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 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,” “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 |
|
|
|
24,957 |
|
|
|
19,627 |
|
|
Corporate, general and administrative |
|
29,591 |
|
|
|
28,991 |
|
|
|
111,337 |
|
|
|
115,637 |
|
|
Depreciation and amortization |
|
5,329 |
|
|
|
4,332 |
|
|
|
18,950 |
|
|
|
15,419 |
|
|
Total expenses |
|
204,284 |
|
|
|
187,816 |
|
|
|
787,035 |
|
|
|
737,482 |
|
| Operating
Loss |
|
(4,883 |
) |
|
|
(10,942 |
) |
|
|
(23,180 |
) |
|
|
(49,395 |
) |
| |
|
|
|
|
|
|
|
| Other Income
(Expense) |
|
|
|
|
|
|
|
|
Interest expense, net |
|
(1,404 |
) |
|
|
(291 |
) |
|
|
(4,023 |
) |
|
|
(1,522 |
) |
|
Gain on cost and equity method investments |
|
4,842 |
|
|
|
— |
|
|
|
2,842 |
|
|
|
— |
|
|
Other income |
|
499 |
|
|
|
(256 |
) |
|
|
2,542 |
|
|
|
124 |
|
|
Total other income (expense) |
|
3,937 |
|
|
|
(547 |
) |
|
|
1,361 |
|
|
|
(1,398 |
) |
| Loss Before Income
Taxes |
|
(946 |
) |
|
|
(11,489 |
) |
|
|
(21,819 |
) |
|
|
(50,793 |
) |
| Provision (Benefit)
for Income Taxes |
|
1,308 |
|
|
|
506 |
|
|
|
1,402 |
|
|
|
(7,241 |
) |
| Net Loss |
|
(2,254 |
) |
|
|
(11,995 |
) |
|
|
(23,221 |
) |
|
|
(43,552 |
) |
|
Less: net loss attributable to noncontrolling interests |
|
(554 |
) |
|
|
(818 |
) |
|
|
(1,883 |
) |
|
|
(2,879 |
) |
| Net Loss Attributable
to InnovAge Holding Corp. |
$ |
(1,700 |
) |
|
$ |
(11,177 |
) |
|
$ |
(21,338 |
) |
|
$ |
(40,673 |
) |
| |
|
|
|
|
|
|
|
| Weighted-average
number of commonshares outstanding -
basic |
|
136,023,975 |
|
|
|
135,632,641 |
|
|
|
135,902,214 |
|
|
|
135,593,824 |
|
| Weighted-average
number of commonshares outstanding -
diluted |
|
136,023,975 |
|
|
|
135,632,641 |
|
|
|
135,902,214 |
|
|
|
135,593,824 |
|
| |
|
|
|
|
|
|
|
| Net loss per share -
basic |
$ |
(0.01 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.30 |
) |
| Net loss per share -
diluted |
$ |
(0.01 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.30 |
) |
| |
Schedule 3
InnovAgeCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(IN
THOUSANDS)
| |
Year Ended June 30, |
|
|
|
2024 |
|
|
|
2023 |
|
| Operating
Activities |
|
|
|
|
Net loss |
$ |
(23,221 |
) |
|
$ |
(43,552 |
) |
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities |
|
|
|
|
Loss on disposal of assets |
|
78 |
|
|
|
1,107 |
|
|
Provision for uncollectible accounts |
|
7,010 |
|
|
|
3,340 |
|
|
Depreciation and amortization |
|
18,950 |
|
|
|
15,419 |
|
|
Operating lease rentals |
|
5,339 |
|
|
|
4,604 |
|
|
Gain on cost and equity method investments |
|
(2,842 |
) |
|
|
— |
|
|
Amortization of deferred financing costs |
|
429 |
|
|
|
429 |
|
|
Stock-based compensation |
|
6,832 |
|
|
|
4,608 |
|
|
Deferred income taxes |
|
1,224 |
|
|
|
(11,525 |
) |
|
Other |
|
1,449 |
|
|
|
167 |
|
|
Changes in operating assets and liabilities, net of
acquisitions |
|
|
|
|
Accounts receivable, net |
|
(30,333 |
) |
|
|
8,223 |
|
|
Prepaid expenses |
|
(703 |
) |
|
|
(3,303 |
) |
|
Income tax receivable |
|
(3,062 |
) |
|
|
6,499 |
|
|
Deposits and other |
|
(2,829 |
) |
|
|
(1,263 |
) |
|
Accounts payable and accrued expenses |
|
1,370 |
|
|
|
6,786 |
|
|
Reported and estimated claims |
|
12,294 |
|
|
|
4,545 |
|
|
Due to Medicaid and Medicare |
|
6,054 |
|
|
|
12 |
|
|
Income taxes payable |
|
(1,212 |
) |
|
|
1,212 |
|
|
Operating lease liabilities |
|
(5,610 |
) |
|
|
(5,187 |
) |
|
Deferred revenue |
|
(28,115 |
) |
|
|
28,115 |
|
|
Net cash provided by (used in) operating activities |
|
(36,898 |
) |
|
|
20,236 |
|
| Investing
Activities |
|
|
|
|
Purchases of property and equipment |
|
(7,914 |
) |
|
|
(23,354 |
) |
|
Purchases of short-term investments |
|
(2,385 |
) |
|
|
(46,167 |
) |
|
Proceeds from sale of short-term investments |
|
3,000 |
|
|
|
— |
|
|
Proceeds from dissolution of equity method investments |
|
4,842 |
|
|
|
— |
|
|
Acquisition of business |
|
(23,916 |
) |
|
|
— |
|
|
Net cash used in investing activities |
$ |
(26,373 |
) |
|
$ |
(69,521 |
) |
| Financing
Activities |
|
|
|
|
Payments for finance lease obligations |
|
(4,637 |
) |
|
|
(4,103 |
) |
|
Principal payments on long-term debt |
|
(3,795 |
) |
|
|
(3,793 |
) |
|
Repurchase of equity securities |
|
(179 |
) |
|
|
— |
|
|
Contribution from joint venture partner |
|
2,900 |
|
|
|
— |
|
|
Taxes paid related to net settlements of stock-based compensation
awards |
|
(1,323 |
) |
|
|
— |
|
|
Net cash used in financing activities |
|
(7,034 |
) |
|
|
(7,896 |
) |
| |
|
|
|
| DECREASE IN CASH, CASH
EQUIVALENTS & RESTRICTED CASH |
|
(70,305 |
) |
|
|
(57,181 |
) |
| CASH, CASH EQUIVALENTS
& RESTRICTED CASH, BEGINNING OF PERIOD |
|
127,265 |
|
|
|
184,446 |
|
| CASH, CASH EQUIVALENTS
& RESTRICTED CASH, END OF PERIOD |
$ |
56,960 |
|
|
$ |
127,265 |
|
| |
|
|
|
| Supplemental Cash
Flows Information |
|
|
|
|
Interest paid |
$ |
4,063 |
|
|
$ |
3,997 |
|
|
Income taxes paid |
$ |
4,452 |
|
|
$ |
13 |
|
|
Property and equipment included in accounts payable |
$ |
181 |
|
|
$ |
882 |
|
|
Property and equipment purchased under capital leases |
$ |
4,142 |
|
|
$ |
9,131 |
|
|
|
|
|
|
|
|
|
|
Schedule 4
InnovAgeRECONCILIATION
OF GAAP AND NON-GAAP MEASURES(IN THOUSANDS)
(UNAUDITED)
Adjusted EBITDA
| |
Three Months Ended |
|
Year Ended |
| |
June 30, 2024 |
|
June 30, 2023 |
|
June 30, 2024 |
|
June 30, 2023 |
| |
|
|
|
|
|
|
|
|
Net Loss |
$ |
(2,254 |
) |
|
$ |
(11,995 |
) |
|
$ |
(23,221 |
) |
|
$ |
(43,552 |
) |
| Interest expense, net |
|
1,404 |
|
|
|
291 |
|
|
|
4,023 |
|
|
|
1,522 |
|
| Other investment
income(a) |
|
(598 |
) |
|
|
(505 |
) |
|
|
(2,385 |
) |
|
|
(1,170 |
) |
| Depreciation and
amortization |
|
5,329 |
|
|
|
4,332 |
|
|
|
18,950 |
|
|
|
15,419 |
|
| Provision (benefit) for income
tax |
|
1,308 |
|
|
|
506 |
|
|
|
1,402 |
|
|
|
(7,241 |
) |
| Stock-based compensation |
|
1,692 |
|
|
|
1,272 |
|
|
|
6,832 |
|
|
|
4,993 |
|
| Litigation costs and
settlement(b) |
|
2,076 |
|
|
|
1,943 |
|
|
|
4,878 |
|
|
|
9,782 |
|
| M&A diligence, transaction
and integration(c) |
|
394 |
|
|
|
137 |
|
|
|
778 |
|
|
|
140 |
|
| Business optimization(d) |
|
727 |
|
|
|
2,117 |
|
|
|
4,399 |
|
|
|
10,535 |
|
| EMR implementation(e) |
|
1 |
|
|
|
1,568 |
|
|
|
3,660 |
|
|
|
6,147 |
|
| Gain on cost and equity method
investments(f) |
|
(4,842 |
) |
|
|
— |
|
|
$ |
(2,842 |
) |
|
$ |
— |
|
|
Adjusted EBITDA |
$ |
5,237 |
|
|
$ |
(334 |
) |
|
$ |
16,474 |
|
|
$ |
(3,425 |
) |
| |
|
|
|
|
|
|
|
| Net loss margin |
(1.1 |
)% |
|
(6.8 |
)% |
|
(3.0 |
)% |
|
(6.3 |
)% |
| Adjusted EBITDA margin |
|
2.6 |
% |
|
(0.2 |
)% |
|
|
2.2 |
% |
|
(0.5 |
)% |
_______________________
|
(a) |
Reflects investment income related to short term investments
included in our consolidated statement of operations. Effective for
the year ended June 30, 2024, the Company has revised the
calculation for Adjusted EBITDA to reflect the impact of investment
income in 2024 and 2023. |
|
(b) |
Reflects a $1.2 million reserve for a California wage and hour
class action settlement for the year ended June 30, 2023 and
each of the years ended June 30, 2023 and 2024 included
charges/(credits) related to litigation by stockholders, litigation
related to de novo center, 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. |
|
(c) |
Reflects charges related to M&A transaction and integrations,
including the Concerto acquisition in December 2023. Effective for
the year ended June 30, 2024, the Company has revised the
calculation for Adjusted EBITDA to no longer exclude de novo center
development costs in 2024 and 2023. De novo center development
costs were $0.4 million and $0.5 million the three months ended
June 30, 2024 and 2023, respectively, and $1.0 million for each of
the years ended June 30, 2024 and 2023. |
|
(d) |
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 June 30, 2024 costs include (i) $0.5 million
in third party consultants as we implement our core provider
initiatives, asses our risk-bearing payor capabilities, and
strengthen our enterprise capabilities and (ii) $0.2 million in
fees associated with the Pinewood Lodge, LLLP (“PWD”) dissolution.
For the three months ended June 30, 2023 costs include (i) $1.1
million related to organizational restructure, (ii) $0.7 million in
third party consultants as we implement our core provider
initiatives, asses our risk-bearing payor capabilities, and
strengthen our enterprise capabilities, and (iii) $0.3 million
related to charges for technology improvements and other
non-recurring projects aimed at reducing costs and improving
efficiencies. For the year ended June 30, 2024 costs include
(i) $3.1 million associated with third party consultants as we
implement our core provider initiatives, asses 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) $0.9 million related to charges for
technology improvements, environmental sustainability, governance
reporting, and other non-recurring projects aimed at reducing costs
and improving efficiencies. For the year ended June 30, 2023, costs
included (i) $1.8 million related to consultants and contractors
performing audit and other related services at sanctioned centers,
(ii) $5.7 million of costs associated with third party consultants
to strengthen enterprise capabilities, (iii) $0.6 million related
to the consolidation of the Germantown, Pennsylvania center, (iv)
$1.1 million related to organizational restructure, and (v) $1.4
million related to other non-recurring projects aimed at reducing
costs and improving efficiencies. |
|
(e) |
Reflects non-recurring expenses relating to the implementation of a
new EMR vendor. |
|
(f) |
Reflects $4.8 million net benefit associated with the dissolution
of PWD partially offset by $2.0 million impairment in Jetdoc
investment. |
|
|
|
| |
Three Months Ended |
| |
March 31, 2024 |
| |
|
|
Net Loss |
$ |
(6,184 |
) |
| Interest expense, net |
|
1,022 |
|
| Other investment
income(a) |
|
(590 |
) |
| Depreciation and
amortization |
|
5,062 |
|
| Provision (benefit) for income
tax |
|
(224 |
) |
| Stock-based compensation |
|
1,551 |
|
| Litigation costs and
settlement(b) |
|
897 |
|
| M&A diligence, transaction
and integration(c) |
|
210 |
|
| Business optimization(d) |
|
738 |
|
| EMR implementation(e) |
|
355 |
|
| Loss on cost and equity method
investments(f) |
|
118 |
|
|
Adjusted EBITDA |
$ |
2,955 |
|
| |
|
| Net loss margin |
(3.2 |
)% |
| Adjusted EBITDA margin |
|
1.5 |
% |
_______________________
|
(a) |
Reflects investment income related to short term investments
included in our consolidated statement of operations. Effective for
the year ended June 30, 2024, the Company has revised the
calculation for Adjusted EBITDA to reflect the impact of investment
income in 2024 and 2023. |
|
(b) |
Reflects charges/(credits) related to litigation by stockholders,
litigation related to de novo center, 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. |
|
(c) |
Reflects charges related to M&A transaction and integrations,
including the Concerto acquisition in December 2023. Effective for
the year ended June 30, 2024, the Company has revised the
calculation for Adjusted EBITDA to no longer exclude de novo center
development costs in 2024 and 2023. De novo center development
costs were $0.1 million in the three months ended March 31,
2024. |
|
(d) |
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 costs include (i) $0.5
million in third party consultants as we implement our core
provider initiatives, asses our risk-bearing payor capabilities,
and strengthen our enterprise capabilities and (ii) $0.2 million
related to charges for technology improvements and other
non-recurring projects aimed at reducing costs and improving
efficiencies. |
|
(e) |
Reflects non-recurring expenses relating to the implementation of a
new EMR vendor. |
|
(f) |
Reflects $0.1 million impairment in Jetdoc investment ($2.0 million
total impairment; balance recorded in three months ended December
31, 2023). |
|
|
|
Center-Level Contribution Margin
| |
Year Ended June 30, 2024 |
|
Year Ended June 30, 2023 |
| in thousands |
PACE |
|
All other(1) |
|
Totals |
|
PACE |
|
All other(1) |
|
Totals |
|
Capitation revenue |
|
762,570 |
|
|
|
— |
|
|
|
762,570 |
|
|
|
686,836 |
|
|
|
— |
|
|
|
686,836 |
|
|
Other service revenue |
|
310 |
|
|
|
975 |
|
|
|
1,285 |
|
|
|
347 |
|
|
|
904 |
|
|
|
1,251 |
|
| Total revenues |
|
762,880 |
|
|
|
975 |
|
|
|
763,855 |
|
|
|
687,183 |
|
|
|
904 |
|
|
|
688,087 |
|
|
External provider costs |
|
403,010 |
|
|
|
— |
|
|
|
403,010 |
|
|
|
374,528 |
|
|
|
— |
|
|
|
374,528 |
|
|
Cost of care, excluding depreciation and amortization |
|
228,203 |
|
|
|
578 |
|
|
|
228,781 |
|
|
|
211,707 |
|
|
|
564 |
|
|
|
212,271 |
|
| Center-Level
Contribution Margin |
|
131,667 |
|
|
|
397 |
|
|
|
132,064 |
|
|
|
100,948 |
|
|
|
340 |
|
|
|
101,288 |
|
|
Overhead costs(2) |
|
136,284 |
|
|
|
10 |
|
|
|
136,294 |
|
|
|
135,264 |
|
|
|
— |
|
|
|
135,264 |
|
|
Depreciation and amortization |
|
18,477 |
|
|
|
473 |
|
|
|
18,950 |
|
|
|
14,959 |
|
|
|
460 |
|
|
|
15,419 |
|
|
Interest expense, net |
|
3,845 |
|
|
|
178 |
|
|
|
4,023 |
|
|
|
1,342 |
|
|
|
180 |
|
|
|
1,522 |
|
|
Gain on cost and equity method investments |
|
(2,842 |
) |
|
|
— |
|
|
|
(2,842 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Other income |
|
(2,542 |
) |
|
|
— |
|
|
|
(2,542 |
) |
|
|
(124 |
) |
|
|
— |
|
|
|
(124 |
) |
| Loss Before Income
Taxes |
$ |
(21,555 |
) |
|
$ |
(264 |
) |
|
$ |
(21,819 |
) |
|
$ |
(50,493 |
) |
|
$ |
(300 |
) |
|
$ |
(50,793 |
) |
| Loss Before Income
Taxes as a % of revenue |
|
|
|
|
(2.9 |
)% |
|
|
|
|
|
(7.4 |
)% |
| Center- Level
Contribution Margin as a % of revenue |
|
|
|
|
|
17.3 |
% |
|
|
|
|
|
|
14.7 |
% |
| |
Three Months Ended June 30, 2024 |
|
Three Months Ended June 30, 2023 |
| in thousands |
PACE |
|
All other(a) |
|
Totals |
|
PACE |
|
All other(a) |
|
Totals |
|
Capitation revenue |
|
199,080 |
|
|
|
— |
|
|
|
199,080 |
|
|
|
176,568 |
|
|
|
— |
|
|
|
176,568 |
|
|
Other service revenue |
|
78 |
|
|
|
243 |
|
|
|
321 |
|
|
|
84 |
|
|
|
222 |
|
|
|
306 |
|
| Total revenues |
|
199,158 |
|
|
|
243 |
|
|
|
199,401 |
|
|
|
176,652 |
|
|
|
222 |
|
|
|
176,874 |
|
|
External provider costs |
|
102,691 |
|
|
|
— |
|
|
|
102,691 |
|
|
|
94,978 |
|
|
|
— |
|
|
|
94,978 |
|
|
Cost of care, excluding depreciation and amortization |
|
59,976 |
|
|
|
156 |
|
|
|
60,132 |
|
|
|
53,252 |
|
|
|
138 |
|
|
|
53,390 |
|
| Center-Level
Contribution Margin |
|
36,491 |
|
|
|
87 |
|
|
|
36,578 |
|
|
|
28,422 |
|
|
|
84 |
|
|
|
28,506 |
|
|
Overhead costs(b) |
|
36,132 |
|
|
|
— |
|
|
|
36,132 |
|
|
|
35,116 |
|
|
|
— |
|
|
|
35,116 |
|
|
Depreciation and amortization |
|
5,213 |
|
|
|
116 |
|
|
|
5,329 |
|
|
|
4,220 |
|
|
|
112 |
|
|
|
4,332 |
|
|
Interest expense, net |
|
1,361 |
|
|
|
43 |
|
|
|
1,404 |
|
|
|
247 |
|
|
|
44 |
|
|
|
291 |
|
|
Gain on cost and equity method investments |
|
(4,842 |
) |
|
|
— |
|
|
|
(4,842 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other income |
|
(499 |
) |
|
|
— |
|
|
|
(499 |
) |
|
|
256 |
|
|
|
— |
|
|
|
256 |
|
| Loss Before Income
Taxes |
$ |
(874 |
) |
|
$ |
(72 |
) |
|
$ |
(946 |
) |
|
$ |
(11,417 |
) |
|
$ |
(72 |
) |
|
$ |
(11,489 |
) |
| Loss Before Income
Taxes as a % of revenue |
|
|
|
|
(0.5 |
)% |
|
|
|
|
|
(6.5 |
)% |
| Center- Level
Contribution Margin as a % of revenue |
|
|
|
|
|
18.3 |
% |
|
|
|
|
|
|
16.1 |
% |
| |
Center-Level Contribution
Margin
| |
Three Months Ended March 31, 2024 |
| (In thousands) |
PACE |
|
All other(a) |
|
Totals |
|
Capitation revenue |
$ |
192,756 |
|
|
$ |
— |
|
|
$ |
192,756 |
|
|
Other service revenue |
|
78 |
|
|
|
237 |
|
|
|
315 |
|
| Total revenues |
|
192,834 |
|
|
|
237 |
|
|
|
193,071 |
|
|
External provider costs |
|
99,996 |
|
|
|
— |
|
|
|
99,996 |
|
|
Cost of care, excluding depreciation and amortization |
|
58,959 |
|
|
|
119 |
|
|
|
59,078 |
|
| Center-Level
Contribution Margin |
|
33,879 |
|
|
|
118 |
|
|
|
33,997 |
|
|
Overhead costs(b) |
|
34,727 |
|
|
|
1 |
|
|
|
34,728 |
|
|
Depreciation and amortization |
|
4,929 |
|
|
|
133 |
|
|
|
5,062 |
|
|
Interest expense, net |
|
978 |
|
|
|
44 |
|
|
|
1,022 |
|
|
Loss on cost and equity method investments |
|
118 |
|
|
|
— |
|
|
|
118 |
|
|
Other income |
|
(525 |
) |
|
|
— |
|
|
|
(525 |
) |
| Loss Before Income
Taxes |
$ |
(6,348 |
) |
|
$ |
(60 |
) |
|
$ |
(6,408 |
) |
| Income (Loss) Before
Income Taxes as a % of revenue |
|
|
|
|
(3.3 |
)% |
| Center- Level
Contribution Margin as a % of revenue |
|
|
|
|
|
17.6 |
% |
_______________________
|
(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. |
|
|
|
This press release was published by a CLEAR® Verified
individual.
InnovAge (NASDAQ:INNV)
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