 | ||||||||||||||
| Privia Health | ||||||||||||||
| 950 N. Glebe Road, Suite 700 | ||||||||||||||
| Arlington, VA 22203 | ||||||||||||||
April 17, 2023
Division of Corporation Finance
U.S. Securities and Exchange Commission
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Attn: Christie Wong and Julie Sherman
Re: Privia Health Group, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2022
Filed March 1, 2023
File No. 001-40365
Dear Christie Wong and Julie Sherman:
On behalf of Privia Health Group, Inc. (the “Company”), I am responding to the comments from the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) contained it its letter dated April 4, 2023, relating to the above referenced Form 10-K for the Fiscal Year Ended December 31, 2022 filed with the Commission on March 1, 2023 and the Form 8-K filed with the Commission on February 28, 2023.
For convenience, the Staff’s comments are repeated below in italics, followed by the Company’s responses to the comments.
Form 10-K for the Fiscal Year Ended December 31, 2022
Key Metrics and Non-GAAP Financial Measures, page 72
1.In future filings, please revise to reconcile the non-GAAP measures "Care Margin" and "Platform Contribution" to the most comparable GAAP measure, which appears to be Gross Profit, even if it is not presented on the face of the Statements of Operations. Please also revise the similar reconciliation in Exhibit 99.1 to your Form 8-K dated February 28, 2023.
Response: The Company will revise its future filings with the Commission, beginning with its Form 10-Q and corresponding earnings release for the first quarter of 2023, to reconcile these measures to Gross Profit as the most comparable GAAP measure. For illustrative purposes, the Company will include the following reconciliations in future quarters:
| For the Three Months Ended March 31, | ||||||||
| (Dollars in Thousands) | 2023 | 2022 | ||||||
| Revenue | $ | — | $ | — | ||||
| Provider expense | — | — | ||||||
| Amortization of intangible assets | — | — | ||||||
| Gross Profit | $ | — | $ | — | ||||
| Amortization of intangible assets | — | — | ||||||
| Care Margin | $ | — | $ | — | ||||
| Revenue | $ | — | $ | — | ||||
| Provider expense | — | — | ||||||
| Amortization of intangible assets | — | — | ||||||
| Gross Profit | $ | — | $ | — | ||||
| Amortization of intangible assets | — | — | ||||||
| Cost of Platform | — | — | ||||||
| Stock compensation (included in cost of platform) | — | — | ||||||
| Platform Contribution | $ | — | $ | — | ||||
| ||||||||||||||
| Privia Health | ||||||||||||||
| 950 N. Glebe Road, Suite 700 | ||||||||||||||
| Arlington, VA 22203 | ||||||||||||||
Care Margin
We define Care Margin as Gross Profit excluding amortization of intangible assets. Gross profit is defined as total revenue less provider expenses and amortization of intangible assets.
Platform Contribution
We define Platform Contribution as Gross Profit, excluding amortization of intangible assets, less Cost of platform and excluding stock-based compensation expense included in Cost of platform.
The reconciliation of Care Margin and Platform Contribution that begin on page 72 in our Form 10-K dated December 31, 2023, is revised as follows:
| For the Years Ended December 31, | |||||||||||
| (Dollars in Thousands) | 2022 | 2021 | 2020 | ||||||||
| Revenue | $ | 1,356,660 | $ | 966,220 | $ | 817,075 | |||||
| Provider expense | 1,051,040 | 727,827 | 629,487 | ||||||||
| Amortization of intangible assets | 3,351 | 1,312 | 642 | ||||||||
| Gross Profit | $ | 302,269 | $ | 237,081 | $ | 186,946 | |||||
| Amortization of intangible assets | 3,351 | 1,312 | 642 | ||||||||
| Care Margin | $ | 305,620 | $ | 238,393 | $ | 187,588 | |||||
| For the Years Ended December 31, | |||||||||||
| (Dollars in Thousands) | 2022 | 2021 | 2020 | ||||||||
| Revenue | $ | 1,356,660 | $ | 966,220 | $ | 817,075 | |||||
| Provider expense | 1,051,040 | 727,827 | 629,487 | ||||||||
| Amortization of intangible assets | 3,351 | 1,312 | 642 | ||||||||
| Gross Profit | $ | 302,269 | $ | 237,081 | $ | 186,946 | |||||
| Amortization of intangible assets | 3,351 | 1,312 | 642 | ||||||||
| Cost of Platform | (170,838) | (174,731) | (105,006) | ||||||||
| Stock compensation (included in cost of platform) | 13,758 | 43,888 | — | ||||||||
| Platform Contribution | $ | 148,540 | $ | 107,550 | $ | 82,582 | |||||
Our reconciliation in Exhibit 99.1 to our Form 8-K dated February 28, 2023, is revised as follows:
| For the Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| (Dollars in Thousands) | Unaudited | |||||||||||||
| Revenue | $ | 364,424 | $ | 275,333 | $ | 1,356,660 | $ | 966,220 | ||||||
| Provider expense | 284,368 | 206,722 | 1,051,040 | 727,827 | ||||||||||
| Amortization of intangibles assets | 842 | 830 | 3,351 | 1,312 | ||||||||||
| Gross Profit | $ | 79,214 | $ | 67,781 | $ | 302,269 | $ | 237,081 | ||||||
| Amortization of intangible assets | 842 | 830 | 3,351 | 1,312 | ||||||||||
| Care Margin | $ | 80,055 | $ | 68,611 | $ | 305,620 | $ | 238,393 | ||||||
| ||||||||||||||
| Privia Health | ||||||||||||||
| 950 N. Glebe Road, Suite 700 | ||||||||||||||
| Arlington, VA 22203 | ||||||||||||||
| For the Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Unaudited | ||||||||||||||
| Revenue | $ | 364,424 | $ | 275,333 | $ | 1,356,660 | $ | 966,220 | ||||||
| Provider expense | 284,368 | 206,722 | 1,051,040 | 727,827 | ||||||||||
| Amortization of intangibles assets | 842 | 830 | 3,351 | 1,312 | ||||||||||
| Gross Profit | $ | 79,214 | $ | 67,781 | $ | 302,269 | $ | 237,081 | ||||||
| Amortization of intangible assets | 842 | 830 | 3,351 | 1,312 | ||||||||||
| Cost of Platform | (43,343) | (43,724) | (170,838) | (174,731) | ||||||||||
| Stock compensation (included in cost of platform) | 2,376 | 2,901 | 13,758 | 43,888 | ||||||||||
| Platform Contribution | $ | 39,088 | $ | 27,788 | $ | 148,540 | $ | 107,550 | ||||||
Please do not hesitate to contact me at (571) 295-7520 or dmountcastle@priviahealth.com if you have any questions regarding the foregoing or if I can provide any additional information.
| Very truly yours, | |||||||||||
| /s/ David Mountcastle | |||||||||||
| David Mountcastle, Chief Financial Officer | |||||||||||
cc: Via Email
Shawn Morris, Chief Executive Officer
Thomas Bartrum, General Counsel
Privia Health Group, Inc.
Privia Health Group, Inc.