InnovAge (US:INNV)2025-09-09 22:02Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $221.4 million, an increase of 11% year-over-year [4] - Total revenue for FY 2025 was $853.7 million, up nearly 12% year-over-year [5] - Adjusted EBITDA for FY 2025 was $34.5 million, compared to $16.5 million in FY 2024, with a margin increase from 2.2% to approximately 4% [5][23] - Net loss for FY 2025 was $35.3 million, compared to a net loss of $23.2 million in FY 2024 [22] Business Line Data and Key Metrics Changes - Center-level contribution margin for FY 2025 was $153.6 million, with a margin of 18%, up 70 basis points from FY 2024 [5][20] - The census at the end of FY 2025 was approximately 7,740 participants, reflecting a 10% year-over-year increase [5][13] - Member months in Q4 2025 were 23,000, an increase of approximately 10.5% compared to Q4 FY 2024 [14] Market Data and Key Metrics Changes - The company experienced a 7% increase in external provider costs for FY 2025, primarily driven by an increase in member months [15] - The decrease in cost per participant was attributed to reduced utilization in inpatient and nursing facilities, as well as a transition to in-house pharmacy services [16][17] Company Strategy and Development Direction - The company is advocating for broader access to PACE services, including a Medicare-only option to expand its participant base [8] - The guidance for FY 2026 projects total revenue between $900 million and $950 million, with adjusted EBITDA expected to be between $56 million and $65 million [9][25] - The company is focused on improving operational efficiencies and leveraging technology to enhance care delivery and reduce costs [29] Management's Comments on Operating Environment and Future Outlook - Management noted that recent legislation has created uncertainty for value-based care models, particularly in Medicare Advantage and Medicaid [6] - The company expects to face headwinds from Medicaid redetermination processes impacting census growth in the first half of FY 2026 [54] - Management expressed confidence in achieving adjusted EBITDA margins of 8% to 9% over the next few years [9][41] Other Important Information - The company completed a share repurchase program, acquiring approximately 1,426,000 shares for $7.3 million [25] - The company ended FY 2025 with $64.1 million in cash and equivalents, and $41.8 million in short-term investments [24] Q&A Session Summary Question: Impact of member mix on margins and cost trends - Management indicated that the member mix has normalized and is balanced between community living and assisted living, which has implications for risk scores and revenue [31][32] Question: V-28 Medicare Advantage payment model implications - Management expects the transition to the V-28 model to be a headwind for revenue growth over the next couple of years [35][37] Question: Outlook for EBITDA margins and areas for leverage - Management confirmed that the guidance for margin expansion is reasonable, with a focus on both center-level margin and operating leverage [40][41] Question: Opportunities for automation and technology integration - Management is exploring AI-driven tools and partnerships to enhance operational efficiency and care quality [46][48]