Privia Health Group, Inc. Q4 FY2024 earnings call

• Privia had a strong 2024 with growth across all markets, exceeding the high end of guidance metrics. - Implemented providers grew 11.2% year-over-year, fee-for-service collections grew 13.6%. - Value-based results were better than expected despite challenges in Medicare Advantage. - Adjusted EBITDA was up 25.2%, free cash flow was $109.3 million (121% of adjusted EBITDA), and the company ended 2024 with $491 million in cash and no debt. - Strong provider retention (98%) and patient Net Promoter Score of 87. - Focus on provider growth, attribution growth in value-based arrangements, and operational improvements to drive EBITDA growth.

In 2024, Privia Health's practice collections increased 4.5% to $2.97 billion. Adjusted EBITDA grew 25.2% to $90.5 million. Implemented providers grew 11.2% year-over-year to 4,789, driving fee-for-service collections growth of 13.6%. Attributed lives increased more than 11% from the previous year, with commercial attributed lives up 15.2% to 782,000, and Medicare Advantage and Medicaid attribution both increasing almost 8%. Adjusted EBITDA represented 23.1% of care margin in the fourth quarter of 2024, a 420 basis point improvement from the prior year.

• 2025 guidance midpoint: Implemented providers expected to increase 9.6% to 5,250, attributed lives growth ~7.5%, practice collections growth ~7.8%, care margin growth 8.9%, adjusted EBITDA growth ~19%. - Guidance assumes minimal increase in shared savings accruals due to ongoing challenges in the Medicare Advantage environment. - Focus on provider growth, attribution growth in value-based arrangements, and operational improvements as core priorities.

• Headwinds in Medicare Advantage due to elevated utilization trends, phase-in of V28 through 2026, and changes in Star Scores. - Uncertainties in healthcare and regulatory environments that may impact financial and operating performance. - Risks associated with value-based care contracts and their performance, including potential deviations from expected results.

Q: Can you help us understand the leverage between sales and marketing and G&A in the OpEx line?

A: Parth Mehrotra noted that the scaling of the cost structure is seen, with no new market entry costs assumed in guidance, and operating leverage playing out nicely.

Q: Could you provide more color on the M&A pipeline?

A: Parth Mehrotra said Privia is looking at all transactions in the space, with a robust pipeline but being disciplined in pursuing opportunities.

Q: How do factors influencing the flatness in Shared Savings impact guidance?

A: Parth Mehrotra explained that prudence in shared savings assumptions is part of the guidance, with the only source of variability being the value-based book's performance versus accruals.

Q: What are the key variables moving EBITDA around in the guidance range?

A: Parth Mehrotra stated the only source of variability is the value-based book's performance versus accruals, with the guidance being narrow due to predictability of fee-for-service and consistency in accrual methodology.

Q: How has provider interest trended in the Care Partners program?

A: Parth Mehrotra said the Care Partners program is progressing well, with migration of providers onto the integrated stack planned over time.