Privia Health Group, Inc. (NASDAQ:PRVA) Q4 2025 Earnings Call Transcript

Privia Health Group, Inc. (NASDAQ:PRVA) Q4 2025 Earnings Call Transcript February 26, 2026

Privia Health Group, Inc. beats earnings expectations. Reported EPS is $0.07, expectations were $0.04.

Operator: To withdraw your question, please press 1 again. To withdraw your question, please press 1 again. This call is being webcast and can be accessed in the Investor Relations section of ir.priviahealth.com along with today’s financial press release and slide presentation. Some of the statements we will make today are forward-looking in nature based on our current expectations and view of the business as of 02/26/2026. Such statements, including 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. As a result, these statements should be considered along with the cautionary statement to 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. Reconciliations of these measures to comparable GAAP measures are included in our press release and the accompanying slide presentation on our website. I will now turn the call over to Robert P. Borchert. Please limit yourself to one question only and return to the queue if you have a follow-up so we get to as many questions as possible.

Robert P. Borchert: Thank you, and good morning, everyone. Joining me are Parth Mehrotra, our Chief Executive Officer, and David Mountcastle, our Chief Financial Officer. The financial results reported today are preliminary and are not final until our Form 10-K for the year ended 12/31/2025 is filed with the Securities and Exchange Commission. Following our prepared comments, we will open the line for questions. Now I would like to hand the call over to our CEO, Parth Mehrotra.

Parth Mehrotra: Thank you, Robert, and good morning, everyone. Privia Health Group, Inc. delivered a very strong 2025. Our 2025 performance and very strong value-based performance clearly demonstrate our ability to perform in all types of market and healthcare regulatory environments. We are proud to deliver on our mission to achieve the quadruple aim that our outcomes lower costs, improve patient experience, and happier and more engaged providers. New provider signings and implementations remain strong across all markets, which provides great visibility through 2026. At year-end 2025, we had 5,380 implemented providers, caring for over 5,800,000 patients. We continue to demonstrate very high gross provider retention of 98% and patient NPS of 87 across our footprint.

Added 591 providers, a 12.3% increase year-over-year. We ended the year with 1,540,000 value-based attributed lives, up 22.7%. Privia’s diversified value-based platform serves over 1,500,000 patients through more than 130 commercial and government programs. We remain highly focused on generating positive contribution margin in our value-based book. This was driven by new provider growth across our markets, as we continue to execute extremely well and drive growth across our markets. The combination of implemented provider growth helped increase practice collections 16.9% in 2025. We continue to show strong operating leverage on cost of platform and G&A expenses. Adjusted EBITDA for the year increased 38.8% to $125.5 million with EBITDA margin as a percentage of care margin expanding 480 basis points to reach 27.2%.

On December 5, we completed the acquisition of Evolent Health’s ACO business. This added over 120,000 value-based attributed lives across existing and new states. We also entered Arizona in April with our anchor partner, IMS. IMS was implemented on the Privia platform at the end of Q3, and we are seeing strong sales momentum in the state. Privia Health Group, Inc.’s national footprint now includes a presence in 24 states and the District of Columbia, including the Evolent Health ACO business. We have proven that we can build scale and manage risk without depending on any one particular contract, while we continue to implement clinical and operational enhancements in our medical groups. Lives attributed to the CMS Medicare programs were up 52%.

Commercial attributed lives increased more than 16% from last year to reach 910,000. Medicare Advantage and Medicaid attribution increased 15% and 23%, respectively, from a year ago. Our performance over the past few years is a testament of our approach to value-based care and the strength of our actuarial underwriting, clinical operations, and physician-led governance structure. Our 2025 performance and momentum positions our business extremely well as we converted 130% of EBITDA to free cash flow. We expect to drive EBITDA growth of approximately 20% at the midpoint of our 2026 guidance and convert 80% of EBITDA to free cash flow, assuming no new business development. This positions Privia Health Group, Inc. to end 2026 with approximately $600,000,000 in cash in a very difficult healthcare services environment.

We deployed $180,000,000 for these transactions, and our cash balance ended the year at $480,000,000. This was only $11,000,000 below a year ago, due to the tremendous cash flow generation of our business in 2025. Our 2025 results and 2026 guidance further demonstrate our ability to continue to compound EBITDA and free cash flow. Now I will ask David to review our financial results and 2026 guidance in more detail.

David Mountcastle: Thank you, Parth. Privia Health Group, Inc.’s strong operational performance continued through the fourth quarter. Implemented providers grew 130 sequentially from Q3 to reach 5,380 at December 31, an increase of 12.3% year-over-year. Implemented provider growth along with solid value-based performance in ambulatory utilization trends led to practice collections increasing 9.6% from Q4 a year ago to reach $868.7 million. Adjusted EBITDA increased 26.4% over the fourth quarter last year to reach $31.5 million, representing 27% of care margin, which is reconciled to GAAP net income in the appendix. All metrics were substantially higher than our initial guidance that we provided at the beginning of 2025, with practice collections and platform contribution coming in at the high end.

For the year, we exceeded the high end of our updated 2025 guidance provided in November for all key operating and financial metrics, reflecting our strong execution amidst a very challenging environment, as we continue to generate significant operating leverage. Practice collections increased 16.9% to reach $3.47 billion. Care margin was up 14.4%. And adjusted EBITDA grew an exceptionally strong 38.8% to reach $125.5 million. Our business continues to generate very strong financial leverage as conversion from EBITDA to free cash flow was 130% in 2025. This is a 390 basis point margin improvement year-over-year as we continue to generate significant operating leverage. We ended the year with $479.7 million in cash with no debt. Given our outstanding cash generation with minimum capital expenditures, we expect to end 2026 with approximately $600,000,000 in cash assuming no capital deployment for new business development.

This positions us with significant financial flexibility to take advantage of opportunities as they present themselves in the current market. Using the midpoints of our new 2026 guidance, implemented providers are expected to increase 10.6% year-over-year. Attributed lives are expected to be approximately 1,580,000. We expect practice collections to grow 6.6% and care margin 13% at their respective midpoints. We are guiding to adjusted EBITDA growth of 19.5% at the $150,000,000 midpoint and expect 80% of full-year 2026 adjusted EBITDA to convert to free cash flow as we become a full cash taxpayer this year. While our guidance for 2026 assumes no acquisitions, we will remain disciplined and strategic in our capital deployment. We expect to continue to actively seek business development deals both in new and existing markets to continue to grow the business and compound our EBITDA and free cash flow.

Privia Health Group, Inc.’s business momentum, powered by the consistent execution by our provider partners and our employees across economic, healthcare, and regulatory cycles over the past nine years validates the strength of our business model. I would like to take this opportunity to thank each one of them for their continued hard work. Operator, we are now ready to take questions.

Q&A Session

Operator: We will now open for questions. Your first question comes from the line of Joshua Richard Raskin of Nephron Research. Please go ahead.

Joshua Richard Raskin: Hi. Thanks, and good morning. Can you speak to tech investments including AI and maybe advancements that you are making on your model for physicians? I am interested in any new capabilities that you have implemented, maybe efficiencies you are seeing on both the administrative side and the revenue cycle side. And then lastly, anything athena has rolled out that you think is making an impact on your implemented provider base?

Parth Mehrotra: Yeah, thanks for the question, Josh. So I think it is very timely, and I would like to just step back maybe. When we think about AI-related investments, there are three components that are important to understand in our business model. We are very uniquely positioned with the ACO entity, with our medical group structure, with the single-TIN medical groups, and then with the full tech and services platform where we are deeply embedded in the workflow. I think of a lot of data access and ownership across every single patient, five plus million, every single specialty, every single practice, across the whole care continuum. So the medical groups have access to every single patient encounter, the clinical records.

Our MSO has access to every single claim that goes through the RCM engine. It is a very data-rich environment, and we are really excited to enable us to benefit from all of this innovation that is going to happen now and into the next two to three years. You know, that will lead us to enhance all potential applications of AI. So with that being true, the second key point is what buckets of investments we can make between the corporate side and the physician practice side. On the corporate side, one is every single corporate function at Privia. We are implementing Gemini in every single thing that we do in a HIPAA-compliant manner. We are working with our existing technology partners. So you mentioned athenahealth. There is also Salesforce. There is Workday.

And then there are new innovators that are innovating across the spectrum that we are continuously piloting. So that is on the corporate side. And then on the physician practice side, I think there are three buckets: the entire fee-for-service workflow, the entire value-based workflow, and then the patient engagement workflow where we are looking at different applications of AI with both existing vendors that we work with, like athena, but then also new companies. So we invested in Navina last year as we talked about. Balance between how much we can implement sooner versus a little bit delayed as these models are becoming better and faster, helping us with clinical decision support with suspect medical conditions, with better documentation of patients, scribing as an example.

And the last bucket is actual care delivery. There is a shortage of PCPs, shortage of nurse practitioners, and APPs in a capacity-constrained manner. So how our doctors interact with patients, with our service lines, with after hours, interaction with the patients, scheduling patients, chart prep, medication adherence, risk assessment, obviously, stratify the population, work with the high-acuity patients, and just all of that to how the doctors interact with the patients. The productivity enhancement we can get across our whole organization is massive. So I think if you look at slide 11 on our investor presentation this morning, you know, we have gotten the business to, if you look at the midpoint of our guidance for 2026, at 29% EBITDA margin as a percentage of care margin.

That is very close to what we thought at IPO as our long-term range, 30% to 35%. I think with all that we see from what we can do with AI, I think we can get to the high end of the range or even exceed it over the next many years. There is no reason why a company like ours with this much opportunity should not be able to do that. So I think that is going to lead to really good results for margins and then ultimately shareholder returns.

Jailendra P. Singh: Thank you, and good morning, and congrats on a strong quarter. I was wondering if you can provide some color on practice collection trends for both Q4 results and 2026 guidance. Practice collections declined slightly, like 40 basis points, from Q3 to Q4. I also notice in your slide that the care center locations declined slightly from Q3 to Q4. Not sure if that is the primary driver. Mean Q4 results and 2026 guidance are both pretty solid. But that is the one metric where there is some variability versus what you have typically seen and 2026 guidance. Have practice collections historically grown in ‘26 at the rate you are guiding, and how should we think about that?

Parth Mehrotra: Yeah. Thanks for the question, Jailendra. So in Q3, as you recall, we recognized there is a lot of prior period true-up on our value-based book from ‘24. That obviously led to the great outperformance on EBITDA. But we talked about this last quarter where Q3, we had some prior period adjustments, so the quarter-over-quarter comps get a little bit tougher. And then annually, there are two or three variables. So one is, if you look at page 10 of our press release where we break out revenue by source, you will see the capitated revenue line went up by close to $100,000,000. And that was a result of increase in lives. And then also on the Evolent ACO business, important to highlight, we are not recognizing any premium revenue in practice collections on our value-based book other than this capitated line.

So that makes the comps tougher. I think the right way to look and compare is at the care margin line. That is what we are focused on, on what Privia can get from a shared savings perspective. At the midpoint, care margin is growing low double digits, which is very consistent with how we looked at the business. Just some year-over-year nuances. And then on the care centers, I think it is just rounding. To be precise, it is 1,300 plus care centers. I do not think you are going to see—we are not assuming—the guidance does not assume that that will repeat itself. We are pretty prudent with our guidance. Overall, it is pretty strong trends. The provider growth speaks for itself. The implemented providers is really strong. We had one of our best sales years, best implementation years.

You can see the year-over-year growth. You can see the guidance for this year for ‘26. So that is the key metric there.

Operator: Your next question comes from the line of Lisa Gill of JPMorgan. Please go ahead.

Lisa Gill: Good morning, and thanks for taking my question. I have a question around utilization trends. Obviously, it has been a really strong utilization environment the last few years. What are your thoughts around ACA and Medicaid enrollment and any potential impact that it could have?

Parth Mehrotra: Yes. Thanks for the question, Lisa. So look, I think as we have said previously, we really have to bifurcate the utilization into ambulatory versus the inpatient. Physician community-based physician practice, primary care, and OB, the community-based care utilization versus the inpatient that you see more in the post-acute or acute facilities. Post-COVID, as the trends normalized, I think we have consistently said, and that holds true, that the ambulatory utilization continues to stay elevated, and we expect it to remain elevated. And that is actually a good thing. That is the lowest cost setting. You want patients to interact with their primary care providers. I do think, like you pointed out, with what is happening with the ACA population, with Medicaid, with all the changes, either enforced by the government or otherwise, payers reacting to it, you are going to see a lot of churn.

We expect that to happen. I think our diversified model across commercial, MA, MSSP, exchange positions us really well. We do not have a big Medicaid population, do not have a big exchange population. Whatever we have tends to get normalized. People tend to see their primary care provider. Children tend to see their pediatrician. Even if they lose coverage or move on, we see a lot of uninsured or self-insured folks show up. So we do not see any trends abating for us. Overall, I do think for the acute and post-acute care, there are going to be nuances as all of this normalizes over the next couple of years. I think that bodes well for our business.

Operator: Your next question comes from the line of Jeffrey Robert Garro of Stephens. Please go ahead.

Jeffrey Robert Garro: Yeah, good morning, and thanks for taking the question. I want to ask about EBITDA to free cash flow conversion. Conversion guidance was 90% a couple of years ago and 80% last year and now here in 2026. You also materially outperformed on that metric ultimately in 2025. And I know there are a couple moving pieces with taxes and folding in ECP. So was hoping you could help us bridge between those historical expectations, 2025 outperformance, and the FY 2026 guidance on EBITDA to free cash flow conversion?

Parth Mehrotra: Yeah, absolutely. I will start, and then Dave will give some of the specifics. So look, I think you have highlighted one of the strongest elements of our business model. If you look at slide 11, this is nine years of data, including this year’s guidance. We have averaged over 100% conversion. We love free cash flow. You can quote me on it. It is the cleanest purest metric. You cannot adjust it. It is either in the bank or it is not. Everything is expensed on the P&L, and it is a very clean metric. So I think we are going to manage that as the best we can. Obviously, our guidance always assumes normalization. And then if things turn out better, we hope that benefits the shareholders. Our guidance reflects becoming a full cash taxpayer in 2026 as we run down the NOLs, and David will walk through some of the nuances.

We manage a negative float in this business. We focus on collections, get money to our providers. It is a strength of our business model relative to others in the space. And I think enterprise value to free cash flow is a key metric here. So that is reflected in the 80%. And then I will let David answer any specifics on that one.

David Mountcastle: Yeah. I mean, outside of that, I would just say we had a really good collection year. And we had a few timing issues at the year end that I think we were originally expecting them to come in January, and they came in at the end of the year. So did have a little bit of timing there at the end, but we are definitely confident in our 80% or more for 2026, and we will become a full cash paying taxpayer in ‘26. So that is going to put a little hit in our number for ‘26.

Operator: Your next question comes from the line of Whit Mayo of Leerink Partners. Please go ahead.

Whit Mayo: Hey, thanks. Good morning. You are going to have $600,000,000 of cash at the end of the year. You do not have any debt, and it is not very efficient to have this much cash sitting on the balance sheet. So just maybe any updated thoughts around capital deployment and if priorities have changed at all.

Parth Mehrotra: Yeah, I appreciate the question, Whit. Look, I think, first of all, in probably the toughest healthcare MA regulatory environment, we really love our position in the space. The strength of the model, the cash flow generation, the balance sheet strength, relative to others, private or public companies. Our priority will be to continue to deploy capital to keep compounding the business. You saw us deploy $180,000,000 last year. We have doubled EBITDA ‘23 to ‘25. On a rolling basis, we are going to double it again ‘24 to ‘26. I think our answer is consistent to that question. We think our ability to use cash to acquire assets across this ecosystem and keep compounding our units, whether it is entering new states, adding implemented providers, adding lives, can acquire medical group tax IDs, ACO entities, MSO entities.

Such a diversified business model, and there are a lot of companies that are challenged public and private. I think a lot of medical groups have partnered with other companies that may not be doing that well, to get them at least to have a relationship with Privia in an ACO entity and be part of the Privia family. I think our ability to be the partner of choice for a long-term perspective for a lot of the physician groups out there, given our track record, gives us the ability to be the partner of choice. And then also, we like to keep a sufficient cash balance for a rainy day. We do not like leverage on businesses that could potentially have variability in shared savings. As we all know, pandemics happen, hurricanes happen. We are supporting our medical groups.

There is a rainy day fund. But then also, we have the flexibility to return capital as a last resort if our stock price deviates meaningfully from what we think is intrinsic value. We have that option too. But I think the priority is going to be continue to deploy capital and keep compounding the business the way we have been doing.

Operator: Your next question comes from the line of Matthew Dale Gillmor of KeyBanc. Please go ahead.

Matthew Dale Gillmor: Wanted to ask about the Evolent acquisition. Now that you have owned the asset for a few months, I was curious if you had any updated perspective about the business or the synergy within the acquisition. I was particularly curious about the cross-sell discussions with Privia’s platform into that physician base, whether that is new or existing states. Thanks.

Parth Mehrotra: Yeah, appreciate the question, Matt. So we just closed this in December. I think we are really excited to have the team join us. I think the core business that they run is solid. You can compare their savings rate on that book relative to our overall savings rate. It is publicly available. Our hope is we can increase that savings rate pretty meaningfully this year into the next few years. I also think it allows us to have an offering in this care partners model where the provider groups that they focused on are really providers that are not on our technology stack that we can go out and reach out to a lot more providers that have partnered with other companies that may not be doing that well, to get them to at least have a relationship with Privia in an ACO entity, and then obviously cross-sell into our full medical group business model.

And then obviously in new states as we enter over time. So I think that will materialize itself over the next few years. We are really excited to have that business be part of our offering, and I think we are going to realize as many synergies as we can.

Operator: Your next question comes from the line of Sean Dodge of BMO Capital Markets. Please go ahead.

Sean Dodge: Yes, thanks. Maybe just staying on the Evolent ACO acquisition. Parth, you mentioned increasing their savings rate up to the levels of the other Privia ACOs, maybe as quickly as this year. Just mechanically, how do you do that? What are the first couple of levers you can pull there to drive that? And then initially, you said it would contribute positively to EBITDA in 2026. Any quantification you can share on how much you have embedded in the guidance for ‘26 from the Evolent acquisition?

Parth Mehrotra: Appreciate it, Sean. So just to be clear, I did not say it would happen this year. I think it will happen over time. We have a playbook that we run. You have all the quality metrics that you want to improve. There is some basic block and tackling: getting the patients to see their doctors, making sure we prevent the ED rates and inpatient rates, all of those things. Then all the nuances as we stratify the population, look at where you have some high-acuity patients, manage those, things like that. It is a little bit nuanced given that these providers are not on our platform. So we are focused on making sure we have the right level of engagement with the practices, right level of data that comes through the technology stack that is implemented on top of their existing infrastructure.

We have known that we have been in MSSP for the last eight, nine years. These things take time. We just got the business. I think rule number one is do not do anything stupid and disrupt it. We are going to run our playbook, implement how Privia does things hopefully a little bit better, and so this will happen over time. The acquisition is accretive. You saw their savings rate. It makes money. We did not break out the EBITDA. It is all included in our guidance. We are growing another 20% this year. Part of that is from the acquisitions that we did, and there will be opportunities in some existing states where we have the medical group presence. The synergies are to be had. Our growth algorithm is going to be based on adding new providers, adding lives into value-based arrangements, same-store care center growth, and then doing deals that are accretive.

So I think we are going to keep doing all of those four things and hopefully keep compounding EBITDA here.

Operator: Your next question comes from the line of Andrew Mok of Barclays. Please go ahead.

Andrew Mok: Hi, good morning. The corporate G&A expense dropped sharply in the quarter. Was there anything to call out driving the beat? And is this the right run rate to think about for 2026 even with the moderation in practice collections growth for next year? Thanks.

David Mountcastle: No, there is not really anything to call out. We definitely had some sequential decreases in things like legal and some of our consulting. I would look at our 2026 guidance as maybe a better way to look at all of our expenses. We do expect to continue to gain leverage in the G&A space.

Operator: Your next question comes from the line of Matthew Dineen Shea of Needham & Company. Please go ahead.

Matthew Dineen Shea: One of the things that has impressed us is the continued provider growth in existing markets. So it is good to hear you are already seeing strong sales momentum in Arizona in particular as well as any other noteworthy markets. Do you expect your sales or growth efforts to be different in the value-based care ACO-only states versus the implemented provider states? Or is it the same playbook and resources sort of across markets? Thanks.

Parth Mehrotra: Yeah, I appreciate the question, Matt. So look, our playbook in the core medical group business is the same across all our markets. Our objective is to develop really dense delivery systems with a very low-cost provider base with community-based providers at the forefront. That materializes differently in every state. We establish presence, work with a great anchor group if we can get a pretty sizable anchor partner like we did with IMS. Doctors know doctors the best. Before we show up in the state, this model pretty much does not exist. We establish ourselves, we establish the sales team, we start knocking on doors, and then showcase what we have done in other states. The payers know us. They know the playbook that we run.

There is a win-win here given all the cost pressures and everything that is wrong with the healthcare ecosystem. This is where cost can really be taken out, quality can be improved. So how that materializes to your question, we got a great anchor group, great set of physicians with IMS. They are super excited to be part of Privia. They see what we have done elsewhere. It leads us to then reaching out to the networks around these patients and the independent practices that can stay autonomous and yet be part of something bigger like a Privia. Given the health system dynamics and the payer dynamics in the state, that is our playbook there. As a portfolio approach, implemented provider growth hopefully just continues to pick up. The way we sell the ACO-only versus the full stack just depends by state.

There are nuances to both. We have a very ROI-driven value prop in each. But the medical group value prop obviously is a much deeper discussion. There is a separate sales team for each, but there will be cross-sell. We are kind of indifferent as long as we get them, whether we get them in one or the other. We will just continue to go full steam ahead on both. Some of the competitors that we deal with are also different in both of those. Our overall story should resonate with physician practices. They are looking for a full solution. So we just try to optimize that.

Operator: Your next question comes from the line of Jack Garner Slevin of Jefferies. Please go ahead.

Jack Garner Slevin: Hey, good morning. Thanks for taking the question and congrats on the really strong results. I wanted to touch on a little bit of the MA contracting environment. Acknowledging you have got less full risk in your book and have been on the front end of concessions that are being given by payers to value-based players that are driving value, I would be curious to hear your take on how that might develop for your business as you look at 2026 and then beyond 2027 with some of the payers looking to claw back margin, but also acknowledge the value that is being brought from PCP-led provider groups in the space. Thanks.

Parth Mehrotra: Yeah, thanks for the question. It is pretty nuanced. Just to take a step back, I think us foresighting what might have happened in the MA environment and that shared risk—where the doctor, an entity like Privia, and the payer all have skin in the game—is the right model. I think what you are seeing is an adjustment in the industry by the payers. You have seen a little bit of round robin with how the payers have reacted. The lives are moving between those entities as they adjust benefits, as they prioritize it differently, between three or four of the big MA players out there as you have seen and noted on. Years ago, payer X; last year, payer Y; this year, payer Z. Whether by luck or by foresight or by execution, we kind of avoided some of the traps.

We have continued to have a belief that you have to recognize the amount of work that the physicians have to do to manage a high-cost patient population and to deliver results. You have to get paid for it. If you do not get paid for it, I do not think anybody wins. We love to take as much risk as we can if we can manage it. If the payer gives us a contract that compensates us well to take that risk and compensates the physicians that are working extra hard to perform in these contracts, we are very forward-leaning. So I think we are just going to continue to look for opportunities with our payers, keep getting our delivery networks more dense, adding capabilities, and impacting the total cost of care, and delivering it and showing that to the payers.

I think these things get normalized. I think we are going to flush through V28 over a couple of years here. The payer environment will stabilize, and so I think it positions us really well. If there is some delayed gratification in ramping up risk, we will do that because the doctors do not go anywhere. The patients do not go anywhere. It is just coming to a consensus with the payers on the right contract structure. Our revenue recognition methodology is different. We are not recognizing any premium revenue part of that book.

Operator: Your next question comes from the line of David Larsen of BTIG. Please go ahead.

David Larsen: Congratulations on another good quarter. Can you just reconfirm the Evolent Care Partners EBITDA and revenue? Is it $10,000,000 of EBITDA on $100,000,000 of revenue? And then how many of those doctors do you think you will be able to convert over to your core Privia athena platform where you are doing all the billing and AR for them? Thanks a lot.

Parth Mehrotra: Yeah, thanks for the question, David. I do not think we disclosed any of those numbers. I think those were numbers that Evolent might have disclosed in their earnings call over the last couple of quarters, including this past week. Whatever numbers you are getting from them may be different for us. Our top line includes everything. You will see the results when CMS announces it in August. We are not going to break down EBITDA by any line of business. We have not done it for any acquisition or any line of business. But it is accretive. It is contributing meaningfully to this year’s EBITDA. That is why this was asked earlier on the call. We grew EBITDA 39% last year. We have grown another 20% this year, doubling EBITDA on a three-year rolling basis. And Evolent is part of that growth.

Operator: Your next question comes from the line of A.J. Rice of UBS. Please go ahead.

A.J. Rice: Thanks. If you could just update us on some of your newer markets and your expectations? In contribution, you are $235,000,000, up from $179,000,000 in the prior year. What have you embedded in your guidance this year? Are there any wins worth calling out there? How are they progressing relative to your expectations?

Parth Mehrotra: Yeah, thanks, AJ. So look, I think our goal is to accrue prudently and then hopefully outperform. Our initial guidance was $105 to $110 million EBITDA, and we ended the year at $125 million, materially higher. A lot of it was related to shared savings, some prior year, some in-year, as we perform well. Our guidance has taken the same methodology. We would not expect a material jump. If we do better, we will hopefully see it in the results. If we do not, then we will stick with what we have. We have a very diversified book. You have written really well about all the trends that impact the whole company. It is a portfolio approach. We are now in 24 states, some in various pools of risk. There are some markets that are maturing.

Some are still negative EBITDA. The mature markets are running well ahead of that number. Some may not be doing that well. We evaluate all our markets. If we do not think some markets are working well, we exit. We exited Delaware, as an example, a couple of years ago. So you will see us be very, very prudent with this business. I do not think you can make mistakes. If you think some deal structures or anchor partners or markets are not working well, and we have an opportunity to do it differently, you have to keep pruning the tree here to keep letting it grow really well. The overall business is in very good shape, 29% EBITDA to care margin. So that should tell you that the whole overall business is in very good shape. There are always puts and takes.

Some do better one year, others in other markets. We just develop very dense physician networks here.

Operator: Your next question comes from the line of Ayush on behalf of Elizabeth Hammell Anderson of Evercore ISI. Please go ahead.

Ayush: Hey, good morning, guys. Thanks for taking my question. As CMS transitioned from the ACO REACH program towards the new ACO LEAD model, how are you guys evaluating whether that framework aligns with Privia’s long-term value-based strategy? And then as your value-based book continues to grow in scale, how do you think about maintaining the consistency of performance across cohorts, particularly as the provider mix evolves?

Parth Mehrotra: Yeah, I appreciate the question, Ayush. Like with any new program, we will evaluate it. It goes into effect next year. I think we are still going through the details of LEAD versus REACH. What bodes well is, with the REACH sunsetting, it allows our sales team to reach out to a lot of physician practices and providers that may have participated in REACH. By the way, ‘25 to ‘26, anybody who is in REACH is going to see pretty significant decline in the shared savings just given how they changed some of the elements of that program. We are still studying LEAD. MSSP Enhanced Track versus LEAD is on a TIN basis. It just depends on the patient population, the state, the ACO, the majority of the patient pool. You can participate in one, not both.

We have some REACH lives today, so we will see if they move into MSSP Enhanced or LEAD. As we work with other new partners, we will see if LEAD makes sense or not. If you have a pretty mature ACO in an MSSP Enhanced Track that you have been in for the last many years, we will just evaluate it ACO by ACO. We take a five to ten-year view, like I said earlier. There will be opportunities in particular states. It is a generic question; the answer is much nuanced. This is healthcare. It happens locally in every state. Every pool, every patient population, every payer, every contract is different. That is a core value proposition and moat around this business. It is hard to replicate. A lot of people can enter these businesses, but you have seen how hard it is to make real money and real free cash flow.

Given the diversity of our book and the number of contracts and the payers we work with, and the scale we are operating at across different types of patient populations, I think that just speaks for itself. All of it is a core competence of this business that is very, very hard to replicate. You have to have real capabilities and a great team all around from a risk management perspective, underwriting perspective, delivery of care and total cost of care management with these practices and how you work with them, the data, the technology stack, and convert EBITDA and free cash flow with our shareholders. I think it just speaks for itself in how we have been able to deliver value to the payers, generate shared savings, and share that with physician practices.

Operator: Your next question comes from the line of Jessica Elizabeth Tassan of Piper Sandler. Please go ahead.

Jessica Elizabeth Tassan: Thanks, and congrats on the really strong year. I am interested to understand first what are the specific AI tools that you have rolled out nationally to all of your network providers? What did that rollout process look like? And then any early outcomes or savings data that you can share? Then, going forward, what kind of clinical category would you maybe target for AI-enabled improvement? For example, are care transitions an opportunity? Is end-of-life care planning an opportunity? Just curious if there are any one or two categories that you would call out. Thanks.

Parth Mehrotra: Yeah, I appreciate the question, Jess. This stacks to what Josh asked right at the beginning of the call, so I am not going to repeat all of that. Hopefully, you got some of that. From a category perspective, given the five buckets I described earlier, we are looking at agentic AI as it relates to patient engagement, interaction with patients, scheduling patients, care gap closures, medication adherence, chart prep, risk assessment, clinical decision support, stratify the population, work with the high-acuity patients. Given our physicians are capacity constrained, the ability and the need to work deeply with every patient is front and center as we specifically, as payment models evolve to different versions of value-based care.

Obviously, there is a whole host of applications on revenue cycle, on the fee-for-service workflows. From a company perspective, we are working with some existing companies that we work with today. As they innovate, we invested in this business called Navina, like we talked about last year. That was pretty tangible for us. There are a number of new innovators in the space that we are partnering with and piloting some of them. The technology is evolving really fast. The improvements that we see and the applications are pretty amazing already. I think this is going to be a three, five, seven-year journey. At some point, once it is more baked, we can implement in every single one of those buckets. We are super excited on this journey. I think it will be margin-accretive and productivity-enhancing, and I think you are going to see a lot more adoption.

We will obviously highlight more, but those are the categories going forward for a business like ours.

Operator: Your next question comes from the line of Michael Ha of Baird. Please go ahead.

Michael Ha: Thank you. As you look across the broader value-based care M&A landscape, it appears to be heating up in a pretty big way only very recently. Acquisitions being made, especially in South Florida, interest ramping up in California. A lot of this coming from a couple of your large payer partners looking to really build greater market saturation. And some of these multiples we are hearing of, they are not too far off from your own, but the quality of these assets appear to be much lower. So I am curious to hear your thoughts on all of this. How does it look to you? What do you think is driving the activity? Is it simply now entering the end of V28, and the narrative is beginning to pick up again? And as you look ahead, how does all that you are seeing today impact your own M&A strategy?

Parth Mehrotra: Yeah, it is a good question. Look, I am not going to comment on what others have done recently or any particular deal. You highlighted two geographies in South Florida and Southern California that almost run very, very differently from a large part of this country from a healthcare delivery and risk taking and the concentration MA population. Those are very unique geographies. The assets are unique. Some of the payers have rovers on some of the assets. As you know, we are not in the clinic MA space. We believe in shared risk. We are just not in the MA clinic business. We believe in community-based doctors staying autonomous, independent, and helping them. To the broader question, we are positioned really well.

We have a very diversified model. We can look at assets across the spectrum—ACO entities, medical groups, MSO entities, service providers, whatever have you. We can hopefully be a partner of choice. So we are going to be pretty aggressive. I think finding quality assets is key. You could spend a lot of money buying a lot of things, and they do not have the same quality of earnings. They do not have free cash flow. They do not have EBITDA. We are going to be very, very disciplined. We do not like to pay big multiples, especially for assets that are lower quality. While we have a lot of balance sheet capacity with our cash balance, with any potential debt capacity—even though we do not like leverage on this business—we are primed to do larger deals.

We are going to be very thoughtful. If we can get an asset that we can improve, make an impact, buy and integrate and synergize, and continue this compounding of EBITDA, we will pursue it.

Operator: Your next question comes from the line of Craig Jones of Bank of America. Please go ahead.

Craig Jones: Great, thanks for the question, guys. Thinking more about the long-term 20% EBITDA growth number you have out there. You have a lot of levers in your portfolio to drive this every year. Could you break down how you see the components of driving that 20% growth in a typical year among organic, inorganic, margin expansion, or whatever it may be? And then which components do you view as higher visibility versus lower visibility? Thanks.

Parth Mehrotra: Yeah, I appreciate the question. You have to go back to slide 11 to look at this on a multiyear basis. Those are: you enter new states; you add implemented providers in existing and new states; you add value-based lives in platform practice; you grow same-store; and then you improve the cost structure like we have done, both on the cost of platform and then also on sales and marketing and G&A. Then on value-based contracts on which we have the potential to earn care management fees and shared savings. Every year is different. The components are different, but they all work together. Some years we have scaled the cost structure really well. Some years you do M&A. Like this past year, you look at ‘22 to ‘23, we grew pretty fast.

We entered five new states. The cost structure did not scale, so adjusted EBITDA margin barely improved across those two years. Versus ‘23 to ‘25, you have seen that margin profile get better. It will ebb and flow, but the direction is hopefully upward right. Like I said earlier, with the application of AI and everything else, I think we are going to continue to get this margin profile better. If we do acquisitions, we are going to synergize them. If we enter new states, some of them lose money in the first couple of years. It just depends. Given the whole book where it stands today, you are going to see us pursue all those four components. It will be a combination of both organic and M&A. M&A is a core component of the strategy as we roll up the industry.

How it evolves— which year, which component is higher or lower—I think it will vary, but we are going to keep executing on all of those.

Operator: Your next question comes from the line of Daniel R. Grosslight of Citi. Please go ahead.

Daniel R. Grosslight: Thanks. On taking on risk, I think that has been a recurring theme on a lot of these earnings calls. But it does seem like some of your competitors are now beginning to adopt your type of model or at least approach to risk taking, which I guess is good because imitation is the best form of flattery. But it does make me think about your provider recruitment over the next couple years, if your conversations with providers have shifted at all, and if so, how has that sales pitch gone?

Parth Mehrotra: It is a good question. It builds on some of the themes on the earlier questions. Arguably speaking, the perceived barriers to entry in this business can be lower. Anybody can start an ACO if they raise capital from some VC or private equity fund. The issue is performing and building core competence on how you deliver value, and then execute and deliver shared savings day in, day out, every year, year after year, across cycles, and generate free cash. We have said consistently, I will repeat it: you have to share the appropriate level of risk with the doctor. That is the best long-term strategy. An entity like Privia and the payer and the doctor all share risk. A lot of money got raised and got spent in giving contracts or irrational economics to the payers and to the doctors without sharing the appropriate level of risk.

You do artificial things, and the viability of the business can be put to risk. We have seen that. A lot of companies have not performed well. They are surviving. We think the TAM is pretty large, and hopefully our results just speak for themselves. We have a full-service offering with our medical group that a lot of the competitors do not have: every patient, every specialty, technology stack, payer contracts, and then we have a full suite of value-based capabilities to help them perform in those in a very integrated manner. We think that is a very differentiated approach. Now we have a lot of history and data to back it up—eight, nine years of performance like you see on slide 11, across any cycle. We want competitors to perform really well because that is good for the industry.

There are some competitors that are doing really well. Hopefully, we are one of the survivors and consolidators. Some of them which were not that great, hopefully we can consolidate over time. I do not think the pitch is any different. We execute the way we do. Our record speaks for itself.

Operator: Your next question comes from the line of Ryan M. Langston of TD Cowen. Please go ahead.

Ryan M. Langston: Thanks for squeezing me in. On the prepared remarks, you talked about the IMS acquisition saying there was pretty strong sales momentum in that state. Can you just give us a sense on organic pick up from IMS? I am just trying to understand broadly what the growth trajectory looks like on some of these larger deals as you ramp up in new states. Thanks.

Parth Mehrotra: Yeah, I mean, we do not break it up. You have the size of that group if you go to the website. It was a pretty meaningful group. A very large multispecialty group got themselves out of a health system and then found us. We found them, and there are a lot of synergies in the business model. Our best salespeople are our physicians. If we do well for them, they speak for us. We establish ourselves. We establish the sales team. We start knocking on doors. It starts small and builds up. I just do not think any one year makes a difference. It is a five-year strategy to build a big medical group there. We expect, hopefully, new signings and implemented providers. We are going to continue to go full steam ahead. When you get a sizable group, the snowballing starts sooner.

Operator: Your next question comes from the line of Richard Collamer Close of Canaccord Genuity. Please go ahead.

Richard Collamer Close: Morning. Thanks for fitting me in. Maybe just one last question on your appetite for new business development. How are you thinking about the best return on your investment as you are thinking about either expansion into new markets or investing in some of your more recently entered markets and really trying to build density, all in light of the challenging payer landscape that you have been referring to? How does that impact your philosophy on return on that invested capital?

Parth Mehrotra: That is a great question. Every deal is different, and you have to evaluate it on its merit. Each market runs with its own P&L. They have business leaders that are responsible for growing those markets. We take a portfolio approach. These markets and these dense networks take time to build—five, six years at least. You are seeing us do a whole wide variety of transactions over the last few years, ones that we have disclosed being a public company. We can do in-market BD as opportunities arise, add new capabilities, add new markets, buy businesses like we did with the Evolent deal. Given our capital position and free cash flow profile, we have the luxury to do both. The whole business is performing really well.

So if there is a market where we know we are going to lose money as we invest and put the sales team on the ground, and if it is a smaller anchor partner, but it is a big state with good demographics and enough independent physicians, we will take a five-year view because we understand the unit economics of this business really well. When you get a business operating close to 30% EBITDA to care margin, generating this much cash, we thought we would do that five, six years ago. We have seen across 15 states with the medical group model and now nine more states with the ACO-only model. We know what works, what does not work. We have seen a lot of issues over the years. We have worked with a lot of payers, different healthcare geographies, different payer dynamics, different health system dynamics.

Very few companies are in this position where they can invest with that kind of a mindset. We are pretty fortunate, and we are going to keep pressing on all those fronts. We take all that into consideration as we take that five to ten-year view.

Operator: Ladies and gentlemen, this concludes today’s call. We thank you for your participation. There are no further questions at this time. Please continue, gentlemen. You may now disconnect your lines.

Parth Mehrotra: Thank you for listening to our call today. We appreciate your continued interest and look forward to speaking to you again in the near future. Thank you, operator.