InnovAge (INNV) Q3 2026 earnings summary

Executive summary

• Fiscal Q3 2026 revenue rose 15.5% to $251.9 million, with participant census reaching approximately 8,050 across 20 centers in six states, maintaining the largest PACE provider status.

• Adjusted EBITDA increased to $30.5 million (12.1% margin), and center-level contribution margin reached $61 million (24.2% of revenue), reflecting improved operating execution and prior investments.

• Net loss widened to $29.9 million from $11.1 million year-over-year, primarily due to increased litigation liability and compliance costs.

• Continued investment in clinical teams, technology (including AI), and new centers, especially in Florida, to support long-term growth and quality improvement.

• Ongoing legal, regulatory, and labor challenges, including civil investigative demands, settlements, and labor shortages, continue to impact expenses and margins.

Financial highlights

• Q3 FY26 revenue was $251.9 million, up 15.5% year-over-year and 5.1% sequentially, driven by higher capitation rates and member month growth.

• Center-level contribution margin rose to $61 million (24.2% of revenue), up from $40.7 million (18.7%) in Q3 FY25.

• Adjusted EBITDA was $30.5 million (12.1% margin), up from $10.8 million (4.9%) in Q3 FY25.

• Net loss for the quarter was $29.9 million, with net loss per share of $0.22 on 135.7 million weighted average shares.

• Cash and equivalents at quarter-end were $95.5 million, with $43.1 million in short-term investments and $69.4 million in total debt.

Outlook and guidance

• Fiscal 2026 revenue guidance raised to $950–$975 million and adjusted EBITDA to $85–$90 million, with participant census expected between 7,900 and 8,100.

• De novo center losses for FY26 anticipated at $11.5–$13.5 million.

• Fiscal 2027 expected to face more modest Medicare and Medicaid rate increases, creating potential top-line and margin pressure.

• Ongoing investments in operational initiatives, compliance, and participant growth and retention.

• Cost pressures from labor market challenges and Medicaid rate constraints, especially in Colorado and California.