Privia Health Reports Fourth Quarter 2021 Financial Results

• FY 2021 Financial Results Above High End of Guidance
• FY 2022 Guidance Highlights Practice Collections Growth of 30.7% at Midpoint
• Entries into California, Montana and West Texas help to Accelerate 2022 Growth
• Launches Three New ACOs; Four Existing ACOs participating in MSSP Enhanced Track
• Enters Two New Capitated Arrangements with Potential Upside and Downside Risk
• Jeff Sherman Resigns as CFO; David Mountcastle Reappointed CFO
• Conference Call Moved to Wednesday, March 23, 2022, at 8:30 am ET

ARLINGTON, Va., March 22, 2022 (GLOBE NEWSWIRE) — Privia Health Group, Inc. (Nasdaq: PRVA) today announced financial and operating results for the fourth quarter and full year ended December 31, 2021.

“Our exceptional operating execution throughout 2021 generated excellent fourth quarter and full-year financial performance, with practice collections, care margin and adjusted EBITDA all beating the high end of our most recent full-year financial guidance,” said Shawn Morris, Chief Executive Officer, Privia Health. “In addition, with 30.1% growth in implemented providers and a 15.2% increase in attributed lives across a number of value-based reimbursement programs, our outlook highlights our continued momentum into 2022.

“Privia Health’s highly-aligned provider partnership model and our recent successes have created opportunities to enter new markets, grow within our existing practice partners and expand our number of new provider partners in existing geographies. These efforts and achievements are expected to drive an acceleration of top-line growth and increasing profitability in 2022 as we continue to invest in our operations, talent and technology capabilities to support this growth,” Morris added.

Fourth Quarter
Total revenue for the fourth quarter of 2021 was $275.3 million, compared to total revenue of $213.7 million for the prior year fourth quarter (+28.8%). Operating loss for the fourth quarter of 2021 was $19.3 million, compared to operating income of $4.2 million for the prior year fourth quarter. Net loss for the fourth quarter of 2021 was $12.0 million, or a loss of $0.11 per share, compared to net income of $3.9 million, or $0.04 per share, for the fourth quarter of 2020. Net loss for the fourth quarter of 2021 included $25.1 million in non-cash stock compensation expense and $0.7 million in other non-recurring expenses.

Non-GAAP adjusted net income was $7.0 million, or $0.06 per diluted share, for the fourth quarter of 2021, compared to $5.7 million, or $0.06 per diluted share, for the prior year fourth quarter (+22.8%).

Reconciliation of net (loss) income to adjusted net income, as well as other non-GAAP reconciliations, are presented in tables near the end of this press release.

Key operating and non-GAAP financial metrics include:

• Practice Collections for the fourth quarter of 2021 were $513.2 million, compared to $352.1 million for the same period in 2020 (+45.8%).
• Care Margin for the fourth quarter of 2021 was $68.6 million, compared to $51.3 million for the same period in 2020 (+33.8%).
• Platform Contribution for the fourth quarter of 2021 was $27.8 million, compared to $23.4 million for the same period in 2020 (+18.8%).
• Adjusted EBITDA for the fourth quarter of 2021 was $7.5 million, compared to $6.4 million for the same period in 2020 (+18.2%).
• Implemented Providers for the fourth quarter of 2021 were 3,317, compared to 2,550 at the end of the fourth quarter of 2020 (+30.1%).
• Value-Based Care Attributed Lives for the fourth quarter of 2021 were 786,000, compared to 682,000 at the end of the fourth quarter of 2020 (+15.2%).

Full Year

Total revenue for the full year ended December 31, 2021 was $966.2 million, compared to total revenue of $817.1 million for the same period in the prior year (+18.3%). Operating loss for full-year 2021 was $217.4 million, compared to operating income of $25.4 million for the same period in the prior year. Net loss for full-year 2021 was $188.2 million, or a loss of $1.83 per share, compared to net income of $31.2 million, or $0.33 per share, for the same period in 2020. Net loss for full-year 2021 included $253.5 million in non-cash stock compensation expense and $2.8 million in other non-recurring expenses.

Non-GAAP adjusted net income was $41.6 million or $0.36 per diluted share, compared to $26.6 million, or $0.28 per diluted share, for the same period in the prior year (+56.4%).

Key operating and non-GAAP financial metrics include:

• Practice Collections for full-year 2021 were $1.63 billion, compared to $1.30 billion for the same period in the prior year (+25.0%).
• Care Margin was $238.4 million, compared to $187.6 million for full-year 2020 (+27.1%).
• Platform Contribution for full-year 2021 was $107.6 million, compared to $82.6 million for the same period in the prior year (+30.2%).
• Adjusted EBITDA was $41.4 million, compared to $29.4 million for full-year 2020 (+40.9%).

Capital Resources and Cash Flow

The Company’s balance sheet at December 31, 2021 included $320.6 million of cash and cash equivalents and $33.3 million in outstanding bank debt, compared to cash and cash equivalents of $84.6 million and outstanding bank debt of $34.1 million at December 31, 2020.

Net cash provided by operating activities for the twelve months ended December 31, 2021 was $55.1 million compared to $38.9 million in the prior year (+41.6%). Capital expenditures, which comprise the purchase of property and equipment, were $0.5 million for the twelve months ended December 31, 2021, compared to $0.4 million in the prior year.

New Market Entries

In February, the Company announced a partnership with Surgery Partners (Nasdaq: SGRY) for Privia Health to enter the State of Montana with Great Falls Clinic, a multi-specialty practice with approximately 65 providers spanning 24 specialties. A wholly owned subsidiary of Surgery Partners, Great Falls Clinic will serve as Privia Health’s anchor practice in the state. Privia Health will also provide performance operations services and technology capabilities to Great Falls Clinic as well as to new providers in Montana who join the Privia Platform.

This follows the Company’s October 2021 California market entry with BASS Medical Group, a multi-specialty group with 400+ providers. In the fourth quarter, the Company also launched Privia Medical Group – West Texas with Abilene Diagnostic Clinic, a multi-specialty group practice with more than 30 providers.

These partnerships demonstrate Privia Health’s ability to replicate its operating model with medical groups in uniquely differentiated geographies as the Company executes on its vision to build scaled provider networks nationwide and enable providers to transition profitably to increased risk in value-based programs over time.

New and Existing ACO Participation in MSSP

Privia Health launched three new Accountable Care Organizations (ACOs) in Maryland, Florida and Tennessee, with each participating in the Medicare Shared Savings Program (MSSP). This expands the Privia-owned ACOs to seven, including ACOs in Georgia, Gulf Coast Texas, North Texas and Virginia.

Effective January 1, 2022, Privia ACOs now include 1,900+ independent providers caring for 168,000+ Medicare beneficiaries. Four of the seven ACOs are now participating in the MSSP Enhanced Track with substantial, potential upside and downside financial risk, up from one ACO in the 2021 performance year.

New Capitated Agreements

Privia Health’s ACOs in Florida and the Mid-Atlantic region entered into its first capitated arrangements covering approximately 23,000 Medicare Advantage (MA) beneficiaries effective January 1, 2022.

CFO Departure and Appointment

Privia Health also announced that Jeff Sherman resigned from his position as Executive Vice President and Chief Financial Officer to pursue other opportunities. Mr. Sherman joined the Company on January 5, 2022, and his departure is not a result of any disagreements with Privia Health relating to its operations, policies or practices, or any issues regarding its accounting policies or practices. Subsequently, Privia Health reappointed David Mountcastle Chief Financial Officer. Mr. Mountcastle joined the Company in 2014 as Chief Financial Officer.

Financial and Business Outlook ^{a b c d}

Privia Health’s full-year 2022 guidance, as outlined below, reflects management’s expected contribution from existing market growth, recent entries into the California, Montana and West Texas markets, new capitated agreements, estimated new market entry and development costs as well as other operational, technology and workforce investments to support current and future growth.

• 2022 guidance includes only previously announced new market entries.
• Adjusted EBITDA guidance includes approximately $4-6 million in spending/costs to invest in and support recent new market entry and value-based care initiatives.
• Capital expenditures expected to be less than $1 million in full-year 2022.

1. Management has not reconciled forward-looking non-GAAP measures to their most directly comparable GAAP measures of operating income and net income. This is because the Company cannot predict with reasonable certainty and without unreasonable efforts the ultimate outcome of certain GAAP components of such reconciliations due to market-related assumptions that are not within our control as well as certain legal or advisory costs, tax costs or other costs that may arise. For these reasons, management is unable to assess the probable significance of the unavailable information, which could materially impact the amount of the future directly comparable GAAP measures.
2. See “Key Metrics and Non-GAAP Financial Measures” for more information as to how the Company defines and calculates Implemented Providers, Attributed Lives, Practice Collections, Care Margin, Platform Contribution, and Adjusted EBITDA, and for a reconciliation of the most comparable GAAP measures to Care Margin, Platform Contribution, Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income Per Share.

   Certain non-recurring or non-cash expenses will be treated as an add back in the reconciliation of Net Income to Adjusted EBITDA, and the reconciliation of Net Income to Adjusted Net Income and Adjusted Net Income Per Share, the details of which can be found in the Reconciliation schedules near the end of this and in future quarterly financial press releases.
3. Adjusted EBITDA guidance does not add back actual or estimated new market entry and development costs.
4. Any slight variations in totals due to rounding.

Webcast and Conference Call Information

The Company will host a conference call on March 23, 2022, at 8:30 am ET / 7:30 am CT to discuss these results and management’s outlook for future financial and operational performance. The conference call can be accessed via webcast at ir.priviahealth.com/news-and-events/events-and-presentations or by dialing 855-940-5315 (929-517-0419 for international participants), and referencing participant code 4491575. The conference call was previously scheduled for March 25, 2022, and will no longer be held at that time.

The webcast will be archived and available for replay for on-demand listening shortly after the completion of the call at ir.priviahealth.com/news-and-events/events-and-presentations. 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; and our future operating or financial performance and projections, including our full year guidance for 2022. 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; 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, “Risk Factors” in the Company’s final prospectus dated November 18, 2021, filed with the SEC on November 22, 2021, and the Company’s other public filings.

Contact:
Robert Borchert
SVP, Investor & Corporate Communications
[email protected]
817.783.4841

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.