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Privia Health Group had considered going public with a special purpose acquisition company, but ultimately bucked the SPAC trend and decided to stick with a traditional initial public offering, according to CEO Shawn Morris.
Privia Health attracted interest from SPACs, which are currently one of the hottest ways for companies to go public. The Arlington, Virginia company was able to entertain both paths—SPAC and traditional IPO—because it has strong growth and has been profitable for three years, Morris told Barron’s from the Nasdaq. “Despite the very current opportunity presented by the SPAC market, we have always believed in the value of the rigor and the achievement of the traditional IPO process,” Morris said.
Privia made its public equities market debut Thursday on the Nasdaq. Shares of Privia Health (ticker: PRVA) opened at $30, peaked at $35.89, and ended at $34.75, up 51.1% from its offer price.
The strong performance came after Privia boosted the price range for its deal, ultimately raising $448.5 million. The healthcare company filed to offer 19.5 million shares at $17 to $19, which it raised to $21 to $23 on Wednesday. It sold 19.5 million shares at $23 each.
Privia is a physician-enablement company, which means it uses cloud-based technology and third-party apps to remove administrative burdens for its more than 2,700 physicians and help them provide value-based healthcare, Morris said. The company operates in more than 650 locations in six states and the District of Columbia. “We’re putting up primary capital to grow the business,” Morris said. “We’re excited about taking the model to more states.”
Privia is the latest healthcare services company to tap public equity markets.
(AGL) listed its shares earlier this month, jumping nearly 35% on its first day, while shares of InnovAge (INNV)—which supplies healthcare to seniors in their homes—rose 15% in its March debut.
Privia differs from these companies because it provides care “for every patient that is in the market, not just a niche like Medicare Advantage,” Morris said. The company currently offers services to 3 million patients, including roughly 80,000 in Medicare Advantage, he said. More than 170,000 patients are aging into Medicare over the next five years, the Privia prospectus said.
Privia also stands out from many healthcare services providers because it’s profitable. Net income more than tripled to $30.9 million in 2020 from $7.9 million in 2019. Revenue rose nearly 4% to $817 million in 2020, the prospectus said. Privia has very little debt, about $35 million, on its balance sheet, Morris said.
Brighton Health Group Holdings, which is backed by Goldman Sachs (GS) and Pamplona Capital Management, will own nearly 77% of Privia after the IPO, the prospectus said. Goldman, which has been an investor for seven years, asked Privia’s management to operate the business with a long-term mind-set, Morris said. “If you have a long-term mind-set you will be a better public company,” he said.
Write to Luisa Beltran at luisa.beltran@dowjones.com
