Earnings call transcript Q4 2021

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ConferenceCall Participants

Vikram Kesavabhotla - Baird

Jeff Garro - Piper Sandler

Sarah James - Barclays

Ralph Giacobbe - Citi

Matt Larew - William Blair

Sachs Goldman - Perse Jamie

Operator

presentation, Thank Kubota. hand you XXXX all to Fiscal host Investor will the and are session. of a [Operator Director Instructions]. conference standing Quarter Earnings over by I speaker After Fourth mode. time, like a welcome will Call. be in question-and-answer to InnovAge’s now listen-only for Ryan there the At participants your Relations, this to

Ryan Kubota

fourth Hewitt, for Thank earnings you, of and afternoon me InnovAge’s are call. Gutierrez, quarter operator. CEO XXXX today thank you With Barb joining our fiscal all leadership President Good key and CFO. members team, and Maureen

Today a quarterly press after of issued our we and information market the release annual containing closed, detailed results.

may release access website You the on our innovage.com. company

of herein remarks this initial to and that the earnings as are rebroadcast have subsequent remind September the you not we to XX, made presentation, the call. today listening of Tuesday, XXXX updated those been For

we refer be a this found During can on XXXX non-GAAP fiscal the these on measures section measures press measures, of our reconciliation relations is our fourth of will directly GAAP the posted which with website. quarter call, most comparable release to investor certain

that will statements our are call, fiscal subject to other forward-looking be cause statements, our from risks related XXXX. actual forward-looking can Listeners uncertainties our to our differ XXXX, expectations. year materially we During and our statements all current that growth our of including and regulatory results on prospects, making expectations, outlook are to and cautioned certain

X, risk XXXX. prospectus to our on We March IPO the review in discussed listeners advise factors filed

will the on report As XX-K September for XX, well be as XX. annual Form That SEC upcoming XXXX. fiscal with filed our year

our of open I and to prepared President our your to CEO, the turn the After questions. call call Hewitt. Maureen we'll over completion Maureen? the will now take remarks,

Maureen Hewitt

all us afternoon. Thank thank and you, this joining Ryan, for you

ended XX, pleased I'm to XXXX. our we year finish had report strong fiscal June that to a

well our of fiscal additional outlook a fourth on Let fiscal on brief our and me performance. an summary quarter in minutes. details as provide our Barb first provide as results update will few end a XXXX year

are served midpoint As participants. guidance is the the call, a more last we than of And last expected in we regions and and centers nearly XXXX, InnovAge of Pennsylvania On western just provided pleased open XX, I'm our increase of all X, X.X% consistent represents open of central as over open. year-over-year, centers all the July our in in centers our shortly. to June were National we decline COVID This and of InnovAge our our the able XXXX to to with say trends. Virginia to that participants quarter.

year an revenue previous approximately We reported the million exceeding of guidance the year. fiscal estimate. high our increase for XXXX of of to end This approximately XXX represents compared XX.X% strong fiscal

We million also for reported This XXXX. approximately fiscal contribution XXXX. a to XX XX.X% nearly compared level is million XXX fiscal increase center of margin an or of year

an our will strategy. update now provide I on growth

the centers year two and signed to to Kentucky, existing selected In Orlando one renovate buildings Tampa. we one three in one and working site sites, XXXX. these centers in leases for three novo de and are in with currently centers, diligently have three We plan or fiscal process. we Florida, open are renovating Louisville, in We expect through all development in

impact factors that beyond our expected development, However, may our control as there with are every timing.

within to to and two XX locations continue those plan centers months. current next operational also the have our for evaluate We additional is

sense. the acquisition continue footprints we to acquisitions, Regarding established in new who where economics with markets opportunities experienced pursue have partners community makes and

app a venture connecting strong an equity Jetdoc, urgent medical August telehealth we professionals X, joint value. dedicated to month also opportunities care strategic continuing investment on way. look users are effective in in an that provide We and to with announced Last virtual for

significant telehealth the a more determined we that we pandemic, pace needed in specific that Following utilize increase during we services the telehealth solution.

are remote platform monitoring develop program partnering for a PACE with virtual a patient model. specifically We care Jetdoc and to

have of a early focusing that the and development PACE in the be final on design InnovAge specific begun and experience product. Jetdoc included will features patient biometric

expect We caregivers care. with continue the will and continuity to and allow to of clinical InnovAge staff participants their improved technology connect administrative for

than Regarding other XXX House require vaccine unless legally accommodation all to legally all based mandated entitled religious reasons. employees protected InnovAge continues COVID-XX for to they with employers COVID, and this vaccines month, workers or belief, permitted employees. the participants the are White that earlier federal on an COVID-XX InnovAge and or receive more disability,

We and employees. state, and protocols safety guidance. local appropriate participants includes with in PPE also symptom federal, in our to screening the authority continue health are place requirement and accordance apply and public that for COVID-XX This health

to our employees pleased announce vaccinated of dose completed. least also we of XX% that and of am at have I goal our employees having achieved one our XX%

last of target have goal well. of week, XX% continue to vaccinated participants and XX% as As participants been we a our for our

carefully Should that. pressures centers, our centers that at the we experience of trends our cause would we fully, or we have continue ability them to to in to partially markets COVID monitor each For down us COVID our do and shut centers.

the committed as reopen for positive and ability our of deeply also COVID. in are to We participants safety necessary protocols We to the remain a pressures test them should approach have appropriate staff participant phased any or relieved. have

pre-COVID improve has to throughout growth quarter returned the Enrollment and has to continued levels.

have up participants serve Our as of InnovAge XX% made brand. for growth. the census to Referrals from receive ambassadors continue approximately we participants own InnovAge our historically

we continue grew the referrals during our XX increase focus on as strides to regarding than our efforts significant to we our the digital leads addition XX% marketing make on realign web grew From marketing nearly pandemic. June, channels to end qualifier March strategy more digital of and participants, COVID-XX XX%. In to

this have we of a and about as to now discuss staffing number our to employee received want questions team, I new additions turnover topic.

most our Secretary. She and are out executing the Chief oversees acquiring Nicole brings of build earnings Legal As joined Intellectual key and public MacAndrews with Forbes addition legal, experience a from Corporate company in strategic and at and companies & government the Chief continuing cosmetics divesting leadership Nicole as to information to InnovAge long-term management release, compliance. affairs, Property Counsel security Senior three and recently company Officer as operating positions. diverse ranging to Vice team company pharmaceuticals. and private President D'Amato we we announced of today's public

the Officer. joined spent Tansey Chief new company years than XX our Emily Emily Health. more with CVS as People

home multiple management change organizational and there, including to during transitioning led COVID-XX. While initiatives, employees design work she from

new Compliance recently Officer. will experience policies UnitedHealthcare of staff health training programs. lead our compliance, procedures Officer related for Compliance in Arizona. as including depth InnovAge Corporate most and audit, the leadership in regulatory She training and internal the brings joins of Chief Patton developing a for Olivia company was and monitoring care Phoenix, CMS Medicare and Olivia policies

regular limited operate. all due end of the the which XXXX challenging and surprise employees of environment a with on of approximately approximately and for those year are employees, of that we turnover contractors, clinical participants As ended fiscal the our professionals we XXXX supply June excluding XXXX, is and retention managing XX, in had competitive is workers interact to healthcare organizations, our no basis. It

varies and business proactively being strategies utilizing business location and impact That address staffing talent our that sourcing to to we needs on minimize to by said, continue of by position. the the

total and recruitment total fill temporary utilize and utilize workforce XX% outsourcing, overall labor recruiting in employee company in process to basis. internal contract the We alongside tenens and the on an count, temporary team our interim our locum wide. for help than included accounts less positions When of

operating have work. at counterparts a place a fourth and Regarding row, a has both unique been We culture great work to InnovAge recertified our for retention, that their the we with rewarding leaders in as HR is work believe professionally. and year to personally a foster InnovAge environment

participants as important We have a individuals that and as our company a InnovAge and whole. as staff honors to contributors culture

of work Our supports alongside our in capable it all positive proud work other committed care I'm in to markets. elevating team team extremely a in such delivers and environment. senior care, a each

provide that now effective July update I aggregate X We an of year. across brief this of approximately the X% environment. on regulatory became reimbursement rate Colorado, on increase Virginia and will a and received Pennsylvania,

working is will XXXX effective X negotiations finalizing our will rate significant of COVID that our given rates State year And but will California with for the the which recent we Barb rate of due on highlight rate from fall increase in have with that the still some market. January New state the digit the received date. are additional increases, Mexico specifically, not to Colorado on pandemic. We last mid-single provides we start until decrease detail I a received

for we an levels high. see the environment, federal a to continue pace, Regarding in is in legislative encouraging program at very all-time not the This recent as positive state at is regulatory and sign interest activity seen we memory. have

as services nationally to memberships. legislative our and at insurance Assurance, two or Due activity American participants existing aging or for in our to two PACE PACE Leading the are organizations focused key view the Quality efforts, member combined AHIP NPA, We overall the National as the interest Association as the state memberships Association. furthering Committee advancing the of on legislative interests PACE, when well health National additions our Age InnovAge related increased These and became with plans with these local organizations levels. state and the the of a and NCQA

In and we join will are expand states state PACE, to interest as program, members addition, monitoring continue PACE looking local organizations we grow. in we as of a local states associations this focused is With program. several new and actively to are community we

Plus that additional PACE home the federal current would and changes for budget such could been for those stay policy to included providers HCBS reconciliation summarize package beneficial To budget. in increase billion final at InnovAge services community-based has provide XXX funding actively X.X the provisions, access the for forth and levels through advocating resolution pending legislative forth activity, PACE. in and level trillion be policy set to to funding in the Act PACE the set as

pilots, put projects we to they the CMMI. fits to program unwind leadership out launch looking the PACE the operating within we'll administration, as Health, Medicaid the mission one equality. for with continue in opportunities current believe announced Access, be three under place to we potential of well for discuss Innovation, many CMS that be publicly administration's collaborators. its continues their of select to in Should to have participate CMMI will Center and Biden And of a Medicare demonstration we to and potential positioned the or program pilots that of four they expect

new Rescue until adding and home programs for PACE XX% community-based to states considering any the program. Plan Act presented for PACE the fall American only do be The for as PACE, But as beneficiaries watching to York has additional services are planning including plan the in increase Medicare pilot state as a the are to Medicaid the match a not a state that earliest. with to provides closely would funding New are We federal the expect proposed program well at fee. interest we expand they that

Bill These to periods. has enrollment pending the requires plans. appropriations. provided XXX that been Bill It PACE health be requires become enrollment for during and managed Assembly flexibilities permanent. in were as XXX Medicare telehealth, state makes to referred passed option Regarding California PACE participants Day is care agreements, verbal presented home. include health from services care into and is exempt Medicare mandatory This that bill to enrollment legislation, be an Adult during COVID committee the also Assembly California to to allowed

for In an vote. exists in This an Michigan, before existing PACE that geographic pending already establishment that in and committee new was is of the XXX is demonstration requirements. provides Bill organization unmet area, committee other served a being among heard program pending a that April in need Senate by the PACE health pending area bill the

Agency for manage Ron additional Florida into program. Healthcare law DeSantis to authority signed on PACE was by the with XX, XXXX. House This Bill Administration XXX the Governor provides bill June

in brief the audits Sacramento Colorado. of update on status I will our provide now and a

our are a As the given a audits audits. occurrence business in we of industry, Part nature Medicare regular D the including participants financial and and our reminder, serve,

participants and We have our work as serve regulators their collaboratively and to and to constantly families. improve our continue we to with processes seek outcomes better

medical CMS XX, of early Medicaid XX which began determined notified has we enrollments the past requested provide and we others. promptly. services, will provide detected until to information The corrective developing their in Medicare audit CMS. we were are for working Centers additional May manage audit. deficiencies on situations, based deficiencies specialists completed Sacramento these a the freeze adequate on correct at scheduled among In fieldwork participants May, to to the services, covered audit new in our and center. deficiencies submit plan oversee September relate and This Friday, supplied and a accessible of effect failures remain to Sacramento on routine freeze center our The action Services CMS we and to use

right this unable the center At provide outcome we to are the rebuttal time are is, of center process. freeze, notice recent to or the limited given in requested not a Bernardino how the duration extend our San have final is to freeze a addition, In and our hearing. options This estimate to and of this assessing does Sacramento California. and we

our each we Sacramento committed than there XXX to at participants are comprehensive of coordination of and at the less For context, of improvement this were as quality centers. month, beginning care

subject several onsite CMS. state time. over of conducted completed work Colorado July on audits their work anticipate receiving CMS the audit on by PACE received in completed the that XXXX. program three preliminary findings we report months state has in early their We July and been last audit XX. And X. the The at the Colorado The in

will expect consistency time issue around the state We the that report same also purposes. their for

received not And freeze the business direction program. the entire continued a have CMS or we otherwise our process. to in state curtail our audit throughout have Colorado operate Colorado, to from any In manner consistent we of or

each outcome continue have opportunity for an will improve our process the us our ultimately is identified audit preliminary These corrective the program, audits long-term. to better over our or been the the improve and services, PACE there to integrity to-date. in addition, of we important make and immediate In no participants. of believe actions the program the undergo to We program audit is findings the

XX certification to Committee would our the patient call centers I Before from of highlight for like I the quality centered the medical National Barb, to of turn as over assurance homes.

hard to this effort, to quality care thank our our demonstrate coordination. their participants. We to team commitment ongoing InnovAge tireless certification work, have to I comprehensive at chosen dedication and want pursue entire to our for improvement and

XXXX. in I Barb will Now outlook to call review over financial our for Barb? detail provide our to more and the turn performance

Barb Gutierrez

Thank you, Maureen.

want XXXX XXXX year Before rates our the I year-end highlights to we open call then fiscal XXXX. our provide on Medicaid performance for some provide financial fiscal update to and quarter questions, for year and fourth from fiscal An outlook.

in fourth quarter developments a the provide With third due to to transmission period. respect and sequential COVID refer performance. to decrease rates picture I quarter during our more in the the of a to results our will order meaningful comparisons to

represents strong the XX our with and nearly participants as XXXX. census Compared XXXX quarter the fiscal a produced year, increase fourth We year and just financial XX, census to June over ended prior results ending in of this an centers X.X%. of of

X% higher ended Member months for XX,XXX were prior year. year fiscal XXXX the over than June of XX, the

experienced in wave of prior which return business our the levels primarily to impacted During QX. to quarter the growth to COVID referrals continue census and and improve fourth second

to gross above to to levels, enrollments marketing digital trending that those pre-COVID see care alternatives. searching channels strategy the indications our by senior bolstered realignment We for also reach in more focus were continue on

grew approximately increase Part Revenue driven growth. suspension Medicare and temporary and census year for of $XXX.X to fiscal XXXX by the million Part rates, XX.X% C sequestration an D primarily in

million $X.X performance. due bid to previous and million $XXX.X up in but estimate quarter to of factor, million CMS, revenue fourth revenue of of related grew true an quarter, X.X% compared from the true D reconciliation Fourth adjusted adjustment adjustments payments to RAF full Part year million that up by $X.X recorded received included quarter to risk the of $X.X

for than costs XX.X% million in as increase year-over-year the cost higher third $XXX.X the in inpatient associated the year, fiscal was provider as an COVID related of year pharmacy expenses, and for an the an full XXXX. to to prior fourth well expenses were quarter, per $XX.X outpatient increase increase to compared million, The increase expenses due with a census. XX.X% External quarter of participant

due as the increased were coupled quarter, an housing utilization cost improved. COVID elevated associated and to During per participant external growth. increase specialist, costs primarily continued costs quarterly with normalize outpatient And to provider with rates census transmission in

and of increasing in decrease just X% transportation due of by care were a COVID. amortization flat million by compensation by impacted increase an depreciation was year-over-year, cost excluding $XXX.X offset Our in employee relatively costs and to which costs census

of million a amortization Center the level care, excluding was basis prior contribution margin, less which revenue we XX, and and point year. XXXX. costs This defined cost is $XXX.X improvement external year for fiscal ended XXX over June provider the depreciation as

a $XX reported nearly fiscal compared of For XX% quarter the to increase of an fourth third quarter, we of level margin center fiscal contribution million, the XXXX.

for an expense fiscal $XX.X enrollment headcount was advertising due growth. year XX% new associated XXXX, marketing with and Sales to ended and XX, year-over-year in costs increasing support increase the million June campaigns to

of For our the a marketing XXXX. the to and increased XX.X%, to shift million spend due of fourth million $X.X primarily of half quarter, marketing fiscal quarter-over-quarter, back or the timing sales, in year $X.X expense

Corporate the cancellation connection of year connection XX, incentive million with additional related the $X.X equity with company result Apex the is of recorded increase plan, outstanding IPO. In of under $XX.X IPO, of company XXXX, million increase company's related fees for recorded Apex the $XXX.X the related ended year $XX.X million the year-over-year. transaction incurred an June transaction, XXX% and the stock million July transaction to and the general XXXX The costs. to costs. in as In was transaction expense the fiscal a and XXXX, primarily full administrative of an options

million. quarter expense, XX.X timing debt the the increase to the quarter. with to For additional increase associated cost bad expense prior fourth being and an company and of primarily full due a in administrative public general compensation expense, for a was The corporate increased stock-based XX.X% quarter, over

Net of year million. $XX.X fiscal income XXXX June compared loss fiscal for the $XX.X XX, million prior year was ended net to

with primarily quarter, the agreement income as the January Apex offsetting agreement; our loss transaction to for the as reported the the Sacramento fiscal warrants was with year part Sacramento extinguishment and net our consolidated million. associated following: expenses for result and of of associated related an center of is to other we fourth restated The primarily due gain expected a IPO; the the debt X, innovate our For due and XXXX. JV of and of amended entity credit becoming issued $X.X expenses to costs

For we fiscal earnings of year diluted. ended $X.XX June XX, share loss an XXXX, and reported both per basic

Our share full count was fiscal diluted the fully year shares the year end for XXX,XXX,XXX XXXX. of at

the adding non-recurring EBITDA, taxes, Adjusted costs adjustments a or fiscal the other net calculate amortization June interest, $XX.X depreciation million year. was to and one-time for our costs and increase related transaction income over which and by and prior XX, year we offering for XX.X% XXXX, ended exceptional

fourth quarter. to increase Adjusted centers XXXX. for the EBITDA $XX.X external per the our an in increase the the over quarter partially of attributed costs the decrease fiscal in fiscal million, of public made to in by with fourth The third and a decrease revenue reopening X.X% a an provider quarter-over-quarter being offset is company, was adjustments participant, of cost quarter associated

incurred net in our center de our the losses center in define Louisville California, Sacramento novos in fiscal million as novo in our our do for any the We and operations not Kentucky, back novo year of in losses our pre-opening $X.X of for the first Pennypack related center and Philadelphia months through for EBITDA. startup to center connection XXXX. ramp were which De de we XX losses, centers adjusted calculation add with

as fiscal year year. increased Adjusted in XX.X% to the the ended EBITDA XX, XXXX, compared XX.X% for June prior margin to

we margin basis the fourth XX.X%, fiscal quarter, third XXX a quarter of an the For adjusted points. of from fiscal decrease EBITDA reported

pursuant with Turning debt in on as term commitments, in secured agreement. to balance quarter $XX.X ratio other loan, net representing sheet, leases calculated our our and to and and our debt sheet, under the leverage at we $XXX.X total secured had credit cash a senior of cash X.Xx and the ended plus capital million balance equivalents million

XX, June XXXX, had expenditures. capital For we the fiscal year $XX.X of million ended

to Medicaid Now and Colorado, year received over of a Pennsylvania, X.X% Virginia just I fiscal fiscal for want year we brief provide update XXXX. on rate in a XXXX rates, combined increase

pandemic. mid-single the our last year the specifically, Colorado, was digit received given recent due increase significant we rate rate For decrease to COVID

fiscal guidance to Turning year XXXX. for

between our and expect to be XXXX census We ending XXXX.

member months XX,XXX XXXXX. in of expecting and be to are range We the

million. We of are total $XX the XXXX And forecasting $XXX $XXX million fiscal to $XX million. revenues in in EBITDA the year of range range million adjusted to

In to De for with have nor we our estimating associated adjusted losses any back expected novo fiscal included for did XXXX, acquisitions. approximately de from add we are $XX not fiscal EBITDA any losses XXXX novo results expected potential centers, million. be

we census ongoing growth first provide grow into a end, continue X% some our fiscal digital strategy ramp by year XXXX to of to from census Finally, multi-pronged to up projected our additional growth, visibility to marketing as our our result approximately expect efforts program. quarter our and

XX% In our have revenue generated year-over-year, EBITDA adjusted double-digit and margins, on summary, to consistent over basis. addition generated we from a cash top-line positive flow that historically would operations like we to in highlight growing

will questions. That to concludes prepared comments. call the Operator, now our open we

Operator

Instructions] first [Operator Kesavabhotla of from of line the question Vikram Baird. Our comes

Vikram Kesavabhotla

you range the But results. of per to census like it looks And and start the guidance in you landed like I particular, it beat your revenue looks on member the in months. high-end want range. XQ for

increases. we love on sounds But outperformance drivers So the of the understand of mentioned to that know it took July of rate of just some effect lot like some there. the you a I X.

helpful color to influenced on the factors get some that specifically? be XQ would So

Barb Gutierrez

that. take Barb. It's Yes. I'll

of We revenue in to was as is which factor it million. adjustment which X.X fourth million adjustments the that the our in we related from the And risk in then, in entire was outlined X.X the additional was true included a fourth fiscal typical quarter some the result was ago, minutes million of of in X.X few fourth really one the And quarter. that recorded reconciliation had year, additional to up true our states. remarks, reconciliation had revenue, So about positive Part quarter. payment as to rates some just my that ups quarter, with adjustments a had an of of bid revenue internal we D CMS,

incorrectly takes time additional rates. the Sometimes and the these it get payments us or some states information apply technical pay to to the

in occurred fourth also the quarter. that So

revenue things three guidance to contributed those of the being above range. top-end outside So the the

Vikram Kesavabhotla

in Okay, about great. yeah, And then some sounds ultimately, understand you're freeze, come those your just it to getting of what XXXX. described result comments guess on could results audits? follow appreciate that But could early findings And Colorado, from up could in I the us I the like like in range outcomes those of you fiscal you there member guess freeze taking just a census help Colorado the some of maybe for you further, your regions? experiences with is step in those Thanks. on that you called Sacramento ongoing Sacramento those that give just to and guidance Colorado, can assume out mean, months I in 'XX a and audits? historical based audits And your what the if with given just respect color and

Maureen Hewitt

can is I'll it then and talk as a add well some you bit off around Maureen. This little Barb, start color it. and

as outcome Colorado. the of far do have the Colorado, we not As

a care regulated. provider. we care As are We health you seniors, know, take of and we are our highly

outcomes. around and be there a So surveys survey to going is risk always

solid have and and regulators. job, clinicians, of we plans work our make of is job management, state Our our correction and federal and adhere to compliance leadership, with operations, and sure our our to that

relationship are Colorado and this guidance time. two may we be those give knowledge And as there you Colorado. around some things too, at any don't have related. can't any soon question between there's know Sacramento a that maybe we and So And that we as

Barb Gutierrez

Yes. This is Barb.

generally -- speaking, just what believe reflects relates results. are it it guidance to achievable we guidance, As our

into We the have for guidance. our freeze enrollment consideration taken in Sacramento

acquisitions in then, have potential our consideration. also you, We guidance not remind And remarks, taken was into as well. as does the include previous just we'll that any

Operator

Thank you.

Garro Our Sandler. next from Piper question comes Jeff of

Jeff Garro

the M&A. I'll maybe follow So comment up last on on

been processes like does So have it M&A seem elongated.

update for the to hoping serve further on any and I as finish So the near-term deals pipeline, a was might get over line? what any catalyst

Barb Gutierrez

sure. Yes,

a little talk the pipeline general. in just I'll about So bit

pipeline So our outlined we've here.

the process, within estate catalysts necessarily And all and approvals and we've not fighting that it's control, goes long explained that some includes state that of real a with CMS in the all approvals that. past that and our

So the couple back there's process. be on while, elongated end, it might the a in

So actually accelerated thoughts, well. also compared our to we've of novos a de the as of note, some couple earlier

fast can, we as moving as So are novos. as relates we to furiously de and it

As entered Maureen leases phases are in the said and construction de remarks, of in speak. those her we we've three into as novos in

feel very there. novo our progress and pipeline de our positive we So about

Jeff Garro

questions might have thinking potential from deferred ability to hear. accurate RAF guidance growth factor, great That's risk scores and the could give care The so? rapid to me. been COVID. Any quarter on seasonality couple Maybe expectations from adjustment XX for impact variability a particularly with for impact the comments year of FY enrollment growth and you beyond around the as last COVID first just would impact or be over and enrollment helpful of you're capture about

Barb Gutierrez

that as over the and of comment our FY Sure. that is, in that And the comes XX. XX% under and I'll start About rate. growth that. relates guidance some from enrollment that maybe with might growth of a actually of just it comes from course volume XX% to about high-level answer XX%,

achieve quarter And we've acceleration there, quarter-over-quarter. full we the that year course a growth. the first the over year our the X%, We good to grown and have visibility first we've points see some we quarter, of couple into indicated so know

the little you of bit gives of that sense hopefully, So a timing.

terms conservative, mentioned, RAF will, lot appropriately of other feel being there's those scores. if what the there's just coming of trickle consider out and things In very that with lot scores a of the COVID. that the But of capture of I that still rate to increases, the you we the our for some to of unknowns timing and about unknowns ability We coding. to of our and a speak we the comfortable be XX% particularly about increases, are neutrals Medicare in rate you terms of kind related effect

that's volume So on Medicare we to bit there's were a rates And to lower neutral themselves. rate little the proportion. conservative appropriately why

Operator

you. Thank

comes of question Sarah from next Our Barclays. James

Sarah James

you contribution could more What center I was bit level for margin? does hoping guidance on imply give a color little us XXXX.

Barb Gutierrez

don't have margin we the We our levels fair margin. Barb. I to typically But historically. contribution It’s or to think expect level specifically central in should contribution mid-XXs say we that central to return outline normal say it's that seen level

Sarah James

Maybe you could us Okay. bucket between you margins the out bridge could, some XXXX XXXX. and if help of

the to? is RAF much how versus of you pieces for there that spoke in that So conservatism moving other some the

Barb Gutierrez

Sure.

terms of rates. the So in

that indicated, in So receive the flip while perhaps the significant I very some did spoke to Medicare increases. conservatism, we Medicaid that is of we as rates, side

very would margin feel that be biggest between you just we The about contribution So XX about. that bridge XX center level that. confident asked and

indicated in QX central contribution of quarters in And things. level of outsourced our margins year higher-than-normal centers, we of those the operating and some types the essentially our the we've centers first were because three results, closed. that As and like maintenance costs in lower had resulted transportation things

that margin. factor is there biggest really central level contribution the So

Operator

Thank you.

question next comes from Our Citi. with Ralph Giacobbe

Ralph Giacobbe

little to want we census bit to lower guidance. expected. than back go the just I It's had a

about midpoint the it's growth. think I XX% at

that some the impact mid-teens think there or guess that terms of I helpful? or may Is talked seems there the details holding maybe sort I be back longer growth. will I in freeze type sort it of be of on census. something any even and you understand of more about term XX% and like

Barb Gutierrez

to the this really, Sacramento. So we in it couple Again, freeze did other any that But guidance. not than factored other that, Ralph, in for include acquisitions then things. and thing, we again, relates a

can our the positioning organic on And as visibility novos. our well what business see we're and for rates for we as so to growth current de run the our really, guidance factoring

Ralph Giacobbe

de the Or that And the of fiscal on, couple timing not 'XX, my you opening shifted Okay. have come case? there any of I were is thought that's guess the end off? the supposed of timing novos? I a just to at were

Barb Gutierrez

timeframe. still on we is still working are that. one the in and correct. visibility that recollection second Your toward good one toward opening working And Have

Ralph Giacobbe

Okay. talks the in But release, I think fiscal XX? press about it

Barb Gutierrez

XXXX. fiscal to it's close really and the We've of Yes. got very end --

Ralph Giacobbe

it. Got

right. I to in just membership then ability moment, perspective, guess. that Okay. it freeze much rolls a the border got even have from areas Fair when enroll of seen if Is will, in as other a sort guess enough. impact risk more, just lifted? there off well? then, impact go All freeze one even back I that current guess reputational to does doesn't the And I the a you And to how And have is freeze? this that I

Maureen Hewitt

This is Maureen.

risk facility. I things it the adhering census of like can mentioned, That's one. that's and as a sometimes with impact surveys, current number the regulatory to this. that happen And does So

that that on freeze To diligently that manner, all in how go the with working So lifted important stress have go. ensure will or long that. will don't to for are long will see get it we we our getting corrections just is an staff the to what's a timely are how that ability And I planning and in. both regulators collaboratively most we level, work at want federal all those get state --

risk to other states It's as to the as example, its far it's It's other centers, San that separate from note Bernardino. from well. license. own for separate, has Sacramento important As

there's well. So crossover that regard, as from

say from mention so a proper not happen, that our I twice is which So that compliance to there's seniors, important. it's it’s of about going healthcare, caring we you're what sure is the And because that -- and in of your for different of you staffing At make our long-term the hopefully, risk documentation frail and that's when documentation a to ensure do. importance plans organization think survey, side clinical the all in When care, buckle work place. with the corrections you operations know to place, teams. InnovAge, of and that to going down reputation, do if

to going we are it. So They're it's know addressed. And required more get do. to working on information, as disclose we will we when

Operator

Thank you.

comes next of Larew Blair. Matt Our William question from

Matt Larew

you maybe de than So some to that in novo that broadly, de open I had what of novo reason processes of might that year, other put look at that these the is your do more novo audit Sacramento was the control part launched de when XXXX, July year relative product is less we of a fact be in Are to you issues make within efforts? a taking quality I guess, the extended? place a that the a guess more started. the

Maureen Hewitt

question. This Maureen. you is for Thank the

you this will in novo, make as which July are a things with programs, mentioned, to year de And CMS all up pandemic as the serve So may for opened years recall, patient during X. every place. new sure I program new first the three

learned. to continue given by have the oversight lessons But with quickly to with we're So what our de we and applied ensure certainly, that novos very we going that lessons to good well. and that's is care not learn be as going And regulators here quickly. any that that And quality. in our good respond of have working that to new we're something able them learned type get with ensure Sacramento, are to will will we

any we're So new ones. on stall the not anticipating

Matt Larew

the and row throughout has in mean, bit first below the on quarter. now, a Okay. here census I enrollment been the a you're year, acceleration few And enrollment in fiscal then just in a for quarters X% guiding in the the expectations

stood So what fiscal year said the given the balance you I landmarks out going. over what that changes who this sort assuming throughout are built are of is year the the get Sacramento you can the that, think in, help of

Barb Gutierrez

So this is Barb.

Let’s that. talk about

pickup quarter. with open the for spring. the like it, our second see fourth of higher -- just timing in typically the has enrollment in to it the really just increases Just a do some seasonality not a significant of timing a and And quarter to there's we but we do business, see MA. in things And

see of do a little seasonality. bit we So

across didn't typically just to flat the an I it's want little quarter, each want the I the to impression of So year. increase course give a bit -- see didn't we over of that

Matt Larew

Okay. And XQ was street margin here, based Colorado's to with at -- the think lastly is incrementally the I what on yet, is on the to especially relative to I labor rate update the last quarter, worse. what think, side, I relative respect to on positive outlooks, relative think your comments

you of terms have the for contract in any meaningful can temporary historically, so expected sense seen know, And is labor? building a terms in in give like in about, that turnover, you that, the or you changes XX? FY since contemplated and of And summer? What what's wage relative us inflation XX%

Maureen Hewitt

voluntary turnover, But said, or has to historical, probably of turnover industry staffing voluntary rate being turnover we're this I've pandemic been certainly, see and and plans And very company is approximately currently and in contributed some discussions, we've prior recruitment is across rate. around touched an XX%, that. with which Barb? of some with turnover will the committed mentioned, and where you that Barb staffing the the is earlier consistent ones, or been as retention our and company. certainly the fairly

Barb Gutierrez

the profile, pressure top according saying costs, we're relates forecast as of terms market staffing ratios. to those not in And We it to the increases Yes. cost temporary over or

our put So, based the we cost on correspondingly. census, in

So, seeing increases, we're anything cost building but some we're in not alarming.

Operator

you. Thank

Sachs. Our Perse next comes from Jamie question of Goldman

Jamie Perse

I go Sacramento wanted a for Colorado to the back and to moment. audit

the a Sacramento Colorado basically risk being provided similar investors can think services that question and naturally your in in versus Colorado. about will I you have what's outcome different

of different providing Colorado the in that audit. you of was of through things us is cited terms of those that some covered why why talk the more challenging than expected services, specialists, level were maybe So issues in use Sacramento and

Maureen Hewitt

of they're a tell can And different. you of that they're because Sacramento, is as little think both as well, much they're occurred, program. it's two census I learning different lower startup, So is new you going as on, surveys the that really a lots kinds well. although also so surveys, a CMS brand And know

trying it improve those that, help learn new learn and with PACE understanding So teams to continuously really is program. a about to and run

of So things. they're different two kind

and finance health recall, three focus HCPF, surveys as CDPH. was survey and CMS that a Colorado, survey policy and care you well In as going on, a as

very they're recall a complaint. was you different may related, So things. Colorado to Also, two as

So do different. they similarities, for we different you similar, surveys going really And describe can in of even the because there's time for or obviously they're today, and but two you on. types differences do or that what I the programs. were They're in can't today differences the to what in points is are

Jamie Perse

costs. the provider understood. external Okay, on just Maybe

quarter costs down contemplating What external coming those quarter. speaking, in provider do generally in you of and seen the your far trends your fourth a utilization, just of percent view as non-COVID fiscal kind what's And do You your as COVID you guidance think XX? talked so about you what about in across year? first revenue contemplated fiscal for

Barb Gutierrez

Yes.

Barb. is this So

as you to to QX pent In returned quarter actually normal, remarks. when and normalizing actually centers outpatient, prepared was compare this opened QX, bit that's in prepared in the forward. the going demand and a up of saw increase and a we operations there with of compared I'm an specialists a We see remarks. in was four, So the that bit

centers, was quarter-over-quarter. higher be this in it'll in that we than see We our QX, a to fiscal that to you starting expected were year. external get once So normal. costs do actually we normalize to back believe provider opened were those they But

Jamie Perse

something the be normal you we should of that, COVID And to tracking challenged that to term? start or to going is to to with year, near on the in on now, what's costs quarter first that external clarify is expect just going in because start expect, back early right the provider

Barb Gutierrez

normal back to tracking in near term. start it'll think We the

Operator

Thank you.

Our of Gary comes next Cowen. Taylor from question

Gary Taylor

Three questions for me.

The almost recollection my to is your revenue is potentially. entire action relate, of the related there the was first, revenue base for were would XX% exposure in survey whatever company, to of Colorado Colorado -- some was it operations, start the the entire if ballpark so the apply that corrective that audit that or

Maureen Hewitt

correct is Colorado. both That

Gary Taylor

down fiscal numbers? the you and margin bulk Barb, the the or that one revenue we through of EBITDA, contribution is then, adjustments to that flowed think roughly just there up XX Okay. extra trued was that, two the about is the out do of between from for think that -- million for I called And XQ, this offsets of it how revenue

Barb Gutierrez

the bulk of in we investments fourth with just had above question more fourth the of the down. next marketing sales additional D, it so flows think expected, And the slightly part, increased the I substance had we it what in in see some and participant the bulk down So some the flows will we we quarter. fourth some exception And slight quarter additional expenses -- quarter. the of G&A in be, the because did some Part then, in

down all line. And those two. doesn't it the to translate the bridge to bottom reconciliation So of that's really

Gary Taylor

on pushed novos and previous you then I timing. Okay. of like release, called a it the for novo bit expectation. got XX, expectations, looked de of the believe that question is, that's de up, just It contemplating in that couple last losses like that's your versus million looks one XX last little out million dollars fiscal from you're And terms sort out press a

don't next I I sort there's you the why can costs in But deep be here. there's you de help just year? maybe for -- right [ph] [weeds] there don't too know the agree if if anything numbers don't thinking with if way? additional the know at might maybe So of has novo I'm Or about looking the us

Barb Gutierrez

No.

look, really the the them Couple those the some additional also additional I of you it’s way. up right running, things that and think there's the over novos as We ones at two pipeline. to And indicate years. indicated, losses. de looking although, preopening capital are expenditures the you we think it, trying the got two just next I de also the capital one I in get of novos timing and to if and

there'll those to so as startup be related costs And some well.

up of de are trying and accelerate to some novo a pipeline costs those pushed so So we get just that bit.

Operator

you. Thank

Barclays. Our and There's you're James, James the sure Sarah comes is of your unmuted from handset. your if last response. lift question on a please speakerphone no line make of Sarah line

Hewitt the Maureen I’d to back closing for turn like over to remarks. call

Maureen Hewitt

you answering call thank and to to the appreciate might forward We questions, joined additional questions much and commitment to InnovAge your have. who look any Thank you Thank your you you. today. everyone and so

Operator

This you participating. conference today's Thank concludes call. for

You may disconnect. now

InnovAge Holding (INNV) 22 Sep 212021 Q4 Earnings call transcript