A summary of our aggregate share-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,
	2023		2022
	in thousands
Stock options	$	1,010	$	719
Profits interests units	867		1,162
Restricted stock units	3,116		1,858
Total stock-based compensation expense	$	4,993	$	3,739

TCO Group Holdings, L.P. (the “LP”), the Company’s largest shareholder and prior to the IPO, the Company’s 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, 2023, a total of 13,009,137 profits interests units have been granted under the 2020 Equity Incentive Plan.

These profits interests represent profits interest ownership in the LP tied solely to the accretion, if any, in the value of the LP following the date of issuance of such profits interests. Profits interests participate in any increase of LP value after a hurdle rate is achieved and, for performance-based units, the LP profits interests receive the agreed-upon return on their invested capital and internal rate of return, as applicable. The hurdle rate per unit is $5.49 for both the performance-based and time-based units outstanding as of June 30, 2023.

(i)The profits interests receive distributions (other than tax distributions) only upon a liquidity event, as defined, that exceeds a threshold equivalent to the fair value of the LP, as determined by the LP’s Board of Directors, at the grant date.

(ii)A portion of the units vest over a period of continuous employment or service (time-based units) while the other portion of the units only vest based on the level of aggregate multiple of invested capital and, with respect to certain grants of profits interests, internal rate of return achieved by Ignite Aggregator LP, one of the limited partners of the LP, upon a change of control of the Company (performance-based units).

The Company uses the Monte Carlo option model to determine the fair value of the granted profits interests units at the time of the grant. As the awards outstanding as of June 30, 2023, were granted prior to our IPO, the stock price was based on prices realized in equity transactions prior to being publicly traded. Expected stock price volatility was based on consideration of indications observed from several publicly traded peer companies. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the unit. The dividend yield percentage is zero because the Company neither currently pays dividends nor intends to do so during the expected term. The expected term of the units represents the time the units are expected to be outstanding. The assumptions under the Monte Carlo model related to the profits interests units, presented on a weighted-average basis, are provided below:


Time-based unit awards	Number of units	Weighted average grant date fair value
Unvested balance, June 30, 2022	2,158,072	$	1.28
Granted	—	$	—
Forfeited	(49,654)	$	1.28
Vested	(844,081)	$	1.28
Unvested balance, June 30, 2023	1,264,337	$	1.28


Performance-based unit awards	Number of units	Weighted average grant date fair value
Unvested balance, June 30, 2022	2,217,865	$	0.57
Granted	—	$	—
Forfeited	(99,307)	$	0.57
Vested	—	$	—
Unvested balance, June 30, 2023	2,118,558	$	0.57

The total unrecognized compensation cost related to profits interests units outstanding as of June 30, 2023 was $2.1 million, comprised (i) $0.9 million related to time-based unit awards expected to be recognized over a weighted-average period of 1.8 years and (ii) $1.2 million related to performance-based unit awards, which will be recorded when it is probable that the performance-based criteria will be met.

In March 2021, the Board of Directors approved the InnovAge Holding Corp. 2021 Omnibus Incentive Plan (“2021 Omnibus Incentive Plan”), pursuant to which various stock-based awards may be granted to employees, directors, consultants, and advisers. The total number of shares of the Company’s common stock authorized under the 2021 Omnibus Incentive Plan is 14,700,000. The Company has issued time-based restricted stock units under this plan to its employees which generally vest or vested (i) on March 4, 2023, the second anniversary of the grant date, (ii) over a three-year period with one-third vesting on each anniversary of the date of grant, or (iii) at other dates. The grant date fair value of restricted stock units is based on the closing market price of our common stock on the date of grant. Certain awards under this plan vest upon achieving specific share price performance criteria and are determined to have performance-based vesting conditions.


Restricted stock units - time based	Number of awards	Weighted average grant-date fair value per share
Outstanding balance, June 30, 2022	476,768	$	9.69
Forfeited	(236,344)	$	5.19
Vested	(194,337)	$	6.29
Granted	1,827,707	$	6.49
Outstanding balance, June 30, 2023	1,873,794	$	10.10

The total unrecognized compensation cost related to time-based restricted stock units outstanding as of June 30, 2023, was $9.4 million and is expected to be recognized over a weighted-average period of 2.3 years.


Restricted stock units - performance based	Number of awards	Weighted average grant-date fair value per share
Outstanding balance, June 30, 2022	258,767	$	5.18
Forfeited	—	$	—
Vested	—	$	—
Granted	—	$	—
Outstanding balance, June 30, 2023	258,767	$	5.18

The fair value of the performance-based restricted stock units and performance-based stock options granted during the year ended June 30, 2022, was based upon a Monte Carlo option pricing model using the assumptions in the following table:

The total unrecognized compensation cost related to performance-based vesting restricted stock units outstanding as of June 30, 2023, was $0.8 million and is expected to be recognized over a weighted-average period of 2.4 years.


Stock options - time based	Number of awards	Weighted average grant-date fair value per share
Outstanding balance, June 30, 2022	554,499	$	1.61
Granted	162,162	$	0.80
Forfeited	—	$	—
Exercised	—	$	—
Expired	—	$	—
Outstanding balance, June 30, 2023	716,661	$	1.43

Exercisable balance, June 30, 2023	207,936	$	0.21

The total unrecognized compensation costs related to time-based vesting stock options outstanding as of June 30, 2023, was $0.4 million and is expected to be recognized over a weighted-average period of 1.8 years.


	2023
Expected volatility	34.5		%
Weighted-average expected life (years) - time vesting units	2.9
Interest rate	1.56		%
Dividend yield	0		%
Weighted-average fair values	$	0.80
Fair value of underlying stock	$	3.70


Stock options - performance based	Number of awards	Weighted average grant-date fair value per share
Outstanding balance, June 30, 2022	776,299	$	3.08
Granted	—	$	—
Forfeited	—	$	—
Vested	—	$	—
Outstanding balance, June 30, 2023	776,299	$	3.08

The fair value of the performance-based stock options granted during the year ended June 30, 2022, was based upon a Monte Carlo option pricing model using the assumptions in the table above under the ‘Restricted Stock Units’ heading.