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United States securities and exchange commission logo
January 22, 2021
Thomas Bartrum
General Counsel
Privia Health Group, Inc.
950 N. Glebe Rd., Suite 700
Arlington, VA 22203
Re: Privia Health
Group, Inc.
Draft Registration
Statement on Form S-1
Submitted December
28, 2020
CIK No. 0001759655
Dear Mr. Bartrum:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
DRS S-1 filed December 28, 2020
Cover Page
1. We note that you
indicate in your graphic that you have generated $1.3 billion in practice
collections. Please
disclose your revenues and net income (loss) figures here with equal
prominence. Please also
explain how practice collections correspond to revenues.
Prospectus Summary, page 1
2. Here, at page 81, page
101, and anywhere else you deem appropriate, please revise your
disclosure to state
succinctly and in plain-English your business structure and operating
model. In this
discussion, specifically state what products and services you provide and
how they generate
revenue.
Thomas Bartrum
FirstName LastNameThomas Bartrum
Privia Health Group, Inc.
Comapany
January 22,NamePrivia
2021 Health Group, Inc.
January
Page 2 22, 2021 Page 2
FirstName LastName
3. Please provide a corporate structure chart of your operations. In this
chart, please indicate
what entities (or group of entities) you own and those with which you
have a contractual
relationship.
4. Please disclose in your Prospectus Summary, and anywhere else you deem
appropriate,
the breakdown of how your revenue is generated. Disclose whether the
revenue is
generated from owned entities or contractual relationships.
5. We note that you identify a total addressable market of over $3
trillion in annual U.S.
healthcare spend. Please disclose what portion of this amount
represents the type of
services you provide to your customers.
6. You state throughout your filing that "as of the twelve months ended
September 30, 2020,
approximately $1.3 billion total practice collections, high return on
invested capital with
superior unit economics and high free cash flow conversion." Please
discuss why you
chose this 12 month period given that your fiscal year ends on
December 31 and that you
are omitting interim financials for the period ending September 30,
2019 and 2020. If you
believe that you should continue to use this period, please provide
disclosures for a similar
period (i.e., 12 months) ending on September 30, 2019 for comparison.
7. Please provide a summary of the competitors in your marketspace.
Technology and Population Health, page 7
8. Please modify your graphic here to ensure that all text is legible.
Please make such
adjustments throughout your filing as necessary.
Risk Factors, page 14
9. Please disclose here that you will be a "controlled company" and the
implications of that
designation.
If our current agreements or arrangements with any of our majority-owned
medical groups are
deemed invalid under state law, page 34
10. To the extent material, please summarize in your Business section, or
where you deem
appropriate, the referenced agreements and arrangements with your
majority-owned
medical groups. Please attach as exhibits any such arrangements.
Our certificate of incorporation will designate the Court of Chancery of the
State of Delaware as
the exclusive forum for certain litigation, page 66
11. We note that your amended and restated bylaws will provide that the
Court of Chancery of
the State of Delaware is the exclusive forum for certain claims. You
also state that this
provision "will not apply to suits to enforce a duty or liability
created by the Securities
Act, the Exchange Act or any other claim for which the federal courts
have exclusive
jurisdiction." Please ensure that your amended and restated bylaws
reflects this language.
Thomas Bartrum
FirstName LastNameThomas Bartrum
Privia Health Group, Inc.
Comapany
January 22,NamePrivia
2021 Health Group, Inc.
January
Page 3 22, 2021 Page 3
FirstName LastName
Use of Proceeds, page 70
12. If known, please revise your Use of Proceeds section to disclose the
amounts that will be
allocated to the purposes referenced.
Non-GAAP Financial Measures, page 77
13. Please revise, throughout the filing, to present the most directly
comparable GAAP
measure with equal or greater prominence whenever you present a
non-GAAP financial
measure. Refer to Question 102.10 of the Compliance & Disclosure
Interpretations-Non-
GAAP Financial Measures.
Selected Consolidated Financial Data
Key Metrics, page 77
14. We note that your key metrics include both owned and affiliated
medical groups. Since it
appears that your owned and affiliated medical groups contributed to
significantly
different revenue sources, please explain to us your consideration of
separately disclosing
owned and affiliated medical groups for each of your metrics.
Key Factors Affecting Our Performance, page 85
15. Please expand your disclosure to discuss how you define the market
from which you
derive your market share.
Management s Discussion and Analysis of Financial Condition and Results of
Operations
Comparison of the Year Ended December 31, 2019 and 2018
Revenue, page 92
16. Please revise to disclose your revenue by specific sources as
indicated on page F-20 and
provide a discussion of significant variances and related drivers for
each revenue source.
In that regard, we note that your FFS-patient care revenue and
FFS-administrative services
revenue were driven by different groups of implemented providers.
Refer to the
requirements of Item 303(a) of Regulation S-K.
Governance and Physician Leadership Culture, page 117
17. Please provide more details on your multipurpose governance model,
including any
specific duties and authority to make corporate policies. Please
discuss any ability of the
company's management to override any decisions.
Case Studies, page 122
18. Please provide a summary of why you are including "case studies" and
what they are
meant to convey. Please explain why you selected the profiled clients
and how these
clients provide a meaningful representation of your customer base.
Thomas Bartrum
FirstName LastNameThomas Bartrum
Privia Health Group, Inc.
Comapany
January 22,NamePrivia
2021 Health Group, Inc.
January
Page 4 22, 2021 Page 4
FirstName LastName
Government Regulations, page 128
19. We note that you operate in six states and the District of Columbia.
We also note that you
are subject to multiple state and federal regulations, some of which
prohibit you from
practicing medicine, controlling physicians medical decisions or
engaging in practices
such as splitting fees with physicians. Please expand your disclosure
to identify the states
in which you generate material revenue. Please discuss how the state
laws in these states
apply to your business, including your corporate structure and
contractual arrangements.
Revise your disclosures throughout, where appropriate, to account for
this information.
Certain Relationships and Related Party Transactions, page 149
20. We note that your Lead Sponsors will control you following the
offering. We also note
that your Lead Sponsors include investment entities affiliated with
Goldman Sachs, one of
your underwriters in this offering. Please discuss the underwriting
arrangements here if it
qualifies as a related party transaction.
Forum Selection, page 156
21. Please revise to include disclosure in this section that the forum
selection provision will
not apply to suits to enforce a duty or liability created by the
Securities Act, the Exchange
Act or any other claim for which the federal courts have exclusive
jurisdiction.
Note 1. Organization and Summary of Significant Accounting Policies
Organization, page F-7
22. Please revise to disclose your accounting treatment for the 51% owned
Privia
Management Services Organization joint venture.
23. You disclose here that the medical groups that are majority-owned by
you (owned medical
groups) reflect their operations within your consolidated financial
results and that
they have no ownership in the underlying physician practices. You also
disclose on page
F-12 that your FFS-patient care revenue is generated from providing
healthcare services to
patients through affiliated physician practices that are members of
your consolidated
medical groups. Please respond to the following:
Please clearly disclose the relationship between the owned
medical groups and their
membered physician practices, including the revenue sources of
the owned medical
groups and the physician practices and the related accounting
treatment.
Since you consolidate the owned medical groups but not the
membered physician
practices (because they are not owned), please provide us your
analysis of your basis
for reporting related revenues on a gross basis under ASC
606-10-55-36 to -40.
Variable Interest Entities, page F-8
24. You disclose here that your affiliated physician practices and your
non-owned medical
Thomas Bartrum
FirstName LastNameThomas Bartrum
Privia Health Group, Inc.
Comapany
January 22,NamePrivia
2021 Health Group, Inc.
January
Page 5 22, 2021 Page 5
FirstName LastName
groups are not considered to be VIEs and thus not consolidated in your
financial
statements. Please respond to the following:
Please clarify for us, and revise if necessary, whether the
affiliated physician
practices referenced here also include the affiliated physician
practices that are
members of your consolidated medical groups. If not, please
revise here and
throughout the filing to clearly distinguish affiliated
physicians practices with your
owned and non-owned medical groups.
Please describe to us, and revise if necessary, the
relationship and responsibilities
between you and your non-owned medical groups and their
affiliated physician
practices, including the service agreements, and billing and
payment arrangements.
Please clarify for us the difference in your agreements with
those physician practices
who are members of your consolidated medical group and those
affiliated physician
practices of your non-owned medical group. Also, clarify for us
how those
differences impacted your revenue recognition.
Revenue Recognition, page F-12
25. Please revise to clarify the reason that the adoption of ASC 606
resulted in a
reclassification of bad debt expense from general and administrative
expense to a contra
revenue account.
26. Please expand to further disclose details of all variable
consideration for FFS patient care
as well as for other revenue sources. Clarify the nature of implicit
price concessions,
discounts or other reductions and the methods, inputs and assumptions
used in
determining the related transaction price in accordance with ASC
606-10-50-20. We note
that you disclosed rebates under certain management services
agreements on page 131.
Note 8. Note Payable, page F-23
27. We note your disclosure that interest expense relating to the note
payable is included in
general and administrative expenses in your consolidated statements of
operations. Please
explain to us why this is not included in interest expense.
Exhibits
28. Please list and attach all material agreements, including, but not
limited to, employment
agreements, compensation arrangements, and services agreements.
General
29. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
Thomas Bartrum
Privia Health Group, Inc.
January 22, 2021
Page 6
You may contact Li Xiao at (202) 551-4391 or Brian Cascio at (202)
551-3676 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Courtney Lindsay at (202) 551-7237 or Chris Edwards at (202) 551-6761
with any other
questions.
FirstName LastNameThomas Bartrum Sincerely,
Comapany NamePrivia Health Group, Inc.
Division of
Corporation Finance
January 22, 2021 Page 6 Office of Life
Sciences
FirstName LastName