Privia Health Reports Fourth Quarter and Full-Year 2023 Financial Results

• Achieved All 2023 Operating and Financial Guidance Metrics
• Implemented Providers +19.4% compared to Year-End 2022
• Introduces Full-Year 2024 Guidance
• Proactive Steps to Limit Downside Risk Arrangements in Current Medicare Advantage Environment for More Favorable Contract Structures and Margin Contribution

ARLINGTON, Va., Feb. 27, 2024 (GLOBE NEWSWIRE) — Privia Health Group, Inc. (Nasdaq: PRVA) today announced financial and operating results for the fourth quarter and full year ended December 31, 2023. The Company achieved each of its full-year guidance metrics for 2023, as highlighted below.

Full-Year Performance

Highlights from 2023 include:

• Record new provider signings with Implemented Providers increasing 19.4% from year-end 2022;
• Gross provider retention of 98+%;
• Strong fee-for-service collections, value-based care performance and new markets growth offset an approximate $110 million Practice Collections headwind due to the restructuring of a capitation contract announced in 1Q’23;
• Three new market entries – Connecticut, South Carolina and Washington;
• Strong Platform Contribution performance helped absorb incremental new market entry costs; and
• Adjusted EBITDA growth of 18.7% compared to full-year 2022.

Key Operating and Non-GAAP Financial Metrics

Full-Year 2023 Actual Performance versus Guidance

Fourth Quarter Performance

Key Operating and Non-GAAP Financial Metrics

Capital Resources and Cash Flow

The Company’s balance sheet at December 31, 2023 included $389.5 million of cash and cash equivalents and no debt, compared to cash and cash equivalents of $348.0 million and no debt at December 31, 2022.

Net cash provided by operating activities for the year ended December 31, 2023 was $80.8 million compared to $47.2 million in the prior year (+71.2%). Capital expenditures were $0.1 million for the year ended December 31, 2023, compared to $0.1 million in the prior year. The Company invested $42.9 million in 2023 on business acquisitions to enter new states.

2024 Financial and Business Outlook ^{g h i}

Privia Health’s key actions and areas of focus in 2024 include:

• Increasing density and scale in existing geographies through organic provider growth;
• Limiting downside-risk arrangements in a challenging Medicare Advantage (MA) market;
  • Renegotiating MA capitation arrangements for more favorable contract structures and margin contribution expected to reduce capitated practice collections by approximately $198 million year-over-year due to revenue recognition rules as 19,900 attributed lives move to upside/downside risk arrangements;
  • Exiting Delaware ACO (~12,000 attributed lives in the Medicare Shared Savings Program), effective January 1, 2024;
• Achieving operating leverage to drive Adjusted EBITDA growth, and converting 80% of Adjusted EBITDA to Free Cash Flow (defined as net cash provided by operating activities less purchases of property and equipment); and
• Continuing to pursue business development efforts to enter new states and increase overall addressable market.

The Company’s 2024 operating and financial guidance is as follows:

• Practice Collections guidance includes reduction of approximately $198 million from renegotiated Medicare Advantage capitation agreements, and assumes minimal year-over-year increase in Shared Savings accruals
• Adjusted EBITDA guidance includes approximately $10-12 million in start-up costs for new geographies announced in last 15 months
• Capital expenditures are expected to be less than $1 million in full-year 2024
• Approximately 80% of Adjusted EBITDA expected to convert to free cash flow in FY 2024
• Effective tax rate expected to be approximately 27-28%

Webcast and Conference Call Information

The Company will host a conference call on February 27, 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 please go to https://register.vevent.com/register/BI4f3d577f597e4536bc0d4c9f66d273ff to preregister 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.

Safe Harbor Statement

The financial results in this press release reflect preliminary, unaudited results, which are not final until the Company’s Form 10-K 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; expectations for new health system and other partnerships, including to enter Ohio; 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: 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 enter into a definitive agreement for its partnership in Ohio; 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 referenced in Part II, Item 1A, other important 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

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

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

^(l) 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^(m)

Non-GAAP Financial Measures ^(q)(r)

Reconciliation of Gross Profit to Care Margin^(s)

Reconciliation of Gross Profit to Platform Contribution^(t)

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

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

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