Matthew Gilmore

Matthew Gilmore inquired about the current member mix, the progress of acuity normalization following census growth, and how these factors are influencing margins and cost trends.

Answer

CEO Patrick Blair and President and COO Michael Scarborough explained that the member mix has largely rebalanced as anticipated since sanctions were lifted, with a balanced pool of enrollments focused on keeping participants in the community. They noted that while this mix can negatively impact risk scores, it contributes to growth and margin expansion. CFO Ben Adams added that the V-28 Medicare Advantage payment model phase-in is expected to be a slight headwind to revenue over the next couple of years, though it is factored into current guidance.

Matthew Gilmore from KeyBanc inquired about the normalization of member mix and acuity, its progression, and the impact on InnovAge's margins and cost trends, as well as the expected effects of the V-28 Medicare Advantage payment model phase-in on revenue growth for fiscal year 2026 and beyond.

Answer

Patrick Blair (CEO, InnovAge) and Michael Scarborough (President and COO, InnovAge) stated that the member mix has largely rebalanced since sanctions were lifted, with a balanced pool of enrollments for community and assisted living residents. They noted that the mix of population, age, and acuity has progressed as anticipated, reaching target levels. While this shift can impact revenue due to lower risk scores, the right clinical model ensures appropriate contribution to growth and margin expansion. Ben Adams (CFO, InnovAge) confirmed that the V-28 phase-in is included in the FY2026 guidance and is expected to be a headwind over the next couple of years, though only one year of guidance is provided.

Matthew Gilmore asked for clarification on the sequential revenue decline implied in the Q4 guidance and requested an update on the engagement progress for the Care Anywhere program.

Answer

Executive Robert Freeman explained that sequential revenue declines in Q4 are typical, as growth from new, lower-PMPM members and disenrollment of higher-acuity members offset overall membership gains. He also confirmed that Care Anywhere engagement reached over 40% of targeted new members in Q3, keeping them on track for their year-end goals despite higher-than-expected growth.