Physician enablement company Privia Health continued to chart profitable growth in the second quarter as it expanded its provider network into Washington, its 13th state.
This week, the company announced an agreement with Walla Walla Clinic, a multi-specialty practice with more than 50 providers caring for patients in three locations. It's the second West Coast market for Privia Health after its earlier move into California. Privia Health, which went public in 2021, has been rapidly expanding and in the past year, it has inked partnerships to push into Connecticut, Delaware, North Carolina and Ohio.
Walla Walla will serve as Privia's latest anchor group as it looks to further expand in the state.
"Privia's national footprint continues to expand and now includes close to 3,900 implemented providers in our medical groups caring for more than 4.4 million patients in over 1,000 care center locations," Privia Health CEO Parth Mehrotra said during the company's second-quarter earnings call Wednesday. "Our scale and diverse provider and payer partnerships are true differentiators. We are building one of the largest multi-specialty medical groups and ambulatory care delivery networks in the country that can improve patient outcomes and reduce costs."
The company is ahead of its growth plan for adding new providers, he said.
"If you see our performance since going public a couple of years ago, we've accelerated the opening of new states. We've entered now five states in pretty short order here in the last 12 months. And when we went public, we said expect us to enter one state a year and we're clearly exceeding that," Mehrotra told investors during the call.
The company brought in $7.3 million in net income, or six cents per share, in the second quarter compared to a loss of $10.5 million, or a loss of 10 cents per share, a year ago.
The company's second-quarter revenue jumped 23% to $413.4 million from $335.5 million a year ago.
The top- and bottom-line results exceeded Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for quarter earnings of five cents per share during the quarter.
Privia Health shares have added about 18.5% since the beginning of the year versus the S&P 500's gain of 17.6%. As many digital health companies continue to see shares slide in a market downturn, Privia Health is one of the few health tech-enabled companies to buck the market trend.
This week, the company also added former UnitedHealth Group CEO David Wichmann to its board along with Pamela Kimmet, the chief human resources office at Manulife. Adam Boehler, managing partner of Rubicon Founders, also joined Privia Health's board on July 1.
Arlington, Virginia-based Privia Health was founded in 2007, saw its first practice go live in 2013 and popped during its spring 2021 IPO. It works with over 3,870 providers across more than 1,000 practice locations providing care to more than 4.4 million patients.
The company now has approximately 1.1 million attributed lives covered by its value-based care arrangements and total attributed lives increased 27% from a year ago, executives said during the earnings call.
The company's practice collections increased more than 14% year over year to reach $700 million in the second quarter.
Privia's adjusted EBITDA for the second quarter was $19.3 million, up 24% from $15.5 million for the same period in 2022.
The company's current balance sheet includes $317.9 million of cash and cash equivalents and no outstanding bank debt.
But the company did feel the impacts of its decision to pause a contract with a health insurer in the first quarter. Privia lost about 9,000 capitated lives because of that contract pause which dropped its total number of capitated lives to 31,300. That development will impact the company's total practice collections and attributed lives for the full-year, executives said during the earnings call.
"If we hadn't had that contract paused, you can imply that we would have been closer to the mid to high end of our original guidance even on practice collections," Mehrotra said.
Based on its year-to-date financial and operating performance, Privia Health raised its 2023 guidance metrics to the mid to high end of its initial ranges, except practice collections and attributed lives, chief financial officer David Mountcastle said.
The company expects to see its provider network grow to more than 4,100 by year's end. Privia Health projects full-year revenue in the range of $1.55 billion to $1.65 billion. It also projects adjusted EBITDA for the year to be in the range of $70 million and $74 million.
Privia Health remains "well positioned to thrive as an operating provider in fee-for-service healthcare, but also benefits as it helps transition provider partners to value-based care business models," wrote Ryan Daniels, an analyst with William Blair, in a note.
"Given the above, the stock remains one of our favorite technology-enabled healthcare services names," Daniels note.
The primary care model is set for material disruption over the coming years, Daniels noted. "We also believe that Privia Health’s positive macro tailwinds, myriad growth drivers, and scalable business model will drive material expansion in both top- and bottom-line results going forward," he wrote.