InnovAge — Fiscal First Quarter 2027 Earnings Summary

Financial Performance:

• Total revenues reached $264.8 million for the three months ended September 30, 2026, an increase of approximately 12.1% compared to $236.1 million in the first quarter of fiscal year 2026.
• Income before income taxes was $20.0 million, representing a 153.1% increase from $7.9 million in the prior year period; this equates to 7.6% of revenue, up 4.2 percentage points.
• Net income was $20.9 million, compared to $7.7 million in the first quarter of fiscal year 2026, resulting in a net income margin of 7.9% versus 3.2%.
• Net income attributable to InnovAge Holding Corp. was $19.6 million, or $0.14 per share (basic and diluted), compared to $8.0 million, or $0.06 per share, in the prior year period.
• Center-level contribution margin increased 23.8% to $63.6 million from $51.4 million, representing 24.0% of revenue, up 2.2 percentage points year-over-year.
• Adjusted EBITDA rose to $31.3 million from $17.6 million, an increase of $13.6 million, with the margin expanding to 11.8% from 7.5%.
• Cash and cash equivalents totaled $119.3 million, plus $43.7 million in short-term investments, as of September 30, 2026.
• Total debt on the balance sheet was $61.4 million, comprising senior secured term loans, revolving credit facilities, and finance lease obligations.
• Net cash provided by operating activities was $28.7 million for the quarter, compared to $3.9 million in the prior year period.

Guidance and Future Outlook:

• Confirmed full fiscal year 2027 guidance for census between 8,625 and 8,850 participants.
• Projected total member months for fiscal year 2027 to range between 101,000 and 102,500.
• Forecasted total revenues for fiscal year 2027 between $1,050 million and $1,085 million.
• Guided for Adjusted EBITDA for fiscal year 2027 between $105 million and $115 million.
• Management noted that actual results may differ materially from guidance due to factors outside the Company's control.

Business Segments and Product Lines:

• The Company serves approximately 8,420 participants across 20 centers in six states as of September 30, 2026.
• Census grew to approximately 8,420 participants in the first quarter of fiscal 2027, up from 7,890 in the first quarter of fiscal 2026.
• Member months increased to approximately 25,070 in the first quarter of fiscal 2027, compared to 23,500 in the prior year period.
• Revenue was derived primarily from Capitation revenue ($264.7 million), with minimal other service revenue ($0.1 million).
• The Senior Housing operating segment, which previously contributed to "All other" revenue, was discontinued following the sale of assets on September 11, 2025.
• Business optimization charges included $1.5 million for organizational restructure and executive severance, and $0.2 million for the closure of a planned de novo center in Downey, California.

Market and Competitive Landscape:

• InnovAge operates as a market leader in managing care for high-cost, frail, and predominantly dual-eligible seniors through the Program of All-inclusive Care for the Elderly (PACE).
• The Company serves a predominantly dual-eligible senior demographic, focusing on enabling older adults to age independently in their own homes.

Risks and Challenges:

• Risks include the viability of the growth strategy, specifically the ability to find suitable geographies for new centers, attract/retain participants, and obtain necessary licenses.
• Potential impacts from state and federal efforts to reduce healthcare spending, including Medicaid budget cuts and legislation reducing funding budgets.
• Dependence on a limited number of government payors exposes the Company to risks of funding reductions, legislative changes, and budgetary pressures.
• Risks associated with labor shortages, competition, high inflation, and supply chain disruptions due to tariffs and trade disputes.
• Potential for PACE reimbursement rates to be reduced or for costs of providing services to exceed compensation.
• Risks related to periodic inspections, audits, and investigations under federal and state programs, including the potential for deficiencies and repayment obligations.
• Legal proceedings, enforcement actions, and litigation disputes, including risks regarding risk adjustment scores and submission accuracy.

Management Commentary and Tone:

• CEO Patrick Blair expressed pleasure with the strong start to fiscal 2027, citing continued census growth and disciplined clinical and operational execution.
• Management emphasized confidence in the long-term potential of the business and progress made over the past several years.
• The Company is shifting its earnings commentary approach to emphasize year-over-year performance rather than sequential-quarter comparisons to better reflect the longer-term operating trajectory.
• Management stated a continued focus on strengthening capabilities, supporting growth, and positioning the company to serve more participants.

Other Key Points:

• The Company hosted a conference call on November 3, 2026, at 5:00 PM Eastern Time, with a live webcast available on its investor website.
• Adjusted EBITDA guidance for fiscal year 2027 excludes net income guidance and reconciliation details due to the inherent difficulty in forecasting reconciling items such as effective tax rates and acquisition-related expenses.
• The Company incurred $1.7 million in offering expenses related to the filing and legal fees for a Form S-3 Shelf Registration Statement and subsequent secondary offering.
• Litigation costs and settlements added $0.3 million to Adjusted EBITDA adjustments, reflecting charges related to stockholder litigation, civil investigative demands, and settlement with a former pharmacy provider.
• The Company reported a loss on assets held for sale of $0 in the current quarter, compared to $0.1 million in the prior year period.
• Stock-based compensation expense was $1.7 million for the quarter, down from $2.3 million in the prior year period.