InnovAge's Q3 2025: Dissecting Contradictions in Medicare Rates, Pharmacy Trends, and Enrollment Dynamics

Medicare and Medicaid rate developments, pharmacy utilization trends, Medicare Part D impact, and enrollment and de novo losses are the key contradictions discussed in InnovAge Holding's latest 2025Q3 earnings call.



Financial Growth and Operational Efficiency:
- InnovAge reported revenue of $218.1 million for Q3, representing an 13% increase year-over-year.
- The company's center-level contribution margin improved by approximately 110 basis points year-over-year, and Adjusted EBITDA increased more than 3.5x compared to Q3 2024.
- This growth was driven by disciplined cost management, effective medical expense control, and strong top-line growth, despite seasonal dynamics.

Census and Geographic Expansion:
- InnovAge's participant census grew to approximately 7,530, reflecting a 10% annual increase.
- The growth was supported by both organic growth in existing centers and the addition of de novo centers in Florida and the acquisition from Concerto.
- The company remains focused on sustainable growth across a balanced geographic footprint, mitigating churn during Medicare's Annual Enrollment Period.

Pharmacy Integration and Cost Management:
- The company acquired a pharmacy to bring key capabilities in-house, contributing to a 77% flu vaccination rate, well above the national average.
- This initiative is expected to improve medication adherence, participant outcomes, and reduce costs by simplifying logistics.
- The integration of pharmacy services into the clinical model aims to enhance care quality and efficiency.

Clinical Value Initiatives and Operational Excellence:
- InnovAge's Clinical Value Initiatives (CVIs) have led to a reduction in assisted living and skilled nursing facility utilization, contributing to cost savings.
- The company's proactive clinical model, with participants visiting centers regularly, enables earlier intervention to maintain health and reduce external costs.
- The focus on operational excellence and organizational efficiency is expected to position InnovAge for sustainable growth and superior outcomes.