References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Foresight Acquisition Corp. References to our "management" or
our "management team" refer to our officers and directors, and references to the
"Sponsor" refer to Foresight Sponsor Group, LLC and references to the "Sponsors"
refer to the Sponsor and FACo-Investment LLC. The following discussion and
analysis of the Company's financial condition and results of operations should
be read in conjunction with the financial statements and the notes thereto
contained elsewhere in this Quarterly Report. Certain information contained in
the discussion and analysis set forth below includes forward-looking statements
that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act
that are not historical facts and involve risks and uncertainties that could
cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Form
10-Q
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
completion of the Proposed Business Combination (as defined below), the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements, including that the conditions of
the Proposed Business Combination are not satisfied. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's Annual Report on Form
10-K
final prospectus for its Initial Public Offering filed with the U.S. Securities
and Exchange Commission (the "SEC"). The Company's securities filings can be
accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as
expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
August 20, 2020 for the purpose of effectuating a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses (the "Business Combination").
We intend to effectuate our Business Combination using cash from the proceeds of
the Initial Public Offering and the sale of the Private Placement Warrant, our
capital stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Proposed Business Combination
On May 25, 2021, the Company, P3 Health Group Holdings, LLC ("P3") and FAC
Merger Sub LLC, a wholly-owned subsidiary of the Company ("Merger Sub"), entered
into an agreement and plan of merger (the "Merger Agreement") and (ii) the
Company;
FAC-A
Merger Sub Corp. and
FAC-B
Merger Sub Corp. (together, the "Merger Corps"); CPF P3
Blocker-A,
LLC and CPF P3
Blocker-B,
LLC (together, the "Blockers"); CPF P3 Splitter, LLC ("Splitter"); Chicago
Pacific Founders
Fund-A,
L.P.; and Chicago Pacific Founders
Fund-B,
L.P. entered into a transaction and combination agreement (the "Blocker
Agreement" and, together with the Merger Agreement, the "Transaction
Agreements") pursuant to which, among other things, upon the satisfaction or
waiver of the conditions set forth in the Transaction Agreements, P3 will merge
with and into Merger Sub, with Merger Sub as the surviving company (the
"Surviving Company"), and the Merger Corps will merge with and into the
Blockers, with the Blockers as the surviving entities and wholly-owned
subsidiaries of the Company (collectively, the "Transaction"). Through the
foregoing mergers and other related transactions, immediately after the closing,
the Company and P3 will be organized in an
"Up-C"
structure in which all of the P3 operating subsidiaries will be held directly or
indirectly by the Surviving Company and the Company will directly own
approximately 30% of the Surviving Company and will become the sole manager of
the Surviving Company.
Consummation of the Transaction is subject to customary and other conditions,
including, among other things: (i) the stockholders of the Company having
approved, among other things, the transactions contemplated by the Merger
Agreement and the Blocker Agreement; (ii) the absence of any governmental order
that would prohibit the Transaction; (iii) the completion of all required
filings under the Hart-Scott-Rodino Act; (iv) the required approvals to
consummate the Transaction; (v) after giving effect to (A) the payment by the
Company of any of the company's expenses, fees or costs incurred related to the
Merger Agreement, (B) the exercise of redemption rights by holders of the
outstanding shares of the Company's Class A common stock and (C) the sale and
issuance by the Company of the Company's Class A common stock between the date
of the Merger Agreement and the Effective Time (as defined in the Merger
Agreement) pursuant to the PIPE Subscription Agreements (as defined in Note 9 to
the financial statements contained elsewhere in this Quarterly Report) and
(D) the sale and issuance by the Company of any other securities of the Company
in accordance with the provisions of the Merger Agreement between the date of
the Merger Agreement and the Effective Time, the amount of cash held by
Foresight and the Surviving Company in the aggregate, whether in or outside the
Trust Account shall be at least $400,000,000; and (vi) the representations and
warranties of the other parties to the Merger Agreement being true and correct,
subject to the de minimis, materiality and material adverse effect standards
contained in the Merger Agreement. The proposed Transaction is more fully
described in Note 9 to the financial statements contained elsewhere in this
Quarterly Report.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from August 20, 2020 (inception) through June 30, 2021 were
organizational activities, those necessary to prepare for the Initial Public
Offering, described below, and identifying a target company for a Business
Combination. We do not expect to generate any operating revenues until after the
completion of our Business Combination. We generate non-operating income in the
form of interest income on marketable securities held in the Trust Account. We
incur expenses as a result of being a public company (for legal, financial
reporting, accounting and auditing compliance), as well as for due diligence
expenses.

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For the three months ended June 30, 2021, we had net loss of $10,523,877, which
consists of formation and operational costs of $639,534 and change in fair value
of warrant liabilities of $9,894,792, offset by interest income from the bank of
$15 and interest earned on marketable securities held in Trust Account of
$10,434.
For the six months ended June 30, 2021, we had net loss of $5,704,921, which
consists of formation and operational costs of $1,121,745 and change in fair
value of warrant liabilities of $4,593,625, offset by interest income from the
bank of $15 and interest earned on marketable securities held in Trust Account
of $10,434.
Liquidity and Capital Resources
As
of June 30, 2021, we had cash of $583,701
and a funding commitment from related parties of $300,000
. Until
the consummation of the Initial Public Offering, our only source of liquidity
was an initial purchase of common stock by the Sponsor and loans from our
Sponsors.
On February 12, 2021, we consummated the Initial Public Offering of 31,625,000
Units, at a price of $10.00 per Unit, which included the full exercise by the
underwriters of their over-allotment option in the amount of 4,125,000 Units,
generating gross proceeds of $316,250,000. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 832,500 Private
Placement Units to the Sponsors at a price of $10.00 per Private Placement Unit
generating gross proceeds of $8,325,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Units, a total of $316,250,000 was
placed in the Trust Account. We incurred $6,827,967 in transaction costs,
including $6,325,000 of underwriting fees, and $502,967 of other offering costs.
For the six months ended June 30, 2021, cash used in operating activities was
$953,782. Net loss of $5,704,921 was affected by the change in the fair value of
the warrant liabilities of $4,593,625, transaction costs associated with the IPO
of $234,419, and interest earned on marketable securities held in Trust Account
of $10,434. Changes in operating assets and liabilities used $66,471 of cash for
operating activities.

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As of June 30, 2021, we had cash held in the Trust Account of $316,260,434.
Interest income on the balance in the Trust Account may be used by us to pay
taxes. Through June 30, 2021, we have not withdrawn any interest earned from the
Trust Account.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (less
income taxes payable), to complete our Business Combination. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our Business Combination, the remaining proceeds held in the Trust
Account will be used as working capital to finance the operations of the target
business or businesses, make other acquisitions and pursue our growth
strategies.
As of
June 30, 2021, we had cash of $583,701 and a funding commitment from related
parties of $300,000. We intend to use the funds held outside the Trust Account
primarily to identify and evaluate target businesses, perform business due
diligence on prospective target businesses, travel to and from the offices,
plants or similar locations of prospective target businesses or their
representatives or owners, review corporate documents and material agreements of
prospective target businesses, and structure, negotiate and complete a Business
Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete a Business Combination, we may
repay such loaned amounts out of the proceeds of the Trust Account released to
us. In the event that a Business Combination does not close, we may use a
portion of the working capital held outside the Trust Account to repay such
loaned amounts, but no proceeds from our Trust Account would be used for such
repayment. Up to $1,500,000 of such loans may be convertible into units upon
consummation of the Business Combination, at a price of $10.00 per unit, at the
option of the lender. The units would be identical to the Private Placement
Units.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking
in-depth
due diligence and negotiating a Business Combination are less than the actual
amount necessary to do so, we may have insufficient funds available to operate
our business prior to our Business Combination. Moreover, we may need to obtain
additional financing either to complete our Business Combination or because we
become obligated to redeem a significant number of our public shares upon
consummation of our Business Combination, in which case we may issue additional
securities or incur debt in connection with such Business Combination. Subject
to compliance with applicable securities laws, we would only complete such
financing simultaneously with the completion of our Business Combination. If we
are unable to complete our Business Combination because we do not have
sufficient funds available to us, we will be forced to cease operations and
liquidate the Trust Account. In addition, following our Business Combination, if
cash on hand is insufficient, we may need to obtain additional financing in
order to meet our obligations.
Off-Balance
Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of June 30, 2021. We do not participate in transactions
that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating
off-balance
sheet arrangements. We have not entered into any
off-balance
sheet financing arrangements, established any special purpose entities,
guaranteed any debt or commitments of other entities, or purchased any
non-financial
assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
a monthly fee of $10,000 for office space, administrative and support services.
We began incurring these fees on February 9, 2021 and will continue to incur
these fees monthly until the earlier of the completion of the Business
Combination and our liquidation.
The Company intends to engage the underwriters to act as advisors in connection
with its Business Combination to assist the Company in holding meetings with its
stockholders to discuss the potential Business Combination and the target
business's attributes, introduce the Company to potential investors that are
interested in purchasing the Company's securities in connection with the
potential Business Combination, assist in obtaining stockholder approval for the
Business Combination and assist with the Company's press releases and public
filings in connection with the Business Combination. The Company will pay the
underwriters a fee for such services upon the consummation of its Business
Combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds
of the Initial Public Offering, including any proceeds from the full or partial
exercise of the over-allotment option.
Critical Accounting Policies
The preparation of condensed consolidated financial statements and related
disclosures in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
income and expenses during the periods reported. Actual results could materially
differ from those estimates. We have identified the following critical
accounting policies:
Warrant Liabilities
We account for the warrants issued in connection with our Initial Public
Offering in accordance with the guidance contained in ASC 815 under which the
warrants do not meet the criteria for equity treatment and must be recorded as
liabilities. Accordingly, we classify the warrants as liabilities at their fair
value and adjust the warrants to fair value at each reporting period. This
liability is subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is
recognized in our statements of operations. The fair value of the warrants was
estimated using a Monte Carlo simulation approach.

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Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Common stock subject to mandatory
redemption is classified as a liability instrument and measured at fair value.
Conditionally redeemable common stock (including common stock that features
redemption rights that are either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within our
control) is classified as temporary equity. At all other times, common stock is
classified as stockholders' equity. Our common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, common stock subject to
possible redemption is presented at redemption value as temporary equity,
outside of the stockholders' equity section of our condensed consolidated
balance sheets.
Net Loss Per Common Share
We apply the
two-class
method in calculating earnings per share. Net income (loss) per common share,
basic and diluted for Class A common stock subject to possible redemption is
calculated by dividing the interest income earned on the Trust Account, net of
applicable taxes, if any, by the weighted average number of shares of Class A
common stock subject to possible redemption outstanding for the period. Net
income (loss) per common share, basic and diluted for and
non-redeemable
common stock is calculated by dividing net loss less income attributable to
Class A common stock subject to possible redemption, by the weighted average
number of shares of
non-redeemable
common stock outstanding for the period presented.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU")
2020-06,
Debt - Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic
815-40)
("ASU
2020-06")
to simplify accounting for certain financial instruments. ASU
2020-06
eliminates the current models that require separation of beneficial conversion
and cash conversion features from convertible instruments and simplifies the
derivative scope exception guidance pertaining to equity classification of
contracts in an entity's own equity. The new standard also introduces additional
disclosures for convertible debt and freestanding instruments that are indexed
to and settled in an entity's own equity. ASU
2020-06
amends the diluted earnings per share guidance, including the requirement to use
the
if-converted
method for all convertible instruments. ASU
2020-06
is effective January 1, 2022 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021.
The Company is currently assessing the impact, if any, that ASU
2020-06
would have on its financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our condensed consolidated financial statements.

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