Company: PIII
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001628280-25-026021
Chunk: 29

Company: P3 Health Partners Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 29
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M 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.

Medical margin should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using medical margin on a supplemental basis. You should review the reconciliation of gross profit to medical margin set forth below and not rely on any single financial measure to evaluate our business.

P3 Health Partners Inc. | Q1 2025 Form 10-Q | 26

The following table presents our medical margin:

Three Months Ended March 31,20252024(in thousands)Capitated revenue$369,517 $384,134 Less: medical claims expense(352,317)(347,582)Medical margin$17,200 $36,552 

The following table sets forth a reconciliation of our gross profit, the most directly comparable GAAP metric, to medical margin:

Three Months Ended March 31,20252024(in thousands)Gross profit (loss)$1,182 $6,431 Other patient service revenue(3,708)(4,354)Other medical expense19,726 34,475 Medical margin$17,200 $36,552 

Key Performance Metrics

We monitor the following operating metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. 

Gross Profit

Gross profit represents the amount earned from total operating revenue less the sum of: (i) medical claims expenses and (ii) other medical expenses including physician compensation expense related to surplus sharing and bonuses and other direct medical expenses incurred to improve care for our members. We believe this metric provides insight into the economics of the P3 Care Model, as it includes all medical claims expense associated with our members’ care as well as partner compensation and additional medical costs we incur as part of our aligned partnership model. Other medical expenses are largely variable and proportionate to the level of surplus in each respective market, among other cost factors. 

The following table presents our gross profit (loss):

Three Months Ended March 31,20252024(in thousands)Total operating revenue$373,225 $388,488 Less: medical claims expense(352,317)(347,582)Less: other medical expense(19,726)(34,475)Gross profit (loss)$1,182 $6,