Facing a lawsuit and enrollment caps, a local senior-care company tries to make a comeback.
During InnovAge’s Sept. 13 earnings call, CEO Patrick Blair spoke like a man who was watching a family member recover from a serious illness. In this case, however, that family member was the Denver-based senior-care company that Blair runs.
In early March of 2021, InnovAge (Nasdaq: INNV) was a company drawing all sorts of positive attention. It had just gone public, garnered an enterprise value of $3.75 billion and come oﬀ a ﬁve-year period in which revenue grew by 143%.
But on March 10 of that year, the Colorado-born company that had started life as nonproﬁt Total Longterm Care received a letter from the Colorado Department of Health Care Policy and Financing saying it had gotten a complaint about its Thornton facility. The complaint alleged that clinical staﬃng at the center was “dangerously low,” caseloads were far too high and preventable acute medical issues had aﬄicted multiple patients at the facility.
A year and a half later, shares that once traded at $25.98 reached a nadir of $3.50. InnovAge patient enrollment is frozen in Colorado, where 47% of its business resides, as well as in Northern California, until it completes corrective action plans. And the company is the subject of a civil lawsuit ﬁled in the U.S. District Court of Colorado by three investor public pension funds that claims oﬃcials, including a departed CEO, made “materially false and misleading” statements about the company that caused investors to put their money into the ﬁrm only to lose millions of dollars as its value plummeted.
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“I think what our complaint does show is there were systemic issues well before they did the IPO,” said Julie Goldsmith Reiser, a Washington, D.C., attorney who is leading the team seeking unspeciﬁed damages from the company, its current and former leaders and ﬁrms that aided it in going public. “My parents live across the country from me. I’m the type of person who could use this solution … To me, that’s why it’s important to get this story out.”
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Reiser, who ﬁled the lawsuit, said it aims to recover the money lost by investors who bought into “one of the ﬁve worst-performing IPOs in 2021” and suﬀered because of what she claims was “a materially inaccurate registration statement and prospectus.” But she believes that the people speaking out through her eﬀorts will hold sway on the federal and local agencies seeking to get InnovAge to change its practices — and fulﬁll the promises it’s made to frail patients and their families.
“I believe when you have regulatory agencies as involved as we have here … the amount of pressure that shareholders can exert is less than those regulatory agencies,” she said. “InnovAge will have to address those regulatory concerns if it wants to be viable.”
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