InnovAge Holding Corp.

Good day, and thank you for standing by. Welcome to the InnoVage first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Ryan Kubota, Director of Investor Relations. Please go ahead.

Good afternoon, and thank you all for joining the InnovAge 2025 Fiscal First Quarter Earnings Call. With me today is Patrick Blair, CEO, and Ben Adams, CFO. Dr. Rich Pfeiffer, Chief Medical Officer, will also be joining the Q&A portion of the call. Today, after the market closed, we issued an earnings press release containing detailed information on our fiscal first quarter results. You may access the release on the investor relations section of our company website, innovage.com. For those listening to the rebroadcast of this call, we remind you that the remarks made herein are as of today, Tuesday, November 5th, 2024. and have not been updated subsequent to this call. During our call, we will refer to certain non-GAAP measures. Reconciliation of these measures to the most directly comparable GAAP measures can be found in our earnings press release posted on our website. We will also be making forward-looking statements, including statements related to our 2025 fiscal year projections, future growth prospects and growth strategy, our clinical and operational initiatives, Medicare rate increases, executive leadership transition, the status of current and future regulatory actions, and other expectations. Listeners are cautioned that all of our forward-looking statements involve certain assumptions that are inherently subject to risk and uncertainties that could cause our actual results to differ materially from our current expectations. We advise listeners to review the risk factors discussed in our Form 10-K annual report for fiscal year 2024 and any subsequent reports filed with the SEC, including our most recent quarterly report on Form 10-Q. After the completion of our prepared remarks, we will open the call for questions. I will now turn the call over to our CEO, Patrick Blair. Patrick?

Thank you, Ryan, and good afternoon, everyone. I want to begin by expressing my continued appreciation to our colleagues, participants, government partners, and the investor community who support InnovAge. Today, I will discuss several topics, financial results for our first fiscal quarter, an update on our organic growth and drivers, a California regulatory compliance update, recent progress in our clinical and operational value initiatives, and affirmation of our annual targets. Let me start with our first quarter performance. Earlier today, we reported total revenues of $205.1 million, center-level contribution margin of $34.5 million, and adjusted EBITDA of $6.5 million for the first fiscal quarter. When compared to the first quarter of fiscal 2024, revenues have increased by approximately 12% from $192.5 million, and adjusted EBITDA has increased by approximately 500% from adjusted EBITDA of $1.3 million. When compared to the fourth quarter of fiscal 2024, revenues increased by approximately 3%, and adjusted EBITDA increased by approximately 25%. Census increased to approximately 7,210, which represents a quarter over quarter improvement of approximately 3%. Building on our strong fiscal year 2024 performance, our first quarter reflects continued momentum and execution of our strategy to deliver high quality care with strong stewardship of internal and external costs while continuing to enhance our margins. On the leadership front, we welcome Michael Scarborough this week as our new President and Chief Operating Officer. Michael comes with three decades of experience building, scaling, and managing government health care programs. Most recently, he served as the CEO of Optima at Home following the acquisition of Prospero, a physician-led home-based medical care model that Michael co-founded and sold to UnitedHealthcare in 2022. In approximately three years, Prospero grew to serve 50,000 members in 28 states. Prior to that, Michael served as the Senior Vice President at both Anthem and AmeriCorps. Given the uniqueness of Pace as both a provider and payer, we're thrilled to have a leader with Michael's experience and track record join the company at this pivotal inflection point. At the same time, Chris Vint will be leaving the organization. I want to personally thank Chris as a partner and friend for her leadership. She will be missed. Staying a moment longer on the people who deliver on Innovate's mission every day, I'm excited to share that our recent Employee Satisfaction and Engagement Survey demonstrated strong quarter-over-quarter performance with an employee engagement score of 79%. And our recently completed Net Promoter Score Survey, which measures participant satisfaction, loyalty, and enthusiasm, reached a new high of 56, well above the comparable survey score of 50 in the first quarter of fiscal 2024. Fostering a highly engaged workforce is a key priority for our company. When employees are engaged and invested in the company's success, they are more motivated to deliver exceptional service and go the extra mile for our participants. This translates to higher participant loyalty and stronger word-of-mouth referrals that drives incremental growth. Before turning to growth, I do want to take a moment to recognize the tremendous efforts of our teams in Tampa and Orlando, who went above and beyond to support our employees, participants, and local communities during the recent hurricanes. Despite facing significant personal and professional disruptions, our teams demonstrated remarkable resilience, teamwork, and a steadfast commitment to our mission. They worked tirelessly to ensure our facilities remained open, participant care was uninterrupted, and critical resources were provided to those in need. What makes this response even more remarkable is that the teams are simultaneously navigating the complexities of newly opened centers. To demonstrate such resilience, managing both a natural disaster and the day-to-day challenges of scaling operations speaks volumes about their commitment and capabilities. Their actions embodied our core values, and I'm incredibly proud of how they represented our company during this difficult time. On the organic front, we're off to a solid start in fiscal 2025. Census increased to approximately 7,210, which represents approximately 10% year-over-year growth compared to the first quarter of fiscal 2024. Our sales and marketing teams have made significant strides in their ability to identify and engage new prospective participants. By leveraging advanced market data and analytics, they have developed a more nuanced understanding of our target customer segments and their evolving pain points and preferences. This intelligence has allowed our teams to craft highly personalized, channel-specific messaging that resonates more effectively with potential leads. For example, our digital marketing campaigns now leverage sophisticated audience targeting and dynamic creative to serve prospective customers with ads tailored to their specific needs and behaviors. Similarly, our enrollment representatives are armed with deeper insights that enable them to have more meaningful, consultative conversations with prospects. The results of these data-driven strategies are evident in our Q1 performance, which saw a 7% improvement in qualified lead volume compared to the same period last year. Additionally, our inside sales team is now contributing over 20% of our enrollments, which is more than double where it was a year ago. This increased pipeline provides us with greater visibility into future revenue potential and strengthens our ability to efficiently convert prospects into loyal, long-term participants. Lastly, you'll recall previous discussions regarding state processing delays in some of our key markets. I'm pleased to report that we're now beginning to see small but steady signs of improvement in application processing time. thanks to our continued collaboration with state agencies to reduce bottlenecks that have contributed to delayed enrollment and access to pay services. As we enter the Medicare annual enrollment period in the second quarter, we typically experience some seasonal variations in enrollment patterns. However, we are more optimistic about our competitive position this year, particularly given the broader financial pressures affecting the Medicare Advantage sector. These factors position us for stronger comparative performance relative to this period last year. Regarding regulatory compliance, as disclosed in our 10-Q, CMS has closed its audit process for Sacramento, while the state audit processes remain open in Sacramento and San Bernardino. We intend to provide updates as they become available. As such, we have no updates regarding the timeline to open the Bakersfield and Downey locations. On the operational front, we continue to systematically address medical costs, labor efficiency, administrative expenses, and risk score accuracy, through our dual track approach of clinical value initiatives, CVIs, and operational value initiatives, OVIs. Through the first quarter, we're pleased with our progress. Importantly, we look at these as a portfolio, as some initiatives produce more value than we expect and some produce less value or delayed value. Ultimately, we depend on these initiatives to counteract the natural inflation and medical expenses and to aid in rebuilding profitability. With our first group of CVIs now in place for over a year, we believe they are contributing to improvement in our center-level margins. And like our CVIs, we expect OVIs to contribute incremental margin lift over time. External provider costs, PMPM, increased 1.6% on a sequential quarter-over-quarter basis, which is a commendable result given the prevailing environment of higher medical service utilization we're observing more broadly in other programs serving for real seniors. Our inpatient admissions rate decreased to 5.1%, below where we ended fiscal year 24 at 5.5%. And we're pleased that our short-stay nursing utilization of 1.8% continues to remain in our target. And while we are encouraged by these results, managing utilization requires constant vigilance and is subject to some volatility on a quarterly basis. Our clinical and operational teams are driving more consistency across our centers in the areas of utilization management, high acuity care management, recontracting high-cost external providers, ancillary services network management, claims payment integrity, and chronic condition documentation. We are also looking at pharmacy costs. Last fiscal year, we spent $88 million on net pharmacy costs, and it is growing proportionally with our census. We conducted a routine market pricing check last year, and we're taking a close look at the options available in the market, as well as how we're organized to efficiently and effectively deliver these critical services to our participants. We continue to pursue opportunities to improve the participant experience while also reducing costs in this area. We also continue to invest in tools and technologies to enable our clinicians to remain focused on participant care and practice at the top of their license. Last fiscal year, we piloted a new e-consults initiative that enables our primary care physicians to get a specialist review within 24 hours and can often prevent the need for an in-person specialist visit, which can sometimes take months to schedule and complete. After a successful pilot, we're scaling this solution nationally. We believe this is essential for further empowering our physicians who, because of their extensive geriatric training, manage a significant amount of routine specialty care that would otherwise be referred to specialists by other primary care providers. Lastly, we remain committed to strong administrative cost controls in our centers and in corporate services. We continue to push ourselves to find new ways to be more efficient and productive, and we're beginning to see fixed cost leveraging translate into margins. As we conclude the first quarter, our strategic initiatives are delivering measurable results across key metrics. Based on our performance and leading indicators, we are reaffirming our annual guidance. Our disciplined approach to enrollment growth, combined with robust cost management and enhanced quality and compliance programs, has yielded tangible improvements in organizational effectiveness, participant satisfaction scores, and financial performance. At our core, we remain focused on operational excellence in our centers, the foundation of our business. continuous incremental improvements drive sustainable long-term value for our participants and stakeholders. With that, I'll turn it over to Ben to walk through our quarterly financial performance. Thank you, Patrick.