InnovAge, a Denver-based senior health care company (Nasdaq INNV), is showing signs of regaining its footing following crippling public sanctions that have frozen new patient registrations for the past year and a quarter.
InnovAge's CEO Patrick Blair informed investors on a Tuesday quarterly earnings call that the company has seen a small increase in its patient count for the first time since 2020. This is one of many operational milestones which could signal a new growth phase.
InnovAge was released from the patient freezing earlier this month by the California Department of Health Care. This was the last entity required for the company's full resumed enrollment. InnovAge was placed under a patient freeze by the federal and state regulators of Colorado and California in late 2021, after it was determined that InnovAge had failed to provide its patients with medically essential products and services.
Colorado's Health Department released its sanctions in early January, and allowed InnovAge, which comprises 44% of InnovAge's total patient count in Colorado, to enroll new patients in March.
Blair estimated that Colorado would likely return to more normal enrollment rates sometime during the next fiscal year. Blair said that the company had seen more leads than ever before, but the ramp-up of enrollment takes time, particularly for those patients with Medicaid coverage.
Blair said to investors that "the hard work of improving performance begins now."
InnovAge recorded a total net loss of $7.3m in the third quarter. This translates to a loss per share of 5c and a margin of net loss of 4.2%.
About 6,300 patients were cared for by the company, compared with 6,800 during the third quarter last year. The company's revenues totaled 172.5 million dollars, an increase of about 3% compared to last year's same quarter.
Leaders said that InnovAge’s inability during sanctions to add healthy people to their patient mix has led to increased costs and it could take time to balance the system with new enrollments.
Blair stated that the increased labor costs were also due to the continued scrutiny and compliance of regulators. Blair told investors that the company could add 50% more staff to all its living centers. He said the company had spent the past 19 months bolstering technology and staff to prepare for the future.
Blair stated that the company's Sacramento, California market, with only 130 participants, might be a good area for expansion. Meanwhile, efforts are being made to open two living centers in Florida. Construction on the Tampa and Orlando facilities began in 2021, but efforts were paused to deal with remediation in Colorado & California. Each center is approximately 35,000 square foot and has the capacity to house up to 1,300 people.
Blair stated that the opening of these centers could increase InnovAge’s total census capability by more than 20 percent. The company has also reduced its number of living centers in Pennsylvania from 18 to 17 by consolidating three Pennsylvania living centres into two.
Blair praised the addition of several executive staff members to InnovAge who will bring value to a new chapter in operations. Christine Bent was previously an executive at pharmacy benefits manager Prime Therapeutics LLC and she was appointed chief operations officer in march. InnovAge also added a vice-president of medical economics, to help advocate for higher reimbursement rates.
Blair stated, "We will work hard in the coming months to get all of these things dialed in. But I don't believe we are ready to say today when exactly guidance will be reinstated."