• Implemented Providers Increase: 13.1% year-over-year growth.
• Adjusted EBITDA: Increased 25.8% to $23.6 million, with a margin of 23.3% of Care Margin.
• Medicare Shared Savings Program (MSSP) Shared Savings: $176.6 million, a 34.1% increase from 2022.
• Q3 Ending Cash Balance: Approximately $473 million with no debt.
• Practice Collections: Increased 2.3% year-over-year to $739.9 million in Q3.
• Attributed Lives: Total attributed lives increased 14% year-over-year.
• Free Cash Flow: Year-to-date free cash flow was $87 million, pro forma for net cash expected from CMS.
• 2024 Guidance: Raised to the high end of the initial range for all metrics.

• Warning! GuruFocus has detected 3 Warning Signs with CPIX.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Privia Health Group Inc (NASDAQ:PRVA) reported a 25.8% increase in adjusted EBITDA year-over-year, demonstrating strong operational leverage.
• The company achieved $176.6 million in shared savings through its Accountable Care Organizations, marking a 34.1% increase from the previous year.
• Privia Health Group Inc (NASDAQ:PRVA) has a robust cash position with approximately $473 million and no debt, providing significant financial flexibility.
• The company expanded into Indiana with a new partnership, continuing its strategic growth into new markets.
• Privia Health Group Inc (NASDAQ:PRVA) reported a high provider retention rate of over 98% and a Net Promoter Score of 85, indicating strong satisfaction among providers and patients.

Negative Points

• The company faces ongoing challenges in the Medicare Advantage environment, which could impact future growth.
• There are potential headwinds related to benchmark rebasing in the MSSP program, which could affect shared savings.
• Privia Health Group Inc (NASDAQ:PRVA) anticipates continued headwinds in the Medicare Advantage space through 2025 and 2026.
• The company has a cautious outlook on the impact of political changes on healthcare policies, which could affect its operations.
• Privia Health Group Inc (NASDAQ:PRVA) acknowledges the variability in new market entry costs, which could impact EBITDA growth in certain years.

Q & A Highlights

Q: Can you provide more details about the Indiana expansion and the anchor practice? Will it take longer to scale given the smaller starting footprint? A: Parth Mehrotra, CEO: The entry into Indiana is consistent with how we've entered other states like Washington and Georgia. We can start with any size of anchor partner, and we see a big opportunity in Indiana with many independent providers needing a solution like Privia.

Q: As you look ahead to 2025, what are some headwinds and tailwinds to consider for modeling? A: Parth Mehrotra, CEO: While we won't provide 2025 guidance yet, our business metrics are very predictable. Key headwinds include potential misjudgment of our value-based care book, but we mitigate this with over 100 diversified programs. Our strategy remains consistent, targeting 20% EBITDA growth.

Q: You raised the free cash flow conversion from 80% to 90%. Is this due to outperformance in 2023 MSSP results? A: Parth Mehrotra, CEO: The higher free cash flow reflects broad-based outperformance across all lines of business. Our adjusted EBITDA is towards the high end, and we have effectively zero CapEx, which flows straight down to cash flow.

Q: What are the key topics or problems potential physician partners discuss when considering joining Privia? A: Parth Mehrotra, CEO: Our value proposition remains consistent, validated by our results. We offer a unique model that keeps groups independent while supporting them across all lines of business. Our strong performance leads to high conversion rates and referrals from existing physician groups.

Q: Can you discuss your approach with the new partnership in Indiana compared to previous ones? A: Parth Mehrotra, CEO: Our strategy remains the same. We acquired the tax ID and will own 100% of the medical group, ACO, and MSO entities. Implementation is expected early next year. We continue to be aggressive with business development, leveraging our strong cash balance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.