Privia Health Group, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing, not a standalone fourth-quarter report; the figures below are full-year unless otherwise stated.
Business context
Privia is a technology-enabled physician-enablement company. It supports medical groups with practice management, revenue-cycle services, technology and value-based care (VBC) programs. Revenue comes from fee-for-service (FFS) patient care and administrative services, VBC arrangements—including capitation, shared savings and care-management fees—and other services.
At year-end, Privia reported 3,606 implemented providers, 856,000 attributed lives and more than 950 care-center locations. Its network operated across ten markets in nine states and the District of Columbia.
Financial performance and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $1,356.7 million | $966.2 million |
| Operating loss | $19.1 million | $217.4 million |
| Net loss attributable to Privia | $8.6 million | $188.2 million |
| Operating cash flow | $47.2 million | $55.1 million |
| Cash and cash equivalents at year-end | $348.0 million | $320.6 million |
| Term loan outstanding at year-end | $0 | $33.3 million |
- Revenue increased 40.4%. The largest new component was $218.5 million of at-risk capitated revenue, which began in the first quarter of 2022. FFS patient-care revenue rose 12.5% to $869.2 million; shared-savings revenue rose 59.7% to $132.6 million.
- Provider expense increased 44.4% to $1.05 billion, primarily reflecting the new capitation arrangements and higher patient-care activity. At-risk capitation is reported gross, with Privia responsible for the cost of covered care.
- Care Margin, a company-defined non-GAAP measure, was $305.6 million, or 22.5% of revenue, versus $238.4 million, or 24.7%, in 2021. Privia attributed the lower percentage to the addition of gross-reported capitation revenue.
- Platform Contribution was $148.5 million; Platform Contribution Margin was 48.6%, compared with 45.1% in 2021. Adjusted EBITDA was $60.9 million, with an Adjusted EBITDA Margin of 19.9% versus 17.4%. These are non-GAAP measures and should be read with their filing definitions and reconciliations.
- Operating cash flow was positive but declined year over year, partly reflecting higher accounts receivable associated with growth and capitation. Cash was $348.0 million; current assets were $552.0 million and current liabilities were $264.3 million.
- Privia repaid its term loan in June 2022 using cash on hand. Its $65 million revolving facility remained available, with no borrowings outstanding at year-end. The filing reports no material off-balance-sheet arrangements.
Material changes versus the prior year
- Revenue rose 40.4%, while attributed lives increased 8.9% to 856,000 and implemented providers increased 8.7% to 3,606.
- VBC revenue reached 28.5% of total revenue, up from 12.4% in 2021, largely because of the new at-risk capitation business. FFS patient-care revenue’s share of total revenue correspondingly declined.
- The net loss narrowed substantially from 2021, when Privia recorded $253.5 million of stock-based compensation, primarily from changes to option vesting terms around its IPO. Stock-based compensation was $67.4 million in 2022.
- Privia added Montana and North Carolina market operations and expanded its ACO footprint. Five of its ten ACOs were participating in the MSSP Enhanced Track by early 2023.
Outlook, commentary, risks and unusual items
- Outlook: The filing provides no specific numerical revenue, earnings or cash-flow guidance. Management expects VBC revenue to grow as attributed lives and assumed risk increase, and describes continued investment in growth, technology and clinical operations.
- Capitation and claims: As of January 1, 2023, capitated arrangements covered approximately 40,600 Medicare Advantage beneficiaries. Privia bears the cost risk for covered services. The year-end liability for unpaid medical claims under at-risk capitation was $28.6 million; estimates rely on actuarial assumptions and are a critical audit matter.
- Accounting and unusual items: The 2021 comparison includes unusually high IPO-related stock-based compensation. In 2022, Privia changed its Adjusted EBITDA definition to exclude employer taxes on equity vesting and exercises. CARES Act Provider Relief Fund revenue was $0.8 million in 2021 and none in 2022.
- Key risks: The company highlights extensive and evolving healthcare regulation, including corporate-practice-of-medicine, fee-splitting, fraud-and-abuse, privacy and risk-bearing rules; dependence on medical-group and physician relationships; payer reimbursement, attribution and medical-cost estimates; competition and expansion execution; cybersecurity and reliance on athenahealth’s EMR; and labor-cost pressures.
- Concentration and contingencies: Six payers represented approximately 75% of collections in each of 2020–2022 and 67% of accounts receivable at year-end 2022. Privia said current legal proceedings were not reasonably likely to have a material adverse effect and reported no material commitments or contingencies at year-end.
- Controls and audit: Management and the independent auditor concluded internal control over financial reporting was effective as of December 31, 2022. The auditor identified FFS accounts-receivable valuation and the capitation claims liability estimate as critical audit matters.
Important facts for investors to verify
- How much of reported revenue growth and future growth depends on gross-reported at-risk capitation, and how its medical costs affect margins and cash conversion.
- Whether capitation claims estimates, including the $28.6 million unpaid-claims liability, develop in line with actual claims and utilization.
- Whether the increase in accounts receivable and lower operating cash flow relative to 2021 reverse as collections and payer settlements catch up.
- How durable shared-savings performance and attributed-life growth are, and what financial exposure follows from the MSSP Enhanced Track’s downside risk.
- Whether provider growth, new-market launches and the 40,600 capitated Medicare Advantage beneficiaries translate into sustainable GAAP profitability—not only growth in non-GAAP measures.
- Whether payer concentration, reimbursement changes, regulatory scrutiny and dependence on athenahealth create material changes to operating or financial performance.