InnovAge Announces Financial Results for the Fiscal First Quarter Ended September 30, 2022

November 8, 2022

DENVER, Nov. 08, 2022 (GLOBE NEWSWIRE) -- InnovAge Holding Corp. (the “Company” or “InnovAge”) (Nasdaq: INNV), a market leading healthcare delivery platform for high-cost, dual-eligible seniors, announced financial results for its fiscal first quarter ended September 30, 2022.

“We have continued to make solid progress this quarter on our regulatory and operational priorities and are now beginning to look forward to the time when we can serve more deserving seniors with the PACE model,” said Patrick Blair, President, and CEO of InnovAge.

Financial Results

 Three Months Ended
 September 30, 2022 September 30, 2021
in thousands, except percentages and per share amounts       
Total revenues$171,218   $173,070 
Center-level Contribution Margin(1) 21,424    42,330 
Net Income (Loss) (13,699)   7,624 
Net Income (Loss) margin (8.0)%  4.4%
Net Income (Loss) Attributable to InnovAge Holding Corp. (13,073)   7,686 
Net income (Loss) per share - basic and diluted$(0.10)  $0.06 
Adjusted EBITDA(1)$(3,815)  $18,212 
Adjusted EBITDA margin(1) (2.2)%  10.5%

Fiscal First Quarter 2023 Financial Performance

  • Total revenue of $171.2 million, decreased approximately 1.1% compared to $173.1 million in the first quarter of fiscal 2022
  • Center-level Contribution Margin(1) of $21.4 million, decreased 49.4% compared to $42.3 million in the first quarter of fiscal 2022
  • Center-level Contribution Margin(1) as a percent of revenue of 12.5%, decreased 12 percentage points compared to 24.5% in the first quarter of fiscal 2022
  • Net loss of $13.7 million, compared to net income of $7.6 million in the first quarter of fiscal 2022
  • Net loss margin of 8.0%, a decrease of 12.4 percentage points compared to a net income margin of 4.4% in the first quarter of fiscal year 2022
  • Net loss attributable to InnovAge Holding Corp. of $13.1 million, or a loss of $0.10 per share, compared to net income of $7.7 million, or $0.06 per share in the first quarter of fiscal 2022
  • Adjusted EBITDA(1) of negative $3.8 million, a decrease of $22.0 million compared to $18.2 million in the first quarter of fiscal year 2022
  • Adjusted EBITDA(1) margin of negative 2.2%, a decrease of 12.7 percentage points compared to 10.5% in the first quarter of fiscal 2022
  • Census of approximately 6,540 participants compared to 6,990 participants in the first quarter of fiscal year 2022
  • Ended the first quarter of fiscal year 2023 with $188.2 million in cash and cash equivalents and $84.8 million in debt on the balance sheet, representing debt under the Company’s senior secured term loan, convertible term loan and finance leases

(1) Management uses Center-level Contribution Margin as the measure for assessing performance of its segments. Center-level Contribution Margin is defined as total revenues less external provider costs and cost of care, excluding depreciation and amortization, which include all medical and pharmacy costs. Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. For a definition and reconciliation of these non-GAAP measures to the most closely comparable GAAP measures for the periods indicated, see “Note Regarding Use of Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Measures.”

Conference Call

The Company will host a conference call this afternoon at 5:00 PM Eastern Time. A live audio webcast of the call will be available on the Company’s website, A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for a limited time. To access the call by phone, please go to this link (registration link), for dialing instructions and a unique access pin. We encourage participants to dial into the call fifteen minutes ahead of the scheduled start time.

About InnovAge

InnovAge is a market leader in managing the care of high-cost, dual-eligible seniors. Our mission is to enable seniors to age independently in their own homes for as long as possible. Our patient-centered care model is designed to improve the quality of care our participants receive, while reducing over-utilization of high-cost care settings. InnovAge believes its healthcare model is one in which all constituencies — participants, their families, providers and government payors— “win.” As of September 30, 2022, InnovAge served approximately 6,540 participants across 18 centers in five states.

Investor Contact:

Ryan Kubota

Media Contact:

Sarah Rasmussen, APR  

Forward-Looking Statements - Safe Harbor

This press release may contain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “believe,” “project,” “estimate,” “expect,” “may,” “should,” “will” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Forward-looking statements may be identified by the fact that they do not relate strictly to historical or current facts. Examples of forward-looking statements include, among others, statements we may make regarding our expectations with respect to current audits, legal proceedings and government investigations and actions; relationships and discussions with regulatory agencies; our expectations with respect to correcting deficiencies raised in audits and other processes; our ability to effectively implement remediation measures, including creating operational excellence as a provider, expanding our payer capabilities and strengthening enterprise functions; our expectations to increase the number of participants we serve, to grow enrollment and capacity within existing centers, to build de novo centers, or execute acquisitions; quarterly or annual guidance; financial outlook, including future revenues and future earnings; reimbursement and regulatory developments; market developments; new products; integration activities; and the effects of any of the foregoing on our future results of operations or financial conditions.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on currently available information and our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. You should not place undue reliance on our forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) the results of periodic inspections, reviews, audits, investigations under the federal and state government programs, including sanctions currently in place on our centers in Colorado and in our Sacramento center in California; (ii) our ability to sufficiently cure any deficiencies identified by the respective federal and state government programs, in the states of California, Colorado and New Mexico; (iii) the adverse impact of inspections, reviews, audits, investigations, legal proceedings, enforcement actions and litigation, including the current civil investigative demands initiated by federal and state agencies, as well as the litigation and other proceedings initiated by, or on behalf, of our stockholders; (iv) the risk that the cost of providing services will exceed our compensation under PACE; (v) the dependence of our revenues upon a limited number of government payors, particularly Medicare and Medicaid; (vi) changes in the rules governing the Medicare, Medicaid or PACE programs; (vii) the risk that our submissions to government payors may contain inaccurate or unsupportable information regarding risk adjustment scores of participants, which could cause us to overstate or understate our revenue and subjecting us to payment obligations and penalties; (viii) viability of our business strategy and our ability to realize expected results; (ix) the impact on our business of non-renewal or termination of capitation agreements with government payors; (x) the impact of state and federal efforts to reduce healthcare spending; (xi) the impact on our business from an economic downturn; (xii) the effects of a pandemic, epidemic or outbreak of an infectious disease, including the ongoing effects of COVID-19; (xiii) our dependence on our senior management team and other key employees; (xiv) the effects of sustained inflation and increased costs of labor on our business; (xv) the impact of failures by our suppliers, sustained material price increases on supplies or limitations on our ability to access new technology or medical products; (xvi) the effect of our relatively limited operating history as a for-profit company on investors’ ability to evaluate our current business and future prospects; (xvii) our ability to enroll or attract new participants and grow our revenue, especially as a result of the sanctions currently in place on our centers in Colorado and in our Sacramento center in California and actions from other states; (xviii) the concentration of our presence in Colorado; (xix) our ability to establish a presence in new geographic markets, especially as a result of the actions taken by certain states and us in light of our ongoing audit processes; (xx) the impact on our business of security breaches, loss of data or other disruptions causing the compromise of sensitive information or preventing us from accessing critical information; and (xxi) our existing indebtedness and access to capital markets. For a detailed discussion of the risks and uncertainties that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to our most recent Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q, in each case, as filed with the SEC.

Any forward-looking statement made by the Company in this press release is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by law, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Note Regarding Use of Non-GAAP Financial Measures

In addition to reporting financial information in accordance with generally accepted accounting principles (“GAAP”), the Company is also reporting Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures. Adjusted EBITDA and Adjusted EBITDA margin are supplemental measures of operating performance monitored by management that are not defined under GAAP and that do not represent, and should not be considered as, an alternative to net income (loss) and net income (loss) margin, respectively, as determined by GAAP. We believe that Adjusted EBITDA and Adjusted EBITDA margin are appropriate measures of operating performance because the metrics eliminate the impact of revenue and expenses that do not relate to our ongoing business performance, allowing us to more effectively evaluate our core operating performance and trends from period to period. We believe that Adjusted EBITDA and Adjusted EBITDA margin help investors and analysts in comparing our results across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures, including net income (loss) and net income (loss) margin. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by the types of items excluded from the calculation of Adjusted EBITDA. Our use of the term Adjusted EBITDA varies from others in our industry. We define Adjusted EBITDA as net income (loss) adjusted for interest expense, depreciation and amortization, and provision for income tax as well as addbacks for non-recurring expenses or exceptional items, including charges relating to management equity compensation, class action litigation, M&A transaction and integration, business optimization and electronic medical record (EMR) implementation. Adjusted EBITDA margin is Adjusted EBITDA expressed as a percentage of our total revenue less any exceptional, one time revenue items. For a full reconciliation of Adjusted EBITDA to the most closely comparable GAAP financial measure, please see the attachment to this earnings release.

Schedule 1


     September 30,     June 30, 
  2022  2022
Current Assets        
Cash and cash equivalents $188,222  $184,429
Restricted cash  17   17
Accounts receivable, net of allowance ($4,264 – September 30, 2022 and $3,403 – June 30, 2022)  37,517   35,907
Prepaid expenses  12,165   13,842
Income tax receivable  5,010   6,761
Total current assets  242,931   240,956
Noncurrent Assets        
Property and equipment, net  181,086   176,260
Operating lease assets  22,995   
Investments  5,493   5,493
Deposits and other  2,565   2,812
Goodwill  124,217   124,217
Other intangible assets, net  5,693   5,858
Total noncurrent assets  342,049   314,640
Total assets $584,980  $555,596
Liabilities and Stockholders' Equity        
Current Liabilities        
Accounts payable and accrued expenses $50,858  $50,562
Reported and estimated claims  35,974   38,454
Due to Medicaid and Medicare  10,633   9,130
Current portion of long-term debt  3,793   3,793
Current portion of finance lease obligations  3,376   3,368
Current portion of operating lease obligations  3,420   
Deferred revenue  23,361   
Total current liabilities  131,415   105,307
Noncurrent Liabilities        
Deferred tax liability, net  14,290   17,761
Finance lease obligations  8,792   9,440
Operating lease obligations  20,725   
Other noncurrent liabilities  1,135   1,134
Long-term debt, net of debt issuance costs  67,369   68,210
Total liabilities  243,726   201,852
Commitments and Contingencies        
Redeemable Noncontrolling Interests  14,734   15,278
Stockholders’ Equity        
Common stock, $0.001 par value; 500,000,000 authorized as of September 30, 2022 and June 30, 2022; 135,570,078 and 135,532,811 issued shares as of September 30, 2022 and June 30, 2022, respectively  136   136
Additional paid-in capital  328,708   327,499
Retained earnings (deficit)  (8,344)  4,729
Total InnovAge Holding Corp.  320,500   332,364
Noncontrolling interests  6,020   6,102
Total stockholders’ equity  326,520   338,466
Total liabilities and stockholders’ equity $584,980  $555,596

Schedule 2


 Three Months Ended
 September 30, 2022 September 30, 2021
Capitation revenue$170,931  $172,554 
Other service revenue 287   516 
Total revenues 171,218   173,070 
External provider costs 96,237   90,012 
Cost of care, excluding depreciation and amortization 53,557   40,728 
Center-level Contribution Margin 21,424   42,330 
Sales and marketing 4,413   6,293 
Corporate, general and administrative 30,181   21,084 
Depreciation and amortization 3,433   3,293 
Total expenses 187,821   161,410 
Operating Income (Loss) (16,603)  11,660 
Other Income (Expense)       
Interest expense, net (603)  (547)
Other expense 37   (493)
Total other expense (566)  (1,040)
Income (Loss) Before Income Taxes (17,169)  10,620 
Provision for Income Taxes (3,470)  2,996 
Net Income (Loss) (13,699)  7,624 
Less: net loss attributable to noncontrolling interests (626)  (62)
Net Income (Loss) Attributable to InnovAge Holding Corp.$(13,073) $7,686 
Weighted-average number of common shares outstanding - basic 135,566,117   135,516,513 
Weighted-average number of common shares outstanding - diluted 135,566,117   135,516,513 
Net income (loss) per share - basic$(0.10) $0.06 
Net income (loss) per share - diluted$(0.10) $0.06 

Schedule 3


  For the Three Months Ended September 30,
  2022  2021 
Operating Activities      
Net income (loss) $(13,699) $7,624 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities      
(Gain) Loss on disposal of assets  (37)  493 
Provision for uncollectible accounts  1,571   1,268 
Depreciation and amortization  3,433   3,293 
Noncash lease expense  761    
Amortization of deferred financing costs  107   107 
Stock-based compensation  1,209   958 
Deferred income taxes  (3,470)  1,230 
Changes in operating assets and liabilities, net of acquisitions      
Accounts receivable, net  (3,180)  2,929 
Prepaid expenses  1,678   (1,597)
Income tax receivable  1,750   1,766 
Deposits and other  246   (309)
Accounts payable and accrued expenses  1,155   1,248 
Reported and estimated claims  (2,480)  106 
Due to Medicaid and Medicare  1,503   1,443 
Operating lease liabilities  (781)   
Deferred revenue  23,361    
Net cash provided by operating activities  13,127   20,559 
Investing Activities      
Purchases of property and equipment  (7,666)  (3,042)
Purchase of cost method investment     (2,000)
Net cash used in investing activities $(7,666) $(5,042)
Financing Activities      
Payments for finance lease obligations  (720)  (505)
Principal payments on long-term debt  (948)  (947)
Net cash used in financing activities  (1,668)  (1,452)
Supplemental Cash Flows Information      
Interest paid $700  $573 
Income taxes paid $13  $ 
Property and equipment included in accounts payable $2,446  $272 
Property and equipment purchased under finance leases $80  $127 

Schedule 4


 Three Months Ended  
 September 30, 2022 September 30, 2021 
Net income (loss)$(13,699) $7,624 
Interest expense, net 603   547 
Depreciation and amortization 3,433   3,293 
Provision for income tax (3,470)  2,996 
Stock-based compensation 1,300   958 
Class action litigation(a) (46)   
M&A and de novo development(b) 286   327 
Business optimization(c) 7,188   2,117 
EMR implementation(d) 590   350 
Adjusted EBITDA$(3,815) $18,212 
Net income (loss) margin (8.0)% 4.4%
Adjusted EBITDA margin (2.2)% 10.5%


(a)Reflects charges/(credits) related to litigation by stockholders.
(b)Reflects charges related to M&A transaction and integrations, and de novo center development.
(c)Reflects charges related to business optimization initiatives. Such charges related to one-time investments in projects designed to enhance our technology and compliance systems, improve and support the efficiency and effectiveness of our operations, and third party support to address efforts to remediate deficiencies in audits. For the three months ended September 30, 2022 this includes (i) $0.7 million related to consultants and contractors performing audit and other related services at sanctioned centers, (ii) $1.6 million of charges related to government investigations, and (iii) $4.3 million of costs associated with third party consultants as we implement our core provider initiatives, assess our risk-bearing payor capabilities, and strengthen our enterprise capabilities.
(d)Reflects non-recurring expenses relating to the implementation of a new electronic medical record vendor.

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