P3 Health Partners Inc. Goodwill & Intangibles Disclosure
Note 11: Goodwill
The following tables provide changes in goodwill for the periods indicated.
| Predecessor | ||
Balance at December 31, 2019 | $ | 741,128 | |
Acquisitions |
| 130,000 | |
Balance at December 31, 2020 |
| 871,128 | |
Acquisitions |
| 2,934,500 | |
Balance at December 2, 2021 | $ | 3,805,628 | |
Successor | |||
Balance at December 3, 20211 | $ | 1,278,452,778 | |
Acquisitions |
| 31,297,438 | |
Balance at December 31, 2021 | $ | 1,309,750,216 | |
1) | Represents the opening balance of goodwill as of December 3, 2021 due to the Business Combination |
Goodwill recorded in the Predecessor Period of 2021 was associated with the acquisition of three medical practices. The opening balance of goodwill at December 3, 2021 reflects the Business Combinations. Goodwill recorded in the Successor Period of 2021 was associated with the Medcore Acquisition. See Note 7 “Business Combinations.”
Based on Management’s qualitative analysis, no goodwill impairment charges were recorded in the Successor Period of 2021 and the Periods of 2021, 2020 and 2019.
Due to the decrease in the share price over the second quarter of 2022, the Company will record a goodwill impairment of $851.5 million as of June 30, 2022. The amount was not recorded at December 31, 2021 or March 31, 2022 as the decline in the share price was considered temporary under the ASC 350 guidance as of those dates.
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.