IBD Stock Of The Day Privia Health is riding a wave of disruption, sending PRVA stock into a buy zone.
Privia provides management solutions for doctor's offices, from managing insurance reimbursement and financials to providing a technology backbone. The model has proved particularly powerful during times of disruption, says Privia President Parth Mehotra. That's when doctors realize they can't keep tabs on everything involved in running an office and still practice good medicine.
So, they outsource that work to Privia.
"We are one of the only companies that aligns with physicians," he told Investor's Business Daily. "All physicians, all reimbursement models, seeing all kinds of patients — everybody from a child to a young adult to old people, across all specialties."
PRVA Stock: Accelerating Collections
The model is grabbing attention on Wall Street.
Analysts polled by FactSet have a buy rating and 35 price target on PRVA stock. They expect Privia to end 2022 with a 15-cent loss, but project that will flip to earnings in 2023 and beyond.
Collections from doctor's offices are also expected to accelerate through at least 2026. This year, they call for collections to soar nearly 35% to $2.19 billion. By 2026, analysts forecast $3.91 billion in collections. Revenue doesn't include collections from some states due to tax reporting in those areas.
Today, Privia is operating in eight states with about 3,400 providers, Mehotra says. In comparison, a similar operation from UnitedHealth called Optum manages 60,000 to 70,000 providers, he said.
Privia can continue growing by adding providers and expanding into new states, he said. The company earns 12% from any fee-for-service a doctor charges and 40% from value-based services. Value-based services include preventive diagnostics like a routine colonoscopy or mammogram. So, Privia could also work to increase the number of value-based services its clients perform.
He likens the work to Uber with taxis. If a driver isn't working, he or she isn't earning money and Uber doesn't benefit. Similarly, if a doctor isn't working, he or she isn't earning any money and Privia doesn't benefit.
"We're financially aligned with their success," he said.
Highly Rated Medical Stock
On Tuesday, PRVA stock bounded off its 21-day line, according to MarketSmith.com. That put it back into a buy zone off a cup base, though its recent highs could also offer a high handle. Shares surged 7.4% to close at 31.04.
Bullishly, shares have a Relative Strength Rating of 90 out of a best-possible 99. This means shares are outperforming 90% of all stocks in terms of 12-month performance, IBD Digital shows. PRVA stock also has high Composite and EPS ratings of 96 and 95, respectively. So, Privia is in the leasing 4% and 5% of all stocks in terms of fundamental and technical measures as well as earnings growth.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
