Privia Health (US:PRVA)2024-02-27 15:40Financial Data and Key Metrics Changes - Privia Health reported a 19.2% year-over-year increase in Practice Collections for Q4 2023, reaching $757 million [23] - Full-year Practice Collections grew 17.1% to $2.84 billion, while Care Margin increased by 17.5% [24] - Adjusted EBITDA for Q4 2023 grew 21.1% to $17.3 million, and for the full year, it increased by 18.7% to $72.2 million [23][24] Business Line Data and Key Metrics Changes - The company added 200 implemented providers in Q4 2023, totaling 4,305 implemented providers, a 19.4% increase year-over-year [23] - The growth in more mature markets contributed to a significant outperformance in Platform Contribution, validating strong unit economics [12] Market Data and Key Metrics Changes - As of January 1, 2024, Privia serves 1.13 million attributed lives across over 100 at-risk payer contracts, a 32% increase from year-end 2022 [18] - Commercial attributed lives increased by more than 36% to 678,000, with 69% in upside-only arrangements [18] Company Strategy and Development Direction - The company plans to focus on organic provider growth, limit downside risk arrangements, and drive operating leverage for adjusted EBITDA growth in 2024 [26][29] - Privia aims to invest $10 million to $12 million in platform costs in 2024 to support growth in newer markets [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the current environment does not support overextension into downside risk or capitation arrangements, emphasizing a prudent approach to managing risk [13][14] - The company expects to see normalization in the MA market post-2024, allowing for a return to more capitated relationships [46] Other Important Information - Privia ended 2023 with approximately $390 million in cash and no debt, with free cash flow exceeding $81 million [25] - The company is exiting the Delaware ACO effective January 1, 2024, due to negative contribution margin expectations [7] Q&A Session Summary Question: Can you talk about the negotiations with payers around taking risk? - Management explained that they have built a model that can take risk in various forms and that payers are understanding of the need to adjust risk levels based on utilization trends [32][34] Question: How should we think about provider growth and attributed lives growth for 2024? - Management indicated that they aim to add 400 to 500 new implemented providers annually and that they expect to maintain strong growth in EBITDA despite current market challenges [38][40] Question: Can you clarify the minimal increase in shared savings for 2024? - Management attributed the minimal increase to current utilization trends and indicated that they expect normalization in the MA market after 2024 [44][46] Question: What are the new market entry costs expected in 2024? - Management noted that the majority of the $10 million to $12 million in costs are related to platform support for new providers in states like Connecticut and South Carolina [65] Question: Can you discuss the exit from Delaware and its impact? - Management clarified that exiting Delaware was an economic decision due to expected negative margins and that it would prevent further losses [61][66]