses, such as (iv) mark-to-market warrant
expense, (v) premium deficiency reserves, (vi) stock-based
compensation and (vii) transaction expenses. Adjusted EBITDA PMPM
is defined as Adjusted EBITDA divided by the number of at-risk
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. 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 following tables present a
reconciliation of Adjusted EBITDA to net income (loss) and Adjusted
EBITDA PMPM to net income (loss) PMPM, which are the most directly
comparable financial measures calculated in accordance with
GAAP:
In millions $ |
Preliminary |
|
|
For the three months ended |
For the three months ended |
|
December 31, 2021 |
December 31, 2020 |
|
Lower range |
Upper range |
|
Net income (loss) |
$ |
(94.6 |
) |
$ |
(89.6 |
) |
$ |
(14.2 |
) |
Interest (income) expense,
net |
|
4.2 |
|
|
4.2 |
|
|
3.1 |
|
Income tax expense(1) |
|
-- |
|
|
-- |
|
|
0.1 |
|
Depreciation expense |
|
0.5 |
|
|
0.5 |
|
|
0.2 |
|
Amortization expense |
|
7.3 |
|
|
7.3 |
|
|
-- |
|
Mark-to-market warrant
expense |
|
(0.9 |
) |
|
(0.9 |
) |
|
-- |
|
Premium deficiency
reserve |
|
5.7 |
|
|
5.7 |
|
|
(19.2 |
) |
Transaction expense, Business
Combinations |
|
24.7 |
|
|
24.7 |
|
|
-- |
|
Transaction related litigation
fees |
|
7.9 |
|
|
7.9 |
|
|
-- |
|
Stock-based compensation |
|
10.2 |
|
|
10.2 |
|
|
(0.2 |
) |
Adjusted EBITDA |
$ |
(35.0 |
) |
$ |
(30.0 |
) |
$ |
(30.2 |
) |
|
|
|
|
|
|
|
|
|
|
In millions $ |
Preliminary Unaudited |
|
|
For the year ended |
For the year ended |
|
December 31, 2021 |
December 31, 2020 |
|
Lower range |
Upper range |
|
Net income (loss) |
$ |
(180.9 |
) |
$ |
(175.9 |
) |
$ |
(45.4 |
) |
Interest (income) expense,
net |
|
17.4 |
|
|
17.4 |
|
|
10.0 |
|
Income tax expense(1) |
|
-- |
|
|
-- |
|
|
0.1 |
|
Depreciation expense |
|
1.7 |
|
|
1.7 |
|
|
0.8 |
|
Amortization expense |
|
7.3 |
|
|
7.3 |
|
|
-- |
|
Mark-to-market warrant
expense |
|
11.1 |
|
|
11.1 |
|
|
-- |
|
Premium deficiency
reserve |
|
10.3 |
|
|
10.3 |
|
|
(20.5 |
) |
Transaction expense, Business
Combinations |
|
25.6 |
|
|
25.6 |
|
|
-- |
|
Transaction related litigation
fees |
|
7.9 |
|
|
7.9 |
|
|
-- |
|
Stock-based compensation |
|
11.6 |
|
|
11.6 |
|
|
0.4 |
|
Adjusted EBITDA |
$ |
(88.0 |
) |
$ |
(83.0 |
) |
$ |
(54.6 |
) |
|
|
|
|
|
|
|
|
|
|
In PMPM $ |
Preliminary Unaudited |
|
For the year ended |
|
December 31, 2021 |
|
Lower range |
Upper range |
Net income (loss) PMPM |
$ |
(248 |
) |
$ |
(242 |
) |
Interest (income) expense,
net |
|
24 |
|
|
24 |
|
Income tax expense(1) |
|
-- |
|
|
-- |
|
Depreciation expense |
|
2 |
|
|
2 |
|
Amortization expense |
|
10 |
|
|
10 |
|
Mark-to-market warrant
expense |
|
15 |
|
|
15 |
|
Premium deficiency
reserve |
|
14 |
|
|
14 |
|
Transaction expense, Business
Combinations |
|
35 |
|
|
35 |
|
Transaction related litigation
fees |
|
11 |
|
|
11 |
|
Stock-based compensation |
|
16 |
|
|
16 |
|
Adjusted EBITDA PMPM |
$ |
(120 |
) |
$ |
(115 |
) |
|
|
|
|
|
|
|
(1) As of the date of this release, the Company has not
finalized its 2021 income tax provision.
We are not able to provide a reconciliation of guidance for
Adjusted EBITDA or Adjusted EBITDA PMPM to net income (loss) or net
income (loss) PMPM, the most directly comparable GAAP measures,
respectively, and have not provided forward-looking guidance for
net income (loss) or net income (loss) PMPM, because of the
variability around select items that may impact net income (loss),
including stock-based compensation and mark-to-market warrant
expense, that are not within our control or cannot be reasonably
predicted without unreasonable effort.
Key Performance MetricsIn 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 per member
per month fee under capitation arrangements as of the end of a
particular period.
Financial Disclosure AdvisoryThe Company
reports its financial results in accordance with U.S. generally
accepted accounting principles (“GAAP”). The expected financial
results discussed in this press release are preliminary and
represent the most current information available to the Company’s
management, as financial closing procedures for the fourth quarter
and full year ended December 31, 2021, are not yet complete. These
estimates are not a comprehensive statement of the Company’s
financial results for the fourth quarter and full year ended
December 31, 2021, and actual results may differ materially from
these estimates as a result of the completion of year-end
accounting procedures and adjustments, including the execution of
the Company’s internal control over financial reporting, the
completion of the preparation and audit of the Company’s financial
statements and the subsequent occurrence or identification of
events prior to the formal issuance of the audited financial
statements for full year 2021.
Forward-Looking StatementsThis press release
contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, Section 21E of the
Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995, as amended. These
forward-looking statements include statements regarding our future
growth and strategy. 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 and strategy; current expectations regarding the COVID-19
pandemic; preliminary expectations as to revenue, net loss and
Adjusted EBITDA for the quarter ended December 31, 2021;
preliminary expectations as to the number of at-risk Medicare
Advantage members, revenue, net loss, net loss PMPM, Adjusted
EBITDA and Adjusted EBITDA PMPM for the full year ended December
31, 2021; the Company’s outlook as to the number of at-risk
Medicare Advantage members, revenue, Adjusted EBITDA and Adjusted
EBITDA PMPM for the full year ending December 31, 2022; and
expectations to achieve profitability in 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,
changes in market or industry conditions, regulatory environment,
competitive conditions, and receptivity to our services; our
ability to continue 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 or another pandemic, epidemic or outbreak of
infectious disease on our business and results of operation; and
our ability to recruit and retain qualified team members and
independent physicians; and other factors discussed in the “Risk
Factors” section of the Company’s Registration Statement on Form
S-1 filed with the Securities and Exchange Commission (“SEC”) on
December 28, 2021 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.
ContactsKelley Waynert, Senior Manager,
Strategic CommunicationsP3 Health Partners(702)
334-6745KWaynert@p3hp.org
Investor RelationsCody Slach, Alex KovtunGateway Group(949)
574-3860PIII@gatewayir.com
Public RelationsZach Kadletz, Natalie BalladarschGateway
Group(949) 574-3860PIII@gatewayir.com
Grafico Azioni P3 Partners (NASDAQ:PIIIW)
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