管理層發言
Thank you for standing by, and welcome to Privia Health's Second Quarter 2026 Earnings Conference Call. Operator provided instructions. I would now like to hand the call over to Robert Borchert, SVP of Investor and Corporate Communications. Please go ahead.
Thank you, Latif. Joining me are our CEO, Parth Mehrotra, and David Mountcastle, our Chief Financial Officer. This call is being webcast and can be accessed in the Investor Relations section of priviahealth.com along with today's press release and slide presentation. Following our prepared comments, we will open the line for questions. Please limit yourself to one question only and return to the queue if you have a follow-up so we can get to as many questions as possible. Today's reported results are preliminary and are not final until our Form 10-Q for the second quarter and 6-month period ended June 30, 2026, is filed with the Securities and Exchange Commission. Some of our statements today may be forward-looking in nature based on our current expectations and view of our business as of August 6, 2026. Statements such as those related to our future financial and operating performance and future business plans and objectives are subject to risks and uncertainties that may cause actual results to differ materially. These statements should be considered along with the cautionary statements in today's press release and the risk factors described in our 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. And now I'd like to turn the call over to our CEO, Parth Mehrotra.
Thank you, Robert, and good morning, everyone. Today, I'll summarize our performance and market presence, and David will discuss our financial results and updated 2026 guidance before we take your questions. Privia Health has continued to execute at a very high level across all aspects of our business. We delivered strong new provider signings across all our markets, which provides excellent visibility through 2026 and into next year. Implemented provider growth of 10.1% and value-based attributed lives growth of 19.2% year-over-year helped drive total practice collections growth of 12.4% in the second quarter. Adjusted EBITDA increased 29% with EBITDA margin as a percentage of care margin expanding 310 basis points from a year ago. We are continuing our journey to deploy AI applications in various workflows across the organization and expect to continue to expand our EBITDA margin towards the high end of our long-term target range of 30% to 35% of care margin over the next few years. In late May, we announced entry into the state of New Jersey in partnership with the Urology Group of Bergen County, a practice for 25 adult and pediatric clinicians. This represents Privia's 25th state as we build our national primary care-centric delivery network. We raised our 2026 outlook across all key financial metrics, including practice collections, care margin and EBITDA, given our strong first half performance. Attributed lives is above the high end of prior guidance. Our implemented provider guidance is unchanged. We would add 570 providers at the midpoint of our 2026 guidance, which is 10.6% growth over 2025. The Privia Health footprint of community-based medical groups and value-based risk-bearing entities continues to expand. We now have 5,644 implemented providers caring for over 6.1 million patients in more than 1,300 care center locations operating across 25 states and the District of Columbia. A defining component of Privia's operating model is our gross provider retention averaging 98% over the past 3 years. We serve over 1.64 million attributed lives across more than 130 commercial and government value-based care programs. Commercial attributed lives increased 11.7% from last year to reach 942,000. Lives attributed to the CMS Medicare programs were up 55%. Medicare Advantage and Medicaid attribution increased more than 12% and 18%, respectively. The diversification of Privia's value-based care contracts gives us the confidence in our ability to build scale and profitability without depending on any one particular program. Slide 7 shows the scale and breadth of Privia's ACOs. We manage an estimated $15.7 billion in total medical spend across all commercial and government value-based risk arrangements. This $15.7 billion estimate captures the full scope of our value-based programs relative to our fee-for-service collections. It more accurately represents the breadth of total medical spend our clinicians are able to potentially impact over time. We remain highly focused on increasing attribution and generating positive contribution margin across our value-based book. Our ultimate goal is to achieve consistent and sustainable earnings growth for our physician partners and shareholders. David will now review our recent financial results, balance sheet strength and our updated 2026 guidance in more detail.
Thank you, Parth. Privia Health's strong operational execution and growth continued through the second quarter. Implemented providers grew 109 sequentially from Q1 to reach 5,644 at June 30, an increase of 10.1% year-over-year. Implemented provider growth as well as strong ambulatory utilization trends and value-based performance led to practice collections growing 12.4% from a year ago to reach $970 million. Adjusted EBITDA, which is reconciled to GAAP net income in the appendix, increased 29% over the second quarter last year to reach $37.4 million, representing 28.3% of care margin. This is a 310 basis point margin improvement as we generated operating leverage across both cost of platform and G&A while investing across all markets. For the first half of 2026, practice collections increased 13.4% to $1.88 billion. Care margin was up 18.3% and adjusted EBITDA grew 32.5% to reach $74.1 million. We ended the second quarter with more than $412 million in cash and no debt. As we mentioned previously, beginning this year, Privia is now a full cash taxpayer. Given the timing of cash tax payments and provider disbursements, we expect 70% to 80% of our full year adjusted EBITDA to convert to free cash flow. This does not include any capital deployment in year for business development and assumes we will receive a significant portion of our shared savings cash payments for 2025 performance by year-end. Last month, CMS announced certain proposed changes that would be retroactively applied to the Medicare Shared Savings Program for performance year 2025 if finalized. To allow for the implementation of these changes, CMS may delay delivery of the final reconciliation results for performance year 2025 until November. While this has minimal impact on our accruals, it may lead to an atypical year-end cash flow dynamic, depending on when we receive the cash settlement from CMS as well as our subsequent payments to the providers. Our healthy balance sheet continues to position us with significant financial flexibility to deploy capital and take advantage of opportunities in the current market environment. Our first half results gives us confidence to raise our 2026 outlook above the high end of our prior guidance range for attributed lives to the high end of our ranges for practice collections and GAAP revenue and to mid- to high end of our ranges for care margin platform contribution and EBITDA. Our guidance for implemented providers is unchanged. We also continue to maintain a robust pipeline of existing market expansion and potential new market opportunities. As a reminder, our guidance does not assume any additional business development activity. Over the last 9 years, Privia's consistent growth and profitability across cycles is the ultimate proof of our consistent execution, the strength of our differentiated business and the compounding of our economic model year after year. We are confident that our integrated model, combining medical groups, risk-bearing entities and tech and services platforms will continue to drive sustainable growth and profitability for years to come. As Privia continues to build large-scale primary care-centric delivery networks across the nation, we would like to thank all our clinicians and employees for their continued partnership, dedication and hard work to help us achieve these results. Operator, we are now ready to take questions.
分析師問答
Operator provided instructions. Our first question comes from the line of Elizabeth Anderson of Evercore ISI.
Maybe just could we double-click on your question about the CMS shared savings payment being delayed. I guess, obviously, out of your control as that's a government function. But I guess what gives you confidence that it is going to come in the fourth quarter? And how should we think about sort of external signposts we can watch to monitor that?
Yes. We're not that worried about it. They've been really good over the past many years. Usually, results come in August, September. The cash settlement happens sometime October. So it's delayed by, call it, 30 to 45 days. I think it's in their interest to make sure all the providers are getting the cash flow as they deserve for a good performance here. The changes that they proposed are positive in general. I think they need a little bit more time to reconcile it, but we don't see any issues in receiving the money. Whether it comes early November, late November, December, it will happen when it happens, but I don't think it's a big concern for us.
Our next question comes from the line of Ryan Daniels of William Blair.
This is Matthew Mardula on for Ryan Daniels. In your prepared remarks, you talked about being towards the high end of your long-term target range of 30% to 35% for the care margin over the next few years. Can you give us some color on what has changed to give you confidence of being at the high end for your long-term target as well as the drivers of what will help you get to that target? And then any directional time line on when this could be achieved? Is it maybe in the next few years or more of a longer-term target of 5 years?
Thanks for the question, Matt. We covered this a little bit last quarter as well. If you see our guidance, we expect to be 29% this year for EBITDA to care margin, so it's pretty much very close to 30%. Given all the work we are doing with different AI applications and scaling our business with growth, we're confident that we can keep accreting that. There's no set time line. We said over the next few years, it can ebb and flow, but we'll just keep accreting it. We actually feel really good about it because this was a target we had set when we went public at our IPO about 5 years ago, and we're already there at the low end. A lot of our mature markets are already well above that target, close to the high end or above even the high end. That gives us the confidence that as we mature some of the other newer markets, overall profitability should keep trending up.
Our next question comes from the line of Daniel Grosslight of Citi.
Congrats on another solid quarter here. I want to focus a little bit on the updated guide, particularly around practice collections. It does imply a pretty strong deceleration in growth from 1H to 2H. I think it's around — you mentioned 13% in the first half to around 3% in the second half year-over-year. And that's despite continued provider and attributed lives growing. I'm just curious, what's driving that implied deceleration? Is that just conservatism? Or are there specific headwinds or maybe a difficult comp period that we should be aware of in the second half of the year?
Thanks for the question, Dan. There's nothing much in the implied. We've done this for 21 quarters. You've seen how we guide midyear. So we're just being prudent, conservative, whatever you want to call it. At the midpoint, we got it to the high end of the original range. If the trends continue, there should be further upside. We'll just see how it plays out. We feel really good about ambulatory utilization. Folks continue to visit their primary care providers or whoever is the first point of contact. A lot of the utilization trends you're seeing on the inpatient side as reported by health systems don't really apply to a business like Privia. So we feel really good overall and as the year goes on and we keep progressing, we'll update the guidance as it comes.
Our next question comes from the line of A.J. Rice of UBS.
I know there are a variety of drivers to give you confidence on that margin improvement over time, operating leverage, obviously, shared risk performance, value-based performance. But you also now for several quarters have been mentioning the AI opportunities. I wondered if it's possible to get you to enumerate a little bit on some of the use cases, either at the corporate level or at the practice level that you're seeing that get you excited about the opportunities for that to drive improved efficiencies.
I appreciate the question, A.J. We covered this in a fair bit of detail on the last call, but we are looking at our four core workflows across corporate functions, fee-for-service workflows, value-based workflows and everything that happens in the patient care experience when the provider sees their patients. Across those flows, we're evaluating every aspect, leveraging existing partnerships. We're on the Google platform, so we're using Gemini across different aspects of the corporate workflow. We work with other tech companies that have embedded AI applications. Our development teams are continuing to see where we can build, buy, or partner. Whether it's patient experience, clinical decision-making by the doctors, or revenue cycle workflows, all of those are getting impacted. Technology is advancing at a good pace. We are piloting a lot of initiatives and already seeing benefit. We link this with EBITDA margin expansion; ultimately, we measure our ability to deploy these applications by whether things can be done better, faster, cheaper. As we grow, we probably don't need to add a lot more expense in headcount or other fixed costs. All of those will help us achieve that. We've invested in a business called Navina for suspect medical conditions and coding compliance; that's played out well and we have good case studies. A business like ours is a perfect use case for deploying many of these applications as they evolve over time, and we will continue that journey over the next few years.
Our next question comes from the line of Jailendra Singh of Truist.
Congrats on a strong quarter. I want to ask about the New Jersey entry. I know it's a small sized initial anchor practice. But just to confirm, did that have any impact to your guidance on any metric? And more broadly, anything you can share about your approach there, onboarding process? Do you see that market ultimately evolving similar to some of your more successful market launches in the past?
Thanks for the question, Jailendra. It's a pretty small practice but a really good set of providers and we're excited to partner with them. It's an important state from a health care spend perspective with many independent providers. Some providers inside health systems or other entities may come out and join a platform like Privia as market dynamics play out. It was on our radar for a while, and we're glad to finally enter. Like many other markets, this will be a five- to ten-year play for us. In every market we enter, we hope to establish a large medical group. Our strategy is not to be small in any market; we look to build local density of providers across the state. That playbook should play out here as well, and we hope to continue to grow. Given the size of the practice and the timing of the deal toward the middle of the year, it doesn't impact our metrics meaningfully—just a small contribution. Overall, we've had a good first six months, and that is reflected in our guidance.
Our next question comes from the line of Ryan Langston of TD Cowen.
Just maybe any updates on how the Evolent and IMS transactions from last year are progressing this year?
They're progressing really well. We've integrated both pretty much into our operating cadence. You're seeing some of the growth rates that reflect those acquisitions. They were both good additions and our updated guidance reflects some of the good performance in both. We're excited about being in Arizona; it will be a big state for us with momentum and great physician partners there with IMS as we build that medical group further over the next few years. The Evolent business we bought, the Care Partners business, will continue to grow and will be an additional way for us to partner with many providers that may not choose to join our medical group for the full offering right away. Ultimately, it will be a good pipeline and allows us to expand into many states and pursue tuck-in acquisitions to add to that platform over time. We're excited and will continue to execute quarter-by-quarter and month-by-month to build those businesses.
Our next question comes from the line of Sean Dodge of BMO Capital Markets.
This is Thomas Kelliher on for Sean. From the practice or the physician's perspective and thinking about the economics and the value prop around joining the Privia platform, how much incrementally do they typically stand to benefit? And how has that value prop evolved over the last few years or so as you built all this density and continue to strengthen and scale the value-based care business?
I appreciate the question, Tom. This thesis has only improved over time as we've built density. The components of value creation include better fee-for-service contract rates relative to what providers could arrange on their own that appropriately pay them for their work while still being lower than many health systems or facility-based providers. That's valuable to payers to prevent these doctors from being acquired by more expensive entities. There are expense savings on the technology side and efficiency gains—typically a 10% to 20% productivity lift as physicians spend less time on technology, payer contracts, and administrative tasks that we take over. The value-based story is also important—many providers have never been in a value-based arrangement or have only dabbled in it. We provide sophisticated machinery for them to participate across the entire patient panel, not just Medicare lives but commercial lives and Medicaid. We transform fee-for-service payments into a multi-set of payments including care management fees, shared savings, and bonus-related payments across the patient panel, which also benefits payers. Over time, this can range from 15% to 20% up to as high as 50% incremental benefit. We also develop business plans for each practice to grow organically—adding providers, growing patient panels, expanding locations, and adding specialists. We have cases where practices have doubled in size over five to seven years. That combination of cost, revenue enhancement, and growth opportunity is the value proposition, and we continue to refine and execute it so independent practices can thrive in low-cost community settings.
Our next question comes from the line of Andrew Mok of Barclays.
This is Jeffrey on for Andrew. Provider expenses increased to $500 million in the quarter, which grew faster than revenue and was a bit higher than street expectations. Can you provide more detail on the drivers of that variance, particularly across care categories and business lines?
Can you repeat that again? You said provider expenses? I think you should look at it on an annual basis. I'm assuming you're referring to the disclosure on Page 9 of our press release. Those are payments that we pass through to the providers on our fee-for-service book as well as the value-based book over time. So it reflects the growth of the business.
Our next question comes from the line of Matthew Gillmor of KeyBanc.
I wanted to follow up on some of the MSSP discussion and the proposed changes to the financial methodology. It seemed positive overall and CMS is trying to encourage participation. There were some puts and takes for enhanced track ACOs, at least the way we read it. I was curious what you all thought of the proposal and if there are any sort of noteworthy implications for Privia.
Thanks, Matt. Overall, we think it's positive. CMS continues to refine the program for the better. Some changes on adding new providers who've never been in an ACO, how we measure attribution, and changes around rebasing that happens every five years or so are positive. There can be further refinement on a regional basis. Over time, we'll see how programs like REACH and LEAD evolve and whether they merge into MSSP. Overall, it's a step in the right direction and reflects a real effort to improve the program. MSSP remains one of the longest-serving programs with wide adoption across hundreds of thousands of providers and millions of beneficiaries. CMS wants to support community-based providers participating in the program, and we feel really good about MSSP directly contracting with the government and delivering shared savings. Part of our guidance increase reflects that sentiment.
Our next question comes from the line of Whit Mayo of Leerink Partners.
Looking at the implemented provider growth this quarter, would you be willing to share how much of that growth is coming from new physicians joining existing groups versus new groups affiliating with Privia?
We don't break that out because it changes every quarter, so we look at it on an annual basis. Same-store growth is usually 1% to 2%, but that includes both price and volume and can be higher depending on mix. We're growing our practices same-store in a meaningful way and the base keeps getting bigger. We are adding new practices in existing states and entering new states, so the mix varies. It takes us five to six months to implement every provider from the sale and the business becomes predictable nine to twelve months out. By the time we give the following year guidance in February, 90% of the business is pretty much locked in on a fee-for-service basis, which bodes well for predictability.
Our next question comes from the line of Matthew Shea of Needham.
Congrats on the nice quarter here. Maybe on go-to-market, you're running the two go-to-market motions now: the full medical group and the wider ACO-only model. How is the two-pronged strategy doing so far into 2026? Anything interesting to call out? And obviously, we can see the adoption of the full medical group and implemented providers, but it would be good to hear specifically how the ACO-only model is resonating. Any notable additions there?
It's still a little early. We closed the business by the end of last year and integrated it, but it allows us to have many more conversations in states where we do not have a medical group entity set up yet. It allows us to enter partnerships with a larger total addressable market and to follow up acquisitions with tuck-ins. There are many ACO entities that are subscale that we could pick up over time depending on availability and price. We can run that playbook efficiently as industry disruption happens. We work in MSSP, which we understand, and we can also add commercial and MA value-based contracts through a CIN or IPA network in a state. Over time, we hope for cross-sell where some of these providers join our full medical group for the full set of services. This will play out over the next four to five years. It's early days, but we're excited.
Our next question comes from the line of Jessica Tassan of Piper Sandler.
Congrats on the strong results again. We have cost of platform coming in at about 52.5% of care margin, which is down 400 basis points year-over-year. Should we still think about the cost of platform as kind of the cost associated with third-party EHR software? And then does the second quarter leverage reflect the full extent of that opportunity? Or is there a longer-term opportunity to negotiate pricing down and continue to drive margin expansion on that line?
You should look at it on an annual basis; quarterly comparisons can be impacted by shared savings accruals and other items. Over time, our job is to keep improving both cost of platform and SG&A. Technology spend is one component—we expense software in the P&L rather than capitalizing it—but practice operations, revenue cycle, market leadership, fixed and variable costs all factor in. We have levers in our contracts that scale costs appropriately as we get bigger, and we'll keep pulling those levers. Our target is to get to the high end of EBITDA to care margin and Slide 12 shows how both cost of platform and SG&A have scaled well over the past nine years, contributing to EBITDA margin accretion.
Our next question comes from the line of Jack Slevin of Jefferies.
Congrats on the quarter. I just want to double-click a little bit on the BD side of things for the ACO business. Understanding we have this transition this year from ACO REACH to LEAD, possibly some disruption in the marketplace, just wanted to hear if you have any additional color on sort of if that's creating pockets of opportunity or how you think about organic adds to the ACO business going forward?
It's both organic and inorganic. With Care Partners from Evolent, we can sell into practices that were part of REACH and may be considering what to do next, which is helpful. We can also pursue acquisitions of various scales. This transition creates entities that need to find a new partner or determine the programs they will participate in, and many may lack capability. As the industry consolidates to a few larger, scaled players, we'll look to capture both organic and inorganic opportunities. Over time, scale matters and deeper capabilities are required beyond just capital or initial funding, so we expect consolidation and plan to be on the right side of it.
Our next question comes from the line of Ryan Halsted of RBC.
My question is about the managed care landscape looking ahead at 2027. Just curious if there's anything you are starting to think about as you hear about MA plans reevaluating which markets that they're looking to stay in or exit. And similarly, Medicaid managed care and some of the comments that have been coming out about their expectations on membership. I appreciate that.
Good question. We are not in the payer business directly, but this happens periodically. Changes like B-28, exchange population shifts, and Medicaid redetermination have caused more disruption this cycle. Payers will make adjustments payer by payer and state by state. The good news for a business like ours is we create large dense medical groups with low-cost community providers and bring that network to payers across the patient panel—commercial, MA, Medicaid. As cost pressures increase and payers look to create value, a business like ours becomes an important partner because we deliver care at the ground level in communities. Primary care is the chassis that helps deliver care cost-effectively and take ownership of total care dollars and outcomes. As value-based care evolves, payers will turn to entities like ours. Patients don't go away; if a payer exits, people still need care. So it bodes well for a business like ours to capitalize on whatever happens in the payer landscape.
Our next question comes from the line of Olivia Miles of Baird.
This is Olivia on for Michael Ha. I wanted to ask more on your long-term adjusted EBITDA growth target, having achieved an average 32% adjusted EBITDA growth over the last two years and with yet another quarter of nearly 30% EBITDA growth on a business with high visibility. Can you help us understand how you think about the puts and takes of your 20% long-term EBITDA growth target? Specifically, I'm interested in which factors or developments could cause you to revisit and potentially raise your multiyear view on EBITDA growth.
Thanks, Olivia. You've seen our performance—Slide 12 speaks for itself. We target around 20% long-term EBITDA growth, though that can be higher or lower in any given year. We've doubled EBITDA on a rolling three-year basis in a challenging MA environment, which speaks to execution. The drivers are multiple: organic growth in existing states, acquisitions, continued value-based performance, same-store growth, and disciplined capital deployment. The addressable TAM is large—about 1.1 million clinicians in the country and perhaps 600,000 non-facility-based providers addressable. We're around 6,000 providers today, so there is room to expand. Being already at a healthy EBITDA margin toward the low end of our long-term range gives us confidence to reach the high end as we scale. Some years growth will be higher and some years lower, but we'll continue to target that level.
Our next question comes from the line of John Pinney of Canaccord Genuity.
John Pinney on for Richard Close. I just wanted to touch on the AI initiatives. Is there anything that's been surprising to you as far as the cost of the compute and the token use? And just generally, how you're thinking about managing AI spend?
I'm glad you asked. In our prepared remarks, we link AI to EBITDA margin expansion. Whether partners embed technology or we spend directly with our dev teams using models, we expense a lot of this on the P&L and measure it at a micro level by workflow—time saved, outcomes achieved, cost saved. Ultimately, we tie it to increasing EBITDA margin. We won't overspend on technology without seeing resulting margin improvement. We'll manage it carefully and measure ROI. Like other technology cycles, many innovations will be disruptive in positive ways. Our focus is on accreting EBITDA as we use this technology and increasing margins, and we'll continue to manage AI spend accordingly.
Our next question comes from the line of David Larsen of BTIG.
This is Jenny Shen on for David. I was wondering if you could provide some updated thoughts on cost and volume trends in the quarter maybe compared to last quarter or a year ago? And whether you've seen any notable pockets of higher acuity and any notable shifts in the acuity mix?
Thanks, Jenny. There's not much to speak to on a quarter-over-quarter basis; we look at it annually. Quarter comparisons can be difficult given accruals and true-ups. Some inpatient utilization trends have ebbed down. Ambulatory utilization is pretty good, which is positive because it means folks are seeing their primary care providers or first point of contact more regularly. Our shared savings accruals and increased guidance reflect performance in the value-based book. There's nothing notable year-over-year that has changed materially—if anything, we're performing pretty well in our value-based book, and the diversified nature of our platform helps.
Gentlemen, we have no further questions. Please continue.
Yes. Thank you for listening to our call today. We appreciate your continued interest and look forward to discussing our performance next quarter.
This concludes today's conference call. Thank you for participating. You may now disconnect.