Physician enablement company Privia Health pops in public debut with outsized IPO

Healthcare technology company Privia Health made a strong debut on the Nasdaq exchange Thursday, with its stock soaring above $30 per share.

The company, which provides technology and services to physician practices, began trading Thursday and saw its share price jump during trading. The company's stock closed at around $34.75 per share, about 50% above its $23 per share offering price, according to Yahoo.

Privia Health had priced 22.4 million shares at $23, with the aim of raising approximately $516 million. The new share price would boost that to $778.4 million.

The company could be valued at up to $1.97 billion, according to MarketWatch.

The gross proceeds of the offering to Privia Health, before deducting underwriting discounts and commissions and other expenses payable by Privia Health, are expected to be approximately $64.4 million. The company has granted the underwriters a 30-day option to purchase up to an additional 2.9 million shares of its common stock at the initial public offering price.

Privia Health’s shares trade on the Nasdaq Global Select Market under the ticker symbol "PRVA."

The biggest winner from Privia's IPO is its parent company, Brighton Health Group, which owns 79 million shares after offering. Based on the value of the shares at the closing price, that's $2.75 billion. 

CEO Shawn Morris owns 4.1 million shares.

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The physician enablement company plans to use the net proceeds from the offering primarily for general corporate purposes, including working capital, research and development, business development and capital expenditures, according to a press release. Privia Health may also use a portion of the net proceeds to acquire or invest in complementary businesses, technologies or other assets.

"We are looking at this as an opportunity to raise working capital to go out and support more doctors, take our model into new states, build new capabilities and grow the company," Morris told Fierce Healthcare.

Privia Health joins a long and growing list of healthcare technology companies that have gone public in the past year, including Livongo, Phreesia, Health Catalyst, Change Healthcare, Progyny, Oak Street Health, One Medical, Accolade, Amwell, GoodRx and GoHealth.

Privia stands out from many tech-enabled healthcare companies testing the public market because it's profitable. The company reported net income tripled to $31.2 million in 2020 from $8.2 million in 2019, according to its S-1 filing with the U.S. Securities and Exchange Commission (SEC).

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The company brought in revenue of $817 million in 2020, up 4% from $786 million in 2019. Privia also brought in $1.3 billion total practice collections in 2020.

Arlington, Virginia-based Privia is a national physician organization that partners with primary care and select specialist physician practices, health systems, payers and employers.

Privia's footprint includes 2,700-plus healthcare providers who care for more than 3 million patients across six states and Washington, D.C., with a strong focus on primary care. Privia’s proprietary cloud-based technology platform and focus on physician-driven wellness help improve outcomes, lower healthcare costs and create healthier communities, according to the company.

Privia Health, founded in 2007, focuses on reducing physicians’ administrative burdens, accelerating the transition to value-based care and helping physicians adopt user-friendly technology to better engage patients. The company provides physicians with the tools, education and workflow to help them move to value-based care over time.

Physicians across the country face tremendous challenges in managing their practices. Care delivery platforms today are not set up to succeed in different reimbursement models as healthcare shifts to value-based care, according to the company in its S-1 filing. Physician practices also are under tremendous strain from the COVID-19 pandemic.

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"With these issues in mind, Privia has been purpose-built to address a large market opportunity. Unlike peers who focus only on point solutions or narrow patient cohorts, we offer a national platform with hyper-localized solutions that meet the needs of physicians, patients and payers," the company said in the SEC document.

Other companies in the space include Oak Street Health, which focuses on Medicare patients and went public in 2020; One Medical, which raised $245 million in its IPO a year ago; and Agilon Health, which helps primary care physician groups cap costs for their Medicare Advantage patients and raised around $1 billion in its IPO earlier this month. 

A unique point of difference with Privia Health is that the company is helping physicians transition to value-based care models "at scale," Morris said.

"We have 2,700 providers, more than 600 care site locations, 3 million patients, and 700,000 of those are already in value-based arrangements and 68 different value-based care payment arrangements. We allow physicians to remove some of these administrative burdens they face every day and allow them to be successful in that transition to value-based care and not just the niche of Medicare Advantage," he said.

Goldman Sachs & Co. LLC and JPMorgan are acting as joint lead bookrunning managers for the IPO.