InnovAge (US:INNV)2023-09-13 00:11Financial Data and Key Metrics Changes - For fiscal year 2023, total revenue was $688.1 million, a decline of approximately 1.5% compared to fiscal year 2022 [6][28] - The center-level contribution margin for the year was $101.3 million, representing a 14.7% margin, down from 19.4% in the prior year [38] - Consolidated adjusted EBITDA was negative $1.3 million for the fiscal year, compared to positive $34.3 million in the prior year [41] - In Q4 2023, revenue was $176.9 million, a sequential improvement of approximately 2.5% compared to Q3 [8][28] - The center-level contribution margin for Q4 was $28.5 million, representing a 16.1% margin [38] Business Line Data and Key Metrics Changes - The second half of fiscal year 2023 saw a center-level contribution margin of $57.3 million, an increase of approximately 30% compared to the first half [9] - The company ended fiscal year 2023 with approximately 6,400 participants, a decline of 3.9% compared to the prior year [34] - External provider costs for fiscal year 2023 were $374.5 million, a 2.2% decrease compared to the prior year [35] Market Data and Key Metrics Changes - Enrollment in Colorado and Sacramento is tracking to expectations, with gross monthly enrollments returning to pre-sanction levels in Colorado [16] - The company is experiencing sequential improvements in prospect lead volumes and gross enrollments in almost every market, with sales qualified leads increasing by approximately 90% over the last six months [15] Company Strategy and Development Direction - The company aims for responsible growth and to expand access to the PACE program, focusing on execution, margin recapture, and operational excellence [13] - Plans to open new centers in Florida and resume the application in Downey, which would increase census capacity by approximately 500 participants [18] - The company is pursuing a multi-pronged growth strategy that includes new partnerships and tuck-in acquisitions [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's foundation for consistent, responsible, profitable growth moving forward [13] - The company anticipates improvement in profitability as it fills excess capacity in its centers and reaches targeted staffing ratios [10] - Management acknowledged the challenges posed by state resource constraints affecting enrollment processing but remains confident in the overall enrollment strategy [16] Other Important Information - The company has implemented a PACE-specific instance of Epic's EMR in 14 of its 17 centers, which is expected to enhance operational productivity and compliance [32] - The company ended the quarter with $127.2 million in cash and cash equivalents, plus $46.2 million in short-term investments [43] Q&A Session Summary Question: Trends in Colorado re-enrollment and guidance assumptions - Management is pleased with progress in Colorado, tracking closely with expectations and returning to pre-sanction gross monthly enrollment levels [54][58] Question: External provider costs and profitability improvement - Management outlined a robust portfolio of initiatives aimed at improving external provider costs, with a focus on re-contracting and unit cost initiatives [61] Question: Revenue PMPM development and Medicaid redetermination impact - Management expects variability in revenue PMPM throughout the year, with no significant impact from Medicaid redetermination on the population [66][69] Question: COVID incidents and guidance for the upcoming winter - Management noted an increase in COVID cases but emphasized that the highly vaccinated population is not adversely affected economically [72][77] Question: Post-monitoring period in Colorado and cost impacts - Management confirmed that they are still in the post-monitoring period in Colorado, with expectations for improvements in staffing costs once monitoring ends [81]