Key Highlights

  • The PACE enrollee base reached roughly 8,420 people across 20 centers in six states as of September 30, 2026, the close of InnovAge (NASDAQ:INNV) fiscal first quarter of 2027.
  • Provider payments plus cost of care, excluding Depreciation and amortization, came to about 76% of Revenue for the three months ended September 30, 2026.
  • California and Colorado have both frozen new PACE applications and service area growth, with the California freeze lasting at least until November 19, 2027 and the Colorado freeze at least until October 31, 2028.
  • Participants carried an average risk adjustment Factor score of 2.51 against a 1.0 baseline, and the typical participant had been enrolled for 3.1 years.

Quarterly Filing Puts Care Costs and Rate Strain in Focus

InnovAge (NASDAQ:INNV) submitted its 10-Q for the three months ending September 30, 2026 on November 3, 2026. Its PACE model, short for Programs of All-Inclusive Care for the Elderly, makes the company fully responsible for medical care for frail, high-cost seniors while Medicare and Medicaid pay a set amount each month. About 8,420 participants were served through 20 centers in California, Colorado, Florida, New Mexico, Pennsylvania and Virginia. The extract did not contain revenue, Net Income or cash figures, so none are stated here. It did note that cost of care was higher than in the same quarter last year, partly because of competition for workers.

Medicaid Rate Cuts and Provider Cost Increases Ahead

Management anticipates tighter margins during fiscal 2027. Colorado, its largest membership base, is expected to see lower Medicaid premium rates applied retroactively to July 1, 2026, and wage-driven rate pressure is expected from California rates set on January 1, 2027. Third-party provider costs are also projected to rise in the second half of fiscal 2027, a view tied to state budget strain from federal legislation, even though none was seen in the first quarter and none is expected in the second. Delays in Medicaid eligibility decisions could weigh on enrollment, but the company said they have not yet had a material effect on its financial statements.

California Corrective Actions and Colorado Pause Limit Expansion

California's health care services department, and Colorado's health policy department from October 31, 2026, have stopped accepting applications for new PACE organizations and expansions. California's freeze exempts the Bakersfield application, which may proceed once deficiencies raised at the Sacramento and San Bernardino centers are remedied. A corrective plan dated December 23, 2025 is still underway, and a medical review in San Bernardino is ongoing. In July 2026 the company pulled its Downey application, and two Pennsylvania centers are being converted to alternate care settings, slated for the second quarter. Voluntary disenrollment has averaged 6.5% a year over three fiscal years, while technology and artificial intelligence spending adds near-term costs relative to revenue.

Where Things Stand

Cost of care near 76% of revenue comes from fully capitated economics: InnovAge carries the bill for hospital, home and Facility services itself, so wage gains and provider Inflation hit margins directly. For InnovAge (NASDAQ:INNV), the filing extract lacks revenue and profit, so the evidence is mainly about risk: expected Colorado rate cuts, higher provider costs later in fiscal 2027 and two state freezes on expansion. Retention looks steady at 6.5% average voluntary disenrollment. The next checkpoints are the outcome of the California corrective plan, Bakersfield approval and rate notices from January 2027.