Q2 2025 Privia Health Group Inc Earnings Call

Ladies and gentlemen, thank you for standing by. My name is desire and I will be your conference operator. Today at this time I would like to welcome everyone to the preview held second quarter 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session.

If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad,

If you would like to withdraw your question again, press the star 1.

I would now like to turn the conference over to Robert Borchert, SVP of Investor and Corporate Communications. You may begin.

Thank you, Desiree, and good morning everyone. Joining me, our partner rotor, our chief executive officer and David mountcastle, our Chief Financial Officer. This call is being webcast and can be accessed in the best relations section of privilege. Health.com along with today's Financial press release and slide presentation,

Following our prepared comments, we will open the line for questions. Please leave me yourself to 1 question, only and return to the queue if you have a follow-up, so we can get to as many questions as possible.

The financial results today uh our preliminary and are not final until our form 10 Q for the second quarter and 6-month periods. And the June 30th 2025 is filed with the Securities and Exchange Commission.

Some of the statements we will make today are forward-looking in nature based on our current expectations and view of our business. As of August, 7th, 2025.

Such statements, including those related to our future financial and operating performance, as well as our future business plans and objectives, are subject to risks and uncertainties that may cause actual results to differ materially. As a result, these statements should be considered along with the cautionary statements in today's press release and the risk factors described in our company's most recent SEC filings.

Finally, we may refer to certain non-gaap Financial measures on the call reconciliation of these measures to comparable. Gaap measures are included in our press release and the accompanying slide presentation posted on our website. Now, I'd like to hand the call over to our CEO parth Morrow.

Thank you, Robert and good morning, everyone.

Trivia Health continue to execute very well, across all aspects of our business. Through the second quarter of 2025, which positions us very well for success for the remainder of the year and into 2026.

This morning, I'll summarize our second quarter performance and David will discuss our Market presence, Financial results and 2025 guidance. Before we take your questions,

Trivia Health has continued to execute at a very high level across different economic Regulatory and Healthcare Cycles.

This is a testament to our differentiated business model and our, and our consistent operational execution across varying environments.

We delivered strong. New provider signings across all of our markets in the first half.

Which underpins our visibility through 2025 and into next year.

Implemented provider growth of 13.8% and value. Based lives attribution growth of 15.2% year-over-year, help Drive. Total practice collections growth of 18.5% in the second quarter.

Adjusted EVA increased 31.6%, with EVA margin as a percentage of care margin expanding 310 basis points. While we continue to invest in growth and expansion.

Our first half results, were driven by the outstanding performance of all of our provider partners and operating teams amidst a very challenging healthcare services and pear environment.

And to the high-end for the remaining metrics.

Pia's model combines unique aspects of medical groups, risk-bearing entities in a technology and services platform.

The Physician practices, we partner with are an integral part of our medical groups.

This allows Privia to be deeply embedded in the workflows of the practice with a common physician-led governance structure.

Our ability to earn highly predictable fees for our technology and services platform. Gives us a very stable and recurring earnings profile.

The stable earnings stream, coupled with shared savings and Care Management fees across a broad spectrum of value-based. Care Arrangements has allowed us to deliver very consistent financial performance across different environments.

This model offers an unmatched value. Proposition to pairs of healthcare.

And Community Based providers as well as the patients, they serve creating a business and economic mode. That is very hard to replicate.

Previous consistent growth and profitability across Cycles over the past 8 years, is the ultimate proof of the strength of our differentiated business and economic model and the consistent execution year after year.

we expect previous Integrated Medical Group risk-bearing entity and Tech and services platform model to continue to drive sustainable compounding of growth and profitability for years to come

Our last David to review our Market position, recent Financial results, balance sheet strength, and our updated 2025 guidance Outlook in more details.

Thank you Park.

The Premier Health footprint of Community Based medical groups and risk entities. Now comprises 5,125, implemented providers caring for over 5.3 million patients in more than 1300 Care Center locations, operating across 15 states and the District of Columbia

Our balance at Diversified value based Care Organization. Now, serves 1.38 million attributed lives across over 100 Commercial and government. Value based care programs,

Total attribute to lives at June 30th increase 15.2% from a year ago. This was broadly driven by new provider growth across programs and our entry into Arizona.

commercial attribute, utilizes increased 13.8% from last year to reach 843,000

Lives attributed to the CMS medicare programs. We're up. Almost 15%.

Medicare, Medicare Advantage, and Medicaid attribution increased more than 13% and 31%, respectively, from a year ago.

The diversification of pervious value-based care contracts gives us confidence in our ability to build scale and profitability with no dependence on any particular contract or program.

Given the continued challenges facing Medicare Advantage. And Medicaid payers trivia will remain. Highly focused on generating, positive contribution, margin in our value based care, contracts, as we pursue attribution, growth manage risk and Implement clinical and operational enhancements in our partner practices.

Trivia Health, strong, operational, execution, and growth continued through the second quarter.

Implemented providers grew, 254 sequentially from q1 to reach 5,125 of June 30th.

An increase of 13.8% year-over-year.

Growth along with strong ambulatory. Utilization Trends, and value-based performance led to practice collections increasing 18.5% from Q2 a year ago to reach 862.9 million.

Adjusted EBITDA, which is reconciled to GAAP, net income in the appendix increased 31.6% over the second quarter last year to reach $29 million.

Representing 25.2% of care margin.

This is a 310 basis point Improvement, as we generated operating leverage across, both cost of platform and GNA, while investing across all markets.

For the first half of 2025, practice collections increase 15.7% to 1.66 billion.

Our margin was up 13.2% and adjusted Eva grew 33.3% to reach 55.9 million.

We ended the second quarter with more than $390 million in cash and no debt.

This is after deploying 95 million in April for the IMs transaction to enter Arizona.

Consistent with past years. We expect to receive a significant portion of our shared savings cash payments in the second half of the year.

Assuming no further deployment of capital for business development. We expect to end the year with more than 450 million in cash.

Our healthy balance sheet continues to position us with significant financial, flexibility to deploy capital and take advantage of opportunities in the current market.

And adjusted Ava.

Driving this positive outlook is our strong first-half performance across all markets.

Implemented provider growth and strong ambulatory utilization trends.

And performance across our value-based contracts.

This provides us with excellent visibility into next year.

We continue to maintain a robust pipeline of existing Market expansion and potential new market opportunities.

As a reminder, our guidance is not to assume any additional business development activities.

Finally, we can continue to expect more than 80% of full year, adjusted ibida to convert to free cash flow, give our Capital like operating model.

As Privia continues to build large-scale, Primary Care, Centric, delivery networks Across the Nation.

We would like to thank all our physician partners and employees for their continued, dedication and hard work to help us achieve these results. Operator, we are now ready to take questions.

Thank you. We will now begin the question and answer session.

Please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to have your questions, simply press star 1, again, if you are called upon to ask your question and are listening via speaker phone in your device, please pick up your handset to ensure that your phone is not on mute. When asking your question. Again, press star 1 to join the queue,

In our first question comes from the line of Elizabeth Anderson with evercore isi, your line is open.

Hi, good morning guys, um, congrats on the quarter and thanks for the question. Um, you know what I thought was a notable standout this quarter was you obviously had very strong performance while while many of your, uh, peers across payers and others have seen a bunch bunch more challenges. What do you think is sort of misunderstood here in terms of the investor landscape? Because obviously, your stack stock has gotten hit a little bit quarter to date on. I think the re read through but I'm not sure that those are correct. So like, you know, is there something that sort of underappreciated here from the investor perspective that you would call out?

Yeah, thanks for the question. Elizabeth uh great first question to get um I think we have a little bit of an identity crisis. Um still speaking about our business model in the 50th year of being a public company but I guess to your point, it's it's a sign of times in the uh Fair physician, enablement provider landscape. Um I think if you look at our results on slide 6 um and the consistency of those results, um I think it's obvious that the Bedrock of our financial performance over the years is a very simple concept that we get paid a very recurring predictable fees for providing a tech and services platform to all of our practices. Um,

That's a very consistent stable earning stream. Uh, as we mentioned in our prepared remarks, uh, that economic model is no different, uh, than any Tech SAS company. Uh, you could think of a company like toast, uh, that uh provides a platform for restaurants. You could think about a credit card company like Visa or Mastercard that takes a fee off the top of every single transaction. Um, and now that I would like to ever compare doctors to cab drivers, but think about Uber Lyft where they get paid on every single passenger ride. Uh, so as long as there are

Patients, who want to visit a Doctor's practice, um, that is, uh, deploying a private Tech and services platform. That engine works for us across our 1300 Care Center locations that have over 5,000 providers that see over 5 million patients every day of the week. Some patients come in and we get that fees. Uh, it is very consistent over any economic regulatory, whatever is happening in the healthcare environment cycle. I mean, that's a simple payment stream.

I think if you then see how we organize these providers, uh, into our Medical Group entities, they are being credentialed in those medical groups, they are led by a common governance structure. Uh, I think that's very important and underappreciated because we effectively go in and change the engine of the car, back to my, uh, analogy with Uber and Lyft. We changed the chassis, uh, the Uber X converts

And as we grow these practices same store.

Um, and then the final component is the risk-bearing entities and that's probably the the only piece that is very comparable to other value based entities. Uh, but we do things differently in 3 ways. Uh, number 1, we've consciously Diversified the whole value based book across all lines of business. Any patients between commercial and government programs. Uh, that is underappreciated because I think there's a lot of offsetting as 1 program performs. The other doesn't

I think number 2. We've managed risk really really well uh, over the years. Uh, uh, in 3 ways, we don't uh take risk uh on costs where we cannot control those costs. So think about Part D.

Um, number 2, we share risk with both the pairs and the doctors. I think that's a fundamental difference where we believe that aligns interests and over time leads to better outcomes. Um, and then number 3, uh I think we are paid differently. Uh, our Healthcare economic team. Does a great job of making sure that our contracts are structured. So we are paid for the value. We deliver, uh, we try to get a Care Management fees which is again uh uh an an annuity uh a monthly payment on every life in whichever programs we can get no different than how Netflix gets its fees every month for providing Services. I think in healthcare uh you can have a lot of altruistic

Goals about any particular serving any particular uh patient population, but if you're not getting paid by the payer, you're not going to have a viable economic model. So I think those are the 3 components that uh, come together to deliver for us to deliver this kind of consistent growth. And I think that's just underappreciated, but, you know, the results speak for themselves at the end of the day.

Our next question comes from the line of Richard Close with Canaccord Genuity. Your line is open.

Uh, yes, thanks. Good morning. Um, congratulations on the second quarter first half and updated guidance here, just looking at the guidance. Um, you know, it contemplates a step down in the second half. So, uh, just curious what you're seeing, uh, that would drive that. And then any thoughts, uh, with respect to utilization Trends, um, that's baked into the, you know, second half of the year for you.

Yeah, thanks for the question, Richard. Um so you know, as you as you noted we've uh, We've really not had a second half that has been lower than our first half.

Over the past many years, um,

I think that's why we've raised guidance to above the high end. Uh, I think it's prudent in this environment. We get a lot of shared savings through opiates in in the third quarter, including mssp results. Um, I think as a starting point if you double our first half numbers, uh, that's a good starting point for the second, uh, second half. And then, you know, once we get all the value, based care payments, we'll update the guidance, uh, next quarter. Uh, but in this environment, I think we just being prudent, uh, but it gives us a lot of confidence to be the high end, uh, but we chose not to give a specific higher end range, uh, for those reasons. Uh, but there's nothing that we see, uh, that should tell us, uh, given all the data we've got from payers and different value. Based programs, given the trends we see in utilization, uh, strength of our fee for service book, uh, all the sales momentum, we've had in the first half, uh, that translates into good practice collections. Uh, in the second half or or next year, uh, all of those point in the right direction.

um, and then we'll just update guidance specifically at the end of Q3

Okay, great. Thank you.

Next question comes from the line of Jay lendra Singh with Sheri security. Your line is open.

Thank you and good morning, everyone. Um, so I was wondering if you can talk a little bit more about your pipeline of providers. Clearly, some of your peers who have been more focused on full risk. Capitation have struggled health insurance companies are facing their own challenges and we'll see how that flows through provider reimbursement. And then we have all this macro and Regulatory uncertainty concerning all that, have you seen your conversation with providers? Shifting, in any ways, recent months, are you seeing more urgency on their part? Are you seeing any change in how they think of value based care and related to that from your perspective? Is this environment, having any impact on your approach? Like in terms of getting more aggressive than you have in the past?

Momentum. Uh, the sales team has had a great first half of the year, uh, that follows from a very strong 2024. So last 18 months, uh, for all the reasons you mentioned, I think, uh, our model, our value proposition across, uh, the entire patient population for any practice across any specialty. Um, any location, uh, I think is resonating really well uh the fact that we can add value uh, to these practices uh in how they run the practice, how efficient they get.

Can they increase their earning stream across all lines of business, uh, is also resonating. So, um, we've had a record first half where we've sold more providers than we ever have in the history of the company, uh, and we continue to be very aggressive. Uh, I think the, the the doctor business is 1 where decisions are made a little bit slowly as and it's a little bit sticky, but I think the Tailwind, uh, will be persistent for us for a very long time. For all the factors you mentioned, uh, other companies not doing well. Our value proposition resonating, the pairs needing a partner like us, uh, that can truly Drive value. Uh, ultimately care is delivered in the communities in a very low cost setting uh, in medical groups like ours. And I think the value proposition is very, very strong. So we feel really good about the momentum this year, going into next year and just the compounding of this business in a very thoughtful model that we just outlined

Next question comes from the line of Josh Raskin with nephron research, your line is open.

Hi, thanks. Just a quick clarification. Uh, first, just I think you said Medicaid value-based care lives were up 31%. I seen the slides. Those are 100% upside only, so can you talk about those arrangements? Are you producing surplus there, or are those based on quality metrics? And then maybe what segment of Medicaid? And then my real question is, just how are you guys using AI on the platform now? Maybe what areas are provider partners most interested in?

Yeah, thanks Josh. So sequentially. Uh, if you look at, you know, Medicaid lives grew about 15,000 round numbers from 100,000 to 115,000, uh, that was mainly driven by organic growth across, uh, uh, all of our markets but then also notably as we, uh, as we entered Arizona. Um, um, and again, in in the Medicaid book, uh, as you rightly noted, we don't take any downside risk. Uh, we are, uh, uh, trying to contract with pairs, where, if we can add value to these practices and manage these lives. Uh, and have some upside shared savings, we get a piece of it, uh, with no downside for all the reasons. You know, about that program, uh, very volatile, very hard to deliver a lot of value without, uh, without getting paid for it. Uh, and so, you know, that's been opposition in Medicaid, but I think our platform allows our physicians to handle these lives in a much better.

Way than just, uh, playing FIFA service, Medicaid. Uh, and so, you know, we think it's a, it's a great program to be in, uh, we get paid a little bit for the value we add, and we're happy not to take any downside risk even given all the structural issues with that, uh, with that program and what the payers are seeing, uh, as you, well know. Um, and then to your second question, uh, look, we've been using machine learning AI Bots, uh, for many years, uh, across our entire workflow. So, uh, our teams, our technology team and operations team. Uh, look at the entire fee for service workflow. And then the value based care workflows and uh, you know, revenue cycle was an area where a lot of the Innovation happened, uh, over the past few years. Uh, you know, whether it's uh, getting paid faster, whether it's reducing, administrative burden. Uh, so on so forth. But I think some of the new, um, uh, Investments we've made, uh, work with companies like Novena are all on the clinical side. Uh,

That drive, uh, application of AI into the clinical workflow for Value based care. Arrangements, where, uh, we have

Uh, identified suspect medical conditions uh where at the point of care. Uh, Physicians are getting prompted to make sure if a patient shows up over a certain age with certain comorbidities taking certain medications, uh, to check for other conditions that might be persistent. Uh, Based on data sets that that are expanding over time, our data set data from the payers,

Better clinical outcomes uh better coding for the patients in a very compliant manner. So those are the areas we're focused on in partnering with the many companies in that in that space as they are as they innovate.

Next question, comes from the line of Andrew mock with Barkley's. Your line is open.

Good morning. It looks like shared savings Revenue, came in meaningfully better than expectations. Can you provide more detail on what drove the beat in the quarter and how much flow through the care margin. Thanks.

Yeah, thanks, Andrew. I think it was pretty across the board. You know, we followed a very consistent methodology as we got data.

Across all of our value based contracts, commercial ma, mssp Medicaid. Um, so there's no 1 particular contract that we can point to. Uh, I, I think given how well we manage risk how well our operating teams have executed, uh, on the ground day-to-day. Uh, we've been very mindful of the environment. We've been operating in over the past 24 months. Uh, I think we were very well ahead of the curve and understanding all the pressures that have come from uh, utilization Trends, V28 star, score changes, so on and so forth. And so we've been very, very conscious on what data. We get, how we get it, when we get it, how we act on it, how we contract? And I think you're seeing the, the, the benefits of all of that, uh, Consciousness over the past 24, 36 months.

And how we performed. So, I think it was pretty much across the board, um, and, and so that's what you've reflected and then, you know, that directly translates. You've seen our results in the last 6 to 8 quarters, where, uh, we've got very good flow, through all the way, down to care margin down to IBA. And, and that's the beauty of the operating. And the economic structure that we have, you've seen ibaa as a percentage of care margin consistently increase, uh, quarter by quarter and then year over year, uh, you know, we're well on our track to get to 25%. Even as a percentage of care margin, a long-term trajectory or targets for 30 to 35. I think we'll be there in the next few years. Uh, so the business is not only growing and has a lot of momentum. I think. We're expanding margins as we perform well. Um, and we'll hopefully try to continue to do that. But, you know, it's it's tough sledding. I mean, this is a grinding day-to-day business and so, uh, I think we'll just keep at it.

Next question comes from the line of agent.

Rice with UBS.

Uh, hi everybody. I might just ask you about the recent, uh, proposed physician fee schedule. Rule, uh, does seem to have some focus on adjustment adjusting to prioritize office based and primary care physicians maybe uh, relative to facility basis Specialists. Um, what are the, um,

Implications of that for your business, how much, uh, of your business gets impacted by that. And, uh, and give us any thoughts on uh, any opportunities that might present.

Yeah, thanks AJ. So broadly speaking, I think it's, it's a net positive. I mean, you know, we're glad that uh, it's been recognized that Community Based physician practice, reimbursement needs to keep up with inflationary factors. Uh, you know, relative to the healthcare ecosystem. This is still the lowest cost setting first line of contact for anybody in the family. This is where care gets delivered and directed uh, when something shows up with any family member, so, uh, I think we're just glad that, uh, you know, that's been recognized. I think it's going to be a net positive. You'll see that uh, fillet through over over time, uh, you know, in our, uh,

Our Medicare book is similar to the populations, we serve in different states. So ultimately, uh, you know, it varies 15 to 20 25% given the state uh, as to what percentage of the panel is, is uh, our Medicare lives. And so, uh, I think it's a net positive overall for our physician practices. And, and for our results, ultimately

Our next question comes from the line of Matthew Gilmour. With Key Bank, your line is open

Hey, thanks for the question. I wanted to ask about the GNA expense, it it moved up from 18 million to 22 million in the second quarter. You're still driving. Great operating leverage. Even with that increase. Is there anything to call out in terms of what drove that I know the business is performing well. So maybe some incentive comp. You'd also mentioned some ongoing investments in the growth, but just curious if there's any details to share on that.

Markets and increases some of our contractor expenses out there. So, uh, nothing, nothing really to call out. Uh, you know, again, we see a lot of Leverage still in GNA.

Next question comes from the line of Matt Shea with Nom, your line is open.

Hey, good morning. Thanks for taking the question, and congrats on the strong results here. Um, nice to see the strength and implemented providers collections. Any markets to call out that have been particularly strong in terms of Provider adds or performance, and then maybe be good to get an update.

About some of your more tenured markets. Are you still seeing plenty of runway for growth? Or how are you balancing the opportunity to go deeper in existing uh geographies versus leaning into those newer Market?

Yeah, thanks for the question, Matt. So, uh, for the first half, uh, uh, part of your question, I think it was pretty broad-based. Uh, you know, quarter over quarter. There's always variability in which markets, um, where we add providers, uh, and where the sales team sells. But if you take a rolling approach over 4, 6, 8 quarters, uh, we see growth pretty much broad-based across across all of our states. I mean, our our model is pretty similar and our strategy is very similar. Once we enter a state. The idea is to go build density, uh, county by county zip code by ZIP code. So the sales teams out there, uh, you know, you do see,

Snowballing effect in this business where, uh, uh, once we establish ourselves for the first couple of years, 3 years and get some providers and they start to perform better, uh, you know, all of our metrics improve, uh, uh, referrals improve at the top of the funnel conversion rates improve, uh, cost of acquisition goes down overall as a company. Our, uh, our payback period is now less than a year LTV to CAC is, you know, assuming a doctor stays with us or a practice stays with us even for 10 years. Uh, and the results are actually better than that because the attrition has been very low so LTV to CAC is, well over 10x. Uh, so all of our metrics, uh, are doing really well. Uh, you know, and they've been consistent over the past 2, 3 years here, as we've gained all the momentum uh, and lowered, the cost of acquisition, pretty meaningfully. Um, and and I think in the established markets, uh, we are seeing a lot of late adopters. Uh, we still, you know, the, the market was the most density. We

Still at about 10% of Tam. So there's a lot of leg room, you know, headwind for us to, uh, uh, go get a lot of Tam, even in mature markets, we are see having some of the best sales years in some of our more established markets. Uh, goes back to the questions elendra asked, uh, where, uh, you know, we are performing so well, in in markets, we've been present for 10 years, like, Mid-Atlantic where, uh, a lot of late adopters are now coming, uh, back to us, which we've already had a discussion with over the past many years. Uh,

Just given the strength, consistency, and some of the disruption there is in the markets with other companies, I think it is a great momentum to have a good position to be in overall.

Next question comes from the line of Ryan Daniels with William Blair. Your line is open.

Yeah, good morning. Thanks for taking the question, part 1, for you on the other side of the demand which is from the payers, you talked a little bit about some success growing Medicaid. And I'm curious, you know, all the stress that they're under and you no longer have

As many value based care enablers out there, just taking on capitated risk and, you know, doing, uh, full risk with no risk to the providers, Etc. I'm curious if that's opening up. Actually, more opportunities for you to negotiate with balance model with Medicare Advantage, with Medicaid to get those recurring fees. You know, given that the marketplace on a capitated basis is kind of shying away. Is that opening up more opportunity for you, thanks.

Yeah thanks for the question Ron. It's a it's a very good observation you know our prayer Contracting teams, done a fantastic job over the last many years in getting us to this position. Uh, across all lines of business managing risk. Uh, how we present privas value prop to the pairs. Uh,

Betta Care Management fees. Uh, if they are, you know, if there's a Medicaid book uh we like to have the similar conversation. Now, we don't take risk where we cannot control risk.

We like to share the upside with the pairs. I think we've been we've been stating that fundamentally over the past many years. Uh, we just think this notion of full risk Downstream uh, is not sustainable. It could work in a few geographies. Uh, but over time for us, consistent model, you need to share risk with doctors. You need to share risk with bears and then share it, both upside and downside. Uh and I think we've that has led us to having pretty good conversations where as the pairs, look at us as a very stable growth business that can build density and Achieve results for them that impacts ultimately their mlr as well. Uh I I think they're very they're getting more forward-leaning with us as we enter new geographies and then we don't need to have the same repeatable conversations uh because we have case studies to point out in other states. So I think uh but again, the healthcare business is where you're grinding It Out by state, by contract, everybody's running their own p&ls and, and you got to prove yourself,

Uh, but I think the success that we've had, uh, obviously helps us in opening those doors and having those conversations and replicating, what has worked for the payer and Us in another state, in, in some new States. Um, so hopefully that just adds to the momentum that we have.

next question comes from the line of Ryan Langston with TD Cowen, your line is open

Great, thanks. Uh, good morning. Uh, can you just give us a sense of how the IMS integrations are progressing and if you still expect that to be accretive this year? Typically, I think Q4 is a little bit lighter than Q3; last year was a little different. So I guess just taking into account IMS, is there any reason not to expect typical seasonality in the second half? Thanks.

Yeah, thanks for the question. So, uh, you know, integration is going well. I mean, we we acquired the Medical Group entity. So as we noted last quarter, we recognize, uh, practice collections, gaap Revenue, uh, from the date of the acquisition, uh, uh, but the, you know, they'll get implemented on our platform in Q3, uh, at some point. Uh, and so, you know, Q4 onwards, they'll be, uh, contribution at the care margin and and ibida level. Uh, so all that continues to go. Well, it's no different than, you know, uh, other anchor groups that we've implemented over time. So we have a pretty consistent, uh, methodology. Uh, and then as far as the second question is concerned? Uh, yeah, I don't think you should expect, uh, uh, any differences seasonality, uh, over the course of this year. It ties back to the earlier question on. Uh, you know, we don't see any reason why. So the second half should be weaker than the first half, uh, you know, obviously we have the impact of the IMs, Arizona entry, um, that we factored in into our guidance but overall,

Uh, you know, we we should expect similar seasonality. Yeah. And the only thing I'll add is we we do continue to expect positive even uh, from IMS and Q4

So, that is still an expectation.

Next question comes from the line of David Larsen with btig, your line is open.

Hi, this is Jenny Shen on for Dave, Larson. Thanks for taking my question and congrats on a great quarter. Um, I was just, uh, wondering your thoughts on the new big beautiful Bill if that has any impact on Privia at all. Um, what impact do you think it might have potentially on Medicaid, or maybe Medicare membership? Thanks.

Yeah, thanks for the question, Jenny. Um, yeah, so I think you pointed out. I mean, the the, the main thing we're looking at is the impact on on, on the Medicaid attribution, uh, uh or enrollees. Uh and then some of the recent brushes in the in the exchange business uh that the payers are facing. Um, overall we don't think it's a big impact. I mean the Medicaid and exchanges pretty low single digit percentage of our book overall. Uh usually these patients uh as we've seen in the past when we've had some redetermination, uh, effects in the market, uh, they actually show up uh uh in in other programs. So either self-insured or commercial so it's not like patients stopped going.

Uh, there's a little bit of a net positive, um, so I don't think we'll see a Major Impact, uh, of the bill overall. We'll just see how the population shifts in those segments. Uh, hopefully we'll capture them elsewhere. Um, and then, you know, the final point is our our practices are working pretty much at capacity. Uh, so, uh, there's a lot of pent-up demand where even if you lose lose a few patients, uh uh, you know the the practices uh have a lot of demand to uh to get there. Uh patient panels back up uh pretty quickly. In fact, there's a waiting list in many cases. So uh, you know, we'll see how it all plays out, but it's all factored in our guidance.

Our next question comes from the line of Jessica tasan with 5 percenter, your line is open.

Hi guys. Thank you for taking the question. Um, just to follow up on and congrats on the quarter uh, to follow up on the the commentary just about kind of demand. Maybe, can you tell us what you're seeing in terms of utilization type of service and, um, and by payer types so like Medicare commercial Medicaid um, would you call out any categories or trends that feel unusual or elevated? And um and if you're able to give us kind of a view of of mssp Market wide, um, or fee, for service Trend, that would be uh wonderful. Thanks.

Yeah, thanks for the question. Yes. I mean, overall, we've been pretty consistent in our observation and the data we are seeing very strong ambulatory utilization, uh, which is good for us, uh, across all lines as patients come and see, you know, their primary care doctors or the first gatekeeper provider. Uh, we are seeing Downstream, uh, elevated Trends, a lot of the players have talked about it. I mean, uh, it's not like we see anything different in our value based book and you just have to manage through that. Um, uh, so I think, uh, I think that's the case. I mean, it's not a complicated answer. Uh, it's not like any 1 area jumps out. I mean they obviously some nuances by geography by specialty, uh, but overall, we've been trying to manage through that trend line over the past many, many quarters. Now, 2, 3 years ago. Starting when we, when we came out of the co period postco. I think, uh, I think this historical data sets were just depressed, uh, for obvious reasons and, uh, We've we've

Positioned the business, uh, you know, uh, trying to navigate or operate in a new normal utilization Trend, level across all lines, and you're seeing that in our results.

Next question comes from the line of Jeff Garrow with Stevens. Your line is open.

Yeah, good morning, thanks for taking the question. Want to follow up a little bit on Business Development? Trends ask, what are you most excited about? If we we try to separate Business Development into a couple different categories, like new markets versus density in existing markets or independent provider, practices versus Health System Affiliated practices. And I I know these Agreements are complicated and, and take time, but curious, if there's just been any change in seller expectations or Catalyst pushing deals further through the pipeline, thanks.

Yeah, thanks for the question, Jeff. So broadly speaking, I think we we see a lot of momentum

Um, and we are pursuing aggressively both existing Market density and entering new markets. Uh, so there's no trade-off or we're not capacity constrained on either or uh, so I think we talked pretty at at pretty good length about the sales team and its performance in existing States, getting the density, getting that Snowball Effect going. And I think we're seeing a lot of momentum there. Uh, I think, uh, we are getting to see, uh,

all the transactions that are there to see given given our size, our balance sheet, strength, in, in, in a lot of the new States, uh, Banker Le uh, or otherwise, uh, I think, uh,

I think it's great that, uh, at least for us that, uh, you know, private Equity or other buyers that were there chasing the space. Uh, there's obviously they're taking a much more cautious approach given just the performance of some of these companies uh or entities or exit strategies. So I think we become a natural consolidator over time and I think we'll just be very judicious uh as we've noted before. We are even though free cash flow buyers and uh we're going to stick to our model and uh and uh hopefully get reasonable prices for some of these assets. So we'll just keep executing on that, on that strategy.

Next question comes from the line of Daniel gross light with City. Your line is open

Hi guys, thanks for taking the question and congrats on the, uh, strong quarter here. You know, you, you've consistently outperformed this year and it seems like many of these Trends are secular in nature, combined, with your differentiated, differentiated model, and ability to, um, to manage risk. So, as we think about 2026, is there anything that that worries you, uh, and in particular, should we think about trivia continuing to operate, kind of above that 20% ebit da growth, uh, Target on a organic basis. Thanks.

Yeah, thanks for the questions. And so, you know, I think

we've understood this environment for a few years now. Um, you saw us exit the ma capitation book that we had or change those contracts to be much more balanced, uh, at the beginning of 24. Uh, well ahead of the curve. Um, I think we positioned as I just mentioned the business to operate in this environment and we don't expect the environment to change. Uh, you know, I think the pairs will adjust their pricing, uh, across different lines of business as they see the trends. I think that ultimately boards, well, for Downstream provider entities, taking risk, uh, some normaly happens, uh, where people were chasing growth and attribution, giving away benefits, uh, adverse selection of population, cohorts, uh all the impact from V28 star scores, everything that you've all noted in different research reports. Uh as you covered those sectors. Um uh so I think overall our strategy is going to be very consistent. I think we are very very mindful.

Of, I'll go back to the answer. I gave beginning of the call on, if you have to do value based Care by, uh, by program, uh, by cohort, you have to be very mindful that you're getting paid for the value, you deliver so. So that leads you to uh us that leads us to be very conscious on which pools uh of spend. We take risk on.

How do we share the risk with the pair with the doctor? Um, how do we get paid? Uh, some consistent per member per month fees in Care Management fees for delivering that value, which is not tied to any outcomes. Uh, but but allows us to spend the money uh, in in building that chassis to to manage some of these programs. Uh, in healthcare and in this business there's a very easy policy trap where uh, you want to sort of a particular patient population and go take risk and do all the good work, uh, but it's very easy not to get paid for it. Uh, and that leads to misaligned incentives and really bad outcomes. Uh, if you back, stop risk.

For the doctors and it's a heads you win, tails. You never lose deal. That comes back to bite you, if something bad happens, you're seeing that in the results of other companies. So we have been very very cautious uh and mindful but we think we have a sustainable model. So to get back to your question, we don't see any, uh, any major difference in how we think we will perform next year. It's a very predictable model. We think, given the momentum we've had in sales in BD in our performance.

You know, all the data we see across our value-based arrangements indicates that we would continue to target 20% EBA growth into '26. All the momentum this year really helps us. I mean, we’ll see what happens beyond that, but I think our results speak for themselves. I mean, you look at slide 6 at the beginning of '24.

And differentiation of our business model.

Next question.

Hey, good morning, thanks for the question. Uh, Tom already been asked so I'll just jump in with maybe a little more broader 1.

Just want to think about how your conversations with health system clients or potential health system clients are developing. Obviously, health systems are broadly facing some of the biggest headwinds they've seen in a long time in terms of...

Obba and the a ptc's rolling off. Um, and and now, you know, even some discussions around, whether or not Pharma, can horse trade 340b, for, for some form of FM mfn or or pricing. Um, just curious if that's driving increased interest or if, if you're noticing any change in health system be the conversations. Thanks

Yeah, thanks for the question Jack. So, you know, I mean, we have pre-health system Partners today in in Florida, North Carolina and Ohio. And we've had many discussions in many other states. Uh, oh, over the years, um, look, I think they understand the value proposition that Priya brings, uh, which is namely, uh, to have a chassis to work with practices that, uh, would like to stay autonomous and independent. But yet be aligned, uh, with them in a particular way, uh, whether it's the same tax ID or the tech platform or value-based Arrangements, um, and so, Health Systems have

Have, you know, they think about the world in concentric circles, um, doctors that they employ doctors that are affiliated to them in a much more closely aligned way doctors that are affiliated in a much lighter Manner, and then those that are independent across, uh, across the geographies. Uh, so I think Privia can really help with the last 2 buckets, uh, for them. Uh, and I think some Health Systems realize that that's a core competence that don't have and they partner with us, and that's what led to our, uh, Arrangements in North Carolina with Novant with Ohio Health, in Ohio, with Health First in Florida. Um, but I don't think we are for everybody because you know, obviously there's a inherent difference in the business model uh inherent difference in their strategy and and and what they would like to achieve uh and do themselves. So if some Health Systems want to pursue those strategies on their own, that's totally fine. And and we operate independently, uh, of them in many different geographies like we do. I mean, we have health systems in big Health Systems in all of our jobs.

Geographies. Um, I think we are a very unique alternative to, uh, a viable alternative. Now to doctors coming out of residency and that there's a big push that they actually see that there's a viable path to joining an independent practice or starting their own practice. Uh, versus just being employed by the health system. Uh, that's another strategy we're pursuing really aggressively, um, and then we'll see shifts over time. So what what worked 10 years ago is not going to work today?

May not work in 5 years and I think you'll see you'll see that play play out. I mean uh this is a business where incentives have to be aligned and strategy has to be aligned and if those shift uh you know, ultimately our our goal is to keep pursuing our business model, so our doctors, so our medical groups and ultimately our shareholders. So, you know, we'll we'll keep looking for opportunities. Where, uh, if if there's a good match with the health system, we'll we'll go partner with them and if not, you know, you've seen our model work independently, so I don't think we are reliant on the health system strategy to grow this business. Uh, and if and if and when an opportunity comes we'll be happy to partner with somebody.

Next question comes from the line of Michael ha with beard. Your line is open.

Hi. This is Olivia miles on for Michael. Ha. Thanks for taking the question. In addition to recent elevated pressures. That some of your large BBC tears are facing ACO. Reach was corridors are being narrowed into next year. Are you seeing this Dynamic catalyze? Any new prospective physician partner relationships for Privia. We wanted to better understand if there's anything else you would call out with this recent change in the competitive landscape. Thank you.

That ultimately boards. Well, for us, we've evaluated reach. Uh, as we've noted in previous calls, uh, in different geographies every year, uh you can participate in 1 uh or the other. You can't have the same life in both programs for obvious reasons. Uh, so but I think as uh, as that economic outcomes narrow uh uh I think uh it gives us a lot of opportunities to speak to physician practices that may have partnered with somebody on ACO reach. And I think uh, there's going to be much less difference between whether those lives are now moved to an mssp enhanced track. And I think that boards well for our model, uh, I mean we could have a reach program in any of our states. So I think we we evaluate that too but I think um,

The mssb programs just work really well for us given the scale we have. And so uh I think that leads to good good Tailwind as we can go Target some of these practices that may have partnered with somebody else.

Next question comes from the line of two with McQuarrie, your line is open.

Thank you, good morning. Um, CMS recently published, uh the proposed rule of mssp for 2026. I think 1 of the biggest changes was the acceleration of the timeline to transition to higher risk arrangements. So when you look at your Ms, mssp portfolio, how does that change your operating and risk management strategy on? Existing HDO, entities, that are still in the basic track and then broadly as a government seeks more

Savings for Medicare SEC, you know. Spending how do you think it will affect the competitive landscape in the mssp program and would that cost you the tail wing for your for your Ms? Mssd growth. Thank you. Yeah. Yeah. Thanks for the question to also.

You know, broadly speaking, it doesn't change our strategy. I mean we we participate in the mssp program to move to the enhanced track as quickly as we can. Uh you know, we're not interested in remaining in basic tracks uh, because ultimately, that's where the proof of the Ping is. And that's where the economics make it very attractive. As long as you're able to do the job and manage the population really well. So across our different acos, you've seen over the years. Uh, our objective is build enough density in the program, get established and then move to enhance track as quickly as we can. So so that strategy doesn't change. Um, uh, I think it may Force other non-performing acos, uh, to take a call if they're going to, uh, stay in the program or or move to enhance track. And if you're not performing, uh, you know, that can give us some Tailwinds where we could go get, get those lives or go get those groups. Uh, so I think ties to the previous question. I think all of these changes uh, given the scale at which we operate and how. Well, we

We have done and executed and the programs we have in the place, the tech stack we have in the place. Uh, the way we underwrite these programs and and work day-to-day with our physician practices to manage total cost of care. Uh, I think it boards well for uh High performing groups like ours uh to continue to do well.

In our last.

Craig Jones with Bank of America. Your line is open

Great. Uh thanks for the question guys. So um I want to follow up on the on the platform analogy. You gave her on the call. So you said you go in you implement implement, the platform change the card on SUV and everyone gets paid more. So I was wondering if you could give us some guide posts for how much the platform can improve Partners margins quickly when you implement it and then how much maybe it can improve margins over time. Thanks.

Yeah, thanks for the question. Correct. Uh, congrats on your new job, by the way, and thanks for waiting uh, to in line here. Um, yeah. So I think, you know, we've said this in previous calls or as we went public, I mean, we have a pretty, uh, demonstrated Roi to our practices from each of each of these different components that you mentioned. So uh, usually there's expense savings because they've stitched together their own Tech stack and and try to do everything themselves uh, in a pretty unsophisticated manner before they partner with us. Uh, that is that is usually more costly than uh than

Practices, uh, didn't participate. In some value based program, uh, across all of the patient panels. So all of that leads to a value proposition that actually grows over time. There's an impact in the first 6 months, 12 months, 18 months, then you get into value based arrangements and you get into more risk contracts, where there's more upside if you performing well, uh, and that just adds to the value prop. And then we are on top of that. Uh, not only, uh, improving that particular car, uh, that operates as a premier SUV, but the same driver doctor can add another car or add other drivers to their business. I mean, these are small businesses that we are helping grow at the end of the day. Um, and that's another value proposition where, you know, our practice, uh, consultant team and operating teams in each market, uh, work with these practices to grow the book, uh, and their business on the same store basis, very meaningfully. So, we've had practices, we've had case studies in the past that we've shared publicly where we've doubled the size of

Some of the practices that have been with us 7 10 years, uh uh you know from a Topline and a bottom line perspective and that's just an unmatched value proposition. Uh all while the Physicians are running the practices in an autonomous manner, uh they're not uh uh they're not uh employed or guaranteed uh by some other entity, we're just making them run their business. Very very efficiently. Uh, and that leads to our, uh, you know, very high, retention rates and PS scores, uh, and then the

Overall business model, just just harms. So I think that's a pretty comprehensive value. Proposition that that again, as I mentioned right up front, it's it's a economic and a business mode. It's a very hard to replicate and it helps us perform pretty well over time.

Remarks.

Thank you for uh listening to our call today. We appreciate your continued interest and look forward to discussing our performance next quarter.

ladies and gentlemen, that

Concludes today's call. Thank you all for joining. And you may now disconnect

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