I grew up in South Florida, where there are many older adults, so I’m very familiar with the needs of an aging population. Starting at a very young age, before I got into this business, I worked as a specialty contractor in my family’sI focus on producing objective, data-driven research, mostly about small- to mid-cap companies, as these tend to be overlooked by many investors. From time to time, though, I also look at large-cap names, just to give a fuller sense of the broader equity markets.Analyst’s Disc ...

Core Viewpoint - InnovAge Holding Corp. (INNV) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are crucial for predicting near-term stock price movements [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Company-Specific Insights - The upgrade for InnovAge reflects an improvement in its underlying business, suggesting that investor sentiment may drive the stock price higher [5]. - For the fiscal year ending June 2026, InnovAge is expected to earn $0.24 per share, with a 2.9% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - InnovAge's upgrade to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10].

Core Viewpoint - InnovAge Holding Corp. emphasizes the importance of protecting and enhancing care for Colorado's aging population through the PACE program, highlighting its proven benefits and the need for legislative support [1][3]. Group 1: InnovAge and PACE Program - InnovAge is a leading provider of the Program of All-Inclusive Care for the Elderly (PACE), focusing on enabling older adults to age independently in their homes [6]. - As of December 31, 2025, InnovAge served approximately 8,010 participants across 20 centers in six states, showcasing its extensive reach and impact [6]. - The PACE program has demonstrated lower hospitalization rates, reduced emergency room visits, and fewer nursing home admissions, while also alleviating caregiver burden [2][3]. Group 2: Legislative Advocacy - Seniors enrolled in InnovAge Colorado PACE shared their experiences with lawmakers, illustrating how the program supports their independence and quality of life [2][3]. - InnovAge leaders stressed the necessity of raising awareness about PACE among seniors and caregivers, as many remain unaware of its existence [3]. - State leaders discussed critical issues affecting older adults, including Medicaid funding, workforce challenges, and access to community-based care, indicating a collaborative effort to address these concerns [3][5]. Group 3: Community and Provider Support - LeadingAge Colorado partnered with InnovAge to advocate for policies that support senior care providers and the increasing number of older adults relying on community-based services [5]. - The advocacy event aimed to ensure that policymakers hear directly from those who serve older Coloradans, emphasizing the importance of real-world perspectives in shaping effective policies [5].

分组1 - InnovAge Holding Corp. reported quarterly earnings of $0.08 per share, exceeding the Zacks Consensus Estimate of $0.04 per share, compared to a loss of $0.1 per share a year ago, representing an earnings surprise of +100.00% [1] - The company posted revenues of $239.71 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 4.95%, and compared to year-ago revenues of $209 million [2] - InnovAge shares have increased approximately 9.8% since the beginning of the year, outperforming the S&P 500's gain of 1.9% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $0.05 on revenues of $231.7 million, and for the current fiscal year, it is $0.22 on revenues of $930.25 million [7] - The Zacks Industry Rank indicates that the Medical Services sector is currently in the bottom 32% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

Financial Data and Key Metrics Changes - The company reported total revenues of $239.7 million for the second quarter, a 14.7% increase compared to $209 million in the same quarter of fiscal year 2025 [21] - Adjusted EBITDA for the quarter was $22.2 million, compared to $5.9 million in the second quarter of fiscal year 2025, achieving an adjusted EBITDA margin of 9.2% [26][27] - Net income was $11.8 million for the quarter, a significant improvement from a net loss of $13.5 million in the second quarter of fiscal year 2025 [26] Business Line Data and Key Metrics Changes - The company served approximately 8,010 participants across 20 centers, representing a 7.1% growth compared to the second quarter of fiscal year 2025 [19] - Member months totaled 23,960 in the second quarter, an increase of approximately 7.9% compared to the same quarter of fiscal year 2025 [20] Market Data and Key Metrics Changes - The company experienced a slightly more favorable blended rate environment for Medicaid this fiscal year compared to initial assumptions [10] - The Medicare Advantage rates for calendar year 2027 were discussed, indicating that changes in Medicare policy affect the company's operations [11] Company Strategy and Development Direction - The company is focused on strengthening revenue integrity, particularly around Medicaid eligibility and redeterminations, which has shown positive results [8] - There is a commitment to improving participant experience through systematic feedback and continuous improvement initiatives [13] - The governance structure has evolved to support the next phase of execution, with key leadership changes aimed at enhancing oversight [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's operational improvements and raised full-year fiscal 2026 guidance, expecting total revenue between $925 million and $950 million [17][30] - The company acknowledged the inherent variability in its business model but emphasized that the platform is increasingly operating as designed [16] Other Important Information - The company ended the quarter with $83.2 million in cash and cash equivalents and $42.8 million in short-term investments [29] - De novo center losses were reported at $4.7 million for the quarter, primarily related to new centers in Florida [27] Q&A Session Summary Question: Regarding EBITDA progression in the back half of the year - Management noted that the third quarter is typically softer due to seasonal factors and enrollment dynamics, with expectations for a return to normalized growth in Q4 [34][35] Question: Impact of V28 on risk scores - Management discussed the phased-in implementation of the risk adjustment model and its implications for the company's rates, emphasizing that PACE shares similarities with Medicare rate adjustments [39][41] Question: Success in Medicaid redeterminations - Management highlighted improvements in internal processes and collaboration with state-level approvals, leading to better outcomes in reinstating Medicaid coverage [46][48] Question: Patient experience and retention initiatives - Management provided insights into the importance of aligning participant expectations with their experiences, identifying key areas for improvement in the onboarding process and service recovery [57][59]

Financial Data and Key Metrics Changes - The company reported total revenues of $239.7 million for the second quarter, a 14.7% increase compared to $209 million in the same quarter of fiscal year 2025 [21] - Adjusted EBITDA was $22.2 million, compared to $5.9 million in the second quarter of fiscal year 2025, achieving an adjusted EBITDA margin of 9.2% [26][27] - Net income for the quarter was $11.8 million, a significant improvement from a net loss of $13.5 million in the second quarter of fiscal year 2025 [26] Business Line Data and Key Metrics Changes - The company served approximately 8,010 participants across 20 centers, reflecting a growth of 7.1% year-over-year [19] - Member months totaled 23,960, marking a 7.9% increase compared to the second quarter of fiscal year 2025 [20] - The central level contribution margin was $52.8 million, representing 22% of total revenues, an increase of approximately 430 basis points from 17.7% in the same quarter last year [24] Market Data and Key Metrics Changes - The company experienced a favorable blended rate environment for Medicaid this fiscal year, which was better than initial assumptions [10] - The Medicare Advantage rates for calendar year 2027 were discussed, indicating that changes in these rates will affect the company's PACE model [11] Company Strategy and Development Direction - The company is focused on improving participant experience and operational efficiency, with initiatives aimed at reducing unwarranted variation in provider practice patterns [13][60] - There is a commitment to enhancing governance structures to support the next phase of execution and oversight [15] - The company is raising its full-year fiscal 2026 guidance based on improved operational performance and Medicaid rate increases [17][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain performance improvements, emphasizing the importance of disciplined execution and long-term planning [17][31] - The company acknowledged ongoing challenges related to Medicaid redeterminations but noted significant progress in reinstating participants who had lost coverage [36][48] Other Important Information - The company ended the quarter with $83.2 million in cash and cash equivalents and $42.8 million in short-term investments [29] - De novo losses for the quarter were reported at $4.7 million, primarily related to new centers in Florida [27] Q&A Session Summary Question: Regarding EBITDA progression in the back half of the year - Management noted that the third quarter is typically softer due to seasonal factors and the flu season, which may impact margins [34][35] Question: Impact of V28 on risk scores - Management indicated that while there are challenges with the new risk adjustment model, the company is structurally less exposed compared to other Medicare Advantage plans [39] Question: Success in Medicaid redeterminations - Management highlighted improvements in internal processes and collaboration with state-level processes, leading to better outcomes in reinstating Medicaid coverage [46][48] Question: Participant experience and retention - Management discussed the importance of aligning participant expectations with their experiences to reduce voluntary disenrollment, which currently stands at about 6% annually [57][65]

Financial Data and Key Metrics Changes - The company reported total revenues of $239.7 million for Q2 2026, a 14.7% increase compared to $209 million in Q2 2025 [20] - Adjusted EBITDA for the quarter was $22.2 million, significantly up from $5.9 million in Q2 2025, achieving an adjusted EBITDA margin of 9.2% [26][27] - Net income for the quarter was $11.8 million, compared to a net loss of $13.5 million in Q2 2025 [26] Business Line Data and Key Metrics Changes - The company served approximately 8,010 participants across 20 centers, reflecting a 7.1% growth year-over-year [19] - Member months increased to 23,960, a 7.9% rise compared to Q2 2025 [19] - The central level contribution margin was $52.8 million, up from $37.1 million in Q2 2025, representing a margin of 22% [24] Market Data and Key Metrics Changes - The company experienced a favorable blended rate environment for Medicaid this fiscal year, which was better than initial assumptions [10] - The increase in capitation rates was primarily due to annual increases in Medicaid and Medicare rates, partially offset by revenue reserves [20] Company Strategy and Development Direction - The company is focused on strengthening revenue integrity, particularly around Medicaid eligibility and redeterminations, which has shown positive results [8] - There is a commitment to improving participant experience through systematic feedback and service recovery initiatives [12] - The governance structure has evolved to support operational and clinical improvements, with key leadership changes to enhance oversight [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational improvements and raised full-year fiscal 2026 guidance, expecting total revenue between $925 million and $950 million [17][30] - The company acknowledged the inherent variability in a full-risk, highly regulated model but emphasized that the platform is increasingly operating as designed [17] Other Important Information - The company ended the quarter with $83.2 million in cash and cash equivalents and $42.8 million in short-term investments [28] - Positive cash flow from operations was recorded at $21.4 million for the quarter [28] Q&A Session Summary Question: Can you walk through some of the variables going into margin expectations for the back half of the year? - Management noted that Q3 is typically a softer quarter due to slower enrollment gains and the impact of flu season [34] Question: How is the shift in V28 impacting risk scores and subsequent RAF scoring? - Management indicated that while there are challenges, the unique elements of the PACE model, such as the frailty adjuster, provide some protection against the impacts of V28 [40] Question: Where are you seeing success in Medicaid redeterminations? - Management highlighted improvements in internal processes and collaboration with state-level processes as key factors in reinstating Medicaid coverage for participants [44][47] Question: What specific areas within the patient journey could be most impactful for participant experience? - Management emphasized the importance of aligning participant expectations with their experiences, particularly during onboarding and service recovery [54][56]

Company Operations - As of December 31, 2025, InnovAge served approximately 8,010 PACE participants and operated 20 PACE centers across six states[124]. - The average participant tenure was 3.2 years, with a low voluntary disenrollment rate averaging 7.0% annually over the last three fiscal years[134]. - InnovAge has acquired and integrated four PACE organizations since fiscal year 2019, expanding into one new state and five new markets[137]. - The census of capitated participants increased to 8,010 for the six months ended December 31, 2025, compared to 7,480 for the same period in 2024[170]. Financial Performance - Total revenues for the six months ended December 31, 2025, reached $475.8 million, up $61.7 million or 14.9% from $414.1 million in the same period of 2024[150]. - Net income for the six months ended December 31, 2025, was $19.5 million, compared to a net loss of $19.2 million in the same period of 2024[149]. - The company reported a net income of $19.5 million for the six months ended December 31, 2025, compared to a net loss of $(19.2) million for the same period in 2024, marking a year-over-year increase of 201.4%[177]. - For the three months ended December 31, 2025, the company reported a net income of $11.8 million, compared to a net loss of $13.5 million for the same period in 2024, representing a significant turnaround[181]. Revenue Sources - Capitation revenue for Q4 2025 was $239.6 million, an increase of $30.9 million or 14.8% compared to Q4 2024[150]. - The increase in capitation revenue was driven by a 6.4% increase in capitation rates and a 7.9% increase in member months for Q4 2025[150]. Costs and Expenses - Cost of care, excluding depreciation and amortization, represented approximately 78% of revenue for the six months ended December 31, 2025[136]. - The company experienced increased external provider costs due to labor market pressures and competition, impacting the cost of care for the second quarter of fiscal year 2026[126]. - External provider costs for Q4 2025 were $112.0 million, an increase of $4.1 million or 3.8% compared to Q4 2024[152]. - Cost of care (excluding depreciation and amortization) for Q4 2025 was $74.9 million, an increase of $10.8 million or 16.9% compared to Q4 2024[154]. - Total operating expenses for the six months ended December 31, 2025, were $454.3 million, an increase of $22.7 million compared to $431.6 million in the same period of 2024[152]. Administrative and Marketing Expenses - Sales and marketing expenses for Q4 2025 were $8.1 million, an increase of $0.4 million or 4.9% compared to Q4 2024[157]. - Corporate, general and administrative expenses for Q4 2025 decreased to $26.6 million, down $1.5 million or 5.3% from Q4 2024[159]. - Corporate, general and administrative expenses increased by $1.2 million, or 2.7%, to $56.9 million for the six months ended December 31, 2025, compared to $55.6 million for the same period in 2024[160]. Cash Flow and Debt - Cash and cash equivalents as of December 31, 2025, totaled $83.2 million, an increase of $19.1 million from June 30, 2025[184]. - The company had $59.4 million of debt outstanding as of December 31, 2025, which includes $50.1 million under the Term Loan A Facility and $9.4 million drawn on the Revolving Credit Facility[186]. - Net cash provided by operating activities for the six months ended December 31, 2025, was $25.3 million, a significant increase of $26.0 million compared to a net cash outflow of $763,000 in the same period of 2024[193]. - The company plans to retain substantially all available funds and future earnings to fund business development and repay indebtedness, with no anticipated cash dividends in the foreseeable future[192]. Future Outlook - The company anticipates increased costs due to investments in growth, audits, and remediation plans, which may increase expenses as a percentage of revenue in the short term[137]. - The company believes its cash and cash equivalents, cash flows from operations, and access to financing will be sufficient to fund its operating and capital needs for the next 12 months and beyond[188]. - The interest rate on the Term Loan A Facility was 6.24% as of December 31, 2025[190]. - Future minimum operating lease payments under non-cancellable leases through 2039 amount to $33.3 million[187]. Regulatory and Market Conditions - The California Department of Health Care Services has paused PACE applications for a minimum of two years, affecting potential new center openings[132]. - Medicaid spending reductions mandated by the OBBBA may lead to budgetary pressures and potential reductions in optional Medicaid benefits[130]. - InnovAge's economic model relies on capitated arrangements with government payors, which are critical for long-term success and expansion into new geographies[137].

Financial Performance - Total revenues for the fiscal second quarter 2026 were $239.7 million, an increase of approximately 14.7% compared to $209.0 million in the same quarter of fiscal year 2025[5]. - Net income for the quarter was $11.8 million, compared to a net loss of $13.5 million in the same quarter of the previous year, resulting in a net income margin of 4.9%[7]. - Adjusted EBITDA was $22.2 million, an increase of $16.3 million compared to $5.9 million in the second quarter of fiscal year 2025, with an adjusted EBITDA margin of 9.2%[7]. - Operating income for the same period was $13.3 million, compared to a loss of $12.6 million in the prior year, marking a significant turnaround[19]. - Net income attributable to InnovAge Holding Corp. for the three months ended December 31, 2025, was $10.6 million, compared to a loss of $13.2 million in the same period of 2024[19]. - The company reported a net income margin of 4.9% for the three months ended December 31, 2025, compared to a negative margin of 6.5% in the same period of 2024[27]. - Income before income taxes was $12.5 million, a significant increase of approximately 192.6% compared to a loss of $13.5 million in the second quarter of fiscal year 2025[5]. - Income before income taxes for the three months ended December 31, 2025, was $12,456 thousand, translating to 5.2% of total revenues, compared to a loss of $13,457 thousand in the prior year[31]. Revenue and Growth - Full fiscal year 2026 financial guidance for total revenues is raised to between $925 million and $950 million, with total member months expected to be between 92,900 and 95,700[6]. - Total revenues for the three months ended December 31, 2025, increased to $239.7 million, up 14.7% from $209.0 million in the same period of 2024[19]. - For the three months ended December 31, 2025, total revenues reached $239,708 thousand, an increase from $208,999 thousand in the same period of 2024, representing a growth of approximately 14.7%[31]. - Capitation revenue for the three months ended September 30, 2025, was $235,751 thousand, showing a slight decrease from $239,620 thousand in the previous quarter[31]. Cost and Expenses - Center-level contribution margin was $52.8 million, a 42.5% increase from $37.1 million in the same quarter of fiscal year 2025, representing 22.0% of total revenues[7]. - The Center-Level Contribution Margin for the same period was $52,825 thousand, which is 22.0% of total revenues, compared to 17.7% in the prior year[31]. - External provider costs for the three months ended December 31, 2025, were $111,999 thousand, up from $107,873 thousand in the same period of 2024[31]. - Corporate, general and administrative expenses for the three months ended December 31, 2025, were $26,608 thousand, a decrease from $28,103 thousand in the prior year[31]. Cash and Assets - The company ended the quarter with $83.2 million in cash and cash equivalents and $42.8 million in short-term investments, against $69.9 million in debt[7]. - Cash and cash equivalents increased to $83.2 million as of December 31, 2025, from $64.1 million at the beginning of the period[21]. - Total current liabilities decreased to $144.7 million as of December 31, 2025, down from $164.8 million as of June 30, 2025[18]. - The company’s total liabilities decreased to $238.7 million as of December 31, 2025, from $263.9 million as of June 30, 2025[18]. - Total assets as of December 31, 2025, were $527.5 million, slightly up from $526.9 million as of June 30, 2025[18]. Operational Highlights - The company served approximately 8,010 participants as of December 31, 2025, compared to 7,480 participants in the same quarter of fiscal year 2025[7]. - Cash provided by operating activities for the six months ended December 31, 2025, was $25.3 million, a significant improvement from a cash outflow of $0.8 million in the prior year[21]. - The company has ceased operations in the Senior Housing segment as of September 2025, following the sale of remaining assets[31]. - The company remains focused on sustainable growth and long-term value for participants, payors, and shareholders[3].

Core Insights - InnovAge Holding Corp. reported strong financial results for the fiscal second quarter ended December 31, 2025, highlighting a scalable PACE platform and a focus on clinical outcomes and participant experience [2][4]. Financial Performance - Total revenues reached $239.7 million, a 14.7% increase from $209.0 million in the same quarter of the previous fiscal year [4]. - Income before income taxes was $12.5 million, a significant increase of approximately 192.6% compared to a loss of $13.5 million in the prior year [4]. - The net income was $11.8 million, contrasting with a net loss of $13.5 million in the same quarter of the previous year, resulting in a net income margin of 4.9% [4][21]. - Adjusted EBITDA was $22.2 million, up from $5.9 million, with an adjusted EBITDA margin of 9.2% [4][24]. Operational Metrics - The center-level contribution margin was $52.8 million, a 42.5% increase from $37.1 million in the same quarter of the previous fiscal year, representing 22.0% of total revenue [4][30]. - The census of participants increased to approximately 8,010 from 7,480 in the same quarter of the previous fiscal year [4]. Balance Sheet Highlights - As of December 31, 2025, the company had $83.2 million in cash and cash equivalents and $42.8 million in short-term investments, with total debt of $69.9 million [5]. - Total assets were reported at $527.5 million, with total liabilities of $238.7 million [18][19]. Future Guidance - InnovAge raised its full-year fiscal 2026 financial guidance for total revenues to between $925 million and $950 million, while maintaining the census guidance at 7,900 to 8,100 participants [6].