InnovAge Revenue Jumps 11% in Fiscal Q4

Key Points

• Revenue increased 11.0 % from $199.4 million in Q4 FY2024 to $221.4 million in Q4 FY2025.

• EBITDA (non-GAAP) increased 117.3 % from $5.2 million in Q4 FY2024 to $11.3 million in Q4 FY2025, EBITDA margin (non-GAAP) was 5.1 %.

• Net loss per share remained unchanged at $(0.01), as elevated one-time expenses offset strong underlying profitability.

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InnovAge (NASDAQ:INNV), a provider of value-based healthcare programs for seniors through its PACE (Program of All-Inclusive Care for the Elderly) centers, reported results for the fourth quarter of fiscal 2025 on September 9, 2025. The company's core business continued to grow, with strong participant enrollment, a notable increase in revenue, and better operational margins. However, one-time charges led to a net loss for the quarter, keeping the company in the red for the period. Management highlighted that results exceeded earlier revenue and adjusted EBITDA guidance, reflecting both disciplined execution and ongoing business transformation efforts.

What InnovAge Does and Where Its Focus Lies

InnovAge operates the PACE model, a fully-capitated healthcare program for frail seniors who are eligible for both Medicare and Medicaid. Under this system, the company receives fixed payments from government agencies in exchange for taking on comprehensive responsibility for participants' care. This approach aims to improve health outcomes, lower costs, and streamline care between primary, specialist, and at-home services.

Key focuses recently include scaling participant enrollment across a stable base of 20 centers in six states, insourcing more pharmacy operations, and tightening cost controls. Success for InnovAge depends on clinical integration, margin expansion at its care centers, and the company's ability to manage regulatory requirements while delivering on its value-based care promise.

Quarter Highlights: Operations, Financials, and Notable Events

Revenue climbed 11.0 % compared to the prior year period. This result was driven by ongoing participant growth, with year-end enrollment at 7,740, up from 7,020, an increase of about 10.3 %. Nearly all revenue continues to come from capitation arrangements, a type of payment in which InnovAge receives a set amount per person from Medicare and Medicaid, rather than billing for each service provided. This model supports visible, recurring income and allows for more predictable planning and investment.

EBITDA (non-GAAP)—an important measure of profitability before interest, taxes, depreciation, amortization, and certain one-time items—came in at $11.3 million, up from $5.2 million the previous year. Margin on this basis rose to 5.1 % (non-GAAP). Major cost items, including direct care costs, rose in line with ongoing investments in center operations and in-house services such as pharmacy management.

Center-level contribution margin was $41.3 million, up 12.9 % year over year (non-GAAP). Here, "center-level contribution margin" reflects total revenues less external provider costs and cost of care, excluding depreciation and amortization, and includes all medical and pharmacy costs. These improvements track with management's emphasis on clinical integration and efficiency.

Overall net loss was $5.0 million, up from $2.3 million in the prior year period. One-time events weighed heavily on the bottom line, including a $10.1 million litigation settlement accrual, asset impairments (with $13.6 million in charges tied to discontinuing a Kentucky site project), and costs associated with restructuring and business optimization. Excluding these events, core profitability metrics showed clear improvement. INNV does not currently pay a dividend.

Cash and equivalents rose to $64.1 million at quarter-end and Net long-term debt decreased modestly to $57.5 million. Share repurchases totaled $7.3 million. However, total liabilities increased, as did accounts payable and accruals, indicating a need for continued careful balance sheet and liquidity management.

Business Model, Growth, and Strategic Progress

The foundation of InnovAge’s business is its PACE program, a managed-care initiative designed to support dual-eligible seniors with comprehensive medical, social, and long-term care through one network. The program is "fully-capitated," meaning InnovAge receives a fixed monthly payment for each participant, regardless of the amount of care delivered. This system encourages providers to focus on preventative and coordinated care to keep costs down and participants healthy.

The company’s revenue model relies on direct contracts with government payors—Medicare and Medicaid—under what is known as 100% pooled capitation revenue. This structure creates significant visibility into future revenue and reduces the administrative complexity seen in traditional fee-for-service arrangements. This approach helped drive both margin improvement and participant growth within the company’s PACE centers. Center-level margin (non-GAAP) improved as more services—including pharmacy and hospice—were brought in-house, supporting better care coordination and cost management.

Management acknowledged that regular audits and reviews by the Centers for Medicare & Medicaid Services (CMS) and state authorities are ongoing, and these could affect the business if deficiencies are found in the future. During the prior quarter, the company highlighted ongoing state and federal policy reviews as an industry-wide risk and has continued to emphasize regulatory compliance as a business priority.

The company did not provide new data on participant satisfaction for the quarter. The I-SAT NPS score was 56, which compares favorably to a national PACE program average of 55. Management continues to focus on clinical quality, integration, and outcomes, but the absence of updated satisfaction data or explicit improvement plans remains a notable information gap.

Looking Ahead: Guidance and Key Issues to Watch

Management issued total revenue guidance of $900 million to $950 million, representing a projected increase of 5–11 % over the current year's results. Adjusted EBITDA (non-GAAP) is expected between $56 million and $65 million, or growth of 62–89 % compared to FY2025. The participant census is forecast to grow to between 7,900 and 8,100, and member months are anticipated to rise to 91,600–94,400.

As the company works toward these targets, investors will want to monitor cost trends, the scale and frequency of one-time charges, and how successfully center-level margin gains can be maintained. Ongoing regulatory compliance, stability of government payments, and efforts to improve participant satisfaction remain critical watchpoints. Capital returns to shareholders take the form of periodic share repurchases.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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