InnovAge (US:INNV)2024-02-07 01:44Financial Data and Key Metrics Changes - The company reported revenue of $189 million for Q2 2024, a 3.5% increase compared to Q1 2024 [7] - Adjusted EBITDA improved significantly to $7.8 million from approximately $2.2 million in the previous quarter [7][42] - The net loss was $3.8 million, an improvement from a net loss of $11 million in Q1 2024 [42] - Center-level contribution margin increased to 17.8% from 15.3% in the previous quarter [40] Business Line Data and Key Metrics Changes - Participant net enrollment growth was solid at 195 for the quarter, contributing to a total census of 6,780, which is a 3% increase quarter-over-quarter [7][37] - The company effectively managed non-center costs, resulting in a decrease in general and administrative expenses as a percentage of revenue from 15.9% to 13.4% [9] Market Data and Key Metrics Changes - The company is now operational in six states: Colorado, California, Pennsylvania, New Mexico, Virginia, and Florida, with the recent opening of a new center in Tampa [10] - The total sales qualified leads increased by approximately 11% from the prior quarter, indicating strong demand for integrated solutions [20] Company Strategy and Development Direction - The company is focused on responsible growth and restoring operating margins lost during the regulatory sanction period [6] - The acquisition of ConcertoCare added two new centers in Southern California, facilitating faster expansion compared to building new centers from scratch [25][26] - The company aims to achieve a center-level contribution margin above 20% and is focused on improving quality and compliance [91] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in addressing regulatory issues and emphasized the importance of compliance as a guiding principle [13][18] - The company anticipates modest seasonality related to the Medicare annual enrollment period, which may impact growth [20] - Management remains optimistic about achieving financial goals for the second half of fiscal 2024 and creating a path for successful fiscal 2025 [11] Other Important Information - The company completed the implementation of the new Epic EMR across all locations, which is expected to enhance operational productivity and efficiency [33] - The company is hosting its first Investor Day on February 27, 2024, to provide more details on its journey and future plans [34][97] Q&A Session Summary Question: Can you help size the Medicare true-up noted in the quarter? - Management confirmed that the Medicare true-up was a meaningful increase related to a final adjustment for 2022, which provided a boost going into the back half of the year [49][51] Question: How should we think about the Medicaid rate development backdrop? - Management indicated that it is still early to determine Medicaid rates for the next fiscal year, with unexpected reductions in California impacting the back half of the year [62] Question: Can you provide details on the de novo ramp expectations? - Management stated that it typically takes about six quarters for de novo facilities to reach a positive center-level contribution margin, emphasizing careful monitoring of cash flow impact [70] Question: What can be done to speed up enrollment processing delays? - Management engages with families to set expectations and keep them informed about administrative delays, although some delays are beyond their control [75][78] Question: What changes were made in the new marketing campaign? - The new campaign aims to broaden the appeal of PACE services to a wider segment of the senior population and directly target family members involved in decision-making [80][81]