Innovage Holding Corp. · NASDAQ:INNV
Innovage — Investor Day (February 2024)
68 slides from Innovage's investor day presentation, Feb 27, 2024
Slide 1: 2024 Investor Day
2024 Investor Day February 2024 d
Slide 2: Disclaimer
Disclaimer Cautionary Note Regarding Forward-Looking Statements: These presentation materials contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, including, without limitation, es
Slide 3: Investor Day Agenda: Re-Introduction To InnovAge
Investor Day Agenda 3 1 Re-Introduction To InnovAge PATRICK BLAIR
Slide 4: Investment highlights
Investment highlights With focus and execution, we believe InnovAge can deliver attractive top-line growth at a long-term sustainable margin Focus on a largely untapped and growing market enabling frail seniors to remain independent by fully integrating Medicare and Medicaid services Powerful unit e
Slide 5: InnovAge at a glance
InnovAge at a glance We are A PACE organization which keeps people living independently as long as safely possible (nursing home avoidance) We Deliver Comprehensive, personalized, interdisciplinary care for high-cost, dual-eligible seniors We Leverage A center-based model that is the hub of care coo
Slide 6: InnovAge delivers value to all stakeholders
InnovAge delivers value to all stakeholders 6 Savings to Medicare and Medicaid Capitated payment aligns incentives and provides fiscal certainty Provides comprehensive solution to underserved aging population Ability to live independently in their homes and communities Seamless integration of Medica
Slide 7: Our model of care drives superior health outcomes and lower healthcare costs
1. As of December 31, 2023. 2. NPS defined as rating of who would recommend InnovAge to a friend. Average NPS of Heath Plans is 27 per Satmetrix NICE 2021 industry report. 3. As reported by the National PACE Association (NPA), PACE by the Numbers, January 2024. Based on an analysis by the NPA, 2021
Slide 8: InnovAge is a PACE market leader in a large, growing senior market
InnovAge is a PACE market leader in a large, growing senior market Addressable Market PACE Enrollment (000s)6 35 70 2015 2023 2028 CAGR: 20%+ CAGR: 9% Projected growth acceleration driven by increased PACE awareness, growing support for capitated models, and geographic expansion Government Healthcar
Slide 9: Market landscape for PACE is evolving
Market EvolutionHistorical Barriers Market landscape for PACE is evolving 9 Regulatory structure only allowed not-for-profit entities (changed in 2015) Largely comprised of single-center, single-market not-for-profit providers less oriented to geographic expansion Capital intensity created barriers
Slide 10: PACE is positioned towards the end of the healthcare continuum
PACE is positioned towards the end of the healthcare continuum 1. As reported by the National PACE Association (NPA), PACE by the Numbers, January 2024. Younger, healthier, individual with Commercial Insurance (or uninsured) Becomes Medicare eligible due to age (65+) or disability (<65) Becomes Medi
Slide 11: The PACE model offers the most comprehensive healthcare benefits
The PACE model offers the most comprehensive healthcare benefits 11 Original Medicare Medicare Advantage Medicaid Long-Term Services & Supports PACE Physician Care Hospital Care Pharmacy Supplemental Benefits (e.g., Vision, Dental) Home Health (Skilled) Transportation1 Home Care (Unskilled) Adult Da
Slide 12: InnovAge competes effectively against other models
Medicare Advantage (MA) Original Medicare (FFS) No Medicare1 Managed Long-Term Care Medicaid Fee For Service (FFS) No Medicaid Prior Medicare Coverage InnovAge competes effectively against other models and provides access to a large addressable market Note: Sample size of 581 InnovAge survey respond
Slide 13: Best-in-class PACE management team
In the last 2 years, we have built a best-in-class PACE management team Patrick Blair President & CEO* 2 years at InnovAge; 20+ years in industry Ben Adams Chief Financial Officer* Joined InnovAge in 2023; 30+ years in industry Chris Bent Chief Operations Officer* Joined InnovAge in 2023; 30+ years
Slide 14: World-class Board of Directors
We are supported by a world-class Board of Directors James Carlson Chairman Joined board in 2022 Richard Zoretic Board Member Joined board in 2021 Marilyn Tavenner Board Member Joined board in 2021 Patty Fontneau Board Member Joined board in 2023 Jeb Bush Board Member Joined board in 2021 Teresa Spa
Slide 15: Transformation to Scalable Growth & Margin Recapture
Transformation Scalable Growth & Margin Recapture • Standardized operations, quality, and compliance processes • Rebuilt executive leadership team • Implemented culture of compliance and accountability • Developed foundational “payor capabilities” to optimize quality, compliance, revenue, and medica
Slide 16: Investor Day Agenda: Operating Platform
Investor Day Agenda 16 2 Operating Platform DR. RICH FEIFER
Slide 17: Higher acuity drives higher revenue PMPM
Higher acuity More chronic conditions Higher healthcare costs result in meaningfully higher revenue PMPM InnovAge serves a more complex population than traditional value-based primary care providers Traditional Value-Based Primary Care Provider1 Average Age: 1. Traditional VBC data based on publicly
Slide 18: Operating as both provider and payor (payvider)
InnovAge is unique in that it operates at the intersection of being a provider and a payor (“payvider”) 18 Provider Capabilities Fully integrated, comprehensive care delivered by an interdisciplinary care team Payor Capabilities At full risk for all Medicare and Medicaid services, including supporti
Slide 19: Centers are purpose built to manage our population
Centers are purpose built to effectively manage our population 1. Based on all InnovAge centers (operational and under development). 19 • Primary medical care • Nursing care • Dental services • Personal care • Mental health services • Physical, occupational and speech therapy services • Dedicated da
Slide 20: Invested in people, processes, and tools
We have invested in our people, processes, and tools to deliver a better experience for our participants, employees, and government partners Significant technology investments to drive standardization (e.g., Epic, ERP, transportation, telephony, CRM) Investments made in the last 2+ years are driving
Slide 21: Five Pillar performance framework
We use a “Five Pillar” performance framework to drive accountability for results at all levels of the organization 21 1. As of December 31, 2023. Adjusted EBITDA is a non-GAAP measure. See Appendix at the end of this presentation for a reconciliation to the most directly comparable U.S. GAAP measure
Slide 22: Triad Leadership Model
We use a Triad Leadership Model to deliver strong operational and clinical performance Enhanced communication Leadership model encourages collaboration through shared Five Pillar Goals Better and faster decision making Each discipline’s voice is heard and valued enabling transparency and diverse per
Slide 23: Triad Leadership Model at each level of the organization
The Triad Leadership Model is in place at each level of the organization and supported by robust enterprise solutions Purpose-Built Structure Leadership at center level driven by Triad model which is replicated at regional and national levels • Center director owns the P&L • Medical Director owns ov
Slide 24: Single Electronic Health System (Epic)
Clinical Analytics Physician Orders & Documentation Data Sharing Compliance Notifications Transportation and Logistics Medication Management and Delivery Risk Score Capture and Management Participant Scheduling Single source of truth for care coordination Why it Matters • Built first PACE-specific E
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Slide 26: Investor Day Agenda: Clinical Model and Results
Investor Day Agenda 26 3 Clinical Model and Results DR. RICH FEIFER
Slide 27: We serve a frail, highly complex population
We serve a frail, highly complex population 1. Based on InnovAge data as of December 31, 2023. 2. Based on analysis of individuals enrolled in Medicare Fee-for-Service non-dual enrollees, as calculated in an analysis by Avalere Health in June 2020. 3. Based on InnovAge participant data for the 12-mo
Slide 28: More comprehensive care team than traditional primary care
We employ a more comprehensive care team than traditional primary care providers 1. Traditional primary care providers may use these or other types on as needed basis but generally not employed and core to daily delivery model. 2. Represents InnovAge cost of care as % of revenue for the 6-months end
Slide 29: Key roles of the interdisciplinary care team
Key roles of the interdisciplinary care team 1. Roles as defined by the National PACE association. 29 Primary Care Provider Manages all aspects of medical care Registered Nurse Monitors for evolving care needs, coordinates care, and supports chronic condition management Home Care Coordinator Ensures
Slide 30: InnovAge clinical care model
VB: reformatThe InnovAge clinical care model is unique and comprehensive 30 Target Panel Size (compares to 500+ for trad. VBC providers) Average time PCP spends with a participant in their first month InnovAge Differentiators • Integrated approach and execution • Epic tech stack • 24/7 Care (e.g. af
Slide 31: Standardized participant journey
We’ve standardized each phase of the participant journey to ensure continuity of care Enrollment White glove enrollment model from initial assessment and eligibility to enrollment Care Delivery & Ongoing Support Care managers lead IDT-approved protocols for proactive care End of Life Care Support pa
Slide 32: Tracking clinical KPIs in every center
We rigorously track, measure, and act on clinical KPIs in every center, every month Core Clinical Metrics 1. Proprietary composite represents InnovAge internal methodology. Composite scores are compiled quarterly. COVID vaccine data pending. 2. InnovAge participant data as of December 31, 2023. NPA
Slide 33: Building a portfolio of payor capabilities
We are building a portfolio of “payor capabilities” to improve quality, clinical standardization, and reduce medical cost trends 33 Claims Payment Integrity Provider Network Management Resource Management Risk Payment Accuracy Overview • Create and manage high value networks through standardized con
Slide 34: Investor Day Agenda: Growth Strategy
Investor Day Agenda Growth Strategy MATT HURAY & ROB BORELLA 4 34
Slide 35: Multi-pronged growth strategy
M&A Augment organic initiatives through strategic M&A Extend PACE presence into new markets and new geographies via de novos New Center Drive census growth in existing centers through enrollment activities and strategic partnerships Existing Center 35 We are pursuing a multi-pronged growth strategy
Slide 36: Priority #1: responsible growth in existing markets
1,700 5,300 32% 2,800 3,850 73% 480 650 74% - 2,600 -% 700 1,800 39% 1,100 2,050 54% Note: Based on census as of December 31, 2023. Capacity includes 19 centers, plus 3 under development. Priority #1 remains responsible growth in existing markets We believe our meaningful investments over past 2+ ye
Slide 37: Significant embedded revenue opportunity within existing footprint
Significant embedded revenue opportunity within existing footprint 37 ~14,625 6,780 Current Future ~2.2x 22 centers3 90% utilization ~$108K / PMPY4 Census capacity within existing footprint Significant organic upside opportunity 1. As of December 31, 2023. 2. 90% utilization based on highest existin
Slide 38: Why seniors choose InnovAge
Seniors choose InnovAge for the comprehensive benefits, unique experience, and sense of community we create at each center The care [my mother] received has been phenomenal. Everything is done professionally and within a warm, caring atmosphere. It’s a family here. And, I know our care model is crit
Slide 39: Participant acquisition capabilities
Participant acquisition is supported by a robust set of capabilities Internal and external agency partners design on and offline campaigns to generate leads Resources deployed across the community to educate and build awareness for PACE and drive leads from referral organizations Receives leads from
Slide 40: Referral channels
We source participants from a variety of referral channels Targeted direct-to- consumer marketing Increased focus on digital channels Outreach to community partners and prospects Friends and family are key advocates Participant and community education 1. External costs exists for digital / advertisi
Slide 41: PACE enrollment eligibility assessment
PACE enrollment involves both a physical and financial eligibility assessment 1. Collaborative effort between InnovAge and state (employed or contracted) to determine level of care assessment and financial suitability. Physical Assessment to confirm clinical eligibility Financial Assessment to ensur
Slide 42: More efficient and productive sales engine
Continuous improvement in strength and velocity of enrollment funnel resulting in improved growth, cost effectiveness, and speed to impact We’ve made our sales engine more efficient and productive Sales Qualified Lead Growth Gross Enrollment Growth Sales Cycle2 Reduction 42 Note: Metrics provided in
Slide 43: Healthy independence campaign
Our new healthy independence campaign launched in late 2023 Since launching campaign in November 2023, lead growth is up 10% while cost per lead is down 28% 43
Slide 44: TV commercial
TV commercial https://vimeo.com/882302001/b85a4680df 44
Slide 45: Market dynamics by state
Market Dynamics • Flagship market • Strong market share built over many years • Opportunity in new MSAs remain • Leader in PACE adoption and support • Largest number of eligibles • Competition exists in territories • Only PACE program operating in state • Relatively challenging rate environment • Fr
Slide 46: Disciplined approach to evaluate new markets
Relative cost of care and labor inform optimal size of center Assessment of PACE supportiveness overall, for expansion, and especially in areas of unmet need Understanding existing plans and relative integration Service area size and relative density provide visibility to growth Ensuring appropriate
Slide 47: De novo growth model (Tampa)
($5) $0 $5 $10 $15 $20 0 1 2 3 4 5 6 De novo maturity curve Center Level Contribution Margin ($M) De Novo Growth Model (Tampa) 47 Margin growth continues to year 5 Adj. EBITDA margin breakeven ~24–36 months CLCM margin breakeven ~18 months Selected Highlights Upfront Capex ~$12.5M Estimated Time to
Slide 48: Driving Adoption of PACE in California
CASE STUDY Driving Adoption of PACE in California 1. Bakersfield remains under development. 2. Demographic data reflects estimates for San Bernardino county from Claritas Pop Facts 2018, US Census Bureau, American Community Survey (ACS 16 5yr, C18106 & 18107). 3. Measured as InnovAge census as a % o
Slide 49: New center opening blueprint
“Day 1” Checklists Layout and functionality RFP or first come first serve process Dedicated team and standardized approach supports ‘franchise model’ for new center openings Application Process Site Selection (in parallel with application) Construction / Build Out State Readiness ~3-6 months ~1-3 mo
Slide 50: PACE landscape remains highly fragmented
PACE landscape remains highly fragmented for future consolidation WA 3 OR 2 CA 24 ND 1 WY 0 NM 1 OK 3 TX 3 NE 1 CO 5 KS 3 IA 2 WI 1 MI 14 OH 1IN 5 PA 19 NY 9 LA 2 AR 3 TN 1 VA 8 NC 11 SC 3 FL 6 MD 1 DE 2 NJ 6 RI 1 AL 1 MA 8 KY 3 AZ 0 NV 0 UT 0 ID 0 MT 0 MN 0 IL 0 MO 1 SD 0 MS 0 GA 0 WV 0 ME 0 NH 0 V
Slide 51: Investor Day Agenda: Financial Update
Investor Day Agenda Financial Update BEN ADAMS 5 51
Slide 52: Key financial takeaways
Key financial takeaways Significant number of operational enhancements have already been identified / implemented and are beginning to have an impact Clinical value, and other margin improvement initiatives are on track to realize targeted savings, but exact short-term timing remains less clear Our
Slide 53: Continued momentum post sanction release
Continued momentum post sanction release creates foundation for repeatable top line growth 53 6,460 6,310 6,400 6,580 6,780 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 $167.1 $172.5 $176.9 $182.5 $188.9 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 Total Revenue (at Quarter End)Census at Quarter End +13.0%+7.5%
Slide 54: Adjusted EBITDA is building momentum
Adjusted EBITDA is building momentum 1. Adjusted EBITDA is a non-GAAP measure. See Appendix at the end of this presentation for a reconciliation to the most directly comparable U.S. GAAP measure. 54 TTM Adjusted EBITDA and De Novo Losses ($M)1Key Factors Driving Margin Improvement Responsible census
Slide 55: Full-risk model captures a portion of value created
Our full-risk model enables us to capture a portion of the value we create 1. Calculated based off total revenue for the year ended June 30, 2023. 2. Excludes D&A 3. Intermediate-term defined as 2-4 years and long-term defined as greater than 4 years. Time to achievement will be subject to rate of d
Slide 56: Building blocks for Adjusted EBITDA margin target
Building blocks for intermediate-term Adjusted EBITDA margin target 56 External Provider Costs (~2/3 of medical costs) • Generally increase with census, but we expect increases in PMPM costs to be offset partially through CVIs and other initiatives Internal Cost of Care (~1/3 of medical costs) • App
Slide 57: Centers at or above target levels
Significant proportion of centers at/or above target levels Improvement in census drives disproportionate contribution margin Clinical Value Initiatives starting to bend medical cost trend Target goal: 20%+ CLCM at every center in portfolio Unused capacity offers significant embedded CLCM opportunit
Slide 58: Three monthly payments per participant
InnovAge receives three monthly payments per participant from government partners 1. Calculated based off total revenue for the year ended June 30, 2023. 58 + + = ~$3k PMPM ~$1k PMPM ~$5k PMPM ~$9k PMPM Medicare Part C Medicare Part D Medicaid to manage total cost of care for each participant1
Slide 59: Uniqueness of the PACE rate setting process
Uniqueness of the PACE rate setting process 59 Medicare Rate DevelopmentMedicaid Rate Development Covered services and rate setting process differ by state Rates are based on a discount to the Amount that Would Otherwise be Paid (AWOP) Actual PACE experience may or may not be included in the rate de
Slide 60: Balance sheet and capital deployment
Balance sheet and capital deployment 1. As of December 31, 2023. 60 Cash and Cash Equivalents Short Term Investments Revolving Credit Facility Total $54.1M $44.7M $96.9M $195.7M Capital Deployment Priorities 1 2 3 Invest in our business Continued investment in our PACE platform Expand via de novos G
Slide 61: Re-confirmed fiscal 2024 guidance
Re-confirmed fiscal 2024 guidance 61 1. We define 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. 2. Adjusted EBITDA is a non-GAAP measure †. 6.8K – 7.4K 79K - 83K $725M - $775M
Slide 62: Investment highlights
Investment highlights With focus and execution, we believe InnovAge can deliver attractive top-line growth at a long-term sustainable margin Focus on a largely untapped and growing market enabling frail seniors to remain independent by fully integrating Medicare and Medicaid services Powerful unit e
Slide 63: Appendix
Appendix
Slide 64: Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted EBITDA ($ in thousands) 1. Reflects charges related to litigation by shareholders. 2. Reflects charges related to M&A transaction and integrations, and de novo center developments. 3. Reflects charges related to business optimization initiatives. Such charges relate to one-time inv
Slide 65: Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted EBITDA ($ in thousands) 1. For the 3-months ended March 31, 2023, and June 30, 2023, reflects a $1.2 million reserve for a wage and hour class action settlement and, for all periods, reflects charges/(credits) related to litigation by stockholders, litigation related to de novo cen
Slide 66: Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted EBITDA ($ in thousands) 1. Reflects charges/(credits) related to litigation by stockholders, litigation related to de novo center development, and civil investigative demands. Reflects charges related to M&A transaction and integrations, and de novo center developments. Costs refle
Slide 67: Non-GAAP Trailing 12-Month Adjusted EBITDA
Non-GAAP Trailing 12-Month Adjusted EBITDA ($ in thousands) 1. Reflects charges/(credits) related to litigation by stockholders, litigation related to de novo center development, and civil investigative demands. 2. Reflects charges related to M&A transaction and integrations, and de novo center deve
Slide 68: Non-GAAP Center-Level Contribution Margin
Non-GAAP Center-Level Contribution Margin ($ in thousands) 1. Center-Level Contribution Margin from segments below the quantitative thresholds are primarily attributable to the Senior Housing operating segment of the Company. This segment has never met any of the quantitative thresholds for determin