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InnovAge Announces Financial Results for the Fiscal Year and Fourth Quarter Ended June 30, 2021

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DENVER, Sept. 21, 2021 (GLOBE NEWSWIRE) -- InnovAge Holding Corp. (the “Company” or “InnovAge”) (Nasdaq: INNV), a market leading healthcare delivery platform for high-cost, dual-eligible seniors, announced financial results for its fiscal fourth quarter and full year ended June 30, 2021.

“The InnovAge team is excited to deliver strong fourth quarter financial results to end the year with approximately 6,850 participants, an increase of 7.4% year-over-year,” said Maureen Hewitt, President and Chief Executive Officer, of InnovAge. “We produced $637.8 million of total revenues, an increase of approximately 12.5% compared to fiscal year 2020. During the pandemic, we opened two new centers and we remain on track to open de novo centers in two new states in fiscal year 2023. We also expanded our leadership team with the additions of Nicole D’Amato as Chief Legal Officer and Corporate Secretary, Eimile Tansey, Chief People Officer, and Olivia Patton, Chief Compliance Officer.”

Ms. Hewitt continued, “While COVID-19 impacted our business during fiscal year 2021, our team has done an outstanding job providing high quality, value-based care to our participants. We remain committed to ensuring our participants and employees are vaccinated against COVID-19 with a vaccination rate of 86% of participants and 90% of our employees to date. Our top priority is the health of our participants and our goal is to enable our participants to have a richer, social experience through our centers, which we are enabling in the safest way possible. We believe the landscape for future growth remains robust and we are pleased with the amount of federal and state legislative activity that we have seen in 2021. This is an exciting time to be a PACE provider and we continue to execute on our multi-faceted strategy of organic growth, de novo locations in existing and new states, and acquisitions.”

Financial Results

Three Months Ended

Year Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

in thousands, except percentages and per share amounts

Total revenues

$

171,616

$

152,492

$

637,800

$

567,192

Center-level Contribution Margin

48,033

45,456

174,080

141,304

Net Income (Loss)

6,315

11,978

(44,740

)

25,765

Net Income (Loss) Attributable to InnovAge Holding Corp.

6,474

12,097

(43,986

)

26,278

Net income (loss) per share - diluted

$

0.05

$

0.09

$

(0.36

)

$

0.19

Adjusted EBITDA(1)

$

19,348

$

22,932

$

85,333

$

65,909

Adjusted EBITDA margin(1)

11.3

%

15.4

%

13.4

%

11.7

%

Fiscal Year 2021 Financial Highlights

  • Total revenue of $637.8 million in fiscal year 2021, up 12.4% compared to $567.2 million in fiscal year 2020

  • Center-level Contribution Margin of $174.1 million, up 23.2% year-over-year, and Center-level Contribution Margin as a percent of revenue of 27.3%, an increase of approximately 240 basis points year-over-year

  • Net loss attributable to InnovAge Holding Corp. of $44.0 million, or a loss of $0.36 per share, primarily due to the Apax transaction and the Company’s initial public offering on March 8, 2021

  • Net loss of $44.7 million, a decrease from net income of $25.8 million compared to fiscal year 2020

  • Adjusted EBITDA(1) of $85.3 million, an increase of 29.5% year-over-year compared to $65.9 million in fiscal year 2020

  • Census of approximately 6,850, an increase of 7.4% year-over-year; member months of approximately 79,430, an increase of 6.1% year-over-year; and ended the fiscal year with 18 centers in five states

  • Ended the fiscal year with $201.5 million in cash and cash equivalents and $84.6 million in debt on the balance sheet, representing debt under the Company’s senior secured term loan, convertible term loan and capital leases

Fiscal Fourth Quarter 2021 Financial Highlights

  • Total revenue of $171.6 million for the fiscal fourth quarter of 2021, up 12.5% compared to $152.5 million compared to the fourth quarter of 2020

  • Center-level Contribution Margin of $48.0 million, an increase of 5.7% year-over-year, and Center-level Contribution Margin as a percent of revenue of 28.0%

  • Net income attributable to InnovAge Holding Corp. of $6.5 million, or $0.05 per share compared to $12.1 million, or $0.09 per share in the fourth quarter of 2020

  • Net income of $6.3 million compared to net income of $12.0 million for the fourth quarter of 2020. The decrease was primarily the result of increased general and administrative expense and sales and marketing expenses, partially offset by lower interest expense.

  • Adjusted EBITDA(1) of $19.3 million, compared to $22.9 million in the fourth quarter of 2020


Additional Highlights

  • On track to open three de novo centers in two new states in fiscal year 2023 and two additional de novo centers within the next 24 months

  • Re-opened centers in Pennsylvania and Virginia based on loosening state restrictions and COVID-19 infection and vaccination rates resulting in all 18 centers receiving participants in the fourth quarter

  • Made an equity investment in telehealth platform Jetdoc for the development of a purpose-built virtual care and remote patient monitoring platform for our participants and caregivers

  • Achieved goal of having 90% of employees vaccinated for COVID-19, 96% of employees have received at least one dose, and 86% of participants are currently vaccinated

  • Performed more than 110,000 telehealth visits from the start of the pandemic in March 2020 through quarter end

  • Recently, three centers in Pennsylvania, four centers in Virginia and the New Mexico PACE center were recognized as Patient-Centered Medical Homes by the National Committee for Quality Assurance

  • InnovAge is a Great Place to Work-Certified™ company for the fourth consecutive year and the Company has continued to expand its strong leadership team with the addition of Nicole D’Amato as Chief Legal Officer and Corporate Secretary, Eimile Tansey, Chief People Officer, and Olivia Patton, Chief Compliance Officer

Full Fiscal Year 2022 Financial Guidance

Low

High

dollars in thousands

Census

7,500

7,750

Member Months

86,500

87,800

Total revenues

$

712

$

725

Adjusted EBITDA(1)

$

60

$

72

(1) 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, which can be accessed by dialing +1 (833) 398-1024 for U.S. participants, or +1 (914) 987-7722 for international participants and referencing conference ID 3506946; or via a live audio webcast that will be available online at https://investor.innovage.com/investor-relations. 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 approximately 12 months.

About InnovAge

InnovAge is a market leader in managing the care of high-cost, dual-eligible seniors. Our mission is to enable seniors to age independently in their own homes for as long as possible. Our patient-centered care model meaningfully improves the quality of care our participants receive, while reducing over-utilization of high-cost care settings. InnovAge is at the forefront of value based senior healthcare and directly contracts with government payors, such as Medicare and Medicaid, to manage the totality of a participant’s medical care. InnovAge believes its healthcare model is one in which all constituencies — participants, their families, providers and government payors— “win.” As of June 30, 2021, InnovAge serves approximately 6,850 participants across 18 centers in five states. https://www.innovage.com/.

Investor Contact:

Ryan Kubota
rkubota@myinnovage.com

Forward-Looking Statements - Safe Harbor

This press release may contain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “believe,” “project,” “estimate,” “expect,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements may be identified by the fact that they do not relate strictly to historical or current facts. Examples of forward-looking statements include, among others, statements we may make regarding our expectations to increase the number of participants we serve, to grow enrollment and capacity within existing centers, to build de novo centers, to expand into new geographies, to execute on tuck-in acquisitions, to recruit new participants and directly contract with government payors, quarterly or annual guidance, financial outlook, including future revenues and future earnings, expectation regarding legal proceedings or ongoing audits, reimbursement and regulatory developments, market developments, new products and growth strategies, integration activities and the effects of any of the foregoing on our future results of operations or financial conditions.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on currently available information and our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. You should not place undue reliance on our forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) the risk that the cost of providing services will exceed our compensation under PACE; (ii) the dependence of our revenues upon a limited number of government payors, particularly Medicare and Medicaid; (iii) the effects of rules governing the Medicare, Medicaid or PACE programs; (iv) reductions in PACE reimbursement rates or changes in the rules governing PACE programs; (v) the risk that our submissions to government payors may contain inaccurate or unsupportable information regarding risk adjustment scores of participants, which could cause us to overstate or understate our revenue and subjecting us to payment obligations and penalties; (vi) the impact on our business of non-renewal or termination of capitation agreements with government payors; (vii) the potential adverse impact of inspections, reviews, audits, investigations, legal proceedings, enforcement actions and litigation; (viii) the impact of state and federal efforts to reduce healthcare spending; (ix) the effects of a pandemic, epidemic or outbreak of an infectious disease, including the ongoing outbreak of the COVID-19 pandemic; (x) the effect of our relatively limited operating history as a for-profit company on investors’ ability to evaluate our current business and future prospects; (xi) the viability of our growth strategy and our ability to realize expected results; and (xii) our existing indebtedness and access to capital markets. For a detailed discussion of the risks and uncertainties that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to our Prospectus, dated March 3, 2021 in connection with our IPO, our most recent Quarterly Report on Form 10-Q and our upcoming Annual Report on Form 10-K, as filed with the SEC.

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

Note Regarding Use of Non-GAAP Financial Measures

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

Schedule 1

InnovAge
CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,

June 30,

2021

2020

in thousands

Assets

Current Assets

Cash and cash equivalents

$

201,466

$

112,904

Restricted cash

2,234

1,661

Accounts receivable, net of allowance ($4,350 – June 30, 2021 and $6,384 – June 30, 2020)

32,582

46,312

Prepaid expenses

9,249

4,311

Income tax receivable

5,401

1,743

Total current assets

250,932

166,931

Noncurrent Assets

Property and equipment, net

142,715

102,494

Investments

2,645

2,645

Deposits and other

3,877

3,003

Equity method investments

848

13,245

Goodwill

124,217

116,139

Other intangible assets, net

6,518

5,177

Total noncurrent assets

280,820

242,703

Total assets

$

531,752

$

409,634

Liabilities and Stockholders' Equity

Current Liabilities

Accounts payable and accrued expenses

$

32,361

$

28,875

Reported and estimated claims

33,234

30,291

Due to Medicaid and Medicare

7,101

12,244

Current portion of long-term debt

3,790

1,938

Current portion of capital lease obligations

2,079

1,496

Contingent consideration

1,789

Total current liabilities

78,565

76,633

Noncurrent Liabilities

Deferred tax liability, net

15,700

9,282

Capital lease obligations

5,190

4,091

Other noncurrent liabilities

2,758

1,446

Long-term debt, net of debt issuance costs

71,574

210,432

Total liabilities

173,787

301,884

Commitments and Contingencies (See Note 12)

Stockholders’ Equity

Common stock, $0.001 par value; 500,000,000 authorized as of June 30, 2021 and 2020; 135,516,513 and 132,718,461 issued shares as of June 30, 2021 and June 30, 2020, respectively

136

133

Additional paid-in capital

323,760

36,338

Retained earnings

11,250

64,737

Less: Treasury stock; 0 and 102,030 shares of common stock at $0.0 and $1.89 per share as of June 30, 2021 and June 30, 2020, respectively

(193

)

Total InnovAge Holding Corp.

335,146

101,015

Noncontrolling interests

22,819

6,735

Total stockholders’ equity

357,965

107,750

Total liabilities and stockholders’ equity

$

531,752

$

409,634


Schedule 2

InnovAge
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended

Year Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

in thousands, except per share amounts

Revenues

Capitation revenue

$

171,028

$

152,110

$

635,322

$

564,834

Other service revenue

588

382

2,478

2,358

Total revenues

171,616

152,492

637,800

567,192

Expenses

External provider costs

85,102

68,445

309,317

272,832

Cost of care, excluding depreciation and amortization

38,481

38,591

154,403

153,056

Center-level Contribution Margin

48,033

45,456

174,080

141,304

Sales and marketing

7,901

4,596

22,236

19,001

Corporate, general and administrative

26,432

16,064

132,333

58,481

Depreciation and amortization

3,032

2,981

12,294

11,291

Equity loss

475

1,343

678

Other operating expense

1,170

18,211

920

Total expenses

160,948

132,322

650,137

516,259

Operating Income (Loss)

10,668

20,170

(12,337

)

50,933

Other Income (Expense)

Interest expense, net

274

(3,332

)

(16,787

)

(14,619

)

Loss on extinguishment of debt

(14,479

)

Gain on equity method investment

10,871

Other expense

(15

)

54

(2,237

)

(681

)

Total other expense

259

(3,278

)

(22,632

)

(15,300

)

Income (Loss) Before Income Taxes

10,927

16,892

(34,969

)

35,633

Provision for Income Taxes

4,612

4,914

9,771

9,868

Net Income (Loss)

6,315

11,978

(44,740

)

25,765

Less: net loss attributable to noncontrolling interests

(159

)

(119

)

(754

)

(513

)

Net Income (Loss) Attributable to InnovAge Holding Corp.

$

6,474

$

12,097

$

(43,986

)

$

26,278

Weighted-average number of common shares outstanding - basic

135,516,513

132,616,431

123,618,702

132,616,431

Weighted-average number of common shares outstanding - diluted

135,517,753

135,233,630

123,618,702

135,233,630

Net income (loss) per share - basic

$

0.05

$

0.09

$

(0.36

)

$

0.20

Net income (loss) per share - diluted

$

0.05

$

0.09

$

(0.36

)

$

0.19


Schedule 3

InnovAge
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended June 30,

2021

2020

in thousands

Operating Activities

Net income (loss)

$

(44,740

)

$

25,765

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities

Loss on disposal of assets

18

1,039

Provision for uncollectible accounts

8,637

6,204

Depreciation and amortization

12,294

11,291

Gain on equity method investment

(10,871

)

Loss on extinguishment of long-term debt

14,479

Amortization of deferred financing costs

1,056

550

Stock-based compensation

1,664

543

Deferred income taxes

6,418

3,173

Loss in equity of nonconsolidated entities

1,343

678

Change in fair value of warrants

2,264

Change in fair value of contingent consideration

920

Changes in operating assets and liabilities, net of acquisitions

Accounts receivable, net

5,879

(1,202

)

Prepaid expenses

(4,987

)

(1,062

)

Income tax receivable

(3,658

)

1,952

Deposits and other

(874

)

1,063

Accounts payable and accrued expenses

6,137

(1,013

)

Reported and estimated claims

2,613

2,045

Due to Medicaid and Medicare

(5,220

)

(8,120

)

Deferred revenue

2

Net cash provided by (used in) operating activities

(7,548

)

43,828

Investing Activities

Purchases of property and equipment

(17,541

)

(11,844

)

Proceeds from sales of property and equipment

169

Proceeds from net working capital settlements

1,129

Purchase of long term investment

(1,145

)

Purchase of intangible assets

(2,000

)

Net cash used in investing activities

$

(19,541

)

$

(11,691

)

Financing Activities

Distributions to owners

$

(9,500

)

$

Capital contributions

20,000

Payments on capital lease obligations

(1,788

)

(1,834

)

Proceeds from long-term debt

375,000

25,000

Principal payments on long-term debt

(512,660

)

(1,934

)

Payment of financing costs and debt premiums

(14,896

)

Proceeds from initial public offering of common stock

370,468

Treasury stock purchases

(77,603

)

Payments under acquisition agreements

(3,622

)

Payments related to option cancellation

(29,175

)

Net cash provided by financing activities

116,224

21,232

INCREASE IN CASH, CASH EQUIVALENTS, & RESTRICTED CASH

89,135

53,369

CASH, CASH EQUIVALENTS & RESTRICTED CASH, BEGINNING OF PERIOD

114,565

61,196

CASH, CASH EQUIVALENTS & RESTRICTED CASH, END OF PERIOD

$

203,700

$

114,565

Supplemental Cash Flows Information

Interest paid

$

18,030

$

11,551

Income taxes paid

$

7,048

$

4,745

Property and equipment included in accounts payable

$

1,327

$

1,348

Property and equipment purchased under capital leases

$

3,493

$

1,399



Schedule 4

InnovAge
RECONCILIATION OF GAAP AND NON-GAAP MEASURES
(UNAUDITED)

Three Months Ended

Year Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

in thousands

Net income (loss)

$

6,315

$

11,978

$

(44,740

)

$

25,765

Interest expense, net

(274

)

3,332

16,787

14,619

Depreciation and amortization

3,032

2,981

12,294

11,291

Provision for income tax

4,612

4,914

9,771

9,868

Stock-based compensation

562

136

1,664

543

Rate determination(a)

(3,173

)

(2,158

)

(3,372

)

M&A diligence, transaction and integration(b)

4,273

177

67,606

2,718

Business optimization(c)

702

549

1,829

1,171

EMR implementation(d)

126

317

461

1,078

Special employee bonus(e)

551

1,278

Gain on consolidation of equity investee(f)

(10,871

)

Financing-related(g)

14,479

30

Contingent consideration(h)

1,170

18,211

920

Adjusted EBITDA

$

19,348

$

22,932

$

85,333

$

65,909

________________________________

(a)

For the year ended June 30, 2021, this reflects the CMS settlement payment of approximately $2.2 million related to end-stage renal disease beneficiaries for calendar years 2010 through 2020. For the three and twelve months ended June 30, 2020, this reflects the final determination of certain rates for capitation payments from the State of California, all of which we consider non-recurring.

(b)

For the year ended June 30, 2021, this primarily represents (i) $45.4 million related to the cancellation of options and the redemption of shares, including $3.2 million recognized during the fourth quarter of fiscal year 2021, and (ii) $13.1 million of transaction fees and expenses recognized in connection with the July 27, 2020 transaction between us, an affiliate of Apax Partners and our existing equity holders entering into a Securities Purchase Agreement.

(c)

Reflects charges related to business optimization initiatives. Such charges relate to one-time investments in projects designed to enhance our technology systems and improve the efficiency and effectiveness of our operations.

(d)

Reflects non-recurring expenses relating to the transition to a new electronic medical record vendor.

(e)

Reflects non-recurring special bonuses paid to certain of our employees of the Company relating to shareholder dividend transactions that occurred in fiscal years 2018 and 2019.

(f)

Reflects non-recurring expense related to the gain on consolidation of InnovAge California PACE-Sacramento, LLC.

(g)

Reflects fees and expenses incurred in connection with amendments to our credit agreements.

(h)

Reflects the contingent consideration fair value adjustment made during the reporting period associated with our acquisition of NewCourtland LIFE Program which closed during our fiscal year ended June 30, 2019.


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