Privia Health achieves profitable growth in Q2, expanding into Washington, its 13th state. The physician enablement company’s second-quarter revenue jumps 23% to $413.4 million, and it adds former UnitedHealth Group CEO and other notable figures to its board. Despite challenges, Privia Health remains optimistic and raises 2023 guidance metrics. Analysts expect the company’s scalable business model and positive macro tailwinds to drive future expansion and position it as a top technology-enabled healthcare services name.
Privia Health, a leading physician enablement company, continued its profitable growth trajectory in the second quarter by expanding its provider network into Washington, making it its 13th state of operation.
The company recently announced a strategic agreement with Walla Walla Clinic, a multi-specialty practice with over 50 providers offering healthcare services across three locations. This move marks Privia Health’s second venture into the West Coast market, following its successful entry into California. Over the past year, Privia Health has been rapidly expanding its footprint, establishing partnerships to enter states like Connecticut, Delaware, North Carolina, and Ohio.
Walla Walla Clinic will serve as the newest anchor group for Privia Health as it seeks further expansion in the state.
During the company’s second-quarter earnings call, Privia Health CEO Parth Mehrotra highlighted the company’s nationwide growth, boasting close to 3,900 implemented providers in their medical groups, catering to more than 4.4 million patients across more than 1,000 care center locations. Mehrotra emphasized the significance of their scale and diverse provider and payer partnerships as essential differentiators, aiming to create one of the country’s largest multi-specialty medical groups and ambulatory care delivery networks, aimed at improving patient outcomes and reducing healthcare costs.
Privia Health has surpassed its growth plans for adding new providers, outperforming expectations set when it went public in 2021. The company reported net income of $7.3 million, or six cents per share, in the second quarter, compared to a loss of $10.5 million, or a loss of 10 cents per share, the previous year. Furthermore, their second-quarter revenue surged by 23% to $413.4 million from $335.5 million in the corresponding period last year.
These results surpassed Wall Street expectations, with analysts forecasting earnings of five cents per share during the quarter. In contrast to the market downturn experienced by many digital health companies, Privia Health demonstrated resilience, witnessing a stock increase of approximately 18.5% since the start of the year, outperforming the S&P 500’s gain of 17.6%.
Notably, Privia Health has added two influential members, former UnitedHealth Group CEO David Wichmann and Pamela Kimmet, Chief Human Resources Officer at Manulife, to its board. Adam Boehler, Managing Partner of Rubicon Founders, also joined the board recently.
Privia Health, headquartered in Arlington, Virginia, was founded in 2007 and experienced significant growth after its initial practice went live in 2013, culminating in a successful IPO in the spring of 2021. The company currently collaborates with over 3,870 providers across more than 1,000 practice locations, providing care to over 4.4 million patients.
The company’s commitment to value-based care arrangements resulted in approximately 1.1 million attributed lives covered under its value-based care contracts, marking a 27% increase from the previous year. In Q2, Privia’s practice collections increased by over 14% year over year, reaching $700 million.
For the second quarter, Privia Health’s adjusted EBITDA rose to $19.3 million, a 24% increase from the same period in 2022 when it was at $15.5 million.
Despite its impressive performance, Privia Health faced challenges in the first quarter due to a contract pause with a health insurer, resulting in a loss of about 9,000 capitated lives. However, the company remains optimistic about its future performance, raising its 2023 guidance metrics to the mid to high end of its initial ranges.
Looking ahead, Privia Health projects its provider network to surpass 4,100 by the end of the year, with full-year revenue expected to be in the range of $1.55 billion to $1.65 billion. The company anticipates adjusted EBITDA for the year to fall between $70 million and $74 million.
Overall, Privia Health is well-positioned to thrive in the fee-for-service healthcare landscape, while also embracing opportunities to assist provider partners in transitioning to value-based care business models. Industry analysts, like Ryan Daniels from William Blair, express confidence in Privia Health’s future growth prospects, considering their favorable macroeconomic conditions, various growth drivers, and scalable business model, making Privia Health a top pick among technology-enabled healthcare services companies.