Employee feedback highlights pride in and commitment to serving the community InnovAge InnovAge Earns Great Place to Work Recertification DENVER, May 07, 2025 (GLOBE NEWSWIRE) -- InnovAge, a leading provider of Program of All-Inclusive Care for the Elderly (PACE) services, is proud to announce its recertification as a Great Place to Work®. This recognition reflects the company’s continued commitment to fostering a purpose-driven workplace where employees feel supported and empowered to deliver exception ...

Participant and Service Overview - As of March 31, 2025, InnovAge served approximately 7,530 PACE participants across 20 centers in six states[128] - The average risk adjustment factor (RAF) score for participants is 2.46, indicating a higher acuity population compared to Medicare Advantage participants[136] - The average participant tenure was 3.1 years as of March 31, 2025, with a low voluntary disenrollment rate of 6.9% annually over the last three fiscal years[136] - The company operated 20 PACE centers as of March 31, 2025, an increase from 19 centers in the previous year[173] - Total member months increased to 66,130 for the nine months ended March 31, 2025, compared to 60,030 for the same period in 2024[173] Financial Performance - Total revenues for the nine months ended March 31, 2025, reached $632.3 million, up $67.8 million, or 12.0%, from $564.5 million for the nine months ended March 31, 2024[151] - Capitation revenue for the three months ended March 31, 2025, was $217.8 million, an increase of $25.1 million, or 13.0%, compared to $192.8 million for the same period in 2024[150] - The increase in capitation revenue for the three months ended March 31, 2025, was driven by a $4.4 million increase in capitation rates and a $20.7 million increase in member months[150] - Center-level contribution margin rose to $112.4 million for the nine months ended March 31, 2025, up from $95.5 million in the prior year, reflecting a 12.0% increase in total revenue[177] - Adjusted EBITDA increased to $23.1 million for the nine months ended March 31, 2025, compared to $11.2 million for the same period in 2024[173] - The Adjusted EBITDA margin for the nine months ended March 31, 2025, was 3.7%, compared to 2.0% for the same period in 2024[181] Expenses and Costs - External provider costs represented approximately 82% of revenue for the nine months ended March 31, 2025[136] - InnovAge experienced increased costs of care per participant due to rising salaries, wages, and benefits, as well as third-party service provider costs[129] - Corporate, general and administrative expenses increased to $38.6 million for the three months ended March 31, 2025, up $11.0 million, or 40.1%, from $27.5 million for the same period in 2024[158] - Cost of care (excluding depreciation and amortization) for the three months ended March 31, 2025, was $69.5 million, an increase of $10.4 million, or 17.6%, compared to $59.1 million for the same period in 2024[154] - Total operating expenses for the nine months ended March 31, 2025, were $659.9 million, an increase of $77.1 million from $582.8 million for the same period in 2024[152] - Corporate, general and administrative expenses increased by $12.5 million, or 15.3%, to $94.2 million for the nine months ended March 31, 2025, compared to $81.7 million for the same period in 2024[159] Net Loss and Financial Position - Net loss attributable to InnovAge Holding Corp. for the three months ended March 31, 2025, was $11.4 million, compared to a net loss of $5.9 million for the same period in 2024[149] - Net loss attributable to the company was $30.3 million for the nine months ended March 31, 2025, compared to a net loss of $21.0 million for the same period in 2024[173] - The net loss margin increased to (4.8)% for the nine months ended March 31, 2025, compared to (3.7)% for the same period in 2024[173] Cash Flow and Debt - As of March 31, 2025, the company had cash and cash equivalents of $60.5 million, an increase of $3.6 million from June 30, 2024[188] - The company had $63.1 million of debt outstanding as of March 31, 2025, excluding $60.9 million under the Term Loan Facility, which matures on March 8, 2026[190] - For the nine months ended March 31, 2025, net cash provided by operating activities was $23.9 million, a significant increase of $62.6 million compared to a net cash used of $38.8 million in the same period of 2024[198] - The company incurred $0.4 million in costs associated with organizational restructure for the nine months ended March 31, 2025, and $2.6 million for third-party consultants in the same period of 2024[198] - The interest rate on the Term Loan Facility was 6.14% as of March 31, 2025, with variable interest rates exposing the company to market risk[207] Strategic Initiatives and Future Outlook - The company plans to invest in its centers and value-based care model to support long-term growth, expecting expenses to rise in the short term[137] - The company plans to continue investing in resources and initiatives to provide necessary and quality services to participants[189] - The company anticipates continued enrollment processing delays and eligibility gaps due to state-specific procedures, particularly in California[130] - The company does not anticipate paying any cash dividends in the foreseeable future, intending to retain available funds for business development and debt repayment[197] - Inflation has not had a material effect on the company's operating results, although future inflation could impact financial conditions[211]

Financial Data and Key Metrics Changes - The company reported revenue of $218.1 million, representing a 13% year-over-year increase from $193.1 million in the same quarter last year [8][23] - Adjusted EBITDA was $10.8 million, with a margin of 4.9%, significantly improving from $3 million in the third quarter of fiscal year 2024 [9][30] - The net loss for the quarter was $11.1 million, compared to a net loss of $6.2 million in the same quarter last year [29] Business Line Data and Key Metrics Changes - Census grew to approximately 7,530 participants, reflecting a 10% annual increase [10][23] - Center level contribution was $40.7 million, with an 18.7% margin, improving by approximately 110 basis points year-over-year [8][27] - External provider costs were $107.9 million, a 7.9% increase compared to the same quarter last year, driven by an increase in member months [25][26] Market Data and Key Metrics Changes - The increase in member months was primarily due to growth in existing California and Colorado centers, along with new centers in Florida [24] - The company experienced a modest sequential growth in census due to seasonal headwinds during Medicare's Annual Enrollment Period [12] Company Strategy and Development Direction - The company is focused on operational excellence and greater organizational efficiency, aiming to build a scalable, tech-enabled platform for sustainable growth [11][19] - The transformation efforts are described as more ambitious than previous improvement initiatives, with a comprehensive approach to reimagine operations and value creation [11][20] - The company is actively engaging with policymakers to advocate for the PACE model, emphasizing its value for seniors and the healthcare system [7][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a healthcare environment marked by policy uncertainty, reaffirming fiscal year 2025 earnings guidance [6][33] - The company is optimistic about the long-term value of the PACE model, which is seen as resilient in uncertain policy environments [20][21] - Management highlighted the importance of maintaining strong cost discipline while delivering quality outcomes for participants [14][19] Other Important Information - The company has successfully integrated pharmacy services into its clinical model, which is expected to enhance medication adherence and reduce costs [18] - The flu vaccination rate for participants is reported at 77%, significantly above the national average for seniors [15] Q&A Session Summary Question: Initial 2026 guidance and Medicare/Medicaid rate development - Management indicated that it is early for 2026 guidance but expects reasonable Medicare rates and some positive indications for Medicaid rates [36][38] Question: Changes in pharmacy utilization trends - Management noted no significant changes in pharmacy utilization trends, emphasizing that their reimbursement model differs from traditional Medicare Advantage [42][43] Question: Engagement with regulators regarding PACE - Management confirmed increased engagement with regulators, focusing on the value of PACE and the populations served, while addressing potential risks related to eligibility and state budgets [46][49] Question: De novo losses and enrollment trends - Management reported that de novo losses are tracking with expectations, with positive momentum in new markets [66][68] Question: Cost of care and investments - Management acknowledged increased costs due to insourcing certain services but expects a more normalized growth rate going forward [73][75]

Financial Performance - Total revenue for the fiscal third quarter 2025 was $218.1 million, an increase of approximately 13.0% compared to $193.1 million in the same quarter of fiscal year 2024[4] - Net loss for the quarter was $11.1 million, compared to a net loss of $6.2 million in the third quarter of fiscal year 2024, resulting in a net loss margin of 5.1%[6] - Adjusted EBITDA for the quarter was $10.8 million, an increase of $7.8 million compared to $3.0 million in the third quarter of fiscal year 2024, with an Adjusted EBITDA margin of 4.9%[6] - Center-level Contribution Margin was $40.7 million, a 19.9% increase from $34.0 million in the third quarter of fiscal year 2024[6] - Total revenues for the three months ended March 31, 2025, increased to $218,142,000, up 13.5% from $193,071,000 in the same period of 2024[21] - Capitation revenue for the nine months ended March 31, 2025, rose to $631,293,000, compared to $563,490,000 for the same period in 2024, reflecting a growth of 12.0%[21] - Operating loss for the three months ended March 31, 2025, was $10,158,000, compared to a loss of $5,793,000 in the same period of 2024, indicating a deterioration of 75.0%[21] - Net loss attributable to InnovAge Holding Corp. for the three months ended March 31, 2025, was $11,378,000, compared to a loss of $5,887,000 in the same period of 2024, representing an increase of 93.5%[21] - For the three months ended March 31, 2025, the net loss was $11,133 thousand, compared to a net loss of $6,184 thousand for the same period in 2024, reflecting an increase of 79%[25] - Adjusted EBITDA for the three months ended March 31, 2025, was $10,792 thousand, representing an adjusted EBITDA margin of 2.8%, down from 3.7% in the same period of 2024[25] - The adjusted EBITDA for the nine months ended March 31, 2025, was $23,136 thousand, with an adjusted EBITDA margin of 3.0%, compared to 2.2% for the same period in 2024[25] Cash and Assets - The company ended the quarter with $60.5 million in cash and cash equivalents and $41.3 million in short-term investments, with $77.3 million in debt[6] - Total current assets as of March 31, 2025, were $176,183,000, slightly up from $173,142,000 as of June 30, 2024[20] - Cash and cash equivalents at the end of the period were $60,466,000, compared to $54,109,000 at the end of the same period in 2024, showing an increase of 11.0%[23] - The company reported a net cash provided by operating activities of $23,865,000 for the nine months ended March 31, 2025, compared to a net cash used of $38,771,000 in the same period of 2024[23] Liabilities and Equity - Total liabilities increased to $268,943,000 as of March 31, 2025, from $247,853,000 as of June 30, 2024, marking an increase of 8.5%[20] - Total stockholders' equity decreased to $245,605,000 as of March 31, 2025, from $277,608,000 as of June 30, 2024, a decline of 11.5%[20] Participant Metrics - The census of participants increased to approximately 7,530 compared to 6,820 participants in the third quarter of fiscal year 2024[6] - Total Member Months guidance for the full fiscal year 2025 is between 86,000 and 89,000[7] Future Guidance - Full fiscal year 2025 total revenue guidance is between $815 million and $865 million[7] Legal and Other Costs - The company incurred litigation costs and settlements of $13,277 thousand for the three months ended March 31, 2025, significantly higher than $897 thousand in the same period of 2024[25] - Interest expense, net for the three months ended March 31, 2025, was $1,160 thousand, compared to $1,022 thousand for the same period in 2024, indicating an increase of 14%[25] - The company reported asset impairments and loss on sale of assets amounting to $144 thousand for the three months ended March 31, 2025[25] Business Strategy - The company is focused on building a PACE platform that delivers better outcomes for participants and generates savings for the healthcare system[3] Adjustments and Revisions - The company has revised the calculation for Adjusted EBITDA to include the impact of investment income effective for the year ended June 30, 2024, which may affect future financial presentations[25]

Core Viewpoint - InnovAge Holding Corp. reported strong revenue growth but faced increased losses in its fiscal third quarter ended March 31, 2025, indicating challenges in cost management despite a growing participant base [2][3]. Financial Results - Total revenues for the third quarter reached $218.1 million, a 13.0% increase from $193.1 million in the same quarter of the previous year [3][22]. - Loss Before Income Taxes was $11.1 million, up 72.6% from a loss of $6.4 million in the prior year [3][22]. - Net loss was $11.1 million, compared to a net loss of $6.2 million in the same quarter of the previous year, with a net loss margin of 5.1%, an increase of 1.9 percentage points [3][22]. - Adjusted EBITDA was $10.8 million, significantly up from $3.0 million in the same quarter of the previous year, with an adjusted EBITDA margin of 4.9% [3][22]. Operational Metrics - The company served approximately 7,530 participants, an increase from 6,820 participants in the same quarter of the previous year [3][10]. - Center-level Contribution Margin was $40.7 million, a 19.9% increase compared to $34.0 million in the same quarter of the previous year [3][22]. Cash and Debt Position - As of March 31, 2025, InnovAge had $60.5 million in cash and cash equivalents and $41.3 million in short-term investments, with total debt of $77.3 million [3][19]. Full Fiscal Year 2025 Financial Guidance - The company expects total revenues for the fiscal year to be between $815 million and $865 million, with adjusted EBITDA projected between $24 million and $31 million [5][6]. Leadership Changes - Dr. Richard Feifer, the Chief Medical Officer, departed the company effective April 25, 2025, to pursue other opportunities [4].

Core Viewpoint - InnovAge Holding Corp. is actively building legislative support for the PACE program, which is recognized for its high-quality, low-risk, and cost-saving benefits for senior care [1][2][3] Group 1: PACE Program Overview - The PACE program is currently available in 33 states and the District of Columbia, primarily funded through Medicare and Medicaid, providing comprehensive care to seniors [1] - Enrolled seniors receive a wide range of services including in-home care, transportation, primary and specialty care, meals, therapy, and social activities [1] Group 2: Cost-Effectiveness and Outcomes - PACE organizations function as providers, payors, and care delivery systems, leading to improved health outcomes and participant satisfaction while saving costs for federal and state partners [2] - PACE participants experience 44% fewer preventable hospitalizations compared to dually eligible Medicaid nursing home residents, demonstrating its effectiveness [3] - The program saves state governments an average of $6,000 per person annually in Medicaid spending compared to nursing homes [3] Group 3: Growth and Recognition - The PACE model is gaining recognition for its outcomes and cost-effectiveness, with the highest growth rate in its history as more states and providers seek to expand the program [3] - The Federal Department of Health and Human Services identified PACE as a consistently high performer in its 2021 report [3] Group 4: Company Profile - InnovAge is a leader in managing care for high-cost, frail seniors through the PACE program, aiming to enable older adults to age independently in their homes [4] - As of December 31, 2024, InnovAge served approximately 7,480 participants across 20 centers in six states [4]

Core Viewpoint - InnovAge Holding Corp. is a leader in providing healthcare programs for frail, predominantly dual-eligible seniors through the PACE model, emphasizing patient-centered care and cost reduction [1][2]. Group 1: Company Overview - InnovAge serves approximately 7,480 participants across 20 centers in six states as of December 31, 2024 [2]. - The company's mission focuses on enabling older adults to age independently in their homes while improving care quality and reducing high-cost care utilization [2]. Group 2: Upcoming Events - Patrick Blair, CEO, and Ben Adams, CFO of InnovAge will present at the KeyBanc Capital Markets Healthcare Forum on March 18, 2025, at 3:45 p.m. PT [1]. - The event will be available via live webcast, with access provided through the investor relations section of the company's website [1].

Core Insights - InnovAge Holding Corp. is a leader in providing comprehensive healthcare programs for frail, predominantly dual-eligible seniors through the PACE model [1][2] - The company aims to enable older adults to age independently in their homes while improving care quality and reducing high-cost care utilization [2] Company Overview - InnovAge serves approximately 7,480 participants across 20 centers in six states as of December 31, 2024 [2] - The company's patient-centered care model is designed to benefit all stakeholders, including participants, families, providers, and government payors [2] Upcoming Events - Patrick Blair, CEO, and Ben Adams, CFO of InnovAge will speak at the KeyBanc Capital Markets Healthcare Forum on March 18, 2025, at 3:45 p.m. PT [1]

Financial Data and Key Metrics Changes - The company reported revenue of $209 million for the quarter, a 10.6% increase compared to $188.9 million in the second quarter of fiscal year 2024 [14][36] - Adjusted EBITDA was $5.9 million for the quarter, compared to $6.9 million in the second quarter of fiscal year 2024, with an adjusted EBITDA margin of 2.8% [48] - The net loss was $13.5 million, compared to a net loss of $3.8 million in the second quarter of fiscal year 2024 [46] Business Line Data and Key Metrics Changes - Center level contribution margin was $37.1 million for the quarter, representing a 17.7% margin, which is a 90 basis point increase compared to the first quarter of fiscal year 2025 [15][44] - Census grew to approximately 7,480 participants, reflecting over 10% year-over-year growth compared to the second quarter of fiscal 2024 [20][36] - External provider costs increased by 6.8% compared to the second quarter of fiscal year 2024, driven by an increase in member months [39] Market Data and Key Metrics Changes - The company experienced Medicaid rate increases in California and Pennsylvania for 2025, which positively impacted revenue [11][52] - Approximately 50 new PACE centers have opened nationwide over the past three years, indicating a 16% increase from roughly 300 centers operating in January 2022 [13] Company Strategy and Development Direction - The company is focused on transformation over the next 18 months, emphasizing a technology-first mindset to improve operational efficiency and participant satisfaction [19][61] - The acquisition of a small pharmacy in Denver is aimed at enhancing compliance, improving participant outcomes, and reducing costs [28] - The company aims to build a differentiated and scalable platform in the PACE market, enhancing its competitive position for future M&A opportunities [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive sustainable census growth while managing financial variability [23] - The company is optimistic about the impact of new retention-focused efforts during the Medicare open enrollment period [52] - Management acknowledged ongoing enrollment processing delays in California but stated that these have not materially impacted financial results [38] Other Important Information - The company reaffirmed its fiscal year 2025 guidance, projecting total revenue in the range of $815 million to $865 million [51] - The company recorded an impairment of approximately $8.5 million related to halting development on a previously planned de novo center in Louisville, Kentucky [47] Q&A Session Summary Question: What does the transformation over the next 18 months entail? - The transformation involves reimagining operational processes with a technology-first mindset to enhance productivity and efficiency [59][61] Question: Can you provide details on the funding model for revenue per member per month? - The funding model consists of approximately $3,000 from Medicare Part C, $1,000 from Part D, and $5,000 from Medicaid, with state and federal contributions varying [67] Question: How does the company plan to address the challenges in the Medicare Advantage environment? - The company has proactively invested in marketing to educate prospects on the unique services offered by PACE, which has led to improved retention and enrollment [78] Question: What drove the decision to impair the Louisville facility? - The decision was made due to the inability to reenter the market after sanctions and the lack of viable paths for competition in Louisville [81] Question: How will the new pharmacy acquisition impact costs and operations? - The acquisition is expected to improve integration between care teams and pharmacy operations, enhancing service quality and potentially reducing costs over time [96][106]

Participant and Service Growth - As of December 31, 2024, InnovAge served approximately 7,480 PACE participants across 20 centers in six states[130]. - The company operated 20 PACE centers as of December 31, 2024, an increase from 18 centers in the previous year[179]. - Total member months increased to 43,580 for the six months ended December 31, 2024, compared to 39,670 in the same period of 2023[179]. - InnovAge has acquired and integrated four PACE organizations since FY2019, expanding into one new state and five new markets[139]. Financial Performance - Total revenues for Q4 2024 reached $209.0 million, up $20.1 million or 10.6% from $188.9 million in Q4 2023[153]. - Capitation revenue for Q4 2024 was $208.7 million, an increase of $20.1 million or 10.7% compared to Q4 2023[153]. - For the six months ended December 31, 2024, total revenues increased to $414.1 million, up from $371.4 million for the same period in 2023, representing an increase of 11.5%[184]. - Capitation revenue for the six months ended December 31, 2024, was $413.5 million, compared to $370.7 million for the same period in 2023, reflecting an increase of 11.5%[184]. Operating Expenses - Operating expenses increased by $30.9 million, or 16.2%, in Q2 FY2025 compared to Q2 FY2024, primarily due to census growth and increased care costs[131]. - Total operating expenses for Q4 2024 were $221.6 million, an increase of $30.9 million or 16.2% compared to $190.7 million in Q4 2023[155]. - Corporate, general and administrative expenses increased by $2.9 million, or 11.3%, to $28.1 million for the three months ended December 31, 2024, compared to $25.2 million for the same period in 2023[162]. - For the six months ended December 31, 2024, corporate, general and administrative expenses rose by $1.4 million, or 2.7%, to $55.6 million from $54.2 million in the prior year[163]. Profitability and Loss - Net loss attributable to InnovAge Holding Corp. for Q4 2024 was $13.2 million, compared to a net loss of $3.4 million in Q4 2023[151]. - Net loss for the six months ended December 31, 2024 was $19.2 million, compared to a net loss of $14.8 million in the same period of 2023[179]. - The net loss for the six months ended December 31, 2024, was $19.2 million, compared to a net loss of $14.8 million for the same period in 2023, representing a year-over-year increase of 29.9%[186]. Cash Flow and Debt - As of December 31, 2024, cash and cash equivalents were $46.1 million, a decrease of $10.8 million from June 30, 2024[192]. - Long-term debt outstanding as of December 31, 2024, was $64.1 million[194]. - The Company entered into a credit agreement with a senior secured term loan of $75.0 million and a revolving credit facility with a maximum borrowing capacity of $100.0 million[196]. - As of December 31, 2024, total outstanding debt was $61.9 million under the Term Loan Facility and $2.2 million under the convertible term loan[209]. Cost Management and Future Outlook - InnovAge completed the acquisition of pharmacy assets from Tabula Rasa HealthCare Group, Inc. for $4.8 million on January 2, 2025, to support growth and improve pharmacy cost management[139]. - The company expects elevated operating expenses to continue through FY2025 but anticipates that clinical and operational value initiatives will help offset rising care costs[131]. - The company plans to invest in its centers and value-based care model to support long-term growth, expecting expenses to increase in absolute dollars[139]. - The Company does not anticipate paying any cash dividends in the foreseeable future, intending to retain available funds for business development and debt repayment[198].