InnovAge Holding Corp

InnovAge Holding Corp. and Subsidiaries

Quarterly Report on Form 10-Q

For the quarterly period ended December 31, 2023

Cautionary Note on Forward-Looking Statements

Throughout this Quarterly Report on Form 10-Q, we make “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as “may,” “will,” “estimate,” “intend,” “plan,” “continue,” “believe,” “expect,” “anticipate,” “target,” “should,” “could,” “potential,” “opportunity,” “goal” or similar terminology. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business, including with respect to current audits and legal proceedings and actions, relationships and discussions with regulatory agencies, our expectations with respect to correcting deficiencies raised in audits and other processes, and our expectations to increase the number of participants we serve, to grow enrollment and capacity within existing centers, to build or open de novo centers, and other similar statements. The forward-looking statements contained in this Quarterly Report on Form 10-Q are generally located under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in Part I, Item 2, and “Risk Factors,” included in Part II, Item 1A, but may be found in other locations as well. These statements are based upon management’s current expectations, projections, assumptions and estimates and are not guarantees of timing, future results or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks and uncertainties and other factors, including, among other things:

•the viability of our growth strategy, including our ability to obtain licenses to open our de novo centers in Downey and Bakersfield, California;

•our ability to identify and successfully complete and integrate acquisitions;

•our ability to attract new participants and retain existing participants and grow our revenue throughout our existing centers;

•the results of periodic inspections, reviews, audits and investigations under the federal and state government programs, such as the audit of our Sacramento, California center and the targeted medical review of our San Bernardino, California center, and our ability to sufficiently cure any new and recurring deficiencies identified by the respective federal and state government programs;

•the adverse impact of inspections, reviews, audits, investigations, legal proceedings, enforcement actions and litigation, including the current civil investigative demands initiated by federal and state agencies, as well as the litigation and other proceedings initiated by, or on behalf, of our stockholders;

•the risk that the cost of providing services will exceed our compensation under the Program of All Inclusive Care for the Elderly (“PACE”);

•our increased costs and expenditures in the future and our inability to execute or realize the benefits of our clinical value initiatives;

•the impact on our business from ongoing macroeconomic related challenges, including labor shortages and inflation;

•the dependence of our revenues and operations upon a limited number of government payors;

•the risk that our submissions to government payors may contain inaccurate or unsupportable information, including regarding risk adjustment scores of participants;

•the impact on our business of renegotiation, non-renewal or termination of capitation agreements with government payors;

•the difficulty to predict our future results, which could cause such results to fall below any guidance we provide;

•the impact of state and federal efforts to reduce healthcare spending;

•the effects of a pandemic, epidemic or outbreak of an infectious disease, such as COVID-19;

•our dependence on our senior management team and other key employees;

•the impact of failures by our suppliers or limitations on our ability to access new technology or medical products;

•the concentration of our presence in Colorado;

•our ability to manage our operations effectively, execute our business plan, maintain effective levels of service and participant satisfaction and adequately address competitive challenges;

•our ability to compete in the healthcare industry;

•our ability to establish a presence in new geographic markets;

•the impact of competition for physicians and other clinical personnel and related increases in our labor costs;

•labor relations matters, including unionization efforts;

•the impact on our business of security breaches, loss of data or other disruptions causing the compromise of sensitive information or preventing us from accessing critical information;

•our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems;

•our ability to accurately estimate incurred but not reported medical expense or the risk scores of our participants;

•risks associated with our use of “open-source” software;

•the impact on our business of the termination of our leases, increases in rent or inability to renew or extend leases;

•the impact of weather and other factors beyond our control;

•the effect of our relatively limited operating history as a for-profit company on investors' ability to evaluate our current business and future prospects;

•our ability to adhere to complex and changing government laws and regulations in the healthcare industry, including U.S. Healthcare reform, the regulation of the corporate practice of medicine and the Health Information Technology for Economic and Clinical Health Act of 2009 (the “HITECH Act”), and their implementing regulations (collectively, “HIPAA”), the California Consumer Privacy Act (“CCPA”) and other privacy laws and regulations in the healthcare industry;

•our status as a “controlled company”;

•our ability to maintain effective internal controls over financial reporting and other enhanced requirements of being a public company;

•our ability to maintain and enhance our reputation and brand recognition;

•the impact on our business of disruptions in our disaster recovery systems or business continuity planning;

•impact of negative publicity regarding the managed healthcare industry; and

•other factors disclosed in the section entitled “Risk Factors” in our Annual Report for the year ended June 30, 2023 filed with the Securities and Exchange Commission (the “SEC”) on September 12, 2023, and our subsequent filings with the SEC.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Unless otherwise specified or unless the context requires otherwise, all references in this Quarterly Report on Form 10-Q to “InnovAge,” “the Company,” “we,” “us,” and “our,” or similar references, refer to InnovAge Holding Corp. and our consolidated subsidiaries.