PACE Program Overview - As of June 30, 2025, InnovAge served approximately 7,740 PACE participants, making it the largest PACE provider in the U.S. with 20 PACE centers across six states[19]. - InnovAge's PACE program costs are estimated to be 12% lower on average than for a comparable dual-eligible population aged 65 and older under Medicaid[21]. - InnovAge estimates an average annual revenue opportunity of $115,000 per participant, translating to a total addressable market opportunity of $265 billion based on approximately 2.3 million PACE eligible participants in the U.S. in 2024[39]. - The National PACE Association targets a PACE enrollment increase at a compound annual growth rate (CAGR) of approximately 27% over the next four years[40]. - As of June 30, 2025, the typical InnovAge participant had, on average, ten chronic conditions and required assistance with two or more activities of daily living (ADLs)[41]. - InnovAge's care model is designed to enable frail, dual-eligible seniors to live independently in their homes, with approximately 93% of participants able to do so safely[41]. - As of June 30, 2025, approximately 93% of participants lived in their preferred setting: their home or community[50]. - For the fiscal year ended June 30, 2025, the participant census was approximately 7,740 across 20 centers in six states[55]. Financial Performance and Revenue - In fiscal year 2025, nearly all of the company's revenue (99.8%) was derived from the PACE program, highlighting its dependency on government funding levels[129]. - Approximately 99.8% of the company's revenue for the years ended June 30, 2025, and 2024, was derived from capitation agreements with government payors, receiving fixed PMPM fees[161]. - Colorado, California, and Virginia accounted for approximately 86.4% and 84.3% of the company's capitation revenue for the years ended June 30, 2025, and 2024, respectively[167]. - The company has historically received net positive true-up payments during the fiscal years ended June 30, 2025, and 2024, which are based on participant RAF scores[110]. - The company experienced increased costs and expenditures, with labor costs rising due to competitive market conditions and regulatory changes, impacting profitability[144]. - The company anticipates ongoing macroeconomic challenges, including labor shortages and inflation, which may continue to affect its business operations[143]. Regulatory Environment and Compliance - The company operates under various federal, state, and local licensure and certification requirements, which may impact its operations and financial condition[67]. - Non-compliance with licensing and certification laws could lead to cessation of services, loss of contracts, and civil or criminal penalties[68]. - The company is subject to the federal Anti-Kickback Statute, with violations potentially resulting in imprisonment, fines up to $100,000 per kickback, and exclusion from federal healthcare programs[72]. - The Stark Law prohibits physicians with financial relationships from making referrals for designated health services, with penalties including denial of payment and civil monetary penalties of $30,868 per prohibited item[78]. - The company is subject to various state false claims laws, which are becoming increasingly active in policing healthcare fraud and abuse[85]. - The company is subject to penalties for HIPAA violations, which can exceed $50,000 per violation and up to approximately $1.9 million per year for identical violations[95]. - The company must notify affected individuals of breaches of unsecured PHI within 60 days, with additional reporting requirements for breaches involving more than 500 residents[94]. - The company is required to conduct eligibility verifications of Medicaid enrollees every six months under new OBBBA requirements, increasing administrative burdens[105]. - The company is subject to ongoing legal proceedings and regulatory inquiries, which could materially harm its business and results of operations[153]. - Violations of government laws or regulations could lead to severe consequences, including suspension or exclusion from government payment programs[211]. Growth and Expansion Strategies - The company has acquired and integrated four PACE organizations over the past seven fiscal years, expanding into one new state and five new markets[58]. - In fiscal year 2025, the company ramped up newer de novo centers in Florida (Tampa and Orlando) to enhance growth[58]. - The company intends to grow its business through acquisitions in existing and new states, facing increased regulatory scrutiny that could negatively impact growth[106]. - The company opened the Orlando PACE center as a joint venture with Orlando Health, which contributed to increased enrollments[58]. - The company currently operates in six states, with significant exposure to regulatory issues and budget appropriations in Colorado[190]. Workforce and Employee Engagement - As of June 30, 2025, the company had approximately 2,440 employees, including over 1,600 clinical professionals[111]. - The voluntary retention rate for employees was 69% in fiscal year 2025, with 82% of employees expressing pride in working for the company[112]. - The workforce is composed of 76% women and 58% minorities, reflecting the company's commitment to inclusivity[116]. - The company continues to evaluate talent needs at the senior management level to address gaps in capabilities as the business evolves[114]. Risks and Challenges - The company faces significant competition in the U.S. healthcare industry, impacting its ability to attract and retain participants[108]. - The company faces challenges in recruiting and retaining healthcare professionals, which could hinder its ability to grow and manage existing centers effectively[145]. - Enrollment delays due to state verification processes have resulted in lower estimated per member, per month amounts, negatively affecting revenue from Medicaid[141]. - The company is exposed to potential medical malpractice claims, which could strain financial resources and harm its reputation[159]. - The company is vulnerable to budgetary pressures from state governments, particularly in Colorado, which could lead to reduced Medicaid funding and reimbursement rates[182]. - The potential for substantial penalties under the False Claims Act due to inaccurate RAF scores poses a significant financial risk[179]. Legislative and Policy Changes - The Inflation Reduction Act of 2022 introduced significant changes to Medicare prescription drug pricing, including a reduction in the out-of-pocket spending cap for Medicare Part D beneficiaries from $7,050 to $2,000 starting in 2025[100]. - The OBBBA mandates significant reductions in federal Medicaid spending, estimated at approximately $1 trillion over the next ten years, which may decrease Medicaid enrollment and funding for PACE programs[105]. - The 2024 PACE Final Rule includes changes such as civil monetary penalties for non-compliance and reinstating the requirement for written contracts with outside organizations providing services[100]. - Proposed legislation could significantly reduce federal Medicaid spending over the next decade, impacting the company's operations[215]. - Changes in healthcare laws and regulations could impact the company's financial results and operational capabilities[164].

[Executive Summary & Company Overview](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Overview) [Company Introduction](index=1&type=section&id=Company%20Introduction) InnovAge Holding Corp provides comprehensive healthcare for frail seniors through the PACE program and announced its fiscal 2025 results - InnovAge (Nasdaq: INNV) is an industry leader in providing comprehensive healthcare programs to frail, predominantly dual-eligible seniors through the Program of All-inclusive Care for the Elderly (PACE)[2](index=2&type=chunk) - The company announced financial results for its fiscal fourth quarter and full year ended June 30, 2025[2](index=2&type=chunk) [CEO Statement](index=1&type=section&id=CEO%20Statement) The CEO highlighted fiscal 2025's success and expressed confidence for continued momentum into fiscal 2026 - Patrick Blair, CEO, stated that 'Fiscal 2025 was a strong year The combination of **responsible growth, financial discipline, clinical performance, and compliance execution** is what gives us confidence in the durability of our progress'[3](index=3&type=chunk) - The company expects Fiscal 2026 to continue that momentum[3](index=3&type=chunk) [Fiscal Year 2025 Financial Performance Highlights](index=1&type=section&id=Fiscal%20Year%202025%20Financial%20Performance%20Highlights) [GAAP Financial Performance](index=1&type=section&id=GAAP%20Financial%20Performance) The company reported an 11.8% revenue increase to $853.7 million but saw its net loss widen by 52% to $35.3 million | Metric | FY2025 (in millions) | FY2024 (in millions) | YoY Change (%) | | :-------------------------- | :------------------- | :------------------- | :------------- | | Total revenues | $853.7 | $763.9 | 11.8% | | Loss Before Income Taxes | $(34.0) | $(21.8) | 56.0% | | Net Loss | $(35.3) | $(23.2) | 52.0% | | Net Loss margin | (4.1)% | (3.0)% | 1.1 pp | | Net Loss per share | $(0.22) | $(0.16) | - | | Net Loss Attributable to InnovAge Holding Corp. | $(30.3) | $(21.3) | - | [Non-GAAP Financial Performance](index=2&type=section&id=Non-GAAP%20Financial%20Performance) Non-GAAP metrics showed strong growth, with Adjusted EBITDA more than doubling and participant census increasing | Metric | FY2025 (in millions) | FY2024 (in millions) | YoY Change (%) | | :-------------------------------- | :------------------- | :------------------- | :------------- | | Center-level Contribution Margin | $153.6 | $132.1 | 16.3% | | Center-level Contribution Margin as % of revenue | 18.0% | 17.3% | 0.7 pp | | Adjusted EBITDA | $34.5 | $16.5 | 109.1% | | Adjusted EBITDA margin | 4.0% | 2.2% | 1.8 pp | - Census increased to approximately **7,740 participants** in FY2025 compared to 7,020 participants in FY2024[8](index=8&type=chunk) [Fiscal Year 2026 Financial Guidance](index=2&type=section&id=Fiscal%20Year%202026%20Financial%20Guidance) The company projects FY2026 revenues of $900-$950 million and Adjusted EBITDA of $56-$65 million | Metric | Low (in millions) | High (in millions) | | :------------------ | :---------------- | :---------------- | | Census | 7,900 | 8,100 | | Total Member Months | 91,600 | 94,400 | | Total revenues | $900 | $950 | | Adjusted EBITDA | $56 | $65 | - Total Member Months are defined as the total number of participants multiplied by the number of months within a year in which each participant was enrolled in the program, serving as a precise metric for participant tracking[7](index=7&type=chunk) - The company is unable to provide guidance for net loss or a reconciliation of Adjusted EBITDA guidance due to the inherent difficulty in forecasting and quantifying certain reconciling items without unreasonable effort[7](index=7&type=chunk) [About InnovAge](index=3&type=section&id=About%20InnovAge) InnovAge is a market leader in PACE programs, serving approximately 7,740 participants across 20 centers in six states - InnovAge is a market leader in managing the care of high-cost, frail, and predominantly dual-eligible seniors through the Program of All-inclusive Care for the Elderly (PACE)[11](index=11&type=chunk) - The company's mission is to enable older adults to age independently in their own homes for as long as safely possible[11](index=11&type=chunk) - As of June 30, 2025, InnovAge served approximately **7,740 participants across 20 centers in six states**[11](index=11&type=chunk) [Forward-Looking Statements - Safe Harbor](index=3&type=section&id=Forward-Looking%20Statements%20-%20Safe%20Harbor) This section details risks and uncertainties associated with forward-looking statements and directs readers to SEC filings - Forward-looking statements are identified by specific terminology (e.g, 'anticipate,' 'expect,' 'project') and relate to future operating or financial performance, not strictly historical facts[12](index=12&type=chunk) - These statements are based on current information, beliefs, expectations, and assumptions, but are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and outside of the company's control[13](index=13&type=chunk) - Important factors that could cause actual results to differ materially include the viability of growth strategy, ability to integrate acquisitions, macroeconomic challenges, government inspections, legal proceedings, dependence on government payors, and regulatory developments[13](index=13&type=chunk) [Note Regarding Use of Non-GAAP Financial Measures](index=4&type=section&id=Note%20Regarding%20Use%20of%20Non-GAAP%20Financial%20Measures) [Definition of Center-level Contribution Margin](index=4&type=section&id=Definition%20of%20Center-level%20Contribution%20Margin) This non-GAAP measure assesses segment performance by subtracting direct care costs from revenues - Center-level Contribution Margin is a non-GAAP measure used by management for assessing operating segment performance and allocating resources, particularly in budgeting and forecasting[16](index=16&type=chunk) - It is defined as total revenues less external provider costs and cost of care, excluding depreciation and amortization, encompassing all medical and pharmacy costs[17](index=17&type=chunk) - Sales and marketing expense or corporate, general and administrative expenses are not allocated across centers for the purpose of evaluating Center-level Contribution Margin[16](index=16&type=chunk) [Definition of Adjusted EBITDA](index=5&type=section&id=Definition%20of%20Adjusted%20EBITDA) Adjusted EBITDA is a non-GAAP measure calculated by adjusting net loss for specific non-cash and non-recurring items - Adjusted EBITDA is defined as net loss adjusted for interest expense, net, other investment income, depreciation and amortization, and provision (benefit) for income tax[18](index=18&type=chunk) - It includes addbacks for non-recurring or exceptional items such as management equity compensation, litigation costs and settlement, M&A diligence, transaction and integration, business optimization, EMR implementation, gain (loss) on cost and equity method investments, asset impairments, and loss on sale of assets[18](index=18&type=chunk) - Adjusted EBITDA margin is Adjusted EBITDA expressed as a percentage of total revenue[18](index=18&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets of $526.9 million and total stockholders' equity of $237.9 million as of June 30, 2025 | Item | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | YoY Change (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :------------------------ | | Total Assets | $526,851 | $547,661 | $(20,810) | | Total Liabilities | $263,943 | $247,853 | $16,090 | | Total Stockholders' Equity | $237,898 | $277,608 | $(39,710) | | Cash and cash equivalents | $64,129 | $56,946 | $7,183 | | Accounts receivable, net | $36,373 | $48,106 | $(11,733) | | Property and equipment, net | $168,044 | $193,022 | $(24,978) | | Goodwill | $142,046 | $139,949 | $2,097 | | Accounts payable and accrued expenses | $76,750 | $55,459 | $21,291 | | Long-term debt, net | $57,464 | $61,478 | $(4,014) | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company's statement of operations reveals an increased net loss of $35.3 million on revenues of $853.7 million for FY2025 | Item | Year Ended June 30, 2025 (in thousands) | Year Ended June 30, 2024 (in thousands) | YoY Change (in thousands) | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | :------------------------ | | Total revenues | $853,699 | $763,855 | $89,844 | | Total expenses | $883,460 | $787,035 | $96,425 | | Operating Loss | $(29,761) | $(23,180) | $(6,581) | | Loss Before Income Taxes | $(34,027) | $(21,819) | $(12,208) | | Net Loss | $(35,343) | $(23,221) | $(12,122) | | Net Loss Attributable to InnovAge Holding Corp. | $(30,313) | $(21,338) | $(8,975) | | Net loss per share - basic and diluted | $(0.22) | $(0.16) | $(0.06) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities improved significantly to $32.9 million, leading to a $7.2 million increase in total cash | Item | Year Ended June 30, 2025 (in thousands) | Year Ended June 30, 2024 (in thousands) | YoY Change (in thousands) | | :------------------------------------------ | :-------------------------------------- | :-------------------------------------- | :------------------------ | | Net cash provided by (used in) operating activities | $32,866 | $(36,898) | $69,764 | | Net cash used in investing activities | $(5,550) | $(26,373) | $20,823 | | Net cash used in financing activities | $(19,082) | $(7,034) | $(12,048) | | INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS & RESTRICTED CASH | $7,180 | $(70,305) | $77,485 | | CASH, CASH EQUIVALENTS & RESTRICTED CASH, END OF PERIOD | $64,140 | $56,960 | $7,180 | [Reconciliation of GAAP and Non-GAAP Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Measures) [Adjusted EBITDA Reconciliation](index=11&type=section&id=Adjusted%20EBITDA%20Reconciliation) Net loss is reconciled to Adjusted EBITDA, which rose to $34.5 million in FY2025, driven by adjustments for litigation and impairments | Item | Year Ended June 30, 2025 (in thousands) | Year Ended June 30, 2024 (in thousands) | YoY Change (in thousands) | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | :------------------------ | | Net Loss | $(35,343) | $(23,221) | $(12,122) | | Interest expense, net | $4,612 | $4,023 | $589 | | Depreciation and amortization | $19,510 | $18,950 | $560 | | Provision for income tax | $1,316 | $1,402 | $(86) | | Stock-based compensation | $7,619 | $6,832 | $787 | | Litigation costs and settlement | $19,367 | $4,878 | $14,489 | | M&A diligence, transaction and integration | $1,360 | $778 | $582 | | Business optimization | $3,040 | $4,399 | $(1,359) | | EMR implementation | $0 | $3,660 | $(3,660) | | Loss (gain) on cost and equity method investments | $1,393 | $(2,842) | $4,235 | | Asset impairments and loss on assets held for sale | $13,615 | $0 | $13,615 | | Adjusted EBITDA | $34,462 | $16,474 | $17,988 | | Adjusted EBITDA margin | 4.0% | 2.2% | 1.8 pp | - Litigation costs for FY2025 include **$10.1 million accrued** in connection with the potential settlement of a previously disclosed stockholder class action[24](index=24&type=chunk) - Asset impairments for FY2025 include a **$2.6 million impairment loss** for the investment in DispatchHealth Holdings Inc and charges related to halting developments for a planned de novo center in Louisville, Kentucky[26](index=26&type=chunk)[32](index=32&type=chunk) [Center-Level Contribution Margin Reconciliation](index=13&type=section&id=Center-Level%20Contribution%20Margin%20Reconciliation) Total revenues are reconciled to Center-Level Contribution Margin, which grew to $153.6 million in FY2025 | Item | Year Ended June 30, 2025 (in thousands) | Year Ended June 30, 2024 (in thousands) | YoY Change (in thousands) | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | :------------------------ | | Total revenues | $853,699 | $763,855 | $89,844 | | External provider costs | $431,152 | $403,010 | $28,142 | | Cost of care, excluding depreciation and amortization | $268,908 | $228,781 | $40,127 | | Center-Level Contribution Margin | $153,639 | $132,064 | $21,575 | | Center-Level Contribution Margin as a % of revenue | 18.0% | 17.3% | 0.7 pp | - Capitation revenue, the primary component of total revenues, increased to **$852.35 million** in FY2025 from $762.57 million in FY2024[33](index=33&type=chunk) - The 'All other' segment, primarily Senior Housing, contributed **$0.99 million to total revenues** and **$0.42 million to Center-Level Contribution Margin** in FY2025[34](index=34&type=chunk)

Core Insights - InnovAge Holding Corp. reported strong financial performance for fiscal year 2025, with total revenues reaching $853.7 million, an increase of approximately 11.8% compared to $763.9 million in 2024 [5][10] - The company experienced a net loss of $35.3 million for the year, which is a 52% increase from the net loss of $23.2 million in 2024 [5][10] - The CEO expressed confidence in the company's growth momentum, expecting continued progress in fiscal year 2026 [2] Financial Results - Total revenues for the three months ended June 30, 2025, were $221.4 million, compared to $199.4 million for the same period in 2024 [5][21] - The loss before income taxes for the year was $34.0 million, up 56% from $21.8 million in 2024 [5][10] - The net loss margin for the year was 4.1%, an increase of 1.1 percentage points from 3.0% in 2024 [5][10] - Adjusted EBITDA for the year was $34.5 million, an increase of $18.0 million compared to $16.5 million in 2024, with an adjusted EBITDA margin of 4.0% [5][10] Operational Metrics - The company served approximately 7,740 participants as of June 30, 2025, compared to 7,020 participants in 2024 [5][10] - The Center-level Contribution Margin for the year was $153.6 million, a 16.3% increase from $132.1 million in 2024 [5][10] - The Center-level Contribution Margin as a percentage of revenue was 18.0%, up 0.7 percentage points from 17.3% in 2024 [5][10] Fiscal Year 2026 Guidance - InnovAge expects total revenue for fiscal year 2026 to be between $900 million and $950 million [6] - The company anticipates an adjusted EBITDA in the range of $56 million to $65 million for the upcoming fiscal year [6]

Core Insights - InnovAge Holding Corp. will release its 2025 fiscal fourth quarter and full year financial results on September 9, 2025, after market close [1] - A conference call to review the results will be held at 5 p.m. E.T. on the same day [1] Company Overview - InnovAge is a leader in managing care for high-cost, frail, and predominantly dual-eligible seniors through the Program of All-inclusive Care for the Elderly (PACE) [3] - The company's mission is to enable older adults to age independently in their homes for as long as safely possible [3] - As of March 31, 2025, InnovAge served approximately 7,530 participants across 20 centers in six states [3]

Core Viewpoint - InnovAge Holding Corp. has announced a joint venture with Tampa General Hospital to enhance community-based care options for seniors in the Tampa Bay area, focusing on improving access to quality care for clinically frail and underserved seniors [1][2]. Company Overview - InnovAge is a leader in senior care through the Program of All-Inclusive Care for the Elderly (PACE), aiming to help seniors live independently at home while receiving necessary healthcare and support [1][5]. - As of March 31, 2025, InnovAge served approximately 7,530 participants across 20 centers in six states [6]. Joint Venture Details - The joint venture aims to expand innovative community-based care options and improve access to quality care for seniors in Hillsborough, Pasco, and Hernando counties [2]. - The InnovAge Florida PACE center in Tampa has a 35,000-square-foot facility capable of serving around 1,300 seniors, offering a range of services including primary and specialty medical care, dental services, rehabilitation therapies, and social activities [4]. Tampa General Hospital Overview - Tampa General Hospital is recognized as the 1 hospital in the Tampa Bay region for the 10th consecutive year and is noted for its excellence in geriatrics [3]. - The hospital is a not-for-profit academic health system with 1,529 beds and is the only center for Level 1 trauma and comprehensive burn care in the region [7]. - In fiscal year 2023, Tampa General provided a net community benefit of approximately $301.8 million, supporting underinsured patients and community health organizations [8].

Core Points - The United States District Court for the District of Colorado has approved a proposed class action settlement for purchasers of InnovAge Holding Corp. common stock [1] - The proposed settlement amount is $27 million in cash, which aims to resolve all claims in the action [5] Class Action Details - The class includes individuals or entities that purchased InnovAge common stock between May 11, 2021, and December 22, 2021, or in connection with the company's March 4, 2021 initial public offering [3][4] - A hearing is scheduled for November 26, 2025, to determine the fairness and adequacy of the proposed settlement and to address other related matters [6] Claims Process - Class members must submit a Claim Form by November 5, 2025, to be eligible for a payment from the settlement [8] - Members wishing to exclude themselves from the class must submit a request for exclusion by the same date [9] Objections and Inquiries - Any objections to the proposed settlement or related requests must be filed with the court by November 5, 2025 [10] - Inquiries regarding the notice or eligibility should be directed to the Claims Administrator or Lead Counsel [11]

Core Insights - InnovAge sponsors the PBS documentary "Caregiving," which highlights the challenges faced by caregivers in America, featuring Bradley Cooper and narrated by Uzo Aduba [1][2] - The documentary aims to raise national awareness about the caregiving crisis, showcasing stories of families dealing with funding cuts, policy changes, and workforce issues [2] - InnovAge's mission focuses on supporting seniors and their caregivers through its PACE model, allowing older adults to age independently at home while providing dignity and autonomy [3] Company Overview - InnovAge is the largest provider of the Program of All-Inclusive Care for the Elderly (PACE) in the U.S., serving approximately 7,530 participants across 20 centers in six states as of March 31, 2025 [3] - The company aims to improve the quality of care for high-cost, frail seniors while reducing the over-utilization of expensive care settings [3] - InnovAge's person-centered care model is designed to benefit all stakeholders, including participants, families, providers, and government payors [3]

Core Insights - InnovAge has been recertified as a Great Place to Work, highlighting its commitment to a purpose-driven workplace that supports employees in delivering exceptional care to seniors [1][3] - In the 2025 employee survey, 85% of employees expressed pride in working for InnovAge and contributing to community well-being [2] Company Overview - InnovAge is a leading provider of Program of All-Inclusive Care for the Elderly (PACE) services, focusing on managing care for high-cost, frail, and predominantly dual-eligible seniors [4] - The company aims to enable older adults to age independently in their homes while improving care quality and reducing high-cost care utilization [4] - As of March 31, 2025, InnovAge served approximately 7,530 participants across 20 centers in six states [4] Employee Experience - The recertification process involved surveying 100% of employees and evaluating over 60 elements related to their job experiences, including pride in community impact and the meaningfulness of their work [3] - InnovAge's leadership emphasizes the dedication and compassion of its employees, reinforcing the organization's commitment to supporting their passion for serving seniors [4]

Financial Data and Key Metrics Changes - The company reported revenue of $218.1 million, representing a 13% year-over-year increase [8][23] - Adjusted EBITDA was $10.8 million, with a margin of 4.9%, improving more than 3.5 times compared to the same quarter last year [9][29] - The net loss was $11.1 million, compared to a net loss of $6.2 million in the same quarter last year [28] Business Line Data and Key Metrics Changes - Census grew to approximately 7,530 participants, reflecting a 10% annual increase [9][11] - Center level contribution was $40.7 million, with an 18.7% margin, improving by approximately 110 basis points year-over-year [8][26] - External provider costs were $107.9 million, a 7.9% increase year-over-year, but cost per participant decreased [24][25] 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 [23][24] - The company experienced a modest sequential growth due to seasonal headwinds during Medicare's Annual Enrollment Period [11][12] Company Strategy and Development Direction - The company is focused on operational excellence and building a scalable, tech-enabled platform for sustainable growth [10][18] - There is an emphasis on integrating pharmacy services into the clinical model to improve medication adherence and reduce costs [17][18] - The company is actively engaging with policymakers to advocate for the PACE model, which is seen as a high-value solution for seniors [7][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate policy uncertainties and maintain operational predictability [19][20] - The company reaffirmed its fiscal year 2025 guidance, expecting ending census between 7,750 and 7,850 participants [31] Other Important Information - The company has made strategic progress in its pharmacy initiative, successfully transitioning to in-house pharmacy services [17] - There was a significant increase in corporate general and administrative expenses due to the accrual of a stockholder lawsuit settlement [27][28] 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 [34][36][39] 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 [40][41] Question: Engagement with regulators regarding PACE - Management highlighted increased engagement with regulators, focusing on the value of PACE and the populations served [44][45][48] Question: De novo losses and enrollment trends - Management confirmed that de novo losses are tracking with expectations and that census growth is consistent with projections [66][71] Question: Cost of care and investments - Management discussed investments in insourcing services and the impact on cost of care, indicating a potential for normalized growth rates moving forward [72][75]

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]