Privia (PRVA) is a fast-growing physician network that partners with existing doctors’ offices and transitions them to a value-based healthcare model, notes Mike Cintolo, growth stock expert and editor of Cabot Top Ten Trader.
Value-based is industry lingo for basing payments on patient health, so instead of a fee for every visit, x-ray, test performed and prescription written, physicians are measured on patient wellness and the cost of the totality of services that go toward it.
Privia right now has 3,500-plus providers (up 32% from a year ago) serving nearly four million patients (up 16%) in eight states, including Florida, California and Texas.
A big part of why doctors sign up is the company’s proprietary workflow technology, which simplifies doctors’ work by slashing the amount of disparate information that normally bombards them, while Privia’s office management and patient interaction process leads to efficiencies in billing payments and patient care.
Privia recruits a lot of practices that want to be part of Medicare shared savings program (MSSP), which splits cost savings with doctors that produce better patient health. Privia as a whole does the same with its member doctors, splitting both the upside profits and downside costs with members.
The firm’s top brass is ambitious — they want to be in every state — but says they won’t add practices that reduce its current EBITDA margin, which was over 20% on an adjusted basis for care giving in Q2, up from 17% last year and 11% in 2020.
Privia’s growth has been outstanding (EBITDA up 67% in Q2) and relatively consistent, and while that may slow some next year, analysts see the bottom line picking up steam. The value-based healthcare sector has a few players, and Privia looks like a leader.
Technically, PRVA went public in April 2021 at 23, rallied for a few weeks and then sank to 20 last October. Intriguingly, though, that was effectively the bottom—shares held that area (give or take) on multiple tests in the ensuing seven months.
The stock had a huge reversal in May — proving to be the ultimate low. And PRVA has been cranking higher since that point and, recently, tested its old post-IPO high. The stock is relatively thinly traded, but a recent dip to the 25-day line looks normal to us.