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Privia Health Group, Inc. (PRVA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered double‑digit growth and margin expansion: revenue $480.1M (+15.6% y/y), adjusted EBITDA $26.9M (+35.1% y/y), adjusted EPS $0.22, driven by strong ambulatory utilization, same‑store growth, and provider additions .
  • Guidance raised to the mid‑to‑high end for all FY’25 ranges (GAAP revenue, care margin, platform contribution, adjusted EBITDA), with attributed lives unchanged; tax rate 26–28%, ≥80% EBITDA→FCF conversion, de minimis capex .
  • Strategic entry into Arizona via IMS ($95M cash); ~70 providers, 21 locations, ~28k attributed lives; revenue recognized immediately, care margin/EBITDA begin post implementation in Q4 2025; market expected EBITDA‑positive in Q4 and meaningful contribution in 2026 .
  • Management emphasized cautious stance on MA downside risk (V28/star score/utilization headwinds), prioritizing shared‑risk contracts and diversified value‑based programs; operating leverage and cash balance ($469M, no debt) support disciplined BD pipeline .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA rose 35.1% y/y to $26.9M with margin expansion to 25.6% of care margin (+460 bps y/y), reflecting operating leverage in cost of platform and G&A .
  • Strong practice collections $798.6M (+12.8% y/y), implemented providers +11.7% y/y to 4,871, attributed lives +11.1% y/y to 1.27M, underscoring broad‑based growth .
  • Quote: “Adjusted EBITDA increased 35.1%… while we continue to invest in growth and expansion. This highlights the scale and strength of our business model.” — CEO Parth Mehrotra .

What Went Wrong

  • Operating cash flow negative in Q1 (−$24.1M) due to typical early‑year outflows (bonuses, provider payments) and working capital timing; accounts receivable increased ($72.5M) .
  • Capitation claim liabilities rose to $86.4M (from $66.4M at year‑end), reflecting higher incurred costs; management remains cautious on full capitation amid V28/star/utilization headwinds .
  • GAAP diluted EPS remained $0.03 given non‑cash stock‑based comp ($17.8M) and “other expenses”; reliance on non‑GAAP adj. EPS to reflect underlying performance .

Financial Results

Core Financials and Margins (Quarterly)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$437.9 $460.9 $480.1
Gross Profit ($USD Millions)$99.9 $106.1 $103.6
Operating Income ($USD Millions)$5.8 $5.2 $5.2
Net Income ($USD Millions)$3.5 $4.4 $4.2
GAAP Diluted EPS ($)$0.03 $0.03 $0.03
Adjusted Net Income ($USD Millions)$25.1 $26.5 $27.8
Adjusted Diluted EPS ($)$0.20 $0.21 $0.22
Care Margin ($USD Millions)$101.4 $107.7 $105.3
Platform Contribution ($USD Millions)$50.3 $53.2 $51.7
Adjusted EBITDA ($USD Millions)$23.6 $24.9 $26.9
Adjusted EBITDA Margin (% of Care Margin)23.3% 23.1% 25.6%
Platform Contribution Margin (% of Care Margin)49.6% 49.4% 49.1%

Revenue Disaggregation

Revenue Source ($USD Thousands)Q4 2024Q1 2025Q1 2024
FFS – patient care$312,295 $311,761 $274,823
FFS – administrative services$33,525 $32,255 $29,076
Capitated revenue$51,852 $70,690 $51,304
Shared savings$44,482 $47,912 $47,464
Care management fees (PMPM)$16,240 $15,201 $10,603
Other revenue$2,506 $2,278 $1,973
Total Revenue$460,900 $480,097 $415,243

KPIs and Operating Metrics

KPIQ3 2024Q4 2024Q1 2025
Implemented Providers (period end)4,642 4,789 4,871
Attributed Lives (period end)1,247,000 1,256,000 1,270,000
Practice Collections ($USD Millions)$739.9 $792.5 $798.6
Cash and Equivalents ($USD Thousands)$421,997 $491,149 $469,331
Provider Liability ($USD Thousands)$411,252 $364,607 $400,288

Non‑GAAP adjustments (Q1 2025): Stock‑based comp $17.8M; “other expenses” $2.0M; intangible amortization $1.673M; adjusted net income $27.792M, adjusted diluted EPS $0.22 .

Guidance Changes

MetricPeriodPrevious Guidance (2/27/2025)Current Guidance (5/8/2025)Change
Implemented ProvidersFY 20255,200–5,300 Mid to High End Raised (to mid‑high end)
Attributed LivesFY 20251,300,000–1,400,000 Unchanged Maintained
Practice Collections ($USD Millions)FY 2025$3,150–$3,250 Mid to High End Raised (to mid‑high end)
GAAP Revenue ($USD Millions)FY 2025$1,800–$1,900 Mid to High End Raised (to mid‑high end)
Care Margin ($USD Millions)FY 2025$435–$445 Mid to High End Raised (to mid‑high end)
Platform Contribution ($USD Millions)FY 2025$208–$218 Mid to High End Raised (to mid‑high end)
Adjusted EBITDA ($USD Millions)FY 2025$105–$110 Mid to High End Raised (to mid‑high end)
Effective Tax RateFY 202526–28% ~26–28% Maintained
Free Cash Flow ConversionFY 2025≥80% of Adj. EBITDA ≥80% of Adj. EBITDA Maintained
Capital ExpendituresFY 2025De minimis De minimis Maintained
AssumptionsFY 2025Minimal y/y increase in shared savings accruals; no BD activity Minimal y/y increase in shared savings accruals; includes Arizona; no other BD Update to include Arizona

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Ambulatory utilizationContinued solid trends supporting practice collections and margins Strong utilization sustained; guidance reflects continuation Improving/steady
MA risk appetite (V28, stars, utilization)Cautious on full capitation; renegotiated contracts; small positive margin in capitated book Will avoid 100% cap; prefer shared risk; expansion only when compensated Cautious/unchanged
MSSP performance2023 shared savings $176.6M; diversified ACOs, downside risk footprint Guidance assumes minimal y/y shared savings increase; diversified book Prudent accruals
Operating leverageEBITDA margin expansion despite investments; leverage expected to continue Cost of platform up ~10% vs collections +13%; margin expansion and leverage in mature markets Improving
Market expansion (BD)Entered Indiana; robust pipeline; disciplined capital deployment Entered Arizona (IMS); EBITDA positive Q4; significant 2026 contribution Accelerating
AI/technology initiativesScalable tech stack integral to model; athena integration High adoption of AI documentation partner; workflow efficiency gains; case study referenced Expanding
G&A/OpEx cadenceSeasonal bonus accruals; leverage across G&A and platform Q1 sequential G&A decline typical; stable cadence expected Stable
Balance sheet and FCFCash ~$491M, no debt; ≥80% conversion in 2025 (tax step‑up) Cash $469M, no debt; ≥80% conversion reiterated; capex de minimis Strong/unchanged

Management Commentary

  • “Privia Health started 2025 with strong growth and momentum… implemented provider growth of 11.7% and value‑based attribution growth of 11.1%… Adjusted EBITDA increased 35.1%… We are raising our 2025 outlook to the mid‑ to high end of our initial guidance.” — CEO Parth Mehrotra .
  • “The addition of Arizona… implemented providers… 4,871… practice collections increased 12.8%… Adjusted EBITDA… representing 25.6% of care margins… We ended the first quarter with $469 million in cash and no debt.” — CFO David Mountcastle .
  • “Guidance… assumes minimal year‑over‑year increase in value‑based shared savings accruals… includes impact of Arizona market entry… De minimis capital expenditures… At least 80% of Adjusted EBITDA expected to convert to free cash flow…” — Q1 press release .

Q&A Highlights

  • Arizona/IMS economics: EBITDA positive upon Q4 implementation; revenue recognized immediately post acquisition; care margin/EBITDA begin after athena implementation; attributed lives flow in subsequent quarter .
  • Utilization trends: Elevated ambulatory utilization across PCPs/specialists; supports FFS and value‑based performance; guidance presumes continuation .
  • MA risk stance: No near‑term move to full capitation; pursuing tethered/shared risk with fair compensation; small cap book targeted to positive contribution margin .
  • Operating leverage: Cost of platform growth below collections; margin expansion expected as newer markets mature; long‑term EBITDA margin target ~30–35% of care margin discussed historically .
  • OpEx cadence: G&A sequential decline tied to bonus accrual seasonality; similar cadence expected through year .

Estimates Context

MetricQ1 2025 Consensus*Q1 2025 ActualSurpriseQ2 2025 Consensus*
Revenue ($USD Millions)$451.0*$480.1 Bold beat (+6.5%)$467.0*
EPS Normalized ($)$0.1818*$0.22 Bold beat (+21.0%)$0.1994*

Values marked with * retrieved from S&P Global.

Implication: Revenue and normalized EPS exceeded Street, driven by strong collections and operating leverage; consensus may need to move to high‑end ranges consistent with raised FY’25 guidance .

Key Takeaways for Investors

  • Broad‑based beat with strong utilization and provider growth; operating leverage drove adj. EBITDA and margin expansion despite value‑based headwinds .
  • Guidance raised to mid‑to‑high end for all FY’25 financial ranges; catalysts include Q4 Arizona implementation and continued same‑store growth .
  • Risk discipline remains core: favor shared‑risk MA arrangements, prudent shared savings accruals; diversified programs mitigate single‑program shocks .
  • Cash‑rich, capital‑light model supports BD pipeline; de minimis capex and ≥80% EBITDA‑to‑FCF conversion enable selective, accretive expansion .
  • Watch revenue mix (capitation vs FFS) and claims liabilities trajectory; management expects cap book contribution to remain positive and measured .
  • Near‑term trading: positive setup on raised guidance and beat; monitor Q4 Arizona EBITDA inflection and any updates on MA program dynamics .
  • Medium‑term thesis: scalable provider enablement platform with expanding margins and diversified value‑based exposure; disciplined M&A can accelerate growth while preserving profitability .