PRVA Privia Health Group Inc

Privia Health Group, Inc. (Nasdaq: PRVA) today announced financial results for the second quarter and six months ended June 30, 2024.

Second Quarter Performance

		For the Three Months Ended June 30,
($ in millions, except per share amounts)		2024			2023			Change (%)
Total revenue		$	422.3		$	413.4		2.2	%
Gross profit		$	98.3		$	90.2		8.9	%
Operating income		$	5.1		$	7.0		(27.0	)%
Net income a		$	3.5		$	7.3		(52.3	)%
Non-GAAP adjusted net income b		$	23.5		$	20.8		13.0	%
Net income per share		$	0.03		$	0.06		(50.0	)%
Non-GAAP adjusted net income per share		$	0.19		$	0.17		11.8	%

1. Net income for the three months ended June 30, 2024, included $14.4 million in non-cash stock compensation expense. Net income for the three months ended June 30, 2023 included $9.2 million in non-cash stock compensation expense.
2. Reconciliations of non-GAAP adjusted net income and other non-GAAP financial measures are presented in tables near the end of this press release.

Key Operating and Non-GAAP Financial Metrics

		For the Three Months Ended June 30,
($ in millions)		2024			2023			Change (%)
Implemented Providers			4,504			3,870		16.4	%
Value-Based Care Attributed Lives			1,200,000			1,084,000		10.7	%
Practice Collections		$	728.0		$	700.0		4.0	%
Care Margin		$	99.8		$	91.6		8.9	%
Platform Contribution		$	47.4		$	44.6		6.2	%
Adjusted EBITDA		$	22.0		$	19.3		14.0	%

Second Quarter 2024 highlights include:

• Practice Collections of $728.0 million, +4.0% versus 2Q’23, which included a year-over-year reduction due to a shift of capitation risk exposure for improved economic terms;
• Adjusted EBITDA of $22.0 million, +14.0% versus 2Q’23;
• Continued strength in same-store growth and new provider additions, +16.4% versus 2Q’23;
• Cash and cash equivalents of $387.4 million, +21.8% versus 2Q’23, and no debt; and
• Strong sales and business development pipeline.

Six-Month Performance

		For the Six Months Ended June 30,
($ in millions, except per share amounts)		2024			2023			Change (%)
Total revenue		$	837.6		$	799.6		4.7	%
Gross profit		$	191.6		$	173.2		10.6	%
Operating income		$	5.9		$	13.7		(56.8	)%
Net income a		$	6.5		$	14.6		(55.8	)%
Non-GAAP adjusted net income b		$	46.1		$	40.1		15.0	%
Net income per share		$	0.05		$	0.12		(58.3	)%
Non-GAAP adjusted net income per share		$	0.37		$	0.32		15.6	%

1. Net income for the six months ended June 30, 2024 included $26.3 million in non-cash stock compensation expense. Net income for the six ended June 30, 2023 included $14.6 million in non-cash stock compensation expense.  
2. Reconciliations of non-GAAP adjusted net income and other non-GAAP financial measures are presented in tables near the end of this press release.

Key Operating and Non-GAAP Financial Metrics

		For the Six Months Ended June 30,
($ in millions)		2024				2023		Change (%)
Implemented Providers			4,504			3,870		16.4	%
Value-Based Care Attributed Lives			1,200,000			1,084,000		10.7	%
Practice Collections		$	1,435.7		$	1,358.9		5.7	%
Care Margin		$	194.7		$	175.7		10.8	%
Platform Contribution		$	92.1		$	86.0		7.1	%
Adjusted EBITDA		$	41.9		$	36.2		15.9	%

Financial and Business Outlook c d e f

Privia Health raised its full-year 2024 guidance, as follows:

	FY 2023			Initial FY 2024 Guidance c						Current FY 2024 Guidance at 8.8.24
($ in millions)	Actual			Low			High
Implemented Providers		4,305			4,650			4,750		Mid to High End
Attributed Lives		1,120,000			1,150,000			1,200,000		High End
Practice Collections	$	2,839.0		$	2,775		$	2,875		Mid to High End
GAAP Revenue	$	1,657.7		$	1,600		$	1,675		Mid to High End
Care Margin	$	359.2		$	388		$	400		Mid to High End
Platform Contribution	$	173.5		$	180		$	188		Mid to High End
Adjusted EBITDAe	$	72.2		$	85		$	90		Mid to High End

• Practice Collections guidance includes the year-over-year impact of approximately $198 million from renegotiated MA capitation agreements
• Approximately 80% of Adjusted EBITDA expected to convert to free cash flow in FY 2024
• Capital expenditures are expected to be less than $1 million in full-year 2024

3. 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.
4. 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.
5. 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.
6. Any slight variations in totals due to rounding.

Webcast and Conference Call Information

The Company will host a conference call on August 8, 2024, at 8:00 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 dial 800-715-9871 (or 646-307-1963 for international callers) and provide Conference ID 2580381.

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 HealthPrivia 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.

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 2024. 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: any failure by the Company to comply with applicable healthcare laws and government regulations in the heavily regulated industry in which the Company operates; the impact of changes in applicable laws, rules or regulations, including with respect to health plans and payers and our relationships with such plans and payers, and provisions that impact Medicare and Medicaid programs; 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; 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 any failure by the Company to compete effectively 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 financial and operational impact of complying with various complex and changing federal and state privacy and security laws and regulations related to Company’s use, disclosure, and other processing of personal information and protected health information, including the Health Insurance Portability and Accountability Act of 1996; the impact of actual and potential cybersecurity incidents or privacy and security breaches involving us, our vendors or other third parties; the continued availability of a qualified workforce, including staff at our medical groups, and the continued upward pressure on compensation for such workforce; 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, 2023 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(g)(unaudited)(in thousands, except share and per share data)
	For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Revenue	$	422,326			$	413,351			$	837,569			$	799,627
Operating expenses:
Provider expense		322,536				321,718				642,872				623,973
Cost of platform		57,106				50,200				111,163				94,930
Sales and marketing		6,852				5,956				12,937				11,242
General and administrative		28,916				26,808				61,037				52,759
Depreciation and amortization		1,818				1,690				3,639				3,030
Total operating expenses		417,228				406,372				831,648				785,934
Operating income		5,098				6,979				5,921				13,693
Interest (income), net		(2,966	)			(817	)			(5,950	)			(2,630	)
Income before provision for income taxes		8,064				7,796				11,871				16,323
Provision for income taxes		3,421				1,436				4,172				3,561
Net income		4,643				6,360				7,699				12,762
Less: Net income (loss) attributable to non-controlling interests		1,176				(914	)			1,248				(1,836	)
Net income attributable to Privia Health Group, Inc.	$	3,467			$	7,274			$	6,451			$	14,598
Net income per share attributable to Privia Health Group, Inc. stockholders – basic	$	0.03			$	0.06			$	0.05			$	0.13
Net income per share attributable to Privia Health Group, Inc. stockholders – diluted	$	0.03			$	0.06			$	0.05			$	0.12
Weighted average common shares outstanding – basic		119,301,350				116,161,251				118,902,095				115,588,313
Weighted average common shares outstanding – diluted		125,317,908				124,570,875				125,315,681				124,467,343

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

Privia Health Group, Inc. Condensed Consolidated Balance Sheets(h)(in thousands)
	June 30, 2024				December 31, 2023
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	387,352			$	389,511
Accounts receivable		370,055				290,768
Prepaid expenses and other current assets		22,264				20,525
Total current assets		779,671				700,804
Non-current assets:
Property and equipment, net		1,747				2,325
Operating right-of-use asset		5,704				6,612
Intangible assets, net		104,576				107,630
Goodwill		139,457				138,749
Deferred tax asset		31,304				35,200
Other non-current assets		15,162				8,580
Total non-current assets		297,950				299,096
Total assets	$	1,077,621			$	999,900
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$	60,818			$	57,831
Provider liability		366,125				326,078
Operating lease liabilities, current		2,649				3,043
Total current liabilities		429,592				386,952
Non-current liabilities:
Operating lease liabilities, non-current		4,109				5,246
Other non-current liabilities		313				313
Total non-current liabilities		4,422				5,559
Total liabilities		434,014				392,511
Commitments and contingencies
Stockholders’ equity:
Common stock		1,194				1,182
Additional paid-in capital		781,376				753,869
Accumulated deficit		(187,163	)			(193,614	)
Total Privia Health Group, Inc. stockholders’ equity		595,407				561,437
Non-controlling interest		48,200				45,952
Total stockholders’ equity		643,607				607,389
Total liabilities and stockholders’ equity	$	1,077,621			$	999,900

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

Privia Health Group, Inc.Condensed Consolidated Statements of Cash Flows(i)(unaudited)(in thousands)
	For the Six Months Ended June 30,
		2024				2023
Cash flows from operating activities
Net income	$	7,699			$	12,762
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		585				581
Amortization of intangibles		3,054				2,449
Stock-based compensation		26,295				14,628
Deferred tax expense		3,896				3,259
Changes in asset and liabilities:
Accounts receivable		(79,287	)			(130,235	)
Prepaid expenses and other current assets		(1,739	)			(1,850	)
Other non-current assets and right-of-use asset		(676	)			473
Accounts payable and accrued expenses		2,987				(3,967	)
Provider liability		40,047				97,944
Operating lease liabilities		(1,531	)			(1,789	)
Other long-term liabilities		—				(32	)
Net cash provided by (used in) operating activities		1,330				(5,777	)
Cash from investing activities
Business acquisitions, net of cash acquired		(707	)			(24,856	)
Other		(5,006	)			(72	)
Net cash used in investing activities		(5,713	)			(24,928	)
Cash flows from financing activities
Proceeds from exercised stock options		1,224				5,783
Repurchase of non-controlling interest		—				(5,694	)
Contributed non-controlling interest		1,000				569
Net cash provided by financing activities		2,224				658
Net decrease in cash and cash equivalents		(2,159	)			(30,047	)
Cash and cash equivalents at beginning of period		389,511				347,992
Cash and cash equivalents at end of period	$	387,352			$	317,945
Supplemental disclosure of cash flow information:
Interest paid	$	156			$	57
Income taxes paid	$	2,881			$	599

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

Additional Financial Information

Revenues disaggregated by source:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(Dollars in Thousands)	2024			2023			2024			2023
FFS-patient care	$	275,761		$	230,987		$	550,584		$	458,776
FFS-administrative services		32,132			27,172			61,208			53,568
Capitated revenue		56,438			86,695			107,742			164,955
Shared savings		39,818			52,846			87,282			96,774
Care management fees (PMPM)		16,163			13,568			26,766			22,126
Other revenue		2,014			2,083			3,987			3,428
Total Revenue	$	422,326		$	413,351		$	837,569		$	799,627

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

		June 30,
(Dollars in Thousands)			2024				2023
Balance, beginning of period		$	67,138			$	28,617
Incurred health care costs:
Current year			104,610				161,016
Prior years			3,305				6,360
Total claims incurred		$	107,915			$	167,376
Claims paid:
Current year			(47,979	)			(102,326	)
Prior year			(52,877	)			(30,467	)
Total claims paid		$	(100,856	)		$	(132,793	)
Balance, end of period		$	74,197			$	63,200

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(j)

		For the Three Months Ended June 30,						For the Six Months Ended June 30,
(unaudited; $ in millions)		2024			2023			2024			2023
Implemented Providers (as of end of period) (1)			4,504			3,870			4,504			3,870
Attributed Lives (as of end of period) (2)			1,200,000			1,084,000			1,200,000			1,084,000
Practice Collections (3)		$	728.0		$	700.0		$	1,435.7		$	1,358.9
(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 to deliver care as part of a value-based care arrangement through a provider of primary care services as of the end of a particular period.
(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.
(j) Any slight variations in totals are due to rounding.

Non-GAAP Financial Measures (4)(k)

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
(unaudited; $ in thousands)			2024				2023				2024				2023
Care Margin		$	99,790			$	91,633			$	194,697			$	175,654
Platform Contribution		$	47,394			$	44,619			$	92,131			$	86,017
Platform Contribution Margin			47.5	%			48.7	%			47.3	%			49.0	%
Adjusted EBITDA		$	22,023			$	19,312			$	41,945			$	36,176
Adjusted EBITDA Margin			22.1	%			21.1	%			21.5	%			20.6	%
(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 non-recurring expenses. Adjusted EBITDA Margin is Adjusted EBITDA divided by Care Margin.
(k) Any slight variations in totals are due to rounding.

Reconciliation of Gross Profit to Care Margin(l)

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
(unaudited; $ in thousands)			2024				2023				2024				2023
Revenue		$	422,326			$	413,351			$	837,569			$	799,627
Provider expense			(322,536	)			(321,718	)			(642,872	)			(623,973	)
Amortization of intangible assets			(1,527	)			(1,399	)			(3,054	)			(2,449	)
Gross Profit		$	98,263			$	90,234			$	191,643			$	173,205
Amortization of intangible assets			1,527				1,399				3,054				2,449
Care margin		$	99,790			$	91,633			$	194,697			$	175,654
(l) Any slight variations in totals are due to rounding.

Reconciliation of Gross Profit to Platform Contribution(m)

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
(unaudited; $ in thousands)			2024				2023				2024				2023
Revenue		$	422,326			$	413,351			$	837,569			$	799,627
Provider expense			(322,536	)			(321,718	)			(642,872	)			(623,973	)
Amortization of intangible assets			(1,527	)			(1,399	)			(3,054	)			(2,449	)
Gross Profit		$	98,263			$	90,234			$	191,643			$	173,205
Amortization of intangible assets			1,527				1,399				3,054				2,449
Cost of platform			(57,106	)			(50,200	)			(111,163	)			(94,930	)
Stock-based compensation(5)			4,710				3,186				8,597				5,293
Platform Contribution		$	47,394			$	44,619			$	92,131			$	86,017
(m) Any slight variations in totals are due to rounding.
(5) Amount represents stock-based compensation expense included in Cost of Platform.

Reconciliation of Net Income to Adjusted EBITDA(n)

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
(unaudited; $ in thousands)			2024				2023				2024				2023
Net income		$	3,467			$	7,274			$	6,451			$	14,598
Net income (loss) attributable to non-controlling interests			1,176				(914	)			1,248				(1,836	)
Provision for income taxes			3,421				1,436				4,172				3,561
Interest (income), net			(2,966	)			(817	)			(5,950	)			(2,630	)
Depreciation and amortization			1,818				1,690				3,639				3,030
Stock-based compensation			14,391				9,247				26,295				14,628
Other expenses(6)			716				1,396				6,090				4,825
Adjusted EBITDA		$	22,023			$	19,312			$	41,945			$	36,176
(n) Any slight variations in totals are due to rounding.
(6) Other expenses include employer taxes on equity vesting/exercises, severance and certain non-recurring costs.

Reconciliation of Net Income to Adjusted Net Income and Adjusted Net Income Per Share(o)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(unaudited; $ in thousands)	2024			2023			2024			2023
Net income	$	3,467		$	7,274		$	6,451		$	14,598
Stock-based compensation		14,391			9,247			26,295			14,628
Intangible amortization expense		1,527			1,399			3,054			2,449
Provision for income taxes		3,421			1,436			4,172			3,561
Other expenses(7)		716			1,396			6,090			4,825
Adjusted net income	$	23,522		$	20,752		$	46,062		$	40,061
Adjusted net income per share attributable to Privia Health Group, Inc. stockholders – basic	$	0.20		$	0.18		$	0.39		$	0.35
Adjusted net income per share attributable to Privia Health Group, Inc. stockholders – diluted	$	0.19		$	0.17		$	0.37		$	0.32
Weighted average common shares outstanding – basic		119,301,350			116,161,251			118,902,095			115,588,313
Weighted average common shares outstanding – diluted		125,317,908			124,570,875			125,315,681			124,467,343
(o) Any slight variations in totals due to rounding.
(7) Other expenses include employer taxes on equity vesting/exercises, severance and certain non-recurring costs.