Privia Health Group, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2023. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our internal control over financial reporting as of December 31, 2023. In assessing the effectiveness of our internal control over financial reporting, our management used the framework established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2023. The effectiveness of our internal control over financial reporting as of December 31, 2023, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which can be found under Part IV of this Annual Report on Form 10-K. Changes to our Internal Controls over Financial Reporting 84 Table of Contents There were no changes made to the Company’s internal control over financial reporting during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Inherent Limitation on the Effectiveness of Controls The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, in designing and evaluating the disclosure controls and procedures, management recognizes that any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting. ITEM 9B. OTHER INFORMATION No officers or directors of the Company adopted , modified or terminated any trading plan during the fourth quarter of 2023. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENT INSPECTIONS. Not Applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE We adopted a written Code of Ethics and business conduct that applies to our directors, executive officers and employees, including our Chief Executive Officer, President and Chief Operating Officer, General Counsel, Chief Financial Officer, principal accounting officer, the controller and all persons performing similar functions. A current copy of the code is posted under “Governance” on the Investor Relations section of our website, our website, ir.priviahealth.com. Any waiver from the Code of Ethics and any amendments to the Code of Ethics will be disclosed on such page of the Company’s website. The information required by this item will be set forth in the definitive proxy statement to be filed with the SEC in connection with the Annual Meeting of Stockholders within 120 days after December 31, 2023 (the “Proxy Statement”) and is incorporated into this Annual Report on Form 10-K by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by this item will be set forth in the Proxy Statement and is incorporated into this Annual Report on Form 10-K by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item will be set forth in the Proxy Statement and is incorporated into this Annual Report on Form 10-K by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item will be set forth in the Proxy Statement and is incorporated into this Annual Report on Form 10-K by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this item will be set forth in the Proxy Statement and is incorporated into this Annual Report on Form 10-K by reference. PART IV ITEM 15. Exhibits, Financial Statement Schedules. (a) The following documents are filed as part of the Annual Report on Form 10- K: 1. Financial Statements: The accompanying Index to Consolidated Financial Statements on page F-1 of this annual report on Form 10-K is provided in response to this item. 2. Financial Statement Schedules 85 Table of Contents None. (b) Exhibits The exhibits listed in the following “Exhibit Index” are filed, furnished or incorporated by reference as part of this Annual Report on Form 10-K 86 Table of Contents ITEM 15. EXHIBITS Exhibit Number Description Form Exhibit File No. Filing Date Filed Herewith 3.1+ Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form S-1 (File No. 333-255086), filed with the SEC on April 7, 2021) S-1 3.1 333-255086 04/07/2021 3.2+ Third Amended and Restated Bylaws of Privia Health Group, Inc., adopted and in effect as of August 1, 2023 (incorporated herein by reference to Exhibit 3.1 to the registrant's Current Report on Form 8-K (File No. 001-40365), filed with the SEC on July 31, 2023 8-K 3.1 001-40365 07/31/2023 4.1+ Form of Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the registrant’s Registration Statement on Form S-1 (File No. 333-255086), filed with the SEC on April 7, 2021) S-1 4.1 333-255086 04/07/2021 4.2+ Description of Capital Stock 10-K 4.2 227-68304 03/25/2022 10.1+ § 2021 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the registrant’s Registration Statement on Form S-1 (File No. 333-255086), filed with the SEC on April 7, 2021) S-1 10.1 333-255086 04/07/2021 10.2+ § Employment Agreement between Privia Health Group, Inc. and Shawn Morris, dated April 13, 2018 (incorporated herein by reference to Exhibit 10.2 to the registrant’s Registration Statement on Form S-1 (File No. 333-255086), filed with the SEC on April 7, 2021) S-1 10.2 333-255086 04/07/2021 10.3+ § Employment Agreement first amendment between Privia Health Group, Inc. and Shawn Morris, dated April 23, 2019 10-Q 10.1 221-155713 08/11/2022 10.4+ § Employment Agreement second amendment between Privia Health Group, Inc. and Shawn Morris, dated April 1, 2020 10-Q 10.2 221-155713 08/11/2022 10.5+ § Employment Agreement third amendment between Privia Health Group, Inc. and Shawn Morris, dated August 10, 2022 10-Q 10.3 221-155713 08/11/2022 10.6+ § Employment Agreement between Privia Health Group, Inc. and Parth Mehrotra, dated January 1, 2018 (incorporated herein by reference to Exhibit 10.3 to the registrant’s Registration Statement on Form S-1 (File No. 333-255086), filed with the SEC on April 7, 2021) S-1 10.3 333-255086 04/07/2021 10.7+ § Employment Agreement first amendment between Privia Health Group, Inc. and Parth Mehrotra, dated April 1, 2020 10-Q 10.4 221-155713 08/11/2022 10.8+ § Annual Merit Increase and Bonus Payment Memo for Parth Mehrotra dated March 12, 2021 10-K 10.4 227-68304 03/25/2022 10.9+ § Employment Agreement second amendment between Privia Health Group, Inc. and Parth Mehrotra, dated April 16, 2021 10-Q 10.5 221-155713 08/11/2022 10.10+ § Employment Agreement third amendment between Privia Health Group, Inc. and Parth Mehrotra, dated August 10, 2022 10-Q 10.6 221-155713 08/11/2022 10.11+ § Employment Agreement between Privia Health Group, Inc. and Thomas Bartrum, dated February 25, 2019 (incorporated herein by reference to Exhibit 10.4 to the registrant’s Registration Statement on Form S-1 (File No. 333-255086), filed with the SEC on April 7, 2021) S-1 10.4+ 333-255086 04/07/2021 10.12+ § Employment Agreement, between Privia Health Group, Inc. and David Mountcastle dated as of March 21, 2022. 8-K 10.2 001-40365 03/22/2022 10.13+ § Employment Agreement first amendment between Privia Health Group, Inc. and David Mountcastle, dated August 10, 2022 10-Q 10.7 221-155713 08/11/2022 10.14+ § Employment Agreement first amendment between Privia Health Group, Inc. and Thomas Bartrum, dated April 1, 2020 10-K 10.6 227-68304 03/25/2022 10.15+ § Employment Agreement second amendment between Privia Health Group, Inc. and Thomas Bartrum, dated April 16, 2021 10-K 10.7 227-68304 03/25/2022 10.15+ § Employment Agreement third amendment between Privia Health Group, Inc. and Thomas Bartrum, dated March 24, 2022 10-K 10.8 227-68304 03/25/2022 10.16+ § Employment Agreement fourth amendment between Privia Health Group, Inc. and Thomas Bartrum, dated August 10, 2022 10-Q 10.8 221-155713 08/11/2022 10.17+ § Employment Agreement, between Privia Health Group, Inc. and Jeffrey S. Sherman dated as of January 2, 2022,(incorporated herein by reference to Exhibit 10.1 to 8-K (File No. 001-40365), filed with the SEC on January 6, 2022) 8-K 10.1 001-40365 01/06/2022 87 Table of Contents 10.18+ § Separation and Release of Claims Agreement, dated as of March 21, 2022, between the Company and Jeffrey S. Sherman. 8-K 10.1 001-40365 03/22/2022 10.19+ Form of Shareholder Rights Agreement between Privia Health Group, Inc. and the other signatories party thereto 8-K 10.2+ 001-40365 05/03/2021 10.20+ Form of Registration Rights Agreement between Privia Health Group, Inc. and the other signatories party thereto 8-K 10.1+ 001-40365 05/03/2021 10.21+ § Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.7 to the registrant’s Registration Statement on Form S-1 (File No. 333-255086), filed with the SEC on April 22, 2021) S-1 10.7+ 333-255086 04/22/2021 10.22+ § Form of 2021 Omnibus Plan Restricted Stock Unit Award for Employees (incorporated herein by reference to Exhibit 10.8 to the registrant’s Registration Statement on Form S-1 (File No. 333-255086), filed with the SEC on April 22, 2021) S-1 10.8+ 333-255086 04/22/2021 10.23+ § Form of 2021 Omnibus Plan Restricted Stock Unit Award for Non-Employee Directors (incorporated herein by reference to Exhibit 10.9 to the registrant’s Registration Statement on Form S-1 (File No. 333-255086), filed with the SEC on April 22, 2021) S-1 10.9+ 333-255086 04/22/2021 10.24+ § Form of 2021 Omnibus Plan Stock Option Award (incorporated herein by reference to Exhibit 10.10 to the registrant’s Registration Statement on Form S-1 (File No. 333-255086), filed with the SEC on April 22, 2021) S-1 10.1 333-255086 04/22/2021 10.25+ § Amendment No. 1 to the Registration Rights Agreement between Privia Health Group, Inc. and the other signatories party thereto dated October 29, 2021 10-Q 10.11 211-388036 11/08/2021 10.26 + Assumption Agreement and Third Amendment to the Credit Agreement, dated August 27, 2021, by and among Privia Health Group, Inc., as parent guarantor, Privia Health, LLC, as the borrower, certain other subsidiaries of Privia Health Group, Inc., as guarantors, Silicon Valley Bank, as administrative agent and collateral agent, and the several lenders from time to time party thereto (including conformed copy of the Credit Agreement attached as Exhibit B thereto). 8-K 10.1 211-221127 08/30/2021 10.27+ § Second Amended and Restated PH Group Parent Corp. Stock Option Plan S-8 99.2 333-255598 04/29/2021 10.28+ § Form of Non-Qualified Stock Option Agreement under the Second Amended and Restated PH Group Parent Corp. Stock Option Plan S-8 99.3 333-255598 04/29/2021 10.29+ § Form of Amendment to Non-Qualified Stock Option Agreement under Second Amended and Restated PH Group Parent Corp. Stock Option Plan S-8 99.4 333-255598 04/29/2021 10.30+ § Notice of Modification of Option Agreement 10-K 10.23 227-68304 03/25/2022 10.31+ Strategic Alignment Agreement, dated as of March 2, 2023, by and between Privia Health Group, Inc. and ChoiceHealth, Inc. 10-Q 10.2 001-40365 05/04/2023 10.32+ § Form of PSU Award Agreement under the 2021 Omnibus Incentive Plan 10-Q 10.1 001-40365 05/04/2023 10.33+ § M ehrotra Fourth Amendment to Employment Agreement , dated June 23, 2023 8-K 10.1 001-40365 06/29/2023 10.34+ § R elative TS R PSU Agreement, effective July 1, 2023 8-K 10.2 001-40365 06/29/2023 10.35+ § M orris Transition Agreement, dated June 23, 2023 8-K 10.3 001-40365 06/29/2023 10.36+ § C redit Agreement dated as of November 16, 2023 among Privia Health Group, Inc., PH Group Holdings Corp., and Privia Healt h, LLC, as borr ower, with Wells Fargo Bank, National Association, as issuing lender, and certain other lenders 8-K 10.1 001-40365 11/21/2023 10.37+ § T ransition Letter Agreement , dated as of January 25, 2024, between the Company and Thomas Bartrum 8-K 10.1 001-40365 01/29/2024 10.38+ § E mployment Agreement between Privia Health Group, Inc. and Edward Fargis dated January 29, 2024 X 21.1 Subsidiaries of the registrant X 23.1 Consent of Independent Registered Public Accounting Firm X 31.1 Certification of the Chief Executive Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. X 31.2 Certification of the Chief Financial Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. X 88 Table of Contents 32.1* Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, filed herewith. X 32.2* Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, filed herewith. X 97.1+ § P olicy Relating to Recovery of Erroneously Awarded Compensation X 101.INS XBRL Instance Document ** X 101.SCH XBRL Taxonomy Schema ** X 101.CAL XBRL Taxonomy Definition ** X 101.DEF XBRL Taxonomy Calculation ** X 101.LAB XBRL Taxonomy Labels ** X 101.PRE XBRL Taxonomy Presentation ** X + Previously filed * The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. ** The financial information contained in these XBRL documents is unaudited. § Indicates a management contract or compensatory plan or arrangement. ITEM 16. FORM 10-K SUMMARY None. 89 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Privia Health Group, Inc. Date: February 27, 2024 By: /s/ Parth Mehrotra Name: Parth Mehrotra Title: Chief Executive Officer 90 Table of Contents Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Parth Mehrotra Chief Executive Officer and Director (principal executive officer) February 27, 2024 Parth Mehrotra /s/ David Mountcastle Executive Vice President and Chief Financial Officer (principal financial and accounting officer) February 27, 2024 David Mountcastle /s/ Adam Boehler Director February 27, 2024 Adam Boehler /s/ Nancy Cocozza Director February 27, 2024 Nancy Cocozza /s/ Pamela Kimmet Director February 27, 2024 Pamela Kimmet /s/ David King Director February 27, 2024 David King /s/ Patricia Maryland Director February 27, 2024 Patricia Maryland /s/ Thomas McCarthy Director February 27, 2024 Thomas McCarthy /s/ Shawn Morris Director February 27, 2024 Shawn Morris /s/ Jaewon Ryu Director February 27, 2024 Jaewon Ryu, M.D. /s/ William M. Sullivan Director February 27, 2024 William M. Sullivan /s/ David Wichmann Director February 27, 2024 David Wichmann 91 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) F- 2 Consolidated Balance Sheets F- 5 Consolidated Statements of Operations F- 6 Consolidated Statements of Stockholders’ Equity F- 7 Consolidated Statements of Cash Flows F- 8 Notes to the Consolidated Financial Statements F- 9 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Privia Health Group, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Privia Health Group, Inc. and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial F-2 Table of Contents statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Valuation of Fee for Service Patient Care Accounts Receivable As described in Notes 1 and 2 to the consolidated financial statements, substantially all of the Company’s accounts receivable relate to providing healthcare services to patients whose costs are primarily paid by federal and state governmental authorities or commercial insurance companies. The fee for service patient care (FFS patient care) accounts receivable makes up a portion of the Company’s consolidated net accounts receivable balance of $290.8 million as of December 31, 2023. FFS patient care revenue is primarily generated from third-party payers with which management has established contractual billing arrangements and is reported net of provisions for contractual allowances from third-party payers and patients. Management reports accounts receivable at an amount equal to the consideration the Company expects to receive in exchange for providing healthcare services to patients, which is estimated using historical reimbursement rates and an analysis of past experience to estimate potential adjustments. The principal considerations for our determination that performing procedures relating to the valuation of FFS patient care accounts receivable is a critical audit matter are (i) the significant judgment by management when developing the estimated value of FFS patient care accounts receivable and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to adjustments based on historical reimbursement rates and analysis of past experience. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s valuation of FFS patient care accounts receivable. These procedures also included, among others (i) testing management’s process for developing the estimated value of FFS patient care accounts receivable, (ii) evaluating the appropriateness of management’s historical reimbursement rates and analysis of past experience to estimate potential adjustments, (iii) testing the completeness and accuracy of the underlying billing and reimbursement data used by management to estimate potential adjustments, and (iv) evaluating the historical accuracy of management’s process for developing the estimated value of FFS patient care accounts receivable by (a) testing, on a sample basis, the accuracy of revenue transactions and cash collections from the historical billing and reimbursement data used in management’s analysis and (b) comparing actual cash collections to the previously recorded estimated FFS patient care accounts receivable balance as of the prior year balance sheet date. Valuation of Medicare Shared Savings Program Revenue As described in Notes 1 and 2 to the consolidated financial statements, under the shared savings basis, the Company is offered financial incentives to increase their accountability for the cost, quality and efficiency of the care provided to the population of attributed members. Revenue from the Medicare Shared Savings Program (MSSP) makes up the majority of the Company’s consolidated shared savings revenue of $170.1 million for the year ended December 31, 2023. The Company is paid the financial incentives when, for a given twelve-month measurement period, their performance on quality of care and utilization meets or exceeds the standards set by the payers as outlined in the contracts and when savings are achieved for medical costs associated with the population of attributed members. The payers analyze the activities during the measurement period using the agreed upon benchmarks, metrics and performance criteria to determine the appropriate payments to the Company. Management estimates the transaction price by analyzing the activities during the relevant time period in contemplation of the agreed upon benchmarks, metrics, performance criteria, inflation trend factors, risk ratio adjustments, and attribution criteria based on those and any other contractually defined factors. Revenue is not recorded until the price can be estimated by management and to the extent that it is probable that a significant reversal will not occur once any uncertainty associated with the variable consideration is subsequently resolved. Revenue is recorded during the period when the services were provided during a pre-set twelve-month annual measurement period. The principal considerations for our determination that performing procedures relating to the valuation of MSSP revenue is a critical audit matter are (i) the significant judgment by management when developing the estimate of MSSP revenue, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to inflation trend factors and risk ratio adjustments, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s valuation of MSSP revenue. These procedures also included, among others (i) testing the completeness and accuracy of the underlying data used by management and (ii) the involvement of professionals with specialized skill and knowledge to assist in evaluating the reasonableness of management’s estimate of MSSP revenue, on a sample basis, by (a) developing an independent range of estimated MSSP revenue using independently developed assumptions related to inflation trend factors and risk ratio adjustments and (b) comparing the independent range of estimated MSSP revenue to management’s estimate. Valuation of the Provider Liability for Unpaid Medical Claims Under At-Risk Capitation Arrangements As described in Note 8 to the consolidated financial statements, the Company’s consolidated provider liability for unpaid medical claims under at-risk capitation arrangements was $67.1 million as of December 31, 2023. Provider liability estimates are developed using actuarial methods commonly used by health insurance actuaries that include a number of factors and assumptions including F-3 Table of Contents medical service utilization trends, changes in membership, observed medical cost trends, historical claim payment patterns and other factors. Each period, management re-examines previously established provider liability estimates based on actual claim submissions and other changes in facts and circumstances. As more complete claims information becomes available, management adjusts the estimates and recognizes changes in estimates in the period in which the change is identified. The estimated liability for unpaid medical claims under at-risk capitation arrangements is included in provider liability on the consolidated balance sheet. The principal considerations for our determination that performing procedures relating to the valuation of the provider liability for unpaid medical claims liability under at-risk capitation arrangements is a critical audit matter are (i) the significant judgment by management when developing the estimate of the provider liability for unpaid medical claims under at-risk capitation arrangements, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to changes in membership and observed medical cost trends, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s valuation of the provider liability for unpaid medical claims under at-risk capitation arrangements. These procedures also included, among others (i) testing the completeness and accuracy of the underlying data used by management and (ii) the involvement of professionals with specialized skill and knowledge to assist in (a) testing management’s process for developing the estimate of the provider liability for unpaid medical claims under at-risk capitation arrangements, (b) evaluating the appropriateness of management’s actuarial methodologies, and (c) evaluating the reasonableness of management’s significant assumptions related to changes in membership and observed medical cost trends. /s/ PricewaterhouseCoopers LLP Baltimore, Maryland February 27, 2024 We have served as the Company’s auditor since 2020, which includes periods before the Company became subject to SEC reporting requirements. F-4 Table of Contents Privia Health Group, Inc. Consolidated Balance Sheets (in thousands, except share and per share amounts) December 31, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 389,511 $ 347,992 Accounts receivable 290,768 189,604 Prepaid expenses and other current assets 20,525 14,366 Total current assets 700,804 551,962 Non-current assets: Property and equipment, net 2,325 3,386 Right-of-use asset 6,612 8,089 Intangible assets, net 107,630 57,387 Goodwill 138,749 126,938 Deferred tax asset 35,200 40,368 Other non-current assets 8,580 4,683 Total non-current assets 299,096 240,851 Total assets $ 999,900 $ 792,813 Liabilities and stockholders’ equity Current liabilities: Accounts payable and accrued expenses $ 57,831 $ 52,837 Provider liability 326,078 208,424 Operating lease liabilities, current 3,043 3,013 Total current liabilities 386,952 264,274 Non-current liabilities: Operating lease liabilities, non-current 5,246 8,490 Other non-current liabilities 313 1,000 Total non-current liabilities 5,559 9,490 Total liabilities 392,511 273,764 Commitments and contingencies (Note 14) Stockholders’ equity: Common stock, $ 0.01 par value, 1,000,000,000 and 1,000,000,000 shares authorized; 118,216,979 and 114,690,808 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 1,182 1,148 Additional paid-in capital 753,869 714,639 Accumulated deficit ( 193,614 ) ( 216,693 ) Total Privia Health Group, Inc. stockholders’ equity 561,437 499,094 Non-controlling interest 45,952 19,955 Total stockholders’ equity 607,389 519,049 Total liabilities and stockholders’ equity $ 999,900 $ 792,813 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents Privia Health Group, Inc. Consolidated Statements of Operations (in thousands, except share and per share data) For the Years Ended December 31, 2023 2022 2021 Revenue $ 1,657,737 $ 1,356,660 $ 966,220 Operating expenses: Provider expense 1,298,573 1,051,040 727,827 Cost of platform 197,663 170,838 174,731 Sales and marketing 24,732 19,741 22,750 General and administrative 109,587 129,592 255,884 Depreciation and amortization 6,533 4,571 2,464 Total operating expenses 1,637,088 1,375,782 1,183,656 Operating income (loss) 20,649 ( 19,122 ) ( 217,436 ) Interest (income) expense, net ( 8,372 ) ( 542 ) 1,070 Income (loss) before provision for (benefit from) income taxes 29,021 ( 18,580 ) ( 218,506 ) Provision for (benefit from) income taxes 7,993 ( 6,516 ) ( 27,857 ) Net income (loss) 21,028 ( 12,064 ) ( 190,649 ) Less: Loss attributable to non-controlling interests ( 2,051 ) ( 3,479 ) ( 2,419 ) Net income (loss) income attributable to Privia Health Group, Inc. $ 23,079 $ ( 8,585 ) $ ( 188,230 ) Net income (loss) income per share attributable to Privia Health Group, Inc. stockholders – basic $ 0.20 $ ( 0.08 ) $ ( 1.83 ) Net income (loss) income per share attributable to Privia Health Group, Inc. stockholders – diluted $ 0.19 $ ( 0.08 ) $ ( 1.83 ) Weighted average common shares outstanding – basic 116,731,406 110,695,266 102,952,370 Weighted average common shares outstanding – diluted 124,686,067 110,695,266 102,952,370 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents Privia Health Group, Inc. Consolidated Statements of Stockholders’ Equity (in thousands except share amounts) Common Stock Shares Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity attributable to Privia Health Group, Inc. Non-controlling Interest Total Stockholders’ Equity Balance at January 1, 2021 95,985,817 $ 960 $ 165,666 $ ( 19,878 ) $ 146,748 $ ( 3,096 ) $ 143,652 Issuance of common stock upon closing of initial public offering 9,725,000 97 210,897 — 210,994 — 210,994 Issuance of common stock upon exercise of stock options and vesting of restricted stock units 2,126,924 21 3,808 — 3,829 — 3,829 Stock-based compensation expense — — 253,531 — 253,531 — 253,531 Contributed non-controlling interest — — — — — 28,824 28,824 Net loss — — — ( 188,230 ) ( 188,230 ) ( 2,419 ) ( 190,649 ) Balance at Balance at December 31, 2021 107,837,741 1,078 633,902 ( 208,108 ) 426,872 23,309 450,181 Issuance of common stock upon exercise of stock options and vesting of restricted stock units 6,853,067 70 13,378 — 13,448 — 13,448 Stock-based compensation expense — — 67,359 — 67,359 — 67,359 Contributed non-controlling interest — — — — — 125 125 Net loss — — — ( 8,585 ) ( 8,585 ) ( 3,479 ) ( 12,064 ) Balance at December 31, 2022 114,690,808 1,148 714,639 ( 216,693 ) 499,094 19,955 519,049 Issuance of common stock upon exercise of stock options and vesting of restricted stock units 3,526,171 34 8,706 — 8,740 — 8,740 Stock-based compensation expense — — 37,098 — 37,098 — 37,098 Repurchase of non-controlling interest — — ( 8,871 ) — ( 8,871 ) 3,177 ( 5,694 ) Contributed non-controlling interest — — — — — 24,871 24,871 Tax effect related to purchase of non-controlling interest — — 2,297 — 2,297 — 2,297 Net income (loss) — — — 23,079 23,079 ( 2,051 ) 21,028 Balance at December 31, 2023 118,216,979 $ 1,182 $ 753,869 $ ( 193,614 ) $ 561,437 $ 45,952 $ 607,389 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents Privia Health Group, Inc. Consolidated Statements of Cash Flows (in thousands) For the Years Ended December 31, 2023 2022 2021 Cash flows from operating activities Net income (loss) $ 21,028 $ ( 12,064 ) $ ( 190,649 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation 1,174 1,220 1,152 Amortization of intangibles 5,359 3,351 1,312 Amortization of debt issuance costs — 687 157 Stock-based compensation 37,098 67,359 253,531 Debt Issuance costs Amortization — — — Deferred tax expense (benefit) 7,465 ( 7,004 ) ( 28,411 ) Changes in asset and liabilities: Accounts receivable ( 96,877 ) ( 72,202 ) ( 14,642 ) Prepaid expenses and other current assets ( 6,159 ) ( 5,669 ) ( 1,269 ) Other non-current assets and right-of-use asset ( 2,418 ) 1,383 ( 9,680 ) Accounts payable and accrued expenses 4,994 6,852 1,262 Provider liability 113,367 67,716 33,897 Operating lease liabilities ( 3,214 ) ( 2,433 ) 13,936 Other long-term liabilities ( 1,032 ) ( 2,000 ) ( 5,538 ) Net cash provided by operating activities 80,785 47,196 55,058 Cash flows from investing activities Purchases of property and equipment ( 113 ) ( 104 ) ( 547 ) Business acquisitions, net of cash acquired ( 42,858 ) — ( 32,228 ) Net cash used in investing activities ( 42,971 ) ( 104 ) ( 32,775 ) Cash flows from financing activities Proceeds from initial public offering — — 223,685 Payments of underwriting fees, net of discounts and offering costs — — ( 12,691 ) Repurchase of non-controlling interest ( 5,694 ) — — Proceeds from non-controlling interest 659 125 — Repayment of note payable — ( 33,250 ) ( 875 ) Proceeds from exercised stock options 8,740 13,448 3,829 Debt issuance costs — — ( 287 ) Net cash provided by (used in) financing activities 3,705 ( 19,677 ) 213,661 Net increase in cash and cash equivalents 41,519 27,415 235,944 Cash and cash equivalents at beginning of period 347,992 320,577 84,633 Cash and cash equivalents at end of period $ 389,511 $ 347,992 $ 320,577 Supplemental disclosure of cash flow information: Interest paid $ 40 $ 713 $ 888 Income taxes paid $ 1,040 $ 307 $ 504 The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of Contents Privia Health Group, Inc. Notes to Consolidated Financial Statements 1. Organization and Summary of Significant Accounting Policies Organization Privia Health Group, Inc. (“Privia Health”, “Privia”, or the “Company”) is a technology-driven, national physician-enablement company that collaborates with medical groups, health plans, and health systems to optimize physician practices, improve patient experiences, and reward doctors for delivering high-value care in both in-person and virtual care settings (the “Privia Platform”). As of December 31, 2023, Privia operated in fifteen markets: 1) the Mid-Atlantic Region (states of Virginia, Maryland and the District of Columbia); 2) Georgia; 3) Gulf Coast Region (Houston, Texas); 4) North Texas (Dallas/Fort Worth, Texas); 5) West Texas (Abilene, Texas); 6) Central Florida; 7) Tennessee 8) California; 9) Montana; 10) Ohio; 11) North Carolina; 12) Delaware; 13) Connecticut; 14) Washington state; and 15) South Carolina. In our standard Privia Medical Group model, medical groups are formed in a market with the primary purpose to operate as a physician group practice with healthcare services being furnished through physician members (“Privia Physicians”) and non-physician clinicians (together, “Privia Providers”) supervised by Privia Physicians. Privia Physicians typically enter into a PMSA with a medical group, which requires the Privia Physician to provide healthcare services through and on behalf of the medical group. In conjunction with the PMSA, the medical group enters a Support Services Agreement (“SSA”) with the Privia Physician’s historic practice entity (“Affiliated Practice”) whereby the Affiliated Practice provides certain subcontracted services to the medical group to allow the medical group to operate at the practice location. The Company does not own any Affiliated Practice, nor does the Company have risk of loss related to the Affiliated Practices; rather, they are typically owned by certain Privia Physicians. The Company’s ownership varies by state, creating three types of medical groups: Owned Medical Groups, Non-Owned Medical Groups and Friendly Medical Groups (which are also Non-Owned Medical Groups). The Company majority owns Owned Medical Groups in those markets where medical group ownership is allowed with Privia Physicians owning, in the aggregate, the minority interest in the medical group. In other markets where state regulations do not allow the Company to own the medical group, the Companies “Non-Owned Medical Groups” are either (a) 100 % owned by the Privia Physicians or (b) majority owned, indirectly through a professional entity (“Nominee PC”), by a licensed physician holding a Privia leadership position (such physician leader, a “Nominee Physician” and each such Non-Owned Medical Group owned in this manner, a “Friendly Medical Group”). Currently, the Company has Friendly Medical Groups in Tennessee, West Texas, Washington state and South Carolina. The Company has entered into a restriction agreement with each of its Nominee Physicians and their respective Nominee PCs, which provides the Company the right to direct the transfer of each Nominee PC’s ownership in the Friendly Medical Groups to other licensed physicians, among other matters. Owned Medical Groups and Friendly Medical Groups are consolidated into the Company, while Non-Owned Medical Groups are not. For Non-Owned Medical Groups and Friendly Medical Groups, please refer to the discussion of “Variable Interest Entities” for further discussion. The Company also forms local management companies to provide administrative and management services (“MSOs”) to the medical groups through a Management Services Agreement (“MSA”) in each market. The Company owns 100 % of all MSOs, except four where the Company is at least the majority owner. Within each market, Privia has three different sources of revenue: 1) Fee-for-service (“FFS”) revenue consisting of: a) FFS-patient care revenue which is primarily earned through Owned Medical Groups and b) FFS-administrative services revenue which is primarily earned by owned MSOs from Non-Owned Medical Groups through the MSAs; 2) VBC revenue consisting of: a) Capitated revenue, b) shared savings and c) care management fees (“PMPM”) all of which are primarily earned through Company-owned Accountable Care Organizations (“ACOs”) in each market ; and 3) Other revenue which is earned from services provided to patients of both Owned and Non-Owned Medical Groups. Basis of Presentation The consolidated financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”) and include the accounts of the Company and its subsidiaries. Amounts shown on the consolidated statements of operations within the operating expense categories of provider expense, cost of platform, selling and marketing, and general and administrative are recorded exclusive of depreciation and amortization. All significant intercompany transactions are eliminated in consolidation. Variable Interest Entities Management evaluates the Company’s ownership, contractual, and other interests in entities to determine if it has any variable interest in a variable interest entity (“VIE”). These evaluations are complex, involve judgment, and the use of estimates and assumptions based on available historical information, among other factors. If the Company determines that an entity in which it holds a contractual or ownership interest is a VIE and that the Company is the primary beneficiary, the Company consolidates such entity in its consolidated financial statements. The primary beneficiary of a VIE is the party that meets both of the following criteria: (i) has the power to make F-9 Table of Contents decisions that most significantly affect the economic performance of the VIE; and (ii) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Management performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. Changes in consolidation status are applied prospectively. The Company evaluated its relationship with (a) Non-Owned Medical Groups and their Affiliated Practices, (b) Friendly Medical Groups and their Affiliated Practices, and (c) Affiliated Practices associated with Owned Medical Groups to determine if any of these entities should be subject to consolidation. The Company does not have ownership interest in any Affiliated Practices (whether those of Owned Medical Groups, Non-Owned Medical Groups or Friendly Medical Groups); nor does the Company have an ownership in Non-Owned Medical Groups or Friendly Medical Groups. The PMSA and support services agreement (“SSA”) entered by Non-Owned Medical Groups and Friendly Medical Groups with their Privia Physician members and the Affiliated Practices are not contractual relationships within Privia’s legal structure. The only contractual relationship between Privia and Non-Owned Medical Groups is established through the MSA. For Friendly Medical Groups, in addition to the MSA, the Company has a contractual relationship, evidenced by a restriction agreement (each a “Restriction Agreement”) with its Nominee Physicians and their respective Nominee PCs. Management has determined, based on the provisions of the MSAs between the Company and Non-Owned Medical Groups, and after considering the requirements of Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”), the Company is not required to consolidate the financial position or results of operations of the Affiliated Practices associated with Owned Medical Groups; nor is it required to consolidate the financial position or results of operations of Non-Owned Medical Groups (and, therefore, the Company is not required to consolidate the Affiliated Practices of the Non-Owned Medical Groups). However, management has determined, based on the provisions of the Restriction Agreement by and among the Company, the Nominee Physicians and their respective Nominee PCs, the governing documents of the Friendly Medical Groups, and after considering the requirements of ASC 810, that the Company should consolidate the financial position or results of operations of the Friendly Medical Groups and the Nominee PCs, but not the Affiliated Practices of the Friendly Medical Groups. ASC 810 requires the Company to consolidate the financial position, results of operations and cash flows of a Non-Owned Medical Group affiliated by means of a service agreement if the Non-Owned Medical Group is a VIE and the Company is its primary beneficiary. A Non-Owned Medical Group would be considered a VIE if (a) it is thinly capitalized (i.e., the equity is not sufficient to fund the Non-Owned Medical Group’s activities without additional subordinated financial support) or (b) the equity holders of the Non-Owned Medical Group as a group have one of the following four characteristics: (i) lack the power to direct the activities that most significantly affect the Non-Owned Medical Group’s economic performance, (ii) possess non-substantive voting rights, (iii) lack the obligation to absorb the Non-Owned Medical Group’s expected losses, or (iv) lack the right to receive the Non-Owned Medical Group’s expected residual returns. The characteristics of both (a) and (b) do not exist and as such the Non-Owned Medical Groups do not represent VIEs. Accordingly, the Company has not consolidated the financial position, results of operations or cash flows of the Non-Owned Medical Groups that are affiliated with the Company by means of a service agreement for the years ended December 31, 2023, 2022 and 2021. Each time that it enters into a new service agreement or enters into a material amendment to an existing service agreement, the Company considers whether the terms of that agreement or amendment would change the elements it considers in accordance with the VIE guidance. The same analysis was performed for the Affiliated Practices of Owned Medical Groups, which have contractual relationships with Privia through the SSA, and the Company determined they do not represent VIEs as they do not meet the criteria in ASC 810 for similar reasons outlined above. The Company, however, does meet the criteria for consolidation of the Nominee PCs and the Friendly Medical Groups based on the discussion above. In February 2023, the Company announced a partnership with Community Medical Group, the largest Clinically Integrated Network (“CIN”) in Connecticut with approximately 1,100 multi-specialty providers, to launch Privia Quality Network Connecticut (“PQN-CT”). The Company performed an analysis as noted above and determined that PQN- CT does not represent a VIE as it does not meet the criteria in ASC 810, but the entity is consolidated because Privia owns a majority of the voting interest in the entity. Privia Medical Group – West Texas, PLLC, (“PMG West Texas”) is a physician-owned Medical Group, with PMG West Texas Holdings, PLLC (“Friendly WTX PC”), a Texas professional limited liability company entirely owned by a licensed physician with a leadership role in the Company, owning majority membership interests and having governance and control rights via the governing documents of PMG West Texas. The Company has a contractual relationship with Friendly WTX PC through a Restriction Agreement. The VIE analysis was performed, and the Company determined that characteristic (b) exists as a result of meeting (ii) and (iv) and as such, PMG West Texas and Friendly WTX PC do represent VIEs and are consolidated as they do meet the criteria in ASC 810. Privia Medical Group Tennessee, PLLC (“PMG-TN”) is a physician-owned Medical Group, with PMG-TN Physicians, PLLC, a Tennessee professional limited liability company entirely owned by a licensed physician with a leadership role in the Company (“Friendly TN PC”), owning majority membership interests therein and having governance and control rights via the governing documents of PMG-TN. Again, the same analysis was performed, and the Company determined that characteristic (b) exists as a result of meeting (ii) and (iv) and as such, PMG-TN and Friendly TN PC do represent VIEs as they do meet the criteria in ASC 810. F-10 Table of Contents Privia Medical Group Washington, PLLC, (“PMG WA”) is a physician-owned Medical Group, with PMG Washington Holdings, PLLC (“Friendly WA PC”), a Washington professional limited liability company entirely owned by a licensed physician with a leadership role in the Company, owning majority membership interests and having governance and control rights via the governing documents of PMG WA. The Company has a contractual relationship with Friendly WA PC through a Restriction Agreement. The VIE analysis was performed, and the Company determined that characteristic (b) exists as a result of meeting (i), (ii) and (iv) and as such, PMG WA and Friendly WA PC do represent VIEs and are consolidated as they do meet the criteria in ASC 810. Privia Medical Group South Carolina, LLC, (“PMG SC”) is a physician-owned Medical Group, with PMG South Carolina Holdings, PLLC (“Friendly SC PC”), a South Carolina professional limited liability company entirely owned by a licensed physician with a leadership role in the Company, owning majority membership interests and having governance and control rights via the governing documents of PMG SC. The Company has a contractual relationship with Friendly SC PC through a Restriction Agreement. The VIE analysis was performed, and the Company determined that characteristic (b) exists as a result of meeting (i), (ii) and (iv) and as such PMG SC and Friendly SC PC represent VIEs and are consolidated as they meet the criteria in ASC 810. The aggregated carrying value of the current VIE assets and liabilities included in the consolidated balance sheets after elimination of intercompany transactions and balances were $ 6.2 million and $ 6.2 million, respectively, as of December 31, 2023 and $ 1.4 million and $ 1.4 million respectively, as of December 31, 2022. Total revenues and operating expenses were $ 61.1 million and $ 61.1 million, respectively, as of December 31, 2023, $ 34.9 million and $ 34.9 million, respectively, as of December 31, 2022, and $ 5.8 million and $ 5.8 million, respectively, as of December 31, 2021. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure. On an on-going basis the Company evaluates significant estimates and assumptions, including, but not limited to, revenue recognition, stock-based compensation, estimated useful lives of assets, intangible assets subject to amortization, and the computation of income taxes. Future events and their effects cannot be predicted with certainty; accordingly, the Company’s accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the financial statements will change as new events occur, as more experience is acquired, as additional information is obtained, and as the Company’s operating environment changes. Management evaluates and updates assumptions and estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. Operating Segments The Company determined in accordance with ASC 280, Segment Reporting (“ASC 280”) that the Company operates in and reports as a single operating segment, and therefore one reporting segment – Privia Health Group, Inc. Refer to Note 17 “Segment Financial Information” for additional information concerning the Company’s services. Cash and Cash Equivalents The Company considers all unrestricted, liquid financial instruments purchased with original maturity dates of three months or less to be cash equivalents. Cash equivalents are stated at cost which approximates fair value. Accounts Receivable Substantially all of the Company’s accounts receivable relate to providing health care services to patients whose costs are primarily paid by federal and state governmental authorities or commercial insurance companies. The Company reports accounts receivable at an amount equal to the consideration the Company expects to receive in exchange for providing healthcare services to patients, which is estimated using historical reimbursement rates and an analysis of past experience to estimate potential adjustments. Management writes-off receivables when they are deemed uncollectible because of circumstances that affect the ability of payers and self-pay patients to make payments as they occur. While write-offs of customer accounts have historically been within management’s expectations and the provisions established, management cannot guarantee that future write-offs will be consistent with historical experience, which could result in material differences when compared to the Company’s allowances and related provisions. Unearned Revenue The Company records unearned revenue, which is a contract liability, when it has an obligation to provide services and payment is received in advance of performance of those services. Property and Equipment, Net Property and equipment consist of furniture and fixtures, leasehold improvements, and computer hardware and software and are stated at cost, with the exception of assets acquired through acquisitions, which are recorded at fair value, less accumulated depreciation and amortization. Depreciation is recognized on a straight-line method over the assets’ estimated useful lives, which for leasehold improvements are the lesser of the lease terms or the life of the asset, and three to seven years for other property and equipment. Property and equipment consisting of leasehold improvements, furniture, computers and office equipment. F-11 Table of Contents Internal-Use Software The Company capitalizes costs related to internal-use software during the application development stage including consulting costs and compensation expenses related to employees who devote time to development projects. Costs incurred in the preliminary stages of development activities and post implementation activities are expensed in the period incurred and included in cost of platform expense in the consolidated statements of operations. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. The Company records capitalized software development costs in property and equipment, net. Capitalized internal-use software costs are amortized on a straight-line basis over the software’s estimated useful life. Business Combinations Accounting for business combinations requires us to allocate the fair value of purchase considerations to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values, which were determined primarily using the income method. The excess of the fair value of purchase consideration over the fair values of these identified assets and liabilities is recorded as goodwill. Such valuations require us to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, revenue growth rates, medical claims expense, cost of care expenses, operating expenses, discount rate, contract terms and useful life from acquired assets. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Allocation of purchase consideration to identifiable assets and liabilities affects the Company’s amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any indefinite lived intangible assets, including goodwill, are not amortized. During the measurement period, which is not to exceed one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. During the years ended December 31, 2023 and 2021, the Company completed several acquisitions to strengthen its current market share in existing markets or to expand into new markets. The consideration paid for each of the acquisitions was derived through arm’s length negotiations. Each of the Company’s acquisitions was accounted for using the acquisition method pursuant to the requirements of FASB ASC Topic 805, Business Combinations (“ASC 805”) . The results of operations of the acquisitions have been included in the Company’s consolidated financial statements since their respective date of acquisition. For additional details, refer to Note 3 “Business Combinations.” Impairment of Long-Lived Assets Long-lived assets consist of property and equipment. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value. An impairment loss can be recognized in loss from operations when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount. The impairment loss is based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows. The Company did not record any impairment losses on long-lived assets during the years ended December 31, 2023, 2022 or 2021. Goodwill Goodwill represents the excess of the purchase price, plus the fair value of any non-controlling interests in the acquiree, over the fair value of identifiable net assets acquired. The Company performs a qualitative assessment on goodwill at least annually or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. If it is determined in the qualitative assessment that the fair value of a reporting unit is more likely than not below its carrying amount, then the Company will perform a quantitative impairment test. The quantitative goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. Any excess in the carrying value of a reporting unit’s goodwill over its fair value is recognized as an impairment loss, limited to the total amount of goodwill allocated to that reporting unit. The Company completes a single assessment of Goodwill as it has one reporting unit. For the years ended December 31, 2023, 2022 and 2021, there was no impairment loss related to goodwill. For additional details, refer to Note 4 “Goodwill and Intangible Assets, Net.” F-12 Table of Contents Intangible Assets, net Definite-lived intangible assets represent the estimated fair value of intangible assets acquired. Amortization is calculated using the straight-line method over the estimated useful lives of the intangible assets which are as follows: Trade names 20 years Consumer customer relationships 10 - 24 years Management Service Agreement 16 years Physician network 15 years Payer contracts 17 - 22 years MSO Service Agreement 21 years The Company reviews the carrying value of its finite-lived intangible assets for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. If these future undiscounted cash flows are less than the carrying value of the asset, then the carrying amount of the asset is written down to its fair value, based on the related estimated discounted future cash flows. The factors considered by management in performing this assessment include current operating results; trends and prospects; the manner in which the intangible assets are used; and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment, no impairment was recorded for the years ended December 31, 2023, 2022 and 2021. For additional details, refer to Note 4 “Goodwill and Intangible Assets, Net.” Debt Issuance Costs Debt issuance costs represent costs incurred to issue the Company’s note payable and are recorded as a direct reduction to the Company’s note payable. These costs are amortized over the term of the applicable indebtedness using the effective interest method. Amortization is included in interest expense in the accompanying consolidated statements of operations. Revenue Recognition The Company derives revenues from the following three sources: (i) FFS revenue, (ii) VBC revenue and (iii) other revenue from additional services offered by Privia to its Privia Providers or directly to patients or employers. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: i. Identify the contract(s) with a customer; ii. Identify the performance obligations in the contract; iii. Determine the transaction price; iv. Allocate the transaction price to the performance obligations in the contract; and v. Recognize revenue as the entity satisfies a performance obligation. FFS Revenue FFS-patient care The Company’s FFS-patient care revenue is primarily generated from providing healthcare services to patients. Providing medical services to patients represents the Company’s performance obligation under these third-party payer agreements, and accordingly, the transaction price is allocated entirely to that one performance obligation. The Company recognizes revenue as services are rendered and approved by the Privia Providers, which is typically a single day for each service. The Company receives payment for services from third-party payers, as well as from patients who have health insurance, but are also financially responsible for some or all of the service in the form of co-pays, coinsurance or deductibles. Patients who do not have health insurance are required to pay for their services in full. FFS-patient care revenue is reported net of provisions for contractual allowances from third-party payers and patients. The Company has certain agreements with third-party payers that provide for reimbursement at amounts different from the Company’s standard billing rates. The differences between the estimated reimbursement rates and the standard billing rates are accounted for as contractual adjustments, which are deducted from gross revenue to arrive at FFS-patient care revenue. The Company determines the Company’s estimate of implicit price concessions based on the Company’s historical collection experience with classes of patients using a portfolio approach as a practical expedient to account for patient contracts as collective groups rather than individually. The financial statement effects of using this practical expedient are not materially different from an individual contract approach. Subsequent changes to the estimate of the transaction price (determined on a portfolio basis when applicable) are generally recorded as adjustments to revenue in the period of the change. For the years ended December 31, 2023, 2022 and 2021, changes in the Company’s estimates of implicit price concessions, contractual adjustments, and expected payments for performance obligations satisfied in prior periods were not significant. F-13 Table of Contents With respect to the Company’s treatment of revenue from Owned Medical Groups and Friendly Medical Groups, it is necessary to assess whether the Company is the principal or the agent with respect to FFS-patient care revenue in light of the fact that healthcare services are furnished by Privia Providers rather than employees of the Owned Medical Groups. ASC 606-10-55-37A indicates that an entity is a principal if it obtains control of a right to a service to be performed by another party, which gives the entity the ability to direct that party to perform the services to the customer on the entity’s behalf. The Owned Medical Groups, which are each majority-owned and controlled by us, own the contractual relationships with the patients and the third-party payers, and they direct Privia Providers to perform healthcare services on the Company’s behalf. Although the Company is prohibited by law from interfering in the physician-patient relationship or making clinical care decisions, the Company’s Owned Medical Groups are responsible for the fulfillment of healthcare services to patients. Further, the Company employs Chief Medical Officers and Medical Directors who provide clinical oversight and direction over the clinical affairs of the Owned Medical Groups. In addition, the Owned Medical Group provides the care coordination activities, patient outreach and education activities, and sets quality standards for Privia Providers. The Company also verifies that Privia Providers have the proper qualifications (e.g., correct licenses, certificates, etc.) for the Company’s Owned Medical Groups, for the Company and as a delegate on behalf of certain third-party payers. In addition to oversight of health care services, the Owned Medical Group is also the party primarily responsible for providing the services to patients and maintains discretion in establishing pricing for all services through agreements with patients and their insurance payers. The Owned Medical Groups negotiate and enter into provider agreements with third-party payer insurance companies, which outline the obligations of the Owned Medical Group and the third-party payers in connection with providing patient care services to covered patients. This includes setting the reimbursement rate for all services provided by the Owned Medical Groups. In assessing who is the principal in providing the patient care services, the Company considered who controls the provision of patient care services. As a result of the Company’s oversight of Owned Medical Groups (including setting the expectations for the Owned Medical Group’s patients and the commercial payers’ expectations of the Owned Medical Groups) and the contractual relationships with patients and their third-party payers, the Company is the principal in these relationships. FFS-administrative services The Company’s FFS-administrative services business provides administration and management services pursuant to MSA with Non-Owned Medical Groups. The Company’s MSAs with the Non-Owned Medical Groups range from 5 – 20 years in duration and outline the terms and conditions of the administration and management services to be provided, which includes revenue cycle management services such as billings and collections, as well as other services, including, but not limited to, payer contracting, information technology services and accounting and treasury services. In certain MSAs, the Company is paid administrative fees equal to the cost of supplying certain services as outlined in the MSAs, and if applicable, a margin is added to the cost of certain services. The margin, if applicable, is fixed based on the MSAs; however, the cost of supplying certain services can fluctuate during the life of the MSAs. In certain MSAs, the Company is paid a percentage of net collections. The percentage is fixed per the MSAs; however, the net collections can fluctuate during the life of the contract. Under each MSA, there is a single performance obligation to provide a series of administration and management services required for the contract period. The Company believes that each Non-Owned Medical Group receives the management and administrative services each day and has concluded that an output method is appropriate for recognizing administrative services fee revenue. Administrative fees are reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for the provision of administration and management services to the Non-Owned Medical Groups. In addition, certain of the Company’s MSAs include rebates to the customers in the event that certain conditions occur. The Company estimates the transaction price using the most likely amount methodology and amounts are included in the net transaction price to the extent that it is probable that a significant reversal will not occur once any uncertainty associated with the variable consideration is subsequently resolved. The Company reduces the amount of FFS – administrative services revenue by the amount of any rebates earned by its customers. Rebates of $ 2.7 million have been recorded for the years ended December 31, 2023 and 2022, respectively. No rebates were recorded for the year ended December 31, 2021. VBC Revenue The Company’s VBC business consists of its clinically integrated network and ACOs which bring together independent physician practices within the Company medical groups to focus on sharing data, improving care coordination, and collaborating on initiatives to improve outcomes and lower healthcare spending. The Company has contracts with the U.S. federal government and large payer organizations that are multi-year in nature typically ranging from three to five years and are paid as follows: (1) Capitated revenue (2) on a shared savings basis and (3) Care management fees on a per member per month basis. Capitated Revenue Capitated revenue consists of capitation fees earned under contracts with various Medicare Advantage payers (“Payers”) in at-risk capitation arrangements. The Company is entitled to monthly fees to provide a defined range of healthcare services for Medicare F-14 Table of Contents Advantage health plan members (“attributed beneficiaries” or “attributed lives”) attributed to the Company’s contracted physicians (typically primary care). Monthly fees are determined as a percentage of the premium payers receive from the Centers for Medicare & Medicaid Services (“CMS”) for these attributed beneficiaries. In at-risk arrangements, the Company generally accepts financial risk for beneficiaries attributed to its contracted physicians and, therefore, is responsible for the cost of contracted healthcare services required by those beneficiaries in accordance with the terms of each agreement. Fees are recorded gross in revenue because the Company is acting as a principal in coordinating and controlling the range of services provided (other than clinical decisions) under its Capitated revenue contracts with payers. Capitated revenue contracts with payers are generally multi-year arrangements and have a single monthly stand ready performance obligation, as defined by ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), to provide all aspects of necessary medical care to members for the contracted period. The Company recognizes revenue in the month in which the eligible beneficiary is entitled to receive healthcare benefits during the contract term. The transaction price for the Company’s capitation contracts is a fixed percentage of premium per attributed life with periodic adjustment, as the monthly fees to which the Company is entitled are subject to periodic adjustments under CMS’s risk adjustment payment methodology. CMS deploys a risk adjustment model that determines premiums paid to all payers according to each attributed life’s health status and certain demographic factors. Under this risk adjustment methodology, CMS calculates the risk adjusted premium payment using diagnosis data from various settings. The Company and healthcare providers collect and submit diagnosis data to payers (and ultimately to CMS) to be utilized in the determination of risk adjustments and such data is used by the Company to estimate any adjustments to the Capitated revenue earned that may increase or decrease revenue in subsequent periods pursuant to contractual terms. Such adjustments are estimated using the most likely amount methodology and amounts are only included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur once any uncertainty is resolved. Capitated revenue fees are also subject to adjustment for incentives or penalties based on the achievement of certain quality metrics defined in the Company’s contracts with payers. The Company recognizes incentive revenue as earned using the most likely amount methodology and only to the extent it is probable that a significant reversal of cumulative revenue will not occur once any uncertainty is resolved. Neither the Company nor any of its affiliates are a registered insurance company as state law in the states in which the Company operates do not require such registration for risk bearing providers. Shared Savings Under the shared savings basis, the Company is offered financial incentives to increase their accountability for the cost, quality and efficiency of the care provided to the population of attributed members. The Company is paid the financial incentives when, for a given twelve-month measurement period, their performance on quality of care and utilization meets or exceeds the standards set by the payers as outlined in the contracts and when savings are achieved for medical costs associated with the population of attributed members. The payers analyze the activities during the measurement period using the agreed upon benchmarks, metrics and performance criteria to determine the appropriate payments to the Company. The Company estimates the transaction price by analyzing the activities during the relevant time period in contemplation of the agreed upon benchmarks, metrics, performance criteria, inflation trend factors, risks ratio adjustments, and attribution criteria based on those and any other contractually defined factors. Revenue is not recorded until the price can be estimated by the Company and to the extent that it is probable that a significant reversal will not occur once any uncertainty associated with the variable consideration is subsequently resolved. Revenue is recorded during the period when the services were provided during a pre-set twelve-month annual measurement period. Care management Under the per member per month (“PMPM”) basis, the Company is paid a PMPM rate for each covered individual who is attributed by the payer to the Company (“attributed members”). The Company records revenue in the month for which the PMPM rate applies and the member was attributed. The PMPM rate is based on a predetermined monthly contractual rate for each attributed member regardless of the volume of care coordination services provided under the contracts with the payers. The PMPM rate varies based on payer and product. Revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for the provision of care coordination services to its population of attributed members. The Company’s contracts with payers have a single performance obligation that consists of a series of services for the provision of care coordination services for the population of attributed members for the duration of the contract. The transaction price for the contracts is entirely variable, as it is primarily based on a PMPM rate on monthly attributed membership, which can fluctuate during the life of the contract. The majority of the Company’s net PMPM transaction price relates specifically to its efforts to transfer the service for a distinct increment of the series and is recognized as revenue in the month in which attributed members are entitled to care coordination services. F-15 Table of Contents Other Revenue The remainder of the Company’s revenue is derived from leveraging the Company’s existing base of providers and patients to deliver value-oriented services such as concierge services, virtual visits, virtual scribes and coding, clinical trials, behavioral health management, and partnerships with self-insured employers to offer direct primary care to their employees. Fair Value of Financial Instruments The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, other receivables, accounts payable, and debt. The Company considers the carrying values of cash and cash equivalents, accounts receivable, other receivables, accounts payable, debt to related parties and debt to be indicative of their respective fair values. The carrying amount for debt is deemed to approximate fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level hierarchy for fair value measurements exists based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows: Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s financial instruments are considered Level 1 assets and liabilities, with the exception of note payable which is considered Level 2. Non-Controlling Interest The non-controlling interest represents the equity interest of the non-controlling equity holders in results of operations of Privia Management Services Organization, LLC, Privia Management Company Montana, LLC, BASS Privia Management Company of California, LLC, Privia Management Company West Texas, LLC, Privia Management Company North Carolina, LLC, Privia Management Company of Ohio, LLC, Privia Services Company Connecticut, LLC, Privia Quality Network Connecticut, LLC, Privia Quality Network Delaware, LLC and our Owned Medical Groups. The consolidated financial statements include all assets, liabilities, revenues, and expenses of less-than-100%-owned affiliates where the Company has a controlling financial interest. The Company has separately reflected net income attributable to the non-controlling interests in net income in the consolidated statements of operations. Income Taxes The Company accounts for income taxes in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC 740”). ASC 740 requires that income tax accounts be computed using the asset and liability method. Deferred tax assets and liabilities are recognized for the tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Should the Company determine that it is more likely than not that some portion or all of its deferred tax assets will not be realized, a valuation allowance to the deferred tax assets would be established in the period such determination was made. State corporate taxes were calculated based on a blended rate calculated based on the Company’s allocation and apportionment to the states. Calculation under the blended rate does not result in a material difference. ASC 740 requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination. If the tax position meets the more likely than not recognition threshold, the tax effect is recognized at the largest amount of the benefit that has greater than a fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance for classification, interest and penalties, accounting in interim periods, disclosure, and transition. ASC 740 requires that a liability created for unrecognized tax benefits be presented as a separate liability and not combined with deferred tax liabilities or assets. At December 31, 2023, and 2022, the Company believes it has appropriately accounted for any unrecognized tax benefits. To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established or is required to pay amounts in excess of the liability, the Company’s effective tax rate in a given financial statement period may be affected. As there are no uncertain tax positions, the Company does not have any accrued interest or penalties associated with any unrecognized tax benefits. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. As of F-16 Table of Contents December 31, 2023, the periods subject to examination by the Company’s major jurisdictions (federal and various states) are generally for the years December 31, 2020 through December 31, 2023. Provider Liability Provider Liability, previously referred to as “Physician and Practice liability”, represents costs payable to physicians, hospitals and other ancillary providers, including both Privia physicians, their related practices, and providers the Company has contracted with through payer partners. Those costs include amounts that have not yet been paid for physician guaranteed payments and other required distributions pursuant to the service agreements as well as medical claims costs for services provided to attributed beneficiaries for which the Company is financially responsible under at-risk capitated revenue arrangements whether paid directly by the Company or indirectly by payers with whom the Company has contracted . Leases The Company accounts for its leases in accordance with ASU 2016-2, Leases (Topic 842). The Company evaluates whether a contract is or contains a lease at the inception of the contract. Upon lease commencement, which is defined as the date on which a lessor makes the underlying asset available to the Company for use, the Company classifies the lease as either an operating or finance lease. The Company’s leases primarily consist of operating leases for office space in certain states in which the Company operates. The Company also has operating leases for equipment, which are not significant. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are measured at the present value of the remaining, fixed lease payments at lease commencement. The Company uses its incremental borrowing rate, adjusted for the effects of collateralization, based on the information available at the later of adoption, inception, or modification in determining the present value of lease payments. Right-of-use assets are measured at an amount equal to the initial lease liability, plus any prepaid lease payments (less any incentives received) and initial direct costs, at the lease commencement date. The Company has elected to account for lease and non-lease components as a single lease component for its facility leases. As a result, the fixed payments that would otherwise be allocated to the non-lease components are accounted for as lease payments and are included in the measurement of the Company’s right-of-use asset and lease liability. Lease expense for lease payments is recognized on a straight-line basis over the lease term in general and administrative expense on the consolidated statements of operations. The Company does not recognize a lease liability or right-of-use asset on the balance sheet for short-term leases. Instead, the Company recognizes short-term lease payments as an expense on a straight-line basis over the lease term. A short-term lease is defined as a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. When determining whether a lease qualifies as a short-term lease, the Company evaluates the lease term and the purchase option in the same manner as all other leases. Provider Expense Provider expense, previously referred to as “Physician and Practice expense”, are amounts accrued or payments made to physicians, hospitals and other service providers, including Privia physicians, their related physician practices, and providers the Company has contracted with through payer partners. Those costs include physician guaranteed payments and other required distributions pursuant to the service agreements as well as medical claims costs for services provided to attributed beneficiaries under at-risk Capitated revenue arrangements for which the Company is financially responsible whether paid directly by the Company or indirectly by payers with whom the Company has contracted. Provider expenses are recognized in the period in which services are provided. Cost of Platform Cost of platform represents the direct costs the Company incurs to provide services to Privia Physicians and their practices. It includes third-party electronic medical records and practice management software expenses, employee-related expenses, including salaries and employee benefits costs, stock-based compensation, as well as consulting expenses, travel-related expenses and technology related expenses for the team. Cost of platform excludes depreciation and amortization expense. Third-party electronic medical records and practice management software expenses are paid on a percentage of revenue basis, while employee-related expenses are variable based on the number of employees used to service the Company’s implemented physicians. Sales and Marketing Sales and marketing expenses consist of employee-related expenses, including salaries, stock-based compensation, commissions, and employee benefits costs, for all of the Company’s employees, engaged in marketing, sales, community outreach, and sales support. These employee-related expenses capture all costs for both the Company’s field-based and corporate sales and marketing teams. Sales and marketing expenses also include central and community-based advertising to generate greater awareness, engagement, and F-17 Table of Contents retention among the Company’s current and prospective patients as well as the infrastructure required to support all of the Company’s marketing efforts. General and Administrative Corporate, general and administrative expenses include employee-related expenses, including salaries and related costs and stock-based compensation, technology infrastructure, operations, clinical and quality support, finance, legal, human resources, and development departments. In addition, general and administrative expenses include all corporate technology and occupancy costs. Stock-Based Compensation The Company accounts for share-based compensation in accordance with the expense recognition provisions of ASC 718, Compensation–Stock Compensation (“ASC 718”), which requires the issuer to recognize compensation expense for all share-based payments made to employees based on the fair value of the share-based payment at the date of grant. Up until April 2021,the estimated fair value of share-based payments granted to the Company’s employees was determined using the Monte-Carlo option pricing model, which requires inputs based on certain subjective assumptions, including expected term of the option, expected stock price volatility, the risk free interest rate for a period that approximates the expected term of the option and the Company’s expected dividend yield (See Note 11 “Stockholders’ Equity”). The share-based payments granted or modified prior to April 2021 to employees of the Company do not have quoted market prices, and changes in subjective input assumptions can materially affect the fair value estimate. Since April 2021, the Company has estimated the fair value of the options granted to Company’s employees and contractors using the Black-Scholes option-pricing model. Option valuation models require several inputs, such as the expected stock price volatility, the fair value of the stock, the risk free rate, the expected term of the award and the dividend yield. The Company records share-based compensation forfeitures as a reversal of previously recognized compensation expense as the forfeitures occur. For additional details refer to Note 11 “Stockholder Equity.” The Company issued certain performance stock units ("PSUs") during the second quarter of 2023. The awards will vest based on the satisfaction of certain service conditions, performance-based conditions, and/or market conditions. The Company has identified certain performance metrics associated with some of these awards and certain targets will be fully established at a future date. For the awards with performance-based conditions where the target will be fully established at a future date, the Company has determined that the service inception date precedes the grant date for these awards as (a) the awards were authorized prior to establishing an accounting grant date, (b) the recipients began providing services prior to the grant date, and (c) there are performance conditions that, if not met by the accounting grant date, will result in the forfeiture of the awards. As the service inception date precedes the accounting grant date, the Company recognizes stock-based compensation expense over the requisite service period based on the estimated fair value at each reporting date. For the awards that are solely based on employment and the achievement of certain market performance metric targets, which have already been determined, the fair value of the PSUs are determined using a Monte Carlo valuation model as of the grant date and recognize stock-based compensation on a straight-line basis over the requisite service period. Net Income (Loss) per Share Attributable to Common Stockholders Basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. The treasury stock method is used to consider the effect of the potentially dilutive stock options. Diluted net income (loss) attributable to common stockholders is computed by adjusting (loss) income attributable to common stockholders to allocate undistributed earnings based on the potential impact of dilutive securities, including outstanding stock options. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period, including common stock equivalents. In periods when the Company has incurred a net loss, options to purchase common stock are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is antidilutive. Recently Adopted Accounting Pronouncements None. Recently Issued Accounting Pronouncements Pending Adoption In November 2023, the FASB issued Accounting Standards Update No. 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures . The amendments require disclosure of incremental segment information on an annual and interim basis. The amendments also require companies with a single reportable segment to provide all disclosures required by this amendment and all existing segment disclosures in Accounting Standards Codification 280, Segment Reporting . The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company does not expect the adoption of the amendments to have a significant impact on its financial statements. In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes - Improvements to Income Tax Disclosures . The amendments require (i) enhanced disclosures in connection with an entity's effective tax rate reconciliation and (ii) F-18 Table of Contents income taxes paid disaggregated by jurisdiction. The amendments are effective for annual periods beginning after December 15, 2024. The Company does not expect the adoption of the amendments to have a significant impact on its financial statements. 2. Revenue Recognition The following table presents the Company’s revenues disaggregated by source: For the Years Ended December 31, (Dollars in Thousands) 2023 2022 2021 FFS-patient care $ 976,688 $ 869,165 $ 772,482 FFS-administrative services 113,154 94,929 68,805 Capitated revenue 338,729 218,463 — Shared savings 170,143 132,615 83,016 Care management fees (PMPM) 50,519 35,541 36,503 Other revenue 8,504 5,947 5,414 Total Revenue $ 1,657,737 $ 1,356,660 $ 966,220 Fee-for-service (“FFS”) patient care is primarily generated from third-party payers with which the Company has established contractual billing arrangements. The following table presents the approximate percentages by source of net revenue received for healthcare services the Company provided for the periods indicated: For the Years Ended December 31, 2023 2022 2021 Commercial insurers 70 % 70 % 69 % Government payers 15 % 16 % 17 % Patient 15 % 14 % 14 % 100 % 100 % 100 % FFS-administrative services revenue is earned through the Company’s MSA with Non-Owned Medical Groups primarily based on a fixed percentage of net collections on patient care generated by those medical groups. VBC revenue is primarily earned through contracts for Capitated revenue, Shared savings and Care management fees. Capitated revenue is generated through what is typically known as an “at-risk contract.” At-risk capitation refers to a model in which the Company receives a fixed monthly payment from the third-party payer in exchange for providing healthcare services to attributed beneficiaries. The Company is responsible for providing or paying for the cost of healthcare services required by those attributed beneficiaries for a set of services. At-risk Capitated revenue is recorded at the total amount gross in revenues because the Company is acting as a principal in arranging for, providing, and controlling the managed healthcare services provided to the attributed lives. Shared savings revenue and Care management fees are generated through contracts with large commercial payer organizations and the U.S. Federal Government. Contract Asset The Company has the following contract assets: (Dollars in Thousands) December 31, 2023 December 31, 2022 Balances for contracts with customers Accounts receivable $ 290,768 $ 189,604 Remaining Performance Obligations The Company does not disclose the value of the remaining performance obligations at the end of the reporting period or when the Company expects to recognize revenue. The Company has minimal unsatisfied performance obligations at the end of the reporting period as the Company’s patients typically are under no obligation to continue receiving services at the Company’s facilities. 3. Business Combinations During February 2023, the Company entered into the Connecticut market through the acquisition of Privia Quality Network Connecticut (“PQN-CT”), whereby Privia acquired a 51 % ownership interest in PQN-CT. The acquisition was accounted for using the acquisition method pursuant to the requirements of ASC 805. The results of operations of the acquisition have been included in the Company’s consolidated financial statements since the date of acquisition. During August 2023, the Company launched Washington Friendly Medical Group, a physician-owned Medical Group, with Washington Nominee PC, an entity entirely owned by a Nominee Physician, owning majority membership interest and having F-19 Table of Contents governance and control rights via the governing documents of Washington Friendly Medical Group. The Company has a contractual relationship with the Washington Nominee PC and its Nominee Physician owner through a Restriction Agreement. Washington Nominee PC owns 51 % interest in Washington Friendly Medical Group. The results of operations of the acquisition have been included in the Company’s consolidated financial statements since the date of acquisition. During October 2023, the Company acquired Privia Medical Group South Carolina, LLC, (“PMG SC”). PMG SC is a physician-owned Medical Group, with PMG South Carolina Holdings, PLLC (“Friendly SC PC”), a South Carolina professional limited liability company entirely owned by a licensed physician with a leadership role in the Company, owning majority membership interests and having governance and control rights via the governing documents of PMG SC. The Company has a contractual relationship with Friendly SC PC through a Restriction Agreement. PMG SC owns 51 % interest in Friendly SC PC. The results of operations of the acquisition have been included in the Company’s consolidated financial statements since the date of acquisition. The purchase price for the acquisitions noted above was allocated as follows: (Dollars in thousands) Total Acquisitions for the Year Ended December 31, 2023 Total Acquisitions for the Year Ended December 31, 2021 Cash paid, net of cash acquired $ 42,858 $ 32,228 Contingent payables 344 2,942 Total consideration $ 43,202 $ 35,170 Accounts receivable, lease receivable, prepaids, and other current assets $ — $ 4,735 Fixed assets — 292 Accounts payable and other current liabilities assumed — ( 5,378 ) Payer contract and physician network intangibles 55,603 4,270 Management services agreement intangible — 51,800 Goodwill 11,811 8,275 Fair value of non-controlling interests ( 24,212 ) ( 28,824 ) Total acquired net assets $ 43,202 $ 35,170 The goodwill relating to these acquisitions is not deductible for tax purposes and is primarily attributable to synergies related to the assembled workforce. Goodwill is measured as the excess of the consideration transferred over the fair value of assets acquired and liabilities assumed on the acquisition date. For the 2023 transactions related to Washington and South Carolina, the Company is in the process of completing its formal valuation analysis to identify and determine the fair value of tangible and identifiable intangible assets acquired and the liabilities assumed. Thus, the final allocation of the purchase price may differ from the preliminary estimates used at December 31, 2023 based on additional information obtained and completion of the valuation of the identifiable intangible assets. The Company does not expect any adjustments, if necessary, to be material. 4. Goodwill and Intangible Assets, Net For the purposes of the goodwill impairment assessment, the Company as a whole is considered to be the reporting unit. The Company recognizes the excess of the purchase price, plus the fair value of any non-controlling interests in the acquiree, over the fair value of identifiable net assets acquired as goodwill. The Company performs a qualitative assessment on goodwill at least annually or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. If it is determined in the qualitative assessment that the fair value of a reporting unit is more likely than not below its carrying amount, then the Company will perform a quantitative impairment test. The quantitative goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. Any excess in the carrying value of a reporting unit’s goodwill over its fair value is recognized as an impairment loss, limited to the total amount of goodwill allocated to that reporting unit. The Company’s carrying value of goodwill at December 31, 2023 and 2022 is $ 138.7 million and $ 126.9 million, respectively. No indicators of impairment were identified during the years ended December 31, 2023, 2022, and 2021. During the year ended December 31, 2023, Privia entered into three new markets resulting in the recording of goodwill. During February 2023, the Company entered into the Connecticut market through the acquisition of Privia Quality Network Connecticut (“PQN-CT”), whereby Privia acquired majority ownership in PQN-CT. During August 2023, the Company entered into the Washington market through the launch of Washington Friendly Medical Group in affiliation with Walla Walla Clinic, a multi-specialty group practice with more than 50 providers and 3 care center locations. During October 2023, the Company entered into the South Carolina market through the acquisition of Privia Medical Group South Carolina, LLC (“PMG SC”), whereby Privia acquired majority ownership in PMG SC. During the year ended December 31, 2023, the Company recorded Goodwill of $ 11.8 million in connection with PQN-CT, Washington Friendly Medical Group and PMG SC, which represents the excess of the purchase price over the fair value of the net assets acquired. F-20 Table of Contents A summary of the Company’s intangible assets is as follows: December 31, 2023 December 31, 2022 (Dollars in thousands) Intangible Assets Accumulated Amortization Intangible Assets Accumulated Amortization Trade names $ 4,600 $ 2,147 $ 4,600 $ 1,917 Consumer customer relationships 3,100 2,566 3,100 2,291 Management Service Agreement 2,200 1,134 2,200 997 Physician network 7,446 362 1,520 127 Payer contracts 52,427 2,184 2,750 164 MSO Service Agreement 51,800 5,550 51,800 3,087 121,573 $ 13,943 65,970 $ 8,583 Less accumulated amortization ( 13,943 ) ( 8,583 ) Intangible assets, net $ 107,630 $ 57,387 The remaining weighted average life of all amortizable intangible assets is approximately 18.3 years at December 31, 2023. Amortization expense for intangible assets was approximately $ 5.4 million for the year ended December 31, 2023, $ 3.4 million for the year ended December 31, 2022 and $ 1.3 million for the year ended December 31, 2021, respectively. Estimated amortization expense for the Company’s intangible assets for the following five years is as follows: (Dollars in Thousands) 2024 $ 6,023 2025 5,857 2026 5,857 2027 5,857 2028 5,857 Thereafter 78,179 Total $ 107,630 5. Leases The Company leases office space under various operating lease agreements. The initial terms of these leases range from 2 to 9 years and generally provide for periodic rent increases and renewal options. The components of lease expense were as follows: (Dollars in Thousands) For the Years Ended December 31, 2023 2022 Operating lease cost $ 2,696 $ 2,669 Cash paid for amounts included in the measurement of lease liabilities - operating leases $ 3,861 $ 2,971 Weighted-average remaining lease term - operating leases 3.8 Years 4.4 Years Weighted-average discount rate - operating leases 2.7 % 3.0 % New ROU assets recognized in exchange for new lease liabilities $ — $ 147 F-21 Table of Contents The aggregate future lease payments for operating leases in the years subsequent to December 31, 2023 are as follows: (Dollars in Thousands) 2024 $ 2,904 2025 2,401 2026 1,762 2027 814 2028 399 Thereafter 402 Total future lease payments 8,682 Imputed interest ( 393 ) Total $ 8,289 6. Property and Equipment, Net A summary of the Company’s property and equipment, net is as follows: (Dollars in Thousands) December 31, 2023 December 31, 2022 Furniture and fixtures $ 1,402 $ 1,402 Computer equipment 1,686 1,657 Leasehold improvements 4,939 4,855 8,027 7,914 Less accumulated depreciation and amortization ( 5,702 ) ( 4,528 ) Property and equipment, net $ 2,325 $ 3,386 Depreciation and amortization expenses for property and equipment assets was approximately $ 1.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. 7. Account Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following: (Dollars in Thousands) December 31, 2023 December 31, 2022 Accounts payable $ 7,882 $ 6,731 Accrued employee compensation and benefits 5,973 6,177 Bonuses payable 15,073 15,203 Other accrued expenses 28,903 24,726 Total accounts payable and accrued expenses $ 57,831 $ 52,837 8. Provider Liability Provider liability, previously referred to as “Physician and Practice liability”, represents costs payable to physicians, hospitals and other ancillary providers, including both Privia physicians, their related physician practices, and providers the Company has contracted with through payer partners. Those costs include amounts that have not yet been paid for physician guaranteed payments and other required distributions pursuant to the service agreements as well as medical claims costs for services provided to attributed beneficiaries for which the Company is financially responsible under at-risk Capitated revenue arrangements whether paid directly by the Company or indirectly by payers with whom the Company has contracted. Provider expenses are recognized in the period in which services are provided and include estimates of claims that have been incurred but have either not yet been received, processed, or paid and as such, not reported. Provider liability estimates are developed using actuarial methods commonly used by health insurance actuaries that include a number of factors and assumptions including medical service utilization trends, changes in membership, observed medical cost trends, historical claim payment patterns and other factors. Each period, the Company re-examines previously established provider liability estimates based on actual claim submissions and other changes in facts and circumstances. As more complete claims information becomes available, the Company adjusts its estimates and recognizes those changes in estimates in the period in which the change is identified. The difference between the estimated liability and the actual settlements of claims is recognized in the period in which the claims are settled. The Company’s physician and practice F-22 Table of Contents liability balance represents management’s best estimate of its liability for unpaid Provider expenses as of December 31, 2023. The Company uses judgment to determine the appropriate assumptions for developing the required estimates. The Company’s liabilities for unpaid medical claims under at-risk capitation arrangements, which are included in Provider liability in the Company’s consolidated balance sheets, were as follows: (Dollars in Thousands) December 31, 2023 December 31, 2022 Balance, beginning of period $ 28,617 $ — Incurred health care costs: Current year 334,383 218,199 Prior years 2,436 — Total claim incurred 336,819 218,199 Claims paid: Current year ( 270,810 ) ( 189,582 ) Prior year ( 27,488 ) — Total claims paid ( 298,298 ) ( 189,582 ) Balance, end of period $ 67,138 $ 28,617 9. Debt On November 15, 2019, the Company entered into a Credit Agreement (the “Original Credit Agreement”) by and among Privia Health, LLC, as the borrower, PH Group Holdings Corp. and certain subsidiaries of Privia Health, LLC, as guarantors, Silicon Valley Bank, as administrative agent and collateral agent (the “Administrative Agent”). On August 27, 2021, the Company and certain of its subsidiaries entered into an assumption agreement and third amendment (the “Third Amendment”) to the Original Credit Agreement (as amended by the Third Amendment, the “Credit Agreement”). Pursuant to the Third Amendment, the Company became the parent guarantor under the Credit Agreement and granted the Administrative Agent a first-priority security interest on substantially all of its real and personal property, subject to permitted liens. On March 16, 2023, the Company provided notice to terminate the Credit Agreement. As of March 16, 2023, the Company had no borrowings and no letters of credit outstanding under the Credit Agreement. The Company did not incur any early termination penalties in connection with the termination of the Credit Agreement. On November 16, 2023, Privia Health Group, Inc., PH Group Holdings Corp., and Privia Health, LLC, as borrower, (collectively, the “Privia Parties”) entered into a credit agreement (the “Revolving Credit Agreement”) with Wells Fargo Bank, National Association, as issuing lender, and certain other lenders, pursuant to which the Privia Parties established a $ 125 million five-year senior secured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Agreement bears interest at a base rate plus applicable margin, with the base rate being the higher of the Prime Rate or the Federal Funds Rate plus 0.50 %. In no event will the base rate be less than 1.0 % The Revolving Credit Facility, which expires in November 2028, provides for revolving loans and the issuance of letters of credit in an aggregate amount of $ 125 million. On a quarterly basis, the Company pays a commitment fee on the unused Revolving Credit Facility ( 0.20 % per annum). The proceeds of these loans and the letters of credit issued under the Revolving Credit Facility may be used for capital expenditures, expenses related to transactions and general corporate purposes. The Revolving Credit Agreement contains customary affirmative, negative and financial covenants, and customary events of default. The occurrence of an event of default under the Revolving Credit Agreement may cause the unpaid principal and accrued interest, and all other obligations under the Revolving Credit Agreement to become immediately due and payable. As of December 31, 2023, no amounts were outstanding under the Revolving Credit Facility. Substantially all of the Company’s real and personal property serve as collateral under the above debt arrangements. F-23 Table of Contents 10. Income Taxes The provision for (benefit from) income taxes for years ending December 31, 2023, 2022 and 2021 are as follows: December 31, (Dollars in Thousands) 2023 2022 2021 Current: Federal $ — $ — $ — State and Local 528 509 345 Total current 528 509 345 Deferred: Federal 6,221 ( 5,478 ) ( 23,650 ) State and Local 1,244 ( 1,547 ) ( 4,552 ) Total deferred 7,465 ( 7,025 ) ( 28,202 ) Total provision for (benefit from) incomes taxes $ 7,993 $ ( 6,516 ) $ ( 27,857 ) Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and deferred tax liabilities as of December 31, 2023 and 2022 are as follows: (Dollars in Thousands) December 31, 2023 December 31, 2022 Deferred tax assets Net operating loss carryforwards $ 22,071 $ 25,610 Stock compensation 19,598 22,808 Lease liability 2,581 3,010 Other accruals 74 437 Total gross tax assets 44,324 51,865 Less: valuation allowance — — Total deferred tax assets 44,324 51,865 Deferred tax liabilities Fixed and intangible assets ( 7,302 ) ( 9,418 ) Right-of-use asset ( 1,822 ) ( 2,079 ) Total deferred tax liabilities ( 9,124 ) ( 11,497 ) Deferred tax assets, net $ 35,200 $ 40,368 For the years ended December 31, 2023 and 2022, the Company completed an assessment of the likelihood of realizing all or some portion of its net deferred tax assets. Based on an analysis of the positive and negative evidence, the Company determined it was more likely than not that the Company will be in a position to realize the benefits of the deferred tax asset as a result of consistent profitability excluding non-recurring stock compensation charges in connection with the Company's IPO. As such, no valuation allowance was recorded in either year. As of December 31, 2023, the Company has generated federal and state net operating loss carryforwards of approximately $ 89.0 million and $ 63.7 million (post-apportioned state NOL) respectively, that begin to expire in 2034. F-24 Table of Contents The following is a reconciliation of income tax computed at the U.S. federal statutory income tax rate to the benefit from income taxes: Amount Percent December 31, December 31, (Dollars in Thousands) 2023 2022 2021 2023 2022 2021 Tax provision (benefit) computed at Federal statutory income tax rate $ 6,094 $ ( 3,901 ) $ ( 45,806 ) 21.0 % 21.0 % 21.0 % Stock compensation ( 22 ) ( 2,241 ) 21,399 ( 0.1 ) 12.1 ( 9.8 ) State tax expense, net of Federal benefit 2,140 ( 707 ) ( 4,280 ) 7.4 3.8 2.0 Rate change ( 115 ) ( 538 ) 10 ( 0.4 ) 2.9 — Non-controlling interest 331 722 488 1.1 ( 3.9 ) ( 0.2 ) Other ( 435 ) 149 332 ( 1.5 ) ( 0.8 ) ( 0.2 ) Provision for (benefit from) income taxes $ 7,993 $ ( 6,516 ) $ ( 27,857 ) 27.5 % 35.1 % 12.8 % The stock compensation impacting the income tax provision are primarily attributable to stock-based compensation expense that is not deductible under Section 162(m) offset by tax deductible stock based compensation. The 2022, 2021, and 2020 federal and state income tax returns are within the statute of limitations (“SOL”) and are currently not under examination by any federal or state tax authority. The Company assesses the uncertainty in its income tax positions to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals of litigation processes, based on the technical merits of the position. For the tax position meeting the more-likely-than-not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon the ultimate settlement with the relevant taxing authority. As of December 31, 2023, 2022, and 2021, the Company had not recorded any reserves for uncertain tax positions or related interest and penalties. 11. Stockholders’ Equity Novant Health Private Placement On March 2, 2023, the Company entered into a strategic alignment agreement (the “Equity Alignment Agreement”) with ChoiceHealth, Inc. (“Novant Sub”), a subsidiary of Novant Health, Inc. (“Novant Health”), in connection with the strategic partnership between the Company and Novant Health entered into in November 2022 to launch Privia Medical Group — North Carolina. Pursuant to the Equity Alignment Agreement, Novant Sub will be entitled to receive, and the Company agreed to issue, shares of the Company’s common stock, par value $ 0.01 per share (the “Common Stock”), to Novant Sub any time each of the following events occurs, in the following amounts: 1. The Company will issue 745,712 shares of Common Stock to Novant Sub each time Privia Medical Group — North Carolina implements 1,000 providers in specified markets in North Carolina. 2. The Company will issue 372,856 shares of Common Stock to Novant Sub each time the Company and Novant Health enter a new state pursuant to a mutually agreed business plan developed for such state. 3. The Company will issue 745,712 shares of Common Stock to Novant Sub each time the partnership between the Company and Novant Health for each new state implements 1,000 providers in specified core markets in such state. The Equity Alignment Agreement will renew every four years , subject to the delivery of a third-party valuation opinion. The renewal will be required to use the same issuance triggers, but the number of shares may be adjusted to be consistent with the valuation opinion. The number of shares of Common Stock issuable to Novant Sub under the Equity Alignment Agreement and all renewals of the Equity Alignment Agreement will be subject to a total cap equal to 19.9 % of the total number of shares of Common Stock outstanding as of the effective date of the Equity Alignment Agreement and as of the effective date of all renewals, whichever is lowest. PH Group Holdings Corp Stock Option Plan The PH Group Holdings Corp. Stock Option Plan (the PH Group Option Plan) was created on January 17, 2014. The employees of the Company and its subsidiaries, consultants of the Company and the employees of Brighton Health Plan Services Holdings Corp. (BHPS) (a wholly-owned subsidiary of BHG Holdings) and its subsidiaries who have performed services for the Company were the participants of the PH Group Option Plan. The aggregate number of shares of common stock for which options may be granted under the PH Group Option Plan shall not exceed 4,229,850 shares. F-25 Table of Contents Effective August 11, 2016, the PH Group Option Plan was transferred to its parent and became the PH Group Parent Corp. Stock Option Plan (the “PH Parent Option Plan” or “Prior Plan”). All other terms in the PH Group Option Plan remained unchanged in the PH Parent Option Plan at the effective date of the transfer. Effective August 28, 2018, the PH Parent Option Plan was amended and restated to increase the aggregate number of shares of common stock for which options may be granted from 4,229,850 shares to 18,985,846 shares. On April 1, 2021, contingent on the consummation of the IPO, the Board of Directors approved a modification to the PH Group Parent Corp. Stock Option Plan of the vesting conditions of certain outstanding stock option grants to certain employees and consultants. The modification accelerated by one year any time vested options that were not previously 100% vested and modified the vesting condition of the performance based options to vest 60 % at IPO, 20 % 12 months after IPO and 20 % 18 months after the IPO. The modification also accelerated the CEO’s time based options by an additional four months such that 100 % of his time based options are vested. We recognized stock-based compensation of $ 195.1 million in the second quarter of 2021 related to these modifications. 2021 Omnibus Incentive Plan On April 6, 2021, the Company approved the Privia Health Group, Inc. 2021 Omnibus Incentive Plan (the “Plan”) which permits awards up to 10,278,581 shares of the Company’s common stock. The Plan also provides for an automatic increase on the first day of each fiscal year following the effective date of the Plan by an amount equal to the lesser of (i) 5 % of outstanding shares on December 31 of the immediately preceding fiscal year or (ii) such number of shares as determined by the Company’s Compensation Committee in its discretion. The Plan provides for the granting of stock options at a price equal to at least 100 % of the fair market value of the Company’s common stock as of the date of grant. The Plan also provides for the granting of Stock Appreciation Rights, Restricted Stock, Restricted Stock Units (“RSUs”), Performance Awards and other cash-based or other stock-based awards, all which must be granted at not less than the fair market value of the Company’s common stock as of the date of grant. Participants in the Plan may include employees, consultants, other service providers and non-employee directors. On the effective date of the IPO, the Company issued 1,183,871 restricted stock units at the offering price and 3,683,217 options, with an exercise price equal to the offering price. These issuances are expected to generate stock-based compensation expense of $ 62.3 million to be recognized over the next four years starting on the effective date of the IPO as both the restricted stock units and stock options vest. The 2021 Plan is intended as the successor to and continuation of the PH Parent Option Plan. No additional stock awards will be granted under the PH Parent Option Plan. 2021 Employee Stock Purchase Plan In April 2021, the Company’s Board of Directors approved the Company’s 2021 Employee Stock Purchase Plan (“2021 ESPP”). The 2021 ESPP became effective upon the execution of the underwriting agreement for the Company’s IPO in April 2021. Per the 2021 ESPP, shares may be newly issued shares, treasury shares or shares acquired on the open market. The Compensation Committee may elect to increase the total number of Shares available for purchase under the 2021 ESPP as of the first day of each Company fiscal year following the effective date of the 2021 ESPP in an amount equal to up to one percent ( 1 %) of the shares issued and outstanding on the immediately preceding December 31; provided that the maximum number of shares that may be issued under the Plan in any event shall be 10,278,581 shares. As of the IPO, the Company has reserved 1,027,858 shares of common stock for issuance under the 2021 ESPP. As of December 31, 2023, no shares have been issued under this plan. Stock option activity For the Options granted under the Plan, Privia used a Black-Scholes option pricing model to determine the fair value. Option valuation models require several inputs, such as the expected stock price volatility, the fair value of the stock, the risk free rate, the expected term of the award and the dividend yield. Below outlines the assumptions used in the Black-Scholes modeling and calculation of the option fair value. • Volatility - The Company determines volatility based on the historical stock volatilities of a group of publicly listed guideline companies over a period equal to the expected terms of the options, as the Company does not have sufficient trading history to determine the volatility of the Company’s common stock. • Fair value of common stock - Prior to the IPO in April 2021, the Company estimated the fair value of the Company’s common stock using various valuation methodologies, including valuation analyses performed by third-party valuation firms. After the IPO, the Company used the publicly quoted price as the fair value of the Company’s common stock. • Risk-free interest rate - The Company bases the risk-free interest rate used in the Black-Scholes option-pricing model on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent expected term of the options for each option group. • Expected term - The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The expected term assumption is based on the simplified method in which the expected term is equal to the F-26 Table of Contents average of the stock-based award’s weighted-average vesting period and its contractual term. The Company expects to continue using the simplified method until sufficient information about historical behavior is available. • Dividend yield - The Company has not declared or paid any cash dividend and does not currently plan to pay a cash dividend in the foreseeable future. Consequently, the Company used an expected dividend yield of zero. The Company estimated the fair value of stock option grants using a Black-Scholes option pricing model with the following assumptions presented on a weighted-average basis (no stock options granted for the year ended December 31, 2023): For the Year Ended December 31, 2022 Expected term in years 6.25 Years Expected stock price volatility 44.0 % Risk-Free interest rate 2.4 % Expected dividend yield — % The following table summarizes stock option activity under the PH Parent Option Plan and Plan: Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2021 18,300,959 $ 2.01 7.82 $ — Granted 3,753,317 23.15 Exercised ( 1,935,302 ) 2.02 Forfeited ( 202,772 ) 10.87 Outstanding at December 31, 2021 19,916,202 $ 5.90 9.36 $ 398,117 Granted 93,793 26.35 Exercised ( 6,675,810 ) 2.01 Forfeited ( 157,464 ) 19.42 Outstanding at December 31, 2022 13,176,721 $ 7.86 9.02 $ 197,695 Granted — — Exercised ( 3,104,257 ) 2.82 Forfeited ( 251,710 ) 22.78 Balance at December 31, 2023 9,820,754 $ 9.06 7.90 $ 138,028 Exercisable at December 31, 2023 7,610,203 $ 5.01 8.09 $ 137,529 RSU Activity The following table summarizes the RSU activity under the Plan: F-27 Table of Contents Number of Shares Grant Date Fair Value Outstanding at January 1, 2021 — $ — Granted 1,199,315 23.19 Vested ( 195,652 ) 23.00 Forfeited ( 18,762 ) 23.00 Unvested and outstanding at December 31, 2021 984,901 $ 23.23 Granted 1,679,107 24.16 Vested ( 175,300 ) 23.68 Forfeited ( 84,044 ) 24.32 Unvested and outstanding at December 31, 2022 2,404,664 $ 23.81 Granted 1,161,301 27.50 Vested ( 425,076 ) 24.11 Forfeited ( 193,787 ) 24.43 Unvested and outstanding at December 31, 2023 2,947,102 $ 25.18 PSU Activity The following table summarizes the PSU activity under the Plan: Number of Shares Grant Date Fair Value Unvested and outstanding at January 1, 2023 — $ — Granted (1)(2) 781,132 31.91 Vested — — Forfeited ( 5,103 ) 27.61 Unvested and outstanding at December 31, 2023 776,029 $ 31.94 (1) During the twelve months ended December 31, 2023, Privia awarded RSUs in the form of PSUs to certain executive officers, market leaders and employees which vest after three years , subject to continued employment of the recipients and the achievement of certain performance metric targets. The Company has identified certain performance metrics associated with these awards and certain targets will be fully established at a future date. The Company has determined that the service inception date precedes the grant date for these awards as (a) the awards were authorized prior to establishing an accounting grant date, (b) the recipients began providing services prior to the grant date, and (c) there are performance conditions that, if not met by the accounting grant date, will result in the forfeiture of the awards. As the service inception date precedes the accounting grant date, the Company recognizes stock-based compensation expense over the requisite service period based on the fair value at each reporting date. (2) During the twelve months ended December 31, 2023, Privia awarded RSUs in the form of PSUs which vest after four years , subject to continued employment and the achievement of certain market performance metric targets. The fair value of the PSUs are determined using a Monte Carlo valuation model as of the grant date and the stock-based compensation is recognized on a straight-line basis over the requisite service period. Stock-based compensation expense Total stock-based compensation expense was approximately $ 37.1 million, $ 67.4 million and $ 253.5 million for the years ended December 31, 2023, 2022, 2021 respectively. A tax benefit of approximately $ 2.4 million and $ 11.2 million for the years ended December 31, 2023 and 2022, respectively, was included in the Company’s net operating loss carry-forward that could potentially reduce future tax liabilities. At December 31, 2023, there was approximately $ 79.4 million of unrecognized stock-based compensation expense related to unvested options, RSUs and PSUs, net of forfeitures, that is expected to be recognized over a weighted-average period of 1.2 years. As of December 31, 2023, the total intrinsic value of options exercised and the total fair value of shares vested for the 2023 period was approximately $ 74.7 million and $ 14.6 million, respectively. Stock-based compensation expense was classified in the consolidated statements of operations as follows: For the Years Ended December 31, (Dollars in Thousands) 2023 2022 2021 Cost of platform $ 11,980 $ 13,758 $ 43,888 Sales and marketing 2,475 2,711 8,944 General and administrative 22,643 50,890 200,699 Total stock-based compensation $ 37,098 $ 67,359 $ 253,531 12. Employee Benefit Plans The Company has a voluntary 401(k) savings plan that provides a 3.0 % safe harbor contribution to all employees. In addition, a minimum profit-sharing contribution is required to satisfy year end plan testing. The profit-sharing contribution was approximately 1.4 % in 2023, 2022 and 2021. The Company made contributions of approximately $ 4.7 million, $ 4.1 million and $ 2.3 million for the F-28 Table of Contents years ended December 31, 2023, 2022 and 2021, respectively, recorded within cost of platform, sales and marketing and general and administrative expenses in the accompanying consolidated statements of operations. 13. Related-Party Transactions On November 3, 2022, the Company announced a joint venture and strategic partnership with Novant Health Enterprises, a division of Novant Health, to launch Privia Medical Group – North Carolina for independent providers throughout North Carolina. A member of our board of directors is a member of the board of trustees of Novant Health. No revenue or expense was recognized related to Novant Health for the years ended December 31, 2023 and 2022. 14. Commitments and Contingencies There are no material commitments and contingencies as of December 31, 2023 and 2022. 15. Concentrations of Credit Risk Our financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. While the Company’s cash and cash equivalents are managed by reputable financial institutions, the Company’s cash balances with the individual institutions may at times exceed the federally insured limits. At December 31, 2023, substantially all of the Company’s cash and cash equivalents were held at two financial institutions. The following table provides the Company’s revenue concentrations with respect to major payers as a percentage of the Company’s total revenues: For the Years Ended December 31, (Dollars in Thousands) 2023 2022 2021 Payer A 30 % 32 % 31 % Payer B 15 % 16 % 17 % Payer C 11 % 10 % 10 % The following table provides the Company’s concentrations of credit risk with respect to major payers as a percentage of receivables, net: For the Years Ended December 31, (Dollars in Thousands) 2023 2022 Payer A 23 % 21 % Payer B 18 % 19 % Payer C 14 % 15 % 16. Net Income (Loss) Per Share A reconciliation of net income (loss) available to common shareholders and the number of shares in the calculation of basic and diluted earnings (loss) income per share was calculated as follows: For the Years Ended December 31, (in thousands, except for share and per share amounts) 2023 2022 2021 Net income (loss) attributable to Privia Health Group, Inc. common stockholders $ 23,079 $ ( 8,585 ) $ ( 188,230 ) Weighted average common shares outstanding - basic 116,731,406 110,695,266 102,952,370 Weighted average common share outstanding - diluted 124,686,067 110,695,266 102,952,370 Earnings (loss) per share attributable to Privia Health Group, Inc. common stockholders – basic $ 0.20 $ ( 0.08 ) $ ( 1.83 ) Earnings (loss) per share attributable to Privia Health Group, Inc. common stockholders – diluted $ 0.19 $ ( 0.08 ) $ ( 1.83 ) The treasury stock method is used to consider the effect of the potentially dilutive stock options. The following weighted-average outstanding shares of potentially dilutive securities were excluded from computation of diluted loss per share attributable to common shareholders for the period presented because including them would have been antidilutive: F-29 Table of Contents For the Years Ended December 31, 2023 2022 2021 Potentially dilutive stock options to purchase common stock, RSUs and PSUs 5,589,224 15,581,385 20,901,103 Total potentially dilutive shares 5,589,224 15,581,385 20,901,103 17. Segment Financial Information The Company determined in accordance with ASC Topic 280, Segment Reporting (“ASC 280”), that the Company operates in and reports as a single operating segment, which is to care for its patients’ needs. Operating segments are identified as components of an enterprise where separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”), or decision-making group, who reviews financial operating results on a regular basis for the purpose of allocating resources and evaluating financial performance. The Company defines its CODM as its Chief Executive Officer, who regularly reviews financial operating results on a consolidated basis for purposes of allocating resources and evaluating financial performance. Although the Company derives its revenues from a number of different geographic regions, the Company neither allocates resources based on the operating results from the individual regions, nor manages each individual region as a separate business unit. The Company’s CODM manages the operations on a consolidated basis to make decisions about overall corporate resource allocation and to assess overall corporate profitability. As of December 31, 2023 and 2022, all of the Company’s long-lived assets were located in the United States. F-30