Good morning Hospitalogy readers! No, I didn't send this late. What are you talking about - it's Thursday, right? What'd I shoot at Pinehurst No. 2? Guess you'll have to check at the bottom! Some great hole highlights for your consideration. Today we're diving into Privia Health's Q1 2023 results which were stellar. As a reminder, Privia is an enablement company that partners with physicians to make their lives easier in fee for service land while transitioning patient panels to value-based care arrangements. |
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PRIVIA HEALTH Q1 WRITE-UP |
Privia Health Q1 Overview |
Privia Health reported solid financial and operating results in Q1 as the enablement space continues to perform well. The firm hit over 1 million attributed lives in the first quarter while implementing 3,716 providers to its platform. These results added up to $386.3M in revenue (23.1% growth over Q1 2022) and profitable at $16.9M in adjusted EBITDA. |
Privia Health also launched three new ACOs in the first quarter of 2023, expanding the total number of Privia-owned ACOs to ten. The firm now serves beneficiaries across the District of Columbia and eleven states, including California, Connecticut, Delaware, Florida, Georgia, Maryland, Montana, North Carolina, Tennessee, Texas, and Virginia. Through those ACOs, Privia serves over 2,500 providers and around 200,000 Medicare beneficiaries. |
Notable Partnerships: Community Health Group, Novant, Beebe Health, and OhioHealth Privia's business development team has been busy, notching several new partnerships across multiple states. Privia - Novant Health Partnership: in late November 2022, Privia Health announced a robust partnership with Novant Health, in which it'll create a clinically integrated network, launch Privia Medical Group - North Carolina, and joint venture with Novant Health's professional corporation Choice Health. Privia also disclosed some interesting agreement terms related to its joint venture with Novant Health in a recent 8-k filed on March 7. For every 1,000 providers that Novant brings onto the Privia platform, they will be awarded 745,712 shares of Privia's stock. |
Andrew Mok from UBS asked Privia about the equity included in the Novant deal and if this would be the norm for health system JVs moving forward. Privia's CEO Parth Mehrotra noted that it'd vary by system, but with a significant partnership like the one closed with Novant and the number of providers involved, it made sense to align with equity. Privia - Beebe Healthcare Partnership: In January 2023, Privia partnered with Beebe in Delaware to launch Privia's then-ninth ACO with around 12,400 lives and 200 providers - through Privia Care Partners, which is Privia's 'lite' version of its core offering. Privia - Community Health Group Partnership: In February 2023, Privia announced a partnership with Connecticut based Community Medical Group, the largest clinically integrated network in CT with around 1,100 multi-specialty providers (430 PCPs, 450 clinics), and formed an ACO in conjunction with the partnership. Total patient attribution here included 29,000 Medicare beneficiaries - also through Privia Care Partners. Privia - OhioHealth Partnership: Finally, in March 2023, Privia partnered with OHHS to launch a medical group for independent physicians throughout the state of Ohio within OHHS' clinically integrated network and ACO. Another analyst asked how Privia's partnership with Surgery Partners in Montana was going. Privia noted that there are expansion talks underway and that the combined partnership provides a compelling value prop to payors: "So I think we're going to look forward to as we both…bring a very unique offering to our payer partners from a value perspective and how we construct these networks in a multi-specialty medical group with an outpatient facility attached to it. And you can -- as you know, you can reduce total cost of care in a pretty meaningful way with those strategies." Parth Mehrotra takes the helm as CEO In early April, Privia also announced a CEO transition from Shawn Morris to President and COO Parth Mehrotra. Fun fact, Parth was one of the first execs I talked to in early June after starting Hospitalogy. He's been at Privia since 2018 and knows the space like the back of his hand. Goldman sells its entire Privia stake; Pamplona Capital reduces its stake Along with the earnings release, Privia also announced a secondary stock offering from two of its largest institutional investors Goldman Sachs and Pamplona Capital: "Separately, we are very excited and have launched and priced this morning a large secondary offering of the company's total diluted shares outstanding. This transaction substantially reduces or eliminates Goldman Sachs and Pamplona Capital's ownership. We are also very excited to welcome a number of new long-term oriented investors, including Durable Capital Partners and Rubicon Founders among others who purchased shares in this transaction." PRVA Q1 2023 earnings call Both Pamplona (owning 15.3%) and Goldman (owning 21.5%) were pre-IPO, longstanding Privia investors. While it looks like Goldman is exiting entirely, Pamplona reduced its stake a bit. |
Meanwhile, Durable and Rubicon Founders are coming in to the fold, buying up $335M worth of the secondary offering, and I presume the rest will be up for grabs from various other financial players wanting to build stakes in a growing healthcare name. Rubicon Founders also recently invested in Cano Health's 14% interest loan and partnered with cardiology group U.S. Heart & Vascular to "expand USHV's capabilities and build the premier, cardiovascular focused, value-based model in the United States." Is Privia thinking about Specialty Care? On that cardiology note, one of the more interesting analyst questions came from William Blair's Ryan Daniels who asked Privia about how they're thinking about specialty care - particularly when it comes to oncology or nephrology. Parth noted that integrated, multi-specialty care is a pointed Privia strategy and prepares the firm well for the next phase of VBC: - "80% of the cost is downstream from the PCP."
- "But I think going forward, as we both organically internally as well as through partnerships, you should expect us to look at some of these specialty specific strategies. It will be, again, very disease-specific or specialty specific as you outlined, so -- and then geography specific where we have density in lives, and we can make a big impact. But I think it's a big part of our strategy going forward."
Bottom line: There's a reason why we'll continue to see dense multi-specialty groups form. Healthcare is headed in this direction - just ask Privia, Optum, or VillageMD. Specialty care is where the bulk of the spend sits, and the more that VBC penetrates this area, the more opportunity to lower cost of care and generate big savings returns. Parting Thoughts: Privia continues to execute Privia continues to hit singles in publicly traded healthcare arena. It's like a scratch golfer playing even par golf. They're not making mistakes - and it's stress free living. But we may need to see some birdies drop over time. Privia is exhibiting solid growth, implementing and retaining providers, succeeding in MSSP and MA capitated arrangements (although exhibited some weakness here this quarter), and has a solid balance sheet in a capital-efficient business model. I'm excited to see which areas Privia chooses to focus with growth, and who partners with Privia in 2023 as the space heats up. More competition enters the arena by the day. |
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This week's executive briefing is fast approaching on May 18th where we'll have another in-depth discussion from seasoned folks around current events & topics in healthcare. I've been really pleasantly surprised by the level of engagement and discussion by members of the community and am looking forward to another great conversation! |
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I have to say I'm extremely appreciative of the folks who wished me success at Pinehurst No. 2 and are avid followers of the golf game. I have fantastic news to report. I had a spiritual experience at No. 2 on Tuesday and along with some incredible reads from my caddie (shout out Brian) we squeaked out a 79 with some great wedge play, timely punch-outs, and clutch putting. Here are some of the hole highlights: |
Hole 10: I started on this hole, so we drove over to the 10 teebox at 7am sharp. Of course, I was with a larger group and we had the first few tee times. Somehow I found myself as the first one to tee off...on Pinehurst No. 2...at 7am...in front of a crowd of around 20 folks. I teed the ball up, calmed down the heart rate a bit and...obliterated a drive down the left side. As soon as the ball left the face, one of my playing partners behind me let out a "holy sh*t" which cracked me up. Unfortunately the ball got a bad kick into the left waste area, but I punched out from there, leaving me with a 60 yard wedge shot and a good angle into the green. I clipped it perfectly, and the ball took one hop, stopping 12 feet from the pin. Funnily enough, 3 out of the 4 of our group birdied the first hole, and we all drained 12-15 footers. What a start!! |
Hole 12: 2 holes and a bogey later, I found myself 50 yards deep in the trees after pushing a drive straight left. I had a small gap and about 140 yards to the green, so Brian and I agree on a punch shot 7 iron anywhere around the green. I pick a line, focus on tempo, and hit a pure shot straight at the pin. It rolls up to pin high, about 15 feet away, and I get the heck out of there giddy with a par. |
Hole 1: The rest of the front 9 I see-sawed between bogeys and pars. I had some holes where my putter absolutely saved me, draining 2 or 3 15-foot putts for par which ended up saving the breaking 80 in hindsight. On hole 1, I absolutely shellacked a drive 315 or so right down the heart of the fairway - my best drive of the day by far. I then hit a nice wedge in to about 12 feet again, but unfortunately couldn't capitalize on the bird. |
Hole 5: This was, without a doubt, the hole of the day for me, and one that I'll never forget. My driver forgot how to work at this point in the round, and I all of a sudden hit a weak slice 30 yards into the pines. I had an extremely small gap through the trees and pulled a 4 iron to punch it through to get back into position. Brian took one look at it and told me I was crazy. But I was adamant. I addressed the ball, weight forward, and smashed a 4 but it...hit the lowest hanging branch on the farthest tree. The ball kicked down and settled in the left waste area. At this point, the wind was howling in our faces on the long, uphill Par 5. I had about 145 out slope-adjusted, uphill, to a back left pin. There was a tree directly in line between me and the pin, so lots of eye candy dangling in front of me. I pulled out my pitching wedge, but Brian stopped me. "You need a 9 here," he said. "You think so?" I asked. "Yes. 100%, use the 9. Long is fine. You have a bit of space behind the pin. You don't want to me short - trust me." I don't have an ego and I listen to folks wiser than me. So I pulled the 9, intending to hit a nice little fade around the tree. I took a swing and...executed the game plan perfectly. The ball faded around the tree, with the wind helping it bend. It bit onto the green 5 feet from the pin, rolled an inch from the hole, and stopped 3 feet past. I solidified the (terrifying) birdie putt a few minutes later and was on my way to breaking 80. All in all, I had a spiritual experience and to anyone who hasn't been to Pinehurst, you need to go. I think this section ended up longer than the newsletter but I just couldn't help myself!! |
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Thanks for the read! Let me know what you thought by replying back to this email. — Blake |
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