PRIVIA HEALTH GROUP, INC. – 10-Q – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our unaudited
condensed consolidated financial statements and accompanying notes included
elsewhere in this quarterly report on Form 10-Q. In addition, the following
discussion and analysis and information contains forward-looking statements
about the business, operations and financial performance of the Company based on
our current expectations that involve risks, uncertainties and assumptions. Our
actual results could differ materially from those anticipated by these
forward-looking statements as a result of many factors. including, but not
limited to, those identified below and those discussed in the sections titled
"Risk Factors" and "Information Regarding Forward-Looking Statements" in this
quarterly report on Form 10-Q.

Overview

Privia Health is a technology-driven, national physician-enablement company that
collaborates with medical groups, health plans, and health systems to optimize
physician practices, improve patient experiences, and reward doctors for
delivering high-value care in both in-person and virtual care settings on the
"Privia Platform". We directly address three of the most pressing issues facing
physicians today: the transition to the VBC reimbursement model, the
ever-increasing administrative requirements to operate a successful medical
practice and the need to engage patients using modern user-friendly technology.
We seek to accomplish these objectives by entering markets and organizing
existing physicians and non-physician clinicians into a unique practice model
that combines the advantages of a partnership in a large regional Medical Group
with significant local autonomy for Privia Providers joining our Medical Groups.
Other than Tennessee, where our Friendly Medical Group is actively negotiating
with major health insurance plans after recently starting to operate under the
"friendly PC" model, our Medical Groups are designated as in-network by all
major health insurance plans in all of our markets and all Privia Providers are
credentialed with such health insurance plans.

Under our standard model, Privia Physicians join the Medical Group in their
geographic market as an owner of the Medical Group. Certain of our Medical
Groups are Owned Medical Groups, with Privia Physicians owning a minority
interest. However, in those markets in which state regulations do not allow us
to own physician practices, the Medical Groups are Non-Owned Medical Groups or
Friendly Medical Groups. Privia Physicians who owned their own practices prior
to joining Privia continue to own their Affiliated Practices, but those
Affiliated Practices no longer furnish healthcare services. The Medical Groups
have no ownership in the underlying Affiliated Practices, but the Affiliated
Practices do provide certain services to our Medical Groups, such as use of
space, non-physician staffing, equipment and supplies.

We provide management services to each Medical Group through a local MSO
established with the objective of maximizing the independence and autonomy of
our Affiliated Practices, while providing Medical Groups with access to VBC
opportunities either directly or through Privia-owned ACOs. We have national
committees that distribute quality guidance, and we employ Chief Medical
Officers who provide clinical oversight and direction over the clinical affairs
of the Owned Medical Groups. Additionally, we hold the provider contracts,
maintain the patient records, set reimbursement rates, and negotiate payer
contracts on behalf of the Owned Medical Groups.

We also offer Privia Care Partners, a more flexible provider affiliation model,
to providers who do not desire to join one of our medical groups. This model
aggregates providers in certain of our existing markets as well as new markets
who are looking solely for VBC solutions without the necessity of changing EMR
providers. We furnish population health services, reporting and analytics to
such providers along with a menu of management services from which providers may
choose.

GAAP Financial Measures

• Revenue was $313.8 million and $213.6 million for the three months ended
March 31, 2022 and 2021, respectively.

• Operating (loss) income was $(11.5) million and $7.9 million for the three
months ended March 31, 2022 and 2021, respectively; and

•  Net (loss) income attributable to Privia Health Group, Inc. was $(17.5)
million and $5.4 million, for the three months ended March 31, 2022 and 2021,
respectively.

Key Metrics and Non-GAAP Financial Measures

• Practice Collections was $561.9 million and $344.1 million for the three
months ended March 31, 2022 and 2021, respectively;

• Care Margin was $71.6 million and $52.5 million for the three months ended
March 31, 2022 and 2021, respectively;

• Platform Contribution was $35.0 million and $25.5 million for the three
months ended March 31, 2022 and 2021, respectively;

• Adjusted EBITDA was $14.8 million and $9.9 million for the three months ended
March 31, 2022 and 2021, respectively.

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See "Key Metrics and Non-GAAP Financial Measures" for more information as to how
we define and calculate Implemented Providers, Attributed lives, Practice
Collections, Care Margin, Platform Contribution, Platform Contribution Margin,
Adjusted EBITDA and Adjusted EBITDA Margin, and for a reconciliation of income
from operations, the most comparable GAAP measure, to Care Margin, income from
operations, the most comparable GAAP measure, to Platform Contribution, and net
(loss) income, the most comparable GAAP measure, to Adjusted EBITDA.

Coronavirus Aid, Relief and Economic Stimulus Act ("CARES Act")

The COVID-19 pandemic has an impact and may continue to impact our results of
operations, cash flow and financial position. We are closely monitoring the
impact of the pandemic on all aspects of our business including impacts to
employees, customers, patients, suppliers and vendors.

On March 27, 2020, the CARES Act was passed. It is intended to provide economic
relief to individuals and businesses affected by the coronavirus pandemic. It
also contains provisions related to healthcare providers' operations and the
issues caused by the coronavirus pandemic. Pursuant to the CARES Act the Company
elected to defer its portion of Social Security taxes in 2020, which may be
repaid over two years as follows: 50% by the end of 2021 and 50% by the end of
2022. During the year ended December 31, 2021 50% of the Social Security taxes
were repaid. Approximately $0.8 million is recorded in accrued expenses on the
balance sheet as of March 31, 2022 related to this deferral and the Company
intends to remit payment by the end of 2022.

Our Revenue

We recognize revenue from multiple stakeholders, including health care
consumers, health insurers, employers, providers and health systems. Our revenue
includes (i) FFS revenue generated from providing healthcare services to
patients through Privia Providers of Owned Medical Groups or administrative fees
collected for providing administrative services to Non-Owned Medical Groups,
(ii) VBC revenue collected on behalf of our providers, through capitated
revenue, shared savings (including surplus payments, shared savings, total cost
of care budget payments and similar payments) and care management fees
(including care management fees, management services fees, care coordination
fees and all other similar administrative fees), and (iii) other revenue from
additional services, such as concierge services, virtual visits, virtual scribes
and coding.

FFS Revenue

We generate FFS-patient care revenue when we collect reimbursements for FFS
medical services provided by Privia Providers. Our agreements with our providers
have a multi-year term length and we have historically experienced a 95%
provider retention rate, both of which lead to a highly predictable and
recurring revenue model. Our FFS contracts with payer partners typically contain
annual rate inflators and enhanced commercial FFS rates given our scale in each
of our markets. As a result of receiving these rate inflators and enhancements,
if we continue to be successful in expanding our provider base, we expect
revenue will grow year-over-year in absolute dollars. In addition, in our
FFS-patient care revenue, we include collections generated from ancillary
services such as clinical laboratory, imaging and pharmacy operations. We also
generate FFS-administrative services revenue by providing administration and
management services to medical groups which are not owned or consolidated by us.
FFS-patient care revenue represented 65.1%, and 79.4% of total revenue for the
three months ended March 31, 2022 and 2021, respectively. FFS-administrative
services revenue represented 7.3% and 7.2% of total revenue for the three months
ended March 31, 2022 and 2021, respectively.

VBC Revenue

Over time, we create incremental value for our provider partners by enabling
them to succeed in VBC arrangements. We generate VBC revenue when our providers
are reimbursed through traditional FFS Medicare, MSSP, Medicare Advantage,
commercial payers and other existing and emerging direct payer and employer
contracting programs. The revenue is primarily collected in the form of (i)
Capitated revenue earned by providing healthcare services to Medicare Advantage
attributed beneficiaries for a defined group of services to include
professional, institutional and pharmacy through a contract that is typically
known as an "at-risk contract," (ii) Shared savings earned based on improved
quality and lower cost of care for our attributed lives in VBC incentive
arrangements and (iii) Care management fees to cover costs of services typically
not reimbursed under traditional FFS payment models, including population
management, care coordination, advanced technology and analytics. VBC revenue
represented 27.1% and 12.4% of total revenue for the three months ended March
31, 2022 and 2021, respectively. We expect VBC revenue to continue to increase
as a percentage of total revenue as we grow total Attributed Lives under
management as well as increase risk levels undertaken across value-based
arrangements.

Other Revenue

The remainder of our revenue is derived from leveraging our existing base of
providers and patients to deliver value-oriented services such as virtual
visits, virtual scribes and coding. Other revenue represented 0.4% and 1.0% of
total revenue for the three months ended March 31, 2022 and 2021, respectively.
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Key Factors Affecting Our Performance

Addition of New Providers

Our ability to increase our provider base will enable us to deliver financial
growth as our providers generate both our FFS and VBC revenue. Our existing
provider penetration and market share provides us with significant opportunity
to grow in both existing and new geographies, and we believe the number of
providers joining Privia is a key indicator of the market's recognition of the
attractiveness of our platform to our providers, patients and payers. We intend
to increase our provider base in existing and new markets by adding new
practices and assisting our existing practices with recruiting new providers,
using our in-market and national sales and marketing teams. As we add providers
to the Privia Platform, we expect them to contribute incremental economics as we
leverage our existing brand and infrastructure, both at the corporate and
in-market levels.

Addition of New Patients

Our ability to add new patients to our provider base in existing and new markets
will also enable us to deliver revenue growth in both our FFS and VBC contracts.
We believe the number of attributed patient lives in VBC programs is a key
driver of our VBC revenue growth. Our branding and marketing strategies to drive
growth in our practices has continued to result in increased engagement with new
and existing patients. We believe our continued success in growing the
visibility of the Privia brand will result in increased patient panels per
provider and contribute incremental revenue in both FFS and VBC for our
practices.

Expansion to New Markets

Based upon our experience to date, we believe Privia can succeed in all
reimbursement environments and payment models. The data we collected from older
provider cohorts consistently suggest that we improve their performance in both
FFS and VBC metrics over time and inform our expectations for our new markets.
We believe our in-market operating structure and ability to serve providers
wherever they are on their transition to VBC can benefit physicians and
providers throughout the U.S. and that our solution is applicable across all 50
states. We enter a market with an asset-light operating model and employ a
disciplined, uniform approach to market structure and development. We partner
with market leading medical groups and health systems to form anchor
relationships and align other independent, affiliated, or employed providers
into a single-TIN medical group. Our business model also gives us flexibility
for future, incremental growth through the acquisition of minority or majority
stakes in our practices and opening de-novo, fully-owned sites of care focused
on Medicare Advantage and direct contracting models.

On October 1, 2021, we launched Privia Medical Group West Texas in partnership
with Abilene Diagnostic Clinic, an independent multi-specialty group practice
with more than 30 providers and five care center locations. This complements our
established and expanding provider practice locations in North Texas
(Dallas-Fort Worth) and the Gulf Coast region of the state.

On October 13, 2021, we entered the California market through an affiliation
with BASS Medical Group, one of the Greater San Francisco Bay Area's leading
healthcare multi-specialty groups with more than 400 providers spanning 42
specialties caring for patients at over 125 locations. Privia acquired a
majority interest in BASS Management Services Organization, LLC, which is the
exclusive provider of management services to BASS Medical Group.

In February 2022, the Company announced a partnership with Surgery Partners,
Inc. for Privia Health to enter the State of Montana with Great Falls Clinic, a
multi-specialty practice with approximately 65 providers spanning 24
specialties. A wholly owned subsidiary of Surgery Partners, Great Falls Clinic
will serve as Privia Health's anchor practice in the state. Privia Health will
also provide performance operations services and technology capabilities to
Great Falls Clinic as well as to new providers in Montana who join the Privia
Platform.

Provider Satisfaction and Retention

Privia Providers have high satisfaction with their overall performance on our
platform, and we strive to continuously improve provider well-being and patient
satisfaction. Our percentage of collections Care Margin model combined with high
patient and provider satisfaction results in 90%+ Practice Collections
predictability on a rolling twelve month forward basis. We believe these metrics
demonstrate the stability of our provider base and the appeal to prospective
providers and patients of our platform.

Payer Contracts and Ability to Move Markets to VBC

Our FFS and VBC revenue is dependent upon our contracts and relationships with
payers. We partner with a large and diverse set of payer groups nationally and
in each of our markets to form provider networks and to lower the overall cost
of care, and we structure bespoke contracts to help both providers and payers
achieve their objectives in a mutually aligned manner. Maintaining, supporting
and increasing the number of these contracts and relationships, particularly as
we enter new markets, is important for our long-term success.

Our ability to work within each geographic market as it evolves in its shift
towards VBC, with our experience working in all reimbursement environments,
enables providers to accelerate and succeed in their transition. Our model is
aligned with our payer partners, as we have demonstrated improved patient
outcomes while driving incremental revenue growth. We intend to accelerate the
move towards the adoption of VBC reimbursement in each market in current and
emerging payer programs. To do so, we will need to
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continue enhancing our VBC capabilities and executing on initiatives to deliver
next generation access, superior quality metrics and lower cost of care.

At the beginning of 2022, Privia Health launched three new Accountable Care
Organizations (ACOs) in Maryland, Florida and Tennessee, with each participating
in the Medicare Shared Savings Program (MSSP). This expands the Privia-owned
ACOs to seven, including ACOs in Georgia, Gulf Coast Texas, North Texas and
Virginia.

On January 5, 2022 the Company announced that its Florida and the Mid-Atlantic
ACOs entered into capitated payer arrangements. These agreements cover
healthcare services provided to approximately 23,000 Medicare Advantage
beneficiaries effective January 1, 2022. Capitated revenue is generated through
what is typically known as an "at-risk contract." At-risk capitation refers to a
model in which the Company is entitled to fixed monthly fees from the
third-party payer in exchange for providing healthcare services to attributed
beneficiaries in Medicare Advantage plans. The fees are typically based on a
percentage of the defined premium that payers receive from CMS. The Company is
responsible for providing or paying for the cost of healthcare services required
by those attributed beneficiaries. At-risk capitated fees are recorded gross in
revenues because the Company is acting as a principal in arranging for,
providing, and controlling the managed healthcare services provided to the
attributed beneficiaries.

Components of Revenue

Our FFS revenue is primarily dependent upon the size of our provider base, payer
contracted rates and patient volume. Our ability to maintain or improve pricing
levels in our contracts with payers and patient volume for our providers will
impact our results of operations. In addition to increasing our provider base
and contracted rates over time, we also seek to increase patient volume by
demonstrating the ability to provide a better patient experience that leads to
higher retention rates and drives referrals to preferred, high quality and
value-based providers. Our VBC revenue is primarily dependent upon the number of
attributed patients in our VBC arrangements, risk levels of our payer contracts,
and effective management of our patients' total cost of care. As we grow our
provider base, we also expect to increase our total number of attributed
patients in existing and new markets. In addition, we intend to increase the
risk levels of our value-based programs as we seek a higher revenue opportunity
on a per patient basis over time.

Investments in Growth

We expect to continue focusing on long-term growth through investments in our
sales and marketing, our technology-enabled platform, and our operations. In
addition, as we continue our efforts to move markets toward VBC, we expect to
continue making additional investments in operations for an expanded suite of
clinical capabilities to manage our patient population.

We recently began offering Privia Care Partners, a more flexible provider
affiliation model, to providers who do not desire to join one of our medical
groups. This model will initially aggregate providers in certain of our existing
markets as well as new markets who are looking solely for VBC solutions without
the necessity of changing EHR providers. We will furnish population health
services, reporting and analytics to such providers along with a menu of
management services from which providers may choose. We launched Privia Care
Partners on January 1, 2022 with over 25,000 attributed lives in partnership
with more than 300 providers in approximately 100 care center locations

Key Metrics and Non-GAAP Financial Measures

We review a number of operating and financial metrics, including the following
key metrics and non-GAAP financial measures, to evaluate our business, measure
our performance, identify trends affecting our business, formulate our business
plans, and make strategic decisions.

Key Metrics
                                                                For the Three Months Ended March 31,
                                                                     2022                     2021
Implemented Providers (as of end of period)                               3,370                 2,648
Attributed Lives (in thousands) (as of end of period)                       848                   721
Practice Collections (1) ($ in millions)                    $             

561.9 $ 344.1

(1) We define Practice Collections as the total collections from all practices
in all markets and all sources of reimbursement (FFS, VBC and other) that we
receive for delivering care and providing our platform and associated services.
Practice Collections differ from revenue by including collections from Non-Owned
Medical Groups.

Implemented Providers

We define Implemented Providers as the total of all service professionals on
Privia Health's platform at the end of a given period who are credentialed by
Privia Health and bill for medical services, in both Owned and Non-Owned Medical
Groups during that period. This includes, but is not limited to, physicians,
physician assistants, and nurse practitioners. We believe that growth in the
number of Implemented Providers is a key indicator of the performance of our
business and expected revenue growth. This growth depends, in part, on our
ability to successfully add new practices in existing markets and expand into
new markets. The number of Implemented Providers increased 27.3% between
March 31, 2022 and 2021, due to organic growth in our healthcare delivery
business as well as entrance into the West Texas and California markets.
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Attributed Lives

We define Attributed Lives as any patient that selected one of our physicians as
their provider of primary care services, that a payer deems attributed to
Privia, in both Owned and Non-Owned Medical Groups, to deliver care as part of a
VBC arrangement. The number of Attributed Lives is an important measure that
impacts the amount of VBC revenue we receive. Attributed Lives increased 17.6%
between March 31, 2022 and 2021 due to the launch of Privia Care Partners on
January 1, 2022, as well as organic growth in all markets and the addition of
attributed lives in the Tennessee market.

Practice Collections

We define Practice Collections as the total collections from all practices in
all markets and all sources of reimbursement (FFS, VBC and other) that we
receive for delivering care and providing our platform and associated services.
Practice Collections differ from revenue by adding collections from Non-Owned
Medical Groups. Practice Collections increased 63.3% for the three months ended
March 31, 2022 when compared to the same periods in 2021 due mainly to organic
growth of our healthcare delivery business, our new Capitated revenue contracts,
as well as entrance into the West Texas and California markets.

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with GAAP, we
believe Care Margin, Platform Contribution, Platform Contribution Margin,
Adjusted EBITDA and Adjusted EBITDA Margin are useful as non-GAAP measures to
investors as these are metrics used by management in evaluating our operating
performance and in assessing the health of our business. We use Care Margin,
Platform Contribution, Platform Contribution Margin, Adjusted EBITDA and
Adjusted EBITDA Margin to evaluate our ongoing operations and for internal
planning and forecasting purposes. We believe that these non-GAAP financial
measures, when taken together with the corresponding GAAP financial measures,
provide meaningful supplemental information regarding our performance by
excluding certain items that may not be indicative of our business, results of
operations or outlook.

However, non-GAAP financial information is presented for supplemental
informational purposes only, has limitations as an analytical tool and should
not be considered in isolation or as a substitute for financial information
presented in accordance with GAAP. In addition, other companies, including
companies in our industry, may calculate similarly-titled non-GAAP measures
differently or may use other measures to evaluate their performance, all of
which could reduce the usefulness of our non-GAAP financial measure as a tool
for comparison. A reconciliation is provided below for our non-GAAP financial
measures to the most directly comparable financial measure stated in accordance
with GAAP. Investors are encouraged to review the related GAAP financial
measures and the reconciliation of non-GAAP financial measures to their most
directly comparable GAAP financial measures, and not to rely on any single
financial measure to evaluate our business.

                                                                        For the Three Months Ended March 31,
(amounts in thousands, except for percentages)                            2022                      2021
Care Margin 1 ($)                                                   $          71,614       $             52,494
Platform Contribution 1 ($)                                         $          34,965       $             25,532
Platform Contribution Margin 1 (%)                                              48.8%                      48.6%
Adjusted EBITDA 1 ($)                                               $          14,801       $              9,947
Adjusted EBITDA Margin 1 (%)                                                    20.7%                      18.9%
1. See below for more information as to how we define and calculate Care Margin, Platform Contribution, Platform
Contribution Margin, Adjusted EBITDA and Adjusted EBITDA Margin and for a reconciliation of income from
operations, the most comparable GAAP measure, to Care Margin, income from operations, the most comparable GAAP
measure, to Platform Contribution, and net income, the most comparable GAAP measure, to Adjusted EBITDA.


Care Margin

We define Care Margin as total revenue less the sum of provider expense. Our
Care Margin generated from FFS revenue is contractual and recurring in nature,
and primarily based on an individually negotiated percentage of collections for
each practice that joins Privia. Our Care Margin generated from VBC revenue is
based on a percentage of care management fees and shared savings collected. We
view Care Margin as all of the dollars available for us to manage our business,
including providing administrative support to our practices, investing in sales
and marketing to attract new providers to the Privia Platform, and supporting
the organization through our corporate infrastructure. We expect Care Margin
will grow year-over-year in absolute dollars as we continue to expand our
provider base. We would also expect our care management and shared savings
economics in our VBC arrangements to improve on a per patient basis as we manage
towards lower total cost of care for our Attributed Lives and move towards
higher risk VBC arrangements over time. Care Margin increased 36.4% for the
three months ended March 31, 2022 when compared to the same period in 2021 due
to organic growth of our medical practice business. As a percentage of revenue,
Care Margin decreased from 24.6% for the three months ended March 31, 2021 to
22.8% for the same period in 2022 due to the addition of the at-risk capitation
arrangements.

In addition to our financial results determined in accordance with GAAP, we
believe Care Margin, a non-GAAP measure, is useful in evaluating our operating
performance. We use Care Margin to evaluate our ongoing operations and for
internal planning and forecasting purposes. We believe that this non-GAAP
financial measure, when taken together with the corresponding GAAP financial

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measures, provides meaningful supplemental information regarding our performance
by excluding certain items that may not be indicative of our business, results
of operations or outlook. In particular, we believe that the use of Care Margin
is helpful to our investors as it is a metric used by management in assessing
the health of our business and our operating performance.

The following table provides a reconciliation of operating (loss) income, the
most closely comparable GAAP financial measure, to Care Margin.

                                                                  For the Three Months Ended March 31,
(unaudited and amounts in thousands)                                   2022                   2021
Operating (loss) income                                          $      (11,547)         $      7,907
Depreciation and amortization                                                1,118                   445
General and administrative                                                  36,110                13,996
Sales and marketing                                                          4,661                 3,184
Cost of platform                                                            41,272                26,962
Care margin                                                      $       71,614          $     52,494


Platform Contribution

We define Platform Contribution as total revenue less the sum of (i) provider
expense, (ii) cost of platform and (iii) stock-based compensation expense
included in Cost of platform. The following table provides a reconciliation of
operating income, the most closely comparable GAAP financial measure, to
Platform Contribution. We consider platform contribution to be an important
measure to monitor our performance, specific to pricing of our services, direct
costs of delivering care, and cost of our platform and associated services. As a
provider spends a longer time on the Privia Platform, we expect the Platform
Contribution from that provider to increase both in terms of absolute dollars as
well as a percent of Care Margin. We expect that this increase will be driven by
improving per provider revenue economics over time as well as our ability to
generate operating leverage on our in-market infrastructure costs. Platform
Contribution increased 36.9% for the three months ended March 31, 2022 when
compared to the same period in 2021 due to organic growth of our medical
practice business.

Platform Contribution Margin

We define Platform Contribution Margin as Platform Contribution as a percentage
of Care Margin. We consider Platform Contribution Margin to be an important
measure to monitor our performance, specific to pricing of our services, direct
costs of delivering care, and cost of our platform and associated services. As a
provider spends a longer time on the Privia Platform, we expect the Platform
Contribution from that provider to increase both in terms of absolute dollars as
well as a percent of Care Margin. We expect that this increase will be driven by
improving per provider revenue economics over time as well as our ability to
generate operating leverage on our in-market infrastructure costs. Platform
Contribution Margin was 48.8% for three months ended March 31, 2022 compared to
48.6% during the same period in 2021. We continue to make strategic investments
to provide better service to both our patients and physicians at a pace slower
than the increase in revenue.

In addition to our financial results determined in accordance with GAAP, we
believe platform contribution, a non-GAAP measure, is useful in evaluating our
operating performance. We use Platform Contribution to evaluate our ongoing
operations and for internal planning and forecasting purposes. We believe that
this non-GAAP financial measure, when taken together with the corresponding GAAP
financial measures, provides meaningful supplemental information regarding our
performance by excluding certain items that may not be indicative of our
business, results of operations or outlook. In particular, we believe that the
use of Platform Contribution is helpful to our investors as it is a metric used
by management in assessing the health of our business and our operating
performance.

The following table provides a reconciliation of operating income, the most
closely comparable GAAP financial measure, to platform contribution:

                                                                   For the Three Months Ended March 31,
(unaudited and amounts in thousands)                                    2022                   2021
Operating (loss) income                                           $      (11,547)         $      7,907
Depreciation and amortization                                                 1,118                   445
General and administrative                                                   36,110                13,996
Sales and marketing                                                           4,661                 3,184
Stock-based compensation(1)                                                4,623                     -
Platform contribution                                             $      

34,965 $ 25,532
(1) Amount represents stock-based compensation expense included in Cost of Platform.

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Adjusted EBITDA

We define Adjusted EBITDA as net (loss) income excluding interest income,
interest expense, minority interest expense / income, depreciation and
amortization, stock-based compensation, severance, other one time or
non-recurring expenses and the provision for income taxes. We include Adjusted
EBITDA because it is an important measure on which our management assesses and
believes investors should assess our operating performance. We consider Adjusted
EBITDA to be an important measure because it helps illustrate underlying trends
in our business and our historical operating performance on a more consistent
basis. Adjusted EBITDA has limitations as an analytical tool including: (i)
Adjusted EBITDA does not reflect the impact of stock-based compensation expense
or the impact of withholding shares of outstanding common stock upon vesting,
and (ii) Adjusted EBITDA does not reflect interest expense on our debt or the
cash requirements necessary to service interest or principal payments. Adjusted
EBITDA increased 48.8% for the three months ended March 31, 2022, when compared
to the same period in 2021 due to organic growth of our medical practice
business.

Adjusted EBITDA Margin

We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of Care
Margin. We included Adjusted EBITDA Margin because it is an important measure on
which our management assesses and believes investors should assess our operating
performance. We consider Adjusted EBITDA Margin to be an important measure
because it helps illustrate underlying trends in our business and our historical
operating performance on a more consistent basis. Adjusted EBITDA Margin was
20.7% for three months ended March 31, 2022 an increase from 18.9% for the same
period in 2021 due to organic growth of our medical practice business.

We believe that Adjusted EBITDA, when taken together with the corresponding GAAP
financial measures, provides meaningful supplemental information regarding our
performance by excluding certain items that may not be indicative of our
business, results of operations or outlook. In particular, we believe that the
use of Adjusted EBITDA is helpful to our investors as it is a metric used by
management in assessing the health of our business and our operating
performance.

The following table provides a reconciliation of net (loss) income attributable
to the Company, the most closely comparable GAAP financial measure, to Adjusted
EBITDA:

                                                                   For the Three Months Ended March 31,
(unaudited and amounts in thousands)                                    2022                   2021

Net (loss) income                                                 $      (17,510)         $      5,398
Net (loss) income attributable to non-controlling interests                 (577)                  218
Provision for income taxes                                                 6,308                 2,000
Interest expense                                                             232                   291
Depreciation and amortization                                              1,118                   445
Stock-based compensation                                                  24,881                   101
Other expenses(1)                                                            349                 1,494
Adjusted EBITDA                                                   $       14,801          $      9,947

(1) Other expenses include certain non-cash or non-recurring costs.

Components of Results of Operations

Revenue

Our revenue is earned in three main categories: FFS revenue, VBC revenue and
other revenue.

Our FFS-patient care revenue is generated from providing healthcare services to
patients. We receive payments pursuant to contracts with the U.S. federal
government and large and small payer organizations that are multi-year in
nature, typically ranging from three to five years. We also receive payments
from patients that may be financially responsible for a portion or all of the
service in the form of co-pays, coinsurance or deductibles.

Our FFS-administrative services business provides administration and management
services to Non-Owned Medical Groups. The Company's MSAs with Non-Owned Medical
Groups range from 5-20 years in duration and outline the terms and conditions of
the administration and management services to be provided, which includes RCM
services such as billings and collections, as well as other services, including,
but not limited to, payer contracting, information technology services and
accounting and treasury services. In certain MSAs, the Company is paid
administrative fees equal to the cost of supplying certain services as outlined
in the MSAs, and if applicable, a margin is added to the cost of certain
services. Other MSAs are based on a fixed percentage of net collections.

VBC revenue is earned through our clinically integrated network and accountable
care organizations which bring together independent physician practices to focus
on sharing data, improving care coordination, and collaborating on initiatives
to improve outcomes and lower healthcare spending. The Company has contracts
with the U.S. federal government and large payer organizations that are
multi-year in nature typically ranging from three to five years and is paid as
follows: (1) capitated revenue (2) on a shared savings basis and
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(3) care management fees on a per member per month basis. Capitation revenue
consists of capitation fees under contracts with various payers. Under the
typical capitation arrangement, the Company is entitled to monthly fees to
provide a defined range of healthcare services for beneficiaries attributed to
the Company's contracted primary care physicians. The Company has contracts with
large payer organizations that are multi-year in nature typically ranging from
three to five years

The Other revenue is derived from leveraging our existing base of providers and
patients to deliver value-oriented services such as concierge services, virtual
visits, virtual scribes and coding.

Operating Expenses

Provider expenses

Provider expenses are amounts accrued or payments made to physicians, hospitals
and other service providers, including Privia physicians and their related
practices as well as providers the Company has contracted with through payer
partners. Those costs include claims payments, physician guarantee payments and
other required distributions pursuant to the service agreements and include
costs for services provided to the attributed beneficiaries for which the
Company is financially responsible and paid either directly by the Company or
indirectly by payers with whom the Company has contracted. Provider expenses are
recognized in the period in which services are provided.

Cost of platform

Third-party EMR and practice management software expenses are paid on a
percentage of revenue basis, while we pay most of the costs of our platform on a
variable basis related to the number of implemented physicians we service. In
addition, expenses contain stock-based compensation related to employees that
provide Cost of platform services, but exclude any depreciation and amortization
expense. Software development costs that do not meet capitalization criteria are
expensed as incurred. As we continue to grow, we expect the cost of platform to
continue to grow at a rate slower than the revenue growth rate.

Sales and marketing

Sales and marketing expenses consist of employee-related expenses, including
salaries, commissions, stock-based compensation, and employee benefits costs,
for all of our employees engaged in marketing, sales, community outreach, and
sales support. In addition, sales and marketing expenses also include central
and community-based advertising to generate greater awareness, engagement, and
retention among our current and prospective patients as well as the
infrastructure required to support all of our marketing efforts.

General and administrative

Corporate, general and administrative expenses include employee-related
expenses, including salaries and related costs and stock-based compensation,
technology infrastructure, occupancy costs, operations, clinical and quality
support, finance, legal, human resources, and development departments.

Depreciation and amortization expense

Depreciation and amortization expenses are primarily attributable to our capital
investment and consist of fixed asset depreciation and amortization of
intangibles considered to have definite lives. We do not allocate depreciation
and amortization expenses to other operating expense categories.

Interest Expense

Interest expense consists primarily of interest payments on our outstanding
borrowings under our Term Loan Facility. See "Liquidity and Capital
Resources-General and Note Payable."

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Results of Operations

The following table sets forth our condensed consolidated statements of
operations data for the three months ended March 31, 2022 and 2021.

                                             For the Three Months Ended March
                                                           31,
                                                 2022                2021            Change ($)              Change (%)
(in thousands)
Revenue                                      $  313,801          $ 213,607          $  100,194                       46.9  %
Operating expenses:
Provider expense                                242,187            161,113              81,074                       50.3  %
Cost of platform                                 41,272             26,962              14,310                       53.1  %
Sales and marketing                               4,661              3,184               1,477                       46.4  %
General and administrative                       36,110             13,996              22,114                      158.0  %
Depreciation and amortization                     1,118                445                 673                      151.2  %
Total operating expenses                        325,348            205,700             119,648                       58.2  %
Operating (loss) income                         (11,547)             7,907             (19,454)                    (246.0) %
Interest expense                                    232                291                 (59)                     (20.3) %
(Loss) income before provision for income
taxes                                           (11,779)             7,616             (19,395)                    (254.7) %
Provision for income taxes                        6,308              2,000               4,308                      215.4  %
Net (loss) income                               (18,087)             5,616             (23,703)                    (422.1) %
Less: (loss) income attributable to
non-controlling interests                          (577)               218                (795)                    (364.7) %
Net (loss) income attributable to Privia
Health Group, Inc.                           $  (17,510)         $   5,398          $  (22,908)                    (424.4) %


Revenue

The following table presents our revenues disaggregated by source:

                                                     For the Three Months Ended March
                                                                   31,
(Dollars in Thousands)                                   2022                2021            Change ($)              Change (%)
FFS-patient care                                     $  204,344          $ 169,578          $   34,766                       20.5  %
FFS-administrative services                              23,006             15,411               7,595                       49.3  %
Capitated revenue                                        48,330                  -              48,330                          -  %
Shared savings                                           27,959             17,833              10,126                       56.8  %
Care management fees                                      8,804              8,570                 234                        2.7  %
Other revenue                                             1,358              2,215                (857)                     (38.7) %
Total Revenue                                        $  313,801          $ 213,607          $  100,194                       46.9  %

Three months ended March 31, 2022 and 2021

Revenue was $313.8 million for the three months ended March 31, 2022, an
increase from $213.6 million for the three months ended March 31, 2021. Key
drivers of this revenue growth were the addition of capitated revenue in the
first quarter of 2022 of $48.3 million, FFS-patient care revenue, which
increased $34.7 million, shared savings revenue, which increased $10.2 million,
and FFS-administrative services which increased $7.6 million.

Growth in FFS-patient care revenue and FFS-administrative services was primarily
attributed to an increase in visit volumes as COVID-19 restrictions were lifted
in certain states as well as the addition of new providers. As of March 31,
2022, we had 3,370 implemented providers compared to 2,648 as of March 31, 2021.
Capitated revenue growth is due to the commencement of at-risk capitation
arrangements during the first quarter of 2022 resulting in an increase in
revenue of $48.3 million. Shared savings growth was primarily due to more
Attributed Lives in government programs. Care management fees growth was due
mainly to an increase in the total number of VBC contracts that include the
payment of care management fees and an increase in Attributed Lives. The
decrease in other revenue was driven by various immaterial items.
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Operating Expenses

                                                            For the Three Months Ended March
                                                                          31,
(Dollars in Thousands)                                          2022       

        2021            Change ($)              Change (%)
Operating Expenses:
Provider expense                                            $  242,187          $ 161,113          $   81,074                       50.3  %
Cost of platform                                                41,272             26,962              14,310                       53.1  %
Sales and marketing                                              4,661              3,184               1,477                       46.4  %
General and administrative                                      36,110             13,996              22,114                      158.0  %
Depreciation and amortization expense                            1,118                445                 673                      151.2  %
Total operating expenses                                    $  325,348          $ 205,700          $  119,648                       58.2  %


Provider expenses

Physician expenses were $242.2 million for the three months ended March 31, 2022
compared to $161.1 million for the three months ended March 31, 2021. This
increase was driven primarily by the commencement of at-risk capitation
arrangements during the first quarter of 2022 and higher FFS-patient care
revenue and growth in Implemented Providers.

Cost of platform

Cost of platform expenses were $41.3 million for the three months ended
March 31, 2022 an increase from $27.0 million for the three months ended
March 31, 2021. This increase was primarily driven by increased investment in
salaries and benefits of $6.6 million as we continue to grow, an increase of
$4.6 million of stock-based compensation expense recognized during the three
months ended March 31, 2022, and an increase in consulting costs of $3.0 million
due to continued growth and market expansion.

Sales and marketing

Sales and marketing expenses were $4.7 million for the three months ended
March 31, 2022 an increase from $3.2 million for the three months ended
March 31, 2021. This increase was driven primarily by the increase of $0.8
million of stock-based compensation expense recognized during the three months
ended March 31, 2022 and an increase in salaries and benefits of $0.5 million.

General and administrative

General and administrative expenses was $36.1 million for the three months ended
March 31, 2022 an increase from $14.0 million for the three months ended
March 31, 2021. The increase was primarily driven by the increase of $19.4
million of stock-based compensation expense recognized during the three months
ended March 31, 2022, as a result of awards made in connection with the IPO.

Depreciation and amortization expense

Depreciation and amortization expenses was $1.1 million for the three months
ended March 31, 2022 an increase from $0.4 million for the three months ended
March 31, 2021. This increase was primarily driven by amortization of intangible
assets related to the acquisition of BASS Privia Management Company of
California, LLC ("BPMC") and Privia Medical Group West Texas, PLLC, formerly
known as Abilene Diagnostic Clinic, PLLC ("PMG West Texas" or "WTX Friendly
Medical Group") during the fourth quarter of 2021.

Interest expense

Interest expense remained materially unchanged for the three months ended
March 31, 2022 as compared to the same period in 2021.

Provision for income taxes
The provision for income taxes was $6.3 million for the three months ended
March 31, 2022 an increase from $2.0 million for the same period in 2021. The
provision for the three months ended March 31, 2021 is primarily the result of
the tax effect on the company's income. The provision for the three months ended
March 31, 2022 is primarily the result of the pre-tax loss offset by the
non-deductible stock-based compensation expense related to the modification of
vesting terms of options in connection with the Company's IPO during the second
quarter of 2021 in addition to the windfall tax benefit recorded on stock option
exercises during the quarter.

Net loss attributable to non-controlling interests

Net loss attributable to non-controlling interests remained materially unchanged
for the three months ended March 31, 2022 compared to the same period in 2021.

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Liquidity and Capital Resources

General

To date, we have financed our operations principally through sale of our equity,
payments received from various payers and through borrowings under the Credit
Facilities. As of March 31, 2022, we had cash and cash equivalents of
$315.9 million. We received $211.0 million of net proceeds received from the
Company's IPO and Anthem private placement on May 3, 2021. Our cash and cash
equivalents primarily consist of highly liquid investments in money market funds
and cash.

We believe that our cash and cash equivalents, including the proceeds from the
IPO, and borrowing capacity under the Revolving Loan Facility (as defined under
Note 8 "Note Payable") together with cash flows from operations, will provide
adequate resources to fund our short-term and long-term operating and capital
needs. Our assessment of the period of time through which our financial
resources will be adequate to support our operations is a forward-looking
statement and involves risks and uncertainties. Our actual results could vary
because of, and our future capital requirements will depend on many factors,
including our growth rate, and the timing and extent of spending to increase our
sales and marketing activities. We may in the future enter into arrangements to
acquire or invest in complementary businesses, services and technologies,
including intellectual property rights. We have based this estimate on
assumptions that may prove to be wrong, and we could use our available capital
resources sooner than we currently expect. We may be required to seek additional
equity or debt financing. In the event that additional financing is required
from outside sources, we may not be able to raise it on terms acceptable to us
or at all. If we are unable to raise additional capital when desired, or if we
cannot expand our operations or otherwise capitalize on our business
opportunities because we lack sufficient capital, our business, results of
operations, and financial condition would be adversely affected.

Indebtedness

On November 15, 2019, the Company entered into a Credit Agreement (the "Original
Credit Agreement") by and among Privia Health, LLC, as the borrower, PH Group
Holdings Corp., as a guarantor, certain subsidiaries of Privia Health, LLC, as
guarantors, Silicon Valley Bank, as administrative agent and collateral agent
(the "Administrative Agent"), and the several lenders from time to time party
thereto. The Original Credit Agreement provided for up to $35.0 million in term
loans (the "Term Loan Facility") that mature on November 15, 2024 with interest
payable monthly at the lesser of LIBOR plus 2.0% or ABR plus 1.0% payable
monthly (3.0% at March 31, 2022), plus up to an additional $10.0 million of
financing (which was increased to $15.0 million in connection with the first
amendment) in the form of a revolving loan (the "Revolving Loan Facility" and
together with the Term Loan Facility, the "Credit Facilities"). The Revolving
Loan Facility also includes a letter of credit sub-facility in the aggregate
availability amount of $2.0 million and a swingline sub-facility in the
aggregate availability amount of $2.0 million. The Company borrowed
$35.0 million in term loans on November 15, 2019.

During August 2021, the Company and certain of its subsidiaries entered into the
Third Amendment to the Credit Agreement

The Third Amendment increased the size of the Revolving Loan Facility to
$65.0 million, increased the letter of credit sub-facility to $5.0 million and
extended the maturity date of the Credit Agreement to August 27, 2026. As
amended, borrowings under the Credit Agreement bear interest at a rate equal to
(i) in the case of eurodollar loans, LIBOR plus an applicable margin, subject to
a 0.5% floor, and (ii) in the case of ABR loans, an ABR rate plus an applicable
margin, subject to a floor of 1.5%. In addition, the Amendment, among other
things, (i) changed the Term Loan Facility amortization schedule to 0.625% of
the original principal amount of term loans for the fiscal quarters ending
September 30, 2021 through and including June 30, 2024 and 1.25% of the original
principal amount of term loans for the fiscal quarters ending thereafter and
(ii) added a 1.0% prepayment premium for any term loans prepaid within six
months of the effective date of the Third Amendment. The Third Amendment
converted the financial covenants in the Original Credit Agreement to
"springing" financial covenants, so that at any time the Company's cash is less
than 125% of the outstanding borrowings under the Credit Facilities, or at least
$15.0 million of borrowings are outstanding under the Revolving Loan, the
Company will be required to maintain (i) a consolidated fixed charge coverage
ratio of not less than 1.25 to 1.0, and (ii) a consolidated leverage ratio of no
more than 3.0 to 1.0. As of March 31, 2022, the Company had $33.0 million in
principal amount of indebtedness outstanding under the Term Loan Facility. As of
March 31, 2022, "springing" financial covenants were not applicable.

See Note 8 "Note Payable" to the condensed consolidated financial statements for
a discussion about our Credit Facilities.

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