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Item 7. Management’s Discussion and Analysis

2026-09-09 compared with 2025-09-09 · 172 added, 182 removed, 338 unchanged (51% of the section changed)

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The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management.

Our historical results are not necessarily indicative of the results that may occur in the future and actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and in the sections entitled “Risk Factors” and “Forward-Looking Statements” included in this Annual Report.

Our historical results are not necessarily indicative of the results that may occur in the future and actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and in the sections entitled “Risk Factors” and “Cautionary Note About Forward-Looking Statements” included in this Annual Report.

InnovAge Holding Corp.

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

At the beginning of fiscal year 2027, to increase operational efficiency, we began the process of converting two legacy PACE centers to alternate care setting (“ACS”) centers in Pennsylvania.

Once the process is complete, which we expect to be during the second fiscal quarter, these ACS centers will provide our participants with flexibility to participate in activities and receive certain services.

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”), 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), 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;

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We directly contract with government payors, such as Medicare and Medicaid, and do not rely on third-party administrative organizations or health plans.

We believe our model aligns with how healthcare is evolving, namely (i) the shift toward value-based care, in which coordinated, outcomes-driven, quality care is delivered while reducing unnecessary spend, (ii) eliminating excessive administrative costs by contracting directly with the government, (iii) focusing on the patient experience and (iv) addressing social determinants of health.

We believe our model aligns with how healthcare is evolving, namely (i) the shift toward value-based care, in which coordinated, outcomes-driven, quality care is delivered while seeking to reduce unnecessary spend, (ii) reducing excessive administrative costs by contracting directly with the government, (iii) focusing on the patient experience and (iv) addressing social determinants of health.

Trends and Uncertainties Affecting the Company

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.

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 Reconciliation Act, budget cuts to providers from state Medicaid programs, as well as possible increases in other costs in order to provide healthcare services.

While we did not experience a material increase to our cost of care through fiscal year 2026, we continue to monitor the situation.

We believe that our clinical value initiatives and operational value initiatives, which continue to be executed, may assist us in reducing unnecessary utilization and offsetting the increased cost of care anticipated for fiscal year 2027.

Labor market .

Throughout fiscal year 2026, the healthcare sector continued 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, drivers and caregivers, has remained challenging for the Company’s ability to recruit and retain staff.

Labor market pressures and competition continues to impact wage and benefit costs for our direct care providers and have also affected our staffing ability, which could impact our enrollment capacity.

To mitigate these challenges, we continue to review our compensation and benefits to align with the markets in which we operate and focus our retention programs on critical roles and our operational measures to help improve productivity and continue reducing reliance on agency staffing.

Partially as a result of increased competition and other market trends, there was an increase in the cost of care for fiscal year 2026 compared to fiscal year 2025, as discussed in "Results of Operations" below.

Census and capitation revenue.

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.

We continue to monitor the delays and increased gaps in eligibility, both for new enrollments and Medicaid redetermination applications during fiscal year 2026.

Such delays and eligibility gaps stem from issues with state enrollment and redetermination processes, which vary by state and county.

While processing delays abated modestly during fiscal year 2026, it is possible these delays could persist or increase due to potential impacts of the Reconciliation Act.

The foregoing has not yet had a material effect on the Company’s financial statements or operations;

however, we continue to monitor the situation.

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.

Among other things, the Reconciliation Act has constrained states’ use of provider taxes to finance Medicaid programs and some states have mandated changes in order to reduce Medicaid spending.

Consequent state budgetary pressures may lead to (i) reductions in state workforce, which may include those responsible for overseeing PACE, possibly causing delays in eligibility determinations and discharge of other state responsibilities;

(ii) reduction or removal of optional Medicaid services from the PACE benefit package;

and (iii) pressure on Medicaid capitation rates.

In Colorado, where we serve the largest cohort of our PACE census, we anticipate a decrease in Medicaid premium rates which will be retroactive for the fiscal year beginning July 1, 2026.

We also expect to face Medicaid reimbursement wage pressures from other states that release rates effective January 1, 2027, such as California, which could impact the latter half of our fiscal year.

We expect the rate pressures to impact the Company’s margins in fiscal year 2027 and continue to monitor the full effects of the Reconciliation Act on the Company.

California Moratorium.

Effective November 20, 2025, the California Department of Health Care Services (DHCS) paused PACE applications for all new PACE centers for a minimum of two years, or until otherwise notified.

The pause does not apply to the ongoing Bakersfield center application, the review of which may resume following remediation of the deficiencies raised in our Sacramento and San Bernardino centers and the completion of the San Bernardino medical review.

The pause, however, would impact the opening of other de novo centers in the state of California.

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

We continue to

strengthen our encounter data submission process 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 competition, costs and 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 regulatory compliance.

• Our ability to maintain high participant satisfaction and retention.

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Furthermore, we experience low levels of voluntary disenrollment, averaging 6.5% annually over the last three fiscal years.

• Effectively managing the cost of care for our participants .

• Effectively managing .

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

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• 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, 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.

Several factors can affect our ability to open de novo centers, including competition, costs and actions by local and state regulators, such as the moratorium issued in California by the California Department of Health Care Services (“DHCS”) and any sanctions issued by regulators, legal, community or other obstacles in the construction or opening of such centers.

In response to an audit to our Sacramento center and a medical review of our San Bernardino center, which have been previously disclosed, DHCS suspended its attestations in support of the planned de novo centers in Downey and Bakersfield, California.

CMS has closed its process.

DHCS closed its audit with respect to the Sacramento audit, but its medical review with respect to the San Bernardino center is ongoing.

On December 23, 2025, we received a formal Corrective Action Plan (CAP) from DHCS to remediate findings resulting from the San Bernardino medical review.

We continue working closely with the State to fulfill the obligations under the CAP.

In July 2026, we withdrew our PACE application for the previously planned Downey center, however, we continue to pursue the PACE application for the de novo center in Bakersfield.

DHCS provided notice that they would consider restoring the State Attestation that would allow us to open our Bakersfield center based upon the successful remediation of the deficiencies raised in our Sacramento and San Bernardino centers and its completion of the medical review.

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

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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 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.

Acquisitions could help support revenue growth and improve operational efficiency and care delivery post-integration.

In fiscal year 2025, we acquired certain pharmacy assets from Tabula Rasa HealthCare Group, Inc.

(“TRHC”), with the goal of supporting our growth and improving pharmacy cost-management.

• Our ability to maintain high quality of regulatory compliance .

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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 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 .

Our operational and financial results, including medical costs and per-participant revenue true-ups, will experience some variability depending upon the time of year in which they are measured.

Medical costs vary most significantly as a result of (i) the weather, with certain illnesses, such as the influenza and COVID-19 viruses, being more prevalent during colder months of the year, which generally increases per-participant costs and (ii) the number of business days in a period, with shorter periods generally having lower medical costs all else equal.

Per-participant revenue true-ups represent the difference between our estimate of per-participant capitation revenue to be received and actual revenue received from CMS, which is based on CMS’s determination of a participant’s RAF score as measured twice per year and is based on the evolving acuity of a participant.

Where there is a difference between our estimate and the final determination from CMS, we may record either an increase or decrease in true up revenue.

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

We expect our expenses to increase in absolute dollars for the foreseeable future to support our growth and as the result of current and potential legal and regulatory proceedings.

We plan to continue investing in our growth while also maintaining focus on managing our results of operations.

During fiscal years 2025 and 2026 we made investments to increase our sophistication as a payor to drive clinical value, improve outcomes, and manage cost trends, and plan to continue investing in such activities in fiscal year 2027.

Accordingly, in the short term, these activities 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 of our business .

Our operational and financial results, including medical costs and per-participant revenue risk adjustment reconciliation payments, will experience some variability depending upon the time of year in which they are measured.

Medical costs vary most significantly as a result of (i) the weather, with certain illnesses, such as the influenza virus, COVID-19 and respiratory syncytial viruses, being more prevalent during colder months of the year, which generally increases per-participant costs and (ii) the number of business days in a period, with shorter periods generally having lower medical costs all else equal.

Per-participant risk adjustment reconciliation revenue represent the difference between our estimate of per-participant capitation revenue to be received and actual revenue received from CMS, which is based on CMS’s determination of a participant’s RAF score as measured twice per year and is based on the evolving acuity of a participant.

Where there is a difference between our estimate and the final determination from CMS, we may record either an increase or decrease in risk score reconciliation revenue.

Historically, these risk adjustment reconciliation payments typically occur between June and July, 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 and voluntary disenrollments has also been impacted by additional offerings by MA, special needs programs and other competitors including PACE organizations in select markets.

Components of Results of Operations

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In order to provide comprehensive services to manage the totality of a participant’s medical care across all settings, we receive fixed or capitated fees per participant that are paid monthly by Medicare, Medicaid, Veterans Affairs (“VA”) and private pay sources.

The concentration of capitation revenue from our various payors was:

The concentration of capitation revenue from our various payors for the fiscal years ended June 30, 2026 and 2025 was:

Medicaid 56 % 55 %

Medicare 44 % 45 %

Private pay and other *% *%

VA, private pay and other *% *%

Total 100 % 100 %

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Medicaid and Medicare capitation revenues are based on PMPM capitation rates under the PACE program.

The PACE state contracts between us and the respective state Medicaid administering agency are amended annually each June 30 in all states other than California and Pennsylvania, which contract on a calendar-year basis.

The PACE state contracts between us and the respective state Medicaid administering agency are renewed annually each June 30 in all states other than California and Pennsylvania, which contract on a calendar-year basis.

We are currently operating in good standing under each of our PACE state contracts.

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Other Service Revenue.

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

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

For a discussion of our revenue recognition policies, please see Critical Accounting Estimates below and Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this Annual Report.

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Cost of care, excluding depreciation and amortization, includes the costs we incur to operate our care delivery model.

This includes costs related to salaries, wages and benefits for IDT and other center-level staff, participant transportation, medical supplies, occupancy, insurance and other operating costs.

This includes costs related to salaries, wages and benefits for IDT and other center-level staff, participant transportation, medical supplies, pharmacy, occupancy, insurance and other operating costs.

IDT employees include medical doctors, registered nurses, social workers, physical, occupational, and speech therapists, nursing assistants, and transportation workers.

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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 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.

When 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.

Sales and Marketing.

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Corporate, General and Administrative Expenses.

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

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,and compliance costs as we grow our business and continue to operate as a public company.

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

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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Total expenses 987,089 883,460

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

Operating Income (Loss) 2,618 (29,761)

Other Income (Expense)

Interest expense, net (4,258) (4,612)

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

Loss on cost and equity method investments — (1,393)

Other income, net 1,906 1,739

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

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

Total other expense (2,352) (4,266)

Income (Loss) Before Income Taxes 266 (34,027)

Provision for Income Taxes 949 1,316

Net Loss (683) (35,343)

net loss attributable to noncontrolling interests (5,030) (1,883)

net income (loss) attributable to noncontrolling interests 1,854 (5,030)

Net Loss Attributable to InnovAge Holding Corp.

$ (2,537) $ (30,313)

Loss Before Income Taxes as a % of revenue (4.0) % (2.9) %

Income (Loss) Before Income Taxes as a % of revenue — % (4.0) %

Net Loss as a % of revenue (0.1) % (4.1) %

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Capitation revenue was $988.4 million for the year ended June 30, 2026, an increase of $136.0 million, or 16.0%, compared to $852.4 million for the year ended June 30, 2025.

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.

This increase was driven by a $66.2 million, or 7.8% increase in member months (as defined below under “Key Business Metrics and non-GAAP Measures – Total member months”) coupled with a $69.9 million, or 7.6%, increase in capitation rates.

The increase in member months was primarily due to growth in our California, Colorado, and Florida centers.

The increase in capitation rates includes an 8.4% increase in Medicaid rates coupled with a decrease in revenue reserve and a 4.1% increase in Medicare rates.

Year Ended June 30, $ Change % Change

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External provider costs were $449.8 million for the year ended June 30, 2026, an increase of $18.7 million, or 4.3%, compared to $431.2 million for the year ended June 30, 2025.

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.

The increase was driven by an increase of $33.5 million, or 7.8%, in member months partially offset by a decrease of $14.8 million, or 3.2%, in cost per participant.

The decrease in external provider cost per participant was primarily driven by a decrease in permanent nursing facility and short stay nursing facility utilization, and a decrease in pharmacy expense associated with the transition to in-house pharmacy services.

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

Cost of care, excluding depreciation and amortization.

Cost of care, excluding depreciation and amortization expense was $312.1 million for the year ended June 30, 2026, an increase of $43.2 million, or 16.1%, compared to $268.9 million for the year ended June 30, 2025, primarily due to an increase of $20.9 million, or 7.8%, in member months coupled with an increase of $22.3 million, or 7.7%, 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.

The overall increase of cost of care (excluding depreciation and amortization) expense was driven by (i) an $11.7 million increase in salaries, wages and benefits associated with higher wage rates, (ii) $14.2 million in third party fees and shipping costs associated with in-house pharmacy services, (iii) $4.3 million increase in contract services, (iv) $4.8 million in supplies and administrative costs, and (v) an $8.6 million increase in fleet expense including contract transportation.

Sales and marketing.

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.

Sales and marketing expenses were $34.4 million for the year ended June 30, 2026, an increase of $6.1 million, or 21.8%, compared to $28.2 million for the year ended June 30, 2025, primarily due to increased headcount and wage rates, and increased marketing spend to support growth.

Corporate, general and administrative expenses.

Corporate, general and administrative expenses were $166.5 million for the year ended June 30, 2026, an increase of $44.4 million, or 36.4% compared to $122.1 million for the year ended June 30, 2025.

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.

The increase was primarily due to (i) $2.7 million net increase in employee compensation and benefits as the result of organizational restructure, executive severance, and an increase in headcount and wage rates, partially offset by lower variable compensation associated with the restructure, (ii) $2.4 million increase in consulting services, (iii) $0.9 million increase in software license fees, and (iv) a $36.8 million net increase in our litigation expenses related to the accrual for the various legal matters disclosed in Note 9, “Commitments and Contingencies” to the consolidated financial statements included in this Annual Report.

Depreciation and amortization.

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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.

Impairments and loss on assets held for sale were $3.2 million for the year ended June 30, 2026 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 Downey, California that the Company is no longer pursuing, and (ii) 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 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.

Other Income (Expense)

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Interest expense, net $ (4,258) $ (4,612) $ 354 (7.7)%

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

Loss on cost and equity method investments — (1,393) 1,393 (100.0)%

Other income, net 1,906 1,739 167 9.6%

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

Total other expense $ (2,352) $ (4,266) $ 1,914 (44.9)%

Interest expense, net.

Interest expense, net, consists primarily of interest payments on our outstanding borrowings, net of interest income earned on our cash and cash equivalents and restricted cash.

Interest expense, net was $4.6 million for the year ended June 30, 2025, an increase of $0.6 million, or 14.6%, compared to $4.0 million for the year ended June 30, 2024.

The increase was primarily due to interest expense of $6.0 million partially offset by interest income of $1.4 million from money market funds during the year ended June 30, 2025.

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

(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.

Interest expense, net was $4.3 million for the year ended June 30, 2026, a decrease of $0.4 million, or 7.7%, compared to $4.6 million for the year ended June 30, 2025.

The decrease was primarily due to interest expense of $6.2 million partially offset by interest income of $1.9 million from money market funds during the year ended June 30, 2026, compared to interest expense of $6.0 million partially offset by interest income of $1.4 million from money market funds during the year ended June 30, 2025.

Loss on cost and equity method investments.

Loss on cost and equity method investments was $1.4 million for the year ended June 30, 2025.

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 Pinewood Lodge, LLLP (“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.

Other income, net was $1.9 million for the year ended June 30, 2026, an increase of $0.2 million, compared to $1.7 million for the year ended June 30, 2025.

Investment income during the year ended June 30, 2026 was $1.3 million combined with $0.4 million gain on disposal of capital assets.

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

Provision (Benefit) for Income Taxes.

Provision for Income Taxes.

The Company and its subsidiaries calculate federal and state income taxes currently payable and for deferred income taxes arising from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

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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”), 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.

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

In addition, no provision (benefit) for income taxes for SH1 is included in the consolidated financial statements through the date of the Company’s sale of its partnership interest in SH1 on September 11, 2025.

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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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 (benefit) for income taxes.

During the years ended June 30, 2025 and 2024, we reported provision (benefit) for income taxes of $1.3 million and $1.4 million, respectively.

The decrease of $0.1 million is primarily due to (i) pretax book loss recognized during the year ended June 30, 2025, as compared to the pretax book loss recognized during the year ended June 30, 2024 and (ii) the change in our valuation allowance.

Net Loss Attributable to Noncontrolling Interests.

InnovAge Senior Housing Thornton, LLC is a variable interest entity (“VIE”).

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.

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

During the years ended June 30, 2026 and 2025, we reported provision for income taxes of $0.9 million and $1.3 million, respectively.

The decrease of $0.4 million is primarily due to (i) pretax book income recognized during the year ended June 30, 2026, as compared to the pretax book loss recognized during the year ended June 30, 2025 and (ii) the change in our valuation allowance.

During the years ended June 30, 2026 and 2025, we reported a net loss of $0.7 million and $35.3 million, respectively, consisting of (i) operating income (loss) of $2.6 million and $(29.8) million, respectively, (ii) other expense of $2.4 million and $4.3 million, respectively, and (iii) provision for income taxes of $0.9 million and $1.3 million, respectively, each as described above.

Key Business Metrics and Non-GAAP Measures

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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.

(a) Includes InnovAge Sacramento, InnovAge Orlando, and as of August 15, 2025, InnovAge Tampa, which the Company owns and controls through joint ventures and are consolidated in our financial statements.

(b) Amounts are approximate.

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Total Member Months

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 define Total Member Months as the total number of participants multiplied by the number of months within the respective reporting period 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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Impairments and loss on assets held for sale 3,154 13,615

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

Other income (4,266) 1,361

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

Operating income (loss) 2,618 (29,761)

Other expense (2,352) (4,266)

Income (Loss) Before Income Taxes $ 266 $ (34,027)

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(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, 2026.

This segment has never met any of the quantitative thresholds for determining reportable segments.

This segment never met any of the quantitative thresholds for determining reportable segments.

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, 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%.

We define Adjusted EBITDA as net loss adjusted for interest expense, net, other investment income, depreciation and amortization, and provision 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, loss on cost and equity method investments, asset impairments and loss on assets held for sale, and loss on sale of assets.

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

For the year ended June 30, 2025, our net loss margin was 4.1%, compared to our net loss margin of 3.0% for the year ended June 30, 2024.

For the year ended June 30, 2025, our Adjusted EBITDA margin was 4.0%, compared to our Adjusted EBITDA margin for the year ended June 30, 2024 of 2.2%.

For the years ended June 30, 2026 and 2025, our net loss was $0.7 million and $35.3 million, respectively, representing a year-over-year increase of 98%, and Adjusted EBITDA was $94.6 million and $34.5 million, respectively, representing a year-over-year increase of 174%.

For the year ended June 30, 2026, our net loss margin was 0.1%, compared to 4.1% for the year ended June 30, 2025.

For the year ended June 30, 2026, our Adjusted EBITDA margin was 9.6%, compared to 4.0% for the year ended June 30, 2025.

Adjusted EBITDA and Adjusted EBITDA margin are supplemental measures of operating performance monitored by management that are not defined under GAAP and that do not represent, and should not be considered as, an alternative to net loss and net loss margin, respectively, as determined by GAAP.

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Stock-based compensation 7,048 7,619

Litigation costs and settlement (b)

Litigation costs and settlements (b)

56,966 19,367

M&A diligence, transaction and integration (c)

Business optimization (d)

EMR implementation (e)

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)

Loss on cost and equity method investments (e)

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

(Gain) loss on sale of assets (g)

Adjusted EBITDA $ 94,571 $ 34,462

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(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.

(b) Reflects charges/(credits) related to litigation by stockholders, civil investigative demands, and settlement 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.

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.

For the year ended June 30, 2026, includes an aggregate $52.4 million of accrued loss for potential resolutions or paid settlements.

For the year ended June 30, 2025, includes $10.1 million that was accrued in connection with the settlement of the previously disclosed stockholder class action and which was paid in fiscal year 2026.

(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 and improve and support the efficiency and effectiveness of our operations.

For the year ended June 30, 2026 this consists of $3.5 million of costs related to organizational restructure and executive severance..

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) 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.

(e) 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.

(f) For the year ended June 30, 2026, reflects (i) additional loss related to the Company’s sale of its managing member interest in SH1 and the adjacent land and (ii) impairment charges related to ROU asset and construction in progress related to a previously planned de novo center in Downey, California.

For the year ended June 30, 2025, reflects (i) impairment charges related to ROU asset and construction in progress related to halting developments related to the planned Louisville, Kentucky center, (ii) loss on assets held for sale, and (iii) loss on settlement of lease liability in Louisville, Kentucky.

(g) For the year ended June 30, 2026, reflects gain on sale of center equipment that was originally purchased for the center in Louisville, Kentucky.

For the year ended June 30, 2025, reflects loss on sale of center equipment that was originally purchased for the center in Louisville, Kentucky.

Liquidity and capital resources

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.

As of the years ended June 30, 2026 and 2025, we had cash and cash equivalents of $97.9 million and $64.1 million, respectively, an increase of $33.8 million primarily due to an increase in working capital partially offset by cash used in investing activities including capital expenditures.

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 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.

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 from calendar year 2026 through 2039, (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, if any.

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

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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.

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.

On August 8, 2025, the Company entered into Amendment No.

2 to the Credit Agreement originally dated March 8, 2021.

Following entry into Amendment No.

2 to the Credit Agreement, the Credit Agreement consists of a $50.7 million term loan (the "Term Loan A Facility") and a revolving credit facility with $100.0 maximum borrowing capacity (the “Revolving Credit Facility”), with a maturity date of August 8, 2028.

As of June 30, 2026, we had $48.8 million of debt

outstanding under our Term Loan A Facility, no borrowings outstanding, $6.2 million of letters of credit issued, and $93.8 million of remaining capacity under our Revolving Credit Facility.

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.

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

As of June 30, 2025 and 2024, the interest rate on the Term Loan Facility was 6.13% and 7.18%, respectively.

Under the terms of the Credit Agreement, the Revolving Credit Facility fee accrues at 0.25% of the average daily unused amount and is paid quarterly.

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, 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.

As of June 30, 2026, the interest rate was 6.15%.

Under the terms of the Credit Agreement, the Revolving Credit Facility accrues a fee for unused commitments at 0.50% of the average daily unused amount and is paid quarterly.

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

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Long-term debt (excluding interest) $ 48,812 $ 2,536 $ 46,276

$ 60,000 $ 2,250 $ 57,750

Operating leases 30,122 5,999 24,123

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Total $ 94,797 $ 15,221 $ 79,576

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(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.

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Year Ended June 30, $ Change

Net cash provided by (used in) operating activities $ 32,866 $ (36,898) $ 69,764

Net cash provided by operating activities $ 64,714 $ 32,866 $ 31,848

Net cash used in investing activities (12,340) (5,550) (6,790)

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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 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.

Our primary source of liquidity is cash provided by operating activities, consisting of net income adjusted for non-cash items and changes in working capital.

The change in net cash provided by operating activities was primarily due to a $23.6 million increase in net loss adjusted for non-cash items and a $8.2 million increase in working capital.

Investing Activities.

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.

The increase in net cash used in investing activities was primarily due to a $8.0 million increase in purchases of property and equipment to support growth.

Financing activities.

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,” 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.

We intend to take advantage of the longer phase-in periods for the adoption of new or revised financial accounting standards under the JOBS Act until we are no longer an emerging growth company.

Our election to use the phase-in periods permitted by this election may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the longer phase-in periods permitted under the JOBS Act and who will comply with new or revised financial accounting standards.

If we were to subsequently elect instead to comply with public company effective dates, such election would be irrevocable pursuant to the JOBS Act.

The decrease in net cash used in financing activities was primarily due a $7.3 million decrease in cash used for share repurchases and a $2.6 million increase in cash provided from other financing activities, partially offset by a $9.4 million net increase in cash used for debt activities.

Smaller Reporting Company

We qualify as a "smaller reporting company" as defined by the Exchange Act, based on the aggregate worldwide market value of common equity securities held by non-affiliates measured as of the last business day of our most recently completed second fiscal quarter.

As a smaller reporting company, we may take advantage of certain reduced reporting requirements that are otherwise applicable to public companies.

These provisions include, but are not limited to:

• a requirement to present only two years of audited financial statements and 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.

As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

Critical Accounting Estimates

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

Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of assets and liabilities and the recognition of income and expenses.

We consider these accounting policies to be critical accounting policies.

Certain accounting estimates involve significant judgments and assumptions by management, which have a material impact on the carrying value of assets and liabilities and the recognition of income and expenses.

We consider these accounting estimates to be critical accounting estimates.

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

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We recognize revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Our PACE operating unit provides comprehensive healthcare services to participants on the basis of estimated PMPM amounts we expect to be entitled to receive from the capitated fees per participant that are paid monthly by Medicare, Medicaid, the VA, and private pay sources.

We provide comprehensive healthcare services to participants on the basis of estimated PMPM amounts we expect to be entitled to receive from the capitated fees per participant that are paid monthly by Medicare, Medicaid, the VA, and private pay sources.

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

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In certain contracts, PMPM rates also include “risk adjustments” based on various factors.

For additional information see Note 3 “Revenue Recognition”.

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

For additional information see Note 3 “Revenue Recognition” to the consolidated financial statements included in this Annual Report.

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

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.

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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.

We review our assumptions and adjust these estimates as needed, but no less than twice a year.

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.

Under certain agreements the fund risk allocation is established whereby we, as the contracted provider, receive only a portion of the risk and the associated surplus or deficit.

Under certain agreements the fund risk allocation is established whereby we, as the contract provider, receive only a portion of the risk and the associated surplus or deficit.

We estimate and recognize an adjustment monthly to Part D capitation revenues related to these risk corridor provisions based upon pharmacy claims experience to date, as if the annual risk contract were to terminate at the end of the reporting period.

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

Goodwill is not amortized but is tested for impairment at least annually.

We test goodwill for impairment annually on April 1 or more frequently if triggering events occur or other impairment indicators arise which might impair recoverability.

These events or circumstances would include a significant change in the business climate, legal factors, operating performance indicators, competition, sale, disposition of a significant portion of the business, or other factors.

The Company does not amortize goodwill but tests it for impairment at least annually or when an interim triggering event has occurred indicating potential impairment.

Our annual test is performed on April 1, the first day of the fourth quarter.

Our impairment evaluations represent a critical accounting policy as they require significant judgments and assumptions that we believe to be reasonable but that are inherently uncertain and unpredictable.

Impairment of goodwill is evaluated at the reporting unit level.

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For purposes of the annual goodwill impairment assessment, the Company has 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, 2025 and 2024.

In determining the fair value of our reporting units, we estimate a number of factors including anticipated future cash flows and discount rates.

Although we believe these estimates are reasonable, actual results could differ from those estimates due to the inherent uncertainty involved in making such estimates.

When performing our annual test for impairment, we may assess goodwill for potential impairment using either a qualitative or quantitative assessment.

The qualitative assessment may evaluate factors such as a significant change in the business climate, legal factors, operating performance indicators, competition, sale, disposition of a significant portion of the business, or other factors.

If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, a quantitative assessment is performed.

For the quantitative assessment, we compare the estimated fair value of the reporting unit with their respective carrying value, including the goodwill assigned to the reporting unit.

The quantitative assessment uses a combination of an income approach (discounted cash flow analysis), a cost approach, and a market approach to estimate the fair value of each reporting unit.

If carrying value of the reporting unit exceeds its estimated fair value, an impairment charge is recorded.

We completed a qualitative assessment of goodwill as of April 1, 2026, and concluded that it was not more likely than not that the fair value of either reporting unit was less than its carrying value.

Accordingly, no quantitative impairment test was required, and no goodwill impairment was recorded during the years ended June 30, 2026 and 2025.

Reported and estimated claims

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.

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.

We have included incurred but not reported claims of approximately $59.0 million and $55.4 million on our balance sheet as of June 30, 2025 and 2024, respectively.

Our recorded medical claims expense estimate is approximately within +/- 5-10% of actual medical claims expense incurred, or less than 1% of our total operating expense.

Reported and estimated claims represent costs for medical care services provided to our participants by third-party healthcare providers that we are contractually obligated to pay under our full-risk capitation arrangements.

The liability for reported and estimated claims is included in our consolidated balance sheets and reflects our best estimate of amounts owed for both claims received and processed and claims incurred but not yet reported (“IBNR”).

Estimating this liability requires significant judgment and involves consideration of multiple factors, including the utilization of healthcare services, historical payment patterns, cost trends, and other factors.

Given the inherent uncertainty in these factors, actual claims experience may differ from our estimates.

We assess our claims liability estimates on at least a quarterly basis with the assistance of an independent actuarial expert to ensure our estimates reflect the best available data at each reporting date.

We have recorded a reported and estimated claims liability of $56.9 million and $59.0 million as of June 30, 2026 and 2025, respectively.

Our recorded medical claims expense estimate has historically been within approximately +/- 5-10% of actual medical claims incurred;

however, this variance represents less than 1% of total operating expense, reflecting the relative stability and predictability of our claims experience over time.

The following tables provide information about incurred and paid claims reporting and development as of June 30, 2026 (except as otherwise noted).

37 unchanged sentences

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