Innovage Holding Corp. ((INNV)) has held its Q2 earnings call. Read on for the main highlights of the call.
InnovAge Holding Corp.’s recent earnings call delivered a mixed sentiment, highlighting both positive strides and notable challenges. The company reported encouraging revenue and census growth paired with operational enhancements and strategic expansions. However, these positives were tempered by significant net losses, financial setbacks, and obstacles in enrollment processing. InnovAge demonstrated resilience and proactive strategies in navigating industry challenges, yet financial metrics reveal ongoing difficulties.
Revenue Growth
InnovAge reported a revenue of $209 million for the quarter, marking a 10.6% increase from $188.9 million in the second quarter of fiscal year 2024. This growth was driven by both existing centers and the addition of new de novo centers, indicating a robust expansion strategy.
Census Growth
The company experienced a 10.3% year-over-year increase in census, reaching 7,480 participants. This growth reflects a sequential increase of 3.7%, showcasing InnovAge’s ability to attract and retain participants effectively.
Medicaid Rate Increases
InnovAge secured Medicaid rate increases in California and Pennsylvania, ranging from mid to high single digits for 2025. This development promises enhanced revenue streams and underscores the company’s strategic positioning in key states.
Operational Improvements
Operational efficiencies and medical cost management efforts led to a 17.7% center-level contribution margin, a 7% sequential improvement. These improvements demonstrate InnovAge’s commitment to enhancing its operational framework.
Expansion and Acquisition
InnovAge eclipsed 100 participants at the Crenshaw center, successfully scaling smaller PACE organizations. Additionally, the acquisition of a pharmacy in Denver is aimed at improving compliance and reducing costs.
Net Loss
Despite the positive growth metrics, InnovAge reported a net loss of $13.5 million, significantly higher than the $3.8 million loss in the same quarter of the previous year, highlighting ongoing financial challenges.
One-time Adjustments
The company recorded an impairment of approximately $8.5 million related to halting development on a de novo center in Louisville, Kentucky, reflecting strategic shifts and financial adjustments.
Enrollment and Redetermination Delays
State-driven enrollment processing delays in California have impacted accounts receivable, resulting in write-offs. These challenges underline ongoing difficulties in managing state-level processes.
Challenges in Medicare Advantage Environment
InnovAge faced hurdles with Medicare Advantage cash value cards impacting the sales cycle. However, proactive marketing strategies helped mitigate some of the adverse impacts.
Forward-looking Guidance
During the earnings call, InnovAge reaffirmed its fiscal 2025 guidance, projecting total revenue between $815 million and $865 million and adjusted EBITDA between $24 million and $31 million. The company anticipates ending fiscal year 2025 with a census between 7,300 and 7,750 participants. Ongoing clinical and operational initiatives are expected to drive margin improvement and sustainable growth.
In summary, InnovAge Holding Corp.’s earnings call revealed a blend of positive developments and ongoing challenges. While the company showcased growth and strategic expansion, significant financial hurdles remain. The forward-looking guidance remains optimistic, with expectations for continued revenue growth and operational improvements.