Privia Health (US:PRVA)2023-03-03 20:39Financial Data and Key Metrics Changes - Privia Health reported a 49.1% increase in Practice Collections for 2022, reaching over $2.4 billion, with adjusted EBITDA growing 47.1% to $60.9 million [13][30][36] - The care margin increased by 28.2%, reflecting strong operational performance [13] - For 2023, Practice Collections are expected to grow by 14.5% to over $2.7 billion, with adjusted EBITDA projected to increase by 18.3% [37] Business Line Data and Key Metrics Changes - Total value-based care revenue comprised 28.5% of total GAAP revenue in 2022, up from 12.4% the previous year, indicating a significant shift towards value-based arrangements [35] - The number of Implemented Providers increased by 8.7% year-over-year to 3,606, with a strong sales pipeline for new providers [34][30] - The company added over 11,000 capitated lives in 2023, bringing the total to over 40,000, a 38% increase from year-end 2022 [11][37] Market Data and Key Metrics Changes - Privia Health expanded into four new states: North Carolina, Ohio, Connecticut, and Delaware, significantly increasing its addressable market [10][9] - The company now operates in 12 states and the District of Columbia, with over 4 million patients cared for across 950 locations [40] - The entry into new markets is expected to contribute to future growth, although initial contributions from these states are limited [77] Company Strategy and Development Direction - The company aims to build one of the largest care delivery networks in the nation, focusing on expanding its provider partnerships and attributed lives in at-risk value-based arrangements [10][9] - Privia Health's operating model allows for partnerships with various types of providers, enhancing its ability to offer solutions across all specialties [19] - The strategy includes a balanced approach across Commercial, Medicare, and Medicaid contracts, with a focus on transitioning providers to value-based care arrangements [20][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving long-term targets of 20% growth in Practice Collections and 30% growth in adjusted EBITDA annually [37][39] - The company is focused on improving patient outcomes and lowering costs through its capitated agreements, which are still in early stages [14] - Management highlighted the importance of a disciplined approach to risk adjustment and compliance, indicating that the RADV program is not expected to have a material impact on the company [50] Other Important Information - The company maintains a strong balance sheet with $348 million in cash and no debt, with free cash flow for 2022 reported at $47.1 million [36] - Adjusted EBITDA guidance for 2023 includes $8 million to $10 million in investments for new market entries, indicating a commitment to long-term growth despite initial costs [16][80] Q&A Session Summary Question: What is included in the guidance for the new markets? - Management confirmed that attributed lives in Connecticut and Delaware are included in the guidance, although there are no implemented providers in those states yet [51][52] Question: How does the company plan to convert Privia Care Partners providers to fully implemented providers? - Management indicated that converting Privia Care Partners providers to the full stack is a high priority, with internal targets set for this transition [58] Question: What is the expected impact of the RADV program? - Management believes that the diversity of revenue mitigates risks associated with the RADV program, and they do not expect it to have a significant impact [26][50] Question: How does the company view the profitability of Medicare Advantage compared to MSSP? - Management noted that Medicare Advantage has the potential to be more profitable than MSSP, but timing for achieving similar contributions will vary [112] Question: What is the strategy for entering new markets? - The strategy remains consistent across states, focusing on establishing medical groups, risk entities, and service platforms to support growth [71][85]