What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-09-10 compared with 2023-09-12 · 257 added, 195 removed, 726 unchanged (38% of the section changed)

27 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Emphasis of a Matter

As discussed in Note 2 to the financial statements, the Company adopted ASU 2016-02, Leases, and related amendments (Topic 842) on July 1, 2022.

/s/ Deloitte & Touche LLP

Denver, Colorado

September 10, 2024

45 unchanged sentences

500,000,000 authorized as of June 30, 2024 and 2023;

135,639,845 and 135,532,811 issued shares as of June 30, 2023 and June 30, 2022, respectively

136,152,858 issued and 136,116,299 outstanding as of June 30, 2024 and 135,639,845 issued and outstanding as of June 30, 2023.

Treasury stock at cost, 36,559 shares as of June 30, 2024

Additional paid-in capital 337,615 332,107

Retained earnings (deficit) ( 35,944 ) 4,729

Retained deficit ( 68,311 ) ( 35,944 )

Total InnovAge Holding Corp.

21 unchanged sentences

Interest expense, net ( 4,023 ) ( 1,522 )

Other income (expense) 124 ( 305 )

Total other expense ( 1,398 ) ( 2,831 )

Gain on cost and equity method investments 2,842 —

Other income 2,542 124

Total other income (expense) 1,361 ( 1,398 )

Loss Before Income Taxes ( 21,819 ) ( 50,793 )

16 unchanged sentences

Capital Retained

(Deficit) Noncontrolling

(Deficit) Treasury Stock

Noncontrolling

Interests Total Permanent Stockholders' Equity

1 unchanged sentence

(Temporary Equity) Net Loss

Shares Amount

Shares Amount Shares

in thousands, except share amounts

1 unchanged sentence

Stock-based compensation 107,034 — 4,608 — — — — 4,608 —

Adjustment to redemption value — — — 587 — 587 ( 587 )

Net loss — — — ( 40,673 ) — — ( 309 ) ( 40,982 ) ( 2,570 ) $ ( 43,552 )

2 unchanged sentences

Stock-based compensation 800,515 — 6,832 — — — — 6,832 —

Adjustment to redemption value — — — — — — —

Tax withholding related to the net share settlements of stock-based compensation awards ( 287,502 ) — ( 1,324 ) — — — — ( 1,324 ) —

Contribution from joint venture partner — — — — — — 2,900 2,900 —

Shares repurchased at cost ( 36,559 ) — — — 36,559 ( 179 ) — ( 179 ) —

Fair value adjustment for redeemable noncontrolling interests — — — ( 11,029 ) — — — ( 11,029 ) 11,029

Net loss — — — ( 21,338 ) — — ( 346 ) ( 21,684 ) ( 1,537 ) $ ( 23,221 )

12 unchanged sentences

Operating lease rentals 5,339 4,604

Gain on cost and equity method investments ( 2,842 ) —

Amortization of deferred financing costs 429 429

1 unchanged sentence

Deferred income taxes 1,224 ( 11,525 )

Other 1,449 167

Changes in operating assets and liabilities, net of acquisitions

8 unchanged sentences

Operating lease liabilities ( 5,610 ) ( 5,187 )

Net cash provided by operating activities 20,236 27,302

Deferred revenue ( 28,115 ) 28,115

Net cash provided by (used in) operating activities ( 36,898 ) 20,236

Investing Activities

1 unchanged sentence

Purchases of short-term investments ( 2,385 ) ( 46,167 )

Purchase of cost method investment — ( 2,000 )

Proceeds from sale of short-term investments 3,000 —

Proceeds from dissolution of equity method investments 4,842 —

Acquisition of business ( 23,916 ) —

Net cash used in investing activities $ ( 26,373 ) $ ( 69,521 )

2 unchanged sentences

Principal payments on long-term debt ( 3,795 ) ( 3,793 )

Repurchase of equity securities ( 179 ) —

Contribution from joint venture partner 2,900 —

Taxes paid related to net settlements of stock-based compensation awards ( 1,323 ) —

Net cash used in financing activities ( 7,034 ) ( 7,896 )

9 unchanged sentences

InnovAge Holding Corp.

and its subsidiaries (the “Company”), are headquartered in Denver, Colorado.

The Company fulfills a broad range of medical and ancillary services for seniors in need of care and support to safely live independently in their communities, including 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 its subsidiaries (“InnovAge” or the “Company”), are headquartered in Denver, Colorado.

The Company’s participant-centered care delivery approach is designed to improve the quality of care the Company’s participants receive, while keeping them in their homes for as long as safely possible.

Through the Company’s Program of All-Inclusive Care for the Elderly (“PACE”) program, the Company fulfills a broad range of medical and ancillary services for seniors, including 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 and from the PACE center and third-party medical appointments;

and care management.

The Company manages its business as one reportable segment, PACE.

As of June 30, 2023, the Company served approximately 6,400 PACE participants, making it the largest PACE provider in the United States of America (the U.S.) based upon participants served, and operates 17 PACE centers across Colorado, California, New Mexico, Pennsylvania and Virginia.

During the third quarter ended March 31, 2023, the Company consolidated its Germantown LIFE center with its Allegheny and Henry Avenue LIFE centers in Pennsylvania.

As of June 30, 2024, the Company served approximately 7,020 PACE participants, making it the largest PACE provider in the United States of America (the U.S.) based upon participants served, and operated 20 PACE centers across Colorado, California, Florida, 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.

We define dual-eligible seniors as individuals who are 55+ and qualify for benefits under both Medicare and Medicaid.

InnovAge provides 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.

9 unchanged sentences

Estimates are used in accounting for, among other things, the allowance for uncollectible accounts;

revenue reserves;

useful lives of property and equipment and the valuation of goodwill and intangible assets;

12 unchanged sentences

The FDIC insurance coverage is $250,000 on the aggregate of interest bearing and non-interest bearing accounts.

The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

Cost method investments do not have a readily determinable fair value and are carried at cost, less impairment plus or minus any changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.

The Company uses the equity method to account for investments in entities that it does not control, but in which it has the ability to exercise significant influence over operating and financial policies.

The Company’s investments in these nonconsolidated entities is reflected in the Company’s consolidated balance sheets under the equity method, and the Company’s proportionate net income (loss), if any, is included in the Company’s consolidated statements of operations as equity income (loss).

The Company’s investments in these nonconsolidated entities are reflected in the Company’s consolidated balance sheets under the equity method, and the Company’s proportionate net income (loss), if any, is included in the Company’s consolidated statements of operations under the equity method.

The Company evaluates its investments for impairment whenever events or changes in circumstances indicate that a decline in value has occurred that is other than temporary.

1 unchanged sentence

If the investment is determined to have a decline in value deemed to be other than temporary it is written down to estimated fair value.

There were no write-downs in the fiscal years ended June 30, 2023 or 2022.

During the fiscal year ended June 30, 2024, we noted indicators of impairment in one of our investments and recorded $ 2.0 million of impairment charges.

There were no write-downs in the fiscal year ended June 30, 2023.

See Note 4 “Cost and Equity Method Investments” for more information.

8 unchanged sentences

Restricted Cash

Restricted cash includes cash held for participants who have established a personal-needs account to pay for nonmedical personal expenses, payment of which only occurs upon participant authorization, in the amount of approximately $ 0.02 million as of both June 30, 2023 and 2022.

The Company records a related deposit liability for any participant contributions to these personal-needs accounts in accounts payable and accrued expenses in the consolidated balance sheets.

34 unchanged sentences

Goodwill and Intangible Assets

Intangible assets consist of customer relationships acquired through business acquisitions.

Intangible assets primarily consist of customer relationships acquired through business acquisitions.

Goodwill represents the excess of consideration paid over the fair value of net assets acquired through business acquisitions.

7 unchanged sentences

A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component.

The Company has three reporting units for evaluating goodwill impairment.

The Company has two reporting units, East and West, for evaluating goodwill impairment.

ASC 350, Intangibles — Goodwill and Other (“ASC 350”), allows entities to first use a qualitative approach to test goodwill for impairment.

34 unchanged sentences

Stock-based Compensation

The Company and its principal shareholder have long-term equity incentive plans that provide for stock-based compensation, including the granting of stock options, profits interest units and restricted stock units to employees, directors, consultants, or advisers, as determined by each of the respective plans.

The Company and its principal shareholder have long-term equity incentive plans that provide for stock-based compensation, including the granting of stock options, profits interests units and restricted stock units to employees, directors, consultants, or advisers, as determined by each of the respective plans.

The Company utilizes the Black-Scholes option-pricing model to determine the fair value of the stock options on the date of grant.

1 unchanged sentence

The Company uses the Monte Carlo option model to determine the fair value of the granted profits interests units.

For service-vesting awards, we recognize stock-based compensation expense over the requisite service period, which is generally the vesting period of the respective award, on a straight-line basis.

For service-vesting awards (i.e., restricted stock units), we recognize stock-based compensation expense over the requisite service period, which is generally the vesting period of the respective award, on a straight-line basis.

If the award was, in substance, multiple awards, we recognize stock-based compensation expense over the requisite service period for each separately vesting portion of the awards.

For performance-vesting awards, we recognize stock-based compensation expense when it is probable that the performance condition will be achieved.

We analyze if a performance condition is probable for each reporting period through the settlement date for awards subject to performance vesting.

For performance-vesting awards (i.e., performance stock units), we recognize stock-based compensation expense when it is probable that the performance condition will be achieved.

We analyze if a performance condition is probable for each reporting period through the settlement date for awards subject to

performance vesting.

Stock-based compensation is included in corporate, general and administrative expenses on our consolidated statements of operations.

Shares issued pursuant to our equity incentive plans are issued from authorized but unissued shares or from shares, if any, held by the Company as treasury stock.

Shares issued pursuant to our equity incentive plan are issued from authorized but unissued shares or from shares held by the Company as treasury stock, if any.

See Note 10 “Stock-based Compensation.”

2 unchanged sentences

The impact on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment.

The members of SH1 and InnovAge Sacramento have elected to be taxed as partnerships, and no provision for income taxes for SH1 or InnovAge Sacramento is included in these consolidated financial statements.

The members of InnovAge Senior Housing Thornton, LLC (“SH1”) and InnovAge Sacramento have elected to be taxed as partnerships, and no provision (benefit) for income taxes for SH1 or InnovAge Sacramento is included in these consolidated financial statements.

Further, InnovAge Orlando entered into a joint venture on May 28, 2024 and its members elected to be taxed as a partnership.

No provision (benefit) for income taxes for InnovAge Orlando is included in these consolidated financial statements for activity occurring from joint venture formation date through the balance of the fiscal year.

A valuation allowance is provided to the extent that it is more likely than not that deferred tax assets will not be realized.

1 unchanged sentence

The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon settlement.

The Company recognizes interest and penalty expense associated with uncertain tax positions as a component of provision for income taxes.

The Company recognizes interest and penalty expense associated with uncertain tax positions as a component of provision (benefit) for income taxes.

Variable Interest Entities (VIE)

2 unchanged sentences

The primary beneficiary is required to consolidate the VIE.

InnovAge Senior Housing Thornton, LLC (“SH1”) and Pinewood Lodge, LLC (“PWD”) are considered to be VIEs.

InnovAge Senior Housing Thornton, LLC (“SH1”) and Pinewood Lodge, LLP (“PWD”) are considered to be VIEs.

The Company is not considered the primary beneficiary of PWD but is considered the primary beneficiary of SH1.

On March 13, 2024, PWD entered into a Purchase and Sale Agreement for the sale of all of PWD's property, including the Senior Housing unit.

The sale closed on May 2, 2024, and as a result, the Company ceased providing senior housing services through PWD.

Emerging Growth Company Status

4 unchanged sentences

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02 Leases (“ASU 2016-02”), which was intended to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements.

Under the new guidance, lessees are required to recognize a right-of-use (“ROU”) asset and a lease liability, measured on a discounted basis, at the commencement date for all leases with terms greater than 12 months.

Additionally, this guidance requires enhanced disclosures to help investors and other financial statement users to better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements.

In June 2020, the FASB issued ASU 2020-05 Revenue from contracts with customers (Topic 606) and leases (Topic 842) – Effective dates for certain entities which deferred the new lease standard effective date for the Company to interim periods beginning after December 15, 2021, with early adoption permitted.

We adopted the new standard on July 1, 2022 using the modified retrospective transition approach as permitted in ASU 2018-11.

In accordance with this approach, the effective date of Topic 842 is also the application date of the new requirements, with prior comparative periods presented in the financial statements with the legacy requirements of ASC Topic 840, Leases.

We elected the package of practical expedients which permits us not to reassess under the new lease standard our prior conclusions for lease identification and lease classification on expired or existing contracts and whether

initial direct costs previously capitalized would qualify for capitalization under the new lease standard.

We also elected to adopt the optional transition method which allows an entity to recognize, if necessary, a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

The Company did not elect the practical expedient to use hindsight in determining the lease term and in assessing impairment conclusions on the ROU assets.

Comparative periods presented in the financial statements continue to be presented in accordance with GAAP related to leases prior to transitioning to the new lease standard.

The adoption of Topic 842 resulted in the recognition of operating lease liabilities and ROU assets of $ 25.1 million and $ 23.6 million, respectively, while our accounting for capital leases (now referred to as finance leases) remained substantially unchanged.

The impact of adopting Topic 842 was not material to our Statements of Operations and Statements of Cash Flows.

See Note 6, “Leases.”

Recent Accounting Pronouncements Not Yet Adopted

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.

In April 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”), 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 ASU is effective for private companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

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 consolidated financial statements.

We do not expect that any other recently issued accounting guidance will have a significant effect on our condensed consolidated financial statements.

The CECL model is expected to result in more timely recognition of credit losses.

The Company adopted the standard on July 1, 2023.

Our adoption of the standard did not have a material impact on the

consolidated financial statements.

The Company makes estimates of expected credit losses based on a combination of factors, including historical losses adjusted for current market conditions, delinquency trends, aging behaviors of receivables and credit and liquidity indicators, and future market and economic conditions and regularly reviews the adequacy of the allowance for credit losses.

Recent Accounting Pronouncements Not Yet Adopted

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker.

Additionally, ASU 2023-07 requires that all existing annual segment disclosures be provided on an interim basis and clarifies that single reportable segment entities are subject to the disclosure requirement under Topic 280 in its entirety.

ASU 2023-07 will be applied retrospectively and is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

The Company is evaluating the impact of ASU 2023-07 on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 requires additional disclosures related to rate reconciliation, income taxes paid, and other disclosures.

ASU 2023-09 requires public companies to annually (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold.

Additionally, ASU 2023-09 requires public companies to annually disclose the amount of income taxes paid, disaggregated by federal, state, and foreign taxes, as well as the amount of income taxes paid by individual jurisdiction.

ASU 2023-09 is effective for annual periods beginning after December 15, 2025.

The Company is currently evaluating the impact of ASU 2023-09 on our consolidated financial statements.

We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements.

Revenue Recognition

9 unchanged sentences

The Company identified that contracts with customers in the PACE program have similar performance obligations and therefore groups them into one portfolio.

This performance obligation is satisfied as the Company provides comprehensive care to its participants.

This performance obligation is satisfied over time as the Company provides comprehensive care to its participants.

Our revenues are based on the estimated PMPM amounts we expect to be entitled to receive from the capitated fees per participant that are paid monthly by Medicaid, Medicare, the VA, and private pay sources.

2 unchanged sentences

Private pay includes direct payments from participants who do not qualify for the full capitated rate and have to pay all or a portion of the capitated rate.

Costs to obtain contracts consist of sales commissions for new enrollees and are included in deposits and other on our consolidated balance sheets.

These costs are amortized over a three-

year period which corresponds to the average time a participant is enrolled in the PACE program.

As of June 30, 2024 and 2023, contract assets included within deposits and other were $ 2.8 million and $ 1.0 million, respectively.

The Company disaggregates capitation revenue from the following sources for the year ended June 30:

4 unchanged sentences

* Less than 1%

The Company determined that the transaction price for these contracts is the amount we expect to be entitled to, which is the most likely amount.

For certain capitation payments, the Company is subject to retroactive premium risk adjustments based on various factors.

The Company determined the transaction price for these contracts is the amount we expect to be entitled to, which is the most likely amount.

For certain capitation payments, the Company is subject to retroactive premium risk adjustment payments according to the CMS risk adjustment payment timeline.

Specifically, there is a midyear true up payment based on updated risk score calculations and a final true up payment to allow for complete diagnosis submission.

The Company estimates the amount of the adjustment and records it monthly on a straight-line basis.

1 unchanged sentence

The capitation revenues are recognized based on the estimated PMPM transaction price to transfer the service for a distinct increment of the series (i.e.

We recognize revenue in the month in which participants are entitled to receive comprehensive care benefits during the contract term.

We recognize revenue over time in the month in which participants are entitled to receive comprehensive care benefits during the contract term.

As the period between the time of service and time of payment is typically one year or less, the Company elected the practical expedient under ASC 606-10-32-18 and did not adjust for the effects of a significant financing component.

4 unchanged sentences

The Company estimates and records a monthly adjustment to Medicare Part D revenues associated with these risk-sharing corridor provisions.

Medicare Part D comprised (i) 13 % and 12 % of capitation revenues for each of the years ended June 30, 2023 and 2022, respectively, and (ii) 23 % and 23 % of external provider costs for the year ended June 30, 2023 and 2022, respectively.

Medicare Part D comprised (i) 12 % and 13 % of capitation revenues for the years ended June 30, 2024 and 2023, respectively, and (ii) 24 % and 23 % of external provider costs for the years ended June 30, 2024 and 2023, respectively.

The Company provides comprehensive healthcare services to participants on the basis of capitated or fixed fees per participant that are paid monthly by Medicare, Medicaid, the VA, and private pay sources.

9 unchanged sentences

Other Service Revenue and Accounts Receivable

Other service revenue is comprised of rents earned related to Senior Housing and other fee for service revenue.

Other service revenue primarily consists of revenues derived from state food grants and rent revenues.

Accounts receivable related to other service revenue were not significant as of both June 30, 2024 and June 30, 2023.

9 unchanged sentences

Cost Method Investments

The Company maintains two investments that are accounted for using the cost method.

As of June 30, 2024 and 2023, the Company maintained one investment and two investments, respectively, that were accounted for using the cost method.

The Company’s ownership interests are less than 20% of the voting stock of the investments and the Company does not have the ability to exercise significant influence over the operating and financial policies of the investments.

The investments do not have a readily determinable fair value and the Company has elected to record the investments at cost, less impairment, if any, plus or minus any changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.

During the years ended June 30, 2023 and 2022, there were no observable price changes or impairments recorded.

In August 2021, the Company acquired a minority interest equal to 806,481 shares of the outstanding common stock of Jetdoc, Inc.

(“Jetdoc”), a telehealth and virtual urgent care app dedicated to effectively connecting users with medical professionals, for cash consideration of $ 2.0 million.

The balance of the Company’s investment in Jetdoc is $ 2.0 million which represents the maximum exposure to loss.

We determined that indicators of impairment were present as of December 31, 2023, and recognized an impairment loss of $ 1.9 million during the three months then ended.

During the three months ended March 31, 2024, we determined that the remaining balance of our investment in Jetdoc was impaired and recognized an additional impairment loss of $ 0.1 million.

Impairment losses are included in gain on cost and equity method investments on our consolidated statements of operations.

During the year ended June 30, 2023, there were no observable price changes or impairments recorded.

As of June 30, 2024, the Company does not have any ownership interest in JetDoc.

Dispatch Health

1 unchanged sentence

On April 2, 2020, the Company invested an additional $ 1.1 million through the purchase of a portion of its outstanding Series C Preferred Stock.

The balance of the Company’s investment is $ 2.6 million which represents the maximum exposure to loss.

As of June 30, 2024, the balance of the Company’s investment was $ 2.6 million which represents the maximum exposure to loss.

The investment does not have a readily determinable fair value and the Company has elected to record the investment at cost, less impairment, if any, plus or minus any changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.

During the period ended June 30, 2023 and 2022, there were no observable price changes or impairments.

During the years ended June 30, 2024 and 2023, there were no observable price changes or impairments.

Equity Method Investments

Pinewood Lodge

Pinewood Lodge, LLP 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 included in equity method investments in the accompanying consolidated balance sheets.

The equity earnings of PWD are insignificant.

As of June 30, 2023, the balance of the Company’s investment in PWD was $ 0.8 million, which represents the maximum exposure to loss.

Through May 2, 2024, the Company’s operations included a Senior Housing unit that primarily included the accounts of Continental Community Housing (“CCH”), a wholly-owned subsidiary of the Company and the general partner of PWD, which was organized to develop, construct, own, maintain, and operate certain apartment complexes intended for rental to low-income elderly individuals aged 62 or older.

PWD was a VIE, but the Company was not the primary beneficiary.

The Company did not have the power to direct the activities that most significantly impacted the economic performance of PWD.

Accordingly, the Company did not consolidate PWD.

PWD was accounted for using the equity method of accounting.

The equity earnings of PWD were

insignificant.

As of June 30, 2023, the balance of the Company’s investment in PWD was $ 0.8 million, which represented the maximum exposure to loss.

On March 13, 2024, PWD entered into a Purchase and Sale Agreement for the sale of all of PWD's property, including the Senior Housing unit.

On May 2, 2024, PWD closed on the sale of its Senior Housing property for $ 9.5 million.

Upon completion of the sale, PWD ceased providing senior housing services and in June 2024 was dissolved.

Following the dissolution, the remaining proceeds from the sale were distributed in accordance with the partnership agreement and as otherwise agreed by the partners.

Consolidated Entities

Controlling Interest

InnovAge Florida PACE – Orlando

On May 28, 2024, the Company entered into a Joint Venture Agreement with Orlando Health (“OHI”) to develop and manage PACE centers to serve communities in Orlando, Florida.

In connection with the joint venture, the joint venture, InnovAge Florida PACE – Orlando was formed.

The Company contributed $ 26.1 million for its controlling membership interest of 90 %.

As result, the joint venture’s results are consolidated in the Company’s consolidated financial statements.

OHI contributed $ 2.9 million in cash for its 10 % interest.

Noncontrolling Interest

Senior Housing

InnovAge Senior Housing Thornton, LLC is a VIE.

The Company’s operations include a 0.01 % partnership interest in SH1, which was organized to develop, construct, own, maintain, and operate certain apartment complexes intended for rental to low-income elderly individuals aged 62 or older.

SH1 is a VIE.

The Company is the primary beneficiary of SH1 and consolidates SH1.

The Company is the primary beneficiary of SH1 because 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 the convertible term loan held by 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 senior 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 June 30:

Cash and cash equivalents $ 816 $ 648

Accounts receivable — —

Prepaid expenses and other 5 1

2 unchanged sentences

Accounts payable and accrued expenses 295 268

Current portion long-term debt — 43

Deferred revenue 2 —

Noncurrent liabilities 456 454

2 unchanged sentences

InnovAge Sacramento

InnovAge Sacramento is a joint venture with Adventist Health System/West (“Adventist”) and Eskaton Properties, Incorporated (“Eskaton”).

On March 18, 2019, in connection with the formation of InnovAge Sacramento, 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.

Adventist contributed $ 5.8 million in cash and Eskaton contributed $ 3.0 million in cash for membership interests of 26.4 % and 13.7 %, respectively.

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.

Further, Adventist contributed $ 5.8 million in cash and Eskaton contributed $ 3.0 million in cash for membership interests of 26.4 % and 13.7 %, respectively.

In fiscal year 2021, the Company made an additional contribution of $ 52,000 and obtained an additional 0.1 % membership interest in the joint venture, which resulted in the Company obtaining control and consolidating InnovAge Sacramento as of January 1, 2021.

1 unchanged sentence

The Company’s investment in InnovAge Sacramento includes a put right for the noncontrolling interest holders to require the Company to repurchase the interest of the noncontrolling interest holders at fair value, after the initial term of the management services agreement in 2028.

At the time the Company became a publicly traded company these put rights held by the noncontrolling interests of the joint venture were required to be presented as temporary equity.

As of June 30, 2024, none of the conditions specified in the JV Agreement had been met.

These put rights held by the noncontrolling interests of the joint venture are required to be presented as temporary equity.

The redeemable noncontrolling interest of $ 12.7 million was recorded at carrying value as of June 30, 2023.

Accordingly, these put rights held by the noncontrolling interests of the joint venture are required to be presented as temporary equity.

As of June 30, 2024 and 2023, the Company’s redeemable noncontrolling interest was recorded at fair value of $ 22.2 million and carrying value of $ 12.7 million, respectively.

Goodwill and Intangible Assets

Goodwill represents the excess of cost over the fair value of net assets acquired.

Goodwill amounted to $ 124.2 million at each of June 30, 2023 and June 30, 2022.

The Company did no t have any acquisitions resulting in goodwill during the year ended June 30, 2023 and 2022.

Goodwill amounted to $ 139.9 million and $ 124.2 million as of June 30, 2024 and June 30, 2023, respectively.

The Company had one acquisition resulting in goodwill during the year ended June 30, 2024, see additional information in Note 11 “Acquisitions,” and did no t have any acquisitions resulting in goodwill during the year ended June 30, 2023.

Goodwill is not amortized.

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 goodwill impairments recorded during the year ended June 30, 2023 and 2022.

For purposes of the annual goodwill impairment assessment for fiscal year 2024, the Company identified two reporting units, East and West.

There were no indicators of impairment identified and no goodwill impairments recorded during the years ended June 30, 2024 and 2023.

The following table summarizes the changes in goodwill for the fiscal years ended June 30:

in thousands 2024 2023

Balance as of beginning of period $ 124,217 $ 124,217

Goodwill acquired during the period 15,732 —

Balance as of end of period $ 139,949 $ 124,217

Intangible assets consisted of the following as of June 30:

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Intangible assets with a finite useful life continue to be amortized over their useful lives.

The Company recorded amortization expense of $ 0.7 million for each of the years ended June 30, 2023 and 2022, respectively.

The Company recorded amortization expense of $ 0.7 million for each of the years ended June 30, 2024 and 2023.

The total expected future annual amortization expense for the next 5 years ended June 30, is as follows:

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We determine if an arrangement is a lease upon commencement of the contract.

If an arrangement is determined to be a long-term lease (greater than 12 months), we recognize an ROU asset and lease liability based on the present value of the future minimum lease payments over the lease term at the commencement date.

If an arrangement is determined to be a long-term lease (greater than 12 months), we recognize a right-of-use ("ROU") asset and lease liability based on the present value of the future minimum lease payments over the lease term at the commencement date.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

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Lease termination costs are included in other income (expense) on our consolidated statements of operations.

The following table presents the components of our ROU assets and their classification in our Balance Sheet at June 30, 2023.

Component of Lease Balances Balance Sheet Line Items Year Ended June 30,

The following table presents the components of our ROU assets and their classification in our Balance Sheet as of June 30 .

Component of Lease Balances Balance Sheet Line Items 2024 2023

Operating lease assets Operating lease assets $ 28,416 $ 21,210

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Total leased assets $ 44,324 $ 37,588

The following table presents the components of our lease cost and the classification of such costs in our Statement of Operations for the year ended June 30, 2023.

Component of Lease Cost Statement of Operations Line Items Year Ended June 30,

The following table presents the components of our lease cost and the classification of such costs in our Statement of Operations for the years ended June 30 .

Component of Lease Cost Statement of Operations Line Items 2024 2023

Operating lease cost Cost of care excluding depreciation and amortization and Corporate, general and administrative $ 5,402 $ 4,642

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Total lease expense:

$ 7,651 $ 9,167

The following table includes the weighted-average lease terms and discount rates for operating and finance leases as of June 30 .

Weighted average remaining lease term:

Operating leases 7.9 years

Finance leases 3.9 years

Weighted average discount rate June 30,

Operating leases 7.7 years 7.9 years

Finance leases 3.5 years 3.9 years

Weighted average discount rate 2024 2023

Operating leases 6.86 % 6.60 %

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Total long-term lease liabilities $ 26,275 $ 12,743 $ 39,018

The following table includes the future maturities of minimum rental payments that are required to be paid under all non-cancelable operating and capital lease obligations, prior to the adoption of ASC 842:

in thousands Operating Lease Capital Lease

2023 $ 4,873 $ 4,405

2024 4,581 3,909

2025 4,122 3,126

2026 4,061 2,092

2027 3,764 1,393

Thereafter 10,265 535

Total minimum rental payments 31,666 15,460

Amount representing interest ( 2,652 )

Subtotal 12,808

Current portion 3,368

Long-term portion $ 9,440

Long-term Debt

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2021 Credit Agreement

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 its prior credit agreement.

The 2021 Credit Agreement consists of a senior secured term loan (the “Term Loan Facility”) of $ 75.0 million principal amount and a revolving credit facility (the “Revolving Credit Facility”) of $ 100.0 million maximum borrowing capacity.

As of June 30, 2023, we had no borrowings outstanding under the facility.

The remaining capacity under the Revolving Credit Facility as of June 30, 2023 was $ 97.2 million, subject to (i) any issued amounts under our letters of credit, which as of June 30, 2023 was $ 2.8 million, and (ii) applicable covenant compliance restrictions and any other conditions precedent to borrowing.

The maturity date of each of the Term Loan Facility and the Revolving Credit Facility is March 8, 2026.

On March 8, 2021, the Company entered into a credit agreement (as amended, the “2021 Credit Agreement”) that replaced its prior credit agreement.

Borrowing capacity under the Revolving Credit Facility is subject to (i) any issued amounts under our letters of credit, which as of June 30, 2024 was $ 3.9 million, and (ii) applicable covenant compliance restrictions and any other conditions precedent to borrowing.

Loans under the 2021 Credit Agreement are secured by substantially all of the Company’s assets.

Principal on the Term Loan Facility 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 Term Loan Facility, together with proceeds from the IPO, were used to repay amounts outstanding under the 2016 Credit Agreement.

Principal on the Term Loan Facility is paid each calendar quarter in an amount equal to 1.25 % of the initial term loan on closing date.

Outstanding principal amounts under the 2021 Credit Agreement accrue interest at a variable interest rate.

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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.

U.S.-dollar LIBOR ceased to be published on June 30, 2023.

As such, during fiscal year 2023, the Company prospectively adjusted the effective interest rate for debt and now utilizes SOFR as the effective interest rate.

As of June 30, 2024, we had no borrowings outstanding, $ 3.9 million of letters of credit issued, and $ 96.1 million of remaining capacity under the Revolving Credit Facility.

The 2021 Credit Agreement requires the Company to meet certain operational and reporting requirements, including, but not limited to, a secured net leverage ratio.

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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 as of June 30, 2023 and 2022, respectively.

The deferred financing costs related to the Term Loan of $ 2.0 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.

The Company was in compliance with the covenants of the 2021 Credit Agreement as of June 30, 2024 and 2023.

The deferred financing costs of $ 2.0 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 amortization of deferred financing costs was $ 0.4 million and $ 0.4 million for the years ended June 30, 2024 and 2023, respectively.

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On June 29, 2015, SH1 entered into a convertible term loan.

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.

Principal and interest payments of $ 0.02 million are due monthly.

The loan bears interest at an annual rate of 6.68 %, with the remaining principal balance due upon maturity at 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.

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Fair Value Measurements

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.

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Total $ 102,502 $ 102,779 $ 56,946 $ 45,833

Recurring Measurements

As a result, at each fiscal period end the Company reports this put right at the greater of (i) carrying value of the redeemable noncontrolling interest or (ii) fair value of the redeemable noncontrolling interest.

Because this asset does not have observable inputs, Level 3 inputs are used to measure fair value.

The fair value of

the redeemable noncontrolling interest is determined utilizing a discounted cash flow model.

As of June 30, 2024 and 2023, the Company’s redeemable noncontrolling interest was recorded at carrying value of $ 22.2 million and $ 12.7 million, respectively.

There were no transfers in and out of Level 3 during the fiscal years ended June 30, 2024 and 2023.

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The Company is not currently aware of any unasserted claims or unreported incidents that are expected to exceed medical malpractice insurance coverage limits.

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.

From time to time, the Company may be involved in various legal proceedings and be subject to claims.

The Company expenses legal costs as such costs are incurred.

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The demand requests information and documents regarding Medicaid billing, patient services and referrals in connection with the Company’s PACE program in Colorado.

We continue to fully cooperate with the Attorney General and produce the requested information and documentation.

We continue to fully cooperate with the Attorney General .

We are currently unable to predict the outcome of this investigation.

In February 2022, the Company received a civil investigative demand from the Department of Justice (“DOJ”) under the Federal False Claims Act on similar subject matter.

The demand requests information and documents regarding audits, billing, orders tracking, and quality and timeliness of patient services in connection with the Company’s PACE programs in the states where the Company operates (California, Colorado, New Mexico, Pennsylvania, and Virginia).

The demand requests information and documents regarding audits, billing, orders tracking, and quality and timeliness of patient services in connection with the Company’s PACE programs in the states where the Company operated as of 2022 (California, Colorado, New Mexico, Pennsylvania, and Virginia).

In December 2022, the Company received a supplemental civil investigative demand requesting supplemental information on the same matters.

The Company continues to fully cooperate with the DOJ and produce the requested information and documentation.

The Company continues to fully cooperate with the DOJ.

We are currently unable to predict the outcome of this investigation.

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and Welsh, Carson, Anderson & Stowe filed a motion to dismiss the amended complaint for failure to state a claim upon which relief can be granted.

On December 22, 2023, the District Court granted in part and denied in part the motion to dismiss.

The action is now in discovery.

On April 20, 2022, the Board of Directors of the Company received a books and records demand pursuant to Section 220 of the Delaware General Corporation Law, from a purported stockholder of the Company, Brian Hall, in connection with the stockholder’s investigation of, among other matters, potential breaches of fiduciary duty, mismanagement, self-dealing, corporate waste or other violations of law by the Company’s Board with respect to these matters.

We are currently unable to predict the outcome of this matter.

On May 15, 2023, Mr.

Hall filed a lawsuit in the Delaware Court of Chancery asserting derivative claims for breach of fiduciary duty against certain of the Company’s current and former officers and directors generally relating to alleged failures by the defendants to take remedial actions to address the matters that resulted in sanctions by CMS at certain of the Company’s centers, and alleged misstatements in the Company’s public filings relating to those matters.

centers, and alleged misstatements in the Company’s public filings relating to those matters.

On June 28, 2023, upon stipulation of the parties, the court entered an order staying the litigation pending the resolution of the motion to dismiss in the Securities Action or upon fifteen days ’ notice by any party to the litigation.

We are currently unable to predict the outcome of this matters.

On January 22, 2024, upon stipulation of the parties, the court entered an order further staying the litigation pending the close of fact discovery in the Securities Action.

We are currently unable to predict the outcome of these matters.

Other Matters

In the third fiscal quarter of 2023, the Company agreed to settle a wage and hour class action lawsuit in the State of California for a cash payment of $ 1.2 million.

The agreement is subject to court approval.

Subsequently, the Company was notified of certain additional individual claims and agreed to include such claims within the class.

In October 2023, the Company agreed to increase the settlement amount to a total of $ 1.3 million, reflecting the additional individual claim.

The Court entered the final approval of the settlement on April 2, 2024 and the payout occurred on June 7, 2024.

The matter will remain open for 180 days to allow the class members to settle their checks, after which time the case is expected to officially close.

Because the results of legal proceedings and claims are inherently unpredictable and uncertain, we are currently unable to predict whether the legal proceedings we are involved in will, either individually or in the aggregate, have a material adverse effect on our business, financial condition, or cash flows.

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Stock-based Compensation

A summary of our aggregate share-based compensation expense is set forth below.

A summary of our aggregate stock-based compensation expense is set forth below.

Stock-based compensation expense is included in corporate, general and administrative expenses on our consolidated statements of operations.

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As of June 30, 2024, a total of 15,222,837 profits interests units have been granted under the 2020 Equity Incentive Plan.

These profits interests represent 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 participate in any increase of LP value after a hurdle rate is achieved and, for performance-based units, the LP profits interests receive the agreed-upon return on their invested capital and internal rate of return, as applicable.

The hurdle rate per unit is $ 5.49 for both the performance-based and time-based units outstanding as of June 30, 2023.

Each award of profits interests is subject to the following material terms:

(i) The profits interests receive distributions (other than tax distributions) only upon a liquidity event, as defined, that exceeds a threshold equivalent to the fair value of the LP, as determined by the LP’s Board of Directors, at the grant date.

(ii) A portion of the units vest over a period of continuous employment or service (time-based units) while the other portion of the units only vest based on the level of aggregate multiple of invested capital and, with respect to certain grants of profits interests, internal rate of return achieved by Ignite Aggregator LP, one of the limited partners of the LP, upon a change of control of the Company (performance-based units).

The performance-based units are subject to a market condition, which the Company incorporates as part of its determination of the grant date fair value of the units.

The Company uses the Monte Carlo option model to determine the fair value of the granted profits interests units at the time of the grant.

As the awards outstanding as of June 30, 2023, were granted prior to our IPO, the stock price was based on prices realized in equity transactions prior to being publicly traded.

Expected stock price volatility was based on consideration of indications observed from several publicly traded peer companies.

The Company used the Monte Carlo option model to determine the fair value of the granted profits interests units at the time of the grant.

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.

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The expected term of the units represents the time the units are expected to be outstanding.

The assumptions under the Monte Carlo model related to the profits interests units, presented on a weighted-average basis, are provided below:

During the fiscal year ended June 30, 2024, a total of 2,213,700 Class B Units were awarded to the Company's

Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer.

The assumptions under the Monte Carlo model related to the profits interests units for fiscal 2024, presented on a weighted-average basis, are provided below:

Expected volatility 68.0 - 76.0

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grant date fair value

Unvested balance, June 30, 2022 2,158,072 $ 1.28

Outstanding balance, June 30, 2023 1,264,337 $ 1.28

Granted 1,106,850 $ 6.21

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Vested ( 703,395 ) $ 1.28

Unvested balance, June 30, 2023 1,264,337 $ 1.28

Outstanding balance, June 30, 2024 1,287,113 $ 5.52

Performance-based unit awards Number of

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grant date fair value

Unvested balance, June 30, 2022 2,217,865 $ 0.57

Outstanding balance, June 30, 2023 2,118,558 $ 0.57

Granted 1,106,850 $ 1.78

Forfeited ( 1,853,737 ) $ 0.57

Unvested balance, June 30, 2023 2,118,558 $ 0.57

Outstanding balance, June 30, 2024 1,371,671 $ 1.55

The total unrecognized compensation cost related to profits interests units outstanding as of June 30, 2024 was $ 3.9 million, comprised (i) $ 1.8 million related to time-based unit awards expected to be recognized over a weighted-average period of 2.8 years and (ii) $ 2.1 million related to performance-based unit awards, which will be recorded when it is probable that the performance-based criteria will be met.

2021 Omnibus Incentive Plan

In March 2021, the Board of Directors approved the InnovAge Holding Corp.

In March 2021, the Compensation Committee of the Board of Directors approved the InnovAge Holding Corp.

2021 Omnibus Incentive Plan (“2021 Omnibus 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 authorized under the 2021 Omnibus Incentive Plan is 14,700,000 .

The Company has issued time-based restricted stock units under this plan to its employees which generally vest or vested (i) on March 4, 2023, the second anniversary of the grant date, (ii) over a three-year period with one-third vesting on each anniversary of the date of grant, or (iii) at other dates.

The grant date fair value of restricted stock units is based on the closing market price of our common stock on the date of grant.

Certain awards under this plan vest upon achieving specific share price performance criteria and are determined to have performance-based vesting conditions.

The Company has issued time-based restricted stock units under this plan to its employees which generally(i) vested on March 4, 2023, the second anniversary of the grant date, or (ii) vest over a three-year period with one-third vesting on each anniversary of the date of grant.

Certain other vesting periods have also been used.

The grant date fair value of restricted stock units with time-based vesting is based on the closing market price of our common stock on the date of grant.

Certain other awards, including units and stock options under this plan vest upon achieving specific share price performance criteria and are determined to have performance-based vesting conditions.

The Company has also issued time-based vesting stock options under this plan to its employees which generally vest in equal parts over a three-year period.

Restricted Stock Units

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Outstanding balance, June 30, 2024 258,767 $ 5.18

The fair value of the performance-based restricted stock units and performance-based stock options granted during the year ended June 30, 2022, was based upon a Monte Carlo option pricing model using the assumptions in the following table:

Expected volatility 34.5 %

Expected term (in years) 5.0

Interest rate 1.56 %

Dividend yield 0 %

Weighted-average fair values $ 5.18

Fair value of underlying stock $ 7.89

The total unrecognized compensation cost related to performance-based vesting restricted stock units outstanding as of June 30, 2024, was $ 0.4 million and is expected to be recognized over a weighted-average period of 1.5 years.

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Outstanding balance, June 30, 2024 776,299 $ 3.08

The fair value of the performance-based stock options granted during the year ended June 30, 2022, was based upon a Monte Carlo option pricing model using the assumptions in the table above under the ‘Restricted Stock Units’ heading.

The total unrecognized compensation cost related to performance-based vesting stock options outstanding as of June 30, 2024, was $ 0.8 million and is expected to be recognized over a weighted-average period of 1.6 years.

On December 1, 2023, the Company acquired all of the issued and outstanding membership interests of two California-based PACE programs, ConcertoCare PACE of Bakersfield, LLC and ConcertoHealth PACE of Los Angeles, LLC (collectively "Concerto"), from Perfect Health, Inc.

d/b/a ConcertoCare, a tech-enabled, value-based provider of at-home, comprehensive care for seniors and other adults with unmet health and social needs, for $ 23.9 million.

We believe the Concerto acquisition complements our California PACE centers.

The acquisition was funded through cash on hand.

Results of operations from the acquired centers are included in our consolidated statements of operations for the year ended June 30, 2024 beginning with the date of acquisition and were not significant to our results.

We incurred costs related to the acquisition of approximately $ 0.1 million during the year ended June 30, 2024.

Acquisition related costs were expensed as incurred and have been recorded in corporate, general and administrative expenses in our consolidated statements of operations.

The Concerto acquisition was accounted for using the purchase method of accounting.

The purchase price has been preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition.

During the measurement period, which is up to one year from the acquisition date, we may adjust provisional amounts that were recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date.

The fair values of assets acquired and liabilities assumed may change as the valuation of intangible assets, working capital adjustments, and overall purchase price allocation are being finalized.

Goodwill represents the excess of the purchase price over the fair value of net assets acquired.

Goodwill recognized represents the

estimated future economic benefits arising from expected growth opportunities for the Company and is not deductible for income tax purposes.

The following table presents a preliminary allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date:

allocation Measurement period adjustments Adjusted

Cash Consideration $ 23,916 $ — $ 23,916

Total Consideration $ 23,916 $ — $ 23,916

Accounts receivable, net $ 563 $ ( 124 ) $ 439

Prepaid expenses 330 739 1,069

Property and equipment, net 7,969 — 7,969

Operating lease assets 6,892 923 7,815

Goodwill 17,348 ( 1,616 ) 15,732

Deposits and other 343 — 343

Accounts payable and accrued expenses ( 353 ) 78 ( 275 )

Reported and estimated claims ( 111 ) — ( 111 )

Operating lease obligations ( 8,941 ) — ( 8,941 )

Finance lease obligations ( 124 ) — ( 124 )

Fair value of assets and liabilities $ 23,916 $ — $ 23,916

As of June 30, 2024, we recognized a measurement period adjustment for lease incentives related to tenant improvements.

The adjustment resulted in an increase of $ 0.7 million to prepaid expenses and $ 0.9 million to operating lease assets, a decrease of $ 0.1 million to accounts receivable and $ 0.1 million to accounts payable and accrued expenses, and a corresponding decrease of $ 1.6 million to goodwill.

The Company’s effective income tax rate for the years ended June 30, 2024 and 2023 was ( 6.4 )% and 14.3 %, respectively, which differed from the amount computed by applying the applicable U.S.

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State tax ( 1,733 ) ( 2,678 )

Provision for income taxes $ ( 7,241 ) $ 723

Provision (benefit) for income taxes $ 1,402 $ ( 7,241 )

___________________________________

(a) Reflects the permanent addback for the Section 162(m) limitation, which limits the deduction of compensation for the five highest paid officers to $ 1,000,000 .

Provision for income taxes consisted of the following for the years ended June 30, 2023 and 2022:

(a) Reflects the permanent addback for the Section 162(m) limitation, which limits the deduction of compensation for the five highest paid officers to $ 1.0 million per officer.

Provision (benefit) for income taxes consisted of the following for the years ended June 30, 2024 and 2023:

Year ended June 30,

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Total deferred tax expense 1,224 ( 11,525 )

Total provision for income taxes $ ( 7,241 ) $ 723

Total provision (benefit) for income taxes $ 1,402 $ ( 7,241 )

The significant components of deferred tax assets and liabilities were as follows for the years ended June 30, 2024 and 2023:

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The Company had state net operating loss carryforwards of $ 185.8 million and $ 117.9 million at June 30, 2024 and 2023, respectively, which will begin to expire in 2037 if not utilized.

Included in this is a city net operating loss which will begin to expire in 2025 if not utilized.

Included in this is a city net operating loss which will

begin to expire in 2025 if not utilized.

Additionally, the Company has federal net operating loss carryforwards of $ 108.9 million and $ 81.7 million as of June 30, 2024 and 2023, respectively which do not expire.

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The Company had no uncertain tax positions at June 30, 2024 and 2023.

The Company files income tax returns as a consolidated group, excluding SH1 and InnovAge Sacramento, in the U.S.

The Company files income tax returns as a consolidated group, excluding SH1, InnovAge Sacramento, and InnovAge Orlando, in the U.S.

federal jurisdiction and various states and is subject to examination by taxing authorities in all of those jurisdictions.

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Related Parties

Pursuant to the PWD Amended and Restated Agreement of Limited Partnership, Continental Community Housing, the general partner of PWD and our wholly-owned subsidiary (the “General Partner”), helped fund operating deficits and shortfalls of PWD in the form of a loan (the “PWD Loan”).

The PWD Loan does not accrue interest.

Additionally, the General Partner is paid an administration fee of $ 35,000 per year.

At each of June 30, 2023 and 2022, $ 0.7 million was recorded in Deposits and other.

Pursuant to the PWD Amended and Restated Agreement of Limited Partnership, CCH helped fund operating deficits and shortfalls of PWD in the form of a loan (the “PWD Loan”).

The PWD Loan did not accrue interest.

Additionally, CCH was paid an administration fee of $ 35,000 per year.

At June 30, 2023, $ 0.7 million was recorded in Deposits and other related to the PWD Loan.

On March 13, 2024, PWD entered into a Purchase and Sale Agreement for the sale of all of PWD's property, including the Senior Housing unit.

On May 2, 2024, PWD closed on the sale of its Senior Housing property for $ 9.5 million.

Upon completion of the sale, PWD ceased providing senior housing services and was dissolved.

Following the dissolution, the remaining proceeds from the sale were distributed in accordance with the partnership agreement and as otherwise agreed by the partners.

The Company received net proceeds of $ 4.8 million in connection with the dissolution.

Segment Reporting

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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 has determined that it has three operating segments, two of which are related to the Company’s PACE offering.

The PACE-related operating segments are based on two geographic divisions, which are East and West.

Due to the similar economic characteristics, nature of services, and customers, we have aggregated our East and West operating segments into one reportable segment for PACE.

The Company’s remaining operating segment primarily relates to Senior Housing, which is an immaterial operating segment, and shown below as “Other” along with certain corporate unallocated expenses.

As of June 30, 2024, the Company served approximately 7,020 PACE participants, making it the largest PACE provider in the U.S.

based upon participants served, and operated 17 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;

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.

based upon participants served, and operated 20 PACE centers across California, Colorado, Florida, New Mexico, Pennsylvania and Virginia.

PACE is a fully-capitated managed care program, which serves the frail elderly, and predominantly dual-eligible, in a community-based service model.

InnovAge provides 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, VA and private pay sources.

Additionally, under the Medicare Prescription Drug Plan, CMS shares part of the risk for providing prescription medication to the Company’s participants.

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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.

For the periods presented, all of the Company’s long-lived assets were located in the United States and all revenue was earned in the United States.

The CODM uses Center-level Contribution Margin as the measure for assessing performance of its operating 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 twelve months ended:

The following table summarizes the operating results regularly provided to the CODM by segment for the years ended June 30, 2024 and 2023:

June 30, 2024 June 30, 2023

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Depreciation and amortization 18,477 473 18,950 14,959 460 15,419

Equity loss — — — — — —

Other operating (income) expense — — — — — —

Interest expense, net 3,845 178 4,023 1,342 180 1,522

Loss on extinguishment of debt — — — — — —

Gain on equity method investment — — — — — —

Other expense (income) ( 124 ) — ( 124 ) 305 — 305

Income (Loss) Before Income Taxes $ ( 50,493 ) $ ( 300 ) $ ( 50,793 ) $ ( 6,628 ) $ ( 609 ) $ ( 7,237 )

Gain on cost and equity method investments ( 2,842 ) — ( 2,842 ) — — —

Other income ( 2,542 ) — ( 2,542 ) ( 124 ) — ( 124 )

Loss Before Income Taxes $ ( 21,555 ) $ ( 264 ) $ ( 21,819 ) $ ( 50,493 ) $ ( 300 ) $ ( 50,793 )

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(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.

(1) Center-level Contribution Margin from a segment below the quantitative thresholds is attributable to the Senior Housing operating segment of the Company.

This segment has never 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.

8 unchanged sentences

in thousands, except share values 2024 2023

Net income (loss) attributable to InnovAge Holding Corp.

Net loss attributable to InnovAge Holding Corp.

$ ( 21,338 ) $ ( 40,673 )

4 unchanged sentences

EPS (diluted) $ ( 0.16 ) $ ( 0.30 )

Share Repurchase Program

On June 14, 2024, our Board authorized up to $ 5.0 million of share repurchases.

As of June 30, 2024, the Company had repurchased approximately 45,023 shares of its common stock for $ 0.2 million, of which 36,559 were placed in Treasury.

Subsequent Event

The Company has evaluated subsequent events through September 12, 2023, the date on which the condensed consolidated financial statements were issued.

The Company has evaluated subsequent events through September 10, 2024, the date on which the consolidated financial statements were issued.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data