10q10k10q10k.net

What changed in InnovAge Holding Corp.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of InnovAge Holding Corp.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+558 added−574 removedSource: 10-K (2025-09-09) vs 10-K (2024-09-10)

Top changes in InnovAge Holding Corp.'s 2025 10-K

558 paragraphs added · 574 removed · 429 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

88 edited+27 added−11 removed145 unchanged
Biggest changeSeveral states, including California, have adopted laws focused on competition, quality, access, and cost that authorize state agencies to review and approve healthcare transactions, and many other states, including Pennsylvania, are considering similar legislation. California is also considering additional legislation that would provide the California attorney general with approval authority with respect to certain health care transactions.
Biggest changeSeveral states, including California, New Mexico and Colorado have adopted laws focused on competition, quality, access, and cost that either authorize state agencies to review and approve certain healthcare transactions or require notice prior to certain healthcare transactions, such as in California (requiring notice to the office of Health Care Affordability with certain transactions referred to their attorney general for further review) or New Mexico (requiring approval for certain transactions involving acquisitions and other changes in control of hospitals, including formation of a partnership or joint venture that results in an indirect change).
Through our Program of All-Inclusive Care for the Elderly (“PACE”) program, we fulfill a broad range of medical and ancillary services for seniors, including in-home care services (skilled, unskilled and personal care), in-center services such as primary care, physical therapy, occupational therapy, speech therapy, dental services, mental health and psychiatric services, meals, and activities; transportation to and from the PACE center and third-party medical appointments; and care management.
Through our Program of All-Inclusive Care for the Elderly (“PACE”), we fulfill a broad range of medical and ancillary services for seniors, including in-home care services (skilled, unskilled and personal care), in-center services such as primary care, physical therapy, occupational therapy, speech therapy, dental services, mental health and psychiatric services, meals, and activities; transportation to and from the PACE center and third-party medical appointments; and care management.
NPS is a metric used to measure customer satisfaction, loyalty and enthusiasm by asking how likely they are to recommend a company to a 1 Table of Contents friend or colleague, and is reported as a number between negative 100 and positive 100.
NPS is a metric used to measure customer satisfaction, loyalty and enthusiasm by 1 Table of Contents asking how likely they are to recommend a company to a friend or colleague, and is reported as a number between negative 100 and positive 100.
Without personalized, patient-centered care that removes barriers to preventative or other early treatment, high-cost, dual-eligible seniors would continue to likely over-utilize healthcare in higher-cost settings, such as emergency rooms and nursing homes.
Without personalized, patient-centered care that removes barriers to preventative or other early treatment, high-cost, dual-eligible seniors would likely continue to over-utilize healthcare in higher-cost settings, such as emergency rooms and nursing homes.
The HIPAA privacy and security regulations extensively regulate the use and disclosure of PHI and require covered entities and their business associates, to develop and maintain policies and procedures and implement and maintain administrative, physical, and technical safeguards to protect 12 Table of Contents the security of such information. Additional security requirements apply to electronic PHI.
The HIPAA privacy and security regulations extensively regulate the use and disclosure of PHI and require covered entities and their business associates, to develop and maintain policies and procedures and implement and maintain administrative, physical, and technical safeguards to protect the security of 12 Table of Contents such information. Additional security requirements apply to electronic PHI.
If any of our operations are found to violate applicable laws or regulations, we could suffer severe consequences that would have a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price, including: • suspension, termination or exclusion of our participation in government payor programs; • loss of our licenses required to operate healthcare facilities or administer prescription drugs in the states in which we operate; • criminal or civil liability, fines, damages or monetary penalties for violations of healthcare fraud and abuse laws, including the federal Anti-Kickback Statute, Civil Monetary Penalties Law, the False Claims Act (“FCA”) and/or state analogs to these federal enforcement authorities, or other regulatory requirements; • enforcement actions by governmental agencies and/or state law claims for monetary damages by patients or employees relating to breach of, impermissible use or disclosure of, or other incident relating to protected health information (“PHI”) and other types of personal data or personally identifiable information (collectively, “PII” and, together with PHI, “PHI/PII”) that we collect, use, and disclose, in violation of federal or state privacy laws, including, for example and without limitation, the Health Insurance Portability and Accountability Act of 1996, as amended by HITECH Act (“HIPAA”), or state data privacy and security laws; • mandated changes to our practices or procedures that significantly increase operating expenses or decrease our revenue; • imposition of and compliance with corporate integrity agreements that could subject us to ongoing audits and reporting requirements as well as increased scrutiny of our business practices which could lead to potential fines, among other things; • termination of various relationships and/or contracts related to our business, including joint venture arrangements, contracts with government payors, and real estate leases or contracts with clinical providers; • changes in and reinterpretation of rules and laws by a regulatory agency board, or court, such as state corporate practice of medicine laws, that could affect the structure and management of our business; • changes in payor reimbursement, including negative adjustments to government payment models including, but not limited to, Medicare Parts C and D and Medicaid; and • harm to our reputation, which could negatively impact our business relationships, the terms of government payor contracts, our ability to attract and retain participants, physicians, and other clinicians, our ability to obtain financing and our access to new business opportunities, among other things. 7 Table of Contents We expect that our industry will continue to be subject to substantial regulation, the scope and effect of which are difficult to predict.
If any of our operations are found to violate applicable laws or regulations, we could suffer severe consequences that would have a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price, including: • suspension, termination or exclusion of our participation in government payor programs; • loss of our licenses required to operate healthcare facilities or administer prescription drugs in the states in which we operate; • criminal or civil liability, fines, damages or monetary penalties for violations of healthcare fraud and abuse laws, including the federal Anti-Kickback Statute, Civil Monetary Penalties Law, the False Claims Act (“FCA”) and/or state analogs to these federal enforcement authorities, or other regulatory requirements; • enforcement actions by governmental agencies and/or state law claims for monetary damages by patients or employees relating to breach of, impermissible use or disclosure of, or other incidents relating to protected health information (“PHI”) and other types of personal data or personally identifiable information (collectively, “PII” and, together with PHI, “PHI/PII”) that we collect, use, and disclose, in violation of federal or state privacy laws, including, for example and without limitation, the Health Insurance Portability and Accountability Act of 1996, as amended by HITECH Act (“HIPAA”), or state data privacy and security laws; • mandated changes to our practices or procedures that significantly increase operating expenses or decrease our revenue; • imposition of and compliance with corporate integrity agreements that could subject us to ongoing audits and reporting requirements as well as increased scrutiny of our business practices which could lead to potential fines, among other things; • termination of various relationships and/or contracts related to our business, including joint venture arrangements, contracts with government payors, and real estate leases or contracts with clinical providers; • changes in and reinterpretation of rules and laws by a regulatory agency board, or court, such as state corporate practice of medicine laws, which could affect the structure and management of our business; • changes in payor reimbursement, including negative adjustments to government payment models including, but not limited to, Medicare Parts C and D and Medicaid; and • harm to our reputation, which could negatively impact our business relationships, the terms of government payor contracts, our ability to attract and retain participants, physicians, and other clinicians, our ability to obtain financing and our access to new business opportunities, among other things. 7 Table of Contents We expect that our industry will continue to be subject to substantial regulation, the scope and effect of which are difficult to predict.
These exceptions and their various requirements apply based on the level of risk assumed by the arrangement’s participants. These regulations purport to ease the compliance burden for healthcare providers across the industry while maintaining strong safeguards to protect patients and programs from fraud and abuse.
These exceptions and their various requirements apply based on the level of financial risk assumed by the arrangement’s participants. These regulations purport to ease the compliance burden for healthcare providers across the industry while maintaining strong safeguards to protect patients and programs from fraud and abuse.
However, should an individual or entity be excluded, on the preclusion list, or otherwise ineligible for payment and we fail to detect it, a federal agency could require us to refund amounts attributable to all claims or services performed or sufficiently linked to such individual or entity.
Should an individual or entity be excluded, on the preclusion list, or otherwise ineligible for payment and we fail to detect it, a federal agency could require us to refund amounts attributable to all claims or services performed or sufficiently linked to such individual or entity.
To the extent that we rely on the new value-based exceptions to the Stark Law for our value-based arrangements, we intend to fully comply with such safeguards. However, if we were to be found as out of compliance with such exceptions, we could be subject to penalties, as discussed above.
To the extent that we rely on the new value-based exceptions to the Stark Law for our value-based arrangements, we intend to comply with such safeguards. However, if we were to be found as out of compliance with such exceptions, we could be subject to penalties, as discussed above.
We have entered, and may continue to enter, into several arrangements that may not fit squarely within enumerated safe harbors and could potentially implicate the Anti-Kickback Statute if the requisite intent were present, such as: • Joint Ventures.
We have entered, and may continue to enter, into arrangements that may not fit squarely within enumerated safe harbors and could potentially implicate the Anti-Kickback Statute if the requisite intent were present, such as: • Joint Ventures.
Additionally, many states also enacted laws that protect the privacy and security of confidential, personal and health information, which may be even more stringent than HIPAA and may add additional compliance costs and legal risks to our operations.
Additionally, many states have also enacted laws that protect the privacy and security of confidential, personal and health information, which may be even more stringent than HIPAA and may add additional compliance costs and legal risks to our operations.
To the extent we fall within the types of entities to which the Stark Law applies, then we need to ensure that any financial relationships that we have with a referring provider would satisfy a statutory or regulatory exception to the Stark Law prohibition.
To the extent we fall within the types of entities to which the Stark Law applies, then we need to ensure that any financial relationships that we have with a referring provider would satisfy a statutory or regulatory exception to the general Stark Law prohibition.
Many of our arrangements are structured to provide for compensation that is fair market value for services actually rendered and in a manner that does not reflect the volume or value of referrals generated between the parties.
Many of our arrangements are structured to provide for compensation that is fair market value for services rendered and in a manner that does not reflect the volume or value of referrals generated between the parties.
These provisions include, but are not limited to: • not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”); • a requirement to present only two years of audited financial statements, plus unaudited condensed consolidated financial statements for any interim period and related discussion in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; • reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and • exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
These provisions include, but are not limited to: • not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”); • a requirement to present only two years of audited financial statements, plus unaudited condensed consolidated financial statements for any interim period and related discussion in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; • reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and 17 Table of Contents • exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Given our scale across geographies, we believe we are positioned to capitalize on a significant market opportunity to provide care to frail, high-cost, dual-eligible seniors. Our care model targets the most complex, frail subset of the dual-eligible senior population. We estimated our target population at approximately 2.3 million in 2023 based on data from the U.S.
Given our scale across geographies, we believe we are positioned to capitalize on a significant market opportunity to provide care to frail, high-cost, dual-eligible seniors. Our care model targets the most complex, frail subset of the dual-eligible senior population. We estimated our target population at approximately 2.3 million in 2024 based on data from the U.S.
In parallel with OIG’s regulations on value-based care discussed above, on January 19, 2021, CMS issued a sweeping set of regulations that introduce significant new value-based terminology and exceptions to the Stark Law, including new exceptions for certain remuneration exchanged between or among eligible participants in value-based arrangements.
In parallel with OIG’s regulations on value-based care discussed above, on January 19, 2021, CMS issued a sweeping set of regulations that introduce significant new value-based exceptions to the Stark Law, including new exceptions for certain remuneration exchanged between or among eligible participants in value-based arrangements.
We estimate and accrue for the expected true-up payments of our participants. Though no assurances can be made in the future, we have historically used our best estimate for accruing for this payment, and we received net positive true-up payments during the fiscal years ended June 30, 2024 and 2023.
We estimate and accrue for the expected true-up payments of our participants. Though no assurances can be made in the future, we have historically used our best estimate for accruing for this payment. We received net positive true-up payments during the fiscal years ended June 30, 2025 and 2024.
We will remain an emerging growth company until the earlier of (1) June 30, 2026, (2) the last day of the 16 Table of Contents fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the date on which we are deemed to be a large accelerated filer or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We will remain an emerging growth company until the earlier of (1) June 30, 2026, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the date on which we are deemed to be a large accelerated filer or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Additionally, beginning in December 2022, OCR has issued guidance on the use of tracking technologies on websites and mobile applications by covered entities and business associates, indicating that certain information collected by tracking technology vendors from websites and applications may cause a breach under HIPAA.
Beginning in December 2022, OCR issued guidance on the use of tracking technologies on websites and mobile applications by covered entities and business associates, indicating that certain information collected by tracking technology vendors from websites and applications may cause a breach under HIPAA.
Risk Factors—Risks Related to Our Business—“The healthcare industry is highly competitive and, if we are not able to compete effectively, our business could be harmed.” We believe the principal competitive factors for serving adults dually-eligible for Medicare and Medicaid and who meet nursing home eligibility criteria include: participant experience, quality of care, health outcomes, total cost of care, brand identity and trust in that brand.
Risk Factors—“Risks Related to Our Business—The healthcare industry is highly competitive and, if we are not able to compete effectively, our business could be harmed.” We believe the principal competitive factors for serving adults dually-eligible for Medicare and Medicaid and who meet nursing home eligibility criteria include: participant experience, quality of care, health outcomes, total cost of care, brand identity and trust in that brand.
Our participant-centered care delivery approach is designed to improve the quality of care our participants receive, while keeping them in their homes for as long as safely possible and reducing over-utilization of high-cost care settings such as hospitals and nursing homes.
The purpose of our participant-centered care delivery approach is to improve the quality of care our participants receive, while keeping them in their homes for as long as safely possible and reducing over-utilization of high-cost care settings such as hospitals and nursing homes.
Providers that operate comprehensive value-based models, like us, were better positioned to quickly pivot their care delivery approach to safely treat patients in virtual and home-based settings without losing revenue. Our Market Opportunity We are one of the largest healthcare platforms focused on frail, dual-eligible seniors, serving participants exclusively through our PACE program.
Providers that operate comprehensive value-based models, like us, were and remain better positioned to quickly pivot the care delivery approach to safely treat patients in virtual settings without losing revenue. Our Market Opportunity We are one of the largest healthcare platforms focused on frail, dual-eligible seniors, serving participants exclusively through our PACE program.
In fiscal year 2024, we completed an acquisition of two PACE programs in California from ConcertoCare, which included one operating center in the Crenshaw neighborhood of Los Angeles and a second program that is a planned de novo in Bakersfield.
In fiscal year 2024, we completed an acquisition of two PACE programs in California from ConcertoCare, which included one operational center in the Crenshaw neighborhood of Los Angeles and a second program that is a planned de novo in Bakersfield.
Our platform is the largest among PACE providers based on participants served and one of the most geographically diverse. • We plan to continually invest in technology improvements and seek to unlock new insights through enhanced data analytics capabilities that will advance our care model. • We have begun to invest in building capabilities to increase our sophistication as a payor to drive clinical value, improve outcomes, and manage cost trends. • We believe our investments will ultimately result in better health outcomes and lower medical costs for participants.
Our platform is the largest among PACE providers based on participants served and one of the most geographically diverse. • We plan to continually invest in technology improvements and seek to unlock new insights through enhanced data analytics capabilities that will advance our care model. • We are investing in building capabilities to increase our sophistication as a payor to drive clinical value, improve outcomes, and manage cost trends. • We believe our investments will ultimately result in better health outcomes and lower medical costs for participants.
Federal Self-Referral Prohibition The federal Ethics in Patient Referral Act (“Stark Law”) generally prohibits a physician who has (or whose immediate family member has) a financial relationship with certain types of entities from making referrals to that such entities for “designated health services” if payment for the services may be made under Medicare or Medicaid.
Federal Self-Referral Prohibition The federal Ethics in Patient Referral Act (“Stark Law”) generally prohibits a physician who has (or whose immediate family member has) a financial relationship with certain entities from making referrals to such entities for “designated health services” if payment for the services may be made under Medicare or Medicaid.
Privacy and Security HIPAA requires covered entities, and the business associates with whom such covered entities contract for services involving the use or disclosure of protected health information to provide certain protections to their patients or participants and their health information.
Privacy and Security HIPAA requires covered entities, and the business associates with whom such covered entities contract for services involving the use or disclosure of PHI to provide certain protections to their patients or participants and their health information.
There is also increased variability of participant enrollment during the open enrollment period, which occurs during our third fiscal quarter. 15 Table of Contents In addition, the retrospective capitation payments we receive for each participant are determined by a participant’s RAF score, which is calculated twice per year and is based on the evolving acuity and chronic conditions of a participant.
There is also increased variability of participant enrollment during the open enrollment period, which occurs during our third fiscal quarter. In addition, the retrospective capitation payments we receive for each participant are determined by a participant’s RAF score, which is calculated twice per year and is based on the evolving acuity and chronic conditions of a participant.
The IDTs meet multiple times per week to discuss each participant’s care plan and closely monitor key clinical metrics so that each participant receives optimal treatment based on his or her current conditions. Our community-based care delivery model. Our high-touch model delivers care across a continuum of community-based settings.
Members of the IDTs meet multiple times per week to discuss participant care and to closely monitor key clinical metrics so that each participant receives optimal treatment based on his or her current conditions. Our community-based care delivery model. Our high-touch model delivers care across a continuum of community-based settings.
Our model handles all transportation to and from medical appointments and center visits, helps participants with ADLs, and creates social outlets for participants to reduce isolation. Most importantly, we believe we offer “peace of mind” to our participants’ families who know their loved one’s complex 5 Table of Contents needs are cared for.
Our model handles all transportation to and from medical appointments and center visits, helps participants with ADLs, and creates social outlets for participants to reduce isolation. Most importantly, we believe we offer “peace of mind” to our participants’ families who know their loved one’s complex needs are cared for.
“Friends and family” of participants remain one of our largest referral sources for recruiting new participants. Our providers “Win” as they are able to focus on improving the lives of their participants. We enable our providers to focus on taking care of participants by providing them with meaningful clinical and administrative support.
“Friends and family” of participants remain one of our largest referral sources for recruiting new participants. 5 Table of Contents Our providers “Win” as they are able to focus on improving the lives of their participants. We enable our providers to focus on taking care of participants by providing them with meaningful clinical and administrative support.
In order for the shift to value-based payment models to drive meaningful results, we believe there must be a corresponding shift in care delivery models. While there has been significant investment by providers, payors and technology companies in developing solutions to enable higher-quality and lower-cost care, the healthcare industry is still heavily reliant on fee-for-service reimbursement models.
In order for the shift to value-based payment models to drive meaningful results, we believe there must be a corresponding shift in care delivery models. While there has been significant investment by providers, payors and technology companies in developing solutions to enable higher-quality and lower-cost care, the healthcare industry still relies on fee-for-service reimbursement models.
We have built the largest PACE-focused operation in the country based on number of participants, with 20 operational centers across six states; we are 11% larger than the size of our closest PACE-focused competitor and more than 30 times larger than the typical PACE operator.
We have built the largest PACE-focused operation in the country based on number of participants, with 20 PACE centers across six states; we are 16% larger than the size of our closest PACE-focused competitor and more than 30 times larger than the typical PACE operator.
Execute tuck-in acquisitions and partnerships • Over the past six fiscal years, we have acquired and integrated four PACE organizations for a total of eight operational centers (excluding the PACE center in Bakersfield, California, which is not yet operational). These acquisitions represent expansion of our InnovAge Platform into one new state and five new markets.
Execute tuck-in acquisitions, strategic transactions and partnerships • Over the past seven fiscal years, we have acquired and integrated four PACE organizations for a total of eight operational centers (excluding the PACE center in Bakersfield, California, which is not yet operational). These acquisitions represent expansion of our InnovAge Platform into one new state and five new markets.
Our vertically integrated care model and full-risk contracts requires us to coordinate and manage all aspects of a participant’s health, and deliver the necessary care.
Our vertically integrated care model and full-risk contracts require us to coordinate and manage all aspects of a participant’s health, and deliver the necessary care.
In addition, state and federal budgetary shortfalls and constraints pose potential risks for our revenue streams. We cannot predict how government payors or healthcare consumers might react to federal and state healthcare legislation and regulation, whether already enacted or enacted in the future, nor can we predict 13 Table of Contents what form such legislation or regulations will take.
In addition, state and federal budgetary shortfalls and constraints pose potential risks for our revenue streams. We cannot predict how government payors or healthcare consumers might react to federal and state healthcare legislation and regulation, whether already enacted or enacted in the future, nor can we predict what form such legislation or regulations will take.
When an arrangement does not satisfy a safe harbor, the arrangement must be evaluated upon all facts and circumstances, on a case-by-case basis in light of among other things, the parties’ intent, and the arrangement’s potential for abuse. Arrangements that do not satisfy a safe harbor may be subject to greater scrutiny by enforcement agencies.
When an arrangement does not satisfy a safe harbor, the arrangement must be evaluated upon all facts and circumstances, on a case-by-case basis considering among other things, the parties’ intent, and the arrangement’s potential for abuse. Arrangements that do not satisfy a safe harbor may be subject to greater scrutiny by enforcement agencies.
Federal and state law also governs the purchase, handling, and dispensing of controlled substances by physicians and other clinicians. If we are unable to maintain our registrations this could limit or affect our ability to purchase, handle, or dispense controlled substances and other violations of these laws could subject us to criminal or other sanctions.
Consumer Product Safety Commission. Federal and state law also governs the purchase, handling, and dispensing of controlled substances by physicians and other clinicians. If we are unable to maintain our registrations this could limit or affect our ability to purchase, handle, or dispense controlled substances and other violations of these laws could subject us to criminal or other sanctions.
Importantly, we believe our vertically integrated model can deliver better health outcomes and reduces unnecessary or avoidable medical spend. In addition, as of June 30, 2024, we believe our participants had a lower hospital readmission rate compared to a frail, dual-eligible or disabled waiver population.
Importantly, we believe our vertically integrated model can deliver better health outcomes and reduce unnecessary or avoidable medical spend. In addition, as of June 30, 2025, we believe our participants had a lower hospital readmission rate compared to a frail, dual-eligible or disabled waiver population.
Based on InnovAge data as of June 30, 2024, the typical InnovAge participant had, on average, ten chronic conditions and, based on the data most recently available to us from a 2022 modified health outcomes survey, required, on average, assistance with two or more activities of daily living (“ADLs”).
Based on InnovAge data as of June 30, 2025, the typical InnovAge participant had, on average, ten chronic conditions and, based on the data most recently available to us from a 2023 modified health outcomes survey, required, on average, assistance with two or more activities of daily living (“ADLs”).
PACE As of June 30, 2024, the Company served approximately 7,020 PACE participants, making it the largest PACE provider in the United States (the “U.S.”) based on participants served, and operated 20 PACE centers across California, Colorado, Florida, New Mexico, Pennsylvania and Virginia.
PACE As of June 30, 2025, the Company served approximately 7,740 PACE participants, making it the largest PACE provider in the United States (the “U.S.”) based on participants served, and operated 20 PACE centers across California, Colorado, Florida, New Mexico, Pennsylvania and Virginia.
Based on InnovAge data as of June 30, 2024, the typical InnovAge participant had, on average, ten chronic conditions and, based on the data most recently available to us from a 2022 modified health outcomes survey, required, on average, assistance with two or more ADLs.
Based on InnovAge data as of June 30, 2025, the typical InnovAge participant had, on average, ten chronic conditions and, based on the data most recently available to us from a 2023 modified health outcomes survey, required, on average, assistance with two or more ADLs.
As a result, as of June 30, 2024, approximately 92% of our participants lived in their preferred setting: their home or community. We believe our care model also delivers better clinical outcomes: our participants have fewer hospital admissions and lower hospital readmission rates.
As a result, as of June 30, 2025, approximately 93% of our participants lived in their preferred setting: their home or community. We believe our care model also delivers better clinical outcomes: our participants have fewer hospital admissions and lower hospital readmission rates.
In addition, HIPAA provides for criminal penalties of up to $250,000 and ten years in prison, with the severest penalties for obtaining and disclosing PHI with the intent to sell, transfer or use such information for commercial advantage, personal gain or malicious harm.
In addition, HIPAA provides for criminal penalties of up to $250,000 and ten years in prison, with the most severe penalties associated with obtaining and disclosing PHI with the intent to sell, transfer or use such information for commercial advantage, personal gain or malicious harm.
Our platform is designed to enable participants to exercise their preference to age independently in their homes and stay active in their communities for as long as safely possible. All of our participants are certified as nursing home-eligible. As of June 30, 2024, 92% of our participants were able to live safely in their homes and communities.
Our platform is designed to enable participants to exercise their preference to age independently in their homes and stay active in their communities for as long as safely possible. All of our participants are certified as nursing home-eligible. As of June 30, 2025, approximately 93% of our participants were able to live safely in their homes and communities.
Our Growth Strategy Increase participant enrollment and capacity within our centers • For the fiscal year ended June 30, 2024, our participant census was approximately 7,020 across our 20 centers in six states.
Our Growth Strategy Increase participant enrollment and capacity within our centers • For the fiscal year ended June 30, 2025, our participant census was approximately 7,740 across our 20 centers in six states.
Diversity At InnovAge, we strive to be a reflection of the diverse communities that we serve. We are steadfastly dedicated to fostering an atmosphere that champions diversity, equity, and inclusion throughout all sectors of InnovAge. Our commitment remains in building a culture where individual distinctions are not just acknowledged but deeply valued.
At InnovAge, we strive to be a reflection of the communities that we serve. We are steadfastly dedicated to fostering an atmosphere that champions inclusivity throughout all sectors of InnovAge. Our commitment remains in building a culture where individual distinctions are not just acknowledged but deeply valued.
In addition to the Stark Law, various states in which we operate have adopted their own self-referral prohibition statutes.
In addition to the Stark Law, various states in which we operate have adopted similar self-referral prohibition statutes.
Penalties for violation of the Stark Law include denial of payment, recoupment, refunds of amounts paid in violation of the law, exclusion from the Medicare or Medicaid programs, and substantial civil monetary penalties ($29,899 per prohibited item or service and $199,338 if there is a circumvention scheme; penalty amounts reflect current 2023 levels and are adjusted for inflation from time to time). 10 Table of Contents Claims filed in violation of the Stark Law may be deemed false claims under the FCA.
Penalties for violation of the Stark Law include denial of payment, recoupment, refunds of amounts paid in violation of the law, exclusion from the Medicare or Medicaid programs, and substantial civil monetary penalties ($30,868 per prohibited item or service and $205,799 if there is a circumvention scheme; penalty amounts reflect current 2024 levels and are adjusted for inflation from time to time). 10 Table of Contents Claims filed in violation of the Stark Law may be deemed false claims under the FCA.
Civil penalties for violation of the Anti-Kickback Statute include up to $120,816 in monetary penalties per violation, fines, or penalties of up to three times the total payments between the parties to the arrangement and potential exclusion from participation in Medicare and Medicaid.
Civil penalties for violation of the Anti-Kickback Statute include up to $124,732 (adjusted for inflation) in monetary penalties per violation, fines, or penalties of up to three times the total payments between the parties to the arrangement and potential exclusion from participation in Medicare and Medicaid.
Historically, these true-up payments typically occur between May and August, but the timing of these payments is determined by CMS, and we have neither visibility nor control over the timing of such payments. Human Capital Resources As of June 30, 2024, we had approximately 2,350 employees, including over 1,300 clinical professionals (excluding contract labor).
Historically, these true-up payments typically occur between May and August, but the timing of these payments is determined by CMS, and we have neither visibility nor control over the timing of such payments. 16 Table of Contents Human Capital Resources As of June 30, 2025, we had approximately 2,440 employees, including over 1,600 clinical professionals (excluding contract labor).
According to data from the Office of the Actuary of CMS, healthcare spending in the United States grew at approximately 5% per year from 2017 to 2022, and in 2022 represented $4.5 trillion of annual spend, or 17.3% of U.S. GDP. The overall growth rate of healthcare spending is expected to accelerate due to the aging population.
According to data from the Office of the Actuary of CMS, healthcare spending in the United States grew at approximately 6% per year from 2018 to 2023, and in 2023 represented $4.9 trillion of annual spend, or 17.6% of U.S. GDP. The overall growth rate of healthcare spending is expected to accelerate due to the aging population.
Of these estimated PACE eligible participants, only approximately 77,000 are enrolled in a PACE program, based on a June 2024 report from the National PACE Association, and over the next four years, the National PACE Association is targeting a PACE enrollment increase at a compound annual growth rate (“CAGR”) of approximately 23%.
Of these estimated PACE eligible participants, only approximately 85,000 are 3 Table of Contents enrolled in a PACE program, based on a June 2025 report from the National PACE Association, and over the next four years, the National PACE Association is targeting a PACE enrollment increase at a compound annual growth rate (“CAGR”) of approximately 27%.
Such laws may negatively affect our ability to grow our business. Any allegations or findings that we or our providers have violated any of these laws or regulations could have a material adverse impact on our reputation, business, results of operations and financial condition.
Any allegations or findings that we or our providers have violated any of these laws or regulations could have a material adverse impact on our reputation, business, results of operations and financial condition.
We also have one additional planned de novo center in Downey, California. • We believe de novo centers generate compelling long-term unit economics and the potential for robust internal rates of return. • We have operated our platform across different geographies and we expect to prioritize a list of target markets that we believe are optimal environments to launch the InnovAge Platform. • Our approach to de novo developments includes building centers to our experience-based specifications, with flexibility for future center expansion factored into the blueprints where possible.
Build de novo centers • In fiscal year 2025, we ramped up our newer de novo centers in Florida (Tampa and Orlando). • We believe de novo centers generate compelling long-term unit economics and the potential for robust internal rates of return. • We have operated our platform across different geographies and we expect to prioritize a list of target markets that we believe are optimal environments to launch the InnovAge Platform. • Our approach to de novo developments includes building centers to our experience-based specifications, with flexibility for future center expansion factored into the blueprints where possible.
Healthcare spending on nursing care facilities and continuing care retirement communities is expected to reach approximately $216.3 billion in 2024, based on the latest projections made by the Office of the Actuary of CMS, which is a 3.3% increase compared to the current 2023 projection.
Healthcare spending on nursing care facilities and continuing care retirement communities is expected to reach approximately $247.1 billion in 2025, based on the latest projections made by the Office of the Actuary of CMS, which is an 8.0% increase compared to the current 2024 projection.
The Office of Inspector General (the “OIG”) of the Department of Health and Human Services (“HHS”) has warned healthcare entities in the past that certain joint venture relationships have a potential for abuse.
We may enter other joint ventures with providers and payors in the future. The Office of Inspector General (the “OIG”) of the Department of Health and Human Services (“HHS”) has warned healthcare entities in the past that certain joint venture relationships have a potential for abuse.
In addition, employers 14 Table of Contents are required to provide or employ hepatitis B vaccinations, personal protective equipment and other safety devices, infection control training, post-exposure evaluation and follow-up, waste disposal techniques and procedures and work practice controls. Employers are also required to comply with various record-keeping requirements.
In addition, employers are required to provide or employ hepatitis B vaccinations, personal protective equipment and other safety devices, infection control training, post-exposure evaluation and follow-up, waste disposal techniques and procedures and work practice controls. Employers are also required to comply with various record-keeping requirements. In January 2025, we completed the acquisition of certain pharmacy assets from TRHC.
In addition to reducing spend, we also focus on ensuring our participants are satisfied with the services delivered. Our participant satisfaction is administered quarterly and is measured through a Net Promoter Score (“NPS”).
In addition to reducing spend, we also focus on ensuring our participants are satisfied with the services delivered and frequently evaluate benchmarks and survey methodologies to measure their satisfaction. Our participant satisfaction is currently measured through a Net Promoter Score (“NPS”).
Our SEC filings are also available to the public at the SEC’s website at www.sec.gov. 17
Our SEC filings are also available to the public at the SEC’s website at www.sec.gov. 18 Table of Contents
If these types of changes are implemented in the future, we cannot predict whether the amount of fixed federal funding to the states will be based on current payment amounts, or if it will be based on lower payment amounts, which would negatively impact those states that expanded their Medicaid programs in response to the ACA. • Legislation enacted in 2011 requires CMS to sequester or reduce all Medicare payments, including payments to PACE organizations, by two percent per year beginning on April 1, 2013. • The Inflation Reduction Act of 2022 includes a few provisions intended to lower the costs of some drugs covered under Medicare Part D and to limit Medicare beneficiaries’ out-of-pocket spending under the Medicare Part D benefit.
If these types of changes are implemented in the future, we cannot predict whether the amount of fixed federal funding to the states will be based on current payment amounts, or if it will be based on lower payment amounts, which would negatively impact those states that expanded their Medicaid programs in response to the ACA. • Legislation enacted in 2011 requires CMS to sequester or reduce all Medicare payments, including payments to PACE organizations, by two percent per year beginning on April 1, 2013.
We have also implemented processes to ensure that we do not make payments to contracted or noncontracted providers listed on CMS’s preclusion list nor make payments for drugs prescribed by individuals on the preclusion list.
We have also implemented processes to avoid payments to contracted or noncontracted providers listed on CMS’s preclusion list and payments for drugs prescribed by individuals on the preclusion list.
In this new final rule, CMS sets out changes which include but are not limited to: (i) implementation of past performance guidelines used to evaluate new PACE organization applications; (ii) personnel medical clearance guidelines; (iii) updates to service delivery timeframes by which participants must receive services; (iv) guidelines on IDT care coordination across all service settings with timeframes applied to external provider recommendations; (v) new content and documentation guidelines for participant plans of care; (vi) expansion of participant rights in care settings; and (vii) revisions to existing grievance process to align with standard determination request guidance.
The 2025 PACE Final Rule includes various changes that include but are not limited to: (i) implementation of past performance guidelines used to evaluate new PACE organization applications; (ii) personnel medical clearance guidelines; (iii) updates to service delivery timeframes by which participants must receive services; (iv) guidelines on IDT care coordination across all service settings with timeframes applied to external provider recommendations; (v) new content and documentation guidelines for participant plans of care; (vi) expansion of participant rights in care settings; and (vii) revisions to existing grievance process to align with standard determination request guidance. 14 Table of Contents • CMS released an updated PACE Medicaid Capitation Rate Settling Guide, effective January 1, 2025, which clarifies and expands requirements for state development and documentation of PACE Medicaid capitation rates.
Healthcare Reform Efforts The U.S. federal and state governments continue to enact and consider many broad-based legislative and regulatory proposals that have had a material impact on or could materially impact various aspects of the healthcare system and our business, operating results and/or cash flows.
The proposed updated would impose additional requirements on covered entities and business associates to enhance the protection of electronic PHI. 13 Table of Contents Healthcare Reform Efforts The U.S. federal and state governments continue to enact and consider many broad-based legislative and regulatory proposals that have had a material impact on or could materially impact various aspects of the healthcare system and our business, operating results and/or cash flows.
This is driven by two factors: (i) we believe we provide care for a higher acuity population, with an average Medicare Risk Adjustment Factor (“RAF”) score of 2.46 based on InnovAge data as of June 30, 2024, compared to an average RAF score of 1.08 for Medicare fee-for-service non-dual enrollees, as calculated in an analysis by Avalere Health in June 2020 of a cohort of individuals enrolled in Medicare Fee-for-Service in 2019, with a higher RAF score indicating poorer health and higher predicted healthcare costs, and (ii) we have Medicaid spend in addition to Medicare.
This is driven by two factors: (i) we believe we provide care for a higher acuity population, with an average Medicare Risk Adjustment Factor (“RAF”) score of 2.42 based on InnovAge data as of June 30, 2025, with a higher RAF score indicating poorer health and higher predicted healthcare costs, and (ii) we have Medicaid spend in addition to Medicare.
Looking ahead, it is possible that Congress could pursue a federal privacy bill to harmonize privacy regimes across states. Various other federal and state laws restrict the use and protect the privacy and security of individually identifiable information, as well as employee personal information, including certain state laws modeled to some extent on the European Union’s General Data Protection Regulation.
Various other federal and state laws restrict the use and protect the privacy and security of individually identifiable information, as well as employee personal information, including certain state laws modeled to some extent on the European Union’s General Data Protection Regulation.
CMS and state Medicaid agencies also routinely adjust the RAF which is central to payment under PACE and Managed Medicaid programs in which we participate. The monetary “coefficient” values associated with diseases that we manage in our population are subject to change by CMS and state agencies. Such changes could have a material adverse effect on our financial condition.
The monetary “coefficient” values associated with diseases that we manage in our population are subject to change by CMS and state agencies. Such changes could have a material adverse effect on our financial condition. See Item 1A.
These assessment surveys, allow the Company to develop trainings tailored to the most prevalent needs identified by our employees. Implications of being an emerging growth company and a smaller reporting company We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
Implications of being an emerging growth company and a smaller reporting company We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
It is not yet clear what effect, if any, these legislative changes and any subsequent implementing regulations and guidance will have on our business. • The “Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly” final rule (“PACE Final Rule”) set out a number of changes for PACE organizations, including (i) clarifying that CMS has enforcement discretion to impose civil monetary penalties or an intermediate sanction in the event CMS has made a determination that could lead to the termination of a PACE program; and (ii) reinstating the requirement that PACE organizations enter into written contracts with each outside organization, agency, or individual that furnishes administrative or care-related services not furnished directly by the PACE organization, including 25 medical specialties enumerated by the PACE Final Rule. • The remaining provisions of the PACE final rule from 2024 were issued alongside the new PACE Final Rule for 2025.
The OBBBA, signed into law on July 4, 2025, also includes a provision for permanent pre-deductible coverage of telehealth services under high-deductible health plans linked to health savings accounts, which could result in permanent Medicare telehealth flexibilities, potentially impacting PACE care delivery models. • The “Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly” final rule (“2024 PACE Final Rule”) set out a number of changes for PACE organizations, including (i) clarifying that CMS has enforcement discretion to impose civil monetary penalties or an intermediate sanction in the event CMS has made a determination that could lead to the termination of a PACE program; and (ii) reinstating the requirement that PACE organizations enter into written contracts with each outside organization, agency, or individual that furnishes administrative or care-related services not furnished directly by the PACE organization, including 25 medical specialties enumerated by the PACE Final Rule. • The remaining provisions of the 2024 PACE Final Rule were issued alongside the new PACE final rule for 2025 (the “2025 PACE Final Rule”).
As a result, we believe that, subject to our ability to effectively execute our growth strategy, we have a substantial opportunity to bring our comprehensive value-based model of care to more frail, dual-eligible seniors across the country. The InnovAge Platform Our participant-centered approach is tailored to address the complex medical and social needs of our frail dual-eligible senior population.
As a result, we believe that we have a substantial opportunity to bring our comprehensive value-based model of care to more frail, dual-eligible seniors across the country. This opportunity is subject to our ability to effectively execute our growth strategy and assumes no adverse macroeconomic or regulatory changes.
As of February 12, 2024, the minimum False Claims Act penalty increased from $13,508 to $13,946 per claim. The maximum penalty has increased from $27,018 to $27,894 per claim.
As of January 15, 2025, the minimum False Claims Act penalty increased from $13,946 to $14,308 per claim. The maximum penalty has increased from $27,894 to $28,619 per claim.
We believe people want to stay in their home for as long as possible, and the InnovAge Platform is designed to empower seniors to age independently in their own homes, on their own terms, for as long as possible. 3 Table of Contents Based on historical results for the year ended June 30, 2024 and our experience and industry knowledge, we estimate an average annual revenue opportunity of $113,000 per participant (or $9,400 PMPM) and a total addressable market opportunity of $260 billion, based on our estimated market of approximately 2.3 million PACE eligible in the United States in 2023, as described above.
Based on historical results for the year ended June 30, 2025 and our experience and industry knowledge, we estimate an average annual revenue opportunity of $115,000 per participant (or $9,600 PMPM) and a total addressable market opportunity of $265 billion, based on our estimated market of approximately 2.3 million PACE eligible participants in the United States in 2024, as described above.
We leverage the InnovAge Platform to deliver comprehensive, coordinated healthcare to our participants. The InnovAge Platform consists of (1) our Interdisciplinary Care Teams (“IDTs”) and (2) our community-based care delivery model. The key attributes of the InnovAge Platform include: Our participant focus. Our model is focused on caring for frail, high-cost, dual-eligible seniors.
The InnovAge Platform Our participant-centered approach is tailored to address the complex medical and social needs of our frail dual-eligible senior population. We leverage the InnovAge Platform to deliver comprehensive, coordinated healthcare to our participants. The InnovAge Platform consists of (1) our Interdisciplinary Care Teams (“IDTs”) and (2) our community-based care delivery model.
Our target participant population is the frail, nursing home-eligible subset of dual-eligible seniors to whom we refer as “high-cost, dual-eligibles” given their high healthcare acuity and the associated high level of spend. Our participants are among the most frail and medically complex individuals in the U.S. healthcare system.
The key attributes of the InnovAge Platform include: Our participant focus. Our model is focused on caring for frail, high-cost, dual-eligible seniors. Our target participant population is the frail, nursing home-eligible subset of dual-eligible seniors to whom we refer as “high-cost, dual-eligibles” given their high healthcare acuity and the associated high level of spend.
In fiscal year 2024, we opened the Orlando PACE center as a joint venture with Orlando Health, a healthcare system broadly recognized for its care programs, services and extensive community outreach and support with the goal of magnifying the impact and extend the reach of PACE services for eligible seniors in the Orlando market. 6 Table of Contents Reinvest in the InnovAge Platform to optimize performance • We believe that our ongoing investment in the InnovAge Platform drives greater efficiency across our business, creating a virtuous cycle that allows us to continue providing necessary care to our participants.
In fiscal year 2024, we opened the Orlando PACE center as a joint venture with Orlando Health, a healthcare system broadly recognized for its care programs, services and extensive community outreach and support with the goal of magnifying the impact and extend the reach of PACE services for eligible seniors in the Orlando market.
We offer telehealth visits when clinically indicated, allowed per regulations and more convenient for the participant. Our aim is to make virtual care access simple and convenient for our participants. Addressing social determinants of health .
Our aim is to make virtual care access simple and convenient for our participants. Addressing social determinants of health .
Training and Development We aim to provide our employees opportunities to grow and advance in their careers at InnovAge with learning and development programs. Each year we conduct soft skills training for managers and supervisors, the content of which is informed by gap assessment surveys. A quarterly training series for front-line leaders enables them to develop their management skills.
Each year we conduct soft skills training for managers and supervisors, the content of which is informed by gap assessment surveys. A quarterly training series for front-line leaders enables them to develop their management skills. Our clinical leaders also conduct separate physician leadership trainings quarterly, with a new topic for each installment (e.g., email / phone etiquette).
We believe government healthcare spend is higher for the dual-eligible population, who typically suffer from multiple chronic conditions and require long-term services and supports. We believe Medicare and Medicaid spend on average three times more per capita on a dual-eligible senior than a Medicare-only senior.
We believe government healthcare spend has been higher for the dual-eligible population, who typically suffer from multiple chronic conditions and require long-term services and support.
Our clinical leaders also conduct separate physician leadership trainings quarterly, with a new topic for each installment (e.g., email / phone etiquette). We also conduct a periodic training needs assessment surveys to hear directly from employees and managers where they think they could use more support and learning content in the coming year.
We also conduct a periodic training needs assessment surveys to hear directly from employees and managers where they think they could use more support and learning content in the coming year. These assessment surveys allow the Company to develop trainings tailored to the most prevalent needs identified by our employees.
We believe our efforts in managing our workforce have been effective, evidenced by improved retention, lower turnover, and employee satisfaction during fiscal year 2024. Our people are our product at InnovAge, and their commitment to our participants propels our mission of enabling seniors to age at home, with dignity, for as long as is safely possible.
Our people are our product at InnovAge, and their commitment to our participants propels our mission of enabling seniors to age at home, with dignity, for as long as is safely possible. We believe that our employees are drawn to this mission and our values, which is why our voluntary retention rate was 69% in fiscal year 2025.
Clinical laboratories may be subject to oversight by CMS and state regulators, including the Eliminating Kickbacks in Recovery Act of 2018. If our laboratories or laboratories that we partner with are not in compliance with the applicable CMS or state laws or regulations, they could be subject to enforcement action, which could negatively affect our business.
If our laboratories or laboratories that we partner with are not in compliance with the applicable CMS or state laws or regulations, they could be subject to enforcement action, which could negatively affect our business. 15 Table of Contents We have in the past and continue to intend to grow our business through acquisitions in the states in which we currently operate or in new states that we seek to enter.

… 46 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

202 edited+56 added−84 removed157 unchanged
Biggest changeThis competition has intensified due to the availability to seniors of other programs similar to PACE and the ongoing consolidation in the healthcare industry, which may increase our costs to pursue such opportunities; • we may not be able to recruit or retain a sufficient number of new participants to execute our growth strategy or offset costs relating to recruiting new participants or opening de novo centers or executing acquisitions; • we may not be able to hire sufficient numbers of physicians and other clinical staff, particularly in the current labor market characterized by heightened demand for healthcare personnel and labor shortages; • when expanding our business into new states, we may be required to comply with laws and regulations that may differ from states in which we currently operate; • we may face larger than expected costs and legal, community or other obstacles in the construction and opening of de novo centers, such as the revocation of state-required attestations, or expanding capacity in existing centers; and • we may have difficulty identifying appropriate acquisition targets, be precluded from acquiring targets as a result of audits or sanctions or due to other legal restrictions (e.g. federal or state antitrust laws), may fail to satisfy closing conditions or make investments in acquisitions that we are unable to effectively integrate, involve associated risks or liabilities that we are unable to uncover in advance, or that require greater resources than anticipated and that could include deficient quality of service.
Biggest changeThis competition has intensified due to the availability to seniors of other programs similar to PACE and the ongoing consolidation in the healthcare industry, which may increase our costs to pursue such opportunities; • implementation of our organizational and enterprise efficiency initiatives may be more expensive than anticipated and we may fail to realize the anticipated benefits thereof within the expected timeline, or at all; • we may not be able to recruit or retain a sufficient number of new or existing participants to execute our growth strategy or offset costs relating to marketing, opening de novo centers or executing acquisitions; • we may not be able to hire sufficient numbers of physicians and other clinical staff, particularly in the current labor market characterized by heightened demand for healthcare personnel due to an aging population, and upward pressure on wages coupled with labor shortages for qualified healthcare professionals; • when expanding our business into new states, we may be required to comply with laws and regulations that may differ from states in which we currently operate; • we have faced, and may continue to face, larger than expected costs and legal, community or other obstacles in the construction and opening of de novo centers, such as the suspension or revocation of state-required attestations; • we may have difficulty identifying appropriate acquisition targets, be precluded from acquiring targets as a result of audits or sanctions or due to other legal restrictions (e.g. federal or state antitrust laws), may fail to satisfy closing conditions or make investments in acquisitions that we are unable to effectively integrate, involve associated risks or liabilities that we are unable to uncover in advance, or that require greater resources than anticipated and that could include deficient quality of service; and • we may be subject to sanctions as a result of audits and other regulatory processes and proceedings that could include temporary or permanent suspension of enrollments, debarment or exclusion from participation in federal healthcare programs, and the revocation of a center’s license and suspension or revocation of required attestations to open de novo centers, which may in turn result in participant attrition and preclude us from opening de novo centers and conducting tuck-in acquisitions.
Additionally, the Medicare and Medicaid expenses of our participants may be outside of our control in the event that participants take certain actions that increase such expenses, such as emergency room visits or preventable hospital admissions. Historically, our medical costs and expenses as a percentage of revenue have fluctuated.
Additionally, the Medicare and Medicaid expenses of our participants may be outside of our control in the event that participants take certain actions, such as emergency room visits or preventable hospital admissions, that increase such expenses. Historically, our medical costs and expenses as a percentage of revenue have fluctuated.
Additionally, our organizational structure continues to become more complex as we grow and expand our operational, financial and management controls, as well as our reporting systems and procedures as a public company. We may require significant capital expenditures and the allocation of valuable management resources to grow and evolve our operational and financial operations and grow.
Additionally, our organizational structure continues to become more complex as we grow and expand our operational, financial and management controls, as well as our reporting systems and procedures as a public company. We may require significant capital expenditures and the allocation of valuable management resources to grow and evolve our operational and financial operations.
In addition to the above, PACE contracts also impose complex and extensive requirements upon our operations. Federal and state manuals, policies, and other guidance may also affect our operations.
In addition to the above, PACE contracts also impose complex and extensive requirements upon our operations. Federal and state manuals, policies, and other guidance may affect our operations.
A security breach, security incident, or privacy violation that leads to unauthorized use, disclosure, access, acquisition, loss or modification of, or that prevents access to or otherwise impacts the confidentiality, security, or integrity of, participant or employee information, including PHI/PII that we or our third-party service providers process, could harm our reputation and business, compel us to comply with breach notification laws, cause us to incur significant costs for investigation, containment, remediation, mitigation, fines, penalties, settlements, notification to individuals, regulators, media, credit bureaus, and other third parties, complimentary credit monitoring, identity theft protection, training and similar services to participants and/or employees where required by law or otherwise appropriate, for measures intended to 31 repair or replace systems or technology and to prevent future occurrences.
A security breach, security incident, or privacy violation that leads to unauthorized use, disclosure, access, acquisition, loss or modification of, or that prevents access to or otherwise impacts the confidentiality, security, or integrity of, participant or employee information, including PHI/PII that we or our third-party service providers process, could harm our reputation and business, compel us to comply with breach notification laws, cause us to incur significant costs for investigation, containment, remediation, mitigation, fines, penalties, settlements, notification to individuals, regulators, media, credit bureaus, and other third parties, complimentary credit monitoring, identity theft protection, training and similar services to participants and/or employees where required by law or otherwise appropriate, for measures intended to repair or replace systems or technology and to prevent future occurrences.
Risk Factors, “Risks Related to Our Business—We are subject to legal proceedings, enforcement actions and litigation, malpractice and privacy disputes, which are costly to defend and could materially harm our business and results of operations.” Additionally, the federal government has used the FCA to prosecute a wide variety of alleged false claims 34 and fraud allegedly perpetrated against Medicare, Medicaid, and other federally funded healthcare programs.
Risk Factors, “Risks Related to Our Business--We are subject to legal proceedings, enforcement actions and litigation, malpractice and privacy disputes, which are costly to defend and could materially harm our business and results of operations.” Additionally, the federal government has used the FCA to prosecute a wide variety of alleged false claims and fraud allegedly perpetrated against Medicare, Medicaid, and other federally funded healthcare programs.
Pursuant to our certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the United States District Court for the District of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of fiduciary duty owed by, or other wrongdoing by, any our directors, officers, employees or agents to us or our stockholders, creditors or other constituents, or a claim of aiding and abetting any such breach of fiduciary duty, (iii) any action asserting a claim against the us or any of our directors or officers or other employees arising pursuant to any provision of the DGCL or our certificate of incorporation or our Bylaws (as either may be amended, restated, modified, supplemented or waived from time to time), (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or our bylaws, (v) any action asserting a claim against us or any of our directors or officers or other employees governed by the internal affairs doctrine or (vi) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL.
Pursuant to our certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the United States District Court for the District of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of fiduciary duty owed by, or other wrongdoing by, any our directors, officers, employees or agents to us or our shareholders, creditors or other constituents, or a claim of aiding and abetting any such breach of fiduciary duty, (iii) any action asserting a claim against the us or any of our directors or officers or other employees arising pursuant to any provision of the DGCL or our certificate of incorporation or our Bylaws (as either may be amended, restated, modified, supplemented or waived from time to time), (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or our bylaws, (v) any action asserting a claim against us or any of our directors or officers or other employees governed by the internal affairs doctrine or (vi) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL.
Our growth strategy involves identifying and successfully completing acquisitions, joint ventures and strategic partnerships, which involve numerous risks, including failure to consummate negotiated transactions, difficulties in successfully integrating the operations and personnel, navigating the necessary regulatory approval requirements and difficulties in entering new markets. • If we are unable to attract new participants and retain existing participants, our revenue growth will be adversely affected.
Our growth strategy involves identifying, pursuing and successfully completing acquisitions, joint ventures and strategic partnerships, which involve numerous risks, including failure to consummate negotiated transactions, difficulties in successfully integrating the operations and personnel, navigating the necessary regulatory approval requirements and difficulties in entering new markets. • If we are unable to attract new participants and retain existing participants, our revenue growth will be adversely affected.
Accordingly, the failure to adequately predict and control medical costs and expenses, execute or realize the benefits of our clinical value initiatives, and to make reasonable estimates and maintain adequate accruals for incurred but not reported claims, could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Accordingly, the failure to adequately predict and control medical costs and expenses, execute or realize the benefits of our clinical value initiatives and operational value initiatives, and to make reasonable estimates and maintain adequate accruals for incurred but not reported claims, could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our shareholders and the federal district courts of the United States as the 42 exclusive forum for litigation arising under the Securities Act, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us.
Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our shareholders and the federal district courts of the United States as the exclusive forum for litigation arising under the Securities Act, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us.
Under a notice of enforcement discretion issued by HHS in 2019, penalties for violations of HIPAA and its implementing regulations start at $100 (not adjusted for inflation) per violation and are not to exceed approximately $63,000 (not adjusted for inflation) per violation, subject to a cap of approximately $1.9 million (not adjusted for inflation) for violations of the same standard in a single calendar year.
Under a notice of enforcement discretion issued by HHS in 2019 and annually adjusted by the HHS, penalties for violations of HIPAA and its implementing regulations start at $100 (not adjusted for inflation) per violation and are not to exceed approximately $63,000 (not adjusted for inflation) per violation, subject to a cap of approximately $1.9 million (not adjusted for inflation) for violations of the same standard in a single calendar year.
For example, the CCPA provides certain exceptions for PHI, but is still applicable to certain PII we process in the ordinary course of our business. The effects of the CCPA are wide-ranging and afford consumers certain rights with respect to PII, including a private right of action for data breaches involving certain personal 37 information of California residents.
For example, the CCPA provides certain exceptions for PHI, but is still applicable to certain PII we process in the ordinary course of our business. The effects of the CCPA are wide-ranging and afford consumers certain rights with respect to PII, including a private right of action for data breaches involving certain personal information of California residents.
If we are unable to convince the frail, dual-eligible senior population of the benefits of the InnovAge Platform or if potential or existing participants prefer the healthcare provider model of one of our 21 competitors, we may not be able to effectively implement our growth strategy, which depends on our ability to attract new participants.
If we are unable to convince the frail, dual-eligible senior population of the benefits of the InnovAge Platform or if potential or existing participants prefer the healthcare provider model of one of our competitors, we may not be able to effectively implement our growth strategy, which depends on our ability to attract new participants.
With respect to privacy, the FTC also sets expectations that companies honor the privacy promises made to individuals about how the company handles consumers’ personal information; any failure to honor promises, such as the statements made in a privacy policy or on a website, may also constitute unfair or deceptive acts or practices in violation of the FTC Act.
With respect to privacy, the FTC also sets expectations that companies honor the privacy promises made to individuals about how the company handles consumers’ personal information; failure to honor promises, such as the statements made in a privacy policy or on a website, may also constitute unfair or deceptive acts or practices in violation of the FTC Act.
If our new hires perform poorly, if we 20 are unsuccessful in hiring, training, managing and integrating these new employees, if we are not successful in retaining our existing employees, or if we are unable to provide the care and services that our participants require in compliance with regulatory requirements, our business will be adversely affected.
If our new hires perform poorly, if we are unsuccessful in hiring, training, managing and integrating these new employees, if we are not successful in retaining our existing employees or if we are unable to provide the care and services that our participants require in compliance with regulatory requirements, our business will be adversely affected.
In addition, we could be liable 27 for penalties to the federal government under the FCA, which may include per claim penalties, plus up to three times the amount of damages caused by each false claim, which can be as much as the amounts received directly or indirectly from the government for each such false claim.
In addition, we could be liable for penalties to the federal government under the FCA, which may include per claim penalties, plus up to three times the amount of damages caused by each false claim, which can be as much as the amounts received directly or indirectly from the government for each such false claim.
Even when the Principal Shareholders cease to own shares of our stock representing a majority of the total voting power, for so long as the Principal Shareholders continue to own a significant percentage of our stock, the Principal Shareholders will still be able to significantly influence the composition of our Board and the approval of actions requiring shareholder approval.
Even when the Principal Shareholders cease to own shares of our common stock representing a majority of the total voting power, for so long as the Principal Shareholders continue to own a significant percentage of our common stock, the Principal Shareholders will still be able to significantly influence the composition of our Board and the approval of actions requiring shareholder approval.
Our Principal Shareholders beneficially own approximately 83% of our common stock, which means that together they control the vote of all matters submitted to a vote of our stockholders, including the election of members of the Board of Directors of the Company (the “Board”) and all other corporate decisions.
Our Principal Shareholders beneficially own approximately 83% of our common stock, which means that together they control the vote of all matters submitted to a vote of our shareholders, including the election of members of the Board of Directors of the Company (the “Board”) and all other corporate decisions.
The existence of any material weaknesses or significant deficiency could cause us to reissue our financial statements, fail to meet reporting deadlines or undermine shareholders’ confidence in our reported financial statements, all of which could materially and adversely impact our stock price.
The existence of any material weaknesses or significant deficiency could cause us to reissue our financial statements, fail to meet reporting deadlines or undermine shareholders’ confidence in our reported financial statements, any of which could materially and adversely impact our stock price.
Our operations are subject to extensive federal, state and local government laws and regulations, such as: • Federal Medicare, federal and state Medicaid, and federal and state PACE statutes and regulations, which are continuously changing and evolving; • federal and state anti-kickback and self-referral laws, which prohibit, among other things, the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback or remuneration, whether in cash or in kind, for referring an individual, in return for ordering, leasing, purchasing or recommending or arranging for or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by federal healthcare programs, such as Medicare and Medicaid, or by any payor; • the federal civil false claims laws, including the FCA and associated regulations, which impose civil penalties through governmental, whistleblower or qui tam actions, on individuals or entities for, among other things, knowingly submitting false or fraudulent claims for payment to the government or knowingly making, or causing to be made, a false statement in order to have a claim paid.
Our operations are subject to extensive federal, state and local government laws and regulations, such as: • Federal Medicare, federal and state Medicaid, and federal and state PACE statutes and regulations, which are continuously changing and evolving; • federal and state anti-kickback and self-referral laws, which prohibit, among other things, the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback or remuneration, whether in cash or in kind, for referring an individual, in return for ordering, leasing, purchasing or recommending or arranging for or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by federal healthcare programs, such as Medicare and Medicaid, or by any payor; 34 Table of Contents • the federal civil false claims laws, including the FCA and associated regulations, which impose civil penalties through governmental, whistleblower or qui tam actions, on individuals or entities for, among other things, knowingly submitting false or fraudulent claims for payment to the government or knowingly making, or causing to be made, a false statement in order to have a claim paid.
Our certificate of incorporation contains a provision that provides us with protections similar to Section 203 of the DGCL, and prevents us from engaging in a business combination with a person (excluding the Principal Shareholders and any of their direct or indirect transferees and any group as to which such persons are a party) who acquires at least 85% of our common stock for a period of three years from the date such person acquired such common stock, unless Board or shareholder approval is obtained prior to the acquisition.
Our certificate of incorporation contains a provision that provides us with protections similar to Section 203 of the DGCL, and prevents us from engaging in a business combination with a person (excluding the Principal Shareholders and any of their direct or indirect transferees and any group as to which such persons are a party) who acquires at least 15% of our common stock for a period of three years from the date such person acquired such common stock, unless Board or shareholder approval is obtained prior to the acquisition.
Our decision to issue securities in any future offering will depend on market conditions 45 and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings.
Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings.
In addition, if labor market conditions continue to disrupt our ability to recruit healthcare professionals , we may not be able to execute our growth plan and grow capacity in our existing centers or open de novo centers or we may have to do so at costs higher than originally budgeted, which, in turn, could increase our capital needs during a time of high interest rates and when conditions in the credit and capital markets are volatile.
If labor market conditions disrupt our ability to recruit healthcare professionals, we may not be able to execute our growth plan and grow capacity in our existing centers or open de novo centers or we may have to do so at costs higher than originally budgeted, which, in turn, could increase our capital needs during a time of high interest rates and when conditions in the credit and capital markets are volatile.
These transactions may also cause us to significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition or investment, issue common stock that would dilute our current stockholders’ percentage ownership or incur asset write-offs and restructuring costs and other related expenses that could have a material adverse impact on our operating results.
These transactions may also cause us to significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition or investment, issue common stock that would dilute our current shareholders’ percentage ownership or incur asset write-offs and restructuring costs and other related expenses that could have a material adverse impact on our operating results.
If any of these suppliers do not meet our needs for the products they supply, including as a result of price increases, a product recall, product shortage or other supply chain issues, or a dispute, and we are not able to find adequate alternative sources, our business, results of operations, financial condition and cash flows could be materially adversely impacted.
If any of these suppliers do not meet our needs for the products they supply, including as a result of price increases, a product recall, product shortage or other supply chain issues (including as a result of trade tensions), or a dispute, and we are not able to find adequate alternative sources, our business, results of operations, financial condition and cash flows could be materially adversely impacted.
Specifically, if our participants fall ill due to an outbreak, such as during the COVID-19 pandemic, we may experience a high level of unexpected deaths, increased costs, difficulties adhering to the complex government laws and regulations that apply to our business (including difficulties enrolling participants as was the case during the COVID-19 pandemic), and other effects, including a loss of revenue, negative publicity, litigation and inquiries from government regulators.
Specifically, if our participants fall ill due to an outbreak, such as during the COVID-19 pandemic, we may experience a high level of unexpected deaths, increased costs, difficulties adhering to the complex government laws and regulations that apply to our business (including difficulties enrolling participants), and other effects, including a loss of revenue, negative publicity, litigation and inquiries from government regulators.
The FTC sets expectations for failing to take appropriate steps to keep consumers’ personal information secure, or failing to provide a level of security commensurate to promises made to individual about the security of their personal information (such as in a privacy notice) may constitute unfair or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act (“FTC Act”).
The FTC sets expectations for failing to take appropriate steps to keep consumers’ personal information secure, or failing to provide a level of security commensurate to promises made to individuals about the security of their personal information (such as in a privacy notice) may constitute unfair or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act (“FTC Act”).
When an entity is determined to have violated the FCA, the government may impose civil fines and penalties ranging from $13,946 to $27,894 for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; • the federal false claims laws, which impose criminal penalties on individuals who make or present a false, fictitious, or fraudulent claim to the government that the individual knew was false, fictitious, or fraudulent, and was made with the specific intent to violate the law or with a consciousness of wrongdoing; • state false claims laws, which generally follow the FCA and apply to claims submitted to state healthcare programs, and state health insurance fraud laws that impose penalties for the submission of false or fraudulent claims by providers to commercial insurers or other payors of healthcare services; • the federal Civil Monetary Penalties Statute and associated regulations, which impose civil fines for, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know such remuneration is likely to influence the beneficiary’s selection of a particular provider or supplier of services reimbursable by Medicare or a state healthcare program, unless an 33 exception applies, and which authorize assessments and program exclusion for various forms of fraud and abuse involving the Medicare and Medicaid programs; • the federal healthcare fraud statute and its implementing regulations, which created federal criminal laws that prohibit, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • federal and state laws regarding the collection, use disclosure and, protection of personal identifiable information or PII and protected health information or PHI (e.g., HIPAA and the CCPA) and the storage, handling, shipment, disposal and/or dispensing of pharmaceuticals and blood products and other biological materials, and many other applicable state and federal laws and requirements; • state and federal statutes and regulations that govern workplace health and safety; • federal and state laws and policies that require healthcare providers to maintain licensure, certification or accreditation to provide services to patients or to enroll and participate in the Medicaid programs, to report certain changes in their operations to the agencies that administer these programs and, in some cases, to re-enroll in these programs when changes in direct or indirect ownership occur; • federal and state scope of practice and other laws pertaining to the provision of services by qualified healthcare providers, including those pertaining to the provision of services by nurse practitioners and physician assistants in certain settings and requirements for physician supervision of those services; • state laws restricting the corporate practice of medicine; and • federal or state consumer protection laws that regulate various trade practices (e.g. consumer communications or consumer-facing activities).
When an entity is determined to have violated the FCA, the government may impose civil fines and penalties ranging from $14,308 to $28,619 for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; • the federal false claims laws, which impose criminal penalties on individuals who make or present a false, fictitious, or fraudulent claim to the government that the individual knew was false, fictitious, or fraudulent, and was made with the specific intent to violate the law or with a consciousness of wrongdoing; • state false claims laws, which generally follow the FCA and apply to claims submitted to state healthcare programs, and state health insurance fraud laws that impose penalties for the submission of false or fraudulent claims by providers to commercial insurers or other payors of healthcare services; • the federal Civil Monetary Penalties Statute and associated regulations, which impose civil fines for, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know such remuneration is likely to influence the beneficiary’s selection of a particular provider or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies, and which authorize assessments and program exclusion for various forms of fraud and abuse involving the Medicare and Medicaid programs; • the federal healthcare fraud statute and its implementing regulations, which created federal criminal laws that prohibit, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • federal and state laws regarding the collection, use disclosure and protection of personal identifiable information, or PII, and protected health information, or PHI (e.g., HIPAA and the CCPA), and the storage, handling, shipment, disposal and/or dispensing of pharmaceuticals and blood products and other biological materials, and many other applicable state and federal laws and requirements; • state and federal statutes and regulations that govern workplace health and safety; • federal and state laws and policies that require healthcare providers to maintain licensure, certification or accreditation to provide services to patients or to enroll and participate in the Medicaid programs, to report certain changes in their operations to the agencies that administer these programs and, in some cases, to re-enroll in these programs when changes in direct or indirect ownership occur; • federal and state scope of practice and other laws pertaining to the provision of services by qualified healthcare providers, including those pertaining to the provision of services by nurse practitioners and physician assistants in certain settings and requirements for physician supervision of those services; • state laws restricting the corporate practice of medicine; and • federal or state consumer protection laws that regulate various trade practices (e.g. consumer communications or consumer-facing activities).
However, acquisitions, joint ventures and other strategic partnerships, involve numerous risks, including failure to consummate negotiated transactions, difficulties in successfully integrating the operations and personnel, navigating the necessary regulatory approval requirements, including securing regulatory safe harbors necessary for healthcare related join ventures under the Anti-Kickback Statute, distraction of management while overseeing the transactions, and disruption of, our existing operations, difficulties in entering new markets in which we have no or limited direct prior experience, and difficulties in achieving the synergies we anticipated.
However, acquisitions, joint ventures and other strategic partnerships, involve numerous risks, including failure to consummate negotiated transactions, difficulties in successfully integrating the operations and personnel, navigating the necessary regulatory approval requirements, including securing regulatory safe harbors necessary for healthcare related join ventures under the Anti-Kickback Statute, distraction of management while overseeing the transactions, and disruption of, our existing operations, difficulties in entering new markets in which we have no or limited direct prior experience, difficulties in managing novel challenges in markets we have no or limited direct prior experience, and difficulties in achieving the synergies we anticipated.
A significant portion of our total outstanding shares may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well. Sales of a substantial number of shares of our common stock in the public market could occur at any time.
A significant portion of our total outstanding shares may be sold into the market. This could cause the market price of our common stock to drop significantly, even if our business is doing well. Sales of a substantial number of shares of our common stock in the public market could occur at any time.
There can be no assurance that we will be able to continue to expand our operations in any new geographic markets.
There can be no assurance that we will be able to continue to expand our operations in new geographic markets.
In particular, for so long as the Principal Shareholders continue to own a significant percentage of our stock, the Principal Shareholders will be able to cause or prevent a change of control of us or a change in 39 the composition of our Board and could preclude any unsolicited acquisition of us.
In particular, for so long as the Principal Shareholders continue to own a significant percentage of our common stock, the Principal Shareholders will be able to cause or prevent a change of control of us or a change in the composition of our Board and could preclude any unsolicited acquisition of us.
If we are not able to access superior products or new medical products, including biopharmaceuticals or medical devices, on a cost-effective basis or if suppliers are not able to fulfill our requirements for such products, we could face attrition with respect to our participants or health care providers and other personnel and other negative consequences which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
If we are not able to access superior products or new medical products, including biopharmaceuticals or medical devices, on a cost-effective basis or if suppliers are not able to fulfill our requirements for such products, we could face attrition with respect to our participants or healthcare providers and other personnel and other negative consequences which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
In addition, we are party to a Director Nomination Agreement (defined herein) with the Principal Shareholders that provides the Principal Shareholders the right to designate: (i) all of the nominees for election to our Board for so long as the Principal Shareholders collectively beneficially own at least 40% of the Original Amount (as defined therein); (ii) 40% of the nominees for election to our Board for so long as the Principal Shareholders collectively beneficially own less than 40% but at least 30% of the Original Amount; (iii) 30% of the nominees for election to our Board for so long as the Principal Shareholders collectively beneficially own less than 30% but at least 20% of the Original Amount; (iv) 20% of the nominees for election to our Board for so long as the Principal Shareholders collectively beneficially own less than 20% but at least 10% of the Original Amount; and (v) one of the nominees for election to our Board for so long as the Principal Shareholders collectively beneficially own at least 5% of the Original Amount.
Additionally, we are party to a Director Nomination Agreement (defined herein) with the Principal Shareholders that provides the Principal Shareholders the right to designate: (i) all of the nominees for election to our Board for so long as the Principal Shareholders collectively beneficially own at least 40% of the Original Amount (as defined therein); (ii) 40% of the nominees for election to our Board for so long as the Principal Shareholders collectively beneficially own less than 40% but at least 30% of the Original Amount; (iii) 30% of the nominees for election to our Board for so long as the Principal Shareholders collectively beneficially own less than 30% but at least 20% of the Original Amount; (iv) 20% of the nominees for election to our Board for so long as the Principal Shareholders collectively beneficially own less than 20% but at least 10% of the Original Amount; and (v) one of the nominees for election to our Board for so long as the Principal Shareholders collectively beneficially own at least 5% of the Original Amount.
Our future success depends largely upon the services of our senior management team and other key employees. We rely on our leadership team in the areas of operations, provision of medical services, information technology and security, marketing, and general and administrative functions.
Our future success depends largely upon the services of our executive officers, senior management team and other key employees. We rely on our leadership team in the areas of operations, provision of medical services, information technology and security, marketing and general and administrative functions.
It is possible that our estimates of this type of claim may be excessive or inadequate in the future and we may be obligated to repay certain amounts to CMS. In such event, our results of operations could be adversely impacted.
It is possible that our estimates of this type of claim may be excessive or inadequate in the future and we may be obligated to repay certain amounts to CMS. In such event, our results of operations would be adversely impacted.
HIPAA specifies that such notifications must be made “without unreasonable delay and in no case later than 60 calendar days after discovery of the breach.” If a breach affects 500 individuals or more, it must be reported to HHS without unreasonable delay, and in no case later than 60 calendar days after discovery, and HHS will automatically investigate the breach and post the name of the entity on its public breach portal.
HIPAA specifies that such notifications must be made “without unreasonable delay and in no case later than 60 calendar days after discovery of the breach.” If a breach affects 500 individuals or more, it must be reported to HHS without unreasonable delay, and in no case later than 60 calendar days after discovery, and HHS will automatically investigate the breach and post the name of the 38 Table of Contents entity on its public breach portal.
If we are not able to maintain positive cash flow in the long term, we may require additional financing, which may not be available on favorable terms or at all and/or which would be dilutive to our stockholders.
If we are not able to maintain positive cash flow in the long term, we may require additional financing, which may not be available on favorable terms or at all and/or which would be dilutive to our shareholders.
Some of the states in which we currently operate have laws that prohibit business entities, such as us, from practicing medicine, employing physicians or other clinicians to practice medicine, exercising control over medical decisions by physicians or other clinicians or engaging in certain arrangements, such as fee-splitting, with physicians or other clinicians (such activities generally referred to as the “corporate practice of medicine”).
Some of the states in which we currently operate, as well as states in which we may operate in the future, have laws that prohibit business entities, such as us, from practicing medicine, employing physicians or other clinicians to practice medicine, exercising control over medical decisions by physicians or other clinicians or engaging in certain arrangements, such as fee-splitting, with physicians or other clinicians (such activities generally referred to as the “corporate practice of medicine”).
Additionally, even after we no longer qualify as an “emerging growth company,” we may still qualify as a “smaller reporting company” if the market value of our common stock held by non-affiliates is below $250 million (or $700 million if our annual revenue is less than $100 million) as of December 31 in any given year, which would allow us to continue taking advantage of certain of these exemptions.
Even after fiscal year 2026 when we no longer qualify as an “emerging growth company,” we may still qualify as a “smaller reporting company” if the market value of our common stock held by non-affiliates is below $250 million (or $700 million if our annual revenue is less than $100 million) as of December 31 in any given year, which would allow us to continue taking advantage of certain of these exemptions.
As a result of PACE contracts with various federal and state government programs, we are regularly subject to various routine and non-routine governmental inspections, reviews, audits, requests for information and investigations to verify our compliance with applicable laws, assess the quality of our services and evaluate the accuracy of our submitted risk adjustment data.
As a result of PACE contracts with various federal and state government programs, we are regularly subject to, and will continue to be subject to, various routine and non-routine governmental inspections, reviews, audits, requests for information and investigations to verify our compliance with applicable laws, assess the quality of our services and evaluate the accuracy of our submitted risk adjustment data.
For such period of time as our Principal Shareholders beneficially own a majority of the voting power, they will have significant influence. • Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause such results to fall below any guidance, targets or goals we provide.
For such period of time as our Principal Shareholders beneficially own a majority of the voting power, they will have significant influence. • Our operating results fluctuate, which makes our future operating results difficult to predict and could cause such results to fall below any guidance, targets or goals we provide.
In addition, the Principal Shareholders may have an interest in pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to you.
In addition, the Principal Shareholders may have an interest in pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to our other shareholders.
In addition, our results of operations have been and may in the future be negatively impacted by adverse conditions affecting our centers, including severe weather events such as tornadoes, hurricanes and widespread winter storms, earthquakes, violence or threats of violence or other factors beyond our control that cause disruption in provision of participant services, displacement of our participants, employees and care teams, or force certain of our centers to close temporarily.
In addition, our results of operations have been, and may in the future be, negatively impacted by adverse conditions affecting our centers, including severe weather events such as tornadoes, hurricanes and widespread winter storms, floods, fires, earthquakes, power losses, violence or threats of violence or other factors beyond our control that cause disruption in provision of participant services, displacement of our participants, employees and care teams, or force certain of our centers to close temporarily.
There can be no assurance that we will be able to successfully capitalize on growth opportunities, which will negatively impact our business, revenues, results of operations and financial condition. Our growth strategy is partially dependent upon our ability to identify and successfully complete acquisitions, joint ventures and other strategic partnerships.
There can be no assurance that we will be able to successfully capitalize on growth opportunities, which will negatively impact our business, revenues, results of operations and financial condition. 21 Table of Contents Our growth strategy is partially dependent upon our ability to identify and successfully complete acquisitions, joint ventures and other strategic partnerships.
We also have faced and may in the future face allegations or litigation related to our potential and completed acquisitions, securities issuances or business practices, including public disclosures about our business.
We also have faced and may in the future face allegations or litigation related to our potential and completed acquisitions, securities issuances or business practices, including contract claims and public disclosures about our business.
However, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce a duty or liability created by the Securities Act or the rules and regulations thereunder; accordingly, we cannot be certain that a court would enforce such provision.
However, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce a duty or liability created by the Securities Act or 44 Table of Contents the rules and regulations thereunder; accordingly, we cannot be certain that a court would enforce such provision.
In general, inspections, reviews, audits, requests for information or investigations with adverse findings, and in particular the audits described above, have resulted in and may further result in: • temporary or permanent enrollment sanctions in the affected center(s), as was the case with our Sacramento, California center and our centers in the State of Colorado; • refunding amounts we have been paid by the government; • state or federal agencies imposing corrective action plans, fines, penalties, training, policies and procedures, monitoring, and other requirements; • temporary suspension of payments; • debarment or exclusion from participation in federal healthcare programs; • self-disclosure of violations to applicable regulatory authorities; • damage to our reputation; • the revocation of a center’s license or suspension of state attestations to open de novo centers; and • loss of certain rights under, or termination of, our contracts with government payors.
In general, inspections, reviews, audits, requests for information or investigations with adverse findings, and in particular the audits described above, have resulted in and may further result in: • temporary or permanent enrollment sanctions in the affected center(s), as was the case with our Sacramento, California center and our centers in the State of Colorado in 2021; • refunding amounts we have been paid by the government; • state or federal agencies imposing corrective action plans, fines, penalties, training, policies and procedures, monitoring, and other requirements; • temporary suspension of payments; • debarment or exclusion from participation in federal healthcare programs; • self-disclosure of violations to applicable regulatory authorities; • damage to our reputation; 24 Table of Contents • the revocation of a center’s license or suspension of state attestations to open de novo centers, such as the case with our Downey and Bakersfield, California centers; and • loss of certain rights under, or termination of, our contracts with government payors.
If medical costs and expenses exceed the underlying capitation payment received, we will not be able to correspondingly increase our capitated payment and we could suffer losses with respect to such agreements. Changes in our anticipated ratio of medical expense to revenue can significantly impact our financial results.
If medical costs and expenses exceed the underlying capitation payments received, we will not be able to correspondingly increase our capitated payments and thus we could suffer losses with respect to such agreements. Changes in our anticipated ratio of medical expense to revenue can significantly impact our financial results.
We are a “controlled company” within the meaning of the rules of Nasdaq and, as a result, we qualify for, and intend to continue relying on, exemptions from certain corporate governance requirements. Therefore, you do not have the same protections as those afforded to stockholders of companies that are subject to such governance requirements.
We are a “controlled company” within the meaning of the rules of Nasdaq and, as a result, we qualify for, and intend to continue relying on, exemptions from certain corporate governance requirements. Therefore, shareholders do not have the same protections as those afforded to shareholders of companies that are subject to such governance requirements.
If those changes are implemented, we cannot predict whether the amount of fixed federal funding to the states will be based on 28 current payment amounts, or if it will be based on lower payment amounts, which would negatively impact those states that expanded their Medicaid programs in response to the ACA.
If those changes or others are implemented, we cannot predict whether the amount of fixed federal funding to the states will be based on current payment amounts or on lower payment amounts, which would negatively impact those states that expanded their Medicaid programs in response to the ACA.
In addition, this concentration of ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in a company with significant stockholders.
In addition, this concentration of ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in a company with significant shareholders.
Issuing additional shares of our common stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our existing stockholders or reduce the market price of our common stock or both.
Issuing additional shares of our common stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our existing shareholders or reduce the market price of our common stock or both.
These and other factors, many of which are beyond our control, may cause our operating results and the market price and demand for our shares to fluctuate substantially. Fluctuations in our quarterly operating results could limit or prevent investors from readily selling their shares and may otherwise negatively affect the market price and liquidity of our shares.
These and other factors, many of which are beyond our control, may cause the market price and demand for our shares to fluctuate substantially. Fluctuations in the price of our shares could limit or prevent investors from readily selling their shares and may otherwise negatively affect the market price and liquidity of our shares.
Thereafter, we have to, among other things, recruit and retain qualified 30 personnel, develop new centers and establish new relationships or contracts with physicians and other healthcare and services providers.
Thereafter, we have to, among other things, recruit and retain qualified personnel, develop and grow new centers and establish new relationships or contracts with physicians and other healthcare and services providers.
Factors that may cause medical expenses to exceed estimates include: • the health status of participants requiring higher levels of care, such as nursing home care or higher incidents of hospitalization; • higher than expected utilization of new or existing healthcare services; • more frequent catastrophic medical cases (e.g. transplants); • an increase in the cost of healthcare services and supplies, whether as a result of inflation, wage increases, purchases of vaccines and personal protective equipment as a result of a pandemic or epidemic, other health emergencies, or otherwise; • emergence of new high-cost medications to treat conditions that are common in our population, such as lecanemab for Alzheimer’s Dementia; • changes to mandated benefits or other changes in healthcare laws, regulations and practices; • increased costs attributable to specialist physicians, hospitals and ancillary providers; • changes in the demographics of our participants and medical trends; • contractual or claims disputes with providers, hospitals or other service providers; • the occurrence of catastrophes, health emergencies, including epidemics or pandemics or acts of terrorism; and • the reduction of government payor payments.
Factors that may cause medical expenses to exceed estimates include: • the health status of participants requiring higher levels of care, such as nursing home care, or higher incidents of hospitalization; • higher than expected utilization of new or existing healthcare services; • more frequent catastrophic medical cases (e.g. transplants); • an increase in the cost of healthcare services and supplies, whether as a result of inflation, wage increases, purchases of vaccines and personal protective equipment as a result of a pandemic or epidemic, other health emergencies, or otherwise; • emergence of new high-cost medications to treat conditions that are common in our population, such as new treatments for Alzheimer’s Dementia; • changes to mandated benefits or other changes in healthcare laws, regulations and practices at both the federal and state levels; • increased costs attributable to specialist physicians, hospitals, and ancillary providers; • changes in the demographics of our participants and medical trends; 26 Table of Contents • contractual or claims disputes with providers, hospitals or other service providers; • the occurrence of catastrophes, health emergencies, including epidemics or pandemics or acts of terrorism; and • the reduction of government payor payments.
While we believe that we have structured our agreements and operations in material compliance with applicable healthcare laws and regulations, there can be no assurance that regulators will agree with our approach or that we will be able to successfully address changes in the current legislative and regulatory environment.
There can be no assurance that regulators will agree that we have structured our agreements and operations in material compliance with applicable healthcare laws and regulations or that we will be able to successfully address changes in the current legislative and regulatory environment.
If we fail to effectively manage our potential growth and change or fail to ensure that the level of care and services provided by our employees complies with regulatory and contractual requirements, and levels of patient service and satisfaction, our brand and reputation, could suffer, adversely affecting our ability to attract and retain participants and employees and lead to the need for corrective actions or sanctions.
If we fail to effectively manage our potential growth or fail to ensure that the level of care and services provided by our employees complies with regulatory and contractual requirements and levels of patient service and satisfaction, our brand and reputation, could suffer, adversely affecting our ability to attract and retain participants and employees and could also lead to corrective actions or sanctions.
HIPAA establishes a set of national privacy and security standards for the protection of PHI by health plans, healthcare clearinghouses, and certain healthcare providers, referred to as covered entities, and the business associates with whom such covered entities contract for services.
HIPAA establishes a set of national privacy and security standards for the protection of PHI by health plans, healthcare clearinghouses, and certain healthcare providers, referred to as covered entities, which includes the Company, and the business associates with whom such covered entities contract for services.
In recent years, government oversight and law enforcement have become increasingly active and aggressive in investigating and taking legal action against potential fraud and abuse. In July 2021, the Company received a civil investigative demand from the Attorney General for the State of Colorado under the Colorado Medicaid False Claims Act.
In recent years, government oversight and law enforcement have become increasingly active and aggressive in investigating and taking legal action against potential healthcare fraud and abuse. As previously disclosed, in July 2021, the Company received a civil investigative demand from the Attorney General for the State of Colorado under the Colorado Medicaid False Claims Act.
We cannot assure our stockholders as to the ultimate content, timing or effect of any new healthcare legislation or regulations, nor is it possible at this time to estimate the impact of potential new legislation or regulations on our business. Since nearly all of our revenue is derived from government payors, we are always subject to regulatory changes.
We cannot assure our shareholders as to the ultimate content, timing or effect of any new healthcare legislation or regulations, nor is it possible at this time to estimate the impact of potential new legislation or regulations on our business. Since nearly all of our revenue is derived from government payors, we are continually subject to regulatory changes.
We compete with other healthcare providers, primarily hospitals and other centers, in attracting physicians, nurses and medical staff to support our centers, and recruiting and retaining qualified management and support personnel responsible for the daily operations of each of our centers.
We compete with other healthcare providers, primarily hospitals and other centers, and home health care providers in attracting physicians, nurses and medical staff to support our centers, and recruiting and retaining qualified management and support personnel responsible for the daily operations of each of our centers.
Any changes that limit or reduce general PACE rates could have a material adverse effect on our business. • Our records and submissions to government payors may contain inaccurate or unsupportable information regarding risk adjustment scores of participants, which could subject us to repayment obligations or penalties.
Any changes that limit or reduce general PACE rates could have a material adverse effect on our business. • Our records and submissions to government payors may contain inaccurate or unsupportable information regarding risk adjustment scores of participants, which could subject us to repayment obligations or penalties. CMS may audit PACE organizations’ risk adjustment data submissions.
Further, our current or potential competitors may be acquired by third parties with greater available resources. Competing providers may also offer different programs or services than we do, which, combined with the foregoing factors, may result in our competitors being more attractive to our current participants, potential participants and referral sources.
Further, our current or potential competitors may be acquired by third parties 31 Table of Contents with greater available resources. Competing providers may also offer different programs or services than we do, which, combined with the foregoing factors, may result in our competitors being more attractive to our current participants, potential participants and referral sources.
In addition, the 2021 Credit Agreement (as defined in Note 7, “Long-term Debt” to the consolidated financial statements) contains a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests.
In addition, the Credit Agreement (as defined in Note 7, “Long-term Debt” to the consolidated financial statements in this Annual Report) contains a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests.
These provisions could also discourage proxy contests and make it more difficult for you and other shareholders to elect directors of your choosing and cause us to take other corporate actions you desire, including actions that you may deem advantageous, or negatively affect the trading price of our common stock.
These provisions could also discourage proxy contests and make it more difficult for minority shareholders to elect directors of their choosing and cause us to take other corporate actions shareholders desire, including actions that other shareholders may deem advantageous, or negatively affect the trading price of our common stock.
Accordingly, you do not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. 40 We qualify as an “emerging growth company” and a “smaller reporting company” and we have elected to comply with reduced public company reporting requirements, which could make our common stock less attractive to investors.
Accordingly, shareholders do not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. 42 Table of Contents We qualify as an “emerging growth company” and a “smaller reporting company” and we have elected to comply with reduced public company reporting requirements, which could make our common stock less attractive to investors.
Any of the results noted above could have further material adverse effects on our business and operating results. Furthermore, the legal, document production and other costs associated with complying with these inspections, reviews, audits, requests for information or investigations is significant.
Any of the results noted above have had and could have material adverse effects on our business and operating results. Furthermore, the legal, document production and other costs associated with complying with these inspections, reviews, audits, requests for information or investigations are significant.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, such as disclosures related to climate emissions, are creating uncertainty for public companies, increasing legal and financial 41 compliance costs and making some activities more time consuming.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, such as disclosures related to climate emissions, and their varying interpretations, are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming.
Cyber-attacks are becoming more sophisticated, and frequent, and we or our third-party service providers may be unable to anticipate these techniques or to implement adequate protective measures against them or to prevent future attacks. The prevalence of smart/handheld devices and the remote work environment has increased these risks.
Cyber-attacks are becoming more sophisticated including with the use of artificial intelligence, and frequent, and we or our third-party service providers may be unable to anticipate these techniques or to implement adequate protective measures against them or to prevent future attacks. The prevalence of smart/handheld devices and the remote work environment has increased these risks.
Security breaches, loss of data and other disruptions have in the past and could in the future compromise sensitive information related to our business or our participants, or prevent us from accessing critical information and expose us to liability, and could adversely affect our business and our reputation.
Security breaches, loss of data and other disruptions, including disruptions in our disaster recovery systems, have in the past and could in the future compromise sensitive information related to our business or our participants, or prevent us from accessing critical information and expose us to liability, and could adversely affect our business and our reputation.
If any of our operations are found to violate these or other government laws or regulations, we could suffer severe consequences that would have a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price, including: • suspension, termination or exclusion of our participation in government payment programs; • refunds of amounts received in violation of law or applicable payment program requirements dating back to the applicable statute of limitation periods; • criminal or civil liability, fines, damages or monetary penalties for violations of healthcare fraud and abuse laws, including the Anti-Kickback Statute, Civil Monetary Penalties Statute and FCA, or other failures to meet regulatory requirements; • enforcement actions by governmental agencies and/or state law claims for monetary damages for patients or employees relating to breach or impermissible use or disclosure of, or other incident relating to PHI and other types of personal data or PII that we collect, use, and disclose, in violation of federal or state privacy laws, including, for example and without limitation, HIPAA or state data privacy and security laws; • mandated changes to our practices or procedures that could significantly increase operating expenses; • imposition of and compliance with corporate integrity agreements, monitoring agreements or corrective action plans that could subject us to ongoing audits and reporting requirements as well as increased scrutiny of our billing and business practices; • termination of various relationships and/or contracts related to our business, including joint venture arrangements, real estate leases and consulting agreements; and • harm to our reputation, which could negatively impact our business relationships, affect our ability to attract and retain participants and healthcare professionals, affect our ability to obtain financing and decrease access to new business opportunities, among other things.
If any of our operations are found to violate these or other government laws or regulations, we could suffer severe consequences that would have a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price, including: • suspension, termination or exclusion of our participation in government payment programs; • refunds of amounts received in violation of law or applicable payment program requirements dating back to the applicable statute of limitation periods; • criminal or civil liability, fines, damages or monetary penalties for violations of healthcare fraud and abuse laws, including the Anti-Kickback Statute, Civil Monetary Penalties Statute and FCA, or other failures to meet regulatory requirements; • enforcement actions by governmental agencies and/or state law claims for monetary damages for patients or employees relating to breach or impermissible use or disclosure of, or other incident relating to PHI and other types of personal data or PII that we collect, use, and disclose, in violation of federal or state privacy laws, including, for example and without limitation, HIPAA or state data privacy and security laws; • mandated changes to our practices or procedures that could significantly increase operating expenses; • imposition of and compliance with corporate integrity agreements, monitoring agreements or corrective action plans that could subject us to ongoing audits and reporting requirements as well as increased scrutiny of our billing and business practices; • termination of various relationships and/or contracts related to our business, including joint venture arrangements, real estate leases and consulting agreements; and • harm to our reputation, which could negatively impact our business relationships, affect our ability to attract and retain participants and healthcare professionals, affect our ability to obtain financing and decrease access to new business opportunities, among other things. 36 Table of Contents We are, from time to time, and may in the future continue to be, a party to various lawsuits, demands, claims, governmental investigations, audits (including investigations or other actions resulting from our obligation to self-report suspected violations of law), and other legal matters.
Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion.
Debt securities convertible 45 Table of Contents into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion.
Further, the inability to estimate these claims accurately may also affect our ability to take timely corrective actions, further exacerbating the extent of any adverse effect on our results of operations. In addition, our operational and financial results will experience some variability depending upon the time of year in which they are measured.
Further, the inability to estimate these claims accurately may also affect our ability to take timely corrective actions, further exacerbating the extent of any adverse effect on our results of operations. In addition, our operational and financial results vary depending upon the time of year in which they are measured.
If the guidance we provide falls short or we are unable to meet the expectations of analysts or investors, the trading price of our common stock could decline substantially. 19 Risks Related to Our Business Our growth strategy may not prove viable, and we may not realize expected results therefrom.
If the guidance we provide falls short or we are unable to meet the expectations of analysts or investors, the trading price of our common stock could decline substantially. Risks Related to Our Business Our growth strategy may not prove viable and we may fail to realize expected results therefrom fully or at all.
A breach of the covenants or restrictions under the 2021 Credit Agreement could result in an event of default under such document. Such a default may allow the creditors to accelerate the related debt and terminate all commitments to extend credit thereunder and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.
A breach of the covenants or restrictions under the Credit Agreement could result in an event of default under the agreement and could allow the creditors to accelerate the related debt and terminate all commitments to extend credit thereunder and could further result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.
For example, medical costs vary seasonally depending primarily on the weather because certain illnesses, such as the influenza virus, are far more prevalent during colder months of the year. Historically, we have seen higher levels of per-participant medical costs in the second and third quarters of our fiscal year.
For example, medical costs vary seasonally depending primarily on the weather because certain illnesses, such as the influenza, COVID-19 and respiratory syncytia viruses, are far more prevalent during colder months of the year. Historically, we have seen higher levels of per-participant medical costs in the second and third quarters of our fiscal year.
Professional liability claims in excess of applicable insurance coverage could have a material adverse effect on our business, financial condition and results of operations. In addition, any professional liability claim brought against us, whether or not they have merit, could result in an increase of our professional liability insurance premiums.
Professional liability claims in excess of applicable insurance coverage could have a material adverse effect on our business, financial condition and results of operations. In addition, any professional liability claim brought against us, regardless of merit, could result in an increase of our professional liability insurance premiums.
We receive nearly all of our revenue through the PACE program, which accounted for 99.9% and 99.8% of our revenue for the years ended June 30, 2024 and 2023, respectively. As a result, our operations are dependent on government funding levels for PACE programs.
We receive nearly all of our revenue through the PACE program, which accounted for 99.8% of our revenue for each of the years ended June 30, 2025 and 2024. As a result, our operations are dependent on government funding levels for PACE programs.
As the states respond to market dynamics and financial pressures, and as government payors make strategic budgetary decisions in respect of the programs in which they participate, certain government payors may seek to renegotiate or terminate their agreements with us.
As the states respond to market dynamics and financial pressures, and as government payors make strategic budgetary decisions in respect of the programs in which they participate, certain government payors, including CMS and state Medicaid agencies, may seek to renegotiate or terminate their agreements with us.

… 262 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+1 added−0 removed5 unchanged
Biggest changeThe Information Security Team is responsible for the oversight and operation of our Program, and the management our security standards and operating procedures. Cole Naus is our CISO. Mr. Naus has over 10 years of experience in the cybersecurity industry. Mr. Naus holds a degree in Cybersecurity and Information Assurance and holds other cybersecurity certifications. Mr.
Biggest changeNaus has over 10 years of experience in the cybersecurity industry. Mr. Naus holds a degree in Cybersecurity and Information Assurance and holds other cybersecurity certifications. Mr. Naus reports directly to Cara Babachicos, our CIO. Ms.
Our Program employs the National Institute of Standards Technology (NIST) cybersecurity framework and strategy to deliver multi-layered defenses and relevant technologies that are designed to control, audit, monitor, and protect access to sensitive information.
Our Program employs the National Institute of Standards Technology (NIST) Cybersecurity Framework (CSF) and strategy to deliver multi-layered defenses and relevant technologies that are designed to control, audit, monitor, and protect access to sensitive information.
See “ Security breaches, loss of data and other disruptions have in the past and could in the future compromise sensitive information related to our business or our participants, or prevent us from accessing critical information and expose us to liability, and could adversely affect our business and our reputation ” in Item 1A “Risk Factors” in this Annual Report. 46 Governance While our full Board of Directors has overall responsibility for risk oversight, it has delegated primary oversight of certain risks to its committees.
See “ Security breaches, loss of data and other disruptions have in the past and could in the future compromise sensitive information related to our business or our participants, or prevent us from accessing critical information and expose us to liability, and could adversely affect our business and our reputation ” in Item 1A “Risk Factors” in this Annual Report. 46 Table of Contents Governance While our full Board has overall responsibility for risk oversight, it has delegated primary oversight of certain risks to its committees.
During the fiscal year ended June 30, 2024, we did not identify risks from cybersecurity threats, including as a result of previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.
During the fiscal year ended June 30, 2025, we did not identify risks from cybersecurity threats, including as a result of previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.
In addition, external assessors periodically evaluate our safeguards against multiple frameworks, including NIST Cyber Security Framework (CSF). Our Program is integrated into our Enterprise Risk Management (ERM) program and includes a vendor risk management program supported by our security and compliance teams.
In addition, external assessors periodically evaluate our safeguards against multiple frameworks, including NIST CSF. Our Program is integrated into our Enterprise Risk Management (ERM) program and includes a vendor risk management program supported by our security and compliance teams.
Elements of our Program include: (i) required training for our employees (including onboarding and annual training), exercises (including advanced phishing exercises), and awareness for our employees to promote vigilance of cybersecurity risks and (ii) compliance audits and assessments, which include routine technical and non-technical audits and assessments internally and in collaboration with independent third parties at least annually.
Elements of our Program include: (i) required training for our employees (including onboarding and annual training), exercises (including advanced phishing exercises), and awareness for our employees to promote vigilance of cybersecurity risks, including those that may be exacerbated by artificial intelligence, and (ii) compliance audits and assessments, which include routine technical and non-technical audits and assessments internally and in collaboration with independent third parties at least annually.
We assess vendor cybersecurity risks according to HIPAA and N IST CSF standards and have established an oversight process to manage cybersecurity risks related to the products and services we procure.
We assess vendor cybersecurity risks according to HIPAA and NIST CSF standards and have established an oversight process which we periodically review to manage cybersecurity risks related to the products and services we procure.
Naus reports directly to Cara Babachicos, our CIO. Ms. Babachicos has over 20 years of experience in the cybersecurity industry, having previously worked as Chief Information Officer at other companies in the healthcare industry.
Babachicos has over 20 years of experience in the cybersecurity industry, having previously worked as Chief Information Officer at other companies in the healthcare industry.
Our Audit Committee reports to the Board of Directors on cybersecurity matters quarterly, or more often as the need arises. We have an Information Security Team to strengthen our cybersecurity risk management activities across the Company. The Information Security Team reports to our CISO who works in collaboration with our CIO, Chief Compliance Officer and General Counsel.
Our Audit Committee reports to our Board on cybersecurity matters quarterly, or more often as the need arises. We have an Information Security Team to strengthen our cybersecurity risk management activities across the Company, with its members having experience in public and private companies within the healthcare industry, as well as various cybersecurity certifications.
Added
The Information Security Team reports to our CISO who works in collaboration with our CIO, Chief Compliance Officer and General Counsel. The Information Security Team is responsible for the oversight and operation of our Program, and the management our security standards and operating procedures. Cole Naus is our CISO. Mr.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed3 unchanged
Biggest changeWe also own and lease properties for operational PACE centers in Denver, Colorado; Loveland, Colorado; Pueblo, Colorado; Albuquerque, New Mexico; Los Angeles, California; Sacramento, California; San Bernardino, California; Philadelphia, Pennsylvania; Charlottesville, Virginia; Newport News, Virginia; Richmond, Virginia; Roanoke, Virginia; Orlando, Florida; and Tampa, Florida . We do not have any PACE centers or properties located outside of the United States.
Biggest changeWe also own and lease properties for operational PACE centers in Denver, Colorado; Loveland, Colorado; Pueblo, Colorado; Albuquerque, New Mexico; Los Angeles, California; Sacramento, California; San Bernardino, California; Philadelphia, Pennsylvania; Charlottesville, Virginia; Newport News, Virginia; Richmond, Virginia; Roanoke, Virginia; Orlando, Florida; and Tampa, Florida. We also own and lease properties for PACE centers that are not operational.
Item 2. PROPERTIES As of June 30, 2024, we operated an aggregate of 20 centers, of which ten were owned and ten were leased, representing approximately 410,000 and 240,000 gross square feet, respectively. Our centers are located in 14 markets and six states.
Item 2. PROPERTIES As of June 30, 2025, we operated an aggregate of 20 PACE centers, of which ten were owned and ten were leased, representing approximately 410,000 and 240,000 gross square feet, respectively. Our centers are located in 14 markets and six states.
Our leases typically have terms of nine years, and generally provide for renewal or extension options for an average total potential term of approximately 23 years. Our lease obligations often include annual fixed rent escalators ranging between 2.0% and 3.0%.
We do not have any PACE centers or properties located outside of the United States. Our leases typically have terms of nine years, and generally provide for renewal or extension options for an average total potential term of approximately 23 years. Our lease obligations often include annual fixed rent escalators ranging between 2.0% and 3.0%.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

8 edited+12 added−5 removed3 unchanged
Biggest changeOn April 20, 2022, the Board of Directors of the Company received a books and records demand pursuant to Section 220 of the Delaware General Corporation Law, from a purported stockholder of the Company, Brian Hall, in connection with the stockholder’s investigation of, among other matters, potential breaches of fiduciary duty, mismanagement, self-dealing, corporate waste or other violations of law by the Company’s Board with respect to these matters.
Biggest changeUntil the District Court grants final approval of the settlement, there can be no assurances that the settlement will be completed on the terms disclosed herein or at all. On April 20, 2022, the Board received a books and records demand pursuant to Section 220 of the Delaware General Corporation Law, from a purported stockholder of the Company, Brian Hall.
Through the complaint, plaintiffs are asserting claims against the Company, certain of the Company’s officers and directors, Apax Partners, L.P., Welsh, Carson, Anderson & Stowe, and the underwriters in the Company’s IPO, alleging violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 for making allegedly inaccurate and misleading statements and omissions in connection with the Company’s IPO and subsequent earnings calls and public filings, and seeking compensatory damages, among other things.
Through the complaint, plaintiffs asserted claims against the Company, certain of the Company’s officers and directors, Apax Partners, L.P., Welsh, Carson, Anderson & Stowe and the underwriters in the Company’s IPO, alleging violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 for making allegedly inaccurate and misleading statements and omissions in connection with the Company’s IPO and subsequent earnings calls and public filings, and seeking compensatory damages, among other things.
We are currently unable to predict the outcome of these investigations. 47 Stockholder Lawsuits On October 14, 2021, and subsequently amended on June 21, 2022, the Company was named as a defendant in a putative class action complaint filed in the District Court for the District of Colorado on behalf of individuals who purchased or acquired shares of the Company’s common stock during a specified period (the “Securities Action”).
Stockholder Lawsuits On October 14, 2021, the Company was named as a defendant in a putative class action complaint filed in the District Court for the District of Colorado on behalf of individuals who purchased or acquired shares of the Company’s common stock during a specified period (the “Securities Action”).
The demand requests information and documents regarding audits, billing, orders tracking, and quality and timeliness of patient services in connection with the Company’s PACE programs in the states of California, Colorado, New Mexico, Pennsylvania, and Virginia. In December 2022, the Company received a supplemental civil investigative demand requesting supplemental information on the same matters.
The demand requested information and documents regarding audits, billing, orders tracking, and quality and timeliness of patient services in connection with the Company’s PACE programs in the states where the Company operated as of 2022 (California, Colorado, New Mexico, Pennsylvania, and Virginia).
The outcomes of legal proceedings and claims could be material to the Company’s operating results for any particular period, depending in part, upon the operating results of such period. Regardless of the outcome, litigation has the potential to have an adverse impact on us due to any related defense and settlement costs, diversion of management resources, and other factors.
The outcomes of legal proceedings and claims could be material to the Company’s operating results for any particular period, depending in part, upon the operating results of such period.
The demand requests information and documents regarding Medicaid billing, patient services and referrals in connection with the Company’s PACE program in Colorado. The Company continues to fully cooperate with the Attorney General. In February 2022, the Company received a civil investigative demand from the DOJ under the Federal False Claims Act on similar subject matter.
In October 2024, the Company received a civil investigative demand from the DOJ under the Federal False Claims Act on a similar subject matter. The demand requests information and documents regarding the Company's relationship as a PACE provider with residential care facilities in California, Colorado, Virginia and New Mexico, related housing costs, and enrollment practices.
Refer to Note 9 “Commitments and Contingencies” to the Consolidated Financial Statements included in this Annual Report for more information. Item 4. MINE SAFETY DISCLOSURES Not applicable. 48 PART II
Regardless of the outcome, litigation has the potential to have an adverse impact on us due to any related defense and settlement costs, diversion of management resources, and other factors. 48 Table of Contents Refer to Note 9 “Commitments and Contingencies” to the consolidated financial statements included in this Annual Report for more information. Item 4.
On June 28, 2023, upon stipulation of the parties, the court entered an order staying the litigation pending the resolution of the motion to dismiss in the Securities Action or upon fifteen days’ notice by any party to the litigation. We are currently unable to predict the outcome of these matters.
On January 22, 2024, upon stipulation of the parties, the court entered an order further staying the litigation pending the close of fact discovery in the Securities Action or upon order of the Court granting a motion to lift the stay.
Removed
The Company continues to fully cooperate with the DOJ.
Added
The demand requests information and documents regarding Medicaid billing, patient services and referrals in connection with the Company’s PACE program in Colorado. We continue to fully cooperate with the Attorney General. At this time, the Company is unable to estimate the possible losses or range of losses, if any, from this matter.
Removed
On September 13, 2022, the Company and the officer and director defendants and Apax Partners, L.P. and Welsh, Carson, Anderson & Stowe filed a motion to dismiss the amended complaint for failure to state a claim upon which relief can be granted. On December 22, 2023, the District Court granted in part and denied in part the motion to dismiss.
Added
In February 2022, the Company received a civil investigative demand from the Department of Justice (“DOJ”) under the Federal False Claims Act on similar subject matter.
Removed
Other Matters In the third fiscal quarter of 2023, the Company agreed to settle a wage and hour class action lawsuit in the State of California for a cash payment of $1.2 million. Subsequently, the Company was notified of certain additional individual claims and agreed to include such claims within the class.
Added
In 47 Table of Contents December 2022, the Company received a supplemental civil investigative demand requesting supplemental information on the same matters. The Company and the DOJ have begun discussions to understand their respective positions on this matter. At this time, the Company is unable to estimate the possible losses or range of losses, if any, from this matter.
Removed
In October 2023, the Company agreed to increase the settlement amount to a total of $1.3 million, reflecting the additional individual claims. The Court entered the final approval of the settlement on April 2, 2024 and the payout occurred on June 7, 2024.
Added
The Company is fully cooperating with the DOJ and has produced the requested information and documentation. At this time, the Company is unable to estimate the possible losses or range of losses, if any, from this matter.
Removed
The matter will remain open for 180 days to allow the class members to settle their checks, after which time the case is expected to officially close.
Added
In June 2025, the Company and the other defendants entered into an agreement with the plaintiffs to settle all claims in exchange for a payment by the Company of $27.0 million. The settlement agreement received preliminary approval from the District Court on June 17, 2025, and a final approval hearing has been set for November 26, 2025.
Added
After adjusting for the settlement amounts to be paid directly by the Company's insurers, the Company accrued expenses of $10.1 million representing its share of the settlement amount during fiscal year 2025.
Added
On July 11, 2025, the parties informed the Court of the settlement agreement in the Securities Action and requested until September 10, 2025, to provide a further update. The parties are discussing a potential resolution of this matter, including a potential settlement. The Court has not established any further deadlines.
Added
At this time, the Company is unable to estimate the possible losses or range of losses, if any, from this matter.
Added
Other Matters On June 16, 2025, Grane Supply, Inc, d/b/a Grane Rx (“Grane Rx”), the Company’s former pharmacy services vendor, filed an amended demand for arbitration before the American Arbitration Association asserting claims for breach of contract and breach of confidentiality in connection with the Company’s non-renewal and termination of its services agreements with Grane Rx resulting from a discrete Company operational initiative.
Added
Grane Rx’s demand seeks various forms of relief, including compensatory damages and injunctive relief. An arbitrator has been appointed and the parties are currently engaged in discovery. Initial mediation took place in May 2025. A final merits hearing in front of the arbitrator is expected to occur in early 2026.
Added
At this time, the Company is unable to estimate the possible losses or range of losses, if any, from this matter.
Added
MINE SAFETY DISCLOSURES Not applicable. 49 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed3 unchanged
Biggest changeIssuer Purchases of Equity Securities Stock repurchases during the three months ended June 30, 2024 were as follows: Period Total Number of Shares Purchased (a) Average Price Paid per Share (b) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a) April 1 – 30, 2024 - - - - May 1 – 31, 2024 - - - - June 1 – 30, 2024 45,023 $5.00 45,023 $4,775,900 Total 45,023 45,023 ___________________________________ (a) On June 10, 2024, the Company’s Board of Directors announced the approval of a share repurchase program authorizing the repurchase of up to $5 million of the Company’s common stock, with no expiration date.
Biggest changeIssuer Purchases of Equity Securities Repurchases of common stock during the three months ended June 30, 2025 were as follows: Period Total Number of Shares Purchased (a) Average Price Paid per Share (b) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a) April 1 – 30, 2025 101,820 $ 2.92 101,820 $ — May 1 – 31, 2025 — — — $ — June 1 – 30, 2025 — — — $ — Total 101,820 101,820 ___________________________________ (a) On June 10, 2024, the Board announced the approval of a share repurchase program authorizing the repurchase of up to $5 million of the Company’s common stock, with no expiration date.
The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by economic banks, brokers and other financial institutions. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by banks, brokers and other financial institutions. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Securities Market Information Our common stock is listed on the Nasdaq Global Select Market under the symbol “INNV.” Holders of Record As of September 9, 2024, there were approximately ten stockholders of record for our common stock.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Securities Market Information Our common stock is listed on the Nasdaq Global Select Market under the symbol “INNV.” Holders of Record As of September 2, 2025, there were approximately ten stockholders of record for our common stock.
For further information regarding stock repurchase activity, see Note 16 Share Repurchase Program to the consolidated financial statements in this Annual Report. (b) Average price paid per share does not include costs associated with the repurchases. Item 6. [Reserved] 49
For further information regarding stock repurchase activity, see Note 16 Share Repurchase Program to the consolidated financial statements in this Annual Report. (b) Average price paid per share does not include costs associated with the repurchases.
Recent Sales of Unregistered Securities There were no unregistered sales of equity securities during the year ended June 30, 2024.
Recent Sales of Unregistered Securities There were no unregistered sales of equity securities during the year ended June 30, 2025.
Added
On September 26, 2024, the Company announced the Board’s authorization to increase the share repurchase program by an additional $2.5 million of the Company’s common stock. As of June 30, 2025, the repurchase authorization under the program was complete.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

106 edited+32 added−42 removed62 unchanged
Biggest changeA reconciliation of Center-level Contribution Margin to loss before income taxes, the most directly comparable GAAP measure, for each of the periods is as follows: June 30, 2024 June 30, 2023 in thousands PACE All other (1) Totals PACE All other (1) Totals 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) ___________________________________ (1) Center-level Contribution Margin from a segment below the quantitative thresholds is attributable to the Senior Housing operating segment of the Company.
Biggest changeA reconciliation of Center-level Contribution Margin to loss before income taxes, the most directly comparable GAAP measure, for each of the periods is as follows: June 30, 2025 June 30, 2024 in thousands PACE All other (1) Totals PACE All other (1) Totals Capitation revenue $ 852,353 $ — $ 852,353 $ 762,570 $ — $ 762,570 Other service revenue 356 990 1,346 310 975 1,285 Total revenues 852,709 990 853,699 762,880 975 763,855 External provider costs 431,152 — 431,152 403,010 — 403,010 Cost of care, excluding depreciation and amortization 268,338 570 268,908 228,203 578 228,781 Center-Level Contribution Margin 153,219 420 153,639 131,667 397 132,064 Sales and marketing 28,217 24,957 Corporate, general and administrative 122,058 111,337 Depreciation and amortization 19,510 18,950 Impairments and loss on assets held for sale 13,615 — Operating loss (29,761) (23,180) Other income (4,266) 1,361 Loss Before Income Taxes $ (34,027) $ (21,819) ___________________________________ (1) Center-level Contribution Margin from a segment below the quantitative thresholds was attributable to the Senior Housing operating segment of the Company as of June 30, 2025.
Through our Program of All-Inclusive Care for the Elderly (“PACE”) program, we fulfill a broad range of medical and ancillary services for seniors, including in-home care services (skilled, unskilled and personal care), center services such as primary care, physical therapy, occupational therapy, speech therapy, dental services, mental health and psychiatric services, meals, and activities; transportation to and from the PACE center and third-party medical appointments; and care management.
Through our Program of All-Inclusive Care for the Elderly (“PACE”), we fulfill a broad range of medical and ancillary services for seniors, including in-home care services (skilled, unskilled and personal care), center services such as primary care, physical therapy, occupational therapy, speech therapy, dental services, mental health and psychiatric services, meals, and activities; transportation to and from the PACE center and third-party medical appointments; and care management.
We estimate and recognize an adjustment monthly to Part D capitation revenues related to these risk corridor provisions based upon pharmacy claims experience to date, as if the annual risk contract were to terminate at the end of the reporting period. 64 Goodwill Goodwill represents the excess of consideration paid over the fair value of net assets acquired through business acquisitions.
We estimate and recognize an adjustment monthly to Part D capitation revenues related to these risk corridor provisions based upon pharmacy claims experience to date, as if the annual risk contract were to terminate at the end of the reporting period. Goodwill Goodwill represents the excess of consideration paid over the fair value of net assets acquired through business acquisitions.
The borrowing capacity under the Revolving Credit Facility is subject (i) any issued amounts under our letters of credit and (ii) applicable covenant compliance restrictions and any other conditions precedent to borrowing. Principal on the Term Loan Facility is paid each calendar quarter in an amount equal to 1.25% of the initial term loan on closing date.
The borrowing capacity under the Revolving Credit Facility is subject to (i) any issued amounts under our letters of credit and (ii) applicable covenant compliance restrictions and any other conditions precedent to borrowing. Principal on the Term Loan A Facility is paid each calendar quarter in an amount equal to 1.25% of the initial term loan on closing date.
We evaluate our sales and marketing expenses relative to our participant growth and will invest more heavily in sales and marketing from time-to-time to the extent we believe such investment can accelerate our growth without negatively affecting profitability. Corporate, General and Administrative Expenses. Corporate, general and administrative expenses include employee-related expenses, including salaries and related costs.
We evaluate our sales and marketing expenses relative to our participant growth and will invest more heavily in sales and marketing from time-to-time to the extent we believe such investment can accelerate our growth without negatively affecting profitability. Corporate, General and Administrative Expenses. Corporate, general and administrative expenses include other employee-related expenses, including salaries and related costs.
As we serve more participants in existing centers, we expect to leverage our fixed cost base at those centers and increase the value of a center to our business increases over time. • Our ability to expand via de novo centers within existing and new markets.
As we serve more participants in existing centers, we expect to leverage our fixed cost base at those centers and increase the value of a center to our business over time. • Our ability to expand via de novo centers within existing and new markets.
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 loss and net loss margin.
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 GAAP financial measures, including net loss and net loss margin.
There were no indicators of impairment identified and no goodwill impairments recorded during the years ended June 30, 2024 and 2023. In determining the fair value of our reporting units, we estimate a number of factors including anticipated future cash flows and discount rates.
There were no indicators of impairment identified and no goodwill impairments recorded during the years ended June 30, 2025 and 2024. In determining the fair value of our reporting units, we estimate a number of factors including anticipated future cash flows and discount rates.
Our recorded medical claims expense estimate is approximately within +/- 5-10% of actual medical claims expense incurred, or less than 1% of our total operating expense. The following tables provide information about incurred and paid claims reporting and development as of June 30, 2024 (except as otherwise noted).
Our recorded medical claims expense estimate is approximately within +/- 5-10% of actual medical claims expense incurred, or less than 1% of our total operating expense. The following tables provide information about incurred and paid claims reporting and development as of June 30, 2025 (except as otherwise noted).
Our participant-centered care delivery approach is designed to improve the quality of care our participants receive, while keeping them in their homes for as long as safely possible and reducing over-utilization of high-cost care settings such as hospitals and nursing homes.
The purpose of our participant-centered care delivery approach is to improve the quality of care our participants receive, while keeping them in their homes for as long as safely possible and reducing over-utilization of high-cost care settings such as hospitals and nursing homes.
Accordingly, in the short term we expect the activities noted above to increase our expenses as a percentage of revenue, but in the longer term, we anticipate that these investments will positively impact our business and results of operations. • Seasonality to our business .
Accordingly, in the short term we expect these activities to increase our expenses as a percentage of revenue, but in the longer term, we anticipate that these investments will positively impact our business and results of operations. • Seasonality to our business .
The estimated reserve for unpaid claims liability is included in the liability for reported and estimated claims in the consolidated balance sheets and requires estimates including actual member utilization of healthcare services, unit cost trends, participant acuity, changes in net census, known outbreaks of disease or increased incidence of illness such as influenza or COVID-19 and other factors.
The estimated reserve for unpaid claims liability is included in the liability for reported and estimated claims in the consolidated balance sheets and requires estimates including actual member utilization of healthcare services, unit cost trends, participant acuity, changes in net census, known outbreaks of disease or increased incidence of illness such as influenza or 65 Table of Contents COVID-19 and other factors.
For a discussion of our revenue recognition policies, please see Critical Accounting Estimates below and Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this Annual Report. Operating Expenses External Provider Costs. External provider costs consist primarily of the costs for medical care provided by non-InnovAge providers.
For a discussion of our revenue recognition policies, please see Critical Accounting Estimates below and Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this Annual Report. 54 Table of Contents Operating Expenses External Provider Costs. External provider costs consist primarily of the costs for medical care provided by non-InnovAge providers.
Actual results may differ from these estimates under different assumptions or conditions, impacting our reported results of operations and financial condition. Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of assets and liabilities and the recognition of income and expenses.
Actual results may differ from these estimates under different assumptions or conditions, impacting our reported results of operations and financial condition. 64 Table of Contents Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of assets and liabilities and the recognition of income and expenses.
InnovAge Senior Housing Thornton, LLC is a variable interest entity (“VIE”). The Company is the primary beneficiary of SH1 and consolidates SH1. The Company is the primary beneficiary of SH1 because it has the power to direct the activities that are most significant to SH1 and has an obligation to absorb losses or the right to receive benefits from SH1.
InnovAge Senior Housing Thornton, LLC is a variable interest entity (“VIE”). The Company was the primary beneficiary of SH1 and consolidates SH1 because it had the power to direct the activities that are most significant to SH1 and had an obligation to absorb losses or the right to receive benefits from SH1.
We periodically assess our estimates with an independent actuarial expert to ensure our estimates represent the best, most reasonable estimate given the data available to us at the time the estimates are made. We have included incurred but not reported claims of approximately $55.4 million and $43.0 million on our balance sheet as of June 30, 2024 and 2023, respectively.
We periodically assess our estimates with an independent actuarial expert to ensure our estimates represent the best, most reasonable estimate given the data available to us at the time the estimates are made. We have included incurred but not reported claims of approximately $59.0 million and $55.4 million on our balance sheet as of June 30, 2025 and 2024, respectively.
If we were to subsequently elect instead to comply with public company effective dates, such election would be irrevocable pursuant to the JOBS Act. Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP.
If we were to subsequently elect instead to comply with public company effective dates, such election would be irrevocable pursuant to the JOBS Act. Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included in this Annual Report, which have been prepared in accordance with GAAP.
Overview General InnovAge Holding Corp. (“InnovAge”) became a public company in March 2021. The Company served approximately 7,020 PACE participants as of June 30, 2024, making it the largest PACE provider in the U.S. based upon participants served, and operates 20 PACE centers across Colorado, California, Florida, New Mexico, Pennsylvania and Virginia.
Overview General InnovAge Holding Corp. (“InnovAge”) became a public company in March 2021. The Company served approximately 7,740 PACE participants as of June 30, 2025, making it the largest PACE provider in the U.S. based upon participants served, and operates 20 PACE centers across California, Colorado, Florida, New Mexico, Pennsylvania and Virginia.
We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.
We may in the future enter into arrangements to acquire or invest in complementary 62 Table of Contents businesses, services and technologies. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.
For as long as we are an “emerging growth company” or a “smaller reporting company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” or “smaller reporting companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, only being required to present two years of audited financial statements, plus unaudited 63 condensed consolidated financial statements for applicable interim periods and the related discussion in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, exemptions from the requirements of holding non-binding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation.
For as long as we are an “emerging growth company,” which we expect to be through the end of fiscal year 2026, or a “smaller reporting company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” or “smaller reporting companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, only being required to present two years of audited financial statements, plus unaudited condensed consolidated financial statements for applicable interim periods and the related discussion in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, exemptions from the requirements of holding non-binding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation.
While our significant accounting policies are described in more detail in Note 2 “Summary of Significant Accounting Policies” to our audited Consolidated Financial Statements, we believe the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and require management to make subjective and complex judgments and estimates in the preparation of our consolidated financial statements.
While our significant accounting policies are described in more detail in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this Annual Report, we believe the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and require management to make subjective and complex judgments and estimates in the preparation of our consolidated financial statements included in this Annual Report.
The concentration of capitation revenue from our various payors was: 2024 2023 Medicaid 54 % 54 % Medicare 46 % 46 % Private pay and other *% *% Total 100 % 100 % * denotes less than 1% Medicaid and Medicare capitation revenues are based on PMPM capitation rates under the PACE program.
The concentration of capitation revenue from our various payors was: 2025 2024 Medicaid 55 % 54 % Medicare 45 % 46 % Private pay and other *% *% Total 100 % 100 % * denotes less than 1% Medicaid and Medicare capitation revenues are based on PMPM capitation rates under the PACE program.
The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements included in this Annual Report and the reported amounts of revenues and expenses during the reporting period.
Adjusted EBITDA and Adjusted EBITDA Margin 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, EMR implementation and gain on cost and equity method investments.
Adjusted EBITDA and Adjusted EBITDA Margin 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, 60 Table of Contents including charges relating to management equity compensation, litigation costs and settlement, M&A diligence, transaction and integration, business optimization, EMR implementation, loss (gain) on cost and equity method investments, asset impairments and loss on assets held for sale, and loss on sale of assets.
Over the past six fiscal years, we have acquired and integrated four PACE organizations for a total of eight operational centers (excluding the PACE center in Bakersfield, California, which is not yet operational). These acquisitions represent expansion of our InnovAge Platform into one new state and five new markets.
Since fiscal year 2019, we have acquired and integrated four PACE organizations for a total of eight operational centers (excluding the PACE center in Bakersfield, California, which is not yet operational). These acquisitions represent expansion of our InnovAge Platform into one new state and five new markets.
The increase was primarily due to interest expense of $7.5 million partially offset by interest income of $3.5 million from money market funds during the year ended June 30, 2024. Interest income during the year ended June 30, 2023 was $3.4 million from money market funds offsetting interest expense of $4.9 million. Gain on cost and equity method investments.
The increase was primarily due to interest expense of $6.0 million partially offset by interest income of $1.4 million from money market funds during the year ended June 30, 2025. Interest income during the year ended June 30, 2024 was $3.5 million from money market funds offsetting interest expense of $7.5 million. (Loss) gain on cost and equity method investments.
Partially as a result of increased competition and other market trends, in conjunction with increased staffing related to compliance and remediation efforts in our centers, there was an increase in the cost of care for the fiscal year 2024 compared to 2023, as discussed in "Results of Operations" below.
Partially as a result of increased competition and other market trends, in conjunction with increased staffing related to our growth, there was an increase in the cost of care for the fiscal year 2025 compared to 2024, as discussed in "Results of Operations" below.
We achieved an average NPS score of 46 for fiscal year 2024 and average participant tenure of 3.6 years as of June 30, 2024, measured as tenure from enrollment to disenrollment, among our centers that have been operated by us for at least five years.
We achieved an I-SAT NPS score of 56 for fiscal year 2025 and average participant tenure of 3.1 years as of June 30, 2025, measured as tenure from enrollment to disenrollment, among our centers that have been operated by us for at least five years.
For additional information regarding our lease obligations, debt and commitments, see Notes 6 “Leases,” 7 “Long-term Debt,” and 9 “Commitments and Contingencies,” respectively, to our audited consolidated financial statements.
For additional information regarding our lease obligations, debt and commitments, see Notes 6 “Leases,” 7 “Long-term Debt,” and 9 “Commitments and Contingencies,” respectively, to our consolidated financial statements included in this Annual Report.
We expect our expenses to increase in absolute dollars for the foreseeable future to support our growth due, partially, to additional costs we incur in connection with audits to our centers, remediation plans and current and potential legal and regulatory proceedings. We plan to invest in future growth judiciously and maintain focus on managing our results of operations.
We expect our expenses to increase in absolute dollars for the foreseeable future to support our growth due, partially, to additional costs we incur in connection with audits to our centers, remediation plans and current and potential legal and regulatory proceedings. We plan to continue investing in our growth while also managing our expenses and results of operations.
Cost of care, excluding depreciation and amortization expense was $228.8 million for the year ended June 30, 2024, an increase of $16.5 million, or 7.8%, compared to $212.3 million for the year ended June 30, 2023, primarily due to an increase of $7.0 million, or 3.1%, in cost per participant coupled with an increase of $9.5 million, or 4.5%, in member months.
Cost of care, excluding depreciation and amortization expense was $268.9 million for the year ended June 30, 2025, an increase of $40.1 million, or 17.5%, compared to $228.8 million for the year ended June 30, 2024, primarily due to an increase of $23.4 million, or 10.3%, in member months coupled with an increase of $16.7 million, or 6.6%, in cost per participant.
Investment income during the year ended June 30, 2023 was $1.2 million offset by $1.1 million loss on disposal of capital assets. Provision (Benefit) for Income Taxes.
Investment income during the year ended June 30, 2025 was $2.1 million offset by $0.5 million loss on disposal of capital assets. Investment income during the year ended June 30, 2024 was $2.4 million offset by $0.1 million loss on disposal of capital assets. Provision (Benefit) for Income Taxes.
For more information relating to the components of our results of operations, see Results of Operations below and Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this Annual Report for more detailed information regarding our significant accounting policies.
For more information relating to the components of our results of operations, see Results of Operations below and Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this Annual Report for more detailed information regarding our significant accounting policies. 55 Table of Contents Results of Operations The following table sets forth our consolidated results of operations for the periods presented.
Interest expense, net, consists primarily of interest payments on our outstanding borrowings, net of interest income earned on our cash and cash equivalents and restricted cash. Interest expense, net was $4.0 million for the year ended June 30, 2024, an increase of $2.5 million, or 164.3%, compared to $1.5 million for the year ended June 30, 2023.
Interest expense, net, consists primarily of interest payments on our outstanding borrowings, net of interest income earned on our cash and cash equivalents and restricted cash. Interest expense, net was $4.6 million for the year ended June 30, 2025, an increase of $0.6 million, or 14.6%, compared to $4.0 million for the year ended June 30, 2024.
The decrease of $8.6 million is primarily due to (i) pretax book loss recognized during the year ended June 30, 2024, as compared to the pretax book loss recognized during the year ended June 30, 2023 and (ii) the change in our valuation allowance. Net Loss Attributable to Noncontrolling Interests.
The decrease of $0.1 million is primarily due to (i) pretax book loss recognized during the year ended June 30, 2025, as compared to the pretax book loss recognized during the year ended June 30, 2024 and (ii) the change in our valuation allowance. 58 Table of Contents Net Loss Attributable to Noncontrolling Interests.
Furthermore, we experience low levels of voluntary disenrollment, averaging 6.9% annually over the last three fiscal years. • Effectively managing the cost of care for our participants . We receive capitated payments to manage the totality of a participant’s medical care across all settings.
Furthermore, we experience low levels of voluntary disenrollment, averaging 7.0% annually over the last three fiscal years. • Effectively managing the cost of care for our participants . We receive capitated payments to manage the totality of a participant’s medical care across all settings. The risk pool of our population is highly acute.
The 2021 Credit Agreement consists of a senior secured term loan (the “Term Loan Facility”) of $75.0 million principal amount and a revolving credit facility (the “Revolving Credit Facility”) of $100.0 million maximum borrowing capacity.
As of June 30, 2025, the Credit Agreement consisted of a senior secured term loan (the “Term Loan Facility”) of $75.0 million principal amount and a revolving credit facility (the “Revolving Credit Facility”) of $100.0 million maximum borrowing capacity.
For the year ended June 30, 2024, our net loss margin was 3.0%, compared to our net loss margin of 6.3% for the year ended June 30, 2023. For the year ended June 30, 2024, our Adjusted EBITDA margin was 2.2%, compared to our Adjusted EBITDA margin for the year ended June 30, 2023 of (0.5)%.
For the year ended June 30, 2025, our net loss margin was 4.1%, compared to our net loss margin of 3.0% for the year ended June 30, 2024. For the year ended June 30, 2025, our Adjusted EBITDA margin was 4.0%, compared to our Adjusted EBITDA margin for the year ended June 30, 2024 of 2.2%.
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.
Such charges related to one-time investments in projects designed to enhance our technology and compliance systems and improve and support the efficiency and effectiveness of our operations.
(f) Reflects $4.8 million net benefit associated with the dissolution of the PWD partnership partially offset by $2.0 million impairment in Jetdoc investment.
For the year ended June 30, 2024, reflects $4.8 million net benefit associated with the dissolution of the PWD partnership partially offset by $2.0 million impairment in Jetdoc investment.
Year Ended June 30, 2024 2023 dollars in thousands Key Business Metrics: Centers (a) 20 17 Census (a)(b) 7,020 6,400 Total Member Months (b) 80,840 77,370 Non-GAAP Measures: Center-level Contribution Margin (c) $ 132,064 $ 101,288 Center-level Contribution Margin as a % of revenue (c) 17.3 % 14.7 % Adjusted EBITDA (c) $ 16,474 $ (3,425) Adjusted EBITDA Margin (c) 2.2 % (0.5) % ___________________________________ (a) Includes InnovAge Sacramento and InnovAge Orlando, which the Company owns and controls through joint ventures and are consolidated in our financial statements.
Year Ended June 30, 2025 2024 dollars in thousands Key Business Metrics: Centers (a) 20 20 Census (a)(b) 7,740 7,020 Total Member Months (b) 89,130 80,840 Non-GAAP Measures: Center-level Contribution Margin (c) $ 153,639 $ 132,064 Center-level Contribution Margin as a % of revenue (c) 18.0 % 17.3 % Adjusted EBITDA (c) $ 34,462 $ 16,474 Adjusted EBITDA Margin (c) 4.0 % 2.2 % ___________________________________ (a) Includes InnovAge Sacramento and InnovAge Orlando, which the Company owns and controls through joint ventures and are consolidated in our financial statements.
The members of InnovAge Senior Housing Thornton, LLC (“SH1”) and InnovAge Sacramento have elected to be taxed as partnerships, and no provision (benefit) for income taxes for SH1 or InnovAge Sacramento is included in these consolidated financial statements.
The members of InnovAge Senior Housing Thornton, LLC (“SH1”), InnovAge California PACE - Sacramento (“SCR”), and InnovAge Florida PACE II, LLC (“ORL”) have elected to be taxed as partnerships, and no provision (benefit) for income taxes for SH1, SCR, or ORL is included in these consolidated financial statements included in this Annual Report.
This increase was driven by a $30.8 million, or 4.5% increase in member months (as defined below under “Key Business Metrics and non-GAAP Measures – Total member months”) coupled with a $44.9 million, or 6.3%, increase in capitation rates.
This increase was driven by a $78.2 million, or 10.3% increase in member months (as defined below under “Key Business Metrics and non-GAAP Measures – Total member months”) coupled with an $11.6 million, or 1.4%, increase in capitation rates.
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, 2024, this includes (i) $3.1 million of costs associated with third party consultants to implement core provider initiatives, assess our risk-bearing capabilities, and strengthen our enterprise capabilities, (ii) $0.3 million of costs associated with organizational restructure, and (iii) $0.9 million related to other non-recurring projects aimed at reducing costs and improving efficiencies.
For the years ended June 30, 2024 and 2023, our net loss was $23.2 million and $43.6 million, respectively, representing a year-over-year improvement of 47%, and Adjusted EBITDA was $16.5 million and $(3.4) million, respectively, representing a year-over-year increase of 585%. Adjusted EBITDA margin is Adjusted EBITDA expressed as a percentage of our total revenue.
For the years ended June 30, 2025 and 2024, our net loss was $35.3 million and $23.2 million, respectively, representing a year-over-year decline of 52%, and Adjusted EBITDA was $34.5 million and $16.5 million, respectively, representing a year-over-year increase of 109%. Adjusted EBITDA margin is Adjusted EBITDA expressed as a percentage of our total revenue.
Depreciation and amortization expense was $19.0 million for the year ended June 30, 2024, an increase of $3.5 million, or 22.9%, compared to $15.4 million for the year ended June 30, 2023. The increase in depreciation expense was a result of capital additions in the normal course of business.
Depreciation and amortization expense was $19.5 million for the year ended June 30, 2025, an increase of $0.6 million, or 3.0%, compared to $19.0 million for the year ended June 30, 2024. The increase in depreciation expense was a result of capital additions in the normal course of business. Impairments and loss on assets held for sale.
Capitation revenue was $762.6 million for the year ended June 30, 2024, an increase of $75.7 million, or 11.0%, compared to $686.8 million for the year ended June 30, 2023.
Capitation revenue was $852.4 million for the year ended June 30, 2025, an increase of $89.8 million, or 11.8%, compared to $762.6 million for the year ended June 30, 2024.
Our capital resources are generally used to fund (i) debt service requirements, the majority of which relate to the quarterly principal payments of the Term Loan Facility (as defined in Note 7 “Long-term Debt” to the audited consolidated financial statements) due 2026, (ii) finance and operating lease obligations, which are generally paid on a monthly basis and include maturities through 2028 and 2032, respectively, (iii) the operations of our business, (iv) income tax payments, which are generally due on a quarterly and annual basis, (v) capital additions, which include acquisition and de novo centers, and (vi) share repurchases authorized under the $5.0 million Board approved program.
Our capital resources are generally used to fund (i) debt service requirements, the majority of which relate to the quarterly principal payments of the Term Loan A Facility (as defined below) due August 2028, (ii) finance and operating lease obligations, which are generally paid on a monthly basis and include maturities through calendar year 2025 and 2034, respectively, (iii) the operations of our business, (iv) income tax payments, which are generally due on a quarterly and annual basis, (v) capital additions, which include acquisition and de novo centers, and (vi) share repurchases.
Together with the factors disclosed above (increased salaries, wages and benefits, increased fleet and contract transportation costs, annual increases in assisted living and nursing facility unit cost and general medical inflation), our external provider costs and cost of care, excluding depreciation and amortization, represented approximately 83% of our revenue in the year ended June 30, 2024. • Center-level Contribution Margin .
Various factors, including increased salaries, wages and benefits, increased staffing, annual increases in assisted living and nursing facility unit cost and general medical inflation, have affected our external provider costs and cost of care, excluding depreciation and amortization, which represented approximately 82% of our revenue in the year ended June 30, 2025. • Center-level Contribution Margin .
Investing Activities. Net cash used in investing activities in 2024 was primarily made up of $23.9 million for the Concerto acquisition and approximately $7.9 million in purchases of property and equipment.
Net cash used in investing activities in 2025 was primarily made up of $4.8 millions for the Tabula Rasa acquisition and approximately $6.3 million in purchases of property and equipment. In 2024, net cash used in investing activities was primarily due to $23.9 million for the Concerto acquisition and approximately $7.9 million in purchases of property and equipment. Financing activities.
However, we cannot predict whether other employees will follow a similar course of action. 51 For additional information on the various risks posed by macroeconomic events, regulation, and employee matters, please see the section entitled “Risk Factors” included in Part I, Item 1A of this Annual Report.
For additional information on the various risks posed by macroeconomic events, regulation, and employee matters, please see the section entitled “Risk Factors” included in Part I, Item 1A of this Annual Report.
We believe all seniors should have access to the type of all-inclusive care offered by the PACE model. Several factors can affect our ability to grow enrollment and capacity within existing centers, including sanctions issued by regulators or suspensions of State attestations required to open new de novo centers. • Our ability to maintain high participant satisfaction and retention.
Several factors can affect our ability to grow enrollment and capacity within existing centers, including competition, costs and sanctions issued by regulators or suspensions of State attestations required to open new de novo centers. • Our ability to maintain high participant satisfaction and retention.
A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, for each of the periods is as follows: Year Ended June 30, 2024 2023 in thousands Net Loss $ (23,221) $ (43,552) Interest expense, net 4,023 1,522 Other investment income (a) (2,385) (1,170) Depreciation and amortization 18,950 15,419 Provision (benefit) for income tax 1,402 (7,241) Stock-based compensation 6,832 4,993 Litigation costs and settlement (b) 4,878 9,782 M&A diligence, transaction and integration (c) 778 140 Business optimization (d) 4,399 10,535 EMR implementation (e) 3,660 6,147 Gain on cost and equity method investments (f) (2,842) — Adjusted EBITDA $ 16,474 $ (3,425) ___________________________________ (a) Reflects investment income related to short term investments included in our consolidated statement of operations.
A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, for each of the periods is as follows: Year Ended June 30, 2025 2024 in thousands Net Loss $ (35,343) $ (23,221) Interest expense, net 4,612 4,023 Other investment income (a) (2,247) (2,385) Depreciation and amortization 19,510 18,950 Provision for income tax 1,316 1,402 Stock-based compensation 7,619 6,832 Litigation costs and settlement (b) 19,367 4,878 M&A diligence, transaction and integration (c) 1,360 778 Business optimization (d) 3,040 4,399 EMR implementation (e) — 3,660 Loss (gain) on cost and equity method investments (f) 1,393 (2,842) Asset impairments and loss on assets held for sale (g) 13,615 — Loss on sale of assets (h) 220 — Adjusted EBITDA $ 34,462 $ 16,474 ___________________________________ (a) Reflects investment income related to short term investments included in our consolidated statements of operations.
As we open new centers, we expect cost of care, excluding depreciation and amortization, to increase in absolute dollars due to higher census and facility related costs. Sales and Marketing.
The remainder of our cost of care is fixed relative to the number of participants we serve, such as occupancy and insurance expenses. As we open new centers, we expect cost of care, excluding depreciation and amortization, to increase in absolute dollars due to higher census and facility related costs. Sales and Marketing.
Corporate, general and administrative expenses. Corporate, general and administrative expenses were $111.3 million for the year ended June 30, 2024, a decrease of $4.3 million, or 3.7% compared to $115.6 million for the year ended June 30, 2023.
Corporate, general and administrative expenses were $122.1 million for the year ended June 30, 2025, an increase of $10.7 million, or 9.6% compared to $111.3 million for the year ended June 30, 2024.
Gain on cost and equity method investment was $2.8 million for the year ended June 30, 2024 compared to no gain or loss for the year ended June 30, 2023.
Loss on cost and equity method investments was $1.4 million for the year ended June 30, 2025, a change of $4.2 million, compared to a gain of $2.8 million for the year ended June 30, 2024.
Tax benefits from uncertain tax positions are recognized when it is more likely than not that the position will be sustained upon examination based on the technical merits of the position. The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon settlement.
A valuation allowance is provided to the extent that it is more likely than not that deferred tax assets will not be realized. Tax benefits from uncertain tax positions are recognized when it is more likely than not that the position will be sustained upon examination based on the technical merits of the position.
We expect our general and administrative expenses to increase in absolute dollars due to the additional legal, accounting, insurance, investor relations and other costs that we incur as a public company, as well as other costs associated with compliance and continuing to grow our business.
In addition, general and administrative expenses include all corporate technology and occupancy costs associated with our corporate office. We expect our general and administrative expenses to increase in absolute dollars due to the additional legal, accounting,and compliance costs as we grow our business and continue to operate as a public company.
Outstanding principal amounts under the 2021 Credit Agreement accrue interest at a variable interest rate. As of June 30, 2024 and 2023, the interest rate on the Term Loan Facility was 7.18% and 6.95%, respectively.
Outstanding principal amounts under the Credit Agreement accrue interest at a variable interest rate. As of June 30, 2025 and 2024, the interest rate on the Term Loan Facility was 6.13% and 7.18%, respectively. Under the terms of the Credit Agreement, the Revolving Credit Facility fee accrues at 0.25% of the average daily unused amount and is paid quarterly.
For more information about our debt, see Note 7 “Long-term Debt” to our audited consolidated financial statements. 62 Our material cash requirements from known contractual and other obligations primarily relate to long-term debt and lease obligations.
The remaining principal balance is due upon maturity, which is August 20, 2030. For more information about our debt, see Note 7 “Long-term Debt” to our consolidated financial statements included in this Annual Report. Our material cash requirements from known contractual and other obligations primarily relate to long-term debt and lease obligations.
This is driven by two factors: (i) we believe we manage a higher acuity population, with an average RAF score of 2.46 based on InnovAge data as of June 30, 2024, compared to an average RAF score of 1.08 for Medicare fee-for-service non-dual enrollees, as calculated in an analysis by Avalere Health in June 2020 of a cohort of individuals enrolled in Medicare Fee-for-Service in 2019; and (ii) we have Medicaid spend in addition to Medicare.
As a result, we receive larger payments for our participants compared to MA participants. This is driven by two factors: (i) we believe we manage a higher acuity population, with an average RAF score of 2.42 based on InnovAge data as of June 30, 2025; and (ii) we have Medicaid spend in addition to Medicare.
As of June 30, 2024, we also had $2.2 million principal amount outstanding under our convertible term loan. Monthly principal and interest payments are approximately $0.02 million, and the loan bears interest at an annual rate of 6.68%. The remaining principal balance is due upon maturity, which is August 20, 2030.
As of June 30, 2025, we also had $2.2 million principal amount outstanding under our convertible term loan classified as Liabilities held for sale in our consolidated financial statements in this Annual Report. Monthly principal and interest payments are approximately $0.02 million, and the loan bears interest at an annual rate of 6.68%.
Other income consists primarily of the net proceeds received from the sale of or disposal of property and equipment, unrealized gains and losses and investment income related to short-term investments.
Other income, net consists primarily of the net proceeds received from the sale of or disposal of property and equipment, unrealized gains and losses and investment income related to short-term investments. Other income, net was $1.7 million for the year ended June 30, 2025, a decrease of $0.8 million, compared to $2.5 million for the year ended June 30, 2024.
We also have pursued and intend to continue pursuing additional relationships with key stakeholders, existing organizations and other care providers in order to form partnerships in target geography, such as the joint venture we entered into at our Orlando PACE center with Orlando Health during the fourth quarter of fiscal year 2024. • Our ability to maintain high quality of regulatory compliance .
We also have pursued and intend to continue pursuing additional relationships with key stakeholders, existing organizations and other care providers in order to form partnerships in target geographies, such as the joint venture with Orlando Health relating to our Orlando PACE center and the joint venture with Tampa General Hospital relating to our Tampa center which was entered into on August 15, 2025.
Expenses Recorded for the Fiscal Years Ended June 30, 2020 2021 2022 2023 2024 in thousands Claims incurred year: FY 2020 $ 211,381 FY 2021 $ 234,070 FY 2022 $ 299,432 FY 2023 $ 291,988 FY 2024 $ 315,148 Total $ 211,381 $ 234,070 $ 299,432 $ 291,988 $ 315,148 Pharmacy expense 87,862 External provider costs $ 403,010 65 Cumulative Actual Incurred Claims for the Fiscal Year Ended June 30, 2020 2021 2022 2023 2024 in thousands Claims incurred year: FY 2020 $ 210,512 $ 205,633 $ 205,550 $ 205,301 $ 205,244 FY 2021 239,207 238,488 204,792 204,557 FY 2022 291,315 333,752 333,376 FY 2023 285,118 283,542 FY 2024 301,757 Total $ 210,512 $ 444,840 $ 735,353 $ 1,028,963 $ 1,328,476 Cumulative Actual Paid Claims for the Fiscal Year Ended June 30, 2020 2021 2022 2023 2024 in thousands Claims incurred year: FY 2020 $ 179,616 $ 205,601 $ 205,550 $ 205,301 $ 205,244 FY 2021 205,355 238,476 204,792 204,557 FY 2022 252,665 333,747 333,376 FY 2023 241,770 283,538 FY 2024 246,145 Total $ 179,616 $ 410,956 $ 696,691 $ 985,610 $ 1,272,860 Other claims-related liabilities (212) Reported and estimated claims $ 55,404 Recent Accounting Pronouncements See Note 2 to our consolidated financial statements “Summary of Significant Accounting Policies— Recently Adopted Accounting Pronouncements ” and “ Recent Accounting Pronouncements Not Yet Adopted” for more information.
Expenses Recorded for the Fiscal Years Ended June 30, 2021 2022 2023 2024 2025 in thousands Claims incurred year: FY 2021 $ 234,070 FY 2022 $ 299,432 FY 2023 $ 291,988 FY 2024 $ 315,148 FY 2025 $ 340,258 Total $ 234,070 $ 299,432 $ 291,988 $ 315,148 $ 340,258 Pharmacy expense 88,847 External provider costs $ 429,105 66 Table of Contents Cumulative Actual Incurred Claims for the Fiscal Year Ended June 30, 2021 2022 2023 2024 2025 in thousands Claims incurred year: FY 2021 $ 239,207 $ 238,488 $ 204,792 $ 204,557 $ 204,466 FY 2022 291,315 333,752 333,376 333,041 FY 2023 285,118 283,542 281,703 FY 2024 301,757 295,350 FY 2025 327,069 Total $ 239,207 $ 529,803 $ 823,662 $ 1,123,232 $ 1,441,629 Cumulative Actual Paid Claims for the Fiscal Year Ended June 30, 2021 2022 2023 2024 2025 in thousands Claims incurred year: FY 2021 $ 205,355 $ 238,476 $ 204,792 $ 204,557 $ 204,466 FY 2022 252,665 333,747 333,376 333,041 FY 2023 241,770 283,538 281,703 FY 2024 246,145 295,335 FY 2025 270,011 Total $ 205,355 $ 491,141 $ 780,309 $ 1,067,616 $ 1,384,556 Other claims-related liabilities 1,898 Reported and estimated claims $ 58,971 Recent Accounting Pronouncements See Note 2 to our consolidated financial statements “Summary of Significant Accounting Policies— Recently Adopted Accounting Pronouncements ” and “ Recent Accounting Pronouncements Not Yet Adopted” for more information.
The increase in cost per participant was driven by (i) a $12.8 million increase in salaries, wages and benefits associated with increased headcount to support growth and higher wage rates, (ii) a $2.3 million increase in contract provider expense in California, (iii) $1.9 million in increased fleet expense and contract transportation as a result of higher average daily attendance, an increase in external appointments, and higher fuel costs, (iv) $1.2 million in increased building maintenance and security, (v) $1.8 million in software license fees, and (vi) $1.8 million in de novo occupancy and administrative costs inclusive of the Concerto acquisition in December 2023.
The overall increase was driven by (i) a $23.8 million increase in salaries, wages and benefits associated with increased headcount to support growth and higher wage rates, (ii) a $1.5 million increase in software license fees, (iii) a $1.9 million increase in de novo occupancy and administrative expense associated with opening centers in Florida and the acquisition of the Crenshaw center, (iv) a $2.6 million increase in contract provider expense in California associated with growth, (v) $6.7 million in consulting fees and shipping costs associated with in-house pharmacy services, and (vi) a $1.5 million increase in fleet expense including contract transportation.
Year Ended June 30, 2024 2023 in thousands Revenues Capitation revenue $ 762,570 $ 686,836 Other service revenue 1,285 1,251 Total revenues 763,855 688,087 Expenses External provider costs 403,010 374,528 Cost of care, excluding depreciation and amortization 228,781 212,271 Sales and marketing 24,957 19,627 Corporate, general and administrative 111,337 115,637 Depreciation and amortization 18,950 15,419 Total expenses 787,035 737,482 Operating Loss (23,180) (49,395) Other Income (Expense) Interest expense, net (4,023) (1,522) Gain on cost and equity method investments 2,842 — Other income 2,542 124 Total other income (expense) 1,361 (1,398) Loss Before Income Taxes (21,819) (50,793) Provision (Benefit) for Income Taxes 1,402 (7,241) Net Loss (23,221) (43,552) Less: net loss attributable to noncontrolling interests (1,883) (2,879) Net Loss Attributable to InnovAge Holding Corp. $ (21,338) $ (40,673) Loss Before Income Taxes as a % of revenue (2.9) % (7.4) % Net Loss as a % of revenue (3.0) % (6.3) % 55 Revenues Year Ended June 30, $ Change % Change 2024 2023 in thousands Capitation revenue $ 762,570 $ 686,836 $ 75,734 11.0 % Other service revenue 1,285 1,251 34 2.7 % Total revenues $ 763,855 $ 688,087 $ 75,768 11.0 % Capitation revenue.
Year Ended June 30, 2025 2024 in thousands Revenues Capitation revenue $ 852,353 $ 762,570 Other service revenue 1,346 1,285 Total revenues 853,699 763,855 Expenses External provider costs 431,152 403,010 Cost of care, excluding depreciation and amortization 268,908 228,781 Sales and marketing 28,217 24,957 Corporate, general and administrative 122,058 111,337 Depreciation and amortization 19,510 18,950 Impairments and loss on assets held for sale 13,615 — Total expenses 883,460 787,035 Operating Loss (29,761) (23,180) Other Income (Expense) Interest expense, net (4,612) (4,023) (Loss) gain on cost and equity method investments (1,393) 2,842 Other income, net 1,739 2,542 Total other (expense) income (4,266) 1,361 Loss Before Income Taxes (34,027) (21,819) Provision for Income Taxes 1,316 1,402 Net Loss (35,343) (23,221) Less: net loss attributable to noncontrolling interests (5,030) (1,883) Net Loss Attributable to InnovAge Holding Corp. $ (30,313) $ (21,338) Loss Before Income Taxes as a % of revenue (4.0) % (2.9) % Net Loss as a % of revenue (4.1) % (3.0) % Revenues Year Ended June 30, $ Change % Change 2025 2024 in thousands Capitation revenue $ 852,353 $ 762,570 $ 89,783 11.8 % Other service revenue 1,346 1,285 61 4.7 % Total revenues $ 853,699 $ 763,855 $ 89,844 11.8 % Capitation revenue.
We are investing to increase our sophistication as a payor to drive clinical value, improve outcomes, and manage cost trends.
During fiscal years 2024 and 2025 we made investments to increase our sophistication as a payor to drive clinical value, improve outcomes, and manage cost trends. We plan to continue investing in such activities in fiscal year 2026.
Liquidity and capital resources General To date, we have financed our operations principally through cash flows from operations and through borrowings under our credit facilities, from the sale of common stock in our IPO that occurred in March 2021.
(h) Reflects loss on sale of center equipment that was originally purchased for the center in Louisville, Kentucky. Liquidity and capital resources General We have financed our operations principally through cash flows from operations and through borrowings under our credit facilities.
We intend to continue investing in our centers, value-based care model, and sales and marketing organization to support long-term growth.
Maintaining, supporting and growing these relationships, in existing markets as well as new geographies, is critical to our long-term success. • Investing to support growth . We intend to continue investing in our centers, value-based care model, and sales and marketing initiatives to support long-term growth.
We currently intend to retain substantially all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness, other than with respect to share repurchases, and, therefore, we do not anticipate paying any cash dividends in the foreseeable future.
We currently intend to retain substantially all available funds and any future earnings to fund the development and growth of our business, to repay indebtedness, and to repurchase shares, if such repurchases are approved by our Board in the future.
The Company recognizes interest and penalty expense associated with uncertain tax positions as a component of provision (benefit) for income taxes. During the years ended June 30, 2024 and 2023, we reported provision (benefit) for income taxes of $1.4 million and $(7.2) million, respectively.
During the years ended June 30, 2025 and 2024, we reported provision (benefit) for income taxes of $1.3 million and $1.4 million, respectively.
This segment has never met any of the quantitative thresholds for determining reportable segments. (2) Overhead consists of the Sales and marketing and Corporate, general and administrative financial statement line items.
This segment has never met any of the quantitative thresholds for determining reportable segments.
Consolidated Statements of Cash Flows Our consolidated statements of cash flows for the year ended June 30, 2024 and 2023 are summarized as follows: Year Ended June 30, $ Change 2024 2023 in thousands Net cash provided by (used in) operating activities $ (36,898) $ 20,236 $ (57,134) Net cash used in investing activities (26,373) (69,521) 43,148 Net cash used in financing activities (7,034) (7,896) 862 Net change in cash, cash equivalents and restricted cash $ (70,305) $ (57,181) $ (13,124) Operating Activities.
We do not anticipate paying any cash dividends in the foreseeable future. 63 Table of Contents Consolidated Statements of Cash Flows Our consolidated statements of cash flows for the year ended June 30, 2025 and 2024 are summarized as follows: Year Ended June 30, $ Change 2025 2024 in thousands Net cash provided by (used in) operating activities $ 32,866 $ (36,898) $ 69,764 Net cash used in investing activities (5,550) (26,373) 20,823 Net cash used in financing activities (19,082) (7,034) (12,048) Net change in cash, cash equivalents and restricted cash $ 8,234 $ (70,305) $ 78,539 Operating Activities.
Census Our census is comprised of our capitated participants for whom we are financially responsible for their total healthcare costs. Total member months 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.
Total Member Months We define Total Member Months as the total number of participants multiplied by the number of months within a year in which each participant was enrolled in our program. We believe this is a useful metric as it more precisely tracks the number of participants we serve throughout the year.
The gain was partially offset by impairment losses of $2.0 million in conjunction with our minority interest investment in Jetdoc, Inc. ("Jetdoc") during the year ended June 30, 2024. No observable price changes or impairments were recorded during the year ended June 30, 2023. Other income.
The Company recognized a gain of $4.8 million from the dissolution of the Pinewood Lodge, LLLP (“PWD”) partnership, partially offset by impairment losses of $2.0 million in conjunction with a minority interest investment in Jetdoc, Inc. during the year ended June 30, 2024.
Other Income (Expense) Year Ended June 30, 2024 2023 $ Change % Change in thousands Interest expense, net $ (4,023) $ (1,522) $ (2,501) 164.3% Gain on cost and equity method investments 2,842 — 2,842 NM* Other income 2,542 124 2,418 1950.0% Total other income (expense) $ 1,361 $ (1,398) $ 2,759 (197.4)% * Not Meaningful Interest expense, net.
Other Income (Expense) Year Ended June 30, 2025 2024 $ Change % Change in thousands Interest expense, net $ (4,612) $ (4,023) $ (589) 14.6% (Loss) gain on cost and equity method investments (1,393) 2,842 (4,235) (149.0)% Other income, net 1,739 2,542 (803) (31.6)% Total other (expense) income $ (4,266) $ 1,361 $ (5,627) (413.4)% Interest expense, net.
We view the government not only as a payor but also as a key partner in our efforts to expand into new geographies and access more participants in our existing markets. Maintaining, supporting and growing these relationships, in existing markets as well as new geographies, is critical to our long-term success. • Investing to support growth .
Our economic model relies on our capitated arrangements with government payors, namely Medicare and Medicaid. We view the government not only as a payor but also as a key partner in our efforts to expand into new geographies and access more participants in our existing 53 Table of Contents markets.
The increase in cost per participant was primarily driven by a $9.6 million increase associated with increased assisted living utilization and unit cost and a $3.6 million increase associated with higher professional services utilization. This was partially offset by a $5.1 million reduction in permanent nursing facility utilization. Cost of care, excluding depreciation and amortization.
The decrease in external provider cost per participant was partially offset by an increase in inpatient unit cost and an annual increase in assisted living and permanent nursing facility unit cost. Cost of care, excluding depreciation and amortization.
Net Loss During the years ended June 30, 2024 and 2023, we reported net loss of $23.2 million and $43.6 million, respectively, consisting of (i) operating loss of $23.2 million and $49.4 million, respectively, (ii) other income of $1.4 million and other expense of $1.4 million, respectively, and (iii) provision for income taxes of $1.4 million and benefit for income taxes of $7.2 million, respectively, each as described above. 58 Key Business Metrics and Non-GAAP Measures In addition to our GAAP financial information, we review a number of operating and financial metrics, including the following key metrics and non-GAAP measures, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.
Key Business Metrics and Non-GAAP Measures In addition to our GAAP financial information, we review a number of operating and financial metrics, including the following key metrics and non-GAAP measures, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.

… 100 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−3 removed2 unchanged
Biggest changeWe do not believe that an increase or decrease 66 in interest rates of 100 basis points would have a material effect on our business, financial condition or results of operations.
Biggest changeWe do not believe that an increase or decrease in interest rates of 100 basis points would have a material effect on our business, financial condition or results of operations. 67 Table of Contents We had short-term investments $41.8 million and $45.8 million as of June 30, 2025 and 2024, respectively, which are primarily invested in managed income funds managed by major financial institutions.
We are exposed to changes in interest rates as a result of our variable-rate borrowings under the 2021 Credit Agreement. Generally, the Company may designate specific borrowings under the 2021 Credit Agreement as either base rate borrowings or Secured Overnight Financing Rate (“SOFR”) borrowings.
We are exposed to changes in interest rates as a result of our variable-rate borrowings under the Credit Agreement. Generally, the Company may designate specific borrowings under the Credit Agreement as either base rate borrowings or Secured Overnight Financing Rate (“SOFR”) borrowings.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure due to potential changes in inflation or interest rates. We do not hold financial instruments for trading purposes.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure due to potential changes in interest rates. We do not hold financial instruments for trading purposes.
Our cash and cash equivalents and interest payments in respect of our debt are subject to market risk due to changes in interest rates. We had cash and cash equivalents of $56.9 million as of June 30, 2024, which are deposited with high credit quality financial institutions and are primarily in demand deposit accounts.
Our cash and cash equivalents and interest payments in respect of our debt are subject to market risk due to changes in interest rates. We had cash and cash equivalents of $64.1 million as of June 30, 2025, which are deposited with high credit quality financial institutions and are primarily in demand deposit accounts.
As of June 30, 2023, we had total outstanding debt of $67.5 million in principal amount under the Term Loan Facility and $2.3 under the Convertible Term Loan. As of June 30, 2024 and 2023, the interest rate on the Term Loan Facility was 7.18% and 6.95%, respectively.
As of June 30, 2024, we had total outstanding debt of $63.8 million in principal amount under the Term Loan Facility and $2.2 million under the Convertible Term Loan. As of June 30, 2025 and 2024, the interest rate on the Term Loan Facility was 6.13% and 7.18%, respectively.
As of June 30, 2024, based on our secured net leverage ratio, the margins of our borrowings under the Term Loan Facility and Revolving Credit Facility (as defined in Note 7 to the audited consolidated financial statements) were (a) 0.75% for alternate base rate borrowings and (b) 1.75% for Term SOFR borrowings.
As of June 30, 2025, based on our secured net leverage ratio, the margins of our borrowings under the Term Loan Facility were (a) 0.75% for alternate base rate borrowings and (b) 1.75% for Term SOFR borrowings.
Interest rate risk As of June 30, 2024, we had total outstanding borrowings of (i) $63.8 million principal amount under the Term Loan Facility (as defined in Note 7 to the audited consolidated financial statements) and (ii) $2.2 million principal amount under the convertible term loan.
Interest rate risk As of June 30, 2025, we had total outstanding borrowings of (i) $60.0 million principal amount under the Term Loan Facility (as defined in Note 7 to the consolidated financial statements included in this Annual Report) and (ii) $2.2 million principal amount under the convertible term loan (included in “Liabilities held for sale” in the consolidated financial statements included in this Annual Report).
We had short-term investments $45.8 million and $46.2 million as of June 30, 2024 and 2023, respectively, which are primarily invested in managed income funds managed by major financial institutions. The funds mainly invest in investment grade, U.S. denominated short-term fixed and floating rate debt securities. Securities are subject to market risk and sensitive to changes in interest rates.
The funds mainly invest in investment grade, U.S. denominated short-term fixed and floating rate debt securities. Securities are subject to market risk and sensitive to changes in interest rates.
Removed
We amended our 2021 Credit Agreement during the fourth quarter ended June 30, 2024 to replace the London Interbank Offered Rate (“LIBOR”) reference rate with SOFR prior to the discontinuance of LIBOR.
Removed
Inflation risk Based on our analysis of the periods presented, we believe that inflation has not had a material effect on our operating results. See more information under Item 7.
Removed
Management’s Discussion of Financial Condition and Results of Operations—Trends and Uncertainties Affecting the Company.” There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.

Other INNV 10-K year-over-year comparisons