INNV · InnovAge Holding
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $8.50
Note written ·
How this view changed
- · Rated Medium. Results, 3 November 2026: First-quarter fiscal 2027 adjusted EBITDA was $31.3M versus $17.6M a year earlier, revenue $264.8M (+12.1%), census about 8,420 versus 7,890, and the fiscal 2027 guide was affirmed.
Price against the kill line
11.4% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $8.50, on record since 10 November 2026. The shares are down 11.2% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $8.50, under the 1 October 2026 close of $8.80, which would show sponsor selling overwhelming the earnings recovery. A withdrawn or lowered fiscal 2027 adjusted EBITDA guide below $105 million would also show the case failing.
Research onlyNot in the portfolio.
Key figures from the filings · Health Care
Quarter to 30 September 2026, filed 3 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 265
- Revenue, change on a year (%)
- +12.1
- Gross margin (%)
- 24.0
- Operating margin (%)
- 7.6
- Free cash flow, four quarters ($M)
- 76.3
- Net cash, cash less debt ($M)
- 116
- Price to earnings (×)
- 143.6
- Enterprise value to sales (×)
- 1.2
All filed numbers
What InnovAge Holding reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 265 | +12.1 | 24.0 | 7.6 |
| first filed | 262 | +18.3 | 23.9 | 3.9 |
| first filed | 252 | +15.5 | 24.2 | −11.5 |
| first filed | 240 | +14.7 | 22.0 | 5.5 |
| first filed | 236 | +15.1 | 21.8 | 3.5 |
| first filed | 221 | +11.0 | 18.6 | −1.0 |
| Pre-tax income ($M) | Not reported |
| Net income ($M) four quarters: 9.0 | 19.6 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +0.2 |
| Operating cash flow ($M) | 89.5 |
| Capital spending ($M) | 13.2 |
| Free cash flow ($M) | 76.3 |
| Cash and short-term investments ($M) | 163 |
| Debt ($M) non-current long-term debt plus current maturities | 47.5 |
| Net cash, cash less debt ($M) | 116 |
| Deferred revenue ($M) at 31 March 2026, filed 8 May 2026 | 0.3 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 25.5 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 255 |
| Market value ($M) | 1,292 |
| Enterprise value, market value plus net debt ($M) | 1,177 |
| Enterprise value to sales (×) | 1.2 |
| Enterprise value to operating income (×) | 81.3 |
| Price to earnings (×) | 143.6 |
| Price to book value (×) | 5.1 |
| Free-cash-flow yield (%) | 5.9 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 0.8% of shares outstanding sold short, 2.1 days of average trading to cover, −57.0% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $106.6Mand 1 trade without a stated price |
| 12 monthsfrom | $0 | $106.6Mand 1 trade without a stated price |
The thesis
InnovAge's earnings recovery gives the shares a modest edge over the S&P 500 across the next three months, but the controlling private-equity funds have sold at $9.25 twice since September, and that price caps the move. The second-quarter fiscal 2027 report, expected around February 2027, tests whether the $105–115 million adjusted EBITDA guide gets raised.
On 3 November 2026 the company reported first-quarter fiscal 2027 revenue of $264.8 million, up 12.1% from $236.1 million a year earlier. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, with company adjustments) was $31.3 million against $17.6 million, and the margin was 11.8% against 7.5% (company results release, 3 November 2026). Management affirmed the full-year guide and did not raise it.
The shares closed at $9.40 on 12 November 2026. That is 25.6% below the 52-week intraday high of $12.64 set on 30 June 2026, and the three-month change is −11.4%. The market is paying for a recovery already in the numbers and is discounting continued sponsor selling.
Bullish and bearish views on InnovAge Holding Corp.
The bull case on InnovAge Holding Corp. (INNV), in brief: profit growth is visible in the quarter. The bear case: the controlling funds keep selling at $9.25.
Bull case
- Profit growth is visible in the quarter. Adjusted EBITDA rose to $31.3 million from $17.6 million, and the margin to 11.8% from 7.5% (company release, 3 November 2026). Center-level contribution margin was $63.6 million, or 24.0% of revenue, against 21.8% a year earlier.
- GAAP earnings turned clearly positive. Net income attributable to InnovAge was $19.6 million, or $0.14 a share, against $8.0 million, or $0.06 (company release, 3 November 2026). Fiscal 2026 as a whole had a net loss attributable to InnovAge of $2.5 million.
- The guide leaves room for a raise. The affirmed $105–115 million range compares with $94.6 million of adjusted EBITDA in fiscal 2026 and $31.3 million already reported for the first quarter of fiscal 2027.
- Enrollment is growing. Census, the count of enrolled participants, was about 8,420 against 7,890 a year earlier, and member months were about 25,070 against 23,500 (company release, 3 November 2026).
- The balance sheet is liquid. Cash and equivalents were $119.3 million and short-term investments $43.7 million against $61.4 million of debt on 30 September 2026 (company release).
Bear case
- The controlling funds keep selling at $9.25. An underwritten offering of 10 million shares priced at $9.25 on 22 September 2026 (company pricing release). Form 4 filings dated 23 October 2026 report a further open-market sale of 1,500,000 shares at $9.25 on 21 October 2026 by TCO Group Holdings, L.P. and its affiliated Welsh, Carson, Anderson & Stowe and Ignite Aggregator entities.
- A large block remains registered. TCO Group Holdings held 112,988,070 of 135,736,393 shares outstanding on 30 April 2026, before the September and October sales. The company received no proceeds from the offering.
- Management did not raise the guide. A quarter this far ahead of the prior year produced only an affirmation on 3 November 2026. Census of about 8,420 is below the 8,625–8,850 fiscal 2027 year-end range.
- Reimbursement risk is flagged by the company. The release cites recent legislation reducing the budget that funds Medicaid, and cuts to program reimbursement rates, among its risk factors, without quantifying an effect on guidance.
- Insiders have sold. Chief Legal Officer Nicole Damato sold 23,814 shares at $8.70 on 25 September 2026 and 3,402 shares at $9.51 on 22 October 2026, both under Rule 10b5-1 trading plans (SEC Form 4 filings).
Price setup
The shares closed at $9.40 on 12 November 2026. That sits between the 200-day average of $9.22 and the 50-day average of $9.54, both calculated on adjusted closes as of that date. The 52-week closing low is $4.79 on 8 December 2025.
The close was $8.97 on 6 November 2026 and $9.50 on 11 November 2026. The shares have recovered from $8.80 on 1 October 2026, the low close of the autumn sell-off, but remain 11.4% below the $10.61 close of 14 August 2026.
The $9.25 sale price of 22 September 2026 and 21 October 2026 is the nearest level where supply has appeared, and the shares have traded on both sides of it since. A close that holds above the 50-day average would show buyers absorbing that supply. Further fund filings, or a block sale priced below $9.25, would show the supply continuing.
Coverage is a few analysts wide, so one firm's revision moves the published average target.
Catalysts ahead
- ~3 February 2027 (est.): Second-quarter fiscal 2027 report. First chance for the company to raise the $105–115 million adjusted EBITDA guide and to show census moving toward the 8,625–8,850 year-end range.
What would change the view
A daily close below $8.50, under the 1 October 2026 close of $8.80, which would show sponsor selling overwhelming the earnings recovery. A withdrawn or lowered fiscal 2027 adjusted EBITDA guide below $105 million would also show the case failing.
The risks this note tracks, each with what would confirm it:
- The selling funds continue to sell their remaining registered shares, adding supply at or below recent prices. Confirmed by: a new prospectus supplement, block trade or Form 4 or Schedule 13D amendment showing a lower stake, priced at or below $9.25.
- Fiscal 2027 guidance proves too high if state rate changes or reduced Medicaid funding take effect. Confirmed by: a second-quarter report with adjusted EBITDA tracking below the $105–115 million range.
- Census growth stalls short of the year-end range of 8,625–8,850. Confirmed by: reported census near or below the 8,420 of 30 September 2026 at the next quarterly report.
- A CMS sanction or enrollment freeze hits one of the company's centers. Confirmed by: an 8-K or CMS notice disclosing a freeze, audit finding or corrective-action plan.
What it trades with
InnovAge trades with managed-care and government-funded health services. It is exposed to state Medicaid rate decisions and federal Centers for Medicare & Medicaid Services (CMS) policy. It also responds to medical-cost commentary from UnitedHealth, Humana, Centene and Elevance. Its price action since September has followed the sponsor selling more closely than sector moves. Fund sale disclosures are the stock-specific variable alongside the sector.
The evidence, claim by claim (8)
- First-quarter fiscal 2027 revenue $264.8 million, up 12.1% from $236.1 million; adjusted EBITDA $31.3 million against $17.6 million; margin 11.8% against 7.5%; net income attributable to InnovAge $19.6 million, $0.14 a share. InnovAge fiscal first-quarter 2027 results release · as of
- Census about 8,420 against 7,890 a year earlier; member months about 25,070 against 23,500. InnovAge fiscal first-quarter 2027 results release · as of
- Fiscal 2027 guidance affirmed: revenue $1,050–1,085 million, adjusted EBITDA $105–115 million, ending census 8,625–8,850, member months 101,000–102,500. InnovAge fiscal first-quarter 2027 results release · as of
- Cash and equivalents $119.3 million, short-term investments $43.7 million, debt $61.4 million. InnovAge fiscal first-quarter 2027 results release · as of
- Underwritten secondary of 10,000,000 shares priced at $9.25 by funds affiliated with Apax Partners and Welsh, Carson, Anderson & Stowe; the company received no proceeds. InnovAge pricing release (GlobeNewswire) · as of
- TCO Group Holdings, L.P., Ignite Aggregator LP and Welsh, Carson, Anderson & Stowe XII each filed Form 4 reporting an open-market sale of 1,500,000 shares at $9.25 on 21 October 2026. SEC Form 4 filings dated 23 October 2026 · as of
- Chief Legal Officer Nicole Damato sold 3,402 shares at $9.51 on 22 October 2026 under a Rule 10b5-1 plan, after selling 23,814 shares at $8.70 on 25 September 2026. SEC Form 4 filings dated 26 October 2026 and 29 September 2026 · as of
- Closed at $9.40 on 12 November 2026, between the 200-day average of $9.22 and the 50-day average of $9.54; 3-month change −11.4%. Adjusted daily closes · as of
Sources
- Finviz ·
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