What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-09-09 compared with 2024-09-10 · 165 added, 175 removed, 355 unchanged (49% of the section changed)

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The Company served approximately 7,740 PACE participants as of June 30, 2025, making it the largest PACE provider in the U.S.

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

During the year ended June 30, 2024, the Company opened two de novo centers in Tampa and Orlando, Florida, and acquired two PACE centers in California from ConcertoCare, which include one operating center in the Crenshaw neighborhood of Los Angeles, and a second program that is a planned de novo in Bakersfield, California.

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

InnovAge’s programs are designed to allow frail seniors to live life on their terms by aging in place, in their own homes and communities, for as long as safely possible.

Through our Program of All-Inclusive Care for the Elderly (“PACE”) program, we fulfill a broad range of medical and ancillary services for seniors, including in-home care services (skilled, unskilled and personal care), center services such as primary care, physical therapy, occupational therapy, speech therapy, dental services, mental health and psychiatric services, meals, and activities;

Through our Program of All-Inclusive Care for the Elderly (“PACE”), we fulfill a broad range of medical and ancillary services for seniors, including in-home care services (skilled, unskilled and personal care), 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;

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rising costs and poor outcomes.

Our participant-centered care delivery approach is designed to improve the quality of care our participants receive, while keeping them in their homes for as long as safely possible and reducing over-utilization of high-cost care settings such as hospitals and nursing homes.

The purpose of our participant-centered care delivery approach is to improve the quality of care our participants receive, while keeping them in their homes for as long as safely possible and reducing over-utilization of high-cost care settings such as hospitals and nursing homes.

Our participant-centered approach is led by our Interdisciplinary Care Teams (“IDTs”), who oversee all aspects of each participant’s unique care plan and function as the core group of care providers to our participants.

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Trends and Uncertainties Affecting the Company

Macroeconomic conditions.

During fiscal year 2024, the U.S.

continued to wrestle with inflation and the health industry continued to face increased wages due to labor shortages and increased competition among healthcare professionals.

In fiscal year 2023 and 2024, in response to high levels of inflation, we implemented various mitigation strategies to reduce costs of operation, including consolidating services, price negotiations with providers and vendors and limiting corporate staffing, and effecting a reduction in workforce in December 2022 and October 2023.

Inflationary pressures eased significantly during the second half of fiscal year 2024 and abated to normalized levels.

The effects of inflation, after accounting for these mitigation strategies, were immaterial to our financial results for fiscal year 2024.

Increased cost of care .

In fiscal year 2024, operating expenses increased $49.6 million, or 6.7%, compared to 2023 due to (i) the increased cost of care and related cost per participant as a result of increased salaries, wages and benefits associated with increased headcount and higher wage rates and (ii) increased fleet and contract transportation due to an increase in external appointments related to growing census.

Additionally, external provider costs increased in the fiscal year 2024 compared to 2023 due to annual increases in assisted living and nursing facility unit cost and general medical inflation.

In an effort to mitigate the effects of these rising costs, in fiscal years 2023 and 2024, we implemented and continued certain clinical value initiatives designed to manage participant expenses and reduce low-value utilization of services and an infrastructure to ensure accurate reimbursement of services.

During fiscal year 2024, we continued to strengthen our payer capabilities and reduced external provider costs, which we believe to be a result of our maturing clinical value initiatives.

Additionally, in fiscal year 2024 we introduced operational value initiatives to complement our clinical value initiatives.

These initiatives are focused on identifying value-creation opportunities at the center operating level and the selling, general and administrative level to drive staff productivity, operating efficiency and vendor unit economics from better leveraging people, process and technology.

While we expect to continue to experience elevated operating expenses during fiscal year 2025 for similar reasons, we also expect that our clinical value initiatives will help offset increasing cost of care.

Increased cost of care and external provider costs .

In fiscal year 2025, we experienced increased cost of care per participant compared to fiscal year 2024, partly as a result of increased salaries, wages and benefits.

In fiscal year 2026, we anticipate increased cost of care from our third-party service providers in an effort to offset their heightened expenses resulting, in part, from budget pressures due to the OBBBA as well as budget cuts to providers from state Medicaid programs, as well as possible increases in cost of medical and other supplies used in order to provide healthcare services.

We believe that our clinical value initiatives and operational value initiatives, which continue to be developed, may assist us in offsetting the increased cost of care anticipated for fiscal year 2026.

Labor market and access to supportive housing facilities .

The healthcare sector continues to experience workforce shortages, particularly in geriatrics, primary care and direct care roles, as well as a complex set of challenges in hiring additional professionals.

Competition from health systems and home health providers for nurses, drivers and caregivers has intensified, further challenging the Company’s ability to recruit and retain staff.

In addition, there are systemic challenges related to workforce training and the pipeline of qualified professionals, which have not kept pace with this

growing demand.

These labor market pressures have increased wage and benefit costs, and have also affected our staffing ability which could impact our enrollment capacity and services.

To mitigate these challenges, we implemented targeted compensation and retention initiatives, along with operational measures to help improve productivity and reduce reliance on agency staffing.

Partially as a result of increased competition and other market trends, in conjunction with increased staffing related to our growth, there was an increase in the cost of care for the fiscal year 2025 compared to 2024, as discussed in "Results of Operations" below.

In addition, a shortage of clinicians combined with an aging population creates increased demand on the limited number of existing residential facilities.

As a result, the access of our participants to such facilities is uncertain, as such facilities may prioritize private payors or may be unable to accept participants at pre-determined rates.

If we are unable to access residential facilities, we could be unable to continue providing PACE services to participants who require such facilities.

Census and capitation revenue.

On May 11, 2023, President Biden allowed the national emergency and public health emergency declarations related to the COVID-19 pandemic to expire, which ended certain Medicaid waivers.

While states have resumed processing new Medicaid applications and redeterminations of beneficiary eligibility, the healthcare industry, including the Company, experienced increased delays in the processing of such applications.

As a result of such delays, the Company experienced an increase in gaps of eligibility with redetermination applications during fiscal year 2024, which is expected to continue through fiscal year 2025.

While participants continue to receive care and remain enrolled with the Company during this time, the effect of such delays temporarily halts Medicaid revenue related to any closed application and simultaneously increases our risk of revenue recovery.

In an effort to mitigate these risks, the Company utilizes State approved third-party eligibility partners to expedite applications, escalate delayed cases to State administrators, and pursue safe discharges for individuals who are truly ineligible.

There has not been a material effect on the Company’s financial statements or operations due to this situation.

The Company has experienced aging report accounts and financial losses being normalized to pre-public health emergency levels.

The Company expects to continue these mitigating measures during fiscal year 2025 and will continue to assess the situation as it evolves.

Labor market .

The healthcare sector continues to experience a complex set of challenges in hiring additional professionals.

Specifically, the demand for healthcare services has been steadily increasing due to an aging population and a greater focus on health and wellness in society.

In addition, there are systemic challenges related to workforce training and the pipeline of qualified professionals, which have not kept pace with this growing demand.

Furthermore, high inflation experienced during fiscal year 2023, which continued through fiscal year 2024 increased the cost of living, and subsequently, wage pressure for healthcare professionals, with a shift towards an employee-centric market with an emphasis on competitive compensation, flexibility and professional growth opportunities, which contributed to an increasingly competitive labor market.

In an effort to mitigate the effects of these challenges, we adopted strategies to offer competitive compensation packages.

Partially as a result of increased competition and other market trends, in conjunction with increased staffing related to compliance and remediation efforts in our centers, there was an increase in the cost of care for the fiscal year 2024 compared to 2023, as discussed in "Results of Operations" below.

Additionally, on October 13, 2023, California passed into law California Senate Bill No.

525 ("SB 525"), which would raise the minimum wage for many California healthcare workers.

SB 525 becomes effective when certain financial metrics within the State of California are met.

Even though SB 525 is not yet effective and PACE centers are not covered by it, many of our contractors and other third-party providers are expected to be impacted by SB 525, and we believe that due to this and other macroeconomic factors, our California centers have received provider requests to increase rates to cover their increased costs.

In addition, as a result of competition generated by SB 525 and other California market conditions, we have increased our wages for healthcare workers and other comparable market positions in the California market.

These increases did not have a material impact on our labor costs, financial statements or operations for the fourth quarter or fiscal year 2024.

We will continue to evaluate the impact of this legislation on our business.

In addition, in fiscal year 2024, the nurses in our Pennsylvania centers voted to unionize and collective bargaining commenced in late 2024.

These employees represent approximately 1% of our total workforce.

We currently do not expect the impact from the negotiated collective bargaining agreement and costs for unionized employees to have a material effect on our costs of labor or operations.

However, we cannot predict whether other employees will follow a similar course of action.

We experienced delays and increased gaps in eligibility both for new enrollments and Medicaid redetermination applications during fiscal years 2025 and 2024 due to processing delays and other enrollment and redetermination procedures that vary by State and county, especially in the State of California.

In addition, it is possible that these delays could persist or be exacerbated due to potential impacts of the OBBBA, which has not yet had a material effect on the Company’s financial statements or operations;

however, we continue to monitor the effects of the OBBBA on the Company.

Medicaid Spending.

The OBBBA adopted in July 2025, mandates significant reductions in federal Medicaid spending, introduces new work requirements for Medicaid beneficiaries aged 19 to 64 and cost-sharing measures for certain Medicaid beneficiaries, and requires states to conduct bi-annual eligibility verifications of Medicaid enrollees in the expansion population.

These changes may lead to decreased Medicaid enrollment among existing and prospective PACE participants, potentially reducing our funding and decreasing margins.

With the federal funding cuts and states being prohibited from increasing provider taxes to finance their share of Medicaid spending, states may also face budgetary pressures.

Such budgetary pressure may potentially lead to reductions in certain optional Medicaid benefits, reductions in the workforce for the government entities that oversee and administer Medicaid and PACE, causing delays, and downward pressure on rates, including our capitated fee payment.

Finally, the new requirements will necessitate adjustments in our administrative processes to ensure compliance with more frequent eligibility verifications and other reporting standards mandated by federal and state regulatory agencies.

Macroeconomic conditions.

tariff announcements, retaliatory measures by other countries, and significant uncertainty surrounding trade tensions may result in higher prices for medical and other supplies and lead to supply chain disruptions and additional costs.

The degree to which tariffs affect the global supply chain and our business will depend on their timing, duration and magnitude, which may be changed at any time and with little or no prior notice.

For additional information on the various risks posed by macroeconomic events, regulation, and employee matters, please see the section entitled “Risk Factors” included in Part I, Item 1A of this Annual Report.

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This is driven by two factors:

(i) we believe we manage a higher acuity population, with an average RAF score of 2.46 based on InnovAge data as of June 30, 2024, compared to an average RAF score of 1.08 for Medicare fee-for-service non-dual enrollees, as calculated in an analysis by Avalere Health in June 2020 of a cohort of individuals enrolled in Medicare Fee-for-Service in 2019;

(i) we believe we manage a higher acuity population, with an average RAF score of 2.42 based on InnovAge data as of June 30, 2025;

and (ii) we have Medicaid spend in addition to Medicare.

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The Medicare portion of our capitated payment is risk-based on the underlying medical conditions and frailty of each participant.

In fiscal year 2023, we began working on expanding payer capabilities which we continued to strengthen in fiscal 2024 so that our revenue more accurately reflects the acuity of the populations we serve.

We continue to

strengthen our encounter data submission process so that our revenue more accurately reflects the acuity of the populations we serve.

• Our ability to grow enrollment and capacity within existing centers.

We believe all seniors should have access to the type of all-inclusive care offered by the PACE model.

Several factors can affect our ability to grow enrollment and capacity within existing centers, including sanctions issued by regulators or suspensions of State attestations required to open new de novo centers.

Several factors can affect our ability to grow enrollment and capacity within existing centers, including competition, costs and sanctions issued by regulators or suspensions of State attestations required to open new de novo centers.

• Our ability to maintain high participant satisfaction and retention.

Our comprehensive individualized care model and frequency of interaction with participants generates high levels of participant satisfaction.

We achieved an average NPS score of 46 for fiscal year 2024 and average participant tenure of 3.6 years as of June 30, 2024, measured as tenure from enrollment to disenrollment, among our centers that have been operated by us for at least five years.

We achieved an I-SAT NPS score of 56 for fiscal year 2025 and average participant tenure of 3.1 years as of June 30, 2025, measured as tenure from enrollment to disenrollment, among our centers that have been operated by us for at least five years.

Furthermore, we experience low levels of voluntary disenrollment, averaging 7.0% annually over the last three fiscal years.

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We receive capitated payments to manage the totality of a participant’s medical care across all settings.

The risk pool of our population became more acute in fiscal year 2023 as we were not able to replenish our population mix with newer, lower-acuity participants as a result of State sanctions.

Together with the factors disclosed above (increased salaries, wages and benefits, increased fleet and contract transportation costs, annual increases in assisted living and nursing facility unit cost and general medical inflation), our external provider costs and cost of care, excluding depreciation and amortization, represented approximately 83% of our revenue in the year ended June 30, 2024.

The risk pool of our population is highly acute.

Various factors, including increased salaries, wages and benefits, increased staffing, annual increases in assisted living and nursing facility unit cost and general medical inflation, have affected our external provider costs and cost of care, excluding depreciation and amortization, which represented approximately 82% of our revenue in the year ended June 30, 2025.

• Center-level Contribution Margin .

The Company’s management uses Center-level Contribution Margin as the measure for assessing performance of its operating segments.

As we serve more participants in existing centers, we expect to leverage our fixed cost base at those centers and increase the value of a center to our business increases over time.

As we serve more participants in existing centers, we expect to leverage our fixed cost base at those centers and increase the value of a center to our business over time.

• Our ability to expand via de novo centers within existing and new markets.

Several factors can affect our ability to open de novo centers, including sanctions issued by regulators, legal, community or other obstacles in the construction of such centers, and our ability to hire and train enough workers to ramp up these centers to maturity.

In response to an audit to our Sacramento center and a medical review of our San Bernardino center, which have been previously disclosed, the California Department of Health Care Services (“DHCS") notified us

that it was suspending its attestations in support of the planned de novo center in Downey and the recently acquired planned de novo center in Bakersfield.

CMS has closed its process and DHCS's process is ongoing.

While the planned California de novo centers are precluded from opening at this time, DHCS notified us that it would consider restoring the State Attestations upon our successful remediation of the deficiencies raised in our Sacramento center.

• Execute tuck-in acquisitions and partnerships.

Over the past six fiscal years, we have acquired and integrated four PACE organizations for a total of eight operational centers (excluding the PACE center in Bakersfield, California, which is not yet operational).

In response to an audit to our Sacramento center and a medical review of our San Bernardino center, our planned California de novo centers are precluded from opening at this time.

The California Department of Health Care Services (“DHCS”) notified us that it would consider restoring the State Attestations with respect to such centers upon our successful remediation of the deficiencies raised in our Sacramento center and its completion of the medical review (and any potential resulting remediation that may be required) in our San Bernardino center, both of which are ongoing.

• Execute tuck-in acquisitions, strategic transactions and partnerships.

Since fiscal year 2019, we have acquired and integrated four PACE organizations for a total of eight operational centers (excluding the PACE center in Bakersfield, California, which is not yet operational).

These acquisitions represent expansion of our InnovAge Platform into one new state and five new markets.

By bringing acquired organizations under the InnovAge Platform, we hope to further realize revenue growth and improve operational efficiency and care delivery post-integration.

We also have pursued and intend to continue pursuing additional relationships with key stakeholders, existing organizations and other care providers in order to form partnerships in target geography, such as the joint venture we entered into at our Orlando PACE center with Orlando Health during the fourth quarter of fiscal year 2024.

We also have pursued and intend to continue pursuing additional relationships with key stakeholders, existing organizations and other care providers in order to form partnerships in target geographies, such as the joint venture with Orlando Health relating to our Orlando PACE center and the joint venture with Tampa General Hospital relating to our Tampa center which was entered into on August 15, 2025.

On January 2, 2025, with the goal of supporting our growth and improving pharmacy cost-management, we completed the acquisition of certain pharmacy assets from Tabula Rasa HealthCare Group, Inc.

(“TRHC”), a leading pharmacy care management company, for a total purchase price of $4.8 million.

Pursuant to a Management Services Agreement, TRHC provides management services to our acquired pharmacy business with an initial term of five years.

• Our ability to maintain high quality of regulatory compliance .

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Our economic model relies on our capitated arrangements with government payors, namely Medicare and Medicaid.

We view the government not only as a payor but also as a key partner in our efforts to expand into new geographies and access more participants in our existing markets.

We view the government not only as a payor but also as a key partner in our efforts to expand into new geographies and access more participants in our existing

Maintaining, supporting and growing these relationships, in existing markets as well as new geographies, is critical to our long-term success.

• Investing to support growth .

We intend to continue investing in our centers, value-based care model, and sales and marketing organization to support long-term growth.

We intend to continue investing in our centers, value-based care model, and sales and marketing initiatives to support long-term growth.

We expect our expenses to increase in absolute dollars for the foreseeable future to support our growth due, partially, to additional costs we incur in connection with audits to our centers, remediation plans and current and potential legal and regulatory proceedings.

We plan to invest in future growth judiciously and maintain focus on managing our results of operations.

We are investing to increase our sophistication as a payor to drive clinical value, improve outcomes, and manage cost trends.

Accordingly, in the short term we expect the activities noted above to increase our expenses as a percentage of revenue, but in the longer term, we anticipate that these investments will positively impact our business and results of operations.

We plan to continue investing in our growth while also managing our expenses and results of operations.

During fiscal years 2024 and 2025 we made investments to increase our sophistication as a payor to drive clinical value, improve outcomes, and manage cost trends.

We plan to continue investing in such activities in fiscal year 2026.

Accordingly, in the short term we expect these activities to increase our expenses as a percentage of revenue, but in the longer term, we anticipate that these investments will positively impact our business and results of operations.

• Seasonality to our business .

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Historically, these true-up payments typically occur between May and August, but the timing of these payments is determined by CMS, and we have neither visibility into nor control over the timing of such payments.

The variability of participant enrollments during the open enrollment period has also been impacted by additional offerings by MA and other competitors.

We believe that, as a result of these additional offerings, we experienced higher than expected disenrollments during fiscal year 2024.

The variability of participant enrollments and voluntary disenrollments has also been impacted by additional offerings by MA and other competitors including PACE organizations in select markets.

Components of Results of Operations

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The remainder of our cost of care is fixed relative to the number of participants we serve, such as occupancy and insurance expenses.

As a result, as revenue increases due to census growth, cost of care, excluding depreciation and amortization, moderately decreases as a percentage of revenue.

As we open new centers, we expect cost of care, excluding depreciation and amortization, to increase in absolute dollars due to higher census and facility related costs.

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Corporate, General and Administrative Expenses.

Corporate, general and administrative expenses include employee-related expenses, including salaries and related costs.

In addition, general and administrative expenses include all corporate

technology and occupancy costs associated with our corporate office.

We expect our general and administrative expenses to increase in absolute dollars due to the additional legal, accounting, insurance, investor relations and other costs that we incur as a public company, as well as other costs associated with compliance and continuing to grow our business.

Corporate, general and administrative expenses include other employee-related expenses, including salaries and related costs.

In addition, general and administrative expenses include all corporate technology and occupancy costs associated with our corporate office.

We expect our general and administrative expenses to increase in absolute dollars due to the additional legal, accounting,and compliance costs as we grow our business and continue to operate as a public company.

However, we anticipate general and administrative expenses to decrease as a percentage of revenue over the long term, although such expenses may fluctuate as a percentage of revenue from period to period due to the timing and amount of these expenses.

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Depreciation and amortization 19,510 18,950

Impairments and loss on assets held for sale 13,615 —

Total expenses 883,460 787,035

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Interest expense, net (4,612) (4,023)

Gain on cost and equity method investments 2,842 —

Other income 2,542 124

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

(Loss) gain on cost and equity method investments (1,393) 2,842

Other income, net 1,739 2,542

Total other (expense) income (4,266) 1,361

Loss Before Income Taxes (34,027) (21,819)

Provision (Benefit) for Income Taxes 1,402 (7,241)

Provision for Income Taxes 1,316 1,402

Net Loss (35,343) (23,221)

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Capitation revenue was $852.4 million for the year ended June 30, 2025, an increase of $89.8 million, or 11.8%, compared to $762.6 million for the year ended June 30, 2024.

This increase was driven by a $30.8 million, or 4.5% increase in member months (as defined below under “Key Business Metrics and non-GAAP Measures – Total member months”) coupled with a $44.9 million, or 6.3%, increase in capitation rates.

The increase in member months was primarily due to the release of sanctions at our Sacramento, California center and at our Colorado centers.

The increase in capitation rates was primarily driven by an annual increase in both Medicaid capitation rates as determined by the States and Medicare capitation rates as a result of increased risk score and county rates.

This increase was driven by a $78.2 million, or 10.3% increase in member months (as defined below under “Key Business Metrics and non-GAAP Measures – Total member months”) coupled with an $11.6 million, or 1.4%, increase in capitation rates.

The increase in member months was primarily due to growth in our California and Colorado centers, and to a lesser extent to the addition of de novo centers in Florida and the acquisition of the Crenshaw center in California.

The increase in capitation rates includes a

7.2% increase in Medicaid rates partially offset by revenue reserve and a 2.1% increase in Medicare rates partially offset by an out of cycle risk score true up payment received in the prior year.

Year Ended June 30, $ Change % Change

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Depreciation and amortization 19,510 18,950 560 3.0 %

Impairments and loss on assets held for sale 13,615 — 13,615 100.0 %

Total operating expenses $ 883,460 $ 787,035 $ 82,810 10.5 %

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External provider costs were $431.2 million for the year ended June 30, 2025, an increase of $28.1 million, or 7.0%, compared to $403.0 million for the year ended June 30, 2024.

The increase was primarily driven by an increase of $16.8 million, or 4.5% in member months coupled with an increase of $11.7 million, or 3.0%, in cost per participant.

The increase in cost per participant was primarily driven by a $9.6 million increase associated with increased assisted living utilization and unit cost and a $3.6 million increase associated with higher professional services utilization.

This was partially offset by a $5.1 million reduction in permanent nursing facility utilization.

The increase was primarily driven by an increase of $41.3 million, or 10.3%, in member months partially offset by a decrease of $13.4 million, or 3.0%, in cost per participant.

The decrease in external provider cost per participant was primarily driven by a decrease in inpatient, assisted living, permanent nursing facility and short stay nursing facility utilization, a decrease in external hospice care associated with the transition of this function to internal clinical resources, and a decrease in pharmacy expense due to the transition to in-house pharmacy services.

The decrease in external provider cost per participant was partially offset by an increase in inpatient unit cost and an annual increase in assisted living and permanent nursing facility unit cost.

Cost of care, excluding depreciation and amortization.

Cost of care, excluding depreciation and amortization expense was $228.8 million for the year ended June 30, 2024, an increase of $16.5 million, or 7.8%, compared to $212.3 million for the year ended June 30, 2023, primarily due to an increase of $7.0 million, or 3.1%, in cost per participant coupled with an increase of $9.5 million, or 4.5%, in member months.

The increase in cost per participant was driven by (i) a $12.8 million increase in salaries, wages and benefits associated with increased headcount to support growth and higher wage rates, (ii) a $2.3 million increase in contract provider expense in California, (iii) $1.9 million in increased fleet expense and contract transportation as a result of higher average daily attendance, an increase in external appointments, and higher fuel costs, (iv) $1.2 million in increased building maintenance and security, (v) $1.8 million in software license fees, and (vi) $1.8 million in de novo occupancy and administrative costs inclusive of the Concerto acquisition in December 2023.

This was partially offset by a $3.9 million reduction in third party audit and compliance support.

Cost of care, excluding depreciation and amortization expense was $268.9 million for the year ended June 30, 2025, an increase of $40.1 million, or 17.5%, compared to $228.8 million for the year ended June 30, 2024, primarily due to an increase of $23.4 million, or 10.3%, in member months coupled with an increase of $16.7 million, or 6.6%, in cost per participant.

The overall increase was driven by (i) a $23.8 million increase in salaries, wages and benefits associated with increased headcount to support growth and higher wage rates, (ii) a $1.5 million increase in software license fees, (iii) a $1.9 million increase in de novo occupancy and administrative expense associated with opening centers in Florida and the acquisition of the Crenshaw center, (iv) a $2.6 million increase in contract provider expense in California associated with growth, (v) $6.7 million in consulting fees and shipping costs associated with in-house pharmacy services, and (vi) a $1.5 million increase in fleet expense including contract transportation.

Sales and marketing.

Sales and marketing expenses were $25.0 million for the year ended June 30, 2024, an increase of $5.3 million, or 27.2%, compared to $19.6 million for the year ended June 30, 2023, primarily due to a $1.6 million increase in marketing spend and a $2.8 million increase in salaries, wages and benefits, both associated with sanction release in our Colorado and Sacramento, California centers as well as opening new centers in Florida.

Sales and marketing expenses were $28.2 million for the year ended June 30, 2025, an increase of $3.3 million, or 13.1%, compared to $25.0 million for the year ended June 30, 2024, primarily due to increased headcount to support growth and higher wage rates.

Corporate, general and administrative expenses.

Corporate, general and administrative expenses were $111.3 million for the year ended June 30, 2024, a decrease of $4.3 million, or 3.7% compared to $115.6 million for the year ended June 30, 2023.

The decrease was primarily due to (i) $2.7 million reduction in third party legal expense, (ii) $2.3 million reduction in insurance expense, (iii) $4.5 million reduction in consulting expense associated with improving organizational

capabilities including the transition to a new electronic medical record (“EMR”), (iv) $2.2 million reduction in contract staff augmentation, and (v) $1.0 million reduction in recruiting expense.

These decreases were partially offset by (i) a $3.5 million increase in employee compensation and benefits as the result of an increase in headcount to support compliance and bolster organizational capabilities, (ii) $3.7 million in bad debt expense, and (iii) $1.2 million in consulting costs including Sarbanes-Oxley Act of 2002 compliance, internal audit support, and public relations.

Corporate, general and administrative expenses were $122.1 million for the year ended June 30, 2025, an increase of $10.7 million, or 9.6% compared to $111.3 million for the year ended June 30, 2024.

The increase was primarily due to (i) $10.1 million for the anticipated settlement of the securities class action lawsuit and (ii) a $7.3 million increase in employee compensation and benefits as the result of an increase in headcount and wage rates to support compliance and bolster organizational capabilities.

These increases in cost were partially offset by (i) a $5.0 million reduction in consulting expense associated with improving organizational capabilities including the transition to a new EMR system and (ii) a $1.1 million reduction in insurance expense.

Depreciation and amortization.

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The increase in depreciation expense was a result of capital additions in the normal course of business.

Impairments and loss on assets held for sale.

Impairments and loss on assets held for sale were $13.6 million for the year ended June 30, 2025.

This increase was due to (i) impairment charges related to ROU asset and construction in progress related to halting developments to a previously planned de novo center in Louisville, Kentucky that the Company is no longer pursuing, (ii) loss on sale of center equipment that was originally purchased for the center in Louisville,

Kentucky, (iii) loss on assets held for sale, and (iv) loss on settlement of lease liability in Louisville, Kentucky.

There were no impairments recorded during the year ended June 30, 2024.

Other Income (Expense)

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Interest expense, net $ (4,612) $ (4,023) $ (589) 14.6%

Gain on cost and equity method investments 2,842 — 2,842 NM*

Other income 2,542 124 2,418 1950.0%

Total other income (expense) $ 1,361 $ (1,398) $ 2,759 (197.4)%

* Not Meaningful

(Loss) gain on cost and equity method investments (1,393) 2,842 (4,235) (149.0)%

Other income, net 1,739 2,542 (803) (31.6)%

Total other (expense) income $ (4,266) $ 1,361 $ (5,627) (413.4)%

Interest expense, net.

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Interest income during the year ended June 30, 2024 was $3.5 million from money market funds offsetting interest expense of $7.5 million.

Gain on cost and equity method investments.

Gain on cost and equity method investment was $2.8 million for the year ended June 30, 2024 compared to no gain or loss for the year ended June 30, 2023.

On March 13, 2024, Pinewood Lodge, LLLP (“PWD”), a variable interest entity of the Company, entered into a Purchase and Sale Agreement for the sale of all of PWD's property, including its senior housing unit, which was used in our operations.

On May 2, 2024, PWD closed on the sale of the property.

In June 2024, the partnership was dissolved and we recognized a gain of $4.8 million from the dissolution of the partnership.

See Note 4 “Cost and Equity Method Investments” to our consolidated financial statements included in this Annual Report for further discussion.

The gain was partially offset by impairment losses of $2.0 million in conjunction with our minority interest investment in Jetdoc, Inc.

("Jetdoc") during the year ended June 30, 2024.

No observable price changes or impairments were recorded during the year ended June 30, 2023.

Other income.

Other income consists primarily of the net proceeds received from the sale of or disposal of property and equipment, unrealized gains and losses and investment income related to short-term investments.

Other income was $2.5 million for the year ended June 30, 2024, an increase of $2.4 million, compared to $0.1 million for the year ended June 30, 2023, due to $2.4 million in investment income related to short-term investments.

(Loss) gain on cost and equity method investments.

Loss on cost and equity method investments was $1.4 million for the year ended June 30, 2025, a change of $4.2 million, compared to a gain of $2.8 million for the year ended June 30, 2024.

The Company recognized a gain of $4.8 million from the dissolution of the Pinewood Lodge, LLLP (“PWD”) partnership, partially offset by impairment losses of $2.0 million in conjunction with a minority interest investment in Jetdoc, Inc.

during the year ended June 30, 2024.

The Company recognized a loss of $2.6 million associated with the impairment of a minority interest investment in DispatchHealth Holdings, Inc, partially offset by a $1.3 million net benefit associated with the dissolution of the PWD partnership during the year ended June 30, 2025.

Other income, net.

Other income, net consists primarily of the net proceeds received from the sale of or disposal of property and equipment, unrealized gains and losses and investment income related to short-term investments.

Other income, net was $1.7 million for the year ended June 30, 2025, a decrease of $0.8 million, compared to $2.5 million for the year ended June 30, 2024.

Investment income during the year ended June 30, 2025 was $2.1 million offset by $0.5 million loss on disposal of capital assets.

Investment income during the year ended June 30, 2024 was $2.4 million offset by $0.1 million loss on disposal of capital assets.

Provision (Benefit) for Income Taxes.

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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 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, the Company entered into a joint venture called InnovAge Florida PACE – Orlando 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.

The members of InnovAge Senior Housing Thornton, LLC (“SH1”), InnovAge California PACE - Sacramento (“SCR”), and InnovAge Florida PACE II, LLC (“ORL”) have elected to be taxed as partnerships, and no provision (benefit) for income taxes for SH1, SCR, or ORL is included in these consolidated financial statements included in this Annual Report.

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

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InnovAge Senior Housing Thornton, LLC is a variable interest entity (“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 SH1 interest is reflected within equity as noncontrolling interests.

Our share of earnings is recorded in the consolidated statements of operations as net loss attributable to noncontrolling interests.

The Company was the primary beneficiary of SH1 and consolidates SH1 because it had the power to direct the activities that are most significant to SH1 and had an obligation to absorb losses or the right to receive benefits from SH1.

The most significant activity of SH1 was the operation of a housing facility.

The Company provided a subordinated loan to SH1 and a guarantee for the convertible term loan held by SH1.

On June 30, 2025, the Company entered into an agreement to sell the Company’s managing member interest in SH1 and vacant land adjacent to SH1 senior housing property.

As a result, the Company reported the associated assets and liabilities as Assets held for sale and Liabilities held for sale in the Company’s consolidated balance sheets as of June 30, 2025.

During the years ended June 30, 2025 and 2024, we reported net loss of $35.3 million and $23.2 million, respectively, consisting of (i) operating loss of $29.8 million and $23.2 million, respectively, (ii) other income of $4.3 million and other expense of $1.4 million, respectively, and (iii) provision for income taxes of $1.3 million and benefit for income taxes of $1.4 million, respectively, each as described above.

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(a) Includes InnovAge Sacramento and InnovAge Orlando, which the Company owns and controls through joint ventures and are consolidated in our financial statements.

During the fiscal year ended June 30, 2024, the Company opened the Orlando and Tampa centers and acquired an operational center from Concerto in Los Angeles.

(b) Amounts are approximate.

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Total Member Months

We define Total Member Months as the total number of participants as of period end multiplied by the number of months within a year in which each participant was enrolled in our program.

We define Total Member Months as the total number of participants multiplied by the number of months within a year in which each participant was enrolled in our program.

We believe this is a useful metric as it more precisely tracks the number of participants we serve throughout the year.

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We define Center-level Contribution Margin as total revenues less external provider costs and cost of care, excluding depreciation and amortization, which includes all medical and pharmacy costs.

For purposes of evaluating

Center-level Contribution Margin on a center-by-center basis, we do not allocate our sales and marketing expense or corporate, general and administrative expenses across our centers.

For purposes of evaluating Center-level Contribution Margin on a center-by-center basis, we do not allocate our sales and marketing expense or corporate, general and administrative expenses across our centers.

Center-level Contribution Margin was $153.6 million and $132.1 million for the years ended June 30, 2025 and 2024, respectively.

The increase in Center-level Contribution Margin for fiscal year 2025 was primarily due to a year-over-year increase of 11.8% in total revenue and 10.8% in center level expense during the same period.

For more information relating to Center-level Contribution Margin, see Note 14 “Segment Reporting” to our consolidated financial statements.

For more information relating to Center-level Contribution Margin, see Note 14 “Segment Reporting” to our consolidated financial statements included in this Annual Report.

A reconciliation of Center-level Contribution Margin to loss before income taxes, the most directly comparable GAAP measure, for each of the periods is as follows:

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Totals PACE All other (1)

Capitation revenue $ 852,353 $ — $ 852,353 $ 762,570 $ — $ 762,570

Other service revenue 356 990 1,346 310 975 1,285

Total revenues 852,709 990 853,699 762,880 975 763,855

External provider costs 431,152 — 431,152 403,010 — 403,010

Cost of care, excluding depreciation and amortization 268,338 570 268,908 228,203 578 228,781

Center-Level Contribution Margin 153,219 420 153,639 131,667 397 132,064

Overhead costs (2)

136,284 10 136,294 135,264 — 135,264

Sales and marketing 28,217 24,957

Corporate, general and administrative 122,058 111,337

Depreciation and amortization 19,510 18,950

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

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

Impairments and loss on assets held for sale 13,615 —

Operating loss (29,761) (23,180)

Other income (4,266) 1,361

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

(1) Center-level Contribution Margin from a segment below the quantitative thresholds was attributable to the Senior Housing operating segment of the Company as of June 30, 2025.

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.

Adjusted EBITDA and Adjusted EBITDA Margin

We define Adjusted EBITDA as net loss adjusted for interest expense, net, other investment income, depreciation and amortization, and provision (benefit) for income tax as well as addbacks for non-recurring expenses or exceptional items, including charges relating to management equity compensation, litigation costs and settlement, M&A diligence, transaction and integration, business optimization, EMR implementation and gain on cost and equity method investments.

For the years ended June 30, 2024 and 2023, our net loss was $23.2 million and $43.6 million, respectively, representing a year-over-year improvement of 47%, and Adjusted EBITDA was $16.5 million and $(3.4) million, respectively, representing a year-over-year increase of 585%.

including charges relating to management equity compensation, litigation costs and settlement, M&A diligence, transaction and integration, business optimization, EMR implementation, loss (gain) on cost and equity method investments, asset impairments and loss on assets held for sale, and loss on sale of assets.

For the years ended June 30, 2025 and 2024, our net loss was $35.3 million and $23.2 million, respectively, representing a year-over-year decline of 52%, and Adjusted EBITDA was $34.5 million and $16.5 million, respectively, representing a year-over-year increase of 109%.

Adjusted EBITDA margin is Adjusted EBITDA expressed as a percentage of our total revenue.

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We believe that Adjusted EBITDA and Adjusted EBITDA margin help investors and analysts in comparing our results across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures, including net loss and net loss margin.

These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, the analysis of GAAP financial measures, including net loss and net loss margin.

In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation.

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Our use of the term Adjusted EBITDA varies from others in our industry.

Effective for the year ended June 30, 2024, the Company has revised its

calculation of Adjusted EBITDA to no longer exclude de novo center development costs and to reflect the impact of other investment income.

The presentation for the year ended June 30, 2023 has been recast to conform to the current presentation.

A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, for each of the periods is as follows:

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Depreciation and amortization 19,510 18,950

Provision (benefit) for income tax 1,402 (7,241)

Provision for income tax 1,316 1,402

Stock-based compensation 7,619 6,832

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EMR implementation (e)

Gain on cost and equity method investments (f)

Loss (gain) on cost and equity method investments (f)

1,393 (2,842)

Asset impairments and loss on assets held for sale (g)

Loss on sale of assets (h)

Adjusted EBITDA $ 34,462 $ 16,474

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(a) Reflects investment income related to short term investments included in our consolidated statement of operations.

Effective for the year ended June 30, 2024, the Company has revised the calculation for Adjusted EBITDA to reflect the impact of investment income in 2024 and 2023.

(b) Reflects a $1.2 million reserve for a California wage and hour class action settlement for the year ended June 30, 2023, and each of the years ended June 30, 2023 and 2024 included charges/(credits) related to litigation by stockholders, litigation related to de novo center, and civil investigative demands.

See Item 3, “Legal Proceedings” included in this Annual Report.

(a) Reflects investment income related to short term investments included in our consolidated statements of operations.

(b) Reflects charges/(credits) related to litigation by stockholders, litigation related to de novo center, civil investigative demands, and arbitration with our former pharmacy provider.

Refer to Note 9, "Commitments and Contingencies" to

our consolidated financial statements included in this Annual Report for more information regarding litigation by stockholders and civil investigative demands.

Costs reflected consist of litigation costs considered one-time in nature and outside of the ordinary course of business based on the following considerations which we assess regularly:

(i) the frequency of similar cases that have been brought to date, or are expected to be brought within two years, (ii) complexity of the case, (iii) nature of the remedies sought, (iv) litigation posture of the Company, (v) counterparty involved, and (vi) the Company's overall litigation strategy.

Effective for the year ended June 30, 2024, the Company has revised the calculation for Adjusted EBITDA to no longer exclude de novo center development costs in 2024 and 2023.

De novo center development costs were $1.0 million for each of the years ended June 30, 2024 and 2023.

For the year ended June 30, 2025, includes $10.1 million accrued in connection with the potential settlement of the previously disclosed stockholder class action.

(d) Reflects charges related to business optimization initiatives.

Such charges related to one-time investments in projects designed to enhance our technology and compliance systems, improve and support the efficiency and effectiveness of our operations, and third party support to address efforts to remediate deficiencies in audits.

For the year ended June 30, 2024 costs include (i) $3.1 million associated with third party consultants as we implement our core provider initiatives, asses our risk-bearing payor capabilities, and strengthen our enterprise capabilities, (ii) $0.3 million of costs related to severance and other organizational costs, and (iii) $0.9 million related to charges for technology improvements, environmental sustainability, governance reporting, and other non-recurring projects aimed at reducing costs and improving efficiencies.

For the year ended June 30, 2023, costs included (i) $1.8 million related to consultants and contractors performing audit and other related services at sanctioned centers, (ii) $5.7 million of costs associated with third party consultants to strengthen enterprise capabilities, (iii) $0.6 million related to the consolidation of the Germantown, Pennsylvania center, (iv) $1.1 million related to organizational restructure, and (v) $1.4 million related to other non-recurring projects aimed at reducing costs and improving efficiencies.

Such charges related to one-time investments in projects designed to enhance our technology and compliance systems and improve and support the efficiency and effectiveness of our operations.

For the year ended June 30, 2025 this includes (i) $2.5 million of costs associated with organizational restructure and executive severance, and (ii) $0.5 million related to other non-recurring projects aimed at reducing costs and improving efficiencies.

For the year ended June 30, 2024, this includes (i) $3.1 million of costs associated with third party consultants to implement core provider initiatives, assess our risk-bearing capabilities, and strengthen our enterprise capabilities, (ii) $0.3 million of costs associated with organizational restructure, and (iii) $0.9 million related to other non-recurring projects aimed at reducing costs and improving efficiencies.

(e) Reflects non-recurring expenses relating to the implementation of a new EMR vendor.

(f) Reflects $4.8 million net benefit associated with the dissolution of the PWD partnership partially offset by $2.0 million impairment in Jetdoc investment.

(f) For the year ended June 30, 2025, reflects $2.6 million impairment loss for the investment in DispatchHealth Holdings, Inc., partially offset by $1.3 million net benefit associated with the dissolution of the PWD partnership.

For the year ended June 30, 2024, reflects $4.8 million net benefit associated with the dissolution of the PWD partnership partially offset by $2.0 million impairment in Jetdoc investment.

(g) Reflects (i) impairment charges related to ROU asset and construction in progress related to halting developments to a previously planned de novo center in Louisville, Kentucky that the Company is no longer pursuing, (ii) loss on assets held for sale, and (iii) loss on settlement of lease liability in Louisville, Kentucky.

(h) Reflects loss on sale of center equipment that was originally purchased for the center in Louisville, Kentucky.

Liquidity and capital resources

To date, we have financed our operations principally through cash flows from operations and through borrowings under our credit facilities, from the sale of common stock in our IPO that occurred in March 2021.

As of the years ended June 30, 2024 and 2023, we had cash and cash equivalents of $56.9 million and $127.2 million, respectively, a decrease of $70.3 million primarily due to the Concerto acquisition, deferred revenue due to the timing of payments received during the prior fiscal year, and a decrease in working capital.

We have financed our operations principally through cash flows from operations and through borrowings under our credit facilities.

As of the years ended June 30, 2025 and 2024, we had cash and cash equivalents of $64.1 million and $56.9 million, respectively, an increase of $7.2 million primarily due to an increase in working capital partially offset by cash used in financing activities including share repurchases.

Our cash and cash equivalents primarily consist of highly liquid investments in demand deposit accounts and cash.

Our capital resources are generally used to fund (i) debt service requirements, the majority of which relate to the quarterly principal payments of the Term Loan Facility (as defined in Note 7 “Long-term Debt” to the audited consolidated financial statements) due 2026, (ii) finance and operating lease obligations, which are generally paid on a monthly basis and include maturities through 2028 and 2032, respectively, (iii) the operations of our business, (iv) income tax payments, which are generally due on a quarterly and annual basis, (v) capital additions, which include acquisition and de novo centers, and (vi) share repurchases authorized under the $5.0 million Board approved program.

Our capital resources are generally used to fund (i) debt service requirements, the majority of which relate to the quarterly principal payments of the Term Loan A Facility (as defined below) due August 2028, (ii) finance and operating lease obligations, which are generally paid on a monthly basis and include maturities through calendar year 2025 and 2034, respectively, (iii) the operations of our business, (iv) income tax payments, which are generally due on a quarterly and annual basis, (v) capital additions, which include acquisition and de novo centers, and (vi) share repurchases.

We also will continue investing in resources and initiatives to provide necessary and quality services to our participants.

Collectively, these obligations are expected to represent a significant liquidity requirement of our Company on both a short-term (next 12 months) and long-term (beyond 12 months) basis.

For additional information regarding our lease obligations, debt and commitments, see Notes 6 “Leases,” 7 “Long-term Debt,” and 9 “Commitments and Contingencies,” respectively, to our audited consolidated financial statements.

We believe that our cash and cash equivalents and our cash flows from operations, available funds and access to financing sources, including our Revolving Credit Facility (as discussed and defined below), will be sufficient to fund our operating and capital needs for the next 12 months and beyond.

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Our actual results could vary because of, and our future capital requirements will depend on, many factors, including our growth rate, our ability to retain and grow the number of PACE participants, and the expansion of sales and marketing activities and other costs of operating the business.

We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies.

We may in the future enter into arrangements to acquire or invest in complementary

businesses, services and technologies.

We may be required to seek additional equity or debt financing.

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If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations, and financial condition would be adversely affected.

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.

The borrowing capacity under the Revolving Credit Facility is subject (i) any issued amounts under our letters of credit and (ii) applicable covenant compliance restrictions and any other conditions precedent to borrowing.

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.

As of June 30, 2025, the Credit Agreement consisted 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.

Following the entry into Amendment No.

2 to the Credit Agreement on August 8, 2025, the Term Loan Facility was replaced by a $50.7 million term loan (the “Term Loan A Facility”) and the commitments with respect to the Revolving Credit Facility were renewed.

The borrowing capacity under the Revolving Credit Facility is subject to (i) any issued amounts under our letters of credit and (ii) applicable covenant compliance restrictions and any other conditions precedent to borrowing.

Principal on the Term Loan A 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 Credit Agreement accrue interest at a variable interest rate.

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As of June 30, 2025, we had no borrowings outstanding, $5.2 million of letters of credit issued, and $94.8 million of remaining capacity under the Revolving Credit Facility.

As of June 30, 2024, we also had $2.2 million principal amount outstanding under our convertible term loan.

As of June 30, 2025, we also had $2.2 million principal amount outstanding under our convertible term loan classified as Liabilities held for sale in our consolidated financial statements in this Annual Report.

Monthly principal and interest payments are approximately $0.02 million, 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.

For more information about our debt, see Note 7 “Long-term Debt” to our audited consolidated financial statements.

For more information about our debt, see Note 7 “Long-term Debt” to our consolidated financial statements included in this Annual Report.

Our material cash requirements from known contractual and other obligations primarily relate to long-term debt and lease obligations.

Expected timing of those payments are as follows:

Expected timing of those payments as of June 30, 2025 was as follows:

Total Next 12 Months Beyond 12 Months

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Operating leases 42,657 6,272 36,385

38,384 6,023 32,361

Finance leases (excluding interest) 22,369 6,927 15,442

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(1) Represents principal amounts related to the 2021 Credit Agreement.

(2) We adopted ASU 2016-02 on July 1, 2022, which requires lessees to recognize almost all leases on the balance sheet.

See Note 2 “Summary of Significant Accounting Policies” to our Consolidated Financial Statements.

We currently intend to retain substantially all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness, other than with respect to share repurchases, and, therefore, we do not anticipate paying any cash dividends in the foreseeable future.

(1) Represents principal amount related to the Term Loan Facility as of June 30, 2025.

Amount does not reflect the impact of the refinancing of the Term Loan Facility on August 8, 2025, as described above.

We currently intend to retain substantially all available funds and any future earnings to fund the development and growth of our business, to repay indebtedness, and to repurchase shares, if such repurchases are approved by our Board in the future.

We do not anticipate paying any cash dividends in the foreseeable future.

Consolidated Statements of Cash Flows

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Operating Activities.

The change in net cash provided by (used in) operating activities was primarily due to the net effect of (i) a net loss of $23.2 million for the year ended June 30, 2024 compared to a net loss of $43.6 million during the prior year, as described further above, (ii) a decrease of $28.1 million in deferred revenue during fiscal year 2024 due to timing of payments received during the prior year, and (iii) an increase of $38.6 million in accounts receivable, net of allowance primarily due to timing for the receipt of payments in 2024.

The change in net cash provided by (used in) operating activities was primarily due to the net effect of a $67.4 million improvement in cash provided by operating assets and liabilities due to timing of cash receipts and payments for accounts receivable, accounts payable and deferred revenue.

Investing Activities.

Net cash used in investing activities in 2024 was primarily made up of $23.9 million for the Concerto acquisition and approximately $7.9 million in purchases of property and equipment.

In 2023, net cash used in investing activities was primarily due to $23.4 million in purchases of property and equipment and $46.2 million for purchases of short-term investments, consisting primarily of managed income funds invested in investment grade short-term fixed and floating rate debt securities aimed at creating income while maintaining low volatility on principal.

Our investment in managed income funds regularly pay dividends which are reinvested into the funds.

Net cash used in investing activities in 2025 was primarily made up of $4.8 millions for the Tabula Rasa acquisition and approximately $6.3 million in purchases of property and equipment.

In 2024, net cash used in investing activities was primarily due to $23.9 million for the Concerto acquisition and approximately $7.9 million in purchases of property and equipment.

Financing activities.

The decrease in net cash used in financing activities was primarily due to a contribution from a joint venture partner in 2024.

The increase in net cash used in financing activities was primarily due to $7.1 million additional cash used for share repurchases during in 2025 and a $2.9 million contribution from a joint venture partner in 2024.

Emerging Growth Company and Smaller Reporting Company

We qualify as an “emerging growth company” pursuant to the provisions of the Jumpstart Our Business Startups (“JOBS”) Act and a “smaller reporting company” as defined by the Exchange Act.

For as long as we are an “emerging growth company” or a “smaller reporting company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” or “smaller reporting companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, only being required to present two years of audited financial statements, plus unaudited

condensed consolidated financial statements for applicable interim periods and the related discussion in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, exemptions from the requirements of holding non-binding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation.

For as long as we are an “emerging growth company,” which we expect to be through the end of fiscal year 2026, or a “smaller reporting company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” or “smaller reporting companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, only being required to present two years of audited financial statements, plus unaudited condensed consolidated financial statements for applicable interim periods and the related discussion in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, exemptions from the requirements of holding non-binding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation.

In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.

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Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP.

The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included in this Annual Report, which have been prepared in accordance with GAAP.

The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements included in this Annual Report and the reported amounts of revenues and expenses during the reporting period.

Actual results may differ from these estimates under different assumptions or conditions, impacting our reported results of operations and financial condition.

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The estimates and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances.

While our significant accounting policies are described in more detail in Note 2 “Summary of Significant Accounting Policies” to our audited Consolidated Financial Statements, we believe the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and require management to make subjective and complex judgments and estimates in the preparation of our consolidated financial statements.

While our significant accounting policies are described in more detail in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this Annual Report, we believe the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and require management to make subjective and complex judgments and estimates in the preparation of our consolidated financial statements included in this Annual Report.

Revenue recognition

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

The Company estimates the amount of the adjustment based on participant medical status and historical experience.

Such estimates are then recorded monthly on a straight-line basis.

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 based on historical experience.

Such estimates are then recorded monthly on a straight-line basis over the periods for which they pertain.

We review our assumptions and adjust these estimates accordingly on a quarterly basis.

Our consolidated financial statements could be materially impacted if actual risk scores are different from the estimated risk scores.

If our accrual estimates for risk scores at June 30, 2024 were to differ by 5%, the impact on revenues would be approximately $0.5 million .

These adjustments are not expected to be material.

Certain third-party payor contracts include a Medicare Part D payment related to pharmacy claims, which is subject to risk sharing through accepted risk corridor provisions.

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Reported and estimated claims expenses are costs for third-party healthcare service providers that provide medical care to our participants for which we are contractually obligated to pay (through our full-risk capitation arrangements).

The estimated reserve for unpaid claims liability is included in the liability for reported and estimated claims in the consolidated balance sheets and requires estimates including actual member utilization of healthcare services, unit cost trends, participant acuity, changes in net census, known outbreaks of disease or increased incidence of illness such as influenza or COVID-19 and other factors.

COVID-19 and other factors.

We periodically assess our estimates with an independent actuarial expert to ensure our estimates represent the best, most reasonable estimate given the data available to us at the time the estimates are made.

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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 7. Management’s Discussion and Analysis