InnovAge Announces Financial Results for the Fourth Quarter and Fiscal Year Ended June 30, 2024
DENVER, Sept. 10, 2024 (GLOBE NEWSWIRE) -- InnovAge Holding Corp. ("InnovAge" or the "Company") (NASDAQ:INNV), an industry leader in providing comprehensive healthcare programs to frail seniors, predominantly dual-eligible seniors through the Program of All-inclusive Care for the Elderly (PACE), today announced financial results for its fiscal fourth quarter and full year ended June 30, 2024.
"We outlined an ambitious agenda last year focused on quality, compliance, and operational excellence and believe we delivered," said President and CEO Patrick Blair. "We are proud of the strong year over year financial results, and the positive momentum - as we move into the next phase of responsible growth and margin recapture."
Financial Results
Three Months Ended
Year Ended
June 30,2024
June 30,2023
June 30,2024
June 30,2023
in thousands, except percentages and per share amounts
Total revenues
$
199,401
176,874
$
763,855
$
688,087
Loss Before Income Taxes
(946
)
(11,489
)
(21,819
)
(50,793
)
Net Loss
(2,254
)
(11,995
)
(23,221
)
(43,552
)
Net Loss margin
(1.1
)%
(6.8
)%
(3.0
)%
(6.3
)%
Net Loss Attributable to InnovAge Holding Corp.
$
(1,700
)
$
(11,177
)
$
(21,338
)
$
(40,673
)
Net Loss per share - basic and diluted
(0.01
)
(0.09
)
(0.16
)
(0.30
)
Center-level Contribution Margin(1)
$
36,578
$
28,506
$
132,064
$
101,288
Adjusted EBITDA(1)
5,237
(334
)
16,474
(3,425
)
Adjusted EBITDA margin(1)
2.6
%
(0.2
)%
2.2
%
(0.5
)%
Fiscal Year 2024 Financial Performance
Total revenue of $763.9 million, increased approximately 11.0% compared to $688.1 million in 2023
Loss Before Income Taxes of $21.8 million, improved by 57.0% compared to a Loss Before Income Taxes of $50.8 million in 2023
Loss Before Income Taxes as a percent of revenue of 2.9% improved 4.5 percentage points compared to Loss Before Income Tax as a percent of revenue of 7.4% in 2023
Net loss of $23.2 million, compared to a net loss of $43.6 million in 2023
Net loss margin of 3.0%, an improvement of 3.3% percentage points compared to a net loss margin of 6.3% in 2023
Net loss attributable to InnovAge Holding Corp. of $21.3 million, or a loss of $0.16 per share, compared to a net loss of $40.7 million, or $0.30 per share in 2023
Center-level Contribution Margin(1) of $132.1 million, increased 30.4% compared to $101.3 million in 2023
Center-level Contribution Margin(1) as a percent of revenue of 17.3%, increased 2.6 percentage points compared to 14.7% in 2023
Adjusted EBITDA(1) of $16.5 million, an increase of $19.9 million compared to negative $3.4 million in 2023
Adjusted EBITDA(1) margin of 2.2%, an increase of 2.7 percentage points compared to negative 0.5% in 2023
Census of approximately 7,020 participants compared to 6,400 participants in 2023
(1) Center-level Contribution Margin and Center-level Contribution Margin as a percentage of revenue, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. Effective for the year ended June 30, 2024, the Company has revised its calculation of Adjusted EBITDA and has recast the presentation for the year ended June 30, 2023 to conform to the current presentation. For more details and 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."
Full Fiscal Year 2025 Financial Guidance
Based on information as of today, September 10, 2024, InnovAge is issuing the following financial guidance.
Low
High
dollars in millions
Census
7,300
7,750
Total Member Months(1)
86,000
89,000
Total revenues
$
815
$
865
Adjusted EBITDA(2)
24
31
Expected results and estimates may be impacted by factors outside the Company's control, and actual results may be materially different from this guidance. See "Forward-Looking Statements - Safe Harbor" herein.
(1) We define Total Member Months as the total number of participants as of period end multiplied by the number of months within a year in which each participant was enrolled in our program. Management believes this is a useful metric as it more precisely tracks the number of participants the Company serves throughout the year.
(2) Adjusted EBITDA is a non-GAAP measure. See "Note Regarding Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Measures" for a definition of Adjusted EBITDA and a reconciliation to net loss, the most closely comparable GAAP measure. The Company is unable to provide guidance for net loss or a reconciliation of the Company's Adjusted EBITDA guidance because it cannot provide a meaningful or accurate calculation or estimation of certain reconciling items without unreasonable effort. The Company's inability to do so is due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including variations in effective tax rate, expenses to be incurred for acquisition activities and other one-time or exceptional items.
Conference Call
The Company will host a conference call this afternoon at 5:00 p.m. Eastern Time. A live audio webcast of the call will be available on the Company's website, https://investor.innovage.com/. 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, frail, and predominantly dual-eligible seniors through the Program of All-inclusive Care for the Elderly (PACE). With a mission of enabling older adults to age independently in their own homes for as long as safely possible, InnovAge's patient-centered care model is designed to improve the quality of care its participants receive while reducing over-utilization of high-cost care settings. InnovAge believes its PACE healthcare model is one in which all constituencies — participants, their families, providers and government payors, "win." As of June 30, 2024, InnovAge served approximately 7,020 participants across 20 centers in six states. https://www.innovage.com/.
Investor Contact:
Ryan
Media Contact:
Lara
Forward-Looking Statements - Safe HarborThis 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," "estimate," "expect," "project," "plan," "intend," "believe," "may," "will," "should," "can have," "likely" 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 quarterly or annual guidance; financial outlook, including future revenues and future earnings; the viability of our growth strategy including our ability or expectations to increase the number of participants we serve, build and/or open de novo centers, or to identify and execute tuck-in acquisitions, joint ventures and strategic partnerships; our ability to control costs, mitigate the effects of elevated expenses, expand our payer capabilities, implement clinical value initiatives and strengthen enterprise functions; the ongoing effects of the macro-economic environment; our expectations with respect to audits, post-sanction work, legal proceedings and government investigations and actions; relationships and discussions with regulatory agencies; our ability to effectively implement operational excellence as a provider across all our centers; reimbursement and regulatory developments; market developments; new services; integration activities; industry and market opportunity; 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. 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 and may cause our actual results and financial condition to differ materially. Important factors that could cause our actual results and financial condition to differ materially include, among others, the following: (i) the viability of our growth strategy; (ii) our ability to identify and successfully complete acquisitions, joint ventures and strategic partnerships; (iii) our ability to attract new participants and retain existing participants; (iv) the impact on our business from ongoing macroeconomic related challenges, including labor shortages, labor competition and inflation; (v) inspections, reviews, audits and investigations under the federal and state government programs, including any corrective action and adverse findings thereunder; (vi) legal proceedings, enforcement actions and litigation malpractice and privacy disputes, which are costly to defend; (vii) under our PACE contracts, we assume all of the risk that the cost of providing services will exceed our compensation; (viii) the dependence of our revenues upon a limited number of government payors; (ix) the risk that our submissions to government payors may contain inaccurate or unsupportable information including regarding risk adjustment scores of participants, subjecting us to repayment obligations or penalties; and (x) the impact on our business of renegotiation, non-renewal or termination of capitation agreements with government payors.
Forward-looking statements are 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. We advise you to not place undue reliance on forward-looking statements and to review our risk factors and other disclosures included in the reports we file or furnish with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Note Regarding Use of Non-GAAP Financial MeasuresIn addition to reporting financial information in accordance with generally accepted accounting principles ("GAAP"), the Company is also reporting Center-level Contribution Margin, Center-level Contribution Margin as a percentage of revenue, Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures. These non-GAAP measures 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) before income taxes, net income (loss) before income taxes margin, net income (loss) and net income (loss) margin, as applicable, as determined by GAAP. We believe that these non-GAAP measures are appropriate measures of operating performance because the metrics eliminate the impact of certain expenses that, in the case of Adjusted EBITDA, 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 these non-GAAP measures 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) before taxes, net income (loss) before taxes margin, net income (loss), and net income (loss) margin.
The Company's management uses Center-level Contribution Margin as the measure for assessing performance of its operating segments. In evaluating Center-level Contribution Margin on a center-by-center basis, you should be aware that we do not allocate our sales and marketing expense or corporate, general and administrative expenses across our centers. We define Center-level Contribution Margin as total revenues less external provider costs and cost of care, excluding depreciation and amortization, which includes all medical and pharmacy costs.
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 loss adjusted for interest expense, net, other investment income, depreciation and amortization, and provision (benefit) for income tax as well as addbacks for non-recurring expenses or exceptional items, including charges relating to management equity compensation, litigation costs and settlement, M&A diligence, transaction and integration, business optimization and electronic medical record (EMR) implementation and gain on cost and equity method investments. Adjusted EBITDA margin is Adjusted EBITDA expressed as a percentage of our total revenue. Effective for the year ended June 30, 2024, the Company has revised its calculation of Adjusted EBITDA to no longer exclude de novo center development costs and to reflect the impact of other investment income. The presentation for the year ended June 30, 2023 has been recast to conform to the current presentation. For a full reconciliation of Center-level Contribution Margin and Adjusted EBITDA to the most closely comparable GAAP financial measure, please see the attachment to this earnings release.
Schedule 1
InnovAgeCONDENSED CONSOLIDATED BALANCE SHEETS(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
June 30,2024
June 30,2023
Assets
Current Assets
Cash and cash equivalents
$
56,946
$
127,249
Short-term investments
45,833
46,213
Restricted cash
14
16
Accounts receivable, net of allowance ($6,729, June 30, 2024 and $4,161, June 30, 2023)
48,106
24,344
Prepaid expenses
18,919
17,145
Income tax receivable
3,324
262
Total current assets
173,142
215,229
Noncurrent Assets
Property and equipment, net
193,022
192,188
Operating lease assets
28,416
21,210
Investments
2,645
5,493
Deposits and other
5,949
3,823
Goodwill
139,949
124,217
Other intangible assets, net
4,538
5,198
Total noncurrent assets
374,519
352,129
Total assets
$
547,661
$
567,358
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses
$
55,459
$
54,935
Reported and estimated claims
55,404
42,999
Due to Medicaid and Medicare
15,197
9,142
Income tax payable
—
1,212
Current portion of long-term debt
3,795
3,795
Current portion of finance lease obligations
4,599
4,722
Current portion of operating lease obligations
4,145
3,530
Deferred revenue
—
28,115
Total current liabilities
138,599
148,450
Noncurrent Liabilities
Deferred tax liability, net
7,460
6,236
Finance lease obligations
12,743
13,114
Operating lease obligations
26,275
18,828
Other noncurrent liabilities
1,298
1,086
Long-term debt, net of debt issuance costs
61,478
64,844
Total liabilities
247,853
252,558
Commitments and Contingencies (See Note 9)
Redeemable Noncontrolling Interests (See Note 4)
22,200
12,708
Stockholders' Equity
Common stock, $0.001 par value; 500,000,000 authorized as of June 30, 2024 and 2023; 136,152,858 issued and 136,116,299 outstanding as of June 30, 2024 and 135,639,845 issued and outstanding as of June 30, 2023.
136
136
Treasury stock at cost, 36,559 shares as of June 30, 2024
(179
)
—
Additional paid-in capital
337,615
332,107
Retained deficit
(68,311
)
(35,944
)
Total InnovAge Holding Corp.
269,261
296,299
Noncontrolling interests
8,347
5,793
Total stockholders' equity
277,608
302,092
Total liabilities and stockholders' equity
$
547,661
$
567,358
Schedule 2
InnovAgeCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(IN THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE DATA)
Three Months Ended
Year Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Revenues
Capitation revenue
$
199,080
$
176,568
$
762,570
$
686,836
Other service revenue
321
306
1,285
1,251
Total revenues
199,401
176,874
763,855
688,087
Expenses
External provider costs
102,691
94,978
403,010
374,528
Cost of care, excluding depreciation and amortization
60,132
53,390
228,781
212,271
Sales and marketing
6,541
6,125
