Privia Health (PRVA) - 2023 Q4 - Annual Results

Overview and Performance Summary Privia Health demonstrated robust financial and operational growth in 2023, achieving all guidance metrics and continuing strong performance into the fourth quarter Full-Year 2023 Performance Highlights Privia Health achieved all its full-year 2023 guidance metrics, demonstrating strong financial growth with a 22.2% increase in total revenue and a shift from operating loss to income, alongside significant operational expansion in implemented providers and attributed lives Financial Performance Privia Health's full-year 2023 financial performance shows significant revenue growth and a positive shift from net loss to net income | Metric | 2023 ($ millions) | 2022 ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total revenue | 1,657.7 | 1,356.7 | 22.2 % | | Gross profit | 353.8 | 302.3 | 17.0 % | | Operating income (loss) | 20.6 | (19.1) | nm | | Net income (loss) | 23.1 | (8.6) | nm | | Non-GAAP adjusted net income | 81.5 | 63.7 | 27.9 % | | Net income (loss) per share | 0.20 | (0.08) | nm | | Non-GAAP adjusted net income per share | 0.64 | 0.52 | 23.1 % | - Net income for full-year 2023 included $37.1 million in non-cash stock compensation expense and $7.9 million in legal, non-recurring, and other expenses[2] Operating Performance Operational performance for full-year 2023 demonstrates substantial growth in implemented providers and value-based care attributed lives - Implemented Providers increased by 19.4% compared to year-end 2022[4][5][6] - Gross provider retention was over 98%[5] - Three new market entries: Connecticut, South Carolina, and Washington[5] | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Implemented Providers | 4,305 | 3,606 | 19.4 % | | Value-Based Care Attributed Lives | 1,120,000 | 856,000 | 30.8 % | | Practice Collections ($ millions) | 2,839.0 | 2,424.1 | 17.1 % | | Care Margin ($ millions) | 359.2 | 305.6 | 17.5 % | | Platform Contribution ($ millions) | 173.5 | 148.5 | 16.8 % | | Adjusted EBITDA ($ millions) | 72.2 | 60.9 | 18.7 % | Performance vs. Guidance Privia Health successfully achieved or exceeded all its initial and updated 2023 operating and financial guidance metrics - Achieved all 2023 operating and financial guidance metrics[4] | Metric | Initial FY 2023 Guidance (Low) | Initial FY 2023 Guidance (High) | Updated FY 2023 Guidance | FY 2023 Actual | | :--- | :--- | :--- | :--- | :--- | | Implemented Providers | 4,050 | 4,150 | Above High End | 4,305 | | Attributed Lives | 1,050,000 | 1,150,000 | Midpoint | 1,120,000 | | Practice Collections ($ millions) | 2,700 | 2,850 | Midpoint | 2,839.0 | | GAAP Revenue ($ millions) | 1,550 | 1,650 | Mid to High End | 1,657.7 | | Care Margin ($ millions) | 350 | 365 | Mid to High End | 359.2 | | Platform Contribution ($ millions) | 160 | 168 | Above High End | 173.5 | | Adjusted EBITDA ($ millions) | 70 | 74 | Mid to High End | 72.2 | Fourth Quarter 2023 Performance Highlights The fourth quarter of 2023 showed continued strong performance, with total revenue growing by 21.0% and non-GAAP adjusted net income increasing by 26.1% year-over-year, supported by robust practice collections and Adjusted EBITDA growth Financial Performance Fourth quarter 2023 financial results indicate strong revenue growth and a significant increase in non-GAAP adjusted net income | Metric | Q4 2023 ($ millions) | Q4 2022 ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total revenue | 440.8 | 364.4 | 21.0 % | | Gross profit | 90.0 | 79.2 | 13.6 % | | Operating income | 1.4 | 2.2 | nm | | Net income | 2.8 | 17.8 | nm | | Non-GAAP adjusted net income | 20.3 | 16.1 | 26.1 % | | Net income per share | 0.02 | 0.14 | nm | | Non-GAAP adjusted net income per share | 0.15 | 0.13 | 15.4 % | - Net income for the fourth quarter of 2023 included $11.7 million in non-cash stock compensation expense and $2.4 million in legal and other expenses[10] Operating Performance Fourth quarter 2023 operating performance highlights robust growth in practice collections, care margin, and Adjusted EBITDA | Metric | Q4 2023 ($ millions) | Q4 2022 ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | | Practice Collections | 756.6 | 634.8 | 19.2 % | | Care Margin | 91.5 | 80.1 | 14.2 % | | Platform Contribution | 42.3 | 39.1 | 8.2 % | | Adjusted EBITDA | 17.3 | 14.3 | 21.1 % | Detailed Financial Information This section provides comprehensive GAAP financial statements and supplemental data, detailing revenue disaggregation and liabilities for unpaid medical claims GAAP Financial Statements The GAAP financial statements for 2023 reflect a significant improvement in the company's financial health, moving from a net loss to a net income, with substantial increases in assets and operating cash flow, indicating effective financial management and operational efficiency Condensed Consolidated Statements of Operations The condensed consolidated statements of operations show a positive shift from operating loss to income and net loss to net income in 2023 | Metric (in thousands) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Revenue | $ 1,657,737 | $ 1,356,660 | | Total operating expenses | $ 1,637,088 | $ 1,375,782 | | Operating income (loss) | $ 20,649 | $ (19,122) | | Net income (loss) | $ 21,028 | $ (12,064) | | Net income (loss) attributable to Privia Health Group, Inc. | $ 23,079 | $ (8,585) | | Net income (loss) per share – basic | $ 0.20 | $ (0.08) | | Net income (loss) per share – diluted | $ 0.19 | $ (0.08) | Condensed Consolidated Balance Sheets The condensed consolidated balance sheets reflect a strong financial position with increased cash, total assets, and stockholders' equity | Metric (in thousands) | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $ 389,511 | $ 347,992 | | Total current assets | $ 700,804 | $ 551,962 | | Total assets | $ 999,900 | $ 792,813 | | Total current liabilities | $ 386,952 | $ 264,274 | | Total liabilities | $ 392,511 | $ 273,764 | | Total stockholders' equity | $ 607,389 | $ 519,049 | Condensed Consolidated Statements of Cash Flows The condensed consolidated statements of cash flows highlight a significant increase in net cash from operating activities and strategic investments in business acquisitions | Metric (in thousands) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $ 80,785 | $ 47,196 | | Net cash used in investing activities | $ (42,971) | $ (104) | | Net cash provided by (used in) financing activities | $ 3,705 | $ (19,677) | | Net increase in cash and cash equivalents | $ 41,519 | $ 27,415 | | Cash and cash equivalents at end of period | $ 389,511 | $ 347,992 | - The Company invested $42.9 million in 2023 on business acquisitions to enter new states[14][34] Supplemental Financial Data This section provides a detailed breakdown of Privia Health's revenue streams, highlighting growth across all categories, particularly in capitated revenue, and details the increase in liabilities for unpaid medical claims under at-risk arrangements Revenue Disaggregation Revenue disaggregation details the growth across various sources, including FFS patient care, administrative services, capitated revenue, and shared savings | Revenue Source (in Thousands) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | FFS-patient care | $ 976,688 | $ 869,165 | | FFS-administrative services | $ 113,154 | $ 94,929 | | Capitated revenue | $ 338,729 | $ 218,463 | | Shared savings | $ 170,143 | $ 132,615 | | Care management fees (PMPM) | $ 50,519 | $ 35,541 | | Other revenue | $ 8,504 | $ 5,947 | | Total Revenue | $ 1,657,737 | $ 1,356,660 | Liabilities for Unpaid Medical Claims This section outlines the changes in liabilities for unpaid medical claims, reflecting incurred and paid claims over the period | Metric (in Thousands) | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Balance, beginning of period | $ 28,617 | $ — | | Total claims incurred | $ 336,819 | $ 218,199 | | Total claims paid | $ (298,298) | $ (189,582) | | Balance, end of period | $ 67,138 | $ 28,617 | Key Metrics and Non-GAAP Measures This section defines key operating metrics and provides detailed reconciliations for non-GAAP financial measures, offering insights into operational performance Operating Metrics and Definitions Privia Health's key operating metrics for 2023 underscore substantial growth in its provider network and patient reach, while the definitions clarify the methodology behind the company's non-GAAP financial measures used for performance evaluation Key Operating Metrics Key operating metrics for 2023 demonstrate significant expansion in implemented providers, attributed lives, and practice collections | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Implemented Providers | 4,305 | 3,606 | | Attributed Lives | 1,120,000 | 856,000 | | Practice Collections ($ millions) | 2,839.0 | 2,424.1 | - Implemented Providers are defined as all service professionals on Privia Health's platform credentialed and billed for medical services[38] - Attributed Lives are patients attributed to Privia for value-based care arrangements[38] - Practice Collections include total collections from all practices and sources, differing from revenue by including Non-Owned Medical Groups[38] Non-GAAP Financial Measures Definitions This section provides clear definitions for key non-GAAP financial measures, including Care Margin, Platform Contribution, and Adjusted EBITDA - Care Margin is Gross Profit excluding amortization of intangible assets[39] - 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[39] - Adjusted EBITDA is net income (loss) attributable to Privia Health Group, Inc. shareholders and subsidiaries excluding non-controlling interests, provision for (benefit from) income taxes, interest income, interest expense, depreciation and amortization, stock-based compensation, employer taxes on equity vesting/exercises, severance charges and other nonrecurring expenses[41] Non-GAAP Reconciliations This section provides detailed reconciliations of GAAP measures to key non-GAAP financial metrics such as Care Margin, Platform Contribution, Adjusted EBITDA, and Adjusted Net Income, illustrating the adjustments made for non-cash and non-recurring items to provide a clearer view of operational performance Gross Profit to Care Margin This reconciliation details the adjustments from Gross Profit to Care Margin, primarily by adding back amortization of intangible assets | Metric (in thousands) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Gross Profit | $ 353,805 | $ 302,269 | | Amortization of intangible assets | $ 5,359 | $ 3,351 | | Care margin | $ 359,164 | $ 305,620 | Gross Profit to Platform Contribution This reconciliation outlines the adjustments from Gross Profit to Platform Contribution, including amortization and stock-based compensation | Metric (in thousands) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Gross Profit | $ 353,805 | $ 302,269 | | Amortization of intangible assets | $ 5,359 | $ 3,351 | | Cost of platform | $ (197,663) | $ (170,838) | | Stock-based compensation | $ 11,980 | $ 13,758 | | Platform Contribution | $ 173,481 | $ 148,540 | Net Income (Loss) to Adjusted EBITDA This reconciliation details the adjustments from Net Income (Loss) to Adjusted EBITDA, accounting for non-cash and non-recurring expenses | Metric (in thousands) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net income (loss) | $ 23,079 | $ (8,585) | | Stock-based compensation | $ 37,098 | $ 67,359 | | Depreciation and amortization | $ 6,533 | $ 4,571 | | Other expenses | $ 7,948 | $ 8,044 | | Adjusted EBITDA | $ 72,228 | $ 60,852 | Net Income (Loss) to Adjusted Net Income This reconciliation provides adjustments from Net Income (Loss) to Adjusted Net Income, including stock-based compensation and intangible amortization | Metric (in thousands) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net income (loss) | $ 23,079 | $ (8,585) | | Stock-based compensation | $ 37,098 | $ 67,359 | | Intangible amortization expense | $ 5,359 | $ 3,351 | | Provision for (benefit from) income tax | $ 7,993 | $ (6,516) | | Other expenses | $ 7,948 | $ 8,044 | | Adjusted net income attributable to Privia Health Group, Inc. | $ 81,477 | $ 63,653 | | Adjusted net income per share – diluted | $ 0.64 | $ 0.52 | Capital & Outlook This section details Privia Health's capital resources, cash flow, and provides the strategic focus and financial guidance for the full-year 2024 Capital Resources and Cash Flow Privia Health maintained a strong liquidity position at the end of 2023 with significant cash reserves and no debt, supported by a substantial increase in net cash provided by operating activities, demonstrating robust financial stability and cash generation - Cash and cash equivalents at December 31, 2023, were $389.5 million, up from $348.0 million at December 31, 2022[13] - The company had no debt at December 31, 2023, or December 31, 2022[13] - Net cash provided by operating activities for FY2023 was $80.8 million, a 71.2% increase from $47.2 million in the prior year[14] - Capital expenditures were minimal at $0.1 million for FY2023[14] 2024 Financial and Business Outlook For 2024, Privia Health outlines strategic priorities including organic growth, renegotiating Medicare Advantage contracts to mitigate risk, and expanding into new states, while providing guidance that projects continued growth in key operating and non-GAAP financial metrics despite anticipated revenue adjustments Strategic Focus and Key Actions Privia Health's 2024 strategic focus includes organic growth, renegotiating Medicare Advantage contracts, and expanding into new states - Increasing density and scale in existing geographies through organic provider growth[15] - Limiting downside-risk arrangements in the Medicare Advantage (MA) market by renegotiating capitation arrangements for more favorable contract structures[15] - Renegotiated MA capitation arrangements are expected to reduce capitated practice collections by approximately $198 million year-over-year[15][16] - Exiting Delaware ACO (~12,000 attributed lives in Medicare Shared Savings Program) effective January 1, 2024[17] - Continuing to pursue business development efforts to enter new states and increase overall addressable market[17] - Achieving operating leverage to drive Adjusted EBITDA growth and converting 80% of Adjusted EBITDA to Free Cash Flow[17][18] Full-Year 2024 Guidance Full-year 2024 guidance projects continued growth in key operating and non-GAAP financial metrics despite anticipated revenue adjustments | Metric ($ in millions) | FY 2023 Actual | FY 2024 Guidance (Low) | FY 2024 Guidance (High) | Y-Y % Change (Low) | Y-Y % Change (High) | | :--- | :--- | :--- | :--- | :--- | :--- | | Implemented Providers | 4,305 | 4,650 | 4,750 | 8.0 % | 10.3 % | | Attributed Lives | 1,120,000 | 1,150,000 | 1,200,000 | 2.7 % | 7.1 % | | Practice Collections | $ 2,839.0 | $ 2,775 | $ 2,875 | (2.3)% | 1.3 % | | GAAP Revenue | $ 1,657.7 | $ 1,600 | $ 1,675 | (3.5)% | 1.0 % | | Care Margin | $ 359.2 | $ 388 | $ 400 | 8.0 % | 11.4 % | | Platform Contribution | $ 173.5 | $ 180 | $ 188 | 3.8 % | 8.4 % | | Adjusted EBITDA | $ 72.2 | $ 85 | $ 90 | 17.7 % | 24.6 % | - Practice Collections guidance includes a reduction of approximately $198 million from renegotiated Medicare Advantage capitation agreements[16] - Adjusted EBITDA guidance includes approximately $10-12 million in start-up costs for new geographies[18] - Approximately 80% of Adjusted EBITDA is expected to convert to free cash flow in FY 2024[18] Corporate Information & Disclosures This section provides general corporate information, details on non-GAAP financial measures, and a safe harbor statement regarding forward-looking statements General Information This section provides practical information regarding Privia Health's investor communications, including details for its webcast and conference call, and an overview of the company's mission as a technology-driven physician enablement platform Webcast and Conference Call Information This section provides details for accessing the company's conference call and webcast replay for investor communications - Conference call held on February 27, 2024, at 8:00 am ET[20] - Webcast and replay available at ir.priviahealth.com/news-and-events/events-and-presentations[20] About Privia Health Privia Health is a technology-driven physician enablement company focused on optimizing practices and improving patient outcomes - Privia Health is a technology-driven, national physician enablement company[22] - Collaborates with medical groups, health plans, and health systems[22] - Platform aims to optimize physician practices, improve patient experiences, reward doctors for high-value care, reduce unnecessary healthcare costs, and achieve better outcomes[22] Legal & Investor Disclosures This section clarifies the use of non-GAAP financial measures as supplementary information and includes a comprehensive safe harbor statement, cautioning investors about forward-looking statements and outlining potential risks and uncertainties Non-GAAP Financial Measures Explanation This explanation clarifies that non-GAAP financial measures are supplementary to GAAP results, providing consistent operational insights - Non-GAAP financial measures are presented as supplements to, not substitutes for, GAAP results[23][24] - These measures provide useful information for understanding and comparing operating results consistently across periods[24] - Reconciliations to the most directly comparable GAAP financial measures are provided[23] Safe Harbor Statement The safe harbor statement cautions against undue reliance on forward-looking statements due to inherent risks and uncertainties - The press release contains "forward-looking statements" subject to risks and uncertainties[25][26] - Factors that could cause actual results to differ include compliance with healthcare laws, dependence on medical group relationships, growth strategy viability, competition, and challenges in new markets[27] - Readers are cautioned not to place undue reliance on forward-looking statements[26] Contact Information This section provides contact details for investor and corporate communications - Contact: Robert Borchert, SVP, Investor & Corporate Communications[28] - Email: IR@priviahealth.com, Phone: 817.783.4841[28]