Earnings call transcript: Privia Health Q3 2025 revenue beats forecast

Privia Health Group Inc (PRVA) reported its third-quarter earnings for 2025, with revenue significantly surpassing expectations. The company posted a revenue of $580.42 million, exceeding the forecasted $492.21 million by 17.92%. However, the earnings per share (EPS) of $0.05 fell short of the anticipated $0.0545, representing a negative surprise of 8.26%. In pre-market trading, Privia Health’s stock rose by 7.31%, reflecting investor optimism despite the EPS miss.

Key Takeaways

• Revenue exceeded forecasts by 17.92%, reaching $580.42 million.
• EPS fell short of expectations by 8.26%, coming in at $0.05.
• Pre-market stock surged 7.31% to $26.85.
• Practice collections grew by 27.1% year-over-year to $940.4 million.
• Adjusted EBITDA increased by 61.6% year-over-year.

Company Performance

Privia Health demonstrated robust growth in Q3 2025, with significant increases in practice collections and adjusted EBITDA. The company expanded its operations across 15 states and the District of Columbia, serving over 5.6 million patients. This expansion, coupled with strategic acquisitions, has positioned Privia Health as a formidable player in the healthcare sector.

Financial Highlights

• Revenue: $580.42 million, up 17.92% from forecast
• EPS: $0.05, below forecast by 8.26%
• Practice collections: $940.4 million, +27.1% YoY
• Adjusted EBITDA: $38.2 million, +61.6% YoY
• EBITDA margin: 30.5%, a 720 basis point improvement

Earnings vs. Forecast

Privia Health’s revenue for Q3 2025 significantly outpaced expectations, delivering a positive surprise of 17.92%. However, the EPS of $0.05 was a disappointment, missing the forecast by 8.26%. This mixed performance highlights the company’s strong revenue-generating capabilities but also points to areas needing improvement in profitability.

Market Reaction

In pre-market trading, Privia Health’s stock rose by 7.31% to $26.85, nearing its 52-week high of $26.49. This positive movement suggests that investors are focusing on the company’s strong revenue growth and potential for future expansion. The stock’s rise is notable against broader market trends, indicating specific confidence in Privia Health’s strategic direction.

Outlook & Guidance

Privia Health raised its outlook for 2025, anticipating an 11.2% increase in implemented providers and a 17.1% growth in practice collections. The company is targeting a 32% growth in adjusted EBITDA and expects to maintain this momentum into 2026, with a projected 20% growth.

Executive Commentary

CEO Parth Mehrotra emphasized the company’s consistent performance and strategic approach to value-based care, stating, "Our consistent performance over the past few years is a testament to our approach to value-based care." Mehrotra also highlighted the importance of shared risk models with payers and providers, suggesting this structure as optimal for sustained growth.

Risks and Challenges

• Potential for EPS volatility despite strong revenue growth.
• Integration challenges following the acquisition of Evelyn Health ACO.
• Regulatory changes in healthcare could impact future operations.
• Market competition from other healthcare providers.
• Economic fluctuations affecting patient volumes and collections.

Q&A

During the earnings call, analysts inquired about the company’s Medicare Shared Savings Program performance and future expectations. Discussions also covered the potential for expanding ancillary services and strategies for navigating Medicare Advantage market dynamics. CEO Mehrotra addressed these concerns, highlighting opportunities in market dislocation and the company’s ability to execute and scale efficiently.

Full transcript - Privia Health Group Inc (PRVA) Q3 2025:

Chris, Conference Call Operator: Welcome to the Privia Health third-quarter 2025 results conference call. Please note that this call is being recorded. You will have the opportunity to ask questions to our speakers later on during the Q&A session. If you would like to ask a question at that time, please press star one on your telephone keypad. Thank you. I’d like to hand the call over to Robert Borchert, SVP of Investor and Corporate Communications. Please go ahead.

Robert Borchert, SVP of Investor and Corporate Communications, Privia Health: Thank you, Chris, and good morning, everyone. Joining me are Parth Mehrotra, our Chief Executive Officer, 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 financial 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. The financial results reported today are preliminary and are not final until our Form 10Q for the third-quarter and nine-month periods ended September 30, 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 November 6, 2025.

Such statements, including those related to our future financial and operating performance and future business plans and objectives, are subject to risk 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 is included in our press release and the accompanying slide presentation posted on our website. Now, I’d like to turn the call over to Parth Mehrotra, our CEO.

Parth Mehrotra, Chief Executive Officer, Privia Health: Thank you, Robert, and good morning, everyone. Privia Health continued to execute very well across all aspects of our business through the third quarter of 2025. This momentum positions us for continued success in 2026. Today, I’ll summarize our business and financial highlights, and David will discuss our financial results and updated 2025 guidance before we take questions. Privia Health’s consistent results, operational execution, and differentiated business model have clearly demonstrated our ability to perform in all types of market environments. We delivered very strong results across our value-based care book, including the Medicare Shared Savings Program for 2024. New provider signings and implementations remain strong across all of our markets, which provides great visibility for 2026. Implemented provider growth of 13.1% and value-based attribution growth of 12.8% year-over-year helped support practice collections growth of 27.1% in the third quarter.

Adjusted EBITDA increased 61.6%, with EBITDA margin as a percentage of Care Margin expanding 720 basis points to reach 30.5%. This outstanding performance gives us confidence to raise our 2025 outlook above the high end of our previous ranges. In September, Privia Health agreed to acquire an ACO business from Elevance Health for $100 million in cash, plus an earnout of up to $13 million based on 2025 MSSP performance. This business will add over 120,000 value-based care attributed lives across existing and new states in MSSP, as well as various commercial and Medicare Advantage arrangements. The transaction offers a compelling synergy for Privia as the ACO participating providers will have an opportunity to join Privia’s medical groups for a full technology and service platform.

The transaction is expected to close by year-end 2025, pending regulatory approvals, and we expect it to positively contribute to adjusted EBITDA in 2026. Privia’s national footprint now includes 5,250 implemented providers caring for over 5.6 million patients in more than 1,340 care center locations operating in 15 states and DC. Our balanced and diversified value-based care organization now serves over 1.4 million patients through more than 100 commercial and government programs. Our total attributed lives increased close to 13% from a year ago. This was broadly driven by new provider growth and our entry into Arizona. Commercial attributed lives increased more than 12% from last year to reach 864,000. Lives attributed to CMS Medicare programs were up 12%. Medicare Advantage and Medicaid attribution increased more than 12% and 18% respectively from a year ago.

This diversified value-based care book gives us the confidence to build scale and profitability without depending on any one particular contract. With the ACO business acquisition, Privia’s total attributed lives will expand to more than 1.5 million. We remain highly focused on generating positive contribution margin in our value-based contracts as we pursue attribution growth, manage risk, and implement clinical and operational enhancements in our medical groups. Our consistent performance over the past few years is a testament to our approach to value-based care and the strength of our actuarial underwriting, physician-led governance structure, and clinical operations. Our physicians and providers continue to strive to reduce costs, improve patient well-being, and deliver value to our commercial and government payer partners. Now, I’ll ask David to review our recent financial results, balance sheet strength, and our updated 2025 guidance in more detail.

David Mountcastle, Chief Financial Officer, Privia Health: Thank you, Parth. We continue to see very strong performance across our value-based care book, especially in the Medicare Shared Savings Program. Across our nine ACOs and MSSP in 2024, Privia managed over $2.5 billion in medical spend. Our aggregate savings rate of 9.4% was up from 8.2% in 2023. Total shared savings of $234.1 million increased 32.6% from a year earlier. This demonstrates our continued success in increasing savings and profitability while adding value-based and downside risk lives and contracts. After CMS’s share, Privia’s gross shared savings was $160.1 million, a 36% increase over 2023. This is the amount recognized in practice collections and GAAP revenue. In the Mid-Atlantic region, we operate one of the country’s largest ACOs caring for about 60,000 patients.

We delivered savings of 11%, which for the fifth year in a row was the highest savings rate of all ACOs with greater than 40,000 attributed lives. Privia Health’s strong operational execution and growth continued through the third quarter. Implemented providers grew 125 sequentially from Q2 to reach 5,250 at September 30, an increase of 13.1% year-over-year. Implemented provider growth, along with strong value-based performance and solid ambulatory utilization trends, led to practice collections increasing 27.1% from Q3 a year ago to reach $940.4 million. Adjusted EBITDA, which has reconciled to GAAP net income in the appendix, increased 61.6% over the third quarter last year to reach $38.2 million, representing 30.5% of care margin. This is a 720 basis point margin improvement year-over-year as we posted better-than-expected results across our value-based care book, which helped generate significant operating leverage across both cost of platform and G&A.

For the first nine months of 2025, practice collections increased 19.6% to $2.6 billion. Care margin was up 16.7%, and adjusted EBITDA grew 43.5% to reach $94.1 million. Our business continues to generate very strong free cash flow. Pro forma cash at the end of the third quarter was $409.9 million with no debt. This assumes the deployment of $100 million by year-end for the ACO business acquisition and the net cash received from CMS for the 2024 MSSP performance year. Year-to-date pro forma free cash flow, excluding cash employed for business development transactions, was $104.4 million. Assuming no further deployment of capital for business development, we expect to end the year with at least $410 million in cash. This continues to position us with significant financial flexibility to take advantage of opportunities in the current market environment. Our outstanding year-to-date performance positioned us to once again raise our 2025 outlook.

Using the midpoint of our new 2025 guidance, implemented providers are expected to increase 11.2% year-over-year to reach 5,325 by year-end. Attributed lives growth is expected to be approximately 12.5%. We expect practice collections to grow 17.1% and care margin 13.2% at their respective midpoints. We are also guiding to adjusted EBITDA growth of 32% at the midpoint and expect more than 80% of full year 2025 adjusted EBITDA to convert to free cash flow. Privia’s consistent long-term growth and profitability across economic, healthcare, and regulatory cycles validates the strength of our differentiated business and economic model and consistent execution by our provider partners and our employees year after year. Our momentum and diversified book of business has positioned us well to drive organic provider growth and increase operating leverage for long-term adjusted EBITDA and free cash flow growth as we build our national footprint.

We look forward to continuing to serve our physicians, providers, and health system partners and their patients on our long-term journey together. Operator, we are now ready to take questions.

Chris, Conference Call Operator: We will now begin the question and answer session. At this time, I would like to remind everyone in order to ask a question press star then the number one on your telephone keypad. We’ll pause for just a moment to compile your roster. Your first question comes from the line of Josh Raskin with Nephron Research. Please go ahead.

Hey, good morning. This is actually Mark Olan for Josh. I would appreciate you taking the question. Actually, I had one on your MSSP performance. So given the very strong results for that program in 2024, we’re just wondering how you plan to guide to that in the future. Does the outperformance in 2024 now just get factored into the baseline for future planning. Or are there any reasons why we should consider that year to be above the go-forward run rate? Thank you.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, I appreciate the question, Mark. I think we’re going to be pretty consistent with how we’ve done it over the past seven, eight years. We take into account all the data we receive from CMS, look at our attribution, see any changes to the program structure, fee rates, et cetera, just factor all that in. We look at the results, and if we perform well relative to benchmarks, all that just does get factored into the next year. Every year when we report, we are updating for prior year and then also updating current estimates for the current year. All that’s factored into the guidance. You can see with our outperformance, that includes both factoring in for 2024 actual results as well as updated VON 2025.

Chris, Conference Call Operator: Your next question comes from the line of Elizabeth Anderson with Evercore ISI. Please go ahead.

David Mountcastle, Chief Financial Officer, Privia Health5: Good morning, guys. Congrats on the quarter and the good MSSP results, and thanks for the question. Could you tell us about the one that sort of go-forward for the fourth quarter? I know you obviously had the outsized gains in the third quarter, but sort of how are you seeing the core business performing as we go into the fourth quarter? On prior calls, you talked about over $130 million of EBITDA for 2026. I do not know if you could comment on sort of where you are seeing that number now. Thank you.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, thanks, Elizabeth. Appreciate it. Look, I think we continue to see very strong trends. There’s no reason to believe the momentum changes in Q4. We don’t give quarterly guidance. We’re just focused on annual results. Given when value-based care results flow into the year, there’s a very specific reason we just avoid the quarterly guidance or implied outlook and so on and so forth. I think we’re being our usual prudent in terms of implied guidance for Q4. I think we’ll just see how the year goes. We just didn’t want to get ahead of ourselves given we’ve had a pretty outstanding year year-to-date Q3. I think, look, I mean, the updated guidance, we’re sitting close to $120 million for 2024. I think we’re going to keep targeting 20% growth off of that, where we close this year into next year.

We’ll just see how we close the year, hopefully strong. Then close the Evelyn transaction like we noted, factor all that in, see updated results on the value-based book across all categories as we enter later this year, early next year, factor all that in and give guidance in February like we do. There’s no reason to believe. I mean, we’ve had one of our best years, and I think the momentum should help us take that forward like we noted in our prepared remarks. It positions us exceptionally well for a pretty strong 2026.

Chris, Conference Call Operator: Your next question comes from the line of Jake Mail with the Ringers. Please go ahead.

Hey, thanks. When I look at revenues or practice collections per provider, it’s just up a ton this quarter. And I know it’s just a metric, but can you just talk about the factors influencing the strong fee-for-service growth? I know you don’t give same-store volumes, but just the revenues are growing so much faster than the implemented provider growth. Thanks.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, thanks for the question, Wood. I think it was pretty broad-based. We saw that across the fee-for-service book, utilization trends, and then also a value-based book where if the actual results come in ahead of accruals, all that gets factored in the practice collections. We added a couple of markets. Arizona is now fully factored in. When we give original guidance, we do not include BD like we noted. Once we close the transaction, all that gets factored in. Indiana’s got implemented. That got ramped up. I think you are seeing the momentum across the business, same-store, new provider growth, new markets, good value-based book. It just speaks to the momentum in the business. When all of these things hit, you get results like this, and it flows down EBITDA free cash. I think we are really pleased as to how it has played out.

Chris, Conference Call Operator: Your next question comes from the line of Matt Gillmor with KeyBank. Please go ahead.

Speaker 0: Hey, thanks for the question. Parth, I wanted to ask about the synergy opportunities with the Evelyn Health ACO. How are you thinking about the pathway to enhancing the savings rate from Evelyn’s ACO up to previous performance? Also, can you provide a couple of comments about the physician base, which I think is relatively large, around 1,000 physicians? Just give us a sense for what those practices look like and the appetite to join the Privia Medical Group.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, thanks for the question, Matt, and kudos to calling the deal out like a year ago. When we hadn’t even started conversations. Look, I think you noted all of them. I mean, our thesis is this is a core part of our business. We’ve done MSSP for 10 years. We think we can offer a lot more to these provider groups. Obviously, there’s a synergy opportunity in our existing states where we have medical groups. We have a full infrastructure. We’ll have a pretty tangible ROI for many of the practices that can join us. There is that cross-sell opportunity. I don’t think it plays out just in the next quarter or two. I think this thing takes a few years to play out as practices, some of the larger practices make that fundamental decision to join our medical groups. It’s an entirely different business value proposition.

I think it gives us good opportunity to enter. We’re now going to enter six new states with a lighter model with just in the ACO, but then there’s an opportunity for us to find anchor providers and others that we can actually establish our medical group and then implement our full suite and enter these states. I think we’re going to focus on both of those. Obviously, improving the performance of the ACO at hand is kind of job number one. They are at a certain level of shared savings rate with CMS. You’ve seen our performance across our other ACOs as we’ve consistently improved that. We have four or five ACOs that are now close to double-digit or higher than double-digit savings rates.

I do not think, again, that plays out in the near term, but over time, our hope is we can improve performance. There are multiple levers to get synergies out of the business. We have not closed the transaction yet, so we will just go through that, and hopefully, that gives us good tailwinds over the next two, three years as we play out that thesis.

Chris, Conference Call Operator: Your next question comes from the line of Andrew Mock with Barclays. Please go ahead.

David Mountcastle, Chief Financial Officer, Privia Health2: Good morning. This is Thomas Walsh on for Andrew. Hoping you could discuss some of the moving pieces in the capitated business this quarter, including the step-up in revenue, prior year claims development, and any change in membership. Thanks.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, thanks, Thomas. I think we have a pretty small capitated book, about 20,000-22,000 lives. I think that’s just to note that. This was the small book that we retained on a capitated basis when we kind of restructured these contracts a couple of years ago, given our view on the broader MA environment. Our hope was that we would perform well in the book that we are keeping. I think you’re seeing that play out. I think it’s effectively the factors that you would expect on the revenue side, given attribution, risk adjustment. Obviously, performance relative to that on the cost side with all our programs just performing a little bit better than what we expected, which was the hope. You’re seeing that play out. I don’t think it fundamentally changes our view.

On capitation and how that plays out going forward. We continue to believe having a shared risk model with payers, providers, Privia, like we’ve said on our previous calls. We just think that’s the most optimal structure. All the pressures in MA continue to persist as most of the analysts on the call have written pretty extensively about. V28 and star scores, utilization trends. None of that is changing. Fundamentally. I think we’re going to be pretty cautious on capitated MA, but we’re really pleased with the book we have, and we’ll continue to optimize it for profitability and continue to give that value to both our payer partners and our providers. Yeah, and just to add to that, for the quarter, there was a little bit of timing of data and a little bit of retroactivity back to 1/1.

I would say we’re looking at probably Q3 as the high mark for the year and wouldn’t expect that exact trend to continue into Q4.

Chris, Conference Call Operator: Your next question comes from the line of Matthew Gillmor. We need him and company. Please go ahead.

Speaker 0: Hey, thanks for taking the question and congrats on the nice quarter here. Wanted to ask about kind of the go-forward growth algorithm. Historically, you’ve stuck to a cadence of one to two markets per year. You demonstrated that this year. Evelyn obviously adds more than one to two markets immediately. Curious, how does the acquisition change the cadence of new markets? Is it fair to expect you will pause for a bit while you process through integrating those assets, or just how does the deal change the growth algorithm? You also commented on the flexibility the cash position gives you at this point. Just curious what your appetite for incremental M&A is. Thanks.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, I appreciate the question, Matt. I don’t think anything changes fundamentally. We continue to have a pretty good business development pipeline. Evelyn gives us access to six new states, but it’s not with the full model as we just were talking about. I think when we talk about a new state, it’s implementing the full model with our medical groups, risk entities, full services platform. I think that’ll be the cadence. I think we have a pretty strong cash balance, $400 million-plus even at the end of the year, despite spending $200 million this year. I think we’re going to continue to take advantage of all the dislocation in the market. A lot of companies that got started, public, private, have struggled for different reasons. I don’t think new money is chasing some of these models, which is great for us.

A lot of TAM opens up as some of these models struggle, physicians come out. I think we’re going to continue to be pretty aggressive with BD and try to take advantage of this opportunity and window and keep growing our TAM, keep growing our business, and compounding it. Again, we’re going to be disciplined on price, on the types of deal we do, as we have been in the past. I think we’ll just continue with the cadence all across. There is no fundamental change in how we think about our growth algorithm.

Chris, Conference Call Operator: Your next question comes from the line of Jailendra Singh with Truist Securities. Please go ahead.

Speaker 8: Thank you. Good morning and congrats on a strong quarter. I want to stay on the topic of MSSP, clearly a strong result there. With this landscaping jungle, I mean, we have come across multiple companies who were previously only focused on the ACO Reach program and now exploring ways to shift MSSP given all the uncertainties in the ACO Reach program. How does that change the landscape for you guys? I mean, on the same topic of M&A, do you think that could be an opportunity for you to look at some of these entities who might have done okay on ACO Reach, but now are uncertain about the future? Just give us the flavor about the landscape this might be having some impact on.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, thanks, Jailendra. I think it ties to the previous question. I think there’s a lot of dislocation. The barriers to entry to start a Reach or an MSSP ACO were pretty low. But then executing on it and scaling it and making it profitable is where I think all the secret sauce is. I mean, there’s no IP in healthcare services. So I think as new money does not flow in and people are not willing to put in good money behind bad money and some of these models struggle to get profitable or scale, I think all of those give us good opportunities. I mean, at the end of the day, if you look at slide 12, we are chasing two units that drive this business: providers, the patients they cover or lives, and then how many of those are in some value-based arrangements.

As I think some of these entities struggle, the physicians come out, or we have an opportunity to buy some of these entities. At a reasonable price, I think we’re going to look at all of those. The transaction we did with Evelyn is an example of that. I mean, they didn’t do Reach, but I mean, there was a pretty big value-based care book available. I think the transaction was good for both parties. We got it at a reasonable price. They had something that was non-core to them. I think we’re going to look for those kind of opportunities. I think, like we said, we’re going to be pretty aggressive across the board in looking for opportunities to keep growing.

Chris, Conference Call Operator: Your next question comes from the line of Jeff Garro with Defen. Please go ahead.

Speaker 7: Yeah, good morning. Thanks for taking the question. I want to ask how we should be thinking about the evolution of your relationships with payers as we head into the next calendar year and as you might be finalizing any of the negotiations or contractual arrangements with those counterparties towards year end. Has your execution on value-based care from both the cost and quality perspective changed those conversations dramatically, or should we continue to think about it as kind of incremental gains towards value-based care as you show the high level of service that your providers offer? Thanks.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, I appreciate the question, Jeff. I think it’s a great question. Given the breadth of our relationship across commercial, MA, Medicaid, these are ongoing discussions. It’s not like we have contracting discussions at one point of the year because, like we said, we have over 100 VBC contracts, close to 200 commercial contracts, including commercial value-based. The discussions are really broad-based. These happen at the state level, just given how the industry works. As we really perform well in one state, we have case studies. We have a history of performance. The payers understand what we’ve done for them in one state. As we enter a new state or we have some of the younger states, I think those conversations help us. There’s a local-level discussion. There’s a national-level discussion. We include multiple aspects to contracting.

When we go and negotiate a fee-for-service contract, it includes a value-based element to it, even on the commercial book, the MA book, the Medicaid book. I think it’s a differentiated value proposition that very few companies in the space have at the scale and breadth that we do. I think we continue to work with the payers. They’re seeing strong results. We offer them a very low-cost provider network, a delivery network. That’s the right side of history in terms of what you have to do to reduce cost, improve outcomes, improve patient well-being, so on and so forth. I think it’s great to see that play out over four, five, six, seven years. You have empirical, tangible results to show. I think that continues to differentiate us.

I think it’s not only with the payers, it’s with provider groups, it’s with the government. I think all of that bodes pretty well for us as we continue the momentum.

Chris, Conference Call Operator: Your next question comes from the line of Ryan Langston and TD Cowen. Please go ahead.

Speaker 9: Thanks. Good morning. On the MA cap performance, I think I heard you say there was some favorable retro pickup. I guess, could you maybe help us frame how much of that was sort of core performance versus one-time in nature? Then just on the current number of MA lives, 2020, 2000, if you wanted to, is there an opportunity to increase the number of those lives in the current contracts that you have, or would you sort of have to move outside of those and sign additional contracts to grow lives? Thanks.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, I appreciate the question. I think it was a bit of both on the first part. It’s also relative to our accruals, what the actual results are. I mean, we’ve been very, very prudent and thoughtful on how we accrue, just given the environment, given everything you’ve heard from the payers. We were fairly prudent in our assumptions. At the same time, we just don’t take a step back on actually performing in those contracts, and then we hope for the best. I think what you saw was the team did a pretty good job. Now, it’s a pretty small book. Like we said earlier, it’s 20,000-22,000 lives. One or two states, a couple of payers. We really focused on what we needed to do to reduce cost, improve outcomes, and then have the results we did.

I think it was a bit of both in terms of great performance in the year. Now, like we said, I do not think we are going to continue to assume that some of the headwinds in MA just go away. I think we will continue to be prudent in our accruals going forward. If results are better, then you will see the outperformance again. I think that is the tactic we are just going to keep. I think in terms of increasing attribution, look, I think it is going to be both things. I mean, we are looking to increase same-store attribution growth in existing states with existing contracts with existing doctors. We add new providers in the same state and in the same geography. If we have an MA contract and a few zip codes, we add new providers there, that attribution adds to it.

We’re going to obviously try to enter into new MA contracts in existing and new states as well. I think you’ll see a combination of all of that. Our approach is to continue to increase lives across the value-based book, MA, MSSP, Medicaid, commercial. Because that’s the chassis for the business and the economic model. I think you’re going to continue to see us just increase lives as fast as we can.

Chris, Conference Call Operator: Next question comes from the line of A.J. Rice with UBS. Please go ahead.

David Mountcastle, Chief Financial Officer, Privia Health0: Hi, everybody. You have a unique window on a bunch of different payer classes, coverage categories. I wonder, there seems to still be quite a bit of disruption and underlying utilization trends. Is there anything you’re seeing to call out there? There’s also been speculation that as people face coverage changes going into the new year, there might be some acceleration on utilization here in the fourth quarter. Are you seeing any of that in how people are approaching your primary care operations and so forth?

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, thanks for the question, AJ. As we’ve done previously, I think it’s important to distinguish between ambulatory utilization, physician practice offices in the communities versus in the hospitals and post-acute and so forth. I think we continue to see elevated trends across the board. I don’t think there’s any reason to believe that those trends reduce. We’ll just see how Q4 plays out and whether all the changes in some of the programs and where the attribution might change with Medicaid or exchange population is not really big for us. I think that impacts more of the post-acute and acute side of things versus ambulatory. We’ll see how that plays out. I think our underlying assumption is it’s going to be pretty elevated. We plan for that in the value-based book. It bodes well for us on the fee-for-service side.

I think that’s our view.

Chris, Conference Call Operator: Your next question comes from the line of Constantine Davides with Citizens. Please go ahead.

Speaker 3: Thanks. Yeah, maybe just part of changing gears a little bit here. But you’ve more than doubled the number of providers on the platform in the past five years. Can you maybe talk about Privia’s ancillary capabilities and how they’ve evolved over this timeframe as you’ve added new markets and particularly new specialties and increased density in more mature markets? Just again, how your ability to continue to scale the platform is maybe driving your thinking about some of the ancillary services you provide to your groups.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, I appreciate the question, Constantine. So it’s a really good point. I think, look, our strategy is enter a state, get density of providers, and then run the entire playbook for the whole line of business, all patients, all payers, all lines. And as we develop that density, there’s a lot of opportunity for us to get into things like labs, pharmacy benefits, ASCs potentially, clinical research, anything that goes through our practices because we are operating integrated medical groups, risk entities, full tech and services platform. We’ve got all the data. The medical groups make the decisions collectively with the Privia team. And so there’s a lot of saving opportunities that we can offer to the payers, incremental revenue opportunities we can offer to our medical groups and our provider practices. And so you’ll see us pursue all that. Now, it varies by state depending on density.

It’s not going to be homogenous. Across all of those lines, we look to monetize the platform and scale it. I think that leads to the great economic model where incremental revenue just flows down the P&L as we monetize the network. I think that’s one of the underappreciated parts of our business as to how well we can do that. You’re seeing that play out in the thesis. Again, slide 12 speaks for itself. If you look at the provider growth, collections growth, care margin, EBITDA, free cash flow, that’s a fully expensed P&L for all sales, marketing, BD, software development, everything. We are approaching close to target margins. Overall, as a company, we’re at 26% EBITDA to care margin. When we went public five years ago, we said we’re going to target 30-35%.

I mean, we’re pretty much there over the next few years. I think you’re seeing the whole thesis play out as a result.

Chris, Conference Call Operator: Your next question comes from the line of Jessica Tassan with Piper Sandler. Please go ahead.

Hi, guys. This is Derek Gross, on for Jess. Thanks for taking the question. I had one on Evelyn Care Partners. We believe that they had a $220 million a year partial capitation contract with Blue Cross Blue Shield of North Carolina. Do they have any other contracts like this? Did the acquisition include management of this contract or just the MSSP business? Thanks.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, I appreciate the question. As we noted in our press release when we did the deal, we bought the entire business, all contracts. It included commercial and MA as well in addition to MSSP. Yes, we assume that contract. We’re not going to get into details of any specific contract and lives in it or revenue dollars and so forth. We do not do it for the rest of our book. We will include them as part of our whole entire platform and how we report it on slide six. Yes, we have inherited those contracts, and it is part of our core strategy to just add to lives in each of the circles that you have on slide six, and that will add to the MA lives there. We will continue to hope to perform as expected or better over time.

Chris, Conference Call Operator: Your next question comes from the line of Daniel Grosslight with Citi. Please go ahead.

David Mountcastle, Chief Financial Officer, Privia Health3: Hi, guys. Thanks for taking the question and congrats on another strong one here. If I look at the implied guide for 4Q on a year-over-year basis, it seems like you’re projecting limited profitability growth. It’s about low single digits and some margin compression. Parth, I know you mentioned that just given where you are in the year, you do continue to guide conservative. I’m just curious if there’s any investments that you’re making in 4Q that may be weighing on margin. I also just wanted to confirm if IMS contributed anything to profitability this quarter, or are you still expecting that to start contributing in 4Q? Thank you.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, I appreciate the questions. Yeah. There’s no investments. There’s nothing. There’s no anomaly. We’re just being prudent. We don’t want to get ahead of ourselves just given the strong results. If all that momentum continues, hopefully, we’ll close the year pretty strong. IMS, and to your second question, IMS will contribute in Q4 and going forward once they were implemented in September. I think that hasn’t contributed. I think, look, we expect Q4 to be strong. We’ll see how it plays out. Hopefully, it’s better than expected. We just had the magnitude of outperformance in the first three quarters. Like we said earlier, we don’t give implied guidance. We don’t guide by quarter. I think we’re just looking at the full year. On each of our operating metrics, we are well above the high end.

If it continues at the trend that we expect it to, hopefully, you’ll see all that outperformance continue.

Chris, Conference Call Operator: Your next question comes from the line of Jack Slevin with Jefferies. Please go ahead.

David Mountcastle, Chief Financial Officer, Privia Health4: Hey, good morning. Congrats on the quarter. Most of my questions have been asked already, so maybe just a tidying up one on the numbers. In previous years, when you’ve had significant outperformance or a strong lead-in, I know you’ve had sort of higher variable comp or bonuses that have come through in either the fourth quarter or on a cash basis hitting early in the following year. Is there anything we should be looking out for on that front as we look at 4Q and 1Q coming up? Thanks.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, I appreciate it, Jack. Yeah, that’s all factored in the guidance. As we look at our scorecard that you can see on the proxy every year based on the metrics, we accrue for that level of outperformance and bonus accruals and so forth. That’s all in the accrued bonus line on the balance sheet. That’s reflected in the P&L. That’s all fully expensed already. Despite that, you’re seeing the outperformance. Yes, that’ll lead to some increased cash outflow in Q1. You’ll expect that. I mean, that’s a result of great business. The interests are pretty aligned with the shareholders here in terms of how much free cash and EBITDA we generate.

Chris, Conference Call Operator: Your next question comes from the line of David Larsen with BTIG. Please go ahead.

Hi, this is Jenny Shen on for David. Thanks for taking my question and congrats on a great quarter. I just wanted to ask about the new big, beautiful bill law. Any thoughts on impacts to Privia, any impact on your Medicaid book, even though it’s small? Thanks.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, thanks for the question, Jenny. As you noted, I mean, the two main areas there were Medicaid and the exchange populations. Both of those are pretty small for us. We do not take any downside risk on Medicaid. It is a pretty small percentage of collections for our practices. We will see how the patient mix changes, but we do not expect any big changes, any fundamental issues. Practices run at capacity, lives move. I do not think people give up their primary care. It is pretty essential to their well-being and getting back to work and things like that, or kids going to school with pediatricians or women getting their care with our OBs. I do not think all of that changes much for us. We will just see how the shifts happen, but it has happened in the past.

We do not expect any meaningful impact to us given just our business model and mix.

Chris, Conference Call Operator: Your next question comes from the line of Ryan Daniels with William Blair. Please go ahead.

Speaker 4: Yeah, guys, thanks for taking the questions. Congrats on the strong year-to-date performance. Parth, I wanted to go back to some of your comments on ancillary services. I’m curious in particular, I know a few years ago you signed a partnership with a surgery center chain. We’ve got some potential changes to the inpatient-only list. I’m curious if that in particular could be a bigger growth opportunity in kind of managing referrals and point of care for the organization going forward. Thanks.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, I appreciate the question, Ryan. I think absolutely. As we build out, I mean, we’re consciously focused on building a multi-specialty medical group for that reason. Downstream, 80% of the costs are downstream from the PCP, give or take, as you know. I think as we continue to build out density in different states, that’s a core focus for us. I think that comes with opportunities for outpatient surgeries, ASCs, managing more of the total cost of care and partnering with these physicians. I think as we continue to build out our network in each state, get density, I think you’ll expect us to continue to expand in that area. Again, I don’t think we’re going to be very surgical-heavy, just given the nature of our business. I do think folks being taken.

Chronically ill patients, whether it’s cardiology, pulmonology, CKD, things like that, I think we’re going to keep looking at it selectively. Ortho is another big area. I do think you’ll expect us to continue to do it. Again, it’s not going to be homogenous by state, but as we build out the medical groups, that’s a big lever to control cost of total cares.

Chris, Conference Call Operator: Your last question comes from the line of Craig Jones, Bank of America. Please go ahead.

Hey, this is Joaquin on for Craig. Thanks for taking the question. You have astutely shifted down risks in MA during the first two years of V28. What are the odds you think we could see some kind of V29 in the next few years? What would make you more comfortable taking more risk in MA? Thanks.

Parth Mehrotra, Chief Executive Officer, Privia Health: Yeah, I appreciate the question, Joaquin. It’s pretty much similar to what we’ve said earlier. I think we’ll just have to see how it plays out. It’s just tough to predict. When V29 comes, it doesn’t come. What are the specifics on it? We’ve continued to believe that a shared risk model between the payers, the providers, somebody like a Privia in the middle is the right approach. You have to be thoughtful. These are long-term contracts. The patients don’t change their PCPs. You’re trying to manage their total cost as they are growing older. They’re growing sicker. I don’t think any one entity can perform well at the expense of the other on a long-term sustainable basis. I think you can get anomalies in the middle when somebody is trying to grow their business.

With some benefit design changes on the payer side or provider enablement entities throwing a lot of money to just get physicians in some risk contracts. You then see blow-ups happen like we did in the last two, three years. We just think the best long-term sustainable model is alignment of interest and everybody having share in the game. That is what we are going to focus on. I think everybody got too infatuated with how capitation works and does it have to be 100% downstream at the provider entity level versus the payer. We just believe in a different approach, and I think that is just more sustainable. The job to be done is not going to change. You are going to have an aging population that is growing sicker, older, and ultimately dying. I mean, that is the truism of humanity, unfortunately.

I think if that’s the problem at hand, you need doctors in the community to do the work. On behalf of the payers. The payers, unless they have a care delivery arm, they’re not taking care of people. I just think you need interests aligned, and you need to have contracts that reflect that. Physicians need to be paid to get that job done, and that’s the lowest cost setting, first point of contact. I think for all those reasons, no matter what the changes are, once we get some equilibrium over the last two, three years, excesses worn down, benefit designs getting more normalized. We’ll just continue to work with our payers to have a sustainable contract to do our job and get paid for it.

Chris, Conference Call Operator: There are no further questions. Please go ahead, sir.

Parth Mehrotra, Chief Executive Officer, Privia Health: Thank you for listening to our call today. We appreciate your continued interest and look forward to speaking with you again in the near future.

Chris, Conference Call Operator: This concludes today’s conference call. Thank you all for joining. You may now disconnect.

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