Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2021 | May 10, 2021 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2021 | |
Entity File Number | 001-40159 | |
Entity Registrant Name | InnovAge Holding Corp. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-0710819 | |
Entity Address State Or Province | CO | |
Entity Address, Address Line One | 8950 E. Lowry Boulevard | |
Entity Address, City or Town | Denver | |
Entity Address, Postal Zip Code | 80230 | |
City Area Code | 844 | |
Local Phone Number | 803-8745 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | INNV | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 135,516,513 | |
Entity Central Index Key | 0001834376 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 201,527 | $ 112,904 |
Restricted cash | 2,236 | 1,661 |
Accounts receivable, net of allowance ($7,741 - March 31, 2021 and $6,384 - June 30, 2020) | 44,356 | 46,312 |
Prepaid expenses and other | 3,626 | 4,311 |
Income tax receivable | 131 | 1,743 |
Total current assets | 251,876 | 166,931 |
Noncurrent Assets | ||
Property and equipment, net | 141,515 | 102,494 |
Investments | 2,645 | 2,645 |
Deposits and other | 3,611 | 3,003 |
Equity method investments | 848 | 13,245 |
Goodwill | 124,217 | 116,139 |
Other intangible assets, net | 6,683 | 5,177 |
Total noncurrent assets | 279,519 | 242,703 |
Total assets | 531,395 | 409,634 |
Current Liabilities | ||
Accounts payable and accrued expenses | 33,223 | 28,875 |
Reported and estimated claims | 30,735 | 30,291 |
Due to Medicaid and Medicare | 25,054 | 12,244 |
Current portion of long-term debt | 2,852 | 1,938 |
Current portion of capital lease obligations | 2,121 | 1,496 |
Contingent consideration | 1,789 | |
Total current liabilities | 93,985 | 76,633 |
Noncurrent Liabilities | ||
Deferred tax liability, net | 5,817 | 9,282 |
Capital lease obligations | 5,727 | 4,091 |
Other non-current liabilities | 2,390 | 1,446 |
Long-term debt, net of debt issuance costs | 72,415 | 210,432 |
Total liabilities | 180,334 | 301,884 |
Commitments and Contingencies (See Note 10) | ||
Stockholders' Equity | ||
Common stock, $0.001 par value, 500,000,000 authorized as of March 31, 2021 and June 30, 2020; 135,516,513 and 132,718,461 issued shares as of March 31, 2021 and June 30, 2020, respectively; | 136 | 133 |
Additional paid-in capital | 323,127 | 36,338 |
Retained earnings | 4,820 | 64,737 |
Less: Treasury stock (0 and 102,030 shares of common stock at $0.0 and $1.89 per share as of March 31, 2021 and June 30, 2020, respectively) | (193) | |
Total InnovAge Holding Corp. | 328,083 | 101,015 |
Noncontrolling interests | 22,978 | 6,735 |
Total stockholders' equity | 351,061 | 107,750 |
Total liabilities and stockholders' equity | $ 531,395 | $ 409,634 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Jun. 30, 2020 | |
Condensed Consolidated Balance Sheets | ||
Allowance for loss | $ 7,741 | $ 6,384 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock issued (in shares) | 135,516,513 | 132,718,461 |
Treasury stock (in shares) | 0 | 102,030 |
Treasury stock cost per share (in dollars per share) | $ 0 | $ 1.89 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | ||||
Total revenues | $ 156,308 | $ 144,770 | $ 466,184 | $ 414,700 |
Expenses | ||||
External provider costs | 75,389 | 71,022 | 224,215 | 204,387 |
Cost of care, excluding depreciation and amortization | 39,565 | 39,285 | 115,922 | 114,465 |
Sales and marketing | 5,592 | 4,628 | 14,335 | 14,405 |
Corporate, general and administrative | 18,595 | 14,028 | 105,901 | 42,417 |
Depreciation and amortization | 3,311 | 2,769 | 9,262 | 8,310 |
Equity loss | 163 | 1,343 | 203 | |
Other operating expenses (income) | 19,222 | (99) | 18,211 | (250) |
Total expenses | 161,674 | 131,796 | 489,189 | 383,937 |
Operating Income (Loss) | (5,366) | 12,974 | (23,005) | 30,763 |
Other Income (Expense) | ||||
Interest expense, net | (4,876) | (2,361) | (17,061) | (11,287) |
Loss on extinguishment of debt | (13,488) | (14,479) | ||
Gain on equity method investment | 10,871 | 10,871 | ||
Other income (expense) | (2,267) | 244 | (2,222) | (735) |
Total other expense | (9,760) | (2,117) | (22,891) | (12,022) |
Income (Loss) Before Income Taxes | (15,126) | 10,857 | (45,896) | 18,741 |
Provision (Benefit) for Income Taxes | (4,264) | 2,867 | 5,159 | 4,954 |
Net Income (Loss) | (10,862) | 7,990 | (51,055) | 13,787 |
Less: net loss attributable to noncontrolling interests | (352) | (148) | (595) | (394) |
Net Income (Loss) Attributable to InnovAge Holding Corp. | $ (10,510) | $ 8,138 | $ (50,460) | $ 14,181 |
Weighted-average number of common shares outstanding - basic | 121,324,980 | 132,616,431 | 119,619,806 | 132,616,431 |
Weighted-average number of common shares outstanding - diluted | 121,324,980 | 134,368,002 | 119,619,806 | 133,792,985 |
Net income (loss) per share - basic | $ (0.09) | $ 0.06 | $ (0.42) | $ 0.11 |
Net income (loss) per share - diluted | $ (0.09) | $ 0.06 | $ (0.42) | $ 0.11 |
Capitation revenue | ||||
Revenues | ||||
Total revenues | $ 155,835 | $ 144,174 | $ 464,294 | $ 412,724 |
Other service revenue | ||||
Revenues | ||||
Total revenues | $ 473 | $ 596 | $ 1,890 | $ 1,976 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Noncontrolling Interests | Total |
Balances, Beginning at Jun. 30, 2019 | $ 133 | $ 35,795 | $ 38,459 | $ (193) | $ 7,248 | $ 81,442 |
Balances, Beginning (in shares) at Jun. 30, 2019 | 132,718,461 | 102,030 | ||||
Stock-based compensation | 407 | 407 | ||||
Net income (loss) | 14,181 | (394) | 13,787 | |||
Balances, Ending at Mar. 31, 2020 | $ 133 | 36,202 | 52,640 | $ (193) | 6,854 | 95,636 |
Balances, Ending (in shares) at Mar. 31, 2020 | 132,718,461 | 102,030 | ||||
Balances, Beginning at Dec. 31, 2019 | $ 133 | 36,067 | 44,502 | $ (193) | 7,002 | 87,511 |
Balances, Beginning (in shares) at Dec. 31, 2019 | 132,718,461 | 102,030 | ||||
Stock-based compensation | 135 | 135 | ||||
Net income (loss) | 8,138 | (148) | 7,990 | |||
Balances, Ending at Mar. 31, 2020 | $ 133 | 36,202 | 52,640 | $ (193) | 6,854 | 95,636 |
Balances, Ending (in shares) at Mar. 31, 2020 | 132,718,461 | 102,030 | ||||
Balances, Beginning at Jun. 30, 2020 | $ 133 | 36,338 | 64,737 | $ (193) | 6,735 | 107,750 |
Balances, Beginning (in shares) at Jun. 30, 2020 | 132,718,461 | 102,030 | ||||
Treasury stock transaction | $ (77,603) | (77,603) | ||||
Treasury stock transaction (in shares) | 16,095,819 | |||||
Treasury stock retirement | $ (16) | (77,780) | $ 77,796 | |||
Treasury stock retirement (in shares) | (16,197,849) | (16,197,849) | ||||
Stock Option Cancellation, Value | (9,457) | (9,457) | ||||
Time based awards- option cancelation | (32,358) | (32,358) | ||||
Stock-based compensation | 1,102 | 1,102 | ||||
Reclassification of warrant liability | 2,264 | 2,264 | ||||
Capital Contributions | 20,000 | 20,000 | ||||
Initial public offering of common stock | $ 19 | 373,561 | 373,580 | |||
Initial public offering of common stock (in shares) | 18,995,901 | |||||
Consolidation of equity method investment | 16,838 | 16,838 | ||||
Net income (loss) | (50,460) | (595) | (51,055) | |||
Balances, Ending at Mar. 31, 2021 | $ 136 | 323,127 | 4,820 | 22,978 | 351,061 | |
Balances, Ending (in shares) at Mar. 31, 2021 | 135,516,513 | |||||
Balances, Beginning at Dec. 31, 2020 | $ 133 | 24,552 | 15,330 | $ (77,796) | 6,492 | (31,289) |
Balances, Beginning (in shares) at Dec. 31, 2020 | 132,718,461 | 16,197,849 | ||||
Treasury stock retirement | $ (16) | (77,780) | $ 77,796 | |||
Treasury stock retirement (in shares) | (16,197,849) | (16,197,849) | ||||
Stock-based compensation | 530 | 530 | ||||
Reclassification of warrant liability | 2,264 | 2,264 | ||||
Initial public offering of common stock | $ 19 | 373,561 | 373,580 | |||
Initial public offering of common stock (in shares) | 18,995,901 | |||||
Consolidation of equity method investment | 16,838 | 16,838 | ||||
Net income (loss) | (10,510) | (352) | (10,862) | |||
Balances, Ending at Mar. 31, 2021 | $ 136 | $ 323,127 | $ 4,820 | $ 22,978 | $ 351,061 | |
Balances, Ending (in shares) at Mar. 31, 2021 | 135,516,513 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands | Jul. 27, 2020 | Mar. 31, 2021 | Mar. 31, 2021 |
Condensed Consolidated Statements of Shareholders' Equity | |||
Payments of Stock Issuance Costs | $ 22,600 | $ 25,334 | $ 25,334 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Operating Activities | ||
Net income (loss) | $ (51,055) | $ 13,787 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Loss (gain) on disposal of assets | 2 | 1,021 |
Provision for uncollectible accounts | 4,144 | 3,909 |
Depreciation and amortization | 9,262 | 8,310 |
Gain on consolidation | (10,871) | |
Loss on extinguishment of long-term debt | 8,494 | |
Amortization of deferred financing costs | 948 | 412 |
Stock based compensation | 1,102 | 407 |
Change in fair value of warrants | 2,264 | |
Deferred income taxes | (3,464) | 313 |
Equity loss | 1,343 | 203 |
Change in fair value of contingent consideration | (250) | |
Changes in operating assets and liabilities, net of acquisitions | ||
Accounts receivable, net | (1,402) | (6,929) |
Prepaid expenses and other | 635 | 274 |
Income taxes receivable | 1,613 | 2,562 |
Deposits and other | (606) | 689 |
Accounts payable and accrued expenses | 7,717 | 1,372 |
Reported and estimated claims | 114 | (816) |
Due to Medicaid and Medicare | 12,732 | (5,245) |
Deferred revenue | 2 | |
Net cash provided by (used in) operating activities | (17,028) | 20,021 |
Investing Activities | ||
Purchases of property and equipment | (14,083) | (9,088) |
Proceeds from the sale of equipment | 169 | |
Proceeds from net working capital settlements | 1,129 | |
Purchase of intangible assets | (2,000) | |
Net cash used in investing activities | (16,083) | (7,790) |
Financing Activities | ||
Distribution to owners | (9,458) | |
Owner contributions | 20,000 | |
Payments on capital lease obligations | (1,685) | (850) |
Proceeds from long-term debt | 375,000 | 25,000 |
Principal payments on long-term debt | (512,649) | (1,447) |
Payment of debt issuance costs | (8,896) | |
Proceeds from initial public offering of common stock | 373,580 | |
Treasury stock purchase | (77,603) | |
Payments Under Acquisition Agreement | (3,622) | |
Payments related to option cancelation | (32,358) | |
Net cash provided by financing activities | 122,309 | 22,703 |
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS & RESTRICTED CASH | 89,198 | 34,934 |
CASH, CASH EQUIVALENTS & RESTRICTED CASH BEGINNING OF PERIOD | 114,565 | 61,196 |
CASH, CASH EQUIVALENTS & RESTRICTED CASH END OF PERIOD | 203,763 | 96,130 |
Supplemental Cash Flows Information | ||
Interest paid | 16,251 | 10,330 |
Income taxes paid | 7,047 | 2,080 |
Prepayment penalty on extinguishment of debt | 6,000 | |
Property and equipment included in accounts payable | 224 | |
Property and equipment purchased under capital leases | $ 3,517 | $ 1,115 |
Business
Business | 9 Months Ended |
Mar. 31, 2021 | |
Business | |
Business | Note 1: Business InnovAge Holding Corp. (formerly, TCO Group Holdings, Inc.) and certain wholly owned subsidiaries were formed as for-profit corporations effective May 13, 2016, for the purpose of purchasing all the outstanding common stock of Total Community Options, Inc. d/b/a InnovAge, which was formed in May 2007. In connection with this purchase, Total Community Options, Inc. and certain of its subsidiaries converted from not-for-profit organizations to for-profit corporations, and Total Community Options Foundation, Inc. (“Foundation”) and Johnson Adult Day Program, Inc. (“Johnson”), both not-for-profit organizations, separated from Total Community Options, Inc. In connection with the initial public offering, which occurred in March 2021, we changed the name of our company from TCO Group Holdings, Inc. to InnovAge Holding Corp. InnovAge Holding Corp. and its subsidiaries, which are headquartered in Denver, Colorado and employ approximately 2,100 people, have a strong record of innovation, quality, and sensitivity to the needs of participants and staff. The Company manages, and in many cases directly provides, a broad range of medical and ancillary services for seniors in need of care and support to safely live independently in their homes and communities, 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 the Program of All-Inclusive Care for the Elderly (“PACE”) center and third-party medical appointments; and care management. The Company manages its business as one reportable segment, PACE. The Company serves approximately 6,700 PACE participants, making it the largest PACE provider in the United States of America (the “U.S.”) based upon participants served, and operates eighteen PACE centers across Colorado, California, New Mexico, Pennsylvania and Virginia. PACE is a fully-capitated managed care program, which serves the frail elderly, and predominantly dual-eligible, population in a community-based service model. InnovAge is obligated to provide and participants receive all needed healthcare services through an all-inclusive, coordinated model of care, and the Company is at risk for 100% of healthcare costs incurred with respect to the care of its participants. PACE programs receive capitation payments directly from Medicare Parts C and D, Medicaid, Veterans Administration (“VA”), and private pay sources. Additionally, under the Medicare Prescription Drug Plan, the Centers for Medicare and Medicaid Services (“CMS”) share part of the risk for providing prescription medication to the Company’s participants. On March 3, 2021, the Company’s Registration Statement on Form S-1 with respect to the Company’s initial public offering (“IPO”) of shares of common stock, par value $0.001 per share, was declared effective by the Securities and Exchange Commission (“SEC”). The Company’s common stock began trading on March 3, 2021 on the Nasdaq Stock Market LLC (“NASDAQ”) under the ticker symbol “INNV”. On March 8, 2021, we completed our IPO in which we issued and sold 16,666,667 shares of our common stock at an offering price of $21.00 per share. In addition, the underwriters had the option to purchase 2,500,000 additional shares of common stock, and on March 9, 2021, the underwriters exercised the option to purchase 2,329,234 shares of common stock. We received net proceeds of $373.6 million, after deducting underwriting discounts and commissions of $23.9 million and deferred offering costs of $1.4 million. Deferred, direct offering costs were capitalized and consisted of fees and expenses incurred in connection with the sale of our common stock in the IPO, including the legal, accounting, printing and other offering related costs. Upon completion of the IPO, these deferred offering costs were reclassified from current assets to stockholders’ equity and recorded against the net proceeds from the offering. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2: The Company described its significant accounting policies in Note 2 of the notes to consolidated financial statements for the year ended June 30, 2020, which were included in the IPO Prospectus. During the nine months ended March 31, 2021, there were no significant changes to those accounting policies. Those policies impacted by the new accounting pronouncements adopted during the period are further described below in “Recent Accounting Pronouncements.” Basis of Preparation and Principles of Consolidation The unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such regulations. These financial statements have been prepared on a basis consistent with the accounting principles applied for the fiscal year ended June 30, 2020. In the opinion of management, all adjustments (consisting of all normal and recurring adjustments) considered necessary for a fair presentation have been included. The consolidated financial statements include the accounts of InnovAge, its wholly owned subsidiaries, and variable interest entities (“VIEs”) for which it is the primary beneficiary and entities for which it has a controlling interest. All intercompany accounts and transactions have been eliminated in consolidation. The Company does not have any components of comprehensive income and comprehensive income is equal to net income reported in the statements of operations for all periods presented. Property and Equipment Property and equipment were comprised of the following as of March 31, 2021 and June 30, 2020: Estimated (In thousands) Useful Lives March 31, 2021 June 30, 2020 Land N/A $ 11,980 $ 8,580 Buildings and leasehold improvements 10 - 40 years or term of lease 104,727 79,514 Software 3 - 5 years 12,355 11,387 Equipment and vehicles 3 - 7 years 35,201 28,814 Construction in progress N/A 19,257 7,069 183,520 135,364 Less accumulated depreciation and amortization (42,005) (32,870) Total property and equipment, net $ 141,515 $ 102,494 Depreciation of $8.8 million and $7.8 million was recorded during the nine months ended March 31, 2021 and 2020, respectively. Revenue Recognition The Company’s PACE operating unit provides comprehensive health care services to participants on the basis of fixed or capitated fees per participant that are paid monthly by Medicare, Medicaid, the VA, and private pay sources. Medicaid and Medicare capitation revenues are based on per-member, per-month capitation rates under the PACE program. Capitation payments are recognized as revenue in the period in which they relate. Capitation payments received for PACE participants under Medicare Advantage plans are subject to retroactive premium risk adjustments based upon various factors. The Company estimates the amount of current-year adjustments in revenues. Any corresponding retroactive adjustments by CMS are recorded as final settlements are determined. Capitation revenues may be subject to adjustment as a result of examination by government agencies or contractors. The audit process and the resolution of significant related matters as a result of these examinations often are not finalized until several years after the services are rendered. Any adjustments resulting from these examinations are recorded in the period the Company is notified of them. At times, the Company accepts participants into the program pending final authorization from Medicaid. If Medicaid coverage is later denied and there are no alternative resources available to pay for services, the participant is disenrolled. Any costs incurred on behalf of these participants were nominal for the nine months ended March 31, 2021 and 2020. Capitated revenues consisted of the following sources for the nine months ended: March 31, March 31, 2021 2020 Medicaid 53 % 56 % Medicare 46 % 43 % Private pay and other 1 % 1 % Total 100 % 100 % The Company also provides prescription drug benefits in accordance with Medicare Part D. Monthly payments received from CMS and the participants represent the bid amount for providing prescription drug coverage. The portion received from CMS is subject to risk sharing through Medicare Part D risk-sharing corridor provisions. These risk-sharing corridor provisions compare costs targeted in the Company’s bid to actual prescription drug costs. The Company estimates and records a monthly adjustment to Medicare Part D revenues associated with these risk-sharing corridor provisions. Laws and regulations governing the Medicare and Medicaid programs are complex and subject to change, as well as government review. Failure to comply with these laws can expose the entity to significant regulatory action, including fines, penalties, and exclusion from the Medicare and Medicaid programs. Coronavirus Pandemic (“COVID-19”) In March 2020, the World Health Organization declared COVID-19 a pandemic. The global spread of COVID-19 has created significant volatility, uncertainty, and economic disruption. Governments in affected regions have implemented, and may continue to implement, safety precautions which include quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures as they deem necessary. Many organizations and individuals, including the Company and its employees, continue to take additional steps to avoid or reduce infection, including limiting travel and working from home. These measures are disrupting normal business operations both in and outside of affected areas and have had significant negative impacts on businesses worldwide. As a PACE company, we have been and will continue to be impacted by the effects of COVID-19; however, we remain committed to carrying out our mission of caring for our participants. We continue to closely monitor the impact of COVID-19 on all aspects of our business, including the impacts to our employees, participants and suppliers; however, at this time, we are unable to estimate the ultimate impact the pandemic will have on our consolidated financial condition, results of operations or cash flows. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into legislation. The CARES Act provides for $100.0 billion to healthcare providers, including hospitals on the front lines of the COVID-19 pandemic. Under the CARES Act, the state of Pennsylvania signed into law the Act 24 of 2020, which allocates $10.0 million of funding from the federal CARES Act to managed long term care organizations. Funding from the Act 24 of 2020 must be used to cover necessary COVID-19 related costs incurred between March 1, 2020 and November 30, 2020 for entities in operation as of March 31, 2020. We received $2.0 million in funding under the Act 24 of 2020. Of this amount, $1.0 million was allocated to InnovAge centers in Pennsylvania and $0.7 million was recognized as of June 20, 2020. The remaining unrecognized balance of $0.3 million was recognized during the nine months ended March 31, 2021 as a reduction of expense within the consolidated statement of operations. The CARES Act also provides for the temporary suspension of the automatic 2% reduction of Medicare claim reimbursements (sequestration) for the period of May 1, 2020 through December 31, 2021. Recent Accounting Pronouncements Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09 Revenue from Contracts with Customers Leases In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”) which outlines a comprehensive lease accounting model and supersedes the current lease guidance. The new guidance requires lessees to recognize almost all of their leases on the balance sheet by recording a lease liability and corresponding right-of-use assets for all leases with lease terms greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. As per the latest ASU 2020-05 issued by FASB, the entities who have not yet issued or made available for issuance the financial statements as of June 3, 2020 can defer the new guidance for one year. The Company will be adopting this guidance for the annual reporting period beginning July 1, 2022, and interim reporting periods within the annual reporting period beginning July 1, 2023. This will require application of the new accounting guidance at the beginning of the earliest comparative period presented in the year of adoption. The Company is in the process of evaluating the impact that the pronouncement will have on the consolidated financial statements. Financial Instruments In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which requires entities to use a current expected credit loss (“CECL”) model to measure impairment for most financial assets that are not recorded at fair value through net income. Under the CECL model, an entity will estimate lifetime expected credit losses considering available relevant information about historical events, current conditions and supportable forecasts. The CECL model does not apply to available-for-sale debt securities. This guidance also expands the required credit loss disclosures and will be applied using a modified retrospective approach by recording a cumulative effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company will adopt this guidance for the annual and interim reporting periods beginning July 1, 2023. The Company has not determined the effect of the standard on its ongoing financial reporting. In June 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (“Subtopic 470-20”) and Derivatives and Hedging – Contracts in Entity’s Own Equity (“Subtopic 815-40”). This ASU amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. These amendments seek to remove certain requirements from the settlement guidance and clarify scope requirements. The ASU is effective for public companies for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company will adopt this guidance for the annual and interim reporting periods beginning July 1, 2021. The Company has not determined the effect of the standard on its ongoing financial reporting. Non-employee awards In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements. |
Equity
Equity | 9 Months Ended |
Mar. 31, 2021 | |
Equity | |
Equity | Note 3: Equity owner transaction On July 27, 2020, InnovAge Holding Corp. (formerly TCO Group Holdings, Inc.), Ignite Aggregator LP (“Purchaser”), and the former equity holders of InnovAge Holding Corp. (“Sellers”) entered into a Securities Purchase Agreement (the “Agreement”), effective July 27, 2020. Under the terms of the Agreement, the Sellers sold a portion of their equity interest to the Purchaser. The Purchaser and the Sellers then contributed their equity interests in the Company to a newly formed limited partnership, TCO Group Holdings, L.P. (the “LP”) resulting in the Company being wholly owned by the LP. Concurrently with the entry into the Agreement, the Company amended and restated its 2016 Credit Agreement (as defined below), see Note 8 for further discussion. A portion of the proceeds from the 2016 Credit Agreement were used by the Company to repurchase 16,095,819 shares of its common stock for $77.6 million from certain members of management, including certain members of the Board of Directors, and certain members of our equity partner. The common stock was then recognized as Treasury stock. The Treasury stock was retired in March 2021, see Note 14. Additionally, as part of the Agreement, the Company executed an Option Cancellation Agreement (the “Cancellation Agreement”), which canceled the Company’s common stock option awards of 16,994,975 granted under the 2016 Incentive Plan for $74.6 million. Such cancellation resulted in a settlement of the awards. Vesting of the contingent performance-based awards was not deemed probable at the time of the settlement resulting in the settlement of the contingent performance-based awards being recorded as Corporate, general and administrative. Vesting of the time vesting awards was deemed probable at the time of the settlement resulting in a portion of the settlement of the time vesting awards being recorded as Corporate, general and administrative expense and the remainder being recorded as a reduction to Additional paid-in capital. Of the total settlement, $42.2 million was recorded as Corporate, general and administrative expense and $32.4 million was recorded as a reduction to Additional paid-in capital. The Cancellation Agreement resulted in the option holders receiving the same amount of cash that they would have received had they exercised their options, participated in the repurchase described above and sold their remaining shares. As part of the transaction, the Company incurred $22.6 million in transaction costs, of which $13.1 million was recognized as Corporate, general and administrative expense and $9.5 million was recognized as a distribution to owner as the costs were paid on behalf of the owners. Capital Contribution On October 15, 2020 Finback Pace, LP contributed $20.0 million for an investment in the LP, which in turn contributed the funds to the Company. |
Variable Interest Entity
Variable Interest Entity | 9 Months Ended |
Mar. 31, 2021 | |
Variable Interest Entity | |
Variable Interest Entity | Note 4: The Company’s operations also include a Senior Housing unit that primarily includes the accounts of Continental Community Housing (“CCH”), the general partner of Pinewood Lodge, LLP (“ PWD”); a 0.01% partnership interest each in PWD and InnovAge Senior Housing Thornton, LLC (“ SH1 PWD is a VIE, but the Company is not the primary beneficiary. The Company does not have the power to direct the activities that most significantly impact the economic performance of PWD. Accordingly, the Company does not consolidate PWD. PWD is accounted for using the equity method of accounting and is recorded in Equity method investments in the accompanying consolidated balance sheets. The equity earnings of PWD are insignificant. The balance of the Company’s investment in PWD is $0.8 million which represents the maximum exposure to loss. SH1 is a VIE. The Company is the primary beneficiary of SH1 and consolidates SH1. The Company is the primary beneficiary of SH1 as it has the power to direct the activities that are most significant to SH1 and has an obligation to absorb losses or the right to receive benefits from SH1. The most significant activity of SH1 is the operation of the housing facility. The Company has provided a subordinated loan to SH1 and has provided a guarantee for a convertible term loan held by SH1. The following table shows the assets and liabilities of SH1 as of March 31, 2021 and June 30, 2020: In thousands (000’s) March 31, June 30, Assets/Liabilities 2021 2020 Cash and cash equivalents $ 498 $ 435 Accounts receivable 3 1 Prepaid expenses and other 13 7 Property, plant and equipment, net 10,143 10,501 Deposits and other, net 386 376 Accounts payable and accrued expenses 279 199 Current portion long-term debt 39 38 Noncurrent liabilities 454 454 Long-term debt, net of debt issuance costs 3,838 3,901 |
Nonconsolidated Entities
Nonconsolidated Entities | 9 Months Ended |
Mar. 31, 2021 | |
Nonconsolidated Entities | |
Nonconsolidated Entities | Note 5: Prior to January 1, 2021, the Company had two nonconsolidated equity method investments, PWD, see Note 4 for further discussion, and InnovAge California Pace-Sacramento, LLC (“InnovAge Sacramento”). On March 18, 2019, in connection with the formation of InnovAge Sacramento, the joint venture with Adventist Health System/West (“Adventist”) and Eskaton Properties, Incorporated (“Eskaton”), the Company contributed $9.0 million in cash and land valued at $4.2 million for a 59.9% membership interest in the joint venture, InnovAge Sacramento. Further, Adventist contributed $5.8 million in cash and Eskaton contributed $3.0 million in cash for membership interests of 26.41% and 13.69%, respectively. The Company made an additional contribution of $52,000 dollars to obtain an additional 0.1% membership interest in the joint venture. With the acquisition of the additional 0.1% membership interest, the Company obtained control of InnovAge Sacramento effective January 1, 2021. Accordingly, beginning January 1, 2021, the results of InnovAge Sacramento are included in our consolidated results of operations. The InnovAge California PACE-Sacramento LLC Limited Liability Company Agreement (the “JV Agreement”) includes numerous provisions whereby, if certain conditions are met, the joint venture may be required to purchase, at fair market value, certain members’ interests or certain members’ may be required to purchase, at fair market value, the interests of certain other members. As of March 31, 2021, none of the conditions specified in the JV Agreement had been met. At the consummation of the JV Agreement, the Company issued warrants (the “Sacramento Warrants”) to purchase 5% of its issued and outstanding common stock to Adventist Health System/West at a par value of $0.001 per share and an exercise price equal to the fair market value per share at the time of exercise of this warrant. The Sacramento Warrants fully vest on the exercise date, which is defined as the date on which Adventist has made aggregate capital contributions in an amount greater than $25.0 million to one or more joint venture entities in which Adventist and the Company hold equity (the “Investment Threshold”). On February 9, 2021, we entered into an amendment agreement with our joint venture partner Adventist to amend the Sacramento Warrants. The amendment removes the Investment Threshold requirement and grants Adventist the right to purchase up to $15.0 million of our common stock at an exercise price equal to the initial public offering price. The warrant is exercisable for one year beginning on the date of the consummation of the IPO. As of March 31, 2021, Adventist had not exercised any warrants. At inception, the Sacramento Warrants were initially determined to be equity-based payments to nonemployees and as such the measurement date for these warrants was considered to be the date when the Investment Threshold is reached. At the time of the amendment, due to the removal of the Investment Threshold, the warrants were evaluated under ASC 815-40, Contracts in an Entity’s Own Equity We obtained control of InnovAge Sacramento through acquisition of an additional 0.1% membership interest, which we consider to be a step acquisition, whereby the Company remeasured the previously held equity method investment to fair value. This resulted in a gain on consolidation of $10.9 million, which is recorded in gain on equity method investment in the condensed consolidated statement of operations. The fair value of the previously held equity investments was determined using a discounted cash flow model. We accounted for the transaction as a business combination, which requires that we record the assets acquired and liabilities assumed at fair value. The amount by which the purchase price exceeds the fair value of the net assets acquired is recorded as goodwill. January 1, (In thousands) 2021 Assets: Cash $ 646 Accounts receivable 786 Property and equipment, net 30,667 Goodwill 8,078 Total assets 40,177 Liabilities: Accounts payable 530 Reported and estimated claims 330 Due to Medicaid and Medicare 77 Capital leases 428 Other liabilities 48 Total liabilities $ 1,413 The following table sets forth the results of InnovAge Sacramento for the six months ended December 31, 2020. The results of InnovAge Sacramento are consolidated beginning January 1, 2021. Six Months Ended (In thousands) December 31, 2020 Revenue: Total revenue $ 2,297 Less: members’ interest 921 The Company’s interest 1,376 Cost of operations: Total cost of operations 4,538 Less: members’ interest 1,820 The Company’s interest 2,718 The Company’s interest in net income (loss) $ (1,342) The overall operations for InnovAge Sacramento were insignificant during the three and nine months ended March 31, 2021. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Mar. 31, 2021 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | Note 6: Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $124.2 million at March 31, 2021 and $116.1 million as of June 30, 2020. The increase of $8.1 million resulted from the consolidation of InnovAge Sacramento beginning on January 1, 2021. Pursuant to ASC 350, “Intangibles – Goodwill and Other,” we review the recoverability of goodwill annually as of April 1 or whenever significant events or changes occur which might impair the recovery of recorded amounts. For purposes of the annual goodwill impairment assessment, the Company has identified three reporting units. There were no indicators of impairment identified and no goodwill impairments recorded during the nine months ended March 31, 2021 and 2020. The Company has Other intangible assets, net that are both definite and indefinite lived. Other intangible assets that are definite-lived are amortized over their useful lives. Other intangible assets that are definite-lived amounted to $6.6 million at both March 31, 2021 and June 30, 2020 and associated accumulated amortization amounted to $1.9 million and $1.4 million at March 31, 2021 and June 30, 2020, respectively. The Company recorded amortization expense of $0.2 and $0.5 million for both the three and nine months ended March 31, 2021 and 2020, respectively. On October 20, 2020, the Company paid $2.0 million for the right to serve PACE members in Florida, which was recognized within the consolidated balance sheet as Other intangible assets, net and are indefinite-lived. We review the recoverability of other intangible assets in conjunction with long-lived assets whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. There were no intangible asset impairments recorded during the nine months ended March 31, 2021 and 2020. |
Leases
Leases | 9 Months Ended |
Mar. 31, 2021 | |
Leases | |
Leases | Note 7: Property and equipment includes property under various capital leases. These leases have expiration dates ranging from January 2021 to September 2025, varying interest rates, and generally include an option to purchase the equipment at fair value at the end of the underlying lease period. The Company’s capital leases included the following at March 31, 2021 and June 30, 2020: In thousands (000’s) March 31, 2021 June 30, 2020 Equipment $ 13,777 $ 9,845 Less accumulated depreciation (6,848) (4,829) Balance as of end of period $ 6,929 $ 5,016 Certain of the Company’s property and equipment is leased under operating leases. Total rental expense under operating leases was $1.4 million and $3.5 million for the three and nine months ended March 31, 2021, respectively, and $1.5 million and $3.8 million for the three and nine months ended March 31, 2020, respectively. Future minimum lease payments for fiscal years beginning with remainder of fiscal year 2021 for capital leases having initial terms of more than one year and noncancelable operating leases were as follows: Operating Leases Capital Leases Minimum Lease (In thousands) Obligations Payments Amount remaining in 2021 $ 713 $ 866 2022 2,527 4,138 2023 2,468 4,410 2024 1,941 4,052 2025 1,169 3,592 Thereafter 144 13,704 Total 8,962 $ 30,762 Less amount representing interest 1,114 Total minimum lease payments 7,848 Less current maturities 2,121 Noncurrent maturities $ 5,727 |
Long Term Debt
Long Term Debt | 9 Months Ended |
Mar. 31, 2021 | |
Long Term Debt | |
Long Term Debt | Note 8. Long Term Debt Long-term debt consisted of the following at March 31, 2021 and June 30, 2020: In thousands (000’s) March 31, 2021 June 30, 2020 Senior secured borrowings: Senior secured term loan $ 75,000 $ 187,625 Revolving credit facility — 25,000 Convertible term loan 2,377 2,401 Total debt 77,377 215,026 Less unamortized debt issuance costs 2,110 2,656 Less current maturities 2,852 1,938 Long-term debt, net of debt issuance costs $ 72,415 $ 210,432 The Company originally entered into a senior secured borrowing agreement (the “2016 Credit Agreement”) on May 13, 2016, that consisted of a senior secured term loan for $75.0 million and a revolving credit facility for $20.0 million. The 2016 Credit Agreement was subsequently amended on May 2, 2019 to increase the senior secured term loan to $190.0 million and a revolving credit facility for $30.0 million and a delayed draw term loan facility (“DDTL”) for $45.0 million. The senior secured term loan and the DDTL had a maturity date of May 2, 2025, and the revolving credit facility had a maturity date of May 2, 2024. On July 27, 2020, the Company amended and restated the 2016 Credit Agreement once again to increase the senior secured term loan to $300.0 million, the revolving credit facility to $40.0 million and to terminate The structure of the amendment to the 2016 Credit Agreement as amended on July 27, 2020 led to an extinguishment of debt for certain lenders and a modification of debt for other lenders. The total debt structure extinguishment for certain lenders was $57.1 million which led to the write off of $1.0 million in debt issuance costs which was recorded in loss on extinguishment of debt for the nine months ended March 31, 2021. The total debt structure that was modified was $250.0 million, while the new debt issued was $50.0 million, which resulted in $9.1 million of debt issuance costs being capitalized. On March 8, 2021, concurrently with the closing of the IPO, the Company entered into a new credit agreement (the “2021 Credit Agreement”) that replaced the 2016 Credit Agreement. The 2021 Credit Agreement consists of a senior secured term loan of $75.0 million and a revolving credit facility of $100.0 million. The maturity date of the revolving credit facility is March 8, 2026 and of the senior secured term loan, March 8, 2026. The 2021 Credit Agreement includes a more lose set of covenants compared to the 2016 Credit Agreement. Loans under the 2021 Credit Agreement are secured by substantially all of the Company’s assets. Principal on the senior secured term loan is paid each calendar quarter beginning September 2021 in an amount equal to 1.25% of the initial term loan on closing date. Proceeds of the new senior secured loan, together with proceeds from the IPO, were used to repay amounts outstanding under the 2016 Credit Agreement. The structure of the 2021 Credit Agreement led to a 2.0% prepayment fee as the cancellation of the 2016 Credit Agreement occurred prior to the first anniversary of the July 27, 2020 amendment of the 2016 Credit Agreement, an extinguishment of debt for certain lenders, and a modification of debt for other lenders. The total prepayment fee was $6.0 million and is recorded in loss on extinguishment of debt in the consolidated statements of operations. The total debt structure extinguishment for certain lenders was $250.0 million which led to the write off of $7.5 million in debt issuance costs which was recorded in loss on extinguishment of debt for the three months ended March 31, 2021. The total debt structure that was modified was $25.0 million related to each of the term loan and the revolver, while the new debt issued was $50.0 million related to the term loan and $75.0 million related to the revolver. This resulted in $2.1 million of debt issuance costs being capitalized. Any outstanding principal amounts under the 2021 Credit Agreement accrue interest at a variable interest rate. As of March 31, 2021, the interest rate on the senior secured term loan was 1.94%. At June 30, 2020 the interest rate on the senior secured term loan under the 2016 Credit Agreement was 6.0%. Prior to the entry into the 2021 Credit Agreement, the revolving credit facility fee accrued at 0.5%. Under the terms of the 2021 Credit Agreement, the revolving credit facility fee accrues at 0.25% of the average daily unused amount and is paid quarterly. There is also an immaterial administrative fee. During fiscal year 2020, the Company borrowed $25.0 million under the revolving credit facility at an interest rate of 3.94%, to ensure sufficient funds available during the unknown time of the COVID-19 pandemic and for general corporate purposes. The Company repaid all outstanding amounts on the revolving credit facility and as of March 31, 2021 had no outstanding borrowings. The remaining capacity under the revolving credit facility as of March 31, 2021 is $100.0 million. The 2021 Credit Agreement requires the Company to meet certain operational and reporting requirements, including, but not limited to, defined leverage and fixed-charge coverage ratios. Additionally, annual capital expenditures and permitted investments, including acquisitions, are limited to amounts specified in the Credit Agreement. The 2021 Credit Agreement also provides certain restrictions on dividend payments and other equity transactions and requires the Company to make prepayments under specified circumstances. The Company was in compliance with the covenants of the 2021 Credit Agreement and the 2016 Credit Agreement as of March 31, 2021 and June 30, 2020, respectively. The deferred financing costs of $2.1 million are amortized over the term of the underlying debt and unamortized amounts have been offset against long-term debt in the consolidated balance sheets. Total deferred financing costs were $0.9 million and $0.4 million for the nine months ended March 31, 2021 and 2020, respectively. On June 29, 2015, SH1 entered into a convertible term. Monthly principal and interest payments of $0.02 million commenced on September 1, 2015, and the loan bears interest at an annual rate of 6.68%. The remaining principal balance is due upon maturity, which is August 20, 2030. The loan is secured by a deed of trust to Public Trustee, assignment of leases and rents, security agreements, and SH1’s fixture filing. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Mar. 31, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | Note 9: Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants, at the measurement date. A fair value hierarchy was established that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources outside the reporting entity. Unobservable inputs are inputs that reflect the Company’s own assumptions based on market data and assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The sensitivity to changes in inputs and their impact on fair value measurements can be significant. The three levels of inputs that may be used to measure fair value are: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date Level 2 Quoted prices in markets that are not active or inputs that are observable, either directly or indirectly, for substantially the full term of the assets or liabilities Level 3 Unobservable inputs to the valuation techniques that are significant to the fair value measurements of the assets or liabilities Recurring Measurements Effective August 7, 2018, the Company finalized the acquisition of New Courtland LIFE Program (“New Courtland”) in Pennsylvania. The Company paid a base purchase price of $30.0 million, subject to certain net working capital and closing adjustments plus contingent consideration of up to $20.0 million. Such contingent consideration will be paid over a specified period if certain conditions outlined in the Securities Purchase Agreement are met. These conditions are based upon the performance of the PACE centers acquired in the New Courtland acquisition for the two fiscal years following the acquisition, as well as potential payments to be made in the event of the Company being acquired, selling substantially all of its assets, or selling equity securities pursuant to an effective registration statement under the Securities Act of 1933. If all of the contingent consideration of $20.0 million is paid, the lease payments in certain real estate leases between the Company and New Courtland are reduced from their current amounts and allow the Company to exercise its option to purchase the leased buildings at fair market value, after the initial term of the lease. On March 8, 2021, we completed our IPO, which satisfied the condition that the Company sell equity securities pursuant to an effective registration statement. Accordingly, $20.0 million of contingent consideration was paid under the terms of the Securities Purchase Agreement. Changes in fair value resulted in immaterial amounts recorded in other operating (income) expense within the consolidated statement of for the nine months ended March 31, 2021 and 2020, respectively. There were no transfers in and out of Level 3 during the nine months ended March 31, 2021 and 2020. The Company’s policy is to recognize transfers as of the actual date of the event or change in circumstances. Nonrecurring Measurements In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets and liabilities at fair value on a nonrecurring basis. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges that are required by U.S. GAAP. No such amounts were recorded during the nine months ended March 31, 2021 and 2020, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 10: Commitments and Contingencies Professional Liability The Company pays fixed premiums for annual professional liability insurance coverage under a claims-made policy. Under such policy, only claims made and reported to the insurer are covered during the policy term, regardless of when the incident giving rise to the claim occurred. The Company records claim liabilities and expected recoveries, if any, at gross amounts. The Company is not currently aware of any unasserted claims or unreported incidents that are expected to exceed medical malpractice insurance coverage limits. Litigation From time to time, in the normal course of business, the Company is involved in or subject to legal proceedings related to its business. The Company regularly evaluates the status of claims and legal proceedings in which it is involved in order to assess whether a loss is probable or there is a reasonable possibility that a loss may have been incurred, and to determine if accruals are appropriate. In the opinion of management, none of the claims and suits, either individually or in the aggregate, are reasonably likely to have a material adverse effect on the Company's operations or consolidated financial statements. |
Retirement Plans
Retirement Plans | 9 Months Ended |
Mar. 31, 2021 | |
Retirement Plans | |
Retirement Plans | Note 11: The Company offers its eligible employees a 401(k) Retirement Savings Plan (the “Plan”). The Company matches 50% of the employee contribution up to 4% of the employee’s compensation. Matching contributions were $0.4 million and $1.3 million for the three and nine months ended March 31, 2021, respectively, and $0.4 million and $1.3 million for the three and nine months ended March 31, 2020, respectively. Effective January 1, 2016, InnovAge established a 409(a) Deferred Compensation Plan for key employees. Matching contributions were $0.1 million for both the three and nine months ended March 31, 2021 and zero and $0.1 million for the three and nine months ended March 31, 2020, respectively. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Mar. 31, 2021 | |
Stock-based Compensation | |
Stock-based Compensation | Note 12: 2016 Equity Incentive Plan The Company maintained the 2016 Equity Incentive Plan (the “2016 Incentive Plan”) pursuant to which various stock-based awards may be granted to employees, directors, consultants, and advisers. The total number of shares of the Company’s common stock that is authorized under the 2016 Equity Incentive Plan was 17,836,636. As of June 30, 2020 a total of 16,994,976 awards had been granted. The 2016 Incentive Plan provided for the following general vesting terms: (a) Half vested over time (“Time Vesting Awards”). Awards vested on the first anniversary of the grant date in the range of 25% to 62.5% , and the remaining awards that vested over time vest ratably on a semiannual basis thereafter through the fourth anniversary of the grant date. (b) Half vested upon the attainment of certain performance-based criteria measured at the time the Company experiences a liquidity event, as defined by the 2016 Incentive Plan (“Contingent Performance-Based Awards”). Stock options were exercisable over a period of time not to exceed 10 years from the date of grant. Cancellation of Stock Option Awards Under 2016 Equity Incentive Plan On July 27, 2020, TCO Group Holdings, Inc., Ignite Aggregator LP, and the equity holders of TCO Group Holdings, Inc. entered into a Securities Purchase Agreement, effective July 27, 2020. In addition, the Company amended and restated the 2016 Credit Agreement. A portion of the proceeds from the 2016 Credit Agreement were used by the Company to repurchase 16,095,819 shares of its common stock from the certain members of management, the Board of Directors, and members of our equity partner. Additionally, as part of the Agreement, the Company executed the Cancellation Agreement which canceled the Company’s 16,994,976 common stock options which were granted under the 2016 Incentive Plan. The Cancellation Agreement resulted in the option holders receiving the same amount of cash that they would have received had they exercised their options, participated in the repurchase described above and sold their remaining shares. A summary of the stock option activity for the nine months ended March 31, 2021, was as follows: Time Vesting Awards Weighted- Average Number of Option Average Remaining Options Price Range Exercise Price Term (in years) Outstanding balance, June 30, 2020 8,497,488 $ 1.00 - $ 2.35 1.26 6.76 Canceled (8,497,488) $ 1.00 - $ 2.35 1.26 6.76 Outstanding balance, March 31, 2021 — Contingent Performance-based Awards Weighted-Average Number of Weighted-Average Remaining Options Exercise Price Term (in years) Outstanding balance, June 30, 2020 8,497,488 $ 0.78 6.76 Canceled (8,497,488) $ 0.78 6.76 Outstanding balance, March 31, 2021 — Profits Interests The LP maintains the 2020 Equity Incentive Plan (the “2020 Incentive Plan”), pursuant to which interests in the LP in the form of Class B Units (profits interests) may be granted to employees, directors, consultants, and advisers. A maximum number of 16,162,177 Class B Units are authorized for grant under the 2020 Incentive Plan. As of March 31, 2021, a total of 13,009,137 profits interests units have been granted. These profits interests represented profits interest ownership in the LP tied solely to the accretion, if any, in the value of the LP following the date of issuance of such profits interests. Profits interests participated in any increase of LP value related to their profits interests after the hurdle value had been achieved and the LP profits interests received the agreed-upon return on their invested capital. The Company granted 13,009,137 and zero profits interests units during the nine months ended March 31, 2021 and 2020, respectively. Each profits interests unit contains the following material terms: (i) The profits interests receive distributions (other than tax distributions) only upon a liquidity event, as defined, that exceed a threshold equivalent to the fair value of the LP, as determined by the Company’s Board of Directors, at the grant date. (ii) A portion of the units vest over a period of continuous employment or service (service-vesting units) while the other portion of the units only vest based on the level of aggregate multiple of invested capital and internal rate of return achieved by Ignite Aggregator upon a change of control of the Company, (performance-vesting units). The performance-vesting units are subject to a market condition, which the Company incorporated as part of its determination of the grant date fair value of the units. For performance-vesting units, the Company recognizes unit-based compensation expense when it was probable that the performance condition would be achieved. The Company will analyze if a performance condition was probable for each reporting period through the settlement date for units subject to performance vesting. For service-vesting units, the Company will recognize unit-based compensation expense over the requisite service period for each separately vested portion of the profits interests as if the unit was, in-substance, multiple units. The hurdle value per unit is $5.49 for both the performance-vesting and service-vesting units. The Company uses the Monte Carlo option model to determine the fair value of the granted profits interests units. The stock price is based on the price realized in the equity owner transaction. Expected stock price volatility is based on consideration of indications observed from several publicly traded peer companies. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the unit. The dividend yield percentage is zero because the Company neither currently pays dividends nor intends to do so during the expected term. The expected term of the units represents the time the units are expected to be outstanding. The following is a summary of profits interests transactions and number of units outstanding: Time Vesting Units Weighted- Number of Average Units Grant Date FV Outstanding balance, June 30, 2020 — Granted 6,686,568 1.28 Forfeited (99,307) 1.17 Outstanding balance, March 31, 2021 6,587,261 $ 1.28 Performance-Vesting Units Weighted- Number of Average Units Grant Date FV Outstanding balance, June 30, 2020 — Granted 6,322,569 $ 0.57 Forfeited (99,307) 0.44 Outstanding balance, March 31, 2021 6,223,262 $ 0.57 The fair value of the profits interests units granted during the nine months ended March 31, 2021 under the 2020 Incentive Plan, was based upon a Monte Carlo option pricing model using the assumptions in the following table (presented on a weighted average basis): 2021 Expected volatility 44 % Expected life (years) – Time vesting units 1.8 Interest rate 0.16 % Dividend yield 0 % Weighted-average fair values $ 1.28 Fair value of underlying stock $ 5.49 The total unrecognized compensation cost related to all profits interests units outstanding was $11.1 million. The unrecognized compensation cost related to the Time Vesting Units was $7.5 million and is expected to be recognized over a weighted-average period of 3.5 years. The unrecognized compensation cost related to the Performance-Vesting Units was $3.6 million and will be recorded when it is probable that the performance-based criteria will be met. Compensation Expense The Company recognizes stock-based compensation expense on a straight-line basis over the vesting period and includes such charges in employee benefits in the consolidated statements of operations. Three Months Ended Nine Months Ended March 31, March 31, (In thousands) 2021 2020 2021 2020 Stock options $ — $ 135 $ 45,387 $ 407 Profits interest units 530 — 1,102 — Total share-based compensation expense $ 530 $ 135 $ 46,489 $ 407 |
Earnings per Share
Earnings per Share | 9 Months Ended |
Mar. 31, 2021 | |
Earnings per Share | |
Earnings per Share | Note 13: Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding options, using the treasury stock method and the average market price of the Company’s common stock during the applicable period. When a loss from continuing operations exists, all dilutive securities and potentially dilutive securities are anti-dilutive and are therefore excluded from the computation of diluted earnings per share. When net income from continuing operations exists, performance-based units, are omitted from the calculation of diluted EPS until it is determined that the performance criteria has been met at the end of the reporting period. The following table sets forth the computation of basic and diluted net loss per common share: Three Months Ended March 31, Nine Months Ended March 31, (In thousands, except share values) 2021 2020 2021 2020 Net income (loss) attributable to InnovAge Holding Corp. $ (10,510) $ 8,138 $ (50,460) $ 14,181 Weighted average common shares outstanding (basic) 121,324,980 132,616,431 119,619,806 132,616,431 EPS (basic) $ (0.09) $ 0.06 $ (0.42) $ 0.11 Dilutive shares — 1,751,571 — 1,176,554 Weighted average common shares outstanding (diluted) 121,324,980 134,368,002 119,619,806 133,792,985 EPS (diluted) $ (0.09) $ 0.06 $ (0.42) $ 0.11 |
Treasury Stock
Treasury Stock | 9 Months Ended |
Mar. 31, 2021 | |
Treasury Stock. | |
Treasury Stock | Note 14: On July 27, 2020, as a part of the amendment and restatement of the 2016 Credit Agreement, a portion of the proceeds were used by the Company to repurchase 16,095,819 shares of its common stock from certain members of management, our Board of Directors and our equity partner, at $4.82 per share. As a result of the repurchase, $77.6 million was recorded as Treasury stock, see Note 3 for further discussion. In March 2021, the Company retired all outstanding shares of Treasury stock and at March 31, 2021 there were no shares of treasury stock outstanding. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Taxes | |
Income Taxes | Note 15: Income Taxes The Company recorded an income tax benefit of $(4.3) million and a tax provision of $2.9 million for the three months ended March 31, 2021 and 2020, respectively. The Company recorded an income tax provision of $5.2 million and $5.0 million for the nine months ended March 31, 2021 and 2020, respectively. This represents an effective tax rate of 28.2% and 26.4% for the three months ended March 31, 2021 and 2020, respectively. This represents an effective tax rate of (11.2)% and (26.4)% for the nine months ended March 31, 2021 and 2020, respectively. The effective rate for the nine months ended March 31, 2021 was different from the federal statutory rate primarily due to disallowed officers’ compensation under Internal Revenue Code (“IRC”) Section 162(m), lobbying expenses, transaction costs, and payments of contingent consideration which occurred during the nine month period. The Company assesses the valuation allowance recorded against deferred tax assets at each reporting date. The determination of whether a valuation allowance for deferred tax assets is appropriate requires the evaluation of positive and negative evidence that can be objectively verified. Consideration must be given to all sources of taxable income available to realize deferred tax assets, including, as applicable, the future reversal of existing temporary differences, future taxable income forecasts exclusive of the reversal of temporary differences and carryforwards, taxable income in carryback years and tax planning strategies. In estimating income taxes, the Company assesses the relative merits and risks of the appropriate income tax treatment of transactions taking into account statutory, judicial, and regulatory guidance. As of the nine-month period ended March 31, 2021, the Company has determined that it is not “more likely than not” that the deferred tax assets associated with certain state net operating losses will be realized and as such continues to maintain a valuation allowance against these state deferred tax assets. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of the employer portion of social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitation and technical corrections to tax depreciation methods for qualified improvement property. The Company continues to examine the impacts that the CARES Act may have on its business. While several of these provisions may impact the Company, there have not been any significant impacts noted through March 31, 2021. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Mar. 31, 2021 | |
Segment Reporting | |
Segment Reporting | Note 16: The Company applies ASC Topic 280, "Segment Reporting," which establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about operations, major customers and the geographies in which the entity holds material assets and reports revenue. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the Company’s chief executive officer, who is the chief operating decision maker (“CODM”), and for which discrete financial information is available. The Company has determined that it has five operating segments, three of which are related to the Company’s PACE offering. The PACE-related operating segments are based on three geographic divisions, which are West, Central, and East. Due to the similar economic characteristics, nature of services, and customers, we have aggregated our West, Central, and East operating segments into one reportable segment for PACE. The company’s remaining two operating segments relate to Homecare and Senior Housing, which are immaterial operating segments, and are shown below as "Other" along with certain corporate unallocated expenses. The Company serves approximately 6,700 PACE participants, making it the largest PACE provider in the U.S. based upon participants served, and operates eighteen PACE centers across Colorado, California, New Mexico, Pennsylvania and Virginia. PACE, an alternative to nursing homes, is a managed care, capitated program, which serves the frail elderly in a community-based service model. Participants receive all medical services through a comprehensive, consolidated model of care. Capitation payments are received from Medicare parts C and D; Medicaid; VA, and private pay sources. The Company is at risk for all health and allied care costs incurred with respect to the care of its participants, although it does negotiate discounted rates with its provider network consisting of hospitals, nursing homes, assisted living facilities, and medical specialists. Additionally, under the Medicare Prescription Drug Plan, the CMS share part of the risk for providing prescription medication to the Company’s participants. The Company evaluates performance and allocates capital resources to each segment based on an operating model that is designed to maximize the quality of care provided and profitability. The Company does not review assets by segment and therefore assets by segment are not disclosed below. For the periods presented, all of the Company’s long-lived assets were located in the U.S. and all revenue was earned in the U.S. The Company’s management uses Center-level Contribution Margin as the measure for assessing performance of its segments. Center-level Contribution Margin is defined as total segment revenues less external provider costs and cost of care (excluding depreciation and amortization). The Company allocates corporate level expenses to its segments with a majority of the allocation going to the PACE segment. The following table summarizes the operating results regularly provided to the CODM by reportable segment for the three months ended: March 31, 2021 March 31, 2020 (In thousands) PACE All other (1) Totals PACE All other (1) Totals Capitation revenue $ 155,835 $ — $ 155,835 $ 144,174 $ — $ 144,174 Other service revenue (47) 520 473 (56) 652 596 Total revenues 155,788 520 156,308 144,118 652 144,770 External provider costs 75,389 — 75,389 71,022 — 71,022 Cost of care, excluding depreciation and amortization 38,867 698 39,565 38,559 726 39,285 Center-Level Contribution Margin 41,532 (178) 41,354 34,537 (74) 34,463 Overhead costs (2) 24,217 (30) 24,187 18,614 42 18,656 Depreciation and amortization 3,181 130 3,311 2,619 150 2,769 Equity loss — — — 163 — 163 Other operating (income) expense 19,222 — 19,222 (99) — (99) Interest expense, net 4,824 52 4,876 2,317 44 2,361 Loss on extinguishment of debt 13,488 — 13,488 — — — Gain on equity method investment (10,871) — (10,871) — — — Other expense (income) 2,267 — 2,267 (244) — (244) Income (Loss) Before Income Taxes $ (14,796) $ (330) $ (15,126) $ 11,167 $ (310) $ 10,857 The following table summarizes the operating results regularly provided to the CODM by reportable segment for the nine months ended: March 31, 2021 March 31, 2020 (In thousands) PACE All other (1) Totals PACE All other (1) Totals Capitation revenue $ 464,294 $ — $ 464,294 $ 412,724 $ — $ 412,724 Other service revenue 213 1,677 1,890 (1,112) 3,088 1,976 Total revenues 464,507 1,677 466,184 411,612 3,088 414,700 External provider costs 224,215 — 224,215 204,387 — 204,387 Cost of care, excluding depreciation and amortization 113,611 2,311 115,922 111,021 3,444 114,465 Center-Level Contribution Margin 126,681 (634) 126,047 96,204 (356) 95,848 Overhead costs (2) 120,249 (13) 120,236 56,846 (24) 56,822 Depreciation and amortization 8,901 361 9,262 7,525 785 8,310 Equity loss 1,343 — 1,343 201 2 203 Other operating (income) expense 18,211 — 18,211 (252) 2 (250) Interest expense, net 16,919 142 17,061 11,025 262 11,287 Loss on extinguishment of debt 14,479 — 14,479 — — — Gain on equity method investment (10,871) — (10,871) — — — Other expense (income) 2,222 — 2,222 673 62 735 Income (Loss) Before Income Taxes $ (44,772) $ (1,124) $ (45,896) $ 20,186 $ (1,445) $ 18,741 (1) Center-level Contribution Margin from segments below the quantitative thresholds are attributable to two operating segments of the Company. Those segments consist of Homecare and Senior Housing. Neither of those segments has ever met any of the quantitative thresholds for determining reportable segments. (2) Overhead consists of the Sales and marketing and Corporate, general and administrative financial statement line items. |
Related-party
Related-party | 9 Months Ended |
Mar. 31, 2021 | |
Related-party | |
Related-party | Note 17: Pursuant to the PWD Amended and Restated Agreement of Limited Partnership, the general partner, who is a subsidiary of the Company (the “General Partner”), helped fund operating deficits and shortfalls of PWD in the form of a loan. At March 31, 2021 and June 30, 2020, $0.7 million and $0.6 million, respectively, was recorded in Deposits and other. Additionally, the general partner is paid an administration fee of $35,000 per year. In accordance with the Management Service Agreement between the Company and the joint venture partner, the Company is responsible for the daily operations of the joint venture InnovAge Sacramento. For the six months ended December 31, 2020, the Company generated $0.3 million in management fee revenue, which was recorded in other service revenue. For the three months ended March 31, 2021, management fee revenue was eliminated in consolidation as the results of InnovAge Sacramento are consolidated effective January 1, 2021. Management fee revenue was insignificant during the nine months ended March 31, 2020. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Mar. 31, 2021 | |
Subsequent Events | |
Subsequent Events | Note 18: Subsequent Events The Company has evaluated subsequent events through May 11, 2021, the date on which the consolidated financial statements were issued. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Preparation and Principles of Consolidation | Basis of Preparation and Principles of Consolidation The unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such regulations. These financial statements have been prepared on a basis consistent with the accounting principles applied for the fiscal year ended June 30, 2020. In the opinion of management, all adjustments (consisting of all normal and recurring adjustments) considered necessary for a fair presentation have been included. The consolidated financial statements include the accounts of InnovAge, its wholly owned subsidiaries, and variable interest entities (“VIEs”) for which it is the primary beneficiary and entities for which it has a controlling interest. All intercompany accounts and transactions have been eliminated in consolidation. The Company does not have any components of comprehensive income and comprehensive income is equal to net income reported in the statements of operations for all periods presented. |
Property and Equipment | Property and Equipment Property and equipment were comprised of the following as of March 31, 2021 and June 30, 2020: Estimated (In thousands) Useful Lives March 31, 2021 June 30, 2020 Land N/A $ 11,980 $ 8,580 Buildings and leasehold improvements 10 - 40 years or term of lease 104,727 79,514 Software 3 - 5 years 12,355 11,387 Equipment and vehicles 3 - 7 years 35,201 28,814 Construction in progress N/A 19,257 7,069 183,520 135,364 Less accumulated depreciation and amortization (42,005) (32,870) Total property and equipment, net $ 141,515 $ 102,494 Depreciation of $8.8 million and $7.8 million was recorded during the nine months ended March 31, 2021 and 2020, respectively. |
Revenue Recognition | Revenue Recognition The Company’s PACE operating unit provides comprehensive health care services to participants on the basis of fixed or capitated fees per participant that are paid monthly by Medicare, Medicaid, the VA, and private pay sources. Medicaid and Medicare capitation revenues are based on per-member, per-month capitation rates under the PACE program. Capitation payments are recognized as revenue in the period in which they relate. Capitation payments received for PACE participants under Medicare Advantage plans are subject to retroactive premium risk adjustments based upon various factors. The Company estimates the amount of current-year adjustments in revenues. Any corresponding retroactive adjustments by CMS are recorded as final settlements are determined. Capitation revenues may be subject to adjustment as a result of examination by government agencies or contractors. The audit process and the resolution of significant related matters as a result of these examinations often are not finalized until several years after the services are rendered. Any adjustments resulting from these examinations are recorded in the period the Company is notified of them. At times, the Company accepts participants into the program pending final authorization from Medicaid. If Medicaid coverage is later denied and there are no alternative resources available to pay for services, the participant is disenrolled. Any costs incurred on behalf of these participants were nominal for the nine months ended March 31, 2021 and 2020. Capitated revenues consisted of the following sources for the nine months ended: March 31, March 31, 2021 2020 Medicaid 53 % 56 % Medicare 46 % 43 % Private pay and other 1 % 1 % Total 100 % 100 % The Company also provides prescription drug benefits in accordance with Medicare Part D. Monthly payments received from CMS and the participants represent the bid amount for providing prescription drug coverage. The portion received from CMS is subject to risk sharing through Medicare Part D risk-sharing corridor provisions. These risk-sharing corridor provisions compare costs targeted in the Company’s bid to actual prescription drug costs. The Company estimates and records a monthly adjustment to Medicare Part D revenues associated with these risk-sharing corridor provisions. Laws and regulations governing the Medicare and Medicaid programs are complex and subject to change, as well as government review. Failure to comply with these laws can expose the entity to significant regulatory action, including fines, penalties, and exclusion from the Medicare and Medicaid programs. |
Coronavirus Pandemic ("COVID-19") | Coronavirus Pandemic (“COVID-19”) In March 2020, the World Health Organization declared COVID-19 a pandemic. The global spread of COVID-19 has created significant volatility, uncertainty, and economic disruption. Governments in affected regions have implemented, and may continue to implement, safety precautions which include quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures as they deem necessary. Many organizations and individuals, including the Company and its employees, continue to take additional steps to avoid or reduce infection, including limiting travel and working from home. These measures are disrupting normal business operations both in and outside of affected areas and have had significant negative impacts on businesses worldwide. As a PACE company, we have been and will continue to be impacted by the effects of COVID-19; however, we remain committed to carrying out our mission of caring for our participants. We continue to closely monitor the impact of COVID-19 on all aspects of our business, including the impacts to our employees, participants and suppliers; however, at this time, we are unable to estimate the ultimate impact the pandemic will have on our consolidated financial condition, results of operations or cash flows. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into legislation. The CARES Act provides for $100.0 billion to healthcare providers, including hospitals on the front lines of the COVID-19 pandemic. Under the CARES Act, the state of Pennsylvania signed into law the Act 24 of 2020, which allocates $10.0 million of funding from the federal CARES Act to managed long term care organizations. Funding from the Act 24 of 2020 must be used to cover necessary COVID-19 related costs incurred between March 1, 2020 and November 30, 2020 for entities in operation as of March 31, 2020. We received $2.0 million in funding under the Act 24 of 2020. Of this amount, $1.0 million was allocated to InnovAge centers in Pennsylvania and $0.7 million was recognized as of June 20, 2020. The remaining unrecognized balance of $0.3 million was recognized during the nine months ended March 31, 2021 as a reduction of expense within the consolidated statement of operations. The CARES Act also provides for the temporary suspension of the automatic 2% reduction of Medicare claim reimbursements (sequestration) for the period of May 1, 2020 through December 31, 2021. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09 Revenue from Contracts with Customers Leases In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”) which outlines a comprehensive lease accounting model and supersedes the current lease guidance. The new guidance requires lessees to recognize almost all of their leases on the balance sheet by recording a lease liability and corresponding right-of-use assets for all leases with lease terms greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. As per the latest ASU 2020-05 issued by FASB, the entities who have not yet issued or made available for issuance the financial statements as of June 3, 2020 can defer the new guidance for one year. The Company will be adopting this guidance for the annual reporting period beginning July 1, 2022, and interim reporting periods within the annual reporting period beginning July 1, 2023. This will require application of the new accounting guidance at the beginning of the earliest comparative period presented in the year of adoption. The Company is in the process of evaluating the impact that the pronouncement will have on the consolidated financial statements. Financial Instruments In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which requires entities to use a current expected credit loss (“CECL”) model to measure impairment for most financial assets that are not recorded at fair value through net income. Under the CECL model, an entity will estimate lifetime expected credit losses considering available relevant information about historical events, current conditions and supportable forecasts. The CECL model does not apply to available-for-sale debt securities. This guidance also expands the required credit loss disclosures and will be applied using a modified retrospective approach by recording a cumulative effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company will adopt this guidance for the annual and interim reporting periods beginning July 1, 2023. The Company has not determined the effect of the standard on its ongoing financial reporting. In June 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (“Subtopic 470-20”) and Derivatives and Hedging – Contracts in Entity’s Own Equity (“Subtopic 815-40”). This ASU amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. These amendments seek to remove certain requirements from the settlement guidance and clarify scope requirements. The ASU is effective for public companies for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company will adopt this guidance for the annual and interim reporting periods beginning July 1, 2021. The Company has not determined the effect of the standard on its ongoing financial reporting. Non-employee awards In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of useful life of property and equipment | Estimated (In thousands) Useful Lives March 31, 2021 June 30, 2020 Land N/A $ 11,980 $ 8,580 Buildings and leasehold improvements 10 - 40 years or term of lease 104,727 79,514 Software 3 - 5 years 12,355 11,387 Equipment and vehicles 3 - 7 years 35,201 28,814 Construction in progress N/A 19,257 7,069 183,520 135,364 Less accumulated depreciation and amortization (42,005) (32,870) Total property and equipment, net $ 141,515 $ 102,494 |
Schedule of source of revenue | March 31, March 31, 2021 2020 Medicaid 53 % 56 % Medicare 46 % 43 % Private pay and other 1 % 1 % Total 100 % 100 % |
Variable Interest Entity (Table
Variable Interest Entity (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Variable Interest Entity | |
Schedule of Variable Interest Entity | In thousands (000’s) March 31, June 30, Assets/Liabilities 2021 2020 Cash and cash equivalents $ 498 $ 435 Accounts receivable 3 1 Prepaid expenses and other 13 7 Property, plant and equipment, net 10,143 10,501 Deposits and other, net 386 376 Accounts payable and accrued expenses 279 199 Current portion long-term debt 39 38 Noncurrent liabilities 454 454 Long-term debt, net of debt issuance costs 3,838 3,901 |
Nonconsolidated Entities (Table
Nonconsolidated Entities (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Nonconsolidated Entities | |
Schedule of proforma consolidated results | The overall operations for InnovAge Sacramento were insignificant during the three and nine months ended March 31, 2021. |
InnovAge California Pace-Sacramento, LLC | |
Nonconsolidated Entities | |
Summary of the fair value of the assets acquired and net liabilities assumed | January 1, (In thousands) 2021 Assets: Cash $ 646 Accounts receivable 786 Property and equipment, net 30,667 Goodwill 8,078 Total assets 40,177 Liabilities: Accounts payable 530 Reported and estimated claims 330 Due to Medicaid and Medicare 77 Capital leases 428 Other liabilities 48 Total liabilities $ 1,413 |
Summarized income statement of Nonconsolidated Entities | Six Months Ended (In thousands) December 31, 2020 Revenue: Total revenue $ 2,297 Less: members’ interest 921 The Company’s interest 1,376 Cost of operations: Total cost of operations 4,538 Less: members’ interest 1,820 The Company’s interest 2,718 The Company’s interest in net income (loss) $ (1,342) |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Leases | |
Schedule of Company's capital leases | March 31, 2021 June 30, 2020 Equipment $ 13,777 $ 9,845 Less accumulated depreciation (6,848) (4,829) Balance as of end of period $ 6,929 $ 5,016 |
Schedule of capital lease obligations | Future minimum lease payments for fiscal years beginning with remainder of fiscal year 2021 for capital leases having initial terms of more than one year and noncancelable operating leases were as follows: Operating Leases Capital Leases Minimum Lease (In thousands) Obligations Payments Amount remaining in 2021 $ 713 $ 866 2022 2,527 4,138 2023 2,468 4,410 2024 1,941 4,052 2025 1,169 3,592 Thereafter 144 13,704 Total 8,962 $ 30,762 Less amount representing interest 1,114 Total minimum lease payments 7,848 Less current maturities 2,121 Noncurrent maturities $ 5,727 |
Schedule of operating lease minimum lease payments | Operating Leases Capital Leases Minimum Lease (In thousands) Obligations Payments Amount remaining in 2021 $ 713 $ 866 2022 2,527 4,138 2023 2,468 4,410 2024 1,941 4,052 2025 1,169 3,592 Thereafter 144 13,704 Total 8,962 $ 30,762 Less amount representing interest 1,114 Total minimum lease payments 7,848 Less current maturities 2,121 Noncurrent maturities $ 5,727 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Long Term Debt | |
Schedule of long-term debt | In thousands (000’s) March 31, 2021 June 30, 2020 Senior secured borrowings: Senior secured term loan $ 75,000 $ 187,625 Revolving credit facility — 25,000 Convertible term loan 2,377 2,401 Total debt 77,377 215,026 Less unamortized debt issuance costs 2,110 2,656 Less current maturities 2,852 1,938 Long-term debt, net of debt issuance costs $ 72,415 $ 210,432 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Stock-based Compensation | |
Summary of stock option activity | Weighted- Average Number of Option Average Remaining Options Price Range Exercise Price Term (in years) Outstanding balance, June 30, 2020 8,497,488 $ 1.00 - $ 2.35 1.26 6.76 Canceled (8,497,488) $ 1.00 - $ 2.35 1.26 6.76 Outstanding balance, March 31, 2021 — Weighted-Average Number of Weighted-Average Remaining Options Exercise Price Term (in years) Outstanding balance, June 30, 2020 8,497,488 $ 0.78 6.76 Canceled (8,497,488) $ 0.78 6.76 Outstanding balance, March 31, 2021 — |
Summary of profits interests transactions and number of units outstanding | Weighted- Number of Average Units Grant Date FV Outstanding balance, June 30, 2020 — Granted 6,686,568 1.28 Forfeited (99,307) 1.17 Outstanding balance, March 31, 2021 6,587,261 $ 1.28 Weighted- Number of Average Units Grant Date FV Outstanding balance, June 30, 2020 — Granted 6,322,569 $ 0.57 Forfeited (99,307) 0.44 Outstanding balance, March 31, 2021 6,223,262 $ 0.57 |
Schedule of Monte Carlo option pricing model using the fair value assumptions | 2021 Expected volatility 44 % Expected life (years) – Time vesting units 1.8 Interest rate 0.16 % Dividend yield 0 % Weighted-average fair values $ 1.28 Fair value of underlying stock $ 5.49 |
Schedule of stock-based compensation expense | Three Months Ended Nine Months Ended March 31, March 31, (In thousands) 2021 2020 2021 2020 Stock options $ — $ 135 $ 45,387 $ 407 Profits interest units 530 — 1,102 — Total share-based compensation expense $ 530 $ 135 $ 46,489 $ 407 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Earnings per Share | |
Schedule of earnings per share | Three Months Ended March 31, Nine Months Ended March 31, (In thousands, except share values) 2021 2020 2021 2020 Net income (loss) attributable to InnovAge Holding Corp. $ (10,510) $ 8,138 $ (50,460) $ 14,181 Weighted average common shares outstanding (basic) 121,324,980 132,616,431 119,619,806 132,616,431 EPS (basic) $ (0.09) $ 0.06 $ (0.42) $ 0.11 Dilutive shares — 1,751,571 — 1,176,554 Weighted average common shares outstanding (diluted) 121,324,980 134,368,002 119,619,806 133,792,985 EPS (diluted) $ (0.09) $ 0.06 $ (0.42) $ 0.11 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Segment Reporting | |
Schedule of operating results by reportable segments | March 31, 2021 March 31, 2020 (In thousands) PACE All other (1) Totals PACE All other (1) Totals Capitation revenue $ 155,835 $ — $ 155,835 $ 144,174 $ — $ 144,174 Other service revenue (47) 520 473 (56) 652 596 Total revenues 155,788 520 156,308 144,118 652 144,770 External provider costs 75,389 — 75,389 71,022 — 71,022 Cost of care, excluding depreciation and amortization 38,867 698 39,565 38,559 726 39,285 Center-Level Contribution Margin 41,532 (178) 41,354 34,537 (74) 34,463 Overhead costs (2) 24,217 (30) 24,187 18,614 42 18,656 Depreciation and amortization 3,181 130 3,311 2,619 150 2,769 Equity loss — — — 163 — 163 Other operating (income) expense 19,222 — 19,222 (99) — (99) Interest expense, net 4,824 52 4,876 2,317 44 2,361 Loss on extinguishment of debt 13,488 — 13,488 — — — Gain on equity method investment (10,871) — (10,871) — — — Other expense (income) 2,267 — 2,267 (244) — (244) Income (Loss) Before Income Taxes $ (14,796) $ (330) $ (15,126) $ 11,167 $ (310) $ 10,857 The following table summarizes the operating results regularly provided to the CODM by reportable segment for the nine months ended: March 31, 2021 March 31, 2020 (In thousands) PACE All other (1) Totals PACE All other (1) Totals Capitation revenue $ 464,294 $ — $ 464,294 $ 412,724 $ — $ 412,724 Other service revenue 213 1,677 1,890 (1,112) 3,088 1,976 Total revenues 464,507 1,677 466,184 411,612 3,088 414,700 External provider costs 224,215 — 224,215 204,387 — 204,387 Cost of care, excluding depreciation and amortization 113,611 2,311 115,922 111,021 3,444 114,465 Center-Level Contribution Margin 126,681 (634) 126,047 96,204 (356) 95,848 Overhead costs (2) 120,249 (13) 120,236 56,846 (24) 56,822 Depreciation and amortization 8,901 361 9,262 7,525 785 8,310 Equity loss 1,343 — 1,343 201 2 203 Other operating (income) expense 18,211 — 18,211 (252) 2 (250) Interest expense, net 16,919 142 17,061 11,025 262 11,287 Loss on extinguishment of debt 14,479 — 14,479 — — — Gain on equity method investment (10,871) — (10,871) — — — Other expense (income) 2,222 — 2,222 673 62 735 Income (Loss) Before Income Taxes $ (44,772) $ (1,124) $ (45,896) $ 20,186 $ (1,445) $ 18,741 (1) Center-level Contribution Margin from segments below the quantitative thresholds are attributable to two operating segments of the Company. Those segments consist of Homecare and Senior Housing. Neither of those segments has ever met any of the quantitative thresholds for determining reportable segments. (2) Overhead consists of the Sales and marketing and Corporate, general and administrative financial statement line items. |
Business (Details)
Business (Details) $ / shares in Units, $ in Thousands | Mar. 09, 2021USD ($)shares | Mar. 09, 2021USD ($) | Mar. 08, 2021$ / sharesshares | Jul. 27, 2020USD ($) | Mar. 31, 2021USD ($)employee$ / shares | Mar. 31, 2021USD ($)employeeitemCentersegment$ / shares | Mar. 03, 2021$ / shares | Jun. 30, 2020$ / shares |
Segment Reporting Information [Line Items] | ||||||||
Number of employees | employee | 2,100 | 2,100 | ||||||
Par value per share | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Net proceeds | $ 373,580 | |||||||
Underwriting discounts and commissions | $ 22,600 | $ 25,334 | $ 25,334 | |||||
IPO | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Common stock issued | shares | 16,666,667 | |||||||
Offering price | $ / shares | $ 21 | |||||||
Net proceeds | $ 373,600 | |||||||
Underwriting discounts and commissions | 23,900 | |||||||
Deferred offering costs | $ 1,400 | $ 1,400 | ||||||
Over-Allotment Option | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Common stock issued | shares | 2,500,000 | |||||||
Underwriters exercised the option to purchase common stock | shares | 2,329,234 | |||||||
PACE | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Number of reportable segments | segment | 1 | |||||||
Number of PACE participants | item | 6,700 | |||||||
Number of PACE centers excluding non-consolidating joint ventures | Center | 18 | |||||||
Percentage of obligation for health care costs | 100.00% | |||||||
Operating segments | PACE | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Number of reportable segments | segment | 1 | |||||||
Number of PACE participants | item | 6,700 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |||
Property and equipment gross | $ 183,520 | $ 135,364 | |
Less accumulated depreciation and amortization | (42,005) | (32,870) | |
Balance as of end of period | 141,515 | 102,494 | |
Depreciation | 8,800 | $ 7,800 | |
Land | |||
Summary of Significant Accounting Policies | |||
Property and equipment gross | 11,980 | 8,580 | |
Buildings and leasehold improvements | |||
Summary of Significant Accounting Policies | |||
Property and equipment gross | $ 104,727 | 79,514 | |
Buildings and leasehold improvements | Minimum | |||
Summary of Significant Accounting Policies | |||
Estimated Useful Lives | 10 years | ||
Buildings and leasehold improvements | Maximum | |||
Summary of Significant Accounting Policies | |||
Estimated Useful Lives | 40 years | ||
Software | |||
Summary of Significant Accounting Policies | |||
Property and equipment gross | $ 12,355 | 11,387 | |
Software | Minimum | |||
Summary of Significant Accounting Policies | |||
Estimated Useful Lives | 3 years | ||
Software | Maximum | |||
Summary of Significant Accounting Policies | |||
Estimated Useful Lives | 5 years | ||
Equipment and vehicles | |||
Summary of Significant Accounting Policies | |||
Property and equipment gross | $ 35,201 | 28,814 | |
Equipment and vehicles | Minimum | |||
Summary of Significant Accounting Policies | |||
Estimated Useful Lives | 3 years | ||
Equipment and vehicles | Maximum | |||
Summary of Significant Accounting Policies | |||
Estimated Useful Lives | 7 years | ||
Construction in progress | |||
Summary of Significant Accounting Policies | |||
Property and equipment gross | $ 19,257 | $ 7,069 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Capitated Revenues (Details) | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Revenue percentage | 100.00% | 100.00% |
Medicaid | ||
Disaggregation of Revenue [Line Items] | ||
Revenue percentage | 53.00% | 56.00% |
Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Revenue percentage | 46.00% | 43.00% |
Private pay and other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue percentage | 1.00% | 1.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - COVID-19 (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2021 | Nov. 30, 2020 | |
Summary of Significant Accounting Policies | |||
Fund received, Covid 19 | $ 2 | ||
Reimbursement amount allocated | $ 1 | $ 1 | |
Reimbursement amount recognized | $ 0.3 | $ 0.7 |
Equity (Details)
Equity (Details) - USD ($) $ in Thousands | Oct. 15, 2020 | Jul. 27, 2020 | Mar. 31, 2021 | Mar. 31, 2021 | Jun. 30, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Reduction in additional paid in capital | $ 323,127 | $ 323,127 | $ 36,338 | ||
Transaction costs | $ 22,600 | $ 25,334 | $ 25,334 | ||
Dividends | 9,500 | ||||
Investment in TCO Group Holdings, L.P | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Investment | $ 20,000 | ||||
General and administrative expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Transaction costs | $ 13,100 | ||||
Credit Agreement | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Repurchase (in shares) | 16,095,819 | ||||
Repurchase | $ 77,600 | ||||
Cancellation Agreement | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Corporate, general and administrative expense | 42,200 | ||||
Reduction in additional paid in capital | $ 32,400 | ||||
2016 Incentive Plan | Cancellation Agreement | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares cancelled (in shares) | 16,994,975 | ||||
Shares cancelled | $ 74,600 |
Variable Interest Entity (Detai
Variable Interest Entity (Details) $ in Millions | 9 Months Ended |
Mar. 31, 2021USD ($) | |
PWD | |
Variable Interest Entity [Line Items] | |
Partnership interest (as a percent) | 0.01% |
Maximum exposure amount in VIE | $ 0.8 |
SH1 | |
Variable Interest Entity [Line Items] | |
Partnership interest (as a percent) | 0.01% |
Variable Interest Entity - Sche
Variable Interest Entity - Schedule of Variable Interest Entity (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 18, 2019 |
Variable Interest Entity [Line Items] | |||
Cash and cash equivalents | $ 201,527 | $ 112,904 | $ 9,000 |
Accounts receivable | 44,356 | 46,312 | |
Prepaid expenses and other | 3,626 | 4,311 | |
Property, plant and equipment, net | 141,515 | 102,494 | |
Deposits and other, net | 3,611 | 3,003 | |
Accounts payable and accrued expenses | 33,223 | 28,875 | |
Current portion of long-term debt | 2,852 | 1,938 | |
Long-term debt, net of debt issuance costs | 72,415 | 210,432 | |
SH1 | |||
Variable Interest Entity [Line Items] | |||
Cash and cash equivalents | 498 | 435 | |
Accounts receivable | 3 | 1 | |
Prepaid expenses and other | 13 | 7 | |
Property, plant and equipment, net | 10,143 | 10,501 | |
Deposits and other, net | 386 | 376 | |
Accounts payable and accrued expenses | 279 | 199 | |
Current portion of long-term debt | 39 | 38 | |
Noncurrent liabilities | 454 | 454 | |
Long-term debt, net of debt issuance costs | $ 3,838 | $ 3,901 |
Nonconsolidated Entities (Detai
Nonconsolidated Entities (Details) | Feb. 09, 2021USD ($) | Mar. 18, 2019USD ($)$ / shares | Mar. 31, 2021USD ($)item$ / shares | Mar. 03, 2021$ / shares | Jun. 30, 2020USD ($)$ / shares |
Nonconsolidated Entities | |||||
Number of equity method investments | item | 2 | ||||
Cash | $ 9,000,000 | $ 201,527,000 | $ 112,904,000 | ||
Land | $ 4,200,000 | ||||
Cash contributions | $ 20,000,000 | ||||
Percentage of additional membership interest | 0.10% | 0.10% | |||
Par value per share | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||
Change in fair value of warrants | $ 2,300,000 | $ 2,264,000 | |||
Gain on consolidation | $ 10,871,000 | ||||
InnovAge Holding Corp. | |||||
Nonconsolidated Entities | |||||
Membership interest (as a percent) | 59.90% | ||||
Percentage of investment acquired in joint venture | 0.10% | ||||
Adventist Health System/West Joint Venture | |||||
Nonconsolidated Entities | |||||
Percentage of issued and outstanding equity interests | 5.00% | ||||
Par value per share | $ / shares | $ 0.001 | ||||
Capital contributions | $ 25,000,000 | ||||
Warrants right to purchase common stock | $ 15,000,000 | ||||
Warrant exercise term | 1 year | ||||
InnovAge California Pace-Sacramento, LLC | |||||
Nonconsolidated Entities | |||||
Cash contributions | $ 52,000 | ||||
InnovAge California Pace-Sacramento, LLC | Adventist Health System/West Joint Venture | |||||
Nonconsolidated Entities | |||||
Membership interest (as a percent) | 26.41% | ||||
InnovAge California Pace-Sacramento, LLC | Eskaton | |||||
Nonconsolidated Entities | |||||
Membership interest (as a percent) | 13.69% | ||||
InnovAge California Pace-Sacramento, LLC | Adventist Health System/West Joint Venture | |||||
Nonconsolidated Entities | |||||
Cash contributions | $ 5,800,000 | ||||
InnovAge California Pace-Sacramento, LLC | Eskaton | |||||
Nonconsolidated Entities | |||||
Cash contributions | $ 3,000,000 |
Nonconsolidated Entities - Summ
Nonconsolidated Entities - Summary of Fair Value of the Assets Acquired and Net Liabilities Assumed (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jan. 01, 2021 | Jun. 30, 2020 |
Assets: | |||
Goodwill | $ 124,217 | $ 116,139 | |
InnovAge Sacramento | |||
Assets: | |||
Cash | $ 646 | ||
Accounts receivable | 786 | ||
Property and equipment, net | 30,667 | ||
Goodwill | 8,078 | ||
Total Assets | 40,177 | ||
Liabilities: | |||
Accounts payable | 530 | ||
Reported and estimated claims | 330 | ||
Due to Medicaid and Medicare | 77 | ||
Capital leases | 428 | ||
Other liabilities | 48 | ||
Total Liabilities | $ 1,413 |
Nonconsolidated Entities - Su_2
Nonconsolidated Entities - Summary of Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue: | |||||
Total revenues | $ 156,308 | $ 144,770 | $ 466,184 | $ 414,700 | |
Cost of operations: | |||||
Total cost of operations | 161,674 | 131,796 | 489,189 | 383,937 | |
The Company's interest in net income (loss) | $ (5,366) | $ 12,974 | $ (23,005) | $ 30,763 | |
InnovAge California Pace-Sacramento, LLC | |||||
Revenue: | |||||
Total revenues | $ 2,297 | ||||
Less: members' interest | 921 | ||||
The Company's interest | 1,376 | ||||
Cost of operations: | |||||
Total cost of operations | 4,538 | ||||
Less: members' interest | 1,820 | ||||
The Company's interest | 2,718 | ||||
The Company's interest in net income (loss) | $ (1,342) |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Details) | Jan. 01, 2021USD ($) | Oct. 20, 2020USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2021USD ($)item | Mar. 31, 2020USD ($) | Jun. 30, 2020USD ($) |
Goodwill and Other Intangible Assets | ||||||
Goodwill | $ 124,217,000 | $ 124,217,000 | $ 116,139,000 | |||
Increase in goodwill | $ 8,100,000 | |||||
Number of reporting units | item | 3 | |||||
Impairment of goodwill | $ 0 | $ 0 | ||||
Definite-lived intangible assets | 6,600,000 | 6,600,000 | 6,600,000 | |||
Accumulated amortization | 1,900,000 | 1,900,000 | $ 1,400,000 | |||
Amortization expense | $ 200,000 | 500,000 | ||||
Payments to acquire intangible assets | $ 2,000,000 | 2,000,000 | ||||
Intangible asset impairments | $ 0 | $ 0 |
Leases - Assets Under Lease (De
Leases - Assets Under Lease (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Operating Leased Assets [Line Items] | |||||
Equipment | $ 183,520 | $ 183,520 | $ 135,364 | ||
Less accumulated depreciation | (42,005) | (42,005) | (32,870) | ||
Balance as of end of period | 141,515 | 141,515 | 102,494 | ||
Rental expense | 1,400 | $ 1,500 | 3,500 | $ 3,800 | |
Equipment under capital leases | |||||
Operating Leased Assets [Line Items] | |||||
Equipment | 13,777 | 13,777 | 9,845 | ||
Less accumulated depreciation | (6,848) | (6,848) | (4,829) | ||
Balance as of end of period | $ 6,929 | $ 6,929 | $ 5,016 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) $ in Thousands | Mar. 31, 2021USD ($) |
Capital Leases Obligations | |
Amount Remaining in 2021 | $ 713 |
2022 | 2,527 |
2023 | 2,468 |
2024 | 1,941 |
2025 | 1,169 |
Thereafter | 144 |
Total | 8,962 |
Less amount representing interest | 1,114 |
Total minimum lease payments | 7,848 |
Less current maturities | 2,121 |
Noncurrent maturities | 5,727 |
Operating Leases Minimum Lease Payments | |
Amount Remaining in 2021 | 866 |
2022 | 4,138 |
2023 | 4,410 |
2024 | 4,052 |
2025 | 3,592 |
Thereafter | 13,704 |
Total | $ 30,762 |
Long Term Debt - Schedule of Lo
Long Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Debt Instrument [Line Items] | ||
Total debt | $ 77,377 | $ 215,026 |
Less unamortized debt issuance costs | 2,110 | 2,656 |
Less current maturities | 2,852 | 1,938 |
Long-term debt, net of debt issuance costs | 72,415 | 210,432 |
Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Total debt | 0 | 25,000 |
Senior secured term loan | ||
Debt Instrument [Line Items] | ||
Total debt | 75,000 | 187,625 |
Convertible term loan | ||
Debt Instrument [Line Items] | ||
Total debt | $ 2,377 | $ 2,401 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) $ in Thousands | Mar. 08, 2021 | Mar. 07, 2021 | Jul. 27, 2020 | Sep. 01, 2015 | Mar. 31, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | May 02, 2019 | May 13, 2016 |
Debt Instrument [Line Items] | ||||||||||
Loss on extinguishment of long-term debt | $ 8,494 | |||||||||
Outstanding borrowings | $ 77,377 | 77,377 | $ 215,026 | |||||||
Amortization of deferred financing costs | 2,100 | |||||||||
Total deferred financing costs | 900 | 900 | $ 400 | |||||||
Revolving credit facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Loan amount | 75,000 | 75,000 | ||||||||
Outstanding borrowings | 0 | 0 | $ 25,000 | |||||||
Interest rate (as a percent) | 3.94% | |||||||||
Remaining borrowing capacity | 100,000 | 100,000 | ||||||||
Revolving credit facility fee | 0.50% | |||||||||
Senior secured term loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Outstanding borrowings | 75,000 | 75,000 | $ 187,625 | |||||||
Convertible term loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Outstanding borrowings | 2,377 | $ 2,377 | $ 2,401 | |||||||
Interest rate (as a percent) | 6.68% | |||||||||
Monthly principal and interest payments | $ 20 | |||||||||
2016 Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Percentage of aggregate outstanding principal amount | 0.25% | |||||||||
Debt extinguishment | $ 57,100 | |||||||||
Loss on extinguishment of long-term debt | 1,000 | |||||||||
Modified debt | 250,000 | 250,000 | ||||||||
Outstanding borrowings | 50,000 | 50,000 | ||||||||
Total deferred financing costs | 9,100 | 9,100 | ||||||||
2016 Credit Agreement | Revolving credit facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Loan amount | $ 40,000 | $ 30,000 | $ 20,000 | |||||||
2016 Credit Agreement | Senior secured term loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Loan amount | 300,000 | 190,000 | $ 75,000 | |||||||
Interest rate (as a percent) | 6.00% | |||||||||
2016 Credit Agreement | Delayed draw term loan facility (DDTL) | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Loan amount | $ 45,000 | |||||||||
Termination of loan | $ 45,000 | |||||||||
2021 Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt extinguishment | 250,000 | |||||||||
Loss on extinguishment of long-term debt | 7,500 | |||||||||
Modified debt | 25,000 | 25,000 | ||||||||
Outstanding borrowings | 50,000 | 50,000 | ||||||||
Total deferred financing costs | $ 2,100 | $ 2,100 | ||||||||
Prepayment fee (as a percent) | 2.00% | |||||||||
Prepayment fee | $ 6,000 | |||||||||
2021 Credit Agreement | Revolving credit facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Loan amount | $ 100,000 | |||||||||
Revolving credit facility fee | 0.25% | |||||||||
2021 Credit Agreement | Senior secured term loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Loan amount | $ 75,000 | |||||||||
Percentage of aggregate outstanding principal amount | 1.25% | |||||||||
Interest rate (as a percent) | 1.94% | 1.94% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Mar. 08, 2021 | Aug. 07, 2018 | Mar. 31, 2021 | Mar. 31, 2020 |
Fair Value Measurements | ||||
Purchase price | $ 30,000,000 | |||
Contingent consideration | $ 20,000,000 | $ 0 | ||
Contingent consideration paid | $ 20,000,000 | |||
Transfers into Level 3 | 0 | $ 0 | ||
Transfers out of Level 3 | $ 0 | $ 0 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer match (percentage) | 50.00% | |||
Employee pay match (percentage) | 4.00% | |||
Matching contributions amount | $ 0.4 | $ 0.4 | $ 1.3 | $ 1.3 |
Deferred Compensation Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Matching contributions amount | $ 0.1 | $ 0 | $ 0.1 | $ 0.1 |
Stock-based Compensation - Equi
Stock-based Compensation - Equity Incentive Plan (Details) - shares | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Jun. 30, 2020 | Jul. 27, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Repurchase (in shares) | 0 | 16,095,819 | |
Contingent Performance-Based Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares cancelled | 8,497,488 | ||
2016 Equity Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized | 17,836,636 | ||
Granted (in shares) | 16,994,976 | ||
Expiration period | 10 years | ||
Repurchase (in shares) | 16,095,819 | ||
Number of shares cancelled | 16,994,976 | ||
2016 Equity Incentive Plan | Time Vesting Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of vesting | 50.00% | ||
2016 Equity Incentive Plan | Contingent Performance-Based Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of vesting | 50.00% | ||
2016 Equity Incentive Plan | Tranche One | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of vesting | 25.00% | ||
2016 Equity Incentive Plan | Tranche One | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of vesting | 62.50% |
Stock-based Compensation - Time
Stock-based Compensation - Time Vesting Awards (Details) - Time vesting awards - $ / shares | 9 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Jun. 30, 2020 | |
Number of Options | ||
Outstanding balance, June 30, 2020 | 8,497,488 | |
Cancelled | (8,497,488) | |
Outstanding balance, March 31, 2021 | 8,497,488 | |
Option Price Range | ||
Option price lower limit | $ 1 | $ 1 |
Option price upper limit | 2.35 | 2.35 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Outstanding balance, June 30, 2020 | $ 1.26 | |
Cancelled | $ 1.26 | |
Average remaining term of outstanding awards (in years) | 6 years 9 months 3 days | |
Average remaining term of cancelled awards (in years) | 6 years 9 months 3 days |
Stock-based Compensation - Cont
Stock-based Compensation - Contingent Performance-based Awards (Details) - Contingent Performance-Based Awards - $ / shares | 9 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Jun. 30, 2020 | |
Number of Options | ||
Outstanding balance, June 30, 2020 | 8,497,488 | |
Cancelled | (8,497,488) | |
Outstanding balance, March 31, 2021 | 8,497,488 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Outstanding balance, June 30, 2020 | $ 0.78 | |
Cancelled | $ 0.78 | |
Average remaining term of outstanding awards (in years) | 6 years 9 months 3 days | |
Average remaining term of cancelled awards (in years) | 6 years 9 months 3 days |
Stock-based Compensation - Prof
Stock-based Compensation - Profits Interests (Details) - 2020 Equity Incentive Plan - $ / shares | 6 Months Ended | 9 Months Ended | |
Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized | 16,162,177 | ||
Profits interests granted | 13,009,137 | 13,009,137 | 0 |
Hurdle value per unit | $ 5.49 |
Stock-based Compensation - Pr_2
Stock-based Compensation - Profits Interests Transactions and Number of Units Outstanding (Details) | 9 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Time Vesting Units | |
Number of Units | |
Granted | shares | 6,686,568 |
Forfeited | shares | (99,307) |
Outstanding balance, March 31, 2021 | shares | 6,587,261 |
Weighted-Average Grant Date FV | |
Granted | $ / shares | $ 1.28 |
Forfeited | $ / shares | 1.17 |
Outstanding balance, March 31, 2021 | $ / shares | $ 1.28 |
Performance Vesting Units | |
Number of Units | |
Granted | shares | 6,322,569 |
Forfeited | shares | (99,307) |
Outstanding balance, March 31, 2021 | shares | 6,223,262 |
Weighted-Average Grant Date FV | |
Granted | $ / shares | $ 0.57 |
Forfeited | $ / shares | 0.44 |
Outstanding balance, March 31, 2021 | $ / shares | $ 0.57 |
Stock-based Compensation - Mont
Stock-based Compensation - Monte Carlo Option Pricing Model (Details) $ / shares in Units, $ in Millions | 9 Months Ended |
Mar. 31, 2021USD ($)$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost | $ 11.1 |
Profits Interests Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 44.00% |
Expected life (years) - Time vesting units | 1 year 9 months 18 days |
Interest rate | 0.16% |
Dividend yield | 0.00% |
Weighted-average fair values | $ / shares | $ 1.28 |
Fair value of underlying stock | $ / shares | $ 5.49 |
Time Vesting Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost | $ 7.5 |
Weighted-average period (in years) | 3 years 6 months |
Performance Vesting Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost | $ 3.6 |
Stock-based Compensation - Comp
Stock-based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | $ 530 | $ 135 | $ 46,489 | $ 407 |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | $ 135 | 45,387 | $ 407 | |
Profits Interests Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | $ 530 | $ 1,102 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings per Share | ||||
Net income (loss) attributable to InnovAge Holding Corp. | $ (10,510) | $ 8,138 | $ (50,460) | $ 14,181 |
Weighted average common shares outstanding (basic) | 121,324,980 | 132,616,431 | 119,619,806 | 132,616,431 |
EPS (basic) | $ (0.09) | $ 0.06 | $ (0.42) | $ 0.11 |
Dilutive Shares | 1,751,571 | 1,176,554 | ||
Weighted average common shares outstanding (diluted) | 121,324,980 | 134,368,002 | 119,619,806 | 133,792,985 |
EPS (diluted) | $ (0.09) | $ 0.06 | $ (0.42) | $ 0.11 |
Treasury Stock (Details)
Treasury Stock (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 27, 2020 | Mar. 31, 2021 | Jun. 30, 2020 |
Treasury Stock. | |||
Repurchase (in shares) | 16,095,819 | 0 | |
Treasury stock cost per share (in dollars per share) | $ 4.82 | $ 0 | $ 1.89 |
Treasury stock, value | $ 77.6 | ||
Treasury stock shares | 16,095,819 | 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Income Taxes | ||||
Income tax provision | $ (4,264) | $ 2,867 | $ 5,159 | $ 4,954 |
Effective tax rate (as a percent) | 28.20% | 26.40% | 11.20% | 26.40% |
Segment Reporting (Details)
Segment Reporting (Details) | 9 Months Ended |
Mar. 31, 2021itemsegmentCenterdivision | |
PACE | |
Segment Reporting Information [Line Items] | |
Number of operating segments | 3 |
Number of reportable segments | 1 |
Number of PACE participants | item | 6,700 |
Percentage of obligation for health care costs | 100.00% |
Operating segments | |
Segment Reporting Information [Line Items] | |
Number of operating segments | 5 |
Operating segments | PACE | |
Segment Reporting Information [Line Items] | |
Number of geographic divisions | division | 3 |
Number of reportable segments | 1 |
Number of PACE participants | item | 6,700 |
Number of PACE centers | Center | 18 |
Operating segments | Others | |
Segment Reporting Information [Line Items] | |
Number of operating segments | 2 |
Segment Reporting - Operating R
Segment Reporting - Operating Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||||
Total Revenue | $ 156,308 | $ 144,770 | $ 466,184 | $ 414,700 |
External provider costs | 75,389 | 71,022 | 224,215 | 204,387 |
Cost of care, excluding depreciation and amortization | 39,565 | 39,285 | 115,922 | 114,465 |
Equity loss | (163) | (1,343) | (203) | |
Other operating expenses (income) | 19,222 | (99) | 18,211 | (250) |
Interest expense, net | 4,876 | 2,361 | 17,061 | 11,287 |
Loss on extinguishment of debt | (8,494) | |||
Gain on equity method investment | (10,871) | (10,871) | ||
Other expense (income) | (2,267) | 244 | (2,222) | (735) |
Income (Loss) Before Income Taxes | (15,126) | 10,857 | (45,896) | 18,741 |
Capitation revenue | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 155,835 | 144,174 | 464,294 | 412,724 |
Other service revenue | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 473 | 596 | 1,890 | 1,976 |
PACE | ||||
Segment Reporting Information [Line Items] | ||||
Gain on equity method investment | (10,871) | |||
Operating segments | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 156,308 | 144,770 | 466,184 | 414,700 |
External provider costs | 75,389 | 71,022 | 224,215 | 204,387 |
Cost of care, excluding depreciation and amortization | 39,565 | 39,285 | 115,922 | 114,465 |
Center Level contribution Margin | 41,354 | 34,463 | 126,047 | 95,848 |
Overhead Costs | 24,187 | 18,656 | 120,236 | 56,822 |
Depreciation and Amortization | 3,311 | 2,769 | 9,262 | 8,310 |
Equity loss | 163 | 1,343 | 203 | |
Other operating expenses (income) | 19,222 | (99) | 18,211 | (250) |
Interest expense, net | 4,876 | 2,361 | 17,061 | 11,287 |
Loss on extinguishment of debt | 13,488 | 14,479 | ||
Gain on equity method investment | (10,871) | |||
Other expense (income) | 2,267 | (244) | 2,222 | 735 |
Income (Loss) Before Income Taxes | (15,126) | 10,857 | (45,896) | 18,741 |
Operating segments | Capitation revenue | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 155,835 | 144,174 | 464,294 | 412,724 |
Operating segments | Other service revenue | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 473 | 596 | 1,890 | 1,976 |
Operating segments | PACE | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 155,788 | 144,118 | 464,507 | 411,612 |
External provider costs | 75,389 | 71,022 | 224,215 | 204,387 |
Cost of care, excluding depreciation and amortization | 38,867 | 38,559 | 113,611 | 111,021 |
Center Level contribution Margin | 41,532 | 34,537 | 126,681 | 96,204 |
Overhead Costs | 24,217 | 18,614 | 120,249 | 56,846 |
Depreciation and Amortization | 3,181 | 2,619 | 8,901 | 7,525 |
Equity loss | 163 | 1,343 | 201 | |
Other operating expenses (income) | 19,222 | (99) | 18,211 | (252) |
Interest expense, net | 4,824 | 2,317 | 16,919 | 11,025 |
Loss on extinguishment of debt | 13,488 | 14,479 | ||
Gain on equity method investment | (10,871) | |||
Other expense (income) | 2,267 | (244) | 2,222 | 673 |
Income (Loss) Before Income Taxes | (14,796) | 11,167 | (44,772) | 20,186 |
Operating segments | PACE | Capitation revenue | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 155,835 | 144,174 | 464,294 | 412,724 |
Operating segments | PACE | Other service revenue | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | (47) | (56) | 213 | (1,112) |
Operating segments | Others | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 520 | 652 | 1,677 | 3,088 |
Cost of care, excluding depreciation and amortization | 698 | 726 | 2,311 | 3,444 |
Center Level contribution Margin | (178) | (74) | (634) | (356) |
Overhead Costs | (30) | 42 | (13) | (24) |
Depreciation and Amortization | 130 | 150 | 361 | 785 |
Equity loss | 2 | |||
Other operating expenses (income) | 2 | |||
Interest expense, net | 52 | 44 | 142 | 262 |
Other expense (income) | 62 | |||
Income (Loss) Before Income Taxes | (330) | (310) | (1,124) | (1,445) |
Operating segments | Others | Other service revenue | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | $ 520 | $ 652 | $ 1,677 | $ 3,088 |
Related-party (Details)
Related-party (Details) - USD ($) | 6 Months Ended | 9 Months Ended | |
Dec. 31, 2020 | Mar. 31, 2021 | Jun. 30, 2020 | |
Related Party Transaction [Line Items] | |||
Revenue from related parties | $ 35,000 | ||
Deposits and other | |||
Related Party Transaction [Line Items] | |||
Loans and leases receivable, related parties | $ 700,000 | $ 600,000 | |
Other service revenue | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | $ 300,000 |