Privia Health Group, Inc. Common Stock 2026 Q2 Earnings Call

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 six-month period ended June 30th, 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 our business as of August 6th, 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 accompanying slide presentation posted on our website. 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%-35% of care margin over the next few years. In late May, we announced entry into the state of New Jersey in partnership with Neurology Group of Bergen County, a practice with 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 three 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 seven 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 30th, 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%-80% of our full-year adjusted EBITDA to convert to free cash flow. This does not include any capital deployments 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 the 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 nine 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.