Privia Health (PRVA) - 2021 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements Privia Health reported Q1 2021 revenues of $213.6 million, stable net income, and improved operating cash flow, with a post-quarter $212.0 million IPO Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $81,938 | $84,633 | | Accounts receivable | $116,720 | $99,118 | | Total current assets | $204,646 | $190,084 | | Goodwill | $118,663 | $118,663 | | Total assets | $348,276 | $328,969 | | Liabilities & Equity | | | | Physician and practice liability | $123,767 | $106,811 | | Total current liabilities | $157,524 | $146,938 | | Note payable, net of current portion | $32,293 | $32,784 | | Total liabilities | $198,907 | $185,317 | | Total stockholders' equity | $149,369 | $143,652 | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Revenue | $213,607 | $212,942 | | Total operating expenses | $205,700 | $206,446 | | Operating income | $7,907 | $6,496 | | Net income | $5,616 | $5,329 | | Net income attributable to Privia Health Group, Inc. | $5,398 | $5,414 | | EPS - basic and diluted | $0.06 | $0.06 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,476) | $(7,079) | | Net cash used in investing activities | $0 | $(13) | | Net cash (used in) provided by financing activities | $(219) | $10,000 | | Net (decrease) increase in cash | $(2,695) | $2,908 | | Cash at end of period | $81,938 | $49,797 | Notes to Condensed Consolidated Financial Statements Notes detail operations, accounting policies, the $212.0 million IPO, new accounting standards, revenue disaggregation, and share-based compensation modifications - On May 3, 2021, the company closed its IPO, generating gross proceeds of $223.7 million and net proceeds of $212.0 million[27] Disaggregated Revenue (in thousands) | Revenue Source | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | FFS-patient care | $169,578 | $174,870 | | FFS-administrative services | $15,411 | $14,555 | | Shared savings | $17,833 | $16,439 | | Care management fees (PMPM) | $8,570 | $6,230 | | Other revenue | $2,215 | $848 | | Total Revenue | $213,607 | $212,942 | - Contingent on the IPO, the company modified its stock option plan, expecting to recognize stock-based compensation of $189.5 million in Q2 2021 and an additional $95.0 million over the following 18 months[86] - Concurrent with the IPO, Anthem, Inc. purchased 4,000,000 shares for $92 million in a private placement[88] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A highlights flat Q1 2021 revenue of $213.6 million, 21.7% operating income growth, strong non-GAAP metrics, and robust liquidity post-IPO Overview Privia Health enables physician groups to transition to Value-Based Care using its platform, generating revenue from FFS and VBC models - Privia Health is a national physician-enablement company that helps medical groups, health plans, and health systems transition to Value-Based Care (VBC) reimbursement models[91] - The company's core business model involves organizing physicians into large regional Medical Groups, supported by the 'Privia Platform' and proprietary technology, to improve care quality and reduce costs[91][92] - Revenue is derived from three main sources: Fee-for-Service (FFS) patient care and administrative services, VBC payments (per-member-per-month fees and shared savings), and other services[94] Key Metrics and Non-GAAP Financial Measures Key Operating Metrics | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Implemented Providers (end of period) | 2,648 | 2,528 | | Attributed Lives (thousands, end of period) | 721 | 752 | | Practice Collections ($ millions) | $344.1 | $327.4 | Key Non-GAAP Financial Measures (in thousands) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Care Margin | $52,494 | $47,836 | | Platform Contribution | $25,532 | $20,275 | | Adjusted EBITDA | $9,947 | $7,055 | Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net income | $5,398 | $5,414 | | Net income (loss) attributable to non-controlling interests | $218 | $(85) | | Provision for income taxes | $2,000 | $700 | | Interest expense | $291 | $467 | | Depreciation and amortization | $445 | $338 | | Stock-based compensation | $101 | $121 | | Other expenses | $1,494 | $100 | | Adjusted EBITDA | $9,947 | $7,055 | Results of Operations Q1 2021 revenue grew 0.3% to $213.6 million, driven by VBC, while operating income rose 21.7% to $7.9 million despite increased G&A expenses - Total revenue increased by 0.3% to $213.6 million in Q1 2021, driven by growth in care management fees (+37.6%), shared savings (+8.5%), and administrative services (+5.9%), largely offset by a 3.0% decrease in FFS-patient care revenue due to COVID-19 related volume declines[149][150] - Total operating expenses decreased by 0.4% to $205.7 million; physician and practice expenses fell 2.4%, while G&A expenses rose 27.4% due to IPO preparation costs[148][153][156] - Operating income increased by 21.7% to $7.9 million for Q1 2021, up from $6.5 million in Q1 2020, due to controlled operating expenses despite flat revenue[148] - Provision for income taxes increased significantly to $2.0 million from $0.7 million, primarily because the company no longer has a valuation allowance against its deferred tax assets in 2021[159] Liquidity and Capital Resources The company reported $81.9 million cash as of March 31, 2021, bolstered by $212.0 million IPO proceeds, with improved operating cash flow and $33.9 million in term loans - As of March 31, 2021, the company had $81.9 million in cash and cash equivalents, supplemented by an additional $212.0 million in net proceeds from the IPO and Anthem private placement on May 3, 2021[161] - Total outstanding term loans were $33.9 million as of March 31, 2021, under a credit agreement that matures in November 2024[164] - Net cash used in operating activities improved to $2.5 million in Q1 2021 from $7.1 million in Q1 2020, driven by changes in working capital, including physician and practice liabilities[169] - Financing activities used $0.2 million in cash in Q1 2021 for debt repayment, compared to providing $10.0 million in Q1 2020 from a revolver draw in response to COVID-19[170] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate exposure on its floating-rate debt, with a 100 bps change impacting annual interest expense by $0.3 million - The company is exposed to interest rate risk through its loan agreement, which bears a floating interest rate; a 100 basis point (1%) change in market interest rates would result in a $0.3 million change to annual interest expense based on the $33.9 million debt outstanding at March 31, 2021[175] Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2021, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[177] - No material changes were made to the company's internal control over financial reporting during the first quarter of 2021[178] PART II - OTHER INFORMATION Legal Proceedings The company is involved in ordinary course legal proceedings, not expecting a material adverse effect on its financial condition - The company is involved in legal proceedings in the ordinary course of business but does not expect them to have a material adverse effect on its financial condition or results of operations[180] Risk Factors No material changes were reported to the risk factors previously disclosed in the company's Prospectus - No material changes were reported to the risk factors disclosed in the company's IPO Prospectus[181] Unregistered Sales of Equity Securities and Use of Proceeds The company completed its IPO and a private placement on May 3, 2021, generating approximately $212.0 million in net proceeds - The company completed its IPO on May 3, 2021, selling 5,725,000 shares of common stock[182] - Net proceeds from the IPO and the concurrent Anthem private placement were approximately $212.0 million after deducting $7.9 million in underwriters' discounts and $3.8 million in expenses[183] Exhibits This section lists exhibits filed with Form 10-Q, including corporate governance documents and incentive plans