Financial Analysis

Acquisitions TRHC On January 2, 2025, the Company completed the acquisition of certain pharmacy assets from Tabula Rasa Healthcare Group, Inc. (TRHC), a leading pharmacy care management company, for a total purchase price of $4.8 million. The acquisition was funded through cash on hand. The acquisition of the TRHC assets was accounted for using the purchase method of accounting. The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Goodwill represents the excess of the purchase price over the fair value of net assets acquired and the estimated future economic benefits arising from expected growth opportunities for the Company and is not deductible for income tax purposes. The following table represents the finalized allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date. The measurement period has closed, and the Company did not recognize any measurement period adjustments. Final Allocation in thousands Cash Consideration $ 4,774 Total Consideration $ 4,774 Prepaid expenses and other $ 1,503 Property and equipment, net 1,158 Operating lease assets 1,053 Goodwill 2,097 Deposits and other 16 Current portion of operating lease obligation (115) Noncurrent portion of operating lease obligation (938) Fair value of assets and liabilities $ 4,774 …

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Commitments and Contingencies Professional Liability The Company pays fixed premiums for annual professional liability insurance coverage under a claims-made policy. Under such policy, only claims made and reported to the insurer are covered during the policy term, regardless of when the incident giving rise to the claim occurred. The Company records claim liabilities and expected recoveries, if any, at gross amounts. The Company is not currently aware of any unasserted claims or unreported incidents that are expected to exceed medical malpractice insurance coverage limits. Litigation From time to time, the Company is involved in various legal proceedings and be subject to claims. The Company regularly evaluates the status of claims and legal proceedings in which it is involved in order to assess whether a loss is probable or there is a reasonable possibility that a loss may have been incurred, and to determine whether accruals are appropriate. The Company expenses legal costs as such costs are incurred. Civil Investigative Demands In July 2021, the Company received a civil investigative demand from the Attorney General for the State of Colorado under the Colorado Medicaid False Claims Act. The demand requested information and documents regarding Medicaid billing, patient services and referrals in connection with the Companys PACE program in Colorado. In February 2022, the Company received a civil investigative demand from the Department of Justice (DOJ) under the Federal Fal …

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Long-term Debt The components of our long-term debt are as follows: June 30, 2026 June 30, 2025 in thousands Senior secured borrowings: Term Loan Facility $ 48,812 $ 60,000 Total debt 48,812 60,000 Less unamortized debt issuance costs 755 286 Less current maturities 2,536 2,250 Noncurrent maturities $ 45,521 $ 57,464 Credit Agreement On August 8, 2025, the Company entered into Amendment No. 2 to the Credit Agreement, dated as of March 8, 2021 (as amended, the Credit Agreement). Amendment No. 2 refinanced the then-existing Term Loan Facility with a $50.7 million term loan (the Term Loan A Facility), renewed the commitments with respect to the Revolving Credit Facility for maximum borrowing capacity of $100.0 million (the Revolving Credit Facility), and extended the maturity date of both the Term Loan A Facility and the Revolving Credit Facility to August 8, 2028 from March 8, 2026. Terms of the Credit Agreement Borrowing capacity under the Revolving Credit Facility is subject to (i) any issued amounts under our letters of credit, which as of June 30, 2026 was $6.2 million, and (ii) applicable covenant compliance restrictions and any other conditions precedent to borrowing. Loans under the Credit Agreement are secured by substantially all of the Companys assets. Principal on the Term Loan A Facility is paid each calendar quarter in an amount equal to 1.25% of the initial term loan on closing date. Outstanding principal amounts under the Credit Agreement accrue interest at a var …

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The Company disaggregates capitation revenue from the following sources for the year ended June 30: 2026 2025 Medicaid 56 % 55 % Medicare 44 % 45 % VA, private pay and other *% *% Total 100 % 100 % * Less than 1%

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Stock-based Compensation A summary of our aggregate stock-based compensation expense is set forth below. Stock-based compensation expense is included in corporate, general and administrative expenses on our consolidated statements of operations. Year ended June 30, 2026 2025 in thousands Stock options $ 139 $ 669 Profits interests units 1,269 667 Restricted stock units 5,641 6,283 Total stock-based compensation expense $ 7,048 $ 7,619 2020 Equity Incentive Plan Profits Interests TCO Group Holdings, L.P. (the LP), the Companys largest shareholder and prior to the IPO, the Companys parent, maintains the TCO Group Holdings, L.P. Equity Incentive Plan (the 2020 Equity Incentive Plan) pursuant to which interests in the LP in the form of Class B Units (profits interests) may be granted to employees, directors, consultants, advisers, and other services providers (including partners) of the LP or any of its affiliates, including the Company. A maximum number of 16,162,177 Class B Units are authorized for grant under the 2020 Equity Incentive Plan. Both performance-based and time-based units were issued under the plan. As of June 30, 2026, a total of 13,874,760 profits interests units have been granted under the 2020 Equity Incentive Plan. The Company used the Monte Carlo option model to determine the fair value of the granted profits interests units at the time of the grant. Expected stock price volatility is based on consideration of indications observed from several publicly traded …

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Fair Value Measurements Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources outside the reporting entity. Unobservable inputs are inputs that reflect the Companys own assumptions based on market data and assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The sensitivity to changes in inputs and their impact on fair value measurements can be significant. The three levels of inputs that may be used to measure fair value are: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date Level 2 Quoted prices in markets that are not active or inputs that are observable, either directly or indirectly, for substantially the full term of the assets or liabilities Level 3 Unobservable inputs to the valuation techniques that are …

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Goodwill and Intangible Assets Goodwill represents the excess of cost over the fair value of net assets acquired. The Company has no acquisitions during the year ended June 30, 2026. The Company had one acquisition resulting in goodwill during the year ended June 30, 2025, see additional information in Note 11 Acquisitions. Goodwill is not amortized. Pursuant to ASC 350, Intangibles Goodwill and Other, we review the recoverability of goodwill annually as of April 1 or whenever significant events or changes occur which might impair the recovery of recorded amounts. For purposes of the annual goodwill impairment assessment for fiscal years 2026 and 2025, the Company identified two reporting units, East and West. There were no indicators of impairment identified and no goodwill impairments recorded during the years ended June 30, 2026 and 2025. The following table summarizes the changes in goodwill for the fiscal years ended June 30: in thousands 2026 2025 Balance as of beginning of period $ 142,046 $ 139,949 Goodwill acquired during the period 2,097 Balance as of end of period $ 142,046 $ 142,046 Intangible assets consisted of the following as of June 30: in thousands 2026 2025 Definite-lived intangible assets Customer relationships $ 6,600 $ 6,600 Indefinite-lived intangible assets Permits 2,000 2,000 Total intangible assets 8,600 8,600 Accumulated amortization (5,382) (4,723) Balance as of end of period $ 3,218 $ 3,877 Intangible assets with a finite useful life continue to b …

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Income Taxes The components of pre-tax income (loss), based on the jurisdiction of the legal entity, were as follows: Year ended June 30, 2026 2025 in thousands Domestic 266 (34,027) Total pre-tax income (loss) $ 266 $ (34,027) For the years ended June 30, 2026, and 2025, none of the Companys pre-tax income was derived from foreign sources. The Companys effective income tax rate for the years ended June 30, 2026 and 2025 was 356.5% and (3.9)%, respectively, which differed from the amount computed by applying the applicable U.S. federal statutory corporate income tax rate of 21% in each period as a result of the following factors: Year ended June 30, 2026 2025 in thousands, except percentages US Federal statutory rate $ 56 21.0 % $ (7,088) 21.0 % State & local income tax, net of federal benefit (a) (78) (29.4) % 1,251 (3.7) % Change in valuation allowance (1,495) (561.4) % 4,122 (12.2) % Nontaxable or nondeductible items: IRC Section 162(m) limitation (b) 347 130.2 % 358 (1.1) % Non-controlling Interest (389) (146.1) % 1,050 (3.1) % Lobbying expense 200 75.1 % 134 (0.4) % Stock Options 164 61.8 % 139 (0.4) % Meals and Entertainment 54 20.3 % 77 (0.2) % Penalties 3,811 1431.0 % 13 % Other Adjustments Deferred Adjustment (1,646) (617.9) % 1,260 (3.8) % Prior year true-up (75) (28.0) % % Effective Tax Rate $ 949 356.5 % $ 1,316 (3.9) % ___________________________________ (a) The majority of the state tax effect relates to California (b) Reflects the permanent addback for the …

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"Leases Leasing Arrangements as Lessee The Company leases certain property and equipment under various third-party operating and finance lease agreements. The Company determines if an arrangement is or contains a lease at the lease inception date by evaluating whether the arrangement conveys the right to use an identified asset and whether the Company obtains substantially all of the economic benefits from and has the ability to direct the use of the asset. The leases are noncancelable and expire on various terms from 2026 through 2039. We determine if an arrangement is a lease upon commencement of the contract. If an arrangement is determined to be a long-term lease (greater than 12 months), we recognize a right-of-use (""ROU"") asset and lease liability based on the present value of the future minimum lease payments over the lease term at the commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Our lease terms may also include options to extend or terminate the lease when it is reasonably certain that we will exercise those options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. We have elected to apply the short-term lease exception for contracts that have a lease term of twelve months or less and do not include an option to purchase the underlying asset. …

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Recently Adopted Accounting Pronouncements Income Taxes In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . ASU 2023-09 requires public companies to annually (i) disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, and (ii) disclose the amount of income taxes paid, disaggregated by federal, state, and foreign taxes, as well as by individual jurisdiction. The Company adopted ASU 2023-09 in its annual consolidated financial statements for the year ending June 30, 2026. As ASU 2023-09 relates solely to income tax disclosures, adoption did not have a material impact on the Company's consolidated financial statements. The required disclosures are included in Note 12 Income Taxes. Recent Accounting Pronouncements Not Yet Adopted Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) . ASU 2024-03 requires that each interim and annual reporting period, an entity disclose more information about the components of certain expense captions that is currently disclosed in the financial statements. As revised by ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures , the provisions o …

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Revenue Recognition Capitation Revenue and Accounts Receivable Our capitation revenue relates to contracts with participants in which our performance obligation is to provide healthcare services to the participants. Revenues are recorded during the period our obligations to provide healthcare services are satisfied as noted below within each service type. The Company contracts directly with Medicare and Medicaid on a PMPM basis. We receive 100% of the pooled capitated payment to directly provide or manage the healthcare needs of our participants. Fees are recorded gross in revenues because the Company is acting as a principal in providing for or overseeing comprehensive care provided to the participants. Neither the Company nor any of its affiliates is a registered insurance company because state law in the states in which it operates does not require such registration for risk-bearing providers. In general, a participant enrolls in the PACE program and is considered a customer of InnovAge. The Company considers all contracts with participants as a single performance obligation to provide comprehensive medical, health, and social services that integrate acute and long-term care. The Company identified that contracts with customers in the PACE program have similar performance obligations and therefore groups them into one portfolio. This performance obligation is satisfied over time as the Company provides comprehensive care to its participants. Our revenues are based on the e …

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"Segment Reporting As of June 30, 2026, the Company has two operating segments, both of which are related to the Companys PACE offering. The PACE-related operating segments are based on two geographic divisions, which are East and West. Due to the similar economic characteristics, nature of services, and customers, we have aggregated our East and West operating segments into one reportable segment for PACE. The Companys other/reconciling category related to Senior Housing, and is shown below as Other along with certain corporate unallocated expenses. As of June 30, 2026, the Company no longer operates Senior Housing as the remaining Senior Housing assets were sold. See Note 4, ""Investments - Noncontrolling interest."" The Companys chief operating decision maker (CODM) is the chief executive officer. The CODM uses Center-Level Contribution Margin as the measure for assessing performance of its operating segments and allocating resources, predominantly in the annual budget and forecasting process. The Company evaluates performance and allocates capital resources to each segment based on an operating model that is designed to maximize the quality of care provided and profitability. The CODM considers forecast-to-actual Center-Level Contribution Margin variances on a monthly basis when making decisions about allocating capital and personnel to the segments. Center-Level Contribution Margin is defined as total segment revenues less external provider costs and cost of care (exclud …

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Subsequent Event The Company has evaluated subsequent events through September 8, 2026, the date on which the consolidated financial statements were issued, and noted there were none.

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