InnovAge Holding Corp. (“InnovAge” or the “Company”) (Nasdaq:
INNV), an industry leader in providing comprehensive healthcare
programs to frail, predominantly dual-eligible seniors through the
Program of All-inclusive Care for the Elderly (PACE), today
announced financial results for its fiscal third quarter ended
March 31, 2024.
“The portfolio of initiatives that we’ve launched over the past
two years is creating tangible impact,” said Patrick Blair,
President and CEO. “We continue to see ongoing performance
improvement in our operations which is driving greater stability in
our financial results and confidence in our ability to deliver
high-quality care.”
Financial Results
|
Three Months Ended March 31, |
|
Nine Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
in thousands, except
percentages and per share amounts |
|
|
|
|
|
Total revenues |
$ |
193,071 |
|
|
$ |
172,539 |
|
|
$ |
564,454 |
|
|
$ |
511,213 |
|
Loss Before Income Taxes |
|
(6,408 |
) |
|
|
(8,675 |
) |
|
|
(20,873 |
) |
|
|
(39,304 |
) |
Net Loss |
|
(6,184 |
) |
|
|
(7,310 |
) |
|
|
(20,967 |
) |
|
|
(31,557 |
) |
Net Loss margin |
(3.2)% |
|
(4.2)% |
|
(3.7)% |
|
(6.2)% |
|
|
|
|
|
|
|
|
Net Loss Attributable to
InnovAge Holding Corp. |
|
(5,887 |
) |
|
|
(6,630 |
) |
|
|
(19,638 |
) |
|
|
(29,496 |
) |
Net Loss per share - basic and
diluted |
$ |
(0.04 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.22 |
) |
|
|
|
|
|
|
|
|
Center-level Contribution
Margin(1) |
$ |
33,997 |
|
|
$ |
28,785 |
|
|
|
95,486 |
|
|
|
72,782 |
|
Adjusted EBITDA(1) |
$ |
3,606 |
|
|
$ |
3,789 |
|
|
$ |
13,604 |
|
|
$ |
(1,977 |
) |
Adjusted EBITDA margin(1) |
|
1.9 |
% |
|
|
2.2 |
% |
|
|
2.4 |
% |
|
(0.4)% |
|
|
|
|
|
|
|
|
Fiscal Third Quarter 2024 Financial
Performance
- Total revenue
of $193.1 million, increased approximately 11.9% compared to
$172.5 million in the third quarter of fiscal year 2023
- Loss Before Income Taxes of $6.4
million, compared to a loss before income taxes of $8.7 million in
the third quarter of fiscal year 2023
- Loss Before Income Taxes as a
percent of revenue of 3.3% decreased 1.7 percentage points compared
to Loss Before Income Tax as a percent of revenue of 5.0% in in the
third quarter of fiscal year 2023
- Center-level Contribution Margin(1)
of $34.0 million, increased 18.1% compared to $28.8 million in the
third quarter of fiscal year 2023
- Center-level Contribution
Margin(1) as a percent of revenue of 17.6%, increased 0.9
percentage points compared to 16.7% in the third quarter of fiscal
year 2023
- Net loss of $6.2 million, compared
to net loss of $7.3 million in the third quarter of fiscal year
2023
- Net loss margin of 3.2%, a decrease
of 1.0 percentage points compared to a net loss margin of 4.2% in
the third quarter of fiscal year 2023
- Net loss attributable to InnovAge
Holding Corp. of $5.9 million, or a loss of $0.04 per share,
compared to net loss of $6.6 million, or a loss of $0.05 per share
in the third quarter of fiscal year 2023
- Adjusted EBITDA(1) of $3.6
million, a decrease of $0.2 million compared to an Adjusted EBITDA
loss of $3.8 million in the third quarter of fiscal year 2023
- Adjusted EBITDA(1) margin of
1.9%, a decrease of 0.3 percentage points compared to 2.2% in the
third quarter of fiscal year 2023
- Census of approximately 6,820
participants compared to 6,310 participants in the third quarter of
fiscal year 2023
- Ended the third quarter of fiscal
year 2024 with $54.1 million in cash and cash equivalents plus
$45.2 million in short-term investments, and $81.3 million in debt
on the balance sheet, representing debt under the Company’s senior
secured term loan, convertible term loan and finance leases
(1) Center-level Contribution Margin and as a
percentage of revenue, 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.”
Full Fiscal Year 2024 Financial
Guidance
Based on information as of today, May 7,
2024, InnovAge is reiterating the following financial guidance.
|
Low |
|
High |
|
dollars in millions |
Census |
|
6,800 |
|
|
7,400 |
Member Months(1) |
|
79,000 |
|
|
83,000 |
|
|
|
|
Total revenues |
$ |
725 |
|
$ |
775 |
Adjusted EBITDA(2) |
$ |
12 |
|
$ |
18 |
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 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 income (loss), the most
closely comparable GAAP measure. The Company is unable to provide
guidance for net income (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 PM 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, predominantly dual-eligible seniors. Our
mission is to enable seniors to age independently in their own
homes for as long as safely 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 March 31, 2024, InnovAge
served approximately 6,820 participants across 19 centers in six
states. https://www.innovage.com.
Investor Contact:
Ryan Kubotarkubota@innovage.com
Media Contact:
Lara Hazenfieldlhazenfield@innovage.com
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,” “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 quarterly or annual guidance;
financial outlook, including future revenues and future earnings;
our expectations to increase the number of participants we serve,
to grow enrollment and capacity within new and existing centers, to
build and/or open de novo centers, or to find targets and execute
tuck-in acquisitions; our ability to control costs, mitigate the
effects of elevated expenses, expand our payor capabilities,
implement clinical value initiatives and strengthen enterprise
functions; the potential effects of the macro-economic environment;
our expectations with respect to audits, audit post-sanction work,
legal proceedings and government investigations and actions;
relationships and discussions with regulatory agencies; our ability
to effectively implement remediation measures, including creating
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 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 viability of our
growth strategy, including our ability to obtain licenses to open
our de novo centers in Downey and Bakersfield, California, and our
ability to ramp up our de novo centers in Florida; (ii) our ability
to identify and successfully complete and integrate acquisitions;
(iii) our ability to attract new participants and retain existing
participants and grow our revenue throughout our existing centers;
(iv) the results of periodic inspections, reviews, audits, and
investigations under the federal and state government programs,
such as the audit of our Sacramento, California center and the
targeted medical review of our San Bernardino, California center,
and our ability to sufficiently cure any new and recurring
deficiencies identified by the respective federal and state
government programs; (v) 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; (vi) the risk that the cost of
providing services will exceed our compensation under the Program
of All Inclusive Care for the Elderly (“PACE”); (vii) our increased
costs and expenditures in the future and our inability to execute
or realize the benefits of our clinical value initiatives; (viii)
the impact on our business from ongoing macroeconomic challenges,
including labor shortages and inflation; (ix) the dependence of our
revenues and operations upon a limited number of government payors;
(x) the risk that our submissions to government payors may contain
inaccurate or unsupportable information, including regarding risk
adjustment scores of participants; (xi) the impact on our business
of renegotiation, non-renewal or termination of capitation
agreements with government payors; (xii) our ability to compete in
the healthcare industry, including as a result of new or growing
market participants; (xiii) the difficulty to predict our future
results, which could cause such results to fall below any guidance
we provide; (xiv) the impact of state and federal efforts to reduce
healthcare spending; (xv) the effects of a pandemic, epidemic or
outbreak of an infectious disease, such as COVID-19; (xvi) our
dependence on our senior management team and other key employees;
(xvii) the impact of failures by our suppliers or limitations on
our ability to access new technology or medical products; (xviii)
the concentration of our presence in Colorado; (xix) our ability to
manage our operations effectively, execute our business plan,
maintain effective levels of service and participant satisfaction
and adequately address competitive challenges; (xx) our ability to
establish a presence in new geographic markets; (xxi) the impact of
competition for physicians and other clinical personnel and related
increases in our labor costs; (xxii) labor relations matters,
including unionization efforts; (xxiii) 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; (xxiv) our ability to effectively invest in,
implement improvements to and properly maintain the uninterrupted
operation and data integrity of our information technology and
other business systems; (xxv) our ability to accurately estimate
incurred but not reported medical expense or the risk scores of our
participants; (xxvi) risks associated with our use of “open-source”
software; (xxvii) the impact on our business of the termination of
our leases, increases in rent or inability to renew or extend
leases; (xxviii) the impact of weather and other factors beyond our
control; (xxix) the effect of our relatively limited operating
history as a for-profit company on investors' ability to evaluate
our current business and future prospects; (xxx) our ability to
adhere to complex and changing government laws and regulations in
the healthcare industry, including U.S. Healthcare reform, the
regulation of the corporate practice of medicine and the Health
Information Technology for Economic and Clinical Health Act of 2009
(the “HITECH Act”), and their implementing regulations
(collectively, “HIPAA”), the California Consumer Privacy Act
(“CCPA”) and other privacy laws and regulations in the healthcare
industry; (xxxi) our status as a “controlled company”; (xxxii) our
ability to maintain effective internal controls over financial
reporting and other enhanced requirements of being a public
company; (xxxiii) our ability to maintain and enhance our
reputation and brand recognition; (xxxiv) the impact on our
business of disruptions in our disaster recovery systems or
business continuity planning; (xxxv) impact of negative publicity
regarding the managed healthcare industry; and (xxxvi) other
factors disclosed in the section entitled “Risk Factors” in our
Annual Report for the year ended June 30, 2023 filed with the
Securities and Exchange Commission (the “SEC”) on September 12,
2023, and our subsequent filings 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 MeasuresIn addition to reporting financial
information in accordance with generally accepted accounting
principles (“GAAP”), the Company is also reporting Center-level
Contribution Margin, and as a percentage of revenue, Adjusted
EBITDA and Adjusted EBITDA margin, which are non-GAAP financial
measures. Center-level Contribution Margin and as a percentage of
revenue, 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 Center-level Contribution
Margin and as a percentage of revenue, 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 Center-level
Contribution Margin and as a percentage of revenue, 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.
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 income (loss) adjusted for interest expense,
net, depreciation and amortization, and provision (benefit) for
income tax as well as addbacks for non-recurring expenses or
exceptional items, including relating to management equity
compensation, executive severance and recruitment, class action
litigation costs and settlement, M&A and de novo center
development, business optimization, electronic medical record (EMR)
implementation, and loss on minority equity interest. Adjusted
EBITDA margin is Adjusted EBITDA expressed as a percentage of our
total revenue. 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)
(UNAUDITED)
|
March 31,2024 |
|
June 30,2023 |
Assets |
|
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
54,095 |
|
|
$ |
127,249 |
|
Short-term investments |
|
45,235 |
|
|
|
46,213 |
|
Restricted cash |
|
14 |
|
|
|
16 |
|
Accounts receivable, net of allowance ($6,757 – March 31, 2024
and $4,161 – June 30, 2023) |
|
36,457 |
|
|
|
24,344 |
|
Prepaid expenses |
|
13,935 |
|
|
|
17,145 |
|
Income tax receivable |
|
3,330 |
|
|
|
262 |
|
Total current assets |
|
153,066 |
|
|
|
215,229 |
|
Noncurrent Assets |
|
|
|
Property and equipment, net |
|
191,190 |
|
|
|
192,188 |
|
Operating lease assets |
|
29,118 |
|
|
|
21,210 |
|
Investments |
|
3,493 |
|
|
|
5,493 |
|
Deposits and other |
|
5,702 |
|
|
|
3,823 |
|
Goodwill |
|
140,083 |
|
|
|
124,217 |
|
Other intangible assets, net |
|
4,703 |
|
|
|
5,198 |
|
Total noncurrent assets |
|
374,289 |
|
|
|
352,129 |
|
Total assets |
$ |
527,355 |
|
|
$ |
567,358 |
|
Liabilities and
Stockholders' Equity |
|
|
|
Current Liabilities |
|
|
|
Accounts payable and accrued expenses |
$ |
48,891 |
|
|
$ |
54,935 |
|
Reported and estimated claims |
|
49,281 |
|
|
|
42,999 |
|
Due to Medicaid and Medicare |
|
11,412 |
|
|
|
9,142 |
|
Income tax payable |
|
— |
|
|
|
1,212 |
|
Current portion of long-term debt |
|
3,795 |
|
|
|
3,795 |
|
Current portion of finance lease obligations |
|
4,466 |
|
|
|
4,722 |
|
Current portion of operating lease obligations |
|
4,128 |
|
|
|
3,530 |
|
Deferred revenue |
|
— |
|
|
|
28,115 |
|
Total current liabilities |
|
121,973 |
|
|
|
148,450 |
|
Noncurrent Liabilities |
|
|
|
Deferred tax liability, net |
|
6,159 |
|
|
|
6,236 |
|
Finance lease obligations |
|
9,898 |
|
|
|
13,114 |
|
Operating lease obligations |
|
27,322 |
|
|
|
18,828 |
|
Other noncurrent liabilities |
|
1,360 |
|
|
|
1,086 |
|
Long-term debt, net of debt issuance costs |
|
62,321 |
|
|
|
64,844 |
|
Total liabilities |
|
229,033 |
|
|
|
252,558 |
|
Commitments and
Contingencies |
|
|
|
Redeemable
Noncontrolling Interests |
|
11,588 |
|
|
|
12,708 |
|
Stockholders’
Equity |
|
|
|
Common stock, $0.001 par value; 500,000,000 authorized as of
March 31, 2024 and June 30, 2023; 135,925,305 and
135,639,845 issued shares as of March 31, 2024 and
June 30, 2023, respectively |
|
136 |
|
|
|
136 |
|
Additional paid-in capital |
|
336,596 |
|
|
|
332,107 |
|
Retained deficit |
|
(55,582 |
) |
|
|
(35,944 |
) |
Total InnovAge Holding Corp. |
|
281,150 |
|
|
|
296,299 |
|
Noncontrolling interests |
|
5,584 |
|
|
|
5,793 |
|
Total stockholders’ equity |
|
286,734 |
|
|
|
302,092 |
|
Total liabilities and stockholders’ equity |
$ |
527,355 |
|
|
$ |
567,358 |
|
Schedule 2
InnovAgeCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(IN
THOUSANDS) (UNAUDITED)
|
Three Months Ended March 31, |
|
Nine Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Revenues |
|
|
|
|
|
|
|
Capitation revenue |
$ |
192,756 |
|
|
$ |
172,196 |
|
|
$ |
563,490 |
|
|
$ |
510,268 |
|
Other service revenue |
|
315 |
|
|
|
343 |
|
|
|
964 |
|
|
|
945 |
|
Total revenues |
|
193,071 |
|
|
|
172,539 |
|
|
|
564,454 |
|
|
|
511,213 |
|
Expenses |
|
|
|
|
|
|
|
External provider costs |
|
99,996 |
|
|
|
89,805 |
|
|
|
300,319 |
|
|
|
279,550 |
|
Cost of care, excluding depreciation and amortization |
|
59,078 |
|
|
|
53,949 |
|
|
|
168,649 |
|
|
|
158,881 |
|
Sales and marketing |
|
7,179 |
|
|
|
5,314 |
|
|
|
18,416 |
|
|
|
13,502 |
|
Corporate, general and administrative |
|
27,549 |
|
|
|
27,648 |
|
|
|
81,746 |
|
|
|
86,646 |
|
Depreciation and amortization |
|
5,062 |
|
|
|
3,992 |
|
|
|
13,621 |
|
|
|
11,087 |
|
Total expenses |
|
198,864 |
|
|
|
180,708 |
|
|
|
582,751 |
|
|
|
549,666 |
|
Operating
Loss |
|
(5,793 |
) |
|
|
(8,169 |
) |
|
|
(18,297 |
) |
|
|
(38,453 |
) |
|
|
|
|
|
|
|
|
Other Income
(Expense) |
|
|
|
|
|
|
|
Interest expense, net |
|
(1,022 |
) |
|
|
(405 |
) |
|
|
(2,619 |
) |
|
|
(1,231 |
) |
Other income (expense) |
|
525 |
|
|
|
(101 |
) |
|
|
2,043 |
|
|
|
380 |
|
Loss on minority equity interest |
|
(118 |
) |
|
|
— |
|
|
|
(2,000 |
) |
|
|
— |
|
Total other expense |
|
(615 |
) |
|
|
(506 |
) |
|
|
(2,576 |
) |
|
|
(851 |
) |
Loss Before Income
Taxes |
|
(6,408 |
) |
|
|
(8,675 |
) |
|
|
(20,873 |
) |
|
|
(39,304 |
) |
Provision (Benefit)
for Income Taxes |
|
(224 |
) |
|
|
(1,365 |
) |
|
|
94 |
|
|
|
(7,747 |
) |
Net Loss |
|
(6,184 |
) |
|
|
(7,310 |
) |
|
|
(20,967 |
) |
|
|
(31,557 |
) |
Less: net loss attributable to noncontrolling interests |
|
(297 |
) |
|
|
(680 |
) |
|
|
(1,329 |
) |
|
|
(2,061 |
) |
Net Loss Attributable
to InnovAge Holding Corp. |
$ |
(5,887 |
) |
|
$ |
(6,630 |
) |
|
$ |
(19,638 |
) |
|
$ |
(29,496 |
) |
|
|
|
|
|
|
|
|
Weighted-average
number of common shares outstanding - basic |
|
135,908,256 |
|
|
|
135,601,327 |
|
|
|
135,861,922 |
|
|
|
135,581,971 |
|
Weighted-average
number of common shares outstanding - diluted |
|
135,908,256 |
|
|
|
135,601,327 |
|
|
|
135,861,922 |
|
|
|
135,581,971 |
|
|
|
|
|
|
|
|
|
Net loss per share -
basic |
$ |
(0.04 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.22 |
) |
Net loss per share -
diluted |
$ |
(0.04 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.22 |
) |
Schedule 3
InnovAgeCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(IN
THOUSANDS) (UNAUDITED)
|
For the Nine Months Ended March
31, |
|
|
2024 |
|
|
|
2023 |
|
Operating
Activities |
|
|
|
Net loss |
$ |
(20,967 |
) |
|
$ |
(31,557 |
) |
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities |
|
|
|
Gain (loss) on disposal of assets |
|
(14 |
) |
|
|
482 |
|
Provision for uncollectible accounts |
|
5,252 |
|
|
|
2,319 |
|
Depreciation and amortization |
|
13,621 |
|
|
|
11,087 |
|
Operating lease rentals |
|
3,831 |
|
|
|
3,500 |
|
Amortization of deferred financing costs |
|
322 |
|
|
|
322 |
|
Stock-based compensation |
|
5,140 |
|
|
|
3,456 |
|
Loss on minority equity interest investment |
|
2,000 |
|
|
|
— |
|
Deferred income taxes |
|
(78 |
) |
|
|
(12,046 |
) |
Other |
|
302 |
|
|
|
(726 |
) |
Changes in operating assets and liabilities |
|
|
|
Accounts receivable, net |
|
(16,802 |
) |
|
|
(609 |
) |
Prepaid expenses |
|
4,382 |
|
|
|
(81 |
) |
Income tax receivable |
|
(3,068 |
) |
|
|
7,727 |
|
Deposits and other |
|
(2,350 |
) |
|
|
(836 |
) |
Accounts payable and accrued expenses |
|
(5,402 |
) |
|
|
25,161 |
|
Reported and estimated claims |
|
6,171 |
|
|
|
641 |
|
Due to Medicaid and Medicare |
|
2,270 |
|
|
|
1,870 |
|
Income taxes payable |
|
(1,212 |
) |
|
|
— |
|
Operating lease liabilities |
|
(4,054 |
) |
|
|
(3,625 |
) |
Deferred revenue |
|
(28,115 |
) |
|
|
— |
|
Net cash provided by (used in) operating activities |
|
(38,771 |
) |
|
|
7,085 |
|
Investing
Activities |
|
|
|
Purchases of property and equipment |
|
(4,609 |
) |
|
|
(19,329 |
) |
Purchases of short-term investments |
|
(1,782 |
) |
|
|
(45,000 |
) |
Proceeds from sale of short-term investments |
|
3,000 |
|
|
|
— |
|
Acquisition of business |
|
(23,916 |
) |
|
|
— |
|
Net cash used in investing activities |
|
(27,307 |
) |
|
|
(64,329 |
) |
Financing
Activities |
|
|
|
Payments for finance lease obligations |
|
(3,581 |
) |
|
|
(2,637 |
) |
Principal payments on long-term debt |
|
(2,846 |
) |
|
|
(2,843 |
) |
Taxes paid related to net share settlements of stock-based
compensation awards |
|
(651 |
) |
|
|
— |
|
Net cash used in financing
activities |
|
(7,078 |
) |
|
|
(5,480 |
) |
|
|
|
|
DECREASE IN CASH, CASH
EQUIVALENTS & RESTRICTED CASH |
|
(73,156 |
) |
|
|
(62,724 |
) |
CASH, CASH EQUIVALENTS
& RESTRICTED CASH, BEGINNING OF PERIOD |
|
127,265 |
|
|
|
184,446 |
|
CASH, CASH EQUIVALENTS
& RESTRICTED CASH, END OF PERIOD |
$ |
54,109 |
|
|
$ |
121,722 |
|
|
|
|
|
Supplemental Cash Flows Information |
|
|
|
Interest paid |
$ |
2,894 |
|
|
$ |
2,826 |
|
Income taxes paid |
$ |
4,452 |
|
|
$ |
13 |
|
Property and equipment included in accounts payable |
$ |
432 |
|
|
$ |
1,811 |
|
Property and equipment purchased under finance leases |
$ |
108 |
|
|
$ |
8,157 |
|
Schedule 4
InnovAgeRECONCILIATION
OF GAAP AND NON-GAAP MEASURES(IN THOUSANDS)
(UNAUDITED)
Adjusted EBITDA
|
Three months ended March 31, |
|
Nine months ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
Net loss |
$ |
(6,184 |
) |
|
$ |
(7,310 |
) |
|
$ |
(20,967 |
) |
|
$ |
(31,557 |
) |
Interest expense, net |
|
1,022 |
|
|
|
405 |
|
|
|
2,619 |
|
|
|
1,231 |
|
Depreciation and
amortization |
|
5,062 |
|
|
|
3,992 |
|
|
|
13,621 |
|
|
|
11,087 |
|
Provision (benefit) for income
tax |
|
(224 |
) |
|
|
(1,365 |
) |
|
|
94 |
|
|
|
(7,747 |
) |
Stock-based compensation |
|
1,551 |
|
|
|
1,208 |
|
|
|
5,140 |
|
|
|
3,721 |
|
Litigation costs and
settlement(a) |
|
897 |
|
|
|
3,274 |
|
|
|
2,802 |
|
|
|
7,839 |
|
M&A and de novo center
development(b) |
|
271 |
|
|
|
146 |
|
|
|
964 |
|
|
|
452 |
|
Business optimization(c) |
|
738 |
|
|
|
1,394 |
|
|
|
3,672 |
|
|
|
8,418 |
|
EMR implementation(d) |
|
355 |
|
|
|
2,045 |
|
|
|
3,659 |
|
|
|
4,579 |
|
Loss on minority equity
interest(e) |
$ |
118 |
|
|
$ |
— |
|
|
$ |
2,000 |
|
|
$ |
— |
|
Adjusted EBITDA |
$ |
3,606 |
|
|
$ |
3,789 |
|
|
$ |
13,604 |
|
|
$ |
(1,977 |
) |
|
|
|
|
|
|
|
|
Net loss margin |
(3.2)% |
|
(4.2)% |
|
(3.7)% |
|
(6.2)% |
Adjusted EBITDA margin |
|
1.9 |
% |
|
|
2.2 |
% |
|
|
2.4 |
% |
|
(0.4)% |
_______________________ |
(a) |
Reflects charges/(credits) related to litigation by stockholders,
litigation related to de novo center development, and civil
investigative demands. Refer to Note 9, "Commitments and
Contingencies" to our condensed consolidated financial statements
for more information regarding litigation by stockholders and civil
investigative demands. Costs reflected consist of litigation costs
considered one-time in nature and outside of the ordinary course of
business based on the following considerations which we assess
regularly: (i) the frequency of similar cases that have been
brought to date, or are expected to be brought within two years,
(ii) complexity of the case, (iii) nature of the remedies sought,
(iv) litigation posture of the Company, (v) counterparty involved,
and (vi) the Company's overall litigation strategy. |
(b) |
Reflects charges related to M&A transaction and integrations,
and de novo center developments. |
(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 March 31, 2024, this includes (i) $0.4
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 and
(ii) $0.3 million related to other non-recurring charges. For the
three months ended March 31, 2023, this includes (i) $0.3 million
related to consultants and contractors performing audit and other
related services at sanctioned centers, (ii) $0.2 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, (iii) $0.6 million in
the consolidation of the Germantown, Pennsylvania center, and (iv)
$0.3 million related to other non-recurring projects aimed at
reducing costs and improving efficiencies. For the nine months
ended March 31, 2024, this includes (i) $2.6 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 (ii) $0.3 million of
costs related to severance and other organizational costs and (iii)
$0.8 million related to charges for technology improvements,
environmental, sustainability, and governance reporting, and other
non-recurring charges. For the nine months ended March 31, 2023,
this includes (i) $1.5 million related to consultants and
contractors performing audit and other related services at
sanctioned centers, (ii) $5.3 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, (iii) $0.6 million in the
consolidation of the Germantown center and (iv) $1.0 million
related to other non-recurring projects aimed at reducing costs and
improving efficiencies. |
(d) |
Reflects non-recurring expenses relating to the implementation of a
new EMR vendor. |
(e) |
Reflects impairment charges related to our minority equity interest
in Jetdoc, Inc. |
|
Three months ended December
31, |
|
|
2023 |
|
|
|
Net loss |
$ |
(3,821 |
) |
Interest expense, net |
|
935 |
|
Depreciation and
amortization |
|
4,290 |
|
Provision (benefit) for income
tax |
|
93 |
|
Stock-based compensation |
|
1,766 |
|
Litigation costs and
settlement(a) |
|
198 |
|
M&A and de novo center
development(b) |
|
284 |
|
Business optimization(c) |
|
774 |
|
EMR implementation(d) |
|
1,370 |
|
Loss on minority equity
interest(e) |
|
1,882 |
|
Adjusted EBITDA |
$ |
7,771 |
|
|
|
Net loss margin |
(2.0)% |
Adjusted EBITDA margin |
|
4.1 |
% |
(a) |
Reflects charges/(credits) related to litigation by stockholders,
litigation related to de novo center development, and civil
investigative demands. Costs reflected consist of litigation costs
considered one-time in nature and outside of the ordinary course of
business based on the following considerations which we assess
regularly: (i) the frequency of similar cases that have been
brought to date, or are expected to be brought within two years,
(ii) complexity of the case, (iii) nature of the remedies sought,
(iv) litigation posture of the Company, (v) counterparty involved,
and (vi) the Company's overall litigation strategy. |
(b) |
Reflects charges related to M&A transaction and integrations,
and de novo center developments. |
(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 December 31, 2023, this includes (i) $0.3
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 (ii)
$0.3 million of costs related to severance and other organizational
costs and (iii) $0.2 million related to other non-recurring
charges. |
(d) |
Reflects non-recurring expenses relating to the implementation of a
new EMR vendor. |
(e) |
Reflects impairment charges related to our minority equity interest
in Jetdoc, Inc. |
Center-Level Contribution
Margin
|
|
|
|
|
Three Months Ended March 31, 2024 |
|
Three Months Ended March 31, 2023 |
(In thousands) |
PACE |
|
All other(a) |
|
Totals |
|
PACE |
|
All other(a) |
|
Totals |
Capitation revenue |
$ |
192,756 |
|
|
$ |
— |
|
|
$ |
192,756 |
|
|
$ |
172,196 |
|
|
$ |
— |
|
|
$ |
172,196 |
|
Other service revenue |
|
78 |
|
|
|
237 |
|
|
|
315 |
|
|
|
87 |
|
|
|
256 |
|
|
|
343 |
|
Total revenues |
|
192,834 |
|
|
|
237 |
|
|
|
193,071 |
|
|
|
172,283 |
|
|
|
256 |
|
|
|
172,539 |
|
External provider costs |
|
99,996 |
|
|
|
— |
|
|
|
99,996 |
|
|
|
89,805 |
|
|
|
— |
|
|
|
89,805 |
|
Cost of care, excluding depreciation and amortization |
|
58,959 |
|
|
|
119 |
|
|
|
59,078 |
|
|
|
53,861 |
|
|
|
88 |
|
|
|
53,949 |
|
Center-Level
Contribution Margin |
|
33,879 |
|
|
|
118 |
|
|
|
33,997 |
|
|
|
28,617 |
|
|
|
168 |
|
|
|
28,785 |
|
Overhead costs(b) |
|
34,727 |
|
|
|
1 |
|
|
|
34,728 |
|
|
|
33,041 |
|
|
|
(79 |
) |
|
|
32,962 |
|
Depreciation and amortization |
|
4,929 |
|
|
|
133 |
|
|
|
5,062 |
|
|
|
3,858 |
|
|
|
134 |
|
|
|
3,992 |
|
Interest expense, net |
|
(978 |
) |
|
|
(44 |
) |
|
|
(1,022 |
) |
|
|
(360 |
) |
|
|
(45 |
) |
|
|
(405 |
) |
Other income (expense) |
|
525 |
|
|
|
— |
|
|
|
525 |
|
|
|
(101 |
) |
|
|
— |
|
|
|
(101 |
) |
Loss on minority equity interest |
|
(118 |
) |
|
|
— |
|
|
|
(118 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss Before Income
Taxes |
$ |
(6,348 |
) |
|
$ |
(60 |
) |
|
$ |
(6,408 |
) |
|
$ |
(8,743 |
) |
|
$ |
68 |
|
|
$ |
(8,675 |
) |
Loss Before Income
Taxes as a % of revenue |
|
|
|
|
(3.3)% |
|
|
|
|
|
(5.0)% |
Center- Level
Contribution Margin as a % of revenue |
|
|
|
|
|
17.6 |
% |
|
|
|
|
|
|
16.7 |
% |
|
|
|
Three Months Ended December 31, 2023 |
(In thousands) |
PACE |
|
All other(a) |
|
Totals |
Capitation revenue |
$ |
188,561 |
|
|
$ |
— |
|
|
$ |
188,561 |
|
Other service revenue |
|
68 |
|
|
|
269 |
|
|
|
337 |
|
Total revenues |
|
188,629 |
|
|
|
269 |
|
|
|
188,898 |
|
External provider costs |
|
100,964 |
|
|
|
— |
|
|
|
100,964 |
|
Cost of care, excluding depreciation and amortization |
|
54,171 |
|
|
|
150 |
|
|
|
54,321 |
|
Center-Level
Contribution Margin |
|
33,494 |
|
|
|
119 |
|
|
|
33,613 |
|
Overhead costs(b) |
|
31,108 |
|
|
|
— |
|
|
|
31,108 |
|
Depreciation and amortization |
|
4,178 |
|
|
|
112 |
|
|
|
4,290 |
|
Interest expense, net |
|
890 |
|
|
|
45 |
|
|
|
935 |
|
Other income (expense) |
|
(874 |
) |
|
|
— |
|
|
|
(874 |
) |
Loss on minority equity interest |
|
1,882 |
|
|
|
— |
|
|
|
1,882 |
|
Loss Before Income
Taxes |
$ |
(3,690 |
) |
|
$ |
(38 |
) |
|
$ |
(3,728 |
) |
Loss Before Income
Taxes as a % of revenue |
|
|
|
|
(2.0)% |
Center- Level
Contribution Margin as a % of revenue |
|
|
|
|
|
17.8 |
% |
_________________________________ |
(a) |
Center-level Contribution Margin from segments below the
quantitative thresholds are primarily attributable to the Senior
Housing operating segment of the Company. This segment has never
met any of the quantitative thresholds for determining reportable
segments. |
(b) |
Overhead consists of the Sales and marketing and Corporate, general
and administrative financial statement line items. |
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