InnovAge Fiscal Q4 2026 Earnings: Revenue Growth Restores GAAP Profitability

InnovAge (Nasdaq: INNV) reported fiscal Q4 2026 revenue of $261.95 million, up approximately 18.3% from $221.42 million a year earlier, while diluted EPS improved to $0.06 from a loss of $0.01. Net income reached $9.78 million, and adjusted EBITDA more than doubled as center-level profitability expanded.

Core Financial Results

The quarter marked a return to GAAP profitability: operating income improved by $12.30 million year over year, while net income swung from a $5.01 million loss to a $9.78 million profit. Net income attributable to InnovAge was $8.29 million.

The company’s non-GAAP results moved in the same direction. Center-level contribution margin increased 51.5%, while adjusted EBITDA rose 114.4% and its margin expanded by 4.2 percentage points.

Center-level contribution margin and adjusted EBITDA are non-GAAP measures and may not be comparable with similarly named metrics reported by other companies.

Business and Participant Trends

Capitation revenue increased approximately 18.3% to $261.51 million and accounted for nearly all quarterly revenue. The segment reconciliation attributed all fiscal Q4 revenue and center-level contribution margin to the PACE business, with no quarterly contribution from the company’s smaller “all other” category.

Full-year operating metrics also increased. InnovAge served approximately 8,230 participants at June 30, 2026, compared with 7,740 a year earlier, an increase of about 6.3%. Fiscal-year member months rose approximately 7.8% to 96,050 from 89,130.

Wider Center Margins Restored Quarterly Profitability, but Litigation Shaped Full-Year Adjusted Results

Center economics improved because revenue grew faster than the principal costs of providing care. External provider costs increased approximately 7.0% to $115.74 million, while cost of care excluding depreciation and amortization rose approximately 16.2% to $83.65 million. That combination allowed center-level contribution margin to grow substantially faster than revenue.

Corporate costs still increased. Sales and marketing expense rose to $9.93 million from $7.10 million, while corporate, general and administrative expense increased to $33.08 million from $27.82 million. Nevertheless, total quarterly expenses grew approximately 12.6%, below the 18.3% revenue increase, helping InnovAge return to operating profitability.

The full-year gap between GAAP and adjusted performance remains important. InnovAge reported a fiscal 2026 net loss of $0.68 million but adjusted EBITDA of $94.57 million. The largest listed adjustment was $56.97 million of litigation costs and settlements, including an aggregate $52.4 million of accrued losses for potential resolutions or paid settlements. Fiscal Q4’s corresponding litigation adjustment was substantially smaller at $2.85 million.

Cash Flow and Balance Sheet

InnovAge provided cash-flow data on a full-year rather than quarterly basis. Fiscal 2026 operating cash flow increased approximately 96.9% to $64.71 million from $32.87 million. Purchases of property and equipment totaled $14.31 million, leaving operating cash flow approximately $50.4 million above those capital expenditures.

Working capital contributed materially to the cash-flow improvement. A $38.45 million increase in accounts payable and accrued expenses was a source of operating cash, partly offset by a $6.02 million increase in accounts receivable.

At June 30, 2026, cash and cash equivalents stood at $97.89 million, up from $64.13 million a year earlier, while short-term investments were $43.44 million. Current and long-term debt totaled approximately $48.1 million, down from approximately $59.7 million at the end of fiscal 2025.

Fiscal 2027 Guidance

InnovAge issued new fiscal 2027 guidance calling for continued participant, revenue, and adjusted EBITDA growth. Based on fiscal 2026 actual results, the ranges imply approximately 6.1% to 9.6% revenue growth and 11.0% to 21.6% adjusted EBITDA growth.

The company did not provide GAAP net income guidance or a reconciliation from projected adjusted EBITDA, citing the difficulty of forecasting taxes, acquisition-related expenses, and other exceptional items.

Risks Investors Need to Monitor

• Government reimbursement exposure: InnovAge depends on a limited number of government payors. Funding reductions, legislative changes, or lower PACE reimbursement rates could directly pressure revenue and margins.
• Care-cost risk: Under the company’s capitated model, external provider and care costs can exceed the compensation received. Labor shortages, inflation, tariffs, and supply disruptions could increase this pressure.
• Litigation and regulatory costs: Fiscal 2026 included material litigation-related charges. Additional investigations, settlements, repayment obligations, or penalties could affect GAAP earnings and cash flow.
• Growth execution: Fiscal 2027 guidance depends on higher census and member months. Attracting and retaining participants, licensing new centers, and executing expansion plans remain necessary to reach those ranges.
• Working-capital dependence: The full-year operating cash-flow increase benefited from a $38.45 million rise in accounts payable and accrued expenses, making working-capital movements an important part of future cash-flow analysis.

Summary

InnovAge’s fiscal Q4 2026 combined double-digit revenue growth with wider center-level margins, restoring GAAP operating and net profitability. The PACE business remained the company’s central economic driver, while fiscal 2027 guidance points to further participant and adjusted EBITDA growth. The main follow-up issues are care-cost control, execution against the census range, the cash-flow effect of working capital, and the continuing significance of litigation-related adjustments.