• Privia Health Reports First Quarter 2023 Financial Results

    Source: Nasdaq GlobeNewswire / 04 May 2023 05:30:00   America/Chicago

    • Practice Collections +17.3% compared to 1Q’22
    • Implemented Providers +10.3% compared to 1Q’22
    • Company Reiterated Full Year 2023 Guidance

    ARLINGTON, Va., May 04, 2023 (GLOBE NEWSWIRE) -- Privia Health Group, Inc. (Nasdaq: PRVA) today announced financial results for the first quarter ended March 31, 2023.

    Total revenue for the first quarter of 2023 was $386.3 million, compared to total revenue of $313.8 million for the prior year first quarter (+23.1%). Gross Profit for the first quarter of 2023 was $83.0 million, compared to $70.8 million for the prior year first quarter. Operating income for the first quarter of 2023 was $6.7 million, compared to operating loss of $(11.5) million for the prior year first quarter. Net income for the first quarter of 2023 was $7.3 million, or $0.06 per share, compared to net loss of $(17.5) million, or $(0.16) per share, for the first quarter of 2022. Net income for the first quarter of 2023 included $5.4 million in non-cash stock compensation expense and $3.4 million in other expenses. Net loss for the first quarter of 2022 included $24.9 million in non-cash stock compensation expense and $0.3 million in other expenses.

    Non-GAAP adjusted net income was $19.3 million, or $0.16 per diluted share, for the first quarter of 2023, compared to $14.8 million, or $0.12 per diluted share, for the prior year first quarter (+30.4%).

    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 first quarter of 2023 were $658.9 million, compared to $561.9 million for the same period in 2022 (+17.3%).
    • Care Margin for the first quarter of 2023 was $84.0 million, compared to $71.6 million for the same period in 2022 (+17.3%).
    • Platform Contribution for the first quarter of 2023 was $41.4 million, compared to $35.0 million for the same period in 2022 (+18.4%).
    • Adjusted EBITDA for the first quarter of 2023 was $16.9 million, compared to $14.8 million for the same period in 2022 (+13.9%).
    • Implemented Providers for the first quarter of 2023 were 3,716, compared to 3,370 for the same period in 2022 (+10.3%).
    • Value-Based Care Attributed Lives for the first quarter of 2023 were approximately 1,037,000, compared to 848,000 for the same period in 2022 (+22.3%).

    The Company's balance sheet at March 31, 2023 included $311.2 million of cash and cash equivalents and no outstanding bank debt.

    Financial and Business Outlook a b c d

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

     FY 2022 FY 2023 Guidancea Y - Y % Change
    from FY 2022
    ($ in millions)Actual Low High Low High
    Implemented Providers 3,606  4,050  4,150 12.3% 15.1%
    Attributed Lives 856,000  1,050,000  1,150,000 22.7% 34.3%
    Practice Collections$2,424.1 $2,700 $2,850 11.4% 17.6%
    GAAP Revenue$1,356.7 $1,550 $1,650 14.3% 21.6%
    Care Margin$305.6 $350 $365 14.5% 19.4%
    Platform Contribution$148.5 $160 $168 7.7% 13.1%
    Adjusted EBITDAc$60.9 $70 $74 15.0% 21.6%
    • Capital expenditures are expected to be less than $1 million in full-year 2023
    • Adjusted EBITDA guidance includes approximately $8-10 million in start-up costs for new geographies and ACOs
    • 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.

    Webcast and Conference Call Information

    The Company will host a conference call on May 4, 2023, at 8:45 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/BId6b536fcc2e147ea8e3903ebc60fcde6 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.

    Contact:
    Robert Borchert
    SVP, Investor & Corporate Communications
    IR@priviahealth.com
    817.783.4841


    Privia Health Group, Inc.
    Condensed Consolidated Statements of Operations (a)
    Unaudited
    (in thousands, except share and per share data)
     For the Three Months Ended March 31,
      2023   2022 
        
    Revenue$386,276  $313,801 
        
    Operating expenses:   
    Provider expense 302,255   242,187 
    Cost of platform 44,730   41,272 
    Sales and marketing 5,286   4,661 
    General and administrative 25,951   36,110 
    Depreciation and amortization 1,340   1,118 
    Total operating expenses 379,562   325,348 
    Operating income (loss) 6,714   (11,547)
    Interest (income) expense, net (1,813)  232 
    Income (loss) before provision for income taxes 8,527   (11,779)
    Provision for income taxes 2,125   6,308 
    Net income (loss) 6,402   (18,087)
    Less: loss attributable to non-controlling interests (922)  (577)
    Net income (loss) attributable to Privia Health Group, Inc.$7,324  $(17,510)
    Net income (loss) per share attributable to Privia Health Group, Inc. stockholders – basic and diluted$0.06  $(0.16)
    Weighted average common shares outstanding – basic 115,009,010   108,059,064 
    Weighted average common shares outstanding – diluted 124,328,964   108,059,064 

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

    Privia Health Group, Inc.
    Condensed Consolidated Balance Sheets (a)
    (in thousands)
     
     March 31, 2023 December 31, 2022
    Assets(unaudited)  
    Current assets:   
    Cash and cash equivalents$311,229  $347,992 
    Accounts receivable 260,881   189,604 
    Prepaid expenses and other current assets 16,667   14,366 
    Total current assets 588,777   551,962 
    Non-current assets:   
    Property and equipment, net 3,095   3,386 
    Right-of-use asset 7,618   8,089 
    Intangible assets, net 97,637   57,387 
    Goodwill 135,050   126,938 
    Deferred tax asset 38,503   40,368 
    Other non-current assets 4,663   4,683 
    Total non-current assets 286,566   240,851 
    Total assets$875,343  $792,813 
        
    Liabilities and stockholders’ equity   
    Current liabilities:   
    Accounts payable and accrued expenses$46,300  $52,837 
    Provider liability 260,368   208,424 
    Operating lease liabilities, current 3,021   3,013 
    Total current liabilities 309,689   264,274 
    Non-current liabilities:   
    Operating lease liabilities, non-current 7,788   8,490 
    Other non-current liabilities 1,345   1,000 
    Total non-current liabilities 9,133   9,490 
    Total liabilities 318,822   273,764 
    Commitments and contingencies   
    Stockholders’ equity:   
    Common stock 1,159   1,148 
    Additional paid-in capital 721,486   714,639 
    Accumulated deficit (209,369)  (216,693)
    Total Privia Health Group, Inc. stockholders’ equity 513,276   499,094 
    Non-controlling interest 43,245   19,955 
    Total stockholders’ equity 556,521   519,049 
    Total liabilities and stockholders’ equity$875,343  $792,813 

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

    Privia Health Group, Inc.
    Condensed Consolidated Statements of Cash Flows (a)
    unaudited
    (in thousands)
     
     For the Three Months Ended March 31,
      2023   2022 
    Cash flows from operating activities   
    Net income (loss)$6,402  $(18,087)
    Adjustments to reconcile net income (loss) to net cash used in operating activities:   
    Depreciation 291   306 
    Amortization of intangibles 1,049   812 
    Amortization of debt issuance costs —   38 
    Stock-based compensation 5,381   24,881 
    Deferred tax expense 1,865   6,308 
    Changes in asset and liabilities:   
    Accounts receivable (71,277)  (48,836)
    Prepaid expenses and other current assets (2,301)  (1,694)
    Other non-current assets and right-of-use asset 493   1,679 
    Accounts payable and accrued expenses (6,537)  (1,742)
    Provider liability 51,944   31,616 
    Operating lease liabilities (694)  (601)
    Net cash used in operating activities (13,384)  (5,320)
    Cash from investing activities   
    Purchases of property and equipment —   (34)
    Business Acquisitions, net of cash acquired (24,856)  — 
    Net cash used in investing activities (24,856)  (34)
    Cash flows from financing activities   
    Repayment of note payable —   (219)
    Proceeds from exercised stock options 1,477   799 
    Proceeds from non-controlling interest —   125 
    Net cash provided by financing activities 1,477   705 
    Net decrease in cash and cash equivalents (36,763)  (4,649)
    Cash and cash equivalents at beginning of period 347,992   320,577 
    Cash and cash equivalents at end of period$311,229  $315,928 
        
    Supplemental disclosure of cash flow information:   
    Interest paid$22  $368 

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

    Additional Financial Information

    Revenues disaggregated by source:

      
     For the Three Months Ended March 31,
    (Dollars in Thousands) 2023  2022
    FFS-patient care$227,789 $204,344
    FFS-administrative services 26,396  23,006
    Capitated revenue 78,260  48,330
    Shared savings 43,928  27,959
    Care management fees (PMPM) 8,558  8,804
    Other revenue 1,345  1,358
    Total Revenue$386,276 $313,801

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

      March 31,
    (Dollars in Thousands)  2023   2022 
    Balance, beginning of period $28,617  $— 
    Incurred health care costs:    
    Current year  75,632   48,330 
    Prior years  3,268   — 
    Total claims incurred $78,900  $48,330 
    Claims paid:    
    Current year  (29,716)  (33,476)
    Prior year  (28,079)  — 
    Total claims paid $(57,795) $(33,476)
    Adjustments to other claims-related liabilities  —   — 
    Other service physician service agreement adjustments  —   — 
    Balance, end of period $49,722  $14,854 

    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)

      For the Three Months Ended March 31,
    (unaudited; $ in millions)  2023  2022
         
    Implemented Providers (as of end of period)(1)  3,716  3,370
    Attributed Lives (as of end of period)(2)  1,037,000  848,000
    Practice Collections(3) $658.9 $561.9
         
    (1)Implemented Providers is defined as the total of all service professionals on Privia Health’s platform at the end of a given period who are credentialed by Privia Health and billed for medical services, in both Owned and Non-Owned Medical Groups during that period.
    (2)Attributed Lives are defined as any patient that a payer deems attributed to Privia Health, in both Owned and Non-Owned Medical Groups, to deliver care as part of a Value Based Care arrangement.
    (3)Practice Collections are defined as the total collections from all practices in all markets and all sources of reimbursement that the Company receives for delivering care and providing Privia Health’s platform and associated services. Practice Collections differ from revenue by including collections from Non-Owned Medical Groups.
    (a)Any slight variations in totals are due to rounding.
     

    Non-GAAP Financial Measures (4)(a)

      For the Three Months Ended March 31,
    (unaudited; $ in thousands)  2023   2022 
         
    Care Margin $84,021  $71,614 
    Platform Contribution $41,398  $34,965 
    Platform Contribution Margin  49.3%  48.8%
    Adjusted EBITDA $16,864  $14,801 
    Adjusted EBITDA Margin  20.1%  20.7%
         
    (4) In addition to results reported in accordance with GAAP, Privia Health discloses Care Margin, Platform Contribution, Platform Contribution margin, Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures. Each are defined as follows:• Care Margin is Gross Profit excluding amortization of intangible assets.

    • Platform Contribution is Gross Profit, excluding amortization of intangible assets, less Cost of platform and excluding stock-based compensation expense included in Cost of platform.

    • Platform Contribution margin is Platform Contribution divided by Care Margin.

    • Adjusted EBITDA is net income attributable to Privia Health Group, Inc. shareholders and subsidiaries excluding non-controlling interests, provision for income taxes, interest income, interest expense, depreciation and amortization, stock-based compensation, employer taxes on equity vesting/exercises, severance charges and other nonrecurring expenses.

    • Adjusted EBITDA margin is Adjusted EBITDA divided by Care Margin.
    (a) Any slight variations in totals are due to rounding.
     

    Reconciliation of Gross Profit to Care Margin(a)

      For the Three Months Ended March 31,
    (unaudited; $ in thousands)  2023   2022 
    Revenue $        386,276  $        313,801 
    Provider expense          (302,255)          (242,187)
    Amortization of intangible assets          (1,049)          (812)
    Gross Profit $        82,972  $        70,802 
    Amortization of intangibles assets          1,049           812 
    Care margin $        84,021  $        71,614 
    (a) Any slight variations in totals are due to rounding.

    Reconciliation of Gross Profit to Platform Contribution(a)

      For the Three Months Ended March 31,
    (unaudited; $ in thousands)  2023   2022 
    Revenue $        386,276  $        313,801 
    Provider expense          (302,255)          (242,187)
    Amortization of intangibles assets          (1,049)          (812)
    Gross Profit $        82,972  $        70,802 
    Amortization of intangibles assets          1,049           812 
    Cost of platform          (44,730)          (41,272)
    Stock-based compensation(5)          2,107           4,623 
    Platform contribution $        41,398  $        34,965 
    (a) Slight variations in totals are due to rounding.
    (5) Amount represents stock-based compensation expense included in Cost of Platform.

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

      For the Three Months Ended March 31,
    (unaudited; $ in thousands)  2023   2022 
    Net income (loss) $        7,324  $        (17,510)
    Net loss attributable to non-controlling interests          (922)          (577)
    Provision for income taxes          2,125           6,308 
    Interest (income) expense          (1,813)          232 
    Depreciation and amortization          1,340           1,118 
    Stock-based compensation          5,381           24,881 
    Other expenses(6)          3,429           349 
    Adjusted EBITDA $        16,864  $        14,801 
         
    (a) Any slight variations in totals are due to rounding.
    (6) Other expenses include employer taxes on equity vesting/exercises, legal, severance and certain non-recurring costs. Employer taxes on equity vesting/exercises of $0.3 million was recorded for the three months ended March 31, 2023.
     

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

     For the Three Months Ended March 31,
    (unaudited; $ in thousands) 2023   2022 
    Net income (loss)$        7,324  $        (17,510)
    Stock-based compensation         5,381           24,881 
    Intangible amortization expense         1,049           812 
    Provision for income tax         2,125           6,308 
    Other expenses(6)         3,429           349 
    Adjusted net income attributable to Privia Health Group, Inc.$        19,308  $        14,840 
    Adjusted net income per share attributable to Privia Health Group, Inc. stockholders – basic$        0.17  $        0.14 
    Adjusted net income per share attributable to Privia Health Group, Inc. stockholders – diluted$        0.16  $        0.12 
    Weighted average common shares outstanding – basic         115,009,010           108,059,064 
    Weighted average common shares outstanding – diluted         124,328,964           121,481,010 
    (a) Any slight variations in totals due to rounding.
    (6) Other expenses include employer taxes on equity vesting/exercises, legal, severance and certain non-recurring costs. Employer taxes on equity vesting/exercises of $0.3 million was recorded for the three months ended March 31, 2023.

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