While it disclosed bleak fiscal second quarter results this week, InnovAge sees better days ahead as the for-profit Program of All-inclusive Care for the Elderly recuperates from sanctions.
“The release of the sanction in Colorado is both the end of a difficult period and the beginning of the next chapter in this company’s bright future,” Patrick Blair, president and CEO of InnovAge, said in a fiscal second quarter earnings call earlier this week. “Simply, we are a different company than we were 16 months ago. And while our focus on compliance won’t change, we’re poised to help even more seniors with safely in an independent setting, as long as possible. And now more than ever, we believe there are meaningful tailwinds for the PACE model of care nationally.”
Due in part to enrollment challenges related to the sanctions, the company lost $10.5 million in the fiscal second quarter ended Dec. 31. That compares to a profit of $1.1 million last year. Total revenues slipped by 4.5% to $167.5 million. For the six-month period ended Dec. 31, the company lost $24.2 million on slimmer revenues of $338.7 million.
In late January, the company disclosed that state and federal regulators lifted sanctions at the company’s six Colorado centers. The company still is awaiting action from the California Department of Health Care Services for its California center. The Centers for Medicare & Medicaid Services has lifted sanctions at the latter. The company got into hot water last year after regulators in those states found the company was not adequately providing services covered under PACE.
Blair noted that the ending of the formal audits serves as “meaningful catalyst.”
“Frankly, we believe it should strengthen our value proposition to new states and potential partners and it has positioned us to be a more thoughtful acquirer in the future,” he said.
As of Dec. 31, the company has 6,460 participants across 18 centers. Enlisting more participants will take time, he noted.
“Restarting growth in Colorado and accelerating growth in other markets will be a dial, not a switch, meaning we expect it will take a few months to ramp up our enrollment teams, marketing partners and new referral partners before hitting our stride,” he said.
