In its latest financial results, InnovAge Holding Corp (NASDAQ: INNV) reported a robust revenue increase of 11% in the fourth quarter of fiscal year 2025, amounting to $221.4 million, compared to the same period last year. The quarterly center level contribution margin reached $41.3 million, reflecting an 18.6% margin, while adjusted EBITDA improved significantly to $11.3 million, a 5.1% margin that marks a notable enhancement from prior year figures.
For the entire fiscal year 2025, InnovAge reported total revenues of $853.7 million, an uptick of nearly 1% year-over-year. The center level contribution for FY 2025 stood at $153.6 million, maintaining an 18% margin, while adjusted EBITDA soared to $34.5 million, surpassing the company’s guidance of $31 million. This resulted in an adjusted EBITDA margin of approximately 4%, nearly doubling from 2.2% in FY 2024.
However, the year also saw a net loss of $35.3 million, wider than the $23.2 million net loss reported in FY 2024. On a per-share basis, the net loss was $0.22 compared to $0.16 the previous year. The company also faced greater de novo losses, totaling $15.4 million compared to $12 million in FY 2024, attributed primarily to the establishment of new centers in Florida.
On the balance sheet, InnovAge ended the fiscal year with cash and equivalents totaling $64.1 million, combined with $41.8 million in short-term investments. The company carried total debt of $72.8 million.
Looking ahead, InnovAge has issued revenue guidance for FY 2026, estimating between $900 million to $950 million, with adjusted EBITDA anticipated to range from $56 million to $65 million. De novo losses for the upcoming fiscal year are forecasted to be between $13.4 million to $15.4 million.
In a recent earnings call, CEO Patrick Blair addressed queries regarding the impact of member mix on margins and cost trends. He indicated that the company’s member pool has stabilized since sanctions were lifted, with an emphasis on community-based care over nursing home placements. While this rebalance aids in achieving targets, it has negatively affected risk scores, thereby impacting revenue.
CFO Benjamin Adams discussed the forthcoming transition to the B-28 Medicare Advantage payment model, identifying it as a potential headwind for revenue growth over the next few years. Nevertheless, the management team is actively planning to mitigate these impacts in future years.
The outlook on EBITDA margins remains optimistic, with Blair highlighting that improvement is driven by growth initiatives, clinical value projects, and operational efficiencies. The integration of pharmacy services is reportedly giving the company better control over costs, contributing positively to expected margin growth over the coming years.
In response to a query about efficiencies through technological partnerships, Blair mentioned exploring AI-driven tools to enhance operational outcomes. Collaborations with technology providers like Epic and Salesforce are part of a strategy to streamline processes and improve clinical care.
Blair also acknowledged concerns over Medicaid redeterminations impacting growth in census and member progression, particularly in the first half of FY 2026. The company is implementing new processes to efficiently identify participants who may lose Medicaid coverage, but he remained confident in their overall gross enrollment trends and strategic efforts to bolster EBITDA in the face of these challenges.
For a comprehensive review, please refer to the full earnings call transcript.
