What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-27 · 94 added, 206 removed, 397 unchanged (43% of the section changed)

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including, but not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Information Regarding Forward-Looking Statements” in this Annual Report on Form 10-K.

Privia Health 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 on the “Privia Platform”.

We directly address three of the most pressing issues facing physicians today:

the transition to the VBC reimbursement model, the ever-increasing administrative requirements to operate a successful medical practice and the need to engage patients using modern user-friendly technology.

We seek to accomplish these objectives by entering markets and organizing existing physicians and non-physician clinicians into a unique practice model that combines the advantages of a partnership in a large regional Medical Group with significant local autonomy for Privia Providers joining our Medical Groups.

Our Medical Groups are designated as in-network by all major health insurance payers in all of our markets and all Privia Providers are credentialed with such health insurance payers.

Under our standard model, Privia Physicians join the Medical Group in their geographic market as an owner of the Medical Group.

Certain of our Medical Groups are Owned Medical Groups, with Privia Physicians owning a minority interest.

However, in those markets in which state regulations do not allow us to own physician practices, the Medical Groups are Non-Owned Medical Groups or Friendly Medical Groups.

Privia Physicians who owned their own practices prior to joining Privia continue to own their Affiliated Practices, but those Affiliated Practices no longer furnish healthcare services.

The Medical Groups have no ownership in the underlying Affiliated Practices, but the Affiliated Practices do provide certain services to our Medical Groups, such as use of space, non-physician staffing, equipment and supplies.

We provide management services to each Medical Group through a local MSO established with the objective of maximizing the independence and autonomy of our Affiliated Practices, while providing Medical Groups with access to VBC opportunities either directly or through Privia-owned ACOs.

Privia Health is a technology-driven, national physician-enablement company that collaborates with physician practices, health plans, and health systems to achieve the quadruple aim of better outcomes, lower costs, improved patient experience, and happier and more engaged providers.

We seek to accomplish the quadruple aim by entering markets and organizing existing physicians and non-physician clinicians into a unique practice model that combines the advantages of a partnership in a large regional Medical Group with significant provider autonomy for Privia Providers joining our Medical Groups.

Under our Privia Medical Group model, Privia Physicians join the Medical Group in their geographic market as an owner of the Medical Group.

We own a majority interest in certain of our Medical Groups, with Privia Physicians collectively owning a minority interest, and we own no interest in certain other Non-Owned Medical Groups.

In those markets in which state regulations do not allow us to own Medical Groups, the Non-Owned Medical Groups may be owned by the Privia Physicians or owned indirectly by a licensed physician holding a Privia leadership position, otherwise referred to as a Friendly Medical Group.

Privia Physicians furnish healthcare services through our Medical Groups and continue to own their Affiliated Practices, which provide certain services to the Medical Groups, such as use of space, non-physician staffing, equipment and supplies.

We provide management services to the Medical Groups through a local MSO, which provides Medical Groups with access to VBC opportunities either directly or through Privia-owned ACOs.

We have national committees that distribute quality guidance, and we employ Chief Medical Officers who provide clinical oversight and direction over the clinical affairs of the Owned Medical Groups.

Additionally, we hold the provider contracts, maintain the patient records, set reimbursement rates, and negotiate payer contracts on behalf of the Owned Medical Groups and the owned ACOs.

Additionally, we hold the provider contracts, maintain the patient records, set reimbursement rates, and negotiate payer contracts on behalf of the Owned Medical Groups.

In some instances, we also move into and expand in new and existing markets through our Privia Care Partners model, which offers an affiliation model to providers who are looking solely for VBC solutions.

For those practices, we furnish population health services, reporting and analytics, along with certain management.

GAAP Financial Measures

• Revenue was $1,657.7 million, $1,356.7 million and $966.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

• Revenue was $1.74 billion, $1.66 billion and $1.36 billion for the years ended December 31, 2024, 2023 and 2022, respectively.

• Operating income (loss) was $17.0 million, $20.6 million and $(19.1) million for the years ended December 31, 2024, 2023 and 2022, respectively;

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We recognize revenue from multiple stakeholders, including health care consumers, health insurers, employers, providers and health systems.

Our revenue includes (i) FFS revenue generated from providing healthcare services to patients through Privia Providers of Owned Medical Groups or administrative fees collected for providing administrative services to Non-Owned Medical Groups, (ii) VBC revenue collected on behalf of our providers, primarily capitated revenue, shared savings (including surplus payments, shared savings, total cost of care budget payments and similar payments) and per member per month (PMPM) fees (including care management fees, management services fees, care coordination fees and all other similar administrative fees), and (iii) other revenue from additional services, such as concierge services, virtual visits, virtual scribes and coding.

Our revenue includes (i) FFS revenue generated from providing healthcare services to patients through Privia Providers of Owned Medical Groups or administrative fees collected for providing administrative services to Non-Owned Medical Groups, (ii) VBC revenue collected on behalf of our providers, primarily capitated revenue, shared savings (including surplus payments, shared savings, total cost of care budget payments and similar payments) and PMPM fees (including care management fees, management services fees, care coordination fees and all other similar administrative fees), and (iii) other revenue from additional services, such as concierge services, virtual visits, virtual scribes and coding.

We generate FFS-patient care revenue when we collect reimbursements for FFS medical services provided by Privia Providers.

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We generate VBC revenue when our providers are reimbursed through traditional FFS Medicare, MSSP, Medicare Advantage, commercial payers and other existing and emerging direct payer and employer contracting programs.

Given recent regulatory and utilization headwinds in Medicare Advantage, the Company is currently renegotiating certain capitation agreements for more favorable contract structures with potential, positive contribution margin, which the Company expects would move approximately 19,900 attributed lives from capitated revenue, which is recorded on a gross basis, to shared savings revenue, which is recorded on a net basis.

Given recent regulatory and utilization headwinds in Medicare Advantage, during the first quarter of 2024, the Company renegotiated certain capitation agreements for more favorable contract structures.

The revenue is primarily collected in the form of (i) Capitated revenue earned by providing healthcare service to Medicare Advantage attributed beneficiaries for a defined group of services including professional, institutional and pharmacy through a contract that is typically known as an “at-risk contract”, (ii) Shared savings earned based on improved quality and lower cost of care for our attributed lives in VBC incentive arrangements and (iii) Care management fees to cover costs of services typically not reimbursed under traditional FFS payment models, including population management, care coordination, advanced technology and analytics.

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The remainder of our revenue is derived from leveraging our existing base of providers and patients to deliver value-oriented services such as virtual visits, virtual scribes and coding.

Other revenue represented 0.5%, 0.4% and 0.6% of total revenue for the years ended December 31, 2023, 2022 and 2021, respectively.

Other revenue represented 0.5% of total revenue for the years ended December 31, 2024 and 2023, respectively, and 0.4% for the years ended December 31, 2022.

Key Factors Affecting Our Performance

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We believe the number of attributed patient lives in VBC programs is a key driver of our VBC revenue growth.

Our branding and marketing strategies to drive growth in our practices has continued to result in increased engagement with new and existing patients.

Our branding and marketing strategies to drive growth in our practices have continued to result in increased engagement with new and existing patients.

We believe our continued success in growing the visibility of the Privia brand will result in increased patient panels per provider and contribute incremental revenue in both FFS and VBC for our practices.

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Based upon our experience to date, we believe Privia can succeed in all reimbursement environments and payment models.

The data we collected from older provider cohorts consistently suggest that we improve their performance in both FFS and VBC metrics over time and inform our expectations for our new markets.

The data we collected from older provider cohorts consistently suggest that we improve their performance in both FFS and VBC metrics over

time and inform our expectations for our new markets.

We believe our in-market operating structure and ability to serve providers wherever they are on their transition to VBC can benefit physicians and providers throughout the U.S.

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Our business model also gives us flexibility for future, incremental growth through the acquisition of minority or majority stakes in our practices and opening de-novo, fully-owned sites of care focused on Medicare Advantage and direct contracting models.

In January 2023, we announced a partnership with Beebe Healthcare, a not-for-profit community healthcare system located in Sussex County, Delaware, to launch an ACO in that state.

However, we have notified CMS that our ACO in the Delaware market will terminate its participation in MSSP effective January 1, 2024.

In February 2023, we 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 of Connecticut (“PQN-CT”).

We acquired a majority ownership in PQN-CT.

During the three months ended March 31, 2023 we recorded Goodwill of $8.1 million in connection with the acquisition, which represents the excess of the purchase price over the fair value of the net assets acquired.

In March 2023, the Company announced signing of definitive agreements forming a strategic partnership with OhioHealth, a nationally recognized, not-for-profit, charitable, healthcare outreach of the United Methodist Church, to launch Privia Medical Group – Ohio for community physicians throughout the state of Ohio.

In August 2023, the Company launched Privia Medical Group Washington in affiliation with Walla Walla Clinic, an independent multi-specialty group practice with more than 50 providers and 3 care center locations.

In October 2023, the Company launched Privia Medical Group South Carolina in affiliation with Greenville ENT and Allergy Associates, an independent specialty group practice.

During 2023, the Company entered four new markets through partnerships or affiliations with clinically integrated networks, health systems and independent group practices in Connecticut, Ohio, Washington state and South Carolina.

In November 2024, the Company announced it had entered into the Indiana market through the acquisition of an independent group practice, renamed Privia Medical Group Indiana, LLC (“PMG IN”), whereby Privia acquired majority ownership in PMG IN.

Provider Satisfaction and Retention

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Our FFS and VBC revenue is dependent upon our contracts and relationships with payers.

We partner with a large and diverse set of payer groups nationally and in each of our markets to form provider networks and to lower the overall cost of care, and we structure bespoke contracts to help both providers and payers achieve their objectives in a mutually aligned manner.

We partner with a large and varied set of payer groups nationally and in each of our markets to form provider networks and to lower the overall cost of care, and we structure bespoke contracts to help both providers and payers achieve their objectives in a mutually aligned manner.

Maintaining, supporting and increasing the number of these contracts and relationships, particularly as we enter new markets, is important for our long-term success.

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To do so, we will need to continue enhancing our VBC capabilities and executing on initiatives to deliver next generation access, superior quality metrics and lower cost of care.

Privia Health launched three new ACOs in the first quarter of 2023, expanding the total number of Privia-owned ACOs to ten, serving beneficiaries across the District of Columbia and eleven states, including California, Connecticut, Delaware, Florida, Georgia, Maryland, Montana, North Carolina, Tennessee, Texas, and Virginia.

As of December 31, 2024, the total number of Privia-owned ACOs is nine, serving beneficiaries across the District of Columbia and eleven states, including California, Connecticut, Florida, Georgia, Maryland, Montana, North Carolina, Tennessee, Texas, Virginia, and Washington state.

During 2022 and 2023, we entered into capitated payer arrangements.

The Company is currently renegotiating certain capitation agreements for more favorable contract structures with potential, positive contribution margin, which the Company expects would result in our capitated agreements covering healthcare services provided to approximately 16,000 Medicare Advantage beneficiaries, compared to approximately 35,900 MA capitated lives at year-end 2023, effective as of January 1, 2024.

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 is

entitled to fixed monthly fees from the third-party payer in exchange for providing healthcare services to attributed beneficiaries in Medicare Advantage plans.

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 is entitled to fixed monthly fees from the third-party payer in exchange for providing healthcare services to attributed beneficiaries in Medicare Advantage plans.

The fees are typically based on a percentage of the defined premium that payers receive from CMS.

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At-risk capitated fees are recorded 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 beneficiaries.

Components of Revenue

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We furnish population health services, reporting and analytics to such providers along with a menu of management services from which providers may choose.

During 2023, several Privia Care Partners’ providers transitioned to our Privia Medical Group model, which demonstrates the flexibility of our operating model and technology platform, as well as the ability to support physicians wherever they are in their transition value-based care.

As of January 1, 2024, approximately 1,350 providers with approximately 200,000 attributed lives are participating in the Privia Care Partners model.

During 2023 and 2024, several Privia Care Partners’ providers transitioned to our Privia Medical Group model, which demonstrates the flexibility of our operating model and technology platform, as well as the ability to support physicians wherever they are in their transition value-based care.

Key Metrics and Non-GAAP Financial Measures

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This growth depends, in part, on our ability to successfully add new practices in existing markets and expand into new markets.

The number of Implemented Providers increased 19.4% between December 31, 2022 and 2023 mainly due to due to organic growth in our healthcare delivery business as well as entrance into the Connecticut, Washington state and South Carolina markets.

Implemented Providers increased 8.7% between 2021 and 2022, due to the entrance into the Montana market and a full year of operations in the West Texas and California markets.

The number of Implemented Providers increased 11.2% between December 31, 2023 and 2024 mainly due to organic growth in our healthcare delivery business as well as entrance into the Indiana market.

Implemented Providers increased 19.4% between 2022 and 2023, due to organic growth in our healthcare delivery business as well as entrance into new markets.

Attributed Lives

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The number of Attributed Lives is an important measure that impacts the amount of VBC revenue we receive.

Attributed Lives increased 30.8% between December 31,

2022 and 2023 due primarily to our entrance into the Connecticut and Washington state markets as well as organic growth.

Attributed Lives increased 8.9% between 2021 and 2022, due to the launch of Privia Care Partners in January 2022, as well as organic growth in all markets.

Attributed Lives increased 12.1% between December 31, 2023 and 2024 due to organic growth in all markets.

Attributed Lives increased 30.8% between 2022 and 2023, due primarily to our entrance into the Connecticut and Washington state markets as well as organic growth.

Practice Collections

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FFS arrangements accounted for 83.2%, 76.5% and 79.1% of our practice collections for the years ended December 31, 2024, 2023 and 2022, respectively, while VBC accounted for 16.6%, 23.2% and 20.6% of practice collections for the years ended December 31, 2024, 2023 and 2022, respectively.

Practice Collections increased 17.1% for the year ended December 31, 2023 when compared to the same period in 2022 due mainly to organic growth of our healthcare delivery business, our at-risk Capitated revenue contracts and entrance into the Connecticut and Washington state markets and increased 49.1% between 2021 and 2022 due to organic growth of our healthcare delivery business, new at-risk Capitated revenue contracts, as well as a full year of operation in the West Texas and California markets and entrance into the Montana market.

Practice Collections increased 4.5% for the year ended December 31, 2024 when compared to the same period in 2023 due mainly to organic growth of our healthcare delivery business and our entrances into the Ohio, South Carolina, Washington state and Indiana markets and increased 17.1% between 2022 and 2023 due mainly to organic growth of our healthcare delivery business, our at-risk Capitated revenue contracts and entrance into the Connecticut and Washington state markets.

Non-GAAP Financial Measures

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Investors are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business .

In the third quarter of 2022, we changed the definition of Adjusted EBITDA to exclude employer taxes on equity vesting/exercise.

In prior periods, this amount was considered de minimis and the Adjusted EBITDA amounts were not adjusted.

Employer payroll tax expense related to employee stock transactions are tied to the vesting or exercise of underlying equity awards and the price of our common stock at the time of vesting, which varies in amount from period to period and is dependent on market forces that are often beyond our control.

As a result, management excludes this item from our internal operating forecasts and models.

Management believes that non-GAAP measures adjusted for employer payroll taxes on employee stock transactions provide investors with a basis to measure our core performance against the performance of other companies without the variability created by employer payroll taxes on employee stock transactions as a result of the stock price at the time of employee exercise.

For the Years Ended December 31,

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Gross Profit is defined as total revenue less provider expenses and amortization of intangible assets.

Our Care Margin generated from FFS revenue is contractual and recurring in

nature, and primarily based on an individually negotiated percentage of collections for each practice that joins Privia.

Our Care Margin generated from FFS revenue is contractual and recurring in nature, and primarily based on an individually negotiated percentage of collections for each practice that joins Privia.

Our Care Margin generated from VBC revenue is based on a percentage of care management fees and shared savings collected.

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We would also expect our care management and shared savings economics in our VBC arrangements to improve on a per patient basis as we manage towards lower total cost of care for our Attributed Lives and move towards higher risk VBC arrangements over time.

Care Margin increased 17.5% for the year ended December 31, 2023 when compared to the same period in 2022 due to organic growth of our medical practice business which increased 28.2% between 2022 and 2021 due to organic growth of our medical practice business.

As a percentage of revenue, Care Margin decreased to 21.7% for the year ended December 31, 2023 from 22.5% and 24.7% for the same periods in 2022 and 2021, respectively, due to the addition of the at-risk capitation arrangements during 2022 and 2023 resulting in higher revenues.

Care Margin increased 12.4% for the year ended December 31, 2024 when compared to the same period in 2023 and increased 17.5% between 2023 and 2022, in each case due to organic growth of our medical practice business.

As a percentage of revenue, Care Margin was 23.3% for the year ended December 31, 2024 an increase from 21.7% for the same period in 2023 due to renegotiated certain at-risk capitation agreements for a more favorable contract structure which is reflected on a net basis under shared savings starting in 2024 and a decrease from 22.5% in 2022, due to the addition of the at-risk capitation arrangements during 2022 and 2023 resulting in higher revenues.

In addition to our financial results determined in accordance with GAAP, we believe Care Margin, a non-GAAP measure, is useful in evaluating our operating performance.

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We expect that this increase will be driven by improving per provider revenue economics over time as well as our ability to generate leverage on our in-market infrastructure costs.

Platform Contribution increased 16.8% for the year ended December 31, 2023 when compared to the same period in 2022 due to organic growth of our medical practice business and new market entry, and increased 38.1% between 2022 and 2021, due to organic growth of our medical practice business.

Platform Contribution increased 12.8% for the year ended December 31, 2024 when compared to the same period in 2023 and increased 16.8% between 2023 and 2022, in each case due to organic growth of our medical practice business and new market entries.

The following table provides a reconciliation of gross profit, the most closely comparable GAAP financial measure, to Platform Contribution:

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(i) Adjusted EBITDA does not reflect the impact of stock-based compensation expense, and (ii) Adjusted EBITDA does not reflect interest expense on our debt or the cash requirements necessary to service interest or principal payments.

Adjusted EBITDA increased 18.7% for the year ended December 31, 2023, when compared to the same period in 2022 due to organic growth of our medical practice business, new market entry and a focus on managing the investment in new expenses and increased 47.1% between 2021 and 2022 due to organic growth of our medical practice business.

Adjusted EBITDA increased 25.2% for the year ended December 31, 2024, when compared to the same period in 2023 due to organic growth of our medical practice business and growth in Attributed Lives and increased 18.7% between 2022 and 2023 due to organic growth of our medical practice business, new market entry and a focus on managing the investment in new expenses.

Adjusted EBITDA Margin

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We consider Adjusted EBITDA Margin to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis.

Adjusted EBITDA Margin was 20.1% for the year ended December 31, 2023 an increase from 19.9% for the same period in 2022 due to organic growth of our medical practice business, new market entry and a focus on managing the investment in new expenses and an increase from 17.4% in 2021, due to organic growth of our medical practice business.

Adjusted EBITDA Margin was 22.4% for the year ended December 31, 2024 an increase from 20.1% for the same period in 2023 due to organic growth of our medical practice business and an increase from 19.9% in 2022, due to organic growth of our medical practice business, new market entry and a focus on managing the investment in new expenses.

We believe that Adjusted EBITDA and Adjusted EBITDA Margin, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook.

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$ 14,385 $ 23,079 $ (8,585)

Net loss attributable to non-controlling interests (2,051) (3,479) (2,419)

Net income (loss) attributable to non-controlling interests

2,659 (2,051) (3,479)

Provision for (benefit from) income taxes

10,826 7,993 (6,516)

Interest (income) expense, net (8,372) (542) 1,070

Interest income, net

(10,888) (8,372) (542)

Depreciation and amortization 7,268 6,533 4,571

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(1) Other expenses include employer taxes on equity vesting/exercises, legal, severance and certain non-recurring costs.

Employer taxes on equity vesting/exercises of $1.6 million and $3.2 million were recorded for the years ended December 31, 2023 and 2022, respectively.

Components of Results of Operations

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In addition, expenses contain stock-based compensation related to employees that provide Cost of platform services, but exclude any depreciation and amortization expense.

Software development costs that do not meet capitalization criteria are expensed as incurred.

As we continue to grow, we expect the cost of platform to continue to grow at a rate slower than the revenue growth rate.

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We do not allocate depreciation and amortization expenses to other operating expense categories.

Interest (income) expense

Interest (income) expense consists primarily of interest earned by the Company on bank balances, offset by interest expense (including deferred financing costs) on any outstanding borrowings.

Interest income, net

Interest income consists primarily of interest earned by the Company on bank balances, offset by interest expense (including deferred financing costs) on any outstanding borrowings.

See “Liquidity and Capital Resources—General and Note Payable.”

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The following table sets forth our consolidated statements of operations data for the years ended December 31, 2024 and 2023.

A detailed discussion of our 2022 financial condition and results of operations, and of 2023 year-over-year changes as compared to 2022, can be found in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 27, 2024.

For the Years Ended December 31,

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Total operating expenses 1,719,408 1,637,088 82,320 5.0 %

Operating income (loss)

Operating income

16,982 20,649 (3,667) (17.8) %

Interest (income) expense, net (8,372) (542) (7,830) 1444.6 %

Income (loss) before provision for (benefit) from income taxes

Interest income, net 10,888 8,372 2,516 30.1 %

Income before provision for income taxes

27,870 29,021 (1,151) (4.0) %

Provision for (benefit from) income taxes

Provision for income taxes

10,826 7,993 2,833 35.4 %

Net income (loss)

17,044 21,028 (3,984) (18.9) %

Loss attributable to non-controlling interests (2,051) (3,479) 1,428 (41.0) %

Net income (loss) attributable to Privia Health Group, Inc.

Net income (loss) attributable to non-controlling interests 2,659 (2,051) 4,710 (229.6) %

Net income attributable to Privia Health Group, Inc.

$ 14,385 $ 23,079 $ (8,694) (37.7) %

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Revenue was $1.74 billion for the year ended December 31, 2024, an increase from $1.66 billion for the year ended December 31, 2023.

Key drivers of this revenue growth include an increase in capitated revenue of $120.3 million due to the increase of at-risk capitation arrangements during the first quarter of 2023;

FFS–patient care revenue and FFS-administrative services, which increased $107.5 million and $18.2 million, respectively, primarily attributed to an increase in visit volumes as well as the addition of new providers and the new markets of Connecticut and Washington state;

shared savings revenue, which increased $37.5 million primarily due to more Attributed Lives in Medicare programs as well as continued strong estimated performance in our value based care programs;

and an increase in PMPM revenue of $15.0 million primarily due to increased Attributed Lives and entrance into new markets in 2023.

Key drivers of this revenue growth include:

FFS–patient care revenue and FFS-administrative services, which increased $169.5 million and $12.3 million, primarily attributable to the addition of new providers and an increase in visit volume;

an increase in PMPM revenue of $13.5 million primarily due to increased Attributed Lives;

shared savings revenue, which increased $9.1 million primarily due to more Attributed Lives in Medicare programs as well as continued strong estimated performance in our value based care programs in the aggregate.

The decrease in capitated revenue of $(125.7) million is due to renegotiation of capitated arrangements for a more favorable contract structure which is now reflected on a net basis under shared savings starting with the first quarter of 2024.

Operating Expenses

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Provider expenses were $1.33 billion for the year ended December 31, 2024, an increase from $1.30 billion during the same period in 2023.

This increase was driven primarily by higher FFS-patient care revenue and growth in Implemented Providers and the addition of new capitated arrangements.

This increase was driven primarily by higher FFS-patient care revenue and growth in Implemented Providers.

Cost of platform

Cost of platform expenses were $227.0 million for the year ended December 31, 2024, an increase from $197.7 million during the same period in 2023.

The increase was driven by an increase in salaries and benefits of $15.5 million related to continued growth, an increase in platform costs of $9.9 million due to an increase in Implemented Providers and an increase in consulting costs of $1.3 million due to continued growth and market expansion.

The increase was driven by an increase in salaries and benefits of $11.2 million related to continued growth, an increase in stock-based compensation expense of $6.8 million, primarily related to an increase in stock-based awards granted in 2024 compared to 2023, an increase in platform costs of $6.5 million due to an increase in Implemented Providers and an increase in consulting costs of $3.3 million due to continued growth and market expansion.

Sales and marketing

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General and administrative

General and administrative expenses were $109.6 million for the year ended December 31, 2023, a decrease from $129.6 million during the same period in 2022.

The decrease was driven by the reduction of $28.2 million in stock-based compensation expense primarily related to the remaining pre-IPO stock option awards becoming fully vested during the fourth quarter of 2022, partially offset by an increase in professional services of $3.9 million related to additional consulting services, an increase in salaries and benefits of $2.3 million and various other immaterial expenses.

General and administrative expenses were $126.2 million for the year ended December 31, 2024, an increase from $109.6 million during the same period in 2023.

The increase was driven by the increase of $11.2 million in stock-based compensation expense, which is primarily related to an additional quarter of expense due to timing of the 2023 equity awards being granted during the second quarter of 2023 compared to 2024 equity awards being granted during the first quarter of 2024, an increase in salaries and benefits of $1.7 million and an increase in professional services of $1.1 million related to additional consulting services.

Depreciation and amortization expense

Depreciation and amortization expenses were $7.3 million for the year ended December 31, 2024, an increase from $6.5 million during the same period in 2023.

This increase was primarily driven by amortization of intangible assets related to new acquisitions in 2023.

Interest (income) expense, net

This increase was primarily driven by amortization of intangible assets related to a new acquisition in 2024.

Interest income, net

Interest income was $10.9 million for the year ended December 31, 2024, compared to $8.4 million during the same period in 2023.

This change was primarily the result of the repayment of the Term Loan Facility at the end of June 2022 and the increase in the rate of interest earned on cash in our bank accounts in 2023.

Provision for (benefit from) income taxes

The provision for income taxes was $8.0 million for the year ended December 31, 2023, compared to a benefit from income taxes of $6.5 million during the same period in 2022.

The change was primarily attributable to the growth in taxable income and fewer excess tax benefits stemming from share based compensation related to stock option exercises and restricted stock vesting events.

Net loss attributable to non-controlling interests

Net loss attributable to non-controlling interests was $2.1 million for the year ended December 31, 2023, a decrease from $3.5 million during the same period in 2022.

This change was primarily due to the decrease in outstanding non-controlling interests generating losses due to the repurchase of non-controlling interests during the year ended December 31, 2023.

Comparison of the Years Ended December 31, 2022 and 2021

The following table sets forth our consolidated statements of operations data for the years ended December 31, 2022 and 2021.

For the Years Ended December 31,

2022 2021 Change ($) Change (%)

(in thousands)

Revenue $ 1,356,660 $ 966,220 $ 390,440 40.4 %

Operating expenses:

Provider expense

1,051,040 727,827 323,213 44.4 %

Cost of platform 170,838 174,731 (3,893) (2.2) %

Sales and marketing 19,741 22,750 (3,009) (13.2) %

General and administrative 129,592 255,884 (126,292) (49.4) %

Depreciation and amortization 4,571 2,464 2,107 85.5 %

Total operating expenses 1,375,782 1,183,656 192,126 16.2 %

Operating loss (19,122) (217,436) 198,314 (91.2) %

Interest (income) expense, net (542) 1,070 (1,612) (150.7) %

Loss before benefit from income taxes (18,580) (218,506) 199,926 (91.5) %

Benefit from income taxes (6,516) (27,857) 21,341 (76.6) %

Net loss (12,064) (190,649) 178,585 (93.7) %

Loss attributable to non-controlling interests (3,479) (2,419) (1,060) 43.8 %

Net loss income attributable to Privia Health Group, Inc.

$ (8,585) $ (188,230) $ 179,645 (95.4) %

The following table presents our revenues disaggregated by source:

For the Years Ended December 31,

(Dollars in Thousands) 2022 2021 Change ($) Change (%)

FFS-patient care $ 869,165 $ 772,482 $ 96,683 12.5 %

FFS-administrative services 94,929 68,805 26,124 38.0 %

Capitated revenue 218,463 — 218,463 — %

Shared savings 132,615 83,016 49,599 59.7 %

Care management fees (PMPM) 35,541 36,503 (962) (2.6) %

Other revenue 5,947 5,414 533 9.8 %

Total Revenue $ 1,356,660 $ 966,220 $ 390,440 40.4 %

Revenue was $1.36 billion for the year ended December 31, 2022, an increase from $966.2 million for the year ended December 31, 2021.

Key drivers of this revenue growth were the addition of capitated revenue in 2022 of $218.5 million, FFS–patient care revenue, which increased $96.7 million, shared savings revenue, which increased $49.6 million, and FFS-administrative services which increased $26.1 million.

Revenue increases were partially offset by a decrease in care management fees, which decreased $1.0 million as some care management fee revenue was replaced by capitated revenue.

Growth in FFS-patient care revenue and FFS-administrative services were primarily attributed to an increase in visit volumes as COVID-19 restrictions are lifted in certain states as well as the addition of new providers and the new markets of California and West Texas, which were part of Privia for the full year in 2022.

Capitated revenue growth was due to the commencement of at-risk capitation arrangements during the first quarter of 2022 resulting in increased revenue of $218.5 million.

Shared savings growth was primarily due to more Attributed Lives in Medicare programs as well as continued strong estimated performance in our value based care programs.

Operating Expenses

For the Years Ended December 31,

(Dollars in Thousands) 2022 2021 Change ($) Change (%)

Operating Expenses:

Provider expense $ 1,051,040 $ 727,827 $ 323,213 44.4 %

Cost of platform 170,838 174,731 (3,893) (2.2) %

Sales and marketing 19,741 22,750 (3,009) (13.2) %

General and administrative 129,592 255,884 (126,292) (49.4) %

Depreciation and amortization expense 4,571 2,464 2,107 85.5 %

Total operating expenses $ 1,375,782 $ 1,183,656 $ 192,126 16.2 %

Provider expenses

Provider expenses were $1.05 billion for the year ended December 31, 2022, an increase from $727.8 million during the same period in 2021.

This increase was driven primarily by the commencement of at-risk capitation arrangements during the first quarter of 2022 and higher FFS-patient care revenue and growth in Implemented Providers.

Cost of platform

Cost of platform expenses were $170.8 million for the year ended December 31, 2022, a decrease from $174.7 million during the same period in 2021.

This decrease was primarily driven by the reduction of $30.1 million in stock-based compensation expense primarily related to the modification of vesting terms of options in connection with the Company’s IPO during the year ended December 31, 2021, partially offset by an increase in salaries and benefits of $16.4 million related to continued growth, and an increase in EMR and platform technology costs of $6.2 million driven by an increase in FFS claims and an increase in consulting costs of $1.8 million due to continued growth and market expansion, and various other immaterial expenses related to growth and market expansion.

Sales and marketing

Sales and marketing expenses were $19.7 million for the year ended December 31, 2022, a decrease from $22.7 million during the same period in 2021.

The decrease was driven by the reduction of $6.2 million in stock-based compensation expense primarily related to the modification of vesting terms of options in connection with the Company’s IPO during the year ended December 31, 2021, partially offset by an increase in sales and benefits of $2.1 million.

General and administrative

General and administrative expenses were $129.6 million for the year ended December 31, 2022, a decrease from $255.9 million during the same period in 2021.

This decrease was primarily driven by the reduction of $149.8 million in stock-based compensation expense primarily related to the modification of vesting terms of options in connection with the Company’s IPO during the year ended December 31, 2021, partially offset by an increase in compensation and benefits of $11.3 million, which includes $2.4 million of employer taxes on equity vesting/exercises, an increase in professional services of $5.1 million related to additional consulting services for audit, tax and SOX compliance and various other immaterial expenses.

Depreciation and amortization expense

Depreciation and amortization expenses were $4.6 million for the year ended December 31, 2022, an increase from $2.5 million during the same period in 2021.

This increase was primarily driven by amortization of intangible assets related to the acquisition of BASS Privia Management Company of California, LLC (“BPMC”) and Privia Medical Group West Texas, PLLC, formerly known as Abilene Diagnostic Clinic, PLLC (“PMG West Texas” or “WTX Friendly Medical Group”) during the fourth quarter of 2021.

Interest (income) expense, net

Interest (income) expense was $0.5 million for the year ended December 31, 2022, compared to interest expense of $1.1 million during the same period in 2021.

This change was primarily the result of the repayment of the Term Loan Facility at the end of June 2022 and the increase in the rate of interest earned on cash in our bank accounts in 2022.

Benefit from income taxes

The benefit from income taxes of $6.5 million for the year ended December 31, 2022 decreased from $27.9 million during the same period in 2021.

The benefit for the year ended December 31, 2022 is primarily the result of the pre-tax loss and windfall tax deductions related to the exercise of the stock options and vesting of RSUs partially offset by the non-deductible stock-based compensation expense.

Net loss attributable to non-controlling interests

Net loss attributable to non-controlling interests was $3.5 million for the year ended December 31, 2022, an increase from $2.4 million during the same period in 2021.

This change was primarily related to investments in new joint venture markets.

Interest income is primarily based on the cash balance held in interest bearing accounts.

Provision for income taxes

The provision for income taxes was $10.8 million for the year ended December 31, 2024, compared to a provision for income taxes of $8.0 million during the same period in 2023.

The change was primarily attributable to reduced tax benefits stemming from share-based compensation related to stock option exercises and restricted stock unit vesting events.

Net income (loss) attributable to non-controlling interests

Net income attributable to non-controlling interests was $2.7 million for the year ended December 31, 2024, an increase compared to a (loss) of $(2.1) million during the same period in 2023.

The change is primarily related to the ramp up of new markets entered and repurchase of non-controlling interests during 2023.

Liquidity and Capital Resources

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As of December 31, 2024, we had cash and cash equivalents of $491.1 million.

We received $211.0 million of net proceeds from the Company’s IPO and Anthem private placement on May 3, 2021.

Our cash and cash equivalents primarily consist of highly liquid investments in money market funds and cash.

We believe that our cash and cash equivalents, including the proceeds from the IPO, together with cash flows from operations, will provide adequate resources to fund our short-term and long-term operating and capital needs.

We believe that our cash and cash equivalents, together with cash flows from operations, will provide adequate resources to fund our short-term and long-term operating and capital needs.

Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties.

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We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.

We may be required to seek additional equity or debt financing.

We may in the future seek a credit facility with a financial institution for long term capital structure flexibility, and may be required to seek additional equity or debt financing.

In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

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Cash Flows Overview

The Company’s cash requirements within the next twelve months include provider liabilities, accounts payable and accrued liabilities, and purchase commitments and other obligations.

The Company’s cash requirements within the next twelve months include provider liabilities, accounts payable and accrued liabilities, purchase commitments and other obligations.

We expect the cash required to meet these obligations to be primarily generated through cash flows from current operations;

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Significant changes impacting net cash provided by operating activities for the year ended December 31, 2024 compared to the same period in 2023 were as follows:

• An increase in net income of $33.1 million compared to the same period in 2022.

Net income was $21.0 million during the year ended December 31, 2023 compared to the loss of $(12.1) million during the year ended December 31, 2022, primarily driven by the decrease in stock-based compensation expense during the year ended December 31, 2023 when compared to the same period in 2022, primarily related to the remaining pre-IPO stock option awards becoming fully vested during the fourth quarter of 2022.

• An increase of $32.9 million in provider liability for the year ended December 31, 2024 compared to an increase of $113.4 million during the same period in 2023, a difference of $(80.5) million.

The increase is primarily due to an increase in provider expenses related to shared savings and at-risk capitation arrangements during the year ended December 31, 2023.

• An increase of $(96.9) million in accounts receivable, for the year ended December 31, 2023 compared to the same period in 2022 of $(72.2) million, a difference of $(24.7) million.

The increase is primarily driven by the addition of new at-risk capitation arrangements during the year ended December 31, 2023 and an increase in FFS and VBC revenue.

Net cash provided by operating activities was $47.2 million for the year ended December 31, 2022 compared to $55.1 million for the same period in 2021.

Significant changes impacting net cash provided by operating activities for the year ended December 31, 2022 compared to the same period in 2021 were as follows:

• Decrease in loss of $178.5 million from a loss of $(12.1) million during the year ended December 31, 2022 compared to loss of $(190.6) million during the year ended December 31, 2021, primarily driven by the recognition of stock-based compensation expense related to the modification of vesting terms of options in connection with the Company’s IPO during the year ended December 31, 2021 when compared to the recognition of stock-based compensation for the same period in 2022.

• An increase of $(72.2) million in accounts receivable, net, for the year ended December 31, 2022 compared to the same period in 2022 of $(14.6) million, an increase of $(57.6) million.

The increase is primarily driven by the commencement of at-risk capitation arrangements during the year ended December 31, 2022 and an increase in FFS and VBC revenue.

• An increase of $67.7 million in provider liability for the year ended December 31, 2022 compared to an increase of $33.9 million during the same period in 2021, an increase of $33.8 million.

The increase is primarily due to an increase in shared shavings and the commencement of at-risk capitation arrangements during the year ended December 31, 2022, accounting for $28.6 million of the increase.

The change is primarily due to a decrease in provider expense related to renegotiation of at-risk capitated arrangements during the year ended December 31, 2024.

• An increase of $19.9 million in accounts payable and accrued expenses for the year ended December 31, 2024 compared to the same period in 2023 of $5.0 million, a difference of $14.9 million.

The change is primarily driven by organic growth and entrance into new markets.

• A decrease of $(19.8) million in accounts receivable, for the year ended December 31, 2024 compared to the same period in 2023 of $(96.9) million, a difference of $77.1 million.

The change is primarily driven by the renegotiation of at-risk capitated arrangements during the year ended December 31, 2024.

• A decrease in net income of $(4.0) million compared to the same period in 2023.

Net income was $17.0 million during the year ended December 31, 2024 compared to the income of $21.0 million during the year ended December 31, 2023, primarily driven by the increase in stock-based compensation expense during the year ended December 31, 2024 when compared to the same period in 2023.

Investing Activities

Net cash used in investing activities was $12.0 million for the year ended December 31, 2024 compared to $43.0 million during the same period in 2023, primarily due to Privia investing in three new markets during 2023.

Net cash used in investing activities was $0.1 million for the year ended December 31, 2022 compared to $32.8 million during the same period in 2021, primarily due to Privia investing in two new markets during the fourth quarter of 2021.

Financing Activities

Net cash provided by financing activities was $3.7 million for the year ended December 31, 2023, compared to net cash used in financing activities of $(19.7) million for the same period in 2022.

This increase primarily related to the use of cash to repay the Company’s Term Loan Facility during the year ended December 31, 2022, partially offset by the receipt of proceeds from stock options exercised and the repurchase of non-controlling interest.

Net cash used in financing activities was $(19.7) million for the year ended December 31, 2022 compared to net cash provided bv financing activities of $213.7 million for the same period in 2021.

This decrease was primarily related to the receipt of the net proceeds from the Company’s IPO of $211.0 million during year ended December 31, 2021, and the use of cash to repay the Company’s Term Loan Facility during the year ended December 31, 2022, partially offset by the receipt of proceeds from stock options exercised of $13.4 million.

Net cash provided by financing activities was $4.3 million for the year ended December 31, 2024, compared to $3.7 million for the same period in 2023.

This increase is primarily due to a decrease in proceeds from stock options exercised during the year ended December 31, 2024, partially offset by the repurchase of non-controlling interest in 2023.

Comparison of Fiscal 2023 to Fiscal 2022

A detailed discussion of our 2022 to 2023 operations and liquidity and capital resources has been omitted from this Form 10-K, but may be found in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 27, 2024.

Contractual Obligations, Commitments and Contingencies

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The initial terms of these leases range from 3 to 9 years and generally provide for periodic rent increases, renewal, and termination operations.

Total rent expense under operating leases was $2.7 million for the years ended December 31, 2023 and 2022 and $2.1 million for the years ended 2021.

Total rent expense under operating leases was $2.8 million for the years ended December 31, 2024 and $2.7 million for the year ended December 31, 2023 and 2022, respectively.

Off Balance Sheet Obligations.

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Our consolidated financial statements have been prepared in accordance with U.S.

The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures.

The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and

expenses, and related disclosures.

We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances.

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While our significant accounting policies are described in greater detail in Note 1, “Organization and Summary of Significant Accounting Policies,” to our consolidated financial statements included elsewhere in this Annual Report, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Business Combination

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 our 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, we 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.

For additional details, refer to Note 3.

“Business Combinations.”

Revenue Recognition

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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.

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.

The Company’s VBC business consists of its clinically integrated network and Accountable Care Organizations which bring together independent physician practices within our medical groups to focus on sharing data, improving care coordination, and collaborating on initiatives to improve outcomes and lower healthcare spending.

Rebates of $1.8 million have been recorded for the years ended December 31, 2024, and $2.7 million for the years ended December 31, 2023 and 2022, respectively.

The Company’s VBC business consists of its clinically integrated network and ACOs which bring together independent physician practices within our 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.

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The Company is entitled to monthly fees to provide a defined range of healthcare services for Medicare 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.

Monthly fees are determined as a percentage of the premium payers receive from 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.

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Under the shared savings basis, the Company is offered financial incentives to increase its 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, its 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

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.

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The remainder of our revenue is derived from leveraging our 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.

CARES Act funds received have been recorded within other revenue on the statement of operations through December 31, 2021.

No funds were received from the CARES Act for the year ended December 31, 2023 and 2022, respectively.

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.

Provider Liability

Provider Liability, 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.

Provider 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.

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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.

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.

For additional details refer to Note 11 “Stockholders’ Equity.”

The Company issues certain performance stock units ("PSUs").

The awards will vest based on the satisfaction of certain service conditions, performance-based conditions, and market conditions.

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 identified certain performance metrics associated with these awards that are measured on a cumulative basis over a three-year performance period.

The targets for the first year of the PSU performance period are established at the time of grant.

Targets for subsequent years’ PSU performance periods are set annually concurrently with granting and establishing the targets for subsequent years’ PSU grants.

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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis