Privia Health Reports Second Quarter 2023 Financial Results

• Practice Collections +13.7% compared to 2Q’22
• Implemented Providers +9.3% compared to 2Q’22
• Company Updated Full Year 2023 Guidance
  

ARLINGTON, Va., Aug. 03, 2023 (GLOBE NEWSWIRE) -- Privia Health Group, Inc. (Nasdaq: PRVA) today announced financial results for the second quarter and six month periods ended June 30, 2023.

Second Quarter

Total revenue for the second quarter of 2023 was $413.4 million, compared to total revenue of $335.5 million for the prior year second quarter (+23.2%). Gross Profit for the second quarter of 2023 was $90.2 million, compared to $75.4 million for the prior year second quarter. Operating income for the second quarter of 2023 was $7.0 million, compared to operating loss of $(5.3) million for the prior year second quarter. Net income for the second quarter of 2023 was $7.3 million, or $0.06 per share, compared to net loss of $(10.5) million, or $(0.10) per share, for the second quarter of 2022. Net income for the second quarter of 2023 included $9.2 million in non-cash stock compensation expense and $1.4 million in other expenses. Net loss for the second quarter of 2022 included $18.5 million in non-cash stock compensation expense and $1.1 million in other expenses.

Non-GAAP adjusted net income was $20.8 million, or $0.17 per diluted share, for the second quarter of 2023, compared to $15.5 million, or $0.13 per diluted share, for the prior year second quarter (+34.2%).

Reconciliation of net income (loss) to adjusted net income, as well as other non-GAAP reconciliations, are presented in tables near the end of this press release.

Key operating and non-GAAP financial metrics include:

• Practice Collections for the second quarter of 2023 were $700.0 million, compared to $615.5 million for the same period in 2022 (+13.7%).
• Care Margin for the second quarter of 2023 was $91.6 million, compared to $76.2 million for the same period in 2022 (+20.2%).
• Platform Contribution for the second quarter of 2023 was $44.6 million, compared to $37.5 million for the same period in 2022 (+19.0%).
• Adjusted EBITDA for the second quarter of 2023 was $19.3 million, compared to $15.5 million for the same period in 2022 (+24.3%).
• Implemented Providers for the second quarter of 2023 were 3,870, compared to 3,541 for the same period in 2022 (+9.3%).
• Value-Based Care Attributed Lives for the second quarter of 2023 were approximately 1,084,000, compared to 856,000 for the same period in 2022 (+26.6%).

The Company's balance sheet at June 30, 2023 included $317.9 million of cash and cash equivalents and no outstanding bank debt.

Six Months
Total revenue was $799.6 million for the six months ended June 30, 2023, an increase from $649.3 million for the same period in 2022 (+23.1%). Operating income for the first six months of 2023 was $13.7 million, compared to operating loss of $(16.8) million for the same period in the prior year 2022.

Net income for the first six months of 2023 was $14.6 million, or $0.12 per diluted share, compared to net loss of $(28.0) million, or $(0.26) per diluted share, for the same period in 2022. Excluding non-cash or non-recurring expenses, non-GAAP adjusted net income for the first six months of 2023 was $40.1 million, or $0.32 per diluted share, compared to non-GAAP adjusted net income of $30.3 million, or $0.25 per diluted share, for the first six months of 2022 (+32.2%).

Key operating and non-GAAP financial metrics include:

• Practice Collections for the first six months of 2023 were $1.36 billion, compared to $1.18 billion for the same period in the prior year (+15.4%).
• Care Margin was $175.7 million, compared to $147.8 million for the six months ended in June 30, 2023 (+18.8%).
• Platform Contribution for the first six months of 2023 was $86.0 million, compared to $72.5 million for the same period in the prior year (+18.7%).
• Adjusted EBITDA was $36.2 million, compared to $30.3 million for the six months ended in June 30, 2023 (+19.3%).

Financial and Business Outlook ^{a b c d}

Privia Health updated its full-year 2023 guidance, as follows:

• Practice Collections guidance includes impact of paused capitated agreement previously announced
• Adjusted EBITDA guidance includes approximately $8-10 million in start-up costs for new geographies and ACOs
• Capital expenditures are expected to be less than $1 million in full-year 2023
• Approximately 80-90% of Adjusted EBITDA expected to convert to free cash flow (defined as net cash provided by operating activities less capital expenditures) in FY 2023

1. Management has not reconciled forward-looking non-GAAP measures to their most directly comparable GAAP measures of gross margin, operating income and net income. This is because the Company cannot predict with reasonable certainty and without unreasonable efforts the ultimate outcome of certain GAAP components of such reconciliations due to market-related assumptions that are not within our control as well as certain legal or advisory costs, tax costs or other costs that may arise. For these reasons, management is unable to assess the probable significance of the unavailable information, which could materially impact the amount of the future directly comparable GAAP measures.
2. See “Key Metrics and Non-GAAP Financial Measures” for more information as to how the Company defines and calculates Implemented Providers, Attributed Lives, Practice Collections, Care Margin, Platform Contribution, and Adjusted EBITDA, and for a reconciliation of the most comparable GAAP measures to Care Margin, Platform Contribution, Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income Per Share.
3. Certain non-recurring or non-cash and other expenses will be treated as an add back in the reconciliation of Net Income to Adjusted EBITDA, and the reconciliation of Net Income to Adjusted Net Income and Adjusted Net Income Per Share, the details of which can be found in the Reconciliation schedules near the end of this and in future quarterly financial press releases.
4. Any slight variations in totals due to rounding.

Privia Medical Group to Launch in Washington State

On August 1, 2023, Privia Health announced a definitive agreement to enter the state of Washington in partnership with Walla Walla Clinic, a multi-specialty practice with more than 50 providers caring for patients in three locations. Walla Walla Clinic will serve as the anchor practice for Privia Medical Group — Washington. The transaction is expected to close in the third quarter, and Walla Walla Clinic is expected to be implemented on the Privia Platform by the end of 2023.

Expansion of and Changes to Board of Directors

The Company elected four new members to its Board of Directors. David S. Wichmann and Pamela O. Kimmet joined the Board effective August 1, 2023. Mr. Wichmann served as CEO of UnitedHealth Group from 2017 to 2021, concluding a 23-year career at the company. Ms. Kimmet is a seasoned HR executive with broad experience across the corporate landscape and extensive human capital expertise gained in businesses both in and out of healthcare.

Adam Boehler also joined the Privia Health Board of Directors effective July 1, 2023. Mr. Boehler is founder and Managing Partner of Rubicon Founders. He previously served as served as Senior Advisor for Value-based Transformation and Innovation to the Secretary of the Department of Health and Human Services (HHS). Previously, he served as Deputy Administrator of the Centers for Medicare & Medicaid Services (CMS) and as Director of the Innovation Center at CMS (CMMI).

In addition, Parth Mehrotra joined the Board effective July 1, 2023, the date he became the Company’s CEO. Shawn Morris retired as CEO, but remains on the Board. Jeff Bernstein, Managing Director of Goldman Sachs, and Will Sherrill, Principal with Pamplona Capital, resigned from the Board effective August 1, 2023 and July 1, 2023, respectively, following their firms’ sale of its ownership positions in Privia Health through a secondary offering that closed on May 8, 2023.

Webcast and Conference Call Information

The Company will host a conference call on August 3, 2023, at 8:30 am ET to discuss these results and management’s outlook for future financial and operational performance. You can visit ir.priviahealth.com/news-and-events/events-and-presentations to listen to the call via live webcast. The webcast will be archived and available for replay for on-demand listening shortly after the completion of the call under the same link. If you wish to participate in the live conference call, then please go to https://register.vevent.com/register/BI839088e65ffb4d5e98aed1a8d9b1dee5 to pre-register and obtain your dial-in number and passcode.

This news release and the financial statements contained herein, and the slide presentation for the webcast, are also available on the Privia Health Investor Relations website at ir.priviahealth.com.

About Privia Health
Privia Health™ is a technology-driven, national physician enablement company that collaborates with medical groups, health plans, and health systems to optimize physician practices, improve patient experiences, and reward doctors for delivering high-value care in both in-person and virtual settings. Our platform is led by top industry talent and exceptional physician leadership, and consists of scalable operations and end-to-end, cloud-based technology that reduces unnecessary healthcare costs, achieves better outcomes, and improves the health of patients and the well-being of providers. For more information, visit priviahealth.com.

Non-GAAP Financial Measures

The Company reports and discusses its operating results using financial measures consistent with accounting principles generally accepted in the United States ("GAAP"). From time to time, in press releases, financial presentations, earnings conference calls or otherwise, the Company may disclose certain non-GAAP financial measures. The non-GAAP financial measures presented in this press release should not be viewed as alternatives or substitutes for the Company's reported GAAP results. A reconciliation to the most directly comparable GAAP financial measure is set forth in the tables that accompany this release.

The Company believes that the non-GAAP financial measures presented in this press release are relevant and provide useful information to the Company's management, investors, and other interested parties about the Company's operating performance because the measures allow them to understand and compare the Company's actual and expected operating results during the prior, current and future periods in a more consistent manner. The non-GAAP measures presented in this press release may not be comparable to similarly titled measures used by other companies. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and reflect an additional way of viewing aspects of the Company's operations that, when viewed with GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provides a more complete understanding of the results of operations and trends affecting the Company's business. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to financial measures calculated in accordance with GAAP.

In the third quarter of 2022, we changed the definition of Adjusted EBITDA to exclude employer taxes on equity vesting/exercise. In prior periods, this amount was considered de minimis and the Adjusted EBITDA amounts were not adjusted. Employer payroll tax expense related to employee stock transactions are tied to the vesting or exercise of underlying equity awards and the price of our common stock at the time of vesting, which varies in amount from period to period and is dependent on market forces that are often beyond our control. As a result, management excludes this item from our internal operating forecasts and models. Management believes that non-GAAP measures adjusted for employer payroll taxes on employee stock transactions provide investors with a basis to measure our core performance against the performance of other companies without the variability created by employer payroll taxes on employee stock transactions as a result of the stock price at the time of employee exercise.

Safe Harbor Statement

The financial results in this press release reflect preliminary, unaudited results, which are not final until the Company’s Form 10-Q is filed with the Securities and Exchange Commission (“SEC”). This press release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such statements relate to our current expectations, projections and assumptions about our business, the economy and future events or conditions. They do not relate strictly to historical or current facts. Forward-looking statements can be identified by words such as “aims,” “anticipates,” "assumes," “believes,” “estimates,” “expects,” “forecasts,” “future,” “intends,” “likely,” “may,” “outlook,” “plans,” “potential,” “projects,” “seeks,” “strategy,” “targets,” “trends,” “will,” “would,” “could,” “should,” and variations of such terms and similar expressions and references to guidance, although some forward-looking statements may be expressed differently. In particular, these include statements relating to, among other things: our future actions, business plans, objectives and prospects; and our future operating or financial performance and projections, including our full year guidance for 2022. Factors or events that could cause actual results to differ may emerge from time to time and are difficult to predict. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results may differ materially from past results and those anticipated, estimated or projected. We caution you not to place undue reliance upon any of these forward-looking statements.

Factors related to these risks and uncertainties include, but are not limited to: compliance with applicable healthcare laws and government regulations in the heavily regulated industry in which the Company operates; the Company’s dependence on relationships with its medical groups, some of which the Company does not own; the Company’s growth strategy, which may not prove viable and the Company may not realize expected results; the Company’s inability to successfully enter new markets; difficulties implementing the Company’s proprietary end-to-end, cloud-based technology solution for Privia physicians and new medical groups; the high level of competition in the Company’s industry and the Company’s failure to compete and innovate; challenges in successfully establishing a presence in new geographic markets; the Company’s reliance on its electronic medical record vendor, which the Privia Technology Solution is integrated and built upon; changes in the payer mix of patients and potential decreases in the Company’s reimbursement rates as a result of consolidation among commercial payers; the Company’s use, disclosure, and other processing of personally identifiable information, including health information, is subject to the Health Insurance Portability and Accountability Act of 1996 and other federal and state privacy and security regulations; and those factors discussed under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and the Company’s subsequent Quarterly Reports on Form 10-Q. All information in this press release is as of the date of the release, and the Company undertakes no duty to update this information unless required by law.

^(a) Any slight variations in totals due to rounding.

^(a) Any slight variations in totals are due to rounding.

^(a) Any slight variations in totals are due to rounding.

Additional Financial Information

Revenues disaggregated by source:

The Company’s liabilities for unpaid medical claims under at-risk capitation arrangements:

Key Metrics and Non-GAAP Financial Measures

Privia Health reviews a number of operating and financial metrics, including the following key metrics and non-GAAP financial measures, to evaluate the Company’s business, measure performance, identify trends affecting the Company’s business, formulate business plans, and make strategic decisions.

Key Metrics^(a)

Non-GAAP Financial Measures ^(4)(a)

Reconciliation of Gross Profit to Care Margin^(a)

Reconciliation of Gross Profit to Platform Contribution^(a)

Reconciliation of Net Income (Loss) to Adjusted EBITDA^(a)

Reconciliation of Net Income (Loss) to Adjusted Net Income and Adjusted Net Income Per Share^(a)