InnovAge Holding Corp.

Previous wording

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. During the year ended June 30, 2024, the Company opened two de novo centers in Tampa and Orlando, Florida, and acquired two PACE centers in California from ConcertoCare, which include one operating center in the Crenshaw neighborhood of Los Angeles, and a second program that is a planned de novo in Bakersfield, California.

Current wording

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.

Previous wording

InnovAge’s programs are designed to allow frail seniors to live life on their terms by aging in place, in their own homes and communities, for as long as safely possible. 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. The Company manages its business as one reportable segment, PACE.

Current wording

InnovAge’s programs are designed to allow frail seniors to live life on their terms by aging in place, in their own homes and communities, for as long as safely possible. 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. The Company manages its business as one reportable segment, PACE.

Previous wording

We are the leading healthcare delivery platform by number of participants focused on providing all-inclusive, capitated care to high-cost, dual-eligible seniors. Our programs are designed to directly address two of the most pressing challenges facing the U.S. healthcare industry: rising costs and poor outcomes. 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. Our participant-centered approach is led by our Interdisciplinary Care Teams (“IDTs”), who oversee all aspects of each participant’s unique care plan and function as the core group of care providers to our participants. We directly manage and are responsible for all healthcare needs and associated costs for our participants, including housing costs, where applicable. We directly contract with government payors, such as Medicare and Medicaid, and do not rely on third-party administrative organizations or health plans. We believe our model aligns with how healthcare is evolving, namely (i) the shift toward value-based care, in which coordinated, outcomes-driven, quality care is delivered while reducing unnecessary spend, (ii) eliminating excessive administrative costs by contracting directly with the government, (iii) focusing on the patient experience and (iv) addressing social determinants of health.

Current wording

We are the leading healthcare delivery platform by number of participants focused on providing all-inclusive, capitated care to high-cost, dual-eligible seniors. Our programs are designed to directly address two of the most pressing challenges facing the U.S. healthcare industry: rising costs and poor outcomes. 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. Our participant-centered approach is led by our Interdisciplinary Care Teams (“IDTs”), who oversee all aspects of each participant’s unique care plan and function as the core group of care providers to our participants. We directly manage and are responsible for all healthcare needs and associated costs for our participants, including housing costs, where applicable. We directly contract with government payors, such as Medicare and Medicaid, and do not rely on third-party administrative organizations or health plans. We believe our model aligns with how healthcare is evolving, namely (i) the shift toward value-based care, in which coordinated, outcomes-driven, quality care is delivered while reducing unnecessary spend, (ii) eliminating excessive administrative costs by contracting directly with the government, (iii) focusing on the patient experience and (iv) addressing social determinants of health.

Previous wording

Labor market. The healthcare sector continues to experience a complex set of challenges in hiring additional professionals. Specifically, the demand for healthcare services has been steadily increasing due to an aging population and a greater focus on health and wellness in society. In addition, there are systemic challenges related to workforce training and the pipeline of qualified professionals, which have not kept pace with this growing demand. Furthermore, high inflation experienced during fiscal year 2023, which continued through fiscal year 2024 increased the cost of living, and subsequently, wage pressure for healthcare professionals, with a shift towards an employee-centric market with an emphasis on competitive compensation, flexibility and professional growth opportunities, which contributed to an increasingly competitive labor market. In an effort to mitigate the effects of these challenges, we adopted strategies to offer competitive compensation packages. 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.

Current wording

Labor market and access to supportive housing facilities. The healthcare sector continues to experience workforce shortages, particularly in geriatrics, primary care and direct care roles, as well as a complex set of challenges in hiring additional professionals. Competition from health systems and home health providers for nurses, drivers and caregivers has intensified, further challenging the Company’s ability to recruit and retain staff. In addition, there are systemic challenges related to workforce training and the pipeline of qualified professionals, which have not kept pace with this growing demand. These labor market pressures have increased wage and benefit costs, and have also affected our staffing ability which could impact our enrollment capacity and services. To mitigate these challenges, we implemented targeted compensation and retention initiatives, along with operational measures to help improve productivity and reduce reliance on agency staffing. 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.

Previous wording

•Our participants. We focus on providing all-inclusive care to frail, high-cost, dual-eligible seniors. We directly contract with government payors, such as Medicare and Medicaid, through PACE and receive a capitated risk-adjusted payment to manage the totality of a participant’s medical care across all settings. InnovAge manages participants that are, on average, more complex and medically fragile than other Medicare-eligible patients, including those in Medicare Advantage (“MA”) programs. 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 2.46 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. Our participants are managed on a capitated, or at-risk basis, where InnovAge is financially responsible for all participant medical costs. Our comprehensive care model and globally capitated payments are designed to cover participants from enrollment until the end of life, including coverage for participants requiring hospice and palliative care. For dual-eligible participants, we receive PMPM payments directly from Medicare and Medicaid, which provides recurring revenue streams and significant visibility into our revenue. The Medicare portion of our capitated payment is risk-based on the underlying medical conditions and frailty of each participant. In fiscal year 2023, we began working on expanding payer capabilities which we continued to strengthen in fiscal 2024 so that our revenue more accurately reflects the acuity of the populations we serve.

Current wording

•Our participants. We focus on providing all-inclusive care to frail, high-cost, dual-eligible seniors. We directly contract with government payors, such as Medicare and Medicaid, through PACE and receive a capitated risk-adjusted payment to manage the totality of a participant’s medical care across all settings. InnovAge manages participants that are, on average, more complex and medically fragile than other Medicare-eligible patients, including those in Medicare Advantage (“MA”) programs. 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. Our participants are managed on a capitated, or at-risk basis, where InnovAge is financially responsible for all participant medical costs. Our comprehensive care model and globally capitated payments are designed to cover participants from enrollment until the end of life, including coverage for participants requiring hospice and palliative care. For dual-eligible participants, we receive PMPM payments directly from Medicare and Medicaid, which provides recurring revenue streams and significant visibility into our revenue. The Medicare portion of our capitated payment is risk-based on the underlying medical conditions and frailty of each participant. We continue to strengthen our encounter data submission process so that our revenue more accurately reflects the acuity of the populations we serve.

Previous wording

•Our ability to grow enrollment and capacity within existing centers. 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.

Current wording

•Our ability to grow enrollment and capacity within existing centers. 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 competition, costs and sanctions issued by regulators or suspensions of State attestations required to open new de novo centers.

Previous wording

•Our ability to maintain high participant satisfaction and retention. Our comprehensive individualized care model and frequency of interaction with participants generates high levels of participant satisfaction. 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. Furthermore, we experience low levels of voluntary disenrollment, averaging 6.9% annually over the last three fiscal years.

Current wording

•Our ability to maintain high participant satisfaction and retention. Our comprehensive individualized care model and frequency of interaction with participants generates high levels of participant satisfaction. 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. Furthermore, we experience low levels of voluntary disenrollment, averaging 7.0% annually over the last three fiscal years.

Previous wording

•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 became more acute in fiscal year 2023 as we were not able to replenish our population mix with newer, lower-acuity participants as a result of State sanctions. 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.

Current wording

•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. 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.

Previous wording

•Center-level Contribution Margin. The Company’s management uses Center-level Contribution Margin as the measure for assessing performance of its operating segments. 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.

Current wording

•Center-level Contribution Margin. The Company’s management uses Center-level Contribution Margin as the measure for assessing performance of its operating segments. 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.

Previous wording

In response to an audit to our Sacramento center and a medical review of our San Bernardino center, which have been previously disclosed, the California Department of Health Care Services (“DHCS") notified us that it was suspending its attestations in support of the planned de novo center in Downey and the recently acquired planned de novo center in Bakersfield. CMS has closed its process and DHCS's process is ongoing. While the planned California de novo centers are precluded from opening at this time, DHCS notified us that it would consider restoring the State Attestations upon our successful remediation of the deficiencies raised in our Sacramento center.

Current wording

In response to an audit to our Sacramento center and a medical review of our San Bernardino center, our planned California de novo centers are precluded from opening at this time. The California Department of Health Care Services (“DHCS”) notified us that it would consider restoring the State Attestations with respect to such centers upon our successful remediation of the deficiencies raised in our Sacramento center and its completion of the medical review (and any potential resulting remediation that may be required) in our San Bernardino center, both of which are ongoing.

Previous wording

•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. By bringing acquired organizations under the InnovAge Platform, we hope to further realize revenue growth and improve operational efficiency and care delivery post-integration. 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.

Current wording

•Execute tuck-in acquisitions, strategic transactions and partnerships. 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. By bringing acquired organizations under the InnovAge Platform, we hope to further realize revenue growth and improve operational efficiency and care delivery post-integration. 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. On January 2, 2025, with the goal of supporting our growth and improving pharmacy cost-management, we completed the acquisition of certain pharmacy assets from Tabula Rasa HealthCare Group, Inc. (“TRHC”), a leading pharmacy care management company, for a total purchase price of $4.8 million. Pursuant to a Management Services Agreement, TRHC provides management services to our acquired pharmacy business with an initial term of five years.

Previous wording

•Investing to support growth. We intend to continue investing in our centers, value-based care model, and sales and marketing organization to support long-term growth. 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 are investing to increase our sophistication as a payor to drive clinical value, improve outcomes, and manage cost trends. 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.

Current wording

•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 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. 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. 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.

Previous wording

•Seasonality to our business. Our operational and financial results, including medical costs and per-participant revenue true-ups, will experience some variability depending upon the time of year in which they are measured. Medical costs vary most significantly as a result of (i) the weather, with certain illnesses, such as the influenza and COVID-19 viruses, being more prevalent during colder months of the year, which generally increases per-participant costs and (ii) the number of business days in a period, with shorter periods generally having lower medical costs all else equal. Per-participant revenue true-ups represent the difference between our estimate of per-participant capitation revenue to be received and actual revenue received from CMS, which is based on CMS’s determination of a participant’s RAF score as measured twice per year and is based on the evolving acuity of a participant. Where there is a difference between our estimate and the final determination from CMS, we may record either an increase or decrease in true up revenue. 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 into nor control over the timing of such payments. The variability of participant enrollments during the open enrollment period has also been impacted by additional offerings by MA and other competitors. We believe that, as a result of these additional offerings, we experienced higher than expected disenrollments during fiscal year 2024.

Current wording

•Seasonality to our business. Our operational and financial results, including medical costs and per-participant revenue true-ups, will experience some variability depending upon the time of year in which they are measured. Medical costs vary most significantly as a result of (i) the weather, with certain illnesses, such as the influenza and COVID-19 viruses, being more prevalent during colder months of the year, which generally increases per-participant costs and (ii) the number of business days in a period, with shorter periods generally having lower medical costs all else equal. Per-participant revenue true-ups represent the difference between our estimate of per-participant capitation revenue to be received and actual revenue received from CMS, which is based on CMS’s determination of a participant’s RAF score as measured twice per year and is based on the evolving acuity of a participant. Where there is a difference between our estimate and the final determination from CMS, we may record either an increase or decrease in true up revenue. 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 into nor control over the timing of such payments. The variability of participant enrollments and voluntary disenrollments has also been impacted by additional offerings by MA and other competitors including PACE organizations in select markets.

Previous wording

Cost of Care, Excluding Depreciation and Amortization. Cost of care, excluding depreciation and amortization, includes the costs we incur to operate our care delivery model. This includes costs related to salaries, wages and benefits for IDT and other center-level staff, participant transportation, medical supplies, occupancy, insurance and other operating costs. IDT employees include medical doctors, registered nurses, social workers, physical, occupational, and speech therapists, nursing assistants, and transportation workers. Other center-level employees include clinic managers, dieticians, activity assistants and certified nursing assistants. Cost of care excludes any expenses associated with sales and marketing activities incurred at a local level as well as any allocation of our corporate, general and administrative expenses. A portion of our cost of care, including our employee-related costs, is directly related to the number of participants cared for in a center. The remainder of our cost of care is fixed relative to the number of participants we serve, such as occupancy and insurance expenses. As a result, as revenue increases due to census growth, cost of care, excluding depreciation and amortization, moderately decreases as a percentage of revenue. 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.

Current wording

Cost of Care, Excluding Depreciation and Amortization. Cost of care, excluding depreciation and amortization, includes the costs we incur to operate our care delivery model. This includes costs related to salaries, wages and benefits for IDT and other center-level staff, participant transportation, medical supplies, occupancy, insurance and other operating costs. IDT employees include medical doctors, registered nurses, social workers, physical, occupational, and speech therapists, nursing assistants, and transportation workers. Other center-level employees include clinic managers, dieticians, activity assistants and certified nursing assistants. Cost of care excludes any expenses associated with sales and marketing activities incurred at a local level as well as any allocation of our corporate, general and administrative expenses. A portion of our cost of care, including our employee-related costs, is directly related to the number of participants cared for in a center. 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.

Previous wording

Corporate, General and Administrative Expenses. Corporate, general and administrative expenses include employee-related expenses, including salaries and related costs. 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, 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. However, we anticipate general and administrative expenses to decrease as a percentage of revenue over the long term, although such expenses may fluctuate as a percentage of revenue from period to period due to the timing and amount of these expenses.

Current wording

Corporate, General and Administrative Expenses. Corporate, general and administrative expenses include other employee-related expenses, including salaries and related costs. 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. However, we anticipate general and administrative expenses to decrease as a percentage of revenue over the long term, although such expenses may fluctuate as a percentage of revenue from period to period due to the timing and amount of these expenses.

Previous wording

Capitation revenue. 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. 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. The increase in member months was primarily due to the release of sanctions at our Sacramento, California center and at our Colorado centers. The increase in capitation rates was primarily driven by an annual increase in both Medicaid capitation rates as determined by the States and Medicare capitation rates as a result of increased risk score and county rates.

Current wording

Capitation revenue. 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. 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. The increase in member months was primarily due to growth in our California and Colorado centers, and to a lesser extent to the addition of de novo centers in Florida and the acquisition of the Crenshaw center in California. The increase in capitation rates includes a

Previous wording

External provider costs. External provider costs were $403.0 million for the year ended June 30, 2024, an increase of $28.5 million, or 7.6%, compared to $374.5 million for the year ended June 30, 2023. The increase was primarily driven by an increase of $16.8 million, or 4.5% in member months coupled with an increase of $11.7 million, or 3.0%, in cost per participant. 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.

Current wording

External provider costs. External provider costs were $431.2 million for the year ended June 30, 2025, an increase of $28.1 million, or 7.0%, compared to $403.0 million for the year ended June 30, 2024. The increase was primarily driven by an increase of $41.3 million, or 10.3%, in member months partially offset by a decrease of $13.4 million, or 3.0%, in cost per participant. The decrease in external provider cost per participant was primarily driven by a decrease in inpatient, assisted living, permanent nursing facility and short stay nursing facility utilization, a decrease in external hospice care associated with the transition of this function to internal clinical resources, and a decrease in pharmacy expense due to the transition to in-house pharmacy services. 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.

Previous wording

Cost of care, excluding depreciation and amortization. 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. 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. This was partially offset by a $3.9 million reduction in third party audit and compliance support.

Current wording

Cost of care, excluding depreciation and amortization. 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. 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.

Previous wording

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. The decrease was primarily due to (i) $2.7 million reduction in third party legal expense, (ii) $2.3 million reduction in insurance expense, (iii) $4.5 million reduction in consulting expense associated with improving organizational capabilities including the transition to a new electronic medical record (“EMR”), (iv) $2.2 million reduction in contract staff augmentation, and (v) $1.0 million reduction in recruiting expense. These decreases were partially offset by (i) a $3.5 million increase in employee compensation and benefits as the result of an increase in headcount to support compliance and bolster organizational capabilities, (ii) $3.7 million in bad debt expense, and (iii) $1.2 million in consulting costs including Sarbanes-Oxley Act of 2002 compliance, internal audit support, and public relations.

Current wording

Corporate, general and administrative expenses. 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. The increase was primarily due to (i) $10.1 million for the anticipated settlement of the securities class action lawsuit and (ii) a $7.3 million increase in employee compensation and benefits as the result of an increase in headcount and wage rates to support compliance and bolster organizational capabilities. These increases in cost were partially offset by (i) a $5.0 million reduction in consulting expense associated with improving organizational capabilities including the transition to a new EMR system and (ii) a $1.1 million reduction in insurance expense.

Previous wording

Depreciation and amortization. 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.

Current wording

Depreciation and amortization. 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.

Previous wording

Interest expense, net. 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. 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.

Current wording

Interest expense, net. 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 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.

Previous wording

Gain on cost and equity method investments. 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. On March 13, 2024, Pinewood Lodge, LLLP (“PWD”), a variable interest entity of the Company, entered into a Purchase and Sale Agreement for the sale of all of PWD's property, including its senior housing unit, which was used in our operations. On May 2, 2024, PWD closed on the sale of the property. In June 2024, the partnership was dissolved and we recognized a gain of $4.8 million from the dissolution of the partnership. See Note 4 “Cost and Equity Method Investments” to our consolidated financial statements included in this Annual Report for further discussion. 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.

Current wording

(Loss) gain on cost and equity method investments. 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. 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. The Company recognized a loss of $2.6 million associated with the impairment of a minority interest investment in DispatchHealth Holdings, Inc, partially offset by a $1.3 million net benefit associated with the dissolution of the PWD partnership during the year ended June 30, 2025.

Previous wording

Other income. 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 was $2.5 million for the year ended June 30, 2024, an increase of $2.4 million, compared to $0.1 million for the year ended June 30, 2023, due to $2.4 million in investment income related to short-term investments. Investment income during the year ended June 30, 2023 was $1.2 million offset by $1.1 million loss on disposal of capital assets.

Current wording

Other income, net. 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. 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.

Previous wording

The Company and its subsidiaries calculate federal and state income taxes currently payable and for deferred income taxes arising from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured pursuant to enacted tax laws and rates applicable to periods in which those temporary differences are expected to be recovered or settled. The impact on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment. 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. Further, the Company entered into a joint venture called InnovAge Florida PACE – Orlando on May 28, 2024 and its members elected to be taxed as a partnership. No provision (benefit) for income taxes for InnovAge Orlando is included in these consolidated financial statements for activity occurring from joint venture formation date through the balance of the fiscal year.

Current wording

The Company and its subsidiaries calculate federal and state income taxes currently payable and for deferred income taxes arising from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured pursuant to enacted tax laws and rates applicable to periods in which those temporary differences are expected to be recovered or settled. The impact on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment. 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.

Previous wording

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. 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.

Current wording

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. 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.

Previous wording

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. The most significant activity of SH1 is the operation of the housing facility. The Company has provided a subordinated loan to SH1 and has provided a guarantee for the convertible term loan held by SH1. The SH1 interest is reflected within equity as noncontrolling interests. Our share of earnings is recorded in the consolidated statements of operations as net loss attributable to noncontrolling interests.

Current wording

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. The most significant activity of SH1 was the operation of a housing facility. The Company provided a subordinated loan to SH1 and a guarantee for the convertible term loan held by SH1. On June 30, 2025, the Company entered into an agreement to sell the Company’s managing member interest in SH1 and vacant land adjacent to SH1 senior housing property. As a result, the Company reported the associated assets and liabilities as Assets held for sale and Liabilities held for sale in the Company’s consolidated balance sheets as of June 30, 2025.

Previous wording

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.

Current wording

During the years ended June 30, 2025 and 2024, we reported net loss of $35.3 million and $23.2 million, respectively, consisting of (i) operating loss of $29.8 million and $23.2 million, respectively, (ii) other income of $4.3 million and other expense of $1.4 million, respectively, and (iii) provision for income taxes of $1.3 million and benefit for income taxes of $1.4 million, respectively, each as described above.

Previous wording

(a)Includes InnovAge Sacramento and InnovAge Orlando, which the Company owns and controls through joint ventures and are consolidated in our financial statements. During the fiscal year ended June 30, 2024, the Company opened the Orlando and Tampa centers and acquired an operational center from Concerto in Los Angeles.

Current wording

(a)Includes InnovAge Sacramento and InnovAge Orlando, which the Company owns and controls through joint ventures and are consolidated in our financial statements.

Previous wording

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. We believe this is a useful metric as it more precisely tracks the number of participants we serve throughout the year.

Current wording

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.

Previous wording

Center-level Contribution Margin on a center-by-center basis, we do not allocate our sales and marketing expense or corporate, general and administrative expenses across our centers. Center-level Contribution Margin was $132.1 million and $101.3 million for the years ended June 30, 2024 and 2023, respectively. The increase in Center-level Contribution Margin for fiscal year 2024 was primarily due to a year-over-year increase of 11.0% in total revenue and 7.7% in center level expense during the same period. For more information relating to Center-level Contribution Margin, see Note 14 “Segment Reporting” to our consolidated financial statements. A 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:

Current wording

The Company’s management uses Center-level Contribution Margin as the measure for assessing performance of its operating segments. We define Center-level Contribution Margin as total revenues less external provider costs and cost of care, excluding depreciation and amortization, which includes all medical and pharmacy costs. For purposes of evaluating Center-level Contribution Margin on a center-by-center basis, we do not allocate our sales and marketing expense or corporate, general and administrative expenses across our centers. Center-level Contribution Margin was $153.6 million and $132.1 million for the years ended June 30, 2025 and 2024, respectively. The increase in Center-level Contribution Margin for fiscal year 2025 was primarily due to a year-over-year increase of 11.8% in total revenue and 10.8% in center level expense during the same period. For more information relating to Center-level Contribution Margin, see Note 14 “Segment Reporting” to our consolidated financial statements included in this Annual Report. A 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:

Previous wording

(1)Center-level Contribution Margin from a segment below the quantitative thresholds is attributable to the Senior Housing operating segment of the Company. This segment has never met any of the quantitative thresholds for determining reportable segments.

Current wording

(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. This segment has never met any of the quantitative thresholds for determining reportable segments.

Previous wording

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.

Current wording

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, loss (gain) on cost and equity method investments, asset impairments and loss on assets held for sale, and loss on sale of assets.

Previous wording

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%.

Current wording

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%.

Previous wording

Adjusted EBITDA margin is Adjusted EBITDA expressed as a percentage of our total revenue. 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)%.

Current wording

Adjusted EBITDA margin is Adjusted EBITDA expressed as a percentage of our total revenue. 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%.

Previous wording

Adjusted EBITDA and Adjusted EBITDA margin are supplemental measures of operating performance monitored by management that are not defined under GAAP and that do not represent, and should not be considered as, an alternative to net loss and net loss margin, respectively, as determined by GAAP. We believe that Adjusted EBITDA and Adjusted EBITDA margin are appropriate measures of operating performance because the metrics eliminate the impact of expenses that do not relate to our ongoing business performance and certain noncash expenses, allowing us to more effectively evaluate our core operating performance and trends from period to period. We believe that Adjusted EBITDA and Adjusted EBITDA margin help investors and analysts in comparing our results across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures, including net loss and net loss margin. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by the types of items excluded from the calculation of Adjusted EBITDA. Our use of the term Adjusted EBITDA varies from others in our industry. Effective for the year ended June 30, 2024, the Company has revised its calculation of Adjusted EBITDA to no longer exclude de novo center development costs and to reflect the impact of other investment income. The presentation for the year ended June 30, 2023 has been recast to conform to the current presentation.

Current wording

Adjusted EBITDA and Adjusted EBITDA margin are supplemental measures of operating performance monitored by management that are not defined under GAAP and that do not represent, and should not be considered as, an alternative to net loss and net loss margin, respectively, as determined by GAAP. We believe that Adjusted EBITDA and Adjusted EBITDA margin are appropriate measures of operating performance because the metrics eliminate the impact of expenses that do not relate to our ongoing business performance and certain noncash expenses, allowing us to more effectively evaluate our core operating performance and trends from period to period. We believe that Adjusted EBITDA and Adjusted EBITDA margin help investors and analysts in comparing our results across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, the analysis of GAAP financial measures, including net loss and net loss margin. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by the types of items excluded from the calculation of Adjusted EBITDA. Our use of the term Adjusted EBITDA varies from others in our industry.

Previous wording

(a)Reflects investment income related to short term investments included in our consolidated statement of operations. Effective for the year ended June 30, 2024, the Company has revised the calculation for Adjusted EBITDA to reflect the impact of investment income in 2024 and 2023.

Current wording

(a)Reflects investment income related to short term investments included in our consolidated statements of operations.

Previous wording

(b)Reflects a $1.2 million reserve for a California wage and hour class action settlement for the year ended June 30, 2023, and each of the years ended June 30, 2023 and 2024 included charges/(credits) related to litigation by stockholders, litigation related to de novo center, and civil investigative demands. See Item 3, “Legal Proceedings” included in this Annual Report. Costs reflected consist of litigation costs considered one-time in nature and outside of the ordinary course of business based on the following considerations which we assess regularly: (i) the frequency of similar cases that have been brought to date, or are expected to be brought within two years, (ii) complexity of the case, (iii) nature of the remedies sought, (iv) litigation posture of the Company, (v) counterparty involved, and (vi) the Company's overall litigation strategy.

Current wording

(b)Reflects charges/(credits) related to litigation by stockholders, litigation related to de novo center, civil investigative demands, and arbitration with our former pharmacy provider. Refer to Note 9, "Commitments and Contingencies" to our consolidated financial statements included in this Annual Report for more information regarding litigation by stockholders and civil investigative demands. Costs reflected consist of litigation costs considered one-time in nature and outside of the ordinary course of business based on the following considerations which we assess regularly: (i) the frequency of similar cases that have been brought to date, or are expected to be brought within two years, (ii) complexity of the case, (iii) nature of the remedies sought, (iv) litigation posture of the Company, (v) counterparty involved, and (vi) the Company's overall litigation strategy. For the year ended June 30, 2025, includes $10.1 million accrued in connection with the potential settlement of the previously disclosed stockholder class action.

Previous wording

(c)Reflects charges related to M&A transaction and integrations, including the Concerto acquisition in December 2023. Effective for the year ended June 30, 2024, the Company has revised the calculation for Adjusted EBITDA to no longer exclude de novo center development costs in 2024 and 2023. De novo center development costs were $1.0 million for each of the years ended June 30, 2024 and 2023.

Current wording

(c)Reflects charges related to M&A transaction and integrations.

Previous wording

(d)Reflects charges related to business optimization initiatives. 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. 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, 2023, costs included (i) $1.8 million related to consultants and contractors performing audit and other related services at sanctioned centers, (ii) $5.7 million of costs associated with third party consultants to strengthen enterprise capabilities, (iii) $0.6 million related to the consolidation of the Germantown, Pennsylvania center, (iv) $1.1 million related to organizational restructure, and (v) $1.4 million related to other non-recurring projects aimed at reducing costs and improving efficiencies.

Current wording

(d)Reflects charges related to business optimization initiatives. 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. For the year ended June 30, 2025 this includes (i) $2.5 million of costs associated with organizational restructure and executive severance, and (ii) $0.5 million related to 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.

Previous wording

(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.

Current wording

(f)For the year ended June 30, 2025, reflects $2.6 million impairment loss for the investment in DispatchHealth Holdings, Inc., partially offset by $1.3 million net benefit associated with the dissolution of the PWD partnership. 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.