Parth Mehrotra, president and chief operating officer at Privia Health, said the company’s calculated growth strategy and unique business model is behind its success on the public stock market.
While Mehrotra said some companies went public too early, Privia Health was strategic in its initial public offering in April 2021. The company’s business model is similar to United Healthcare’s OptumHealth business, which is a competitor.
Privia operates in nine states and Washington D.C. It’s business relies on provider partnerships that aim to funnel patients into value-based care contracts. While the majority of its contracts are in fee-for-service arrangements, the company is “actively looking” to move as many of its patients into its value-based care reimbursement models.
The strategy has paid off. Privia’s stock price has gone from $22.80 per share in October 2021 to $32.80 per share at the close of trading on Wednesday. According to the Digital Health Business & Technology’s quarterly report, Privia is one of two companies (Pear Therapeutics is the other) to see an increase in stock price out of the 20 companies that went public last year.
Mehrotra chatted about the company’s plans to utilize M&A as a growth strategy, where other digital health companies- have faltered going public and more.
The interview is edited for length and clarity.
There have been so many changes in how primary care is delivered over the past 18 to 24 months. How do you see this space developing?
Everything around community doctors has pretty much been organized or consolidated over the last 20 to 30 years. Payers, distributors, labs, health systems for profit and those not for profit, so this is kind of the last mile. You're seeing a whole host of newer business models emerge, whether they are focused on a clinic-based strategy, Medicare Advantage, an alignment strategy, or a capital model like we are. This is all part of the journey towards empowering doctors in the communities.
Experts expect M&A in this space to continue to increase. What does that mean for Privia? Are you in the market for smaller companies or providers to pick up and fold into your business?
Look, M&A in healthcare services is not new. This is a multi-year journey that will continue. We’ve been candidly surprised that it’s taken this long for some of the larger companies to even attempt to catch up to United Optum. I think they were the first ones that have started this journey in understanding that the puck is going to move from the payer of healthcare to the delivery of health care. They bought a whole host of assets. They are focused on building a care delivery network that can enable lower cost to improve outcomes across a whole set of patient panels. I think what you're seeing from entities like Walgreens, CVS and others is they're trying to effectively catch up.
It doesn’t change what we are doing. We partner with physicians in a unique way where we are building medical groups, building risk entities that have a full service and tech platform to support both of those entities. Physicians join Privia irrespective of their setting. We are obviously not buying large assets. We've grown organically, It's not an acquisition-led model. We’ve bought smaller entities, like a smaller medical group, a tax ID of a group, or a small management services organization entity to establish presence in a state. But we've historically not been relying on acquisitions in a big way.
I think a lot of companies went public when they may or may not have been ready. It may have been too early in their lifecycles. And obviously, the capital markets go in cycles and they are receptive to certain companies in certain stages going public sooner than they may be ready."
