Healthcare tech company Privia Health Group (NASDAQ: PRVA) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 32.5% year on year to $580.4 million. The company’s full-year revenue guidance of $2.08 billion at the midpoint came in 3.6% above analysts’ estimates. Its non-GAAP profit of $0.29 per share was 33.7% above analysts’ consensus estimates.

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StockStory’s Take

Privia Health’s third quarter results surpassed Wall Street’s expectations, yet the market responded negatively—a reaction management attributed in part to uncertainties surrounding the sustainability of recent performance gains. CEO Parth Mehrotra pointed to broad-based growth across both fee-for-service and value-based care, with notable momentum from new provider signings and higher attributed patient lives. Mehrotra highlighted strong execution in the Medicare Shared Savings Program and the company’s ability to drive operational leverage through expanding its provider network and entering new markets, stating, “This outstanding performance gives us confidence to raise our 2025 outlook.” CFO David Mountcastle added that operational improvements led to significant margin expansion, particularly in the company’s value-based care business.

Looking ahead, Privia Health’s raised full-year guidance is underpinned by ongoing provider additions, the recently announced acquisition of Evolent Health’s accountable care organization business, and continued progress in value-based contract performance. Management emphasized that entering new markets and integrating the Evolent business will be crucial for expanding the company’s national footprint and attributed lives. Mehrotra noted, “Our momentum and diversified book of business has positioned us well to drive organic provider growth and increase operating leverage for long-term adjusted EBITDA and free cash flow growth.” However, management also cautioned that the integration of new assets and persistent headwinds in the Medicare Advantage environment require a disciplined, risk-managed approach to capital deployment and contract structuring.

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to robust value-based care execution, diversified provider growth, and the anticipated impact of recent business development initiatives.

• Value-based care momentum: Privia Health saw continued strength in its value-based care programs, especially the Medicare Shared Savings Program, with higher savings rates and increased attributed lives. Management credited improved actuarial underwriting and physician-led governance for driving cost reductions and shared savings.
• Provider network expansion: Implemented provider growth remained strong, fueled by new signings and entry into markets such as Arizona and Indiana. This enabled wider patient coverage and supported double-digit growth in attributed lives across commercial, Medicare, and Medicaid segments.
• Evolent ACO acquisition: The company agreed to acquire Evolent Health’s accountable care organization business, adding over 120,000 value-based care attributed lives and broadening Privia’s footprint to six new states. Management sees this deal as a multi-year opportunity for cross-selling and operational synergies as new providers adopt Privia’s technology and service platform.
• Operational leverage and margin expansion: CFO David Mountcastle highlighted margin improvements, particularly in the value-based care book, where operating leverage from both cost of platform and general and administrative expenses helped drive adjusted EBITDA growth and higher free cash flow conversion.
• Selective approach to Medicare Advantage: Management reiterated a cautious stance toward full-risk Medicare Advantage contracts due to ongoing regulatory and performance headwinds. The company continues to optimize its smaller capitation book while favoring shared-risk arrangements that balance payer, provider, and company interests.

Drivers of Future Performance

Management’s outlook focuses on expanding provider relationships, integrating recent acquisitions, and disciplined growth in value-based care programs to support revenue and margin expansion.

• Acquisition integration and synergy: The closing and integration of the Evolent ACO business is expected to expand Privia’s value-based care presence into new states, enabling cross-selling of its full platform and driving incremental attributed lives. However, management noted that realizing synergies and improved savings rates from the acquired ACOs will be a multi-year process rather than an immediate boost.
• Provider network and market expansion: Sustained growth in implemented providers and new market entries are anticipated to drive organic increases in attributed lives and practice collections. Management emphasized that successful onboarding and density in mature markets enable the rollout of ancillary services and deeper payer relationships, which can improve both top-line growth and margin leverage.
• Regulatory and reimbursement risk management: Persistent uncertainties in Medicare Advantage risk models and evolving government program structures require disciplined capital deployment and cautious contracting. The company aims to balance growth opportunities with prudent risk-taking, favoring shared-risk models over full capitation in the current environment.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will closely monitor (1) the integration progress and synergy realization from the Evolent Health ACO acquisition, (2) the pace of implemented provider growth and successful expansion into new states, and (3) the evolution of value-based care contract performance, particularly in Medicare and Medicaid. Tracking management’s discipline in capital allocation and risk selection amid shifting regulatory environments will also be essential for assessing long-term execution.

Privia Health currently trades at $23.98, down from $25.04 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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