Morning, everyone. My name's Josh Moradfar. I'm with Wells Fargo here. Excited to have you all. Today, I'm excited to introduce both Patrick Blair, Ben Adams from InnovAge to present on the business today. Thank you so much.
Well, great. Thank you. It's good to be with everyone this morning. As Josh said, I'm Patrick Blair, the CEO of InnovAge, and really appreciate the chance to walk you through the company, how the business has evolved over the last several years, and why we believe we have a strong investment thesis, and how we're different than other value-based care models. Why now is a unique inflection point in the company's history, given the internal transformation over the last few years and where we see it going from here. We released earnings yesterday, and we felt really good about the performance of the company over our last fiscal year and excited about the year ahead. Healthcare environment, I know has been challenging for a lot of companies, particularly the full-risk Medicaid and Medicare value-based care models.
Our goal today is not to sell a story, but really to show you how a platform has done the hard work to stabilize, rebuild, and transform. I'll take about 20, 25 minutes to walk through some slides, and then happy to open up to questions. At a high level, you can think of InnovAge as a scaled, vertically integrated payer-provider platform that delivers very personalized, value-based care to medically and socially complex individuals, primarily dual eligibles. Our mission is simple and very focused, and that is that we help frail seniors live independently, while delivering better care and support and meaningful cost savings that are predictable for our federal and state partners. Importantly, we do this by taking full financial responsibility for outcomes and the total cost of care across the full scope of Medicare and Medicaid services.
We really think that's what differentiates the company, and underpins the rest of the story. I want to just take a moment and level set on what we do, and since we don't spend a lot of time explaining PACE elsewhere in the presentation, I think this slide does a good job of providing some of the facts. We deliver a very personalized interdisciplinary care for high cost, primarily dual eligibles in a center-based model. We're supported by a network of contracted hospitals and specialists and ancillary providers. When you think of the population we serve, it's important to note that we're talking about seniors who are 75- 80 years old. The group reflects kind of this leading edge of baby boomers, who were some of the early movers into Medicare and Medicare Advantage maybe 10- 15 years ago.
These are individuals now that have very significant medical and social needs and who are often at risk of entering a nursing home. Many of these individuals require a much different and a much higher level of care than is typically offered through a traditional Medicare or a Medicaid managed care program. No other value-based care program controls as much of the healthcare premium dollar as a PACE program. We are at full risk for all of the Medicare services, all of the Medicaid long-term care services, and our monthly premium that we get from both the federal government and our state partners combine to about $10,000 per participant per month. Quick audio check. I think we have a little echo there. Okay. Thank you. Today, we operate 20 centers across six states. We have about 2,500 employees and a little over 8,200 patients.
The bottom row on the slide of metrics really underscores that the model is not theoretical. It is a scaled platform delivering consistent revenue growth, expanding margins, and positive cash flow. I think this slide is helpful because it puts into context where we are today, and where we were, and how the company has evolved over the last, let's say, four and a half years. What we refer to as InnovAge 1.0 was really about establishing a national platform. The company converted from a not-for-profit status to a for-profit status to access growth capital. It expanded geographically, doubled the number of centers it was operating, and ultimately became a public company. This is the time at sort of the end of 1.0 that I joined the company, and when we came in, the opportunity was really different.
The company had achieved scale, but the infrastructure and the operating disciplines and capabilities had not really kept pace with that growth. So the work that I ushered in in early 2022 was really InnovAge 2.0, and at that time, it was really about building a foundation required to operate at scale. It was about becoming a full risk healthcare company. We upgraded leadership, we strengthened the systems and accountability throughout the company, we made significant technology investments in Epic, in Oracle, in Salesforce. We built a much more sophisticated payer-oriented medical cost management model and capabilities, and we brought important clinical services that were at one time outsourced. We brought those into the platform to get the benefits of that greater integration that would both improve care and improve the economics of the business. What we now describe as 3.0 is really the next stage of that evolution.
It is not about rebuilding the company again. It really is about getting more out of the platform that we have already built. That means continuing to improve the care we provide, driving responsible organic growth, using data much more systematically to reduce variation in the company, applying technology and AI where we can to make our clinicians and our operations more effective, and it means being disciplined about where we deploy capital, whether that is joint ventures, acquisitions, de novos, or potentially other adjacent product opportunities that are upstream of the PACE program. So the objective is to build an increasingly sophisticated value-based care platform, capable of serving many more seniors while improving the efficiency and the economics of the model over time. You can see that the operational discipline is translating into tangible financial results. Census and revenue growth have become more consistent. Adjusted EBITDA has improved meaningfully.
We kind of think of it as very clean EBITDA. There are very few adjustments in our book today, and that has improved meaningfully over time. This performance is not driven by one market or a one-time lever. It really reflects a broad-based improvement across the portfolio of centers and across all of our operational functions. This progression is really giving us confidence in the durability of that performance. One of the most important differentiators for us is that we are both a payer and a provider in many ways. There is a single operating model that brings these two mechanisms together with very unified economics. There is not delegated risk, or there is no coordination layer. In contrast to many other models that do rely on delegated risk or using a network to manage the risk, that creates a much more fragmented accountability and fragmented experience.
Our model is fully integrated, not delegated, and that distinction, we think, matters significantly when you are managing these complex populations. Our care model is designed for depth and outcome. It is not about maximizing throughput. Our doctors and nurses and care teams spend a lot of time with these participants. There are intentionally very small panels, allowing our physicians and care teams to spend a lot of time with every patient. Primary care is deeply integrated with nursing care, with behavioral health, with therapy services, with social services, and transportation. That structure really incentivizes clinicians to take the time they need and the time that is required to provide high quality rather than maximizing volume. The population we serve is also very meaningfully more complex than the average Medicare beneficiary. Our participants typically have multiple chronic conditions.
They require assistance with a number of activities of daily living, and they interact with our care teams very frequently. You can see that our average risk score is a 2.48, which is much higher than you see in a typical managed care plan. But despite this complexity, over 90% of our participants can remain living independently and not in an institution. That is really sort of the magic of the model, is we are able to slow the rate of progression into institutions or stop them altogether during the tenure of someone that was with us. That outcome is central to the value that we create for Medicare and Medicaid. Even while serving a more complex population, we deliver superior outcomes. We see lower inpatient rates, lower readmission rates, lower skilled nursing days.
These are all the key metrics that we impact that have a big impact to our payers. The outcomes are not accidental. They are the result of very proactive, frequent engagement with our participants, and government payers can then rebalance long-term care to a community-based approach rather than toward nursing facilities. That is really what creates the fiscal benefit and the predictability of the program for our partners. This slide really gets to the core of why we think the model is different. We are at full risk for both Medicare and Medicaid. Other models are generally at risk for one or the other, or they could be at risk at both through two separate programs. But we are at risk for all Medicare and Medicaid services through the PACE program. It includes all the primary care, the hospital care, the drugs, the long-term care.
That matters because we control these costs, and we control these services much more than a traditional managed care company, and that control sort of beats influence, as we like to say. Also, one of the things that kind of distinguish our model is about 40% of all care, sometimes 40%-50% of all of the healthcare dollar associated someone on an annual spending for an individual, we are providing that care in our centers with our employees. So we have a lot of control over the healthcare dollar, and that interdisciplinary team really allows us to manage this population longitudinally, and it gives us real visibility into the utilization and where there is opportunity to make better utilization decisions. When care does occur outside of the center, it is very tightly coordinated.
The orders that we write for care outside the center are very precise, they are very narrow, they are very intentional, and they result in a real deep understanding of what that participant needs. This is why we believe PACE is the only model that truly controls a meaningful share of the total cost of care, acute care, all the way through long-term care. Just going to jump ahead here. The market opportunity for PACE remains significant and under-penetrated. There is a growing, I think, bipartisan recognition that PACE can deliver extraordinary value, particularly for these high-risk dual eligibles. Policymakers increasingly view PACE as the most fully integrated care model that is available for this population, which helps reduce long-term regulatory risk.
I think right now we are in a time where there has probably never been more interest in PACE, both at a federal level, at a state level, and there is a lot of curiosity about how could we move upstream, how could we support other populations? These tailwinds are starting to support what we believe is long-term sustained growth of the program, and we expect that to continue in the future. Maybe a little more on that. This slide is really meant to address the question that we often hear, which is whether PACE is simply too small or too constrained to matter. But I think what we are trying to show here is we believe PACE is not just a single growth story. It is a multi-year horizon of expansion that we see with clear and credible ways that the market can grow over time.
If you think about sort of the first 1/3 of the slide, this first horizon is really the organic growth opportunity that is available within the PACE framework today. So even without any policy changes, there is a lot of room to grow in PACE. It is a large, complex population. It is continuing to grow. We remain one of the few models that really can help seniors stay safely in the community or in their homes and live independently, and there is meaningful white space in the market today for new centers moving into new markets. It is proven. It is a repeatable growth strategy that we understand, and we can do all of this using today's rules and today's operating model. But the second horizon in the middle is really to say, well, what if the policy does evolve and modernize?
We think that there are some very straightforward policy changes. Nothing radical, but just simple policy changes that can make it easier to enroll in PACE, can build awareness of PACE, can make it easier to expand into PACE on a quicker timeline. The more flexibility that states and CMS can bring to the PACE program, we think it only increases the likelihood that we will be able to accelerate growth in the future. The third horizon on the right really is saying, how do we take the PACE model of care and apply it to new populations? If we believe in this center-based model, this high-touch model, this interdisciplinary care team model, this sort of high touch, knee to knee with a doctor, sometimes multiple times a week.
If you believe in the model, could we take that and move upstream of PACE eligibility to, say, a Medicare-only population, a population that is not yet eligible for Medicaid, and could we provide similar interventions and slow the rate of frailty, slow the rate of institutionalization, continue reducing readmissions and ER visits and skilled nursing days? We think the answer to that is yes, and we think there is a lot of ways that the model could be expanded, and CMS, CMMI, HHS are all expressing, I think, a genuine interest in learning more about how PACE could do this. I think the key takeaway from the slide is that we do not believe PACE is a niche program. It is a platform.
It does represent an opportunity that we believe expands over time, and as policymakers look for ways to expand and adapt PACE to help it serve more seniors, we think this creates a real opportunity for a company like ours that can operate this business at scale. Another, I think, important factor is the market today is largely made up of small, sub-scale, single-state operators. More than half of all PACE programs have fewer than 250 participants. InnovAge is the only PACE organization with meaningful scale, geographic diversification, and that scale enables multiple growth pathways, as we talked about, and whether it is a de novo or it is M&A, or it is a partnership. We view that InnovAge is the likely partner of choice for a variety of organizations that are looking to expand senior programs into their communities.
No deck would be complete, I think, in today's world without mentioning AI. AI is certainly one of the tools that we believe can help us get more out of our platform that we have created. But I want to be clear on how we are approaching it. We are approaching AI very pragmatically and with a lot of discipline, with the appropriate clinical and human oversight. We are not pursuing AI for the sake of saying we are pursuing AI. We really are starting with specific problems that we believe the technology can help us address, whether that is improving care, improving the participant experience, making the organization more efficient, or where we can measure the result. This slide gives you four examples. I will not go through each one, but maybe I will spend a second on the first one, and that is clinical decision support.
We're developing tools that in many ways bring specialist-level insights directly into the primary care physician workflow today. That opportunity is really about helping our physicians manage more complex conditions within the interdisciplinary team. When a specialist is needed, we make a more precise and targeted referral, which can also save dollars downstream. This is all particularly powerful in our model because we're not trying to influence some physician sitting outside the system as you would have in a managed care organization where they're distant from the patient. These tools are embedded directly into the workflows of the doctors who are serving the participants and who are caring for that person every day.
Whether it's pharmacy and identifying polypharmacy opportunities or drug interactions, or it's scheduling and transportation, trying to optimize the routing of our buses, the scheduling of our participants in our centers, identifying patterns of cancellations and why they occur, or enabling a more positive and proactive outreach to someone. These are the ways that we're using AI, and we think that it has a lot of potential in our business to use it in a very practical and targeted way to help our clinicians simply practice at the top of their license, but also create a great participant experience. Joint ventures. This is a new part of our growth portfolio, but they've become an important part of our growth strategy as we look forward. These are partnerships where we're aligning with preeminent health systems in the communities we operate and where we share a mission.
A lot of these health systems are very trusted in their communities, and when we combine with their community presence with our PACE expertise, it allows us to strengthen referral pathways from these health systems into PACE, improve care coordination of a shared patient population, and it allows us to expand access for seniors who would benefit from our model. The quotes on the bottom of the slide reflect how our partners view the value of these collaborations. Today, we have these collaborations primarily in Florida with two of our de novos, with Orlando Health and Tampa General.
It is a big part of as we view market expansion or M&A, we want to know that there's a health system that we could partner with to help us drive care quality and growth. I'm going to pause here only because we just released earnings yesterday and maybe take you to a slide that kind of just gives you a visual of the company's momentum. What you're seeing here across revenue, census, margins, and contribution margins really is the momentum of the company today, and this continued through our earnings, and it is something that we're very proud of. The consistency across these metrics, I think, reinforces the confidence that we have in the trajectory of the business. It's execution-driven performance. It's not one lever, one market, one rate increase from a state.
It really is supported by a platform that is now operating in the way it was designed to, and we are excited about the future. With that, I think I am going to pause and see if there is any questions in the room, and I have got Ben here with me, so if there is anything financially oriented, he will be happy to jump in. If not, we will wish you all a wonderful conference. Josh?
Maybe any color on the guidance for 2027.
Ben, you want to share some thoughts on 2027 guidance?
Sure. I think that the guidance is. Really, I think we probably focus on the adjusted EBITDA number the most. That is what people seem to be interested in, is $105 million-$115 million. We reported $95 million for fiscal year 2026 just yesterday. I think when we look at the guidance for next year, it is really built on a couple of factors. One is that we are assuming essentially the same enrollment trends on the top-line basis that we have seen really for the last three years. Patrick showed this slide just a minute ago, and it speaks to the consistency of the business. I think we are seeing pretty consistent top-line enrollment growth.
The rate environment's not going to be quite as robust as it was in fiscal year 2026, and we factored that into our guidance, and you can see that in sort of the implied revenue growth in the guidance numbers that we put out there. I guess the third thing I'd probably say is what we've really tried to do with this budget is to make sure that we can defend or slightly increase the margins that we enjoy during fiscal year 2026. A couple of years ago, we had an investor presentation, and we said that we really wanted to get to sort of a 10%+ long-term sustainable margin. We've talked about that on our call yesterday, too, and we're getting pretty close to that.
I think with this budget, with this guidance that we put out there, we're sort of going to get to that place where we think we can sort of sit comfortably going forward. So it factors in a lot what's going on with the business, some of the margin improvements we're doing, as well as some of the rate pressures the whole industry's feeling.
Well, thank you for your time, and we wish everyone a great conference. Enjoy.