INNV — what changed in the latest 10-K

Text added vs the prior filing · source: 10-K · 2026-09-09

• Unsustainable and rising healthcare costs. According to data from the Office of the Actuary of CMS, healthcare spending in the United States grew at approximately 7% per year from 2019 to 2024, and in 2024 represented $5.3 trillion of annual spend, or 18.0% of U.S. GDP. The overall growth rate of he…

• Despite leading the world in healthcare spending, the U.S. continues to lag peer nations on many health outcomes while facing persistent clinician burnout and workforce dissatisfaction.

• Payment structures are evolving to address healthcare issues. Policymakers and healthcare experts generally acknowledge that the fee-for-service model is not designed to deliver on the “triple aim” of providing low-cost, high-

• quality care while improving the patient experience. Historically, healthcare delivery was oriented around reactive care for acute events, which resulted in the development of a fee-for-service payment model. By linking payments to the volume of encounters and pricing for higher complexity intervent…

• We are one of the largest healthcare platforms focused on frail, dual-eligible seniors, serving participants exclusively through our PACE program. We have built the largest PACE-focused operation in the country based on number of participants, with 20 PACE centers across six states; we are 19% large…

Text removed vs the prior filing · source: 10-K · 2025-09-09

• Unsustainable and rising healthcare costs. According to data from the Office of the Actuary of CMS, healthcare spending in the United States grew at approximately 6% per year from 2018 to 2023, and in 2023 represented $4.9 trillion of annual spend, or 17.6% of U.S. GDP. The overall growth rate of he…

• Despite high levels of spending, the U.S. healthcare system struggles to produce better health outcomes and delivers low levels of patient and provider satisfaction.

• Payment structures are evolving to address healthcare issues. Policymakers and healthcare experts generally acknowledge that the fee-for-service model is not designed to deliver on the “triple aim” of providing low-cost, high-quality care while improving the patient experience. Historically, healthc…

• believe it unintentionally creates the opposite result—acute, episodic care delivered in high-cost settings that unnecessarily drive up the total cost of healthcare.

• The COVID-19 pandemic highlighted the need for integrated, multimodal value-based care delivery models. Traditional healthcare providers experienced reduced revenue and strained ability to provide care during shutdowns and restrictions and as a result of general patient fear of medical settings. Pro…

Text added vs the prior filing · source: 10-K · 2026-09-09

• •Our overall business results have been, and we expect will continue, to be impacted by ongoing macroeconomic, geopolitical and industry-related challenges. Macroeconomic and industry challenges, including labor shortages, labor competition, high inflation, and supply chain disruptions as a result o…

• •Under PACE contracts, we assume all of the risk that the cost of providing services will exceed our compensation. Most of our revenue was derived from capitation agreements with government payors in which we receive fixed per member, per month (“PMPM”) fees. To the extent that our participants requ…

• •Our dependence on Medicare and Medicaid exposes us to risks from government funding reductions, legislative changes, including the Reconciliation Act, and federal and state budgetary pressures. A majority of our capitation revenue is derived from a limited number of government payors, particularly …

• •Reductions in PACE reimbursement rates, changes in risk adjustment methodologies or changes in the rules governing PACE programs could have a material adverse effect on our financial condition and results of operations. We receive nearly all of our revenue through the PACE program. As a result, our…

• •We have experienced and expect to continue experiencing increased costs and expenditures in the future. In fiscal year 2026, we continued several initiatives intended to lower our costs and expect to continue making investments in growing our business, including through the implementation of Compan…

Text removed vs the prior filing · source: 10-K · 2025-09-09

• •Our overall business results have been and we expect will continue to be impacted by ongoing macroeconomic and industry-related challenges. Macroeconomic and industry challenges, including labor shortages, labor competition, high inflation, tariffs and trade disputes, have impacted and we expect wi…

• •Under PACE contracts, we assume all of the risk that the cost of providing services will exceed our compensation. Most of our revenue was derived from capitation agreements with government payors in which we receive fixed PMPM fees. To the extent that our participants require more care than anticip…

• •We have experienced and expect to continue experiencing increased costs and expenditures in the future. In fiscal year 2025, we continued several initiatives intended to lower our costs and expect to continue making investments in growing our business, including through the implementation of Compan…

• •Our revenues and operations are dependent upon a limited number of government payors, particularly Medicare and Medicaid. When aggregating the revenue associated with Medicare and Medicaid by state, a majority of our revenue was derived from a limited number of government payors. We expect a majori…

• •Reductions in PACE reimbursement rates or changes in the rules governing PACE programs could have a material adverse effect on our financial condition and results of operations. We receive nearly all of our revenue through the PACE program, which accounted for 99.8% of our revenue for each of the y…

Text added vs the prior filing · source: 10-K · 2026-09-09

• For information regarding our material pending legal proceedings, refer to Note 9 “Commitments and Contingencies” to the consolidated financial statements included in this Annual Report for more information.

Text removed vs the prior filing · source: 10-K · 2025-09-09

• In July 2021, the Company received a civil investigative demand from the Attorney General for the State of Colorado under the Colorado Medicaid False Claims Act. The demand requests information and documents regarding Medicaid billing, patient services and referrals in connection with the Company’s …

• In February 2022, the Company received a civil investigative demand from the Department of Justice (“DOJ”) under the Federal False Claims Act on similar subject matter. The demand requested information and documents regarding audits, billing, orders tracking, and quality and timeliness of patient se…

• December 2022, the Company received a supplemental civil investigative demand requesting supplemental information on the same matters. The Company and the DOJ have begun discussions to understand their respective positions on this matter. At this time, the Company is unable to estimate the possible …

• In October 2024, the Company received a civil investigative demand from the DOJ under the Federal False Claims Act on a similar subject matter. The demand requests information and documents regarding the Company's relationship as a PACE provider with residential care facilities in California, Colora…

• On October 14, 2021, the Company was named as a defendant in a putative class action complaint filed in the District Court for the District of Colorado on behalf of individuals who purchased or acquired shares of the Company’s common stock during a specified period (the “Securities Action”). Through…

Text added vs the prior filing · source: 10-K · 2026-09-09

• At the beginning of fiscal year 2027, to increase operational efficiency, we began the process of converting two legacy PACE centers to alternate care setting (“ACS”) centers in Pennsylvania. Once the process is complete, which we expect to be during the second fiscal quarter, these ACS centers will…

• 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 fo…

• 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 po…

• Increased cost of care and external provider costs. We anticipate increased cost of care from our third-party service providers in an effort to offset their heightened expenses resulting, in part, from budget pressures due to the Reconciliation Act, budget cuts to providers from state Medicaid progr…

• Labor market. Throughout fiscal year 2026, the healthcare sector continued 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 pro…

Text removed vs the prior filing · source: 10-K · 2025-09-09

• 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 fo…

• 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 po…

• Increased cost of care and external provider costs. In fiscal year 2025, we experienced increased cost of care per participant compared to fiscal year 2024, partly as a result of increased salaries, wages and benefits. In fiscal year 2026, we anticipate increased cost of care from our third-party se…

• 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 …

• 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 operationa…

Text added vs the prior filing · source: 10-K · 2026-09-09

• As of June 30, 2026, we had total outstanding borrowings of $48.8 million principal amount under the Term Loan Facility (as defined in Note 7 to the consolidated financial statements included in this Annual Report). As of June 30, 2025,

• we had total outstanding debt of $60.0 million in principal amount under the Term Loan Facility. As of June 30, 2026 and 2025, the interest rate on the Term Loan Facility was 6.13% and 7.18%, respectively.

• We are exposed to changes in interest rates as a result of our variable-rate borrowings under the Credit Agreement. Generally, the Company may designate specific borrowings under the Credit Agreement as either base rate borrowings or Secured Overnight Financing Rate (“SOFR”) borrowings. As of June 3…

• Our cash and cash equivalents and interest payments in respect of our debt are subject to market risk due to changes in interest rates. We had cash and cash equivalents of $97.9 million as of June 30, 2026, which are deposited with high credit quality financial institutions and are primarily in dema…

• We had short-term investments $43.4 million and $41.8 million as of June 30, 2026 and 2025, respectively, which are primarily invested in managed income funds managed by major financial institutions. The funds mainly invest in investment grade, U.S. denominated short-term fixed and floating rate deb…

Text removed vs the prior filing · source: 10-K · 2025-09-09

• As of June 30, 2025, we had total outstanding borrowings of (i) $60.0 million principal amount under the Term Loan Facility (as defined in Note 7 to the consolidated financial statements included in this Annual Report) and (ii) $2.2 million principal amount under the convertible term loan (included …

• We are exposed to changes in interest rates as a result of our variable-rate borrowings under the Credit Agreement. Generally, the Company may designate specific borrowings under the Credit Agreement as either base rate borrowings or Secured Overnight Financing Rate (“SOFR”) borrowings. As of June 3…

• Our cash and cash equivalents and interest payments in respect of our debt are subject to market risk due to changes in interest rates. We had cash and cash equivalents of $64.1 million as of June 30, 2025, which are deposited with high credit quality financial institutions and are primarily in dema…

• We had short-term investments $41.8 million and $45.8 million as of June 30, 2025 and 2024, respectively, which are primarily invested in managed income funds managed by major financial institutions. The funds mainly invest in investment grade, U.S. denominated short-term fixed and floating rate deb…