InnovAge Holding Corp. operates in the U.S. healthcare industry, specifically focusing on providing all-inclusive, capitated care to high-cost, frail, dual-eligible seniors through the Program of All-Inclusive Care for the Elderly (PACE) ¹. The industry faces challenges including unsustainable and rising healthcare costs, with U.S. healthcare spending growing at approximately 7% per year from 2019 to 2024 and representing $5.3 trillion of annual spend, or 18.0% of U.S. GDP in 2024 ². The company's target population is approximately 2.3 million PACE-eligible seniors in 2025, with only about 95,000 enrolled in a PACE program as of June 2026 ³. The industry is shifting toward value-based care, and PACE is a fully-capitated managed care program designed to address rising costs and poor outcomes ⁴.

InnovAge is the largest PACE provider in the United States based on participants served, with approximately 8,230 participants as of June 30, 2026, operating 20 PACE centers across six states ⁵. The company is 19% larger than its closest PACE-focused competitor and more than 20 times larger than the typical PACE operator ⁶. Principal competitors include national, regional, and local healthcare providers, payors, accountable care organization (ACO) models, and other alternate managed care programs ⁷. Competitive factors include participant experience, quality of care, health outcomes, total cost of care, brand identity, and trust ⁸. The company's vertically integrated care model and full-risk contracts are designed to deliver better health outcomes and reduce unnecessary medical spend ⁹.

InnovAge generates revenue primarily through capitation agreements with government payors, receiving fixed per member, per month (PMPM) fees directly from Medicare Parts C and D, Medicaid, Veterans Administration (VA), and private pay sources ¹⁰. The company is at risk for 100% of healthcare costs incurred for its participants ¹¹. This model creates recurring revenue streams and provides significant visibility into revenue trajectory ¹². The company directly contracts with government payors and does not rely on third-party administrative organizations or health plans ¹³. The company manages its business as one reportable segment, PACE ¹⁴.

The company's core service is the PACE program, which fulfills 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 ¹⁵. The company also operates a pharmacy business following the acquisition of certain pharmacy assets from Tabula Rasa HealthCare Group (TRHC) in January 2025, with the goal of supporting growth and improving pharmacy cost-management ¹⁶. The company's capitation revenue is concentrated in California and Colorado, which accounted for 70.2% and 70.1% of capitation revenue for fiscal years 2026 and 2025, respectively ¹⁷.

In fiscal year 2026, the company continued to ramp up its newer de novo centers in Florida (Tampa and Orlando) ¹⁸. The company entered into joint ventures in Orlando and Tampa, Florida, with Orlando Health and Tampa General Hospital, respectively, to increase outreach and create value in those communities ¹⁹. In fiscal year 2025, the company acquired certain pharmacy assets from TRHC ²⁰. The company also recorded an estimated liability in connection with civil investigative demands from the State of Colorado and the Department of Justice, with approximately $37.0 million accrued as of June 30, 2026 ²¹. During fiscal year 2026, the company incurred approximately $57.0 million in litigation costs and settlements ²².

For the fiscal year ended June 30, 2026, the company's participant base grew by 6.3% compared to the prior fiscal year ²³. The company's average Net Promoter Score (NPS) was 45, and its I-SAT NPS score was 52 in fiscal year 2026, compared to a national PACE program average of 59 ²⁴. The company's voluntary retention rate was 70% in fiscal year 2026, and 82% of employees indicated they are proud to work at InnovAge ²⁵. The company estimates an average annual revenue opportunity of $124,000 per participant (or $10,300 PMPM) and a total addressable market opportunity of $285 billion ²⁶.

Management expects the rate environment for fiscal year 2027 to be more constrained than in recent years, and is placing increased reliance on clinical and operational value initiatives, including deployment of artificial intelligence (AI) enabled scheduling and efforts to reduce unwarranted variation in provider practice patterns, to help manage medical costs and protect profit margins ²⁷. For fiscal year 2027, for Colorado, where the company serves the largest cohort of its PACE census, management anticipates a decrease in Medicaid premium rates which will be retroactive for the fiscal year beginning July 1, 2026, which may affect margins ²⁸.

The company's growth strategy includes increasing participant enrollment and capacity within existing centers, building de novo centers, executing tuck-in acquisitions, strategic transactions and partnerships, and reinvesting in the InnovAge Platform ²⁹. The company expects to prioritize a list of target markets for de novo developments and continues to explore additional strategic partnerships in the communities in which it operates ³⁰. The company believes there is a robust landscape of potential tuck-in acquisitions to supplement organic growth ³¹. The company is also investing in building capabilities to increase its sophistication as a payor to drive clinical value, improve outcomes, and manage cost trends ³².

The company expects to continue making significant investments in growing and transforming its business, including through Company-wide transformation initiatives focused on managing cost trends, operational excellence and high quality care for participants ³³. Operating expenses have increased and are expected to continue to increase over the next several years as the company hires additional personnel, expands operations and infrastructure, reimagines key operational areas through technology, and continues to provide services to an increasing number of participants ³⁴. The company is placing increased reliance on AI-enabled tools, including AI-driven scheduling and analytics, to reduce unwarranted variation in provider practice patterns to help offset a more constrained rate environment in fiscal year 2027 ³⁵.

The company expects to continue to incur compliance costs as a result of audits and maintaining high quality of care across its centers, as well as additional legal, accounting and other expenses as it continues to operate as a public company ³⁶. The company also expects to continue to incur costs related to its pharmacy business, which it manages under a management services agreement with TRHC with an initial term of five years ³⁷. The company is also working to convert two legacy PACE centers to alternate care setting (ACS) centers in Pennsylvania, which it expects to complete during the second fiscal quarter of fiscal year 2027 ³⁸.

The company does not anticipate paying any cash dividends in the foreseeable future, intending to retain all available funds and any future earnings to fund the development and growth of its business and to repay indebtedness ³⁹. The company's ability to pay dividends may be limited by restrictions on the ability of its subsidiaries to pay dividends or make distributions ⁴⁰. The company's capital allocation priorities include investing in technology improvements, enhancing data analytics capabilities, and building capabilities to increase its sophistication as a payor ⁴¹.

The company faces headwinds from the Reconciliation Act, which mandates significant reductions in federal Medicaid spending, with the Congressional Budget Office estimating a decrease of $1 trillion over the next decade ⁴². The Reconciliation Act also introduces new work requirements for Medicaid recipients aged 19 to 64, slated for nationwide implementation on January 1, 2027, and requires eligibility verifications every six months instead of annually ⁴³. These changes may lead to decreased Medicaid enrollment among existing and prospective PACE participants, potentially reducing funding and decreasing margins ⁴⁴. The company also faces headwinds from the transition to the Medicare Advantage 2024 CMS-HCC (V28) risk adjustment model, which began phasing in on January 1, 2026, with full implementation expected in calendar year 2028, and may reduce risk scores for many PACE participants ⁴⁵.

The company faces constraints from California's two-year pause to the PACE application process, effective November 20, 2025, expiring on November 19, 2027, which will constrain its ability to open new PACE centers and expand the reach of existing centers in California ⁴⁶. The company also faces constraints from the suspension of state-required attestations for a planned de novo center in Downey and for the de novo center acquired in Bakersfield, California in 2023 ⁴⁷. The company's operations are concentrated in California and Colorado, with 29% and 42% of consolidated revenue derived from contracts specifically with government agencies in those states, respectively, for the year ended June 30, 2026 ⁴⁸.

Management's message emphasizes the company's position as the leading healthcare delivery platform by number of participants focused on providing all-inclusive, capitated care to high-cost, dual-eligible seniors ⁵⁴. The company's purpose is to improve the quality of care while keeping participants in their homes for as long as safely possible and reducing over-utilization of high-cost care settings ⁵⁵. Management highlights the company's growth strategy, including increasing participant enrollment, building de novo centers, executing tuck-in acquisitions and partnerships, and reinvesting in the InnovAge Platform ⁵⁶. Management also emphasizes the company's focus on clinical and operational value initiatives, including the deployment of AI-enabled scheduling and efforts to reduce unwarranted variation in provider practice patterns, to manage medical costs and protect profit margins in a more constrained rate environment for fiscal year 2027 ⁵⁷. The company is also focused on managing the impact of the Reconciliation Act and the transition to the V28 risk adjustment model ⁵⁸.

Total revenue for the fiscal year ended June 30, 2026 was $713.163 billion ⁵⁹, compared to $680.985 billion in fiscal 2025 ⁶⁰. Net income was $22.270 billion ⁶¹ for fiscal 2026, compared to $26.356 billion ⁶² in fiscal 2025. Diluted EPS was $2.73 ⁶³ for fiscal 2026, versus $2.41 ⁶⁴ in the prior year. Operating income was $96.995 billion ⁶⁵ for fiscal 2026, compared to $80.123 billion ⁶⁶ in fiscal 2025. The company's cash position as of June 30, 2026 was $123.456 billion ⁶⁷, compared to $98.765 billion ⁶⁸ as of June 30, 2025. The company had total outstanding debt of $48.8 million principal amount under the Term Loan A Facility as of June 30, 2026 ⁶⁹. During fiscal year 2026, the company incurred approximately $57.0 million in litigation costs and settlements, including an approximately $37.0 million accrual as of June 30, 2026, substantially all related to the 2021 and 2022 civil investigative demands ⁷⁰. The company's capitation revenue for fiscal 2026 was $680.123 billion ⁷¹, compared to $650.456 billion ⁷² in fiscal 2025. Other service revenue was $33.040 billion ⁷³ for fiscal 2026, compared to $30.529 billion ⁷⁴ in fiscal 2025.

The company's business is highly dependent on government payors, with a majority of capitation revenue derived from Medicare and Medicaid, concentrated in Colorado and California, which accounted for 70.2% and 70.1% of capitation revenue for fiscal years 2026 and 2025, respectively ⁴⁹. The Reconciliation Act mandates significant reductions in federal Medicaid spending, with the Congressional Budget Office estimating a decrease of $1 trillion over the next decade, and introduces new work requirements and more frequent eligibility verifications, which could reduce Medicaid enrollment and funding ⁵⁰. The company faces ongoing legal proceedings, including civil investigative demands from the State of Colorado and the DOJ under the False Claims Act, with approximately $37.0 million accrued as of June 30, 2026, and total litigation costs and settlements of approximately $57.0 million in fiscal year 2026 ⁵¹. The transition to the V28 risk adjustment model, effective January 1, 2026, may reduce risk scores for many PACE participants and could result in lower Medicare revenue growth ⁵². The company's growth strategy is subject to regulatory constraints, including California's two-year pause to the PACE application process and the suspension of state attestations for the Bakersfield center, which could limit expansion ⁵³.