Privia Health Group, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022; unaudited consolidated results. Privia is a physician-enablement and practice-management company operating in nine U.S. markets, with fee-for-service (FFS) and value-based care (VBC) revenue.
Financial performance
Amounts below are in millions except per-share data. Comparisons are with the corresponding 2021 period.
| Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 |
|---|---|---|---|---|
| Revenue | $335.5 | $225.8 | $649.3 | $439.4 |
| Operating loss | $(5.3) | $(193.2) | $(16.8) | $(185.3) |
| Net loss attributable to Privia | $(10.5) | $(172.5) | $(28.0) | $(167.1) |
| EPS, basic and diluted | $(0.10) | $(1.68) | $(0.26) | $(1.68) |
| Adjusted EBITDA (non-GAAP) | $15.5 | $10.0 | $30.3 | $20.0 |
| Care Margin (non-GAAP) | $76.2 | $55.8 | $147.8 | $108.3 |
| Platform Contribution (non-GAAP) | $37.5 | $23.1 | $72.5 | $48.7 |
- Revenue grew 48.6% in Q2 and 47.8% in H1. H1 revenue mix included $415.6 million FFS patient care, $46.6 million FFS administrative services, $106.1 million capitation, $60.1 million shared savings and $18.3 million care management fees.
- Care Margin was 22.7% of revenue in Q2 and 22.8% in H1, down from 24.7% in both prior-year periods, which management attributed to the addition of at-risk capitation arrangements. Platform Contribution Margin improved to 49.2% in Q2 and 49.0% in H1; Adjusted EBITDA Margin was 20.4% and 20.5%, respectively.
- H1 operating cash flow was $1.9 million, versus $4.7 million in H1 2021. Capital spending was $0.1 million. Cash declined $28.4 million to $292.2 million, mainly reflecting $33.1 million used to repay the term loan.
- At June 30, cash was $292.2 million; current assets were $521.3 million and current liabilities $265.1 million. Total debt was zero after repayment of the term loan; the $65 million revolving facility remained available. Provider liability was $221.9 million, up from $140.7 million at year-end.
Changes, outlook and notable items
- Growth reflected provider and market expansion, higher visit volumes as pandemic restrictions eased, increased shared savings, and new at-risk capitation contracts. Capitation revenue was $57.7 million in Q2 and $106.1 million in H1, following arrangements covering approximately 23,000 Medicare Advantage beneficiaries launched January 1, 2022.
- Implemented Providers increased 31.5% year over year to 3,541; Attributed Lives rose 15.8% to 856,000. Practice Collections, a non-GAAP operating metric, grew 67.6% in Q2 and 65.5% in H1.
- Reported losses improved sharply versus 2021, but comparisons were affected by unusually large 2021 IPO-related stock compensation expense: $202.6 million in Q2 2021 versus $18.5 million in Q2 2022. H1 stock compensation was $43.4 million versus $202.7 million.
- The company recorded income-tax provisions of $5.5 million in Q2 and $11.8 million in H1 despite pre-tax losses; management cited non-deductible IPO-related stock compensation and stock-option exercise tax effects.
- Management said available cash, expected operating cash flows and revolving capacity should fund short- and long-term needs. It expects VBC revenue to rise as a share of revenue with growth in attributed lives and risk-bearing arrangements; no specific numerical financial guidance is provided in the supplied filing text.
- At-risk arrangements expose the company to medical-cost and claims-estimation risk. H1 capitation incurred health-care costs were $106.1 million; $72.0 million was paid, leaving $34.0 million in unpaid capitation claims. Revenue is subject to risk-adjustment and quality incentives or penalties.
- Six payers accounted for approximately 74% of payments for healthcare services and 69% of accounts receivable at June 30. The company also cited healthcare regulation, medical-group relationships, competition, technology and EMR-vendor dependence, privacy/security, workforce costs, and market expansion as risks. It reported no material changes to the risk factors in its 2021 Form 10-K and no material commitments or contingencies; ordinary-course legal matters were not expected to have a material adverse effect.
Investor verification priorities
- Track capitation claims costs, provider-liability adequacy and medical-cost experience as at-risk exposure expands.
- Assess collections and receivable quality, including payer concentration and the significant H1 increase in accounts receivable to $213.9 million from $117.4 million at year-end.
- Separate underlying operating trends from stock-based compensation and other non-GAAP adjustments; review reconciliations and definitions of Care Margin, Platform Contribution and Adjusted EBITDA.
- Monitor VBC growth, attributed lives and provider additions alongside Care Margin percentage, which declined as capitation revenue grew.
- Confirm liquidity and covenant terms if the revolving facility is drawn, and assess the consequences of collateral securing the credit arrangements.