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Associated Press
6 days ago
- Business
- Associated Press
The Oncology Institute set to join the Russell 2000® and Russell 3000® Indexes
CERRITOS, Calif., June 03, 2025 (GLOBE NEWSWIRE) -- The Oncology Institute, Inc. (NASDAQ: TOI) ('TOI'), one of the largest value-based oncology groups in the United States, today announced that it will join the Russell 2000® and Russell 3000® after the 2025 Russell indexes annual reconstitution, effective after the US market closes on June 27, according to a preliminary list of additions posted on May 23. Annual Russell indexes reconstitution captures the 4,000 largest US stocks as of April 30, ranking them by total market capitalization. Membership in the US all-cap Russell 3000® Index, which remains in place for one year, means automatic inclusion in the large-cap Russell 1000 Index or small-cap Russell 2000 Index and the appropriate growth and value style indexes. FTSE Russell determines membership for its Russell indexes primarily by objective, market-capitalization rankings, and style attributes. 'We are thrilled to be included in the Russell Indexes, which marks a significant milestone in TOI's growth journey,' said Daniel Virnich, CEO of TOI. 'This inclusion reflects our continued execution and the impact of our innovative, value-based approach to cancer care. As we continue to expand our presence across markets, we remain focused on improving outcomes for patients and creating long-term value for our shareholders.' Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. According to data as of the end of June 2024, about $10.6 trillion in assets are benchmarked against the Russell US indexes, which belong to FTSE Russell, the global index provider. For more information on the Russell 3000® Index and the Russell indexes reconstitution, go to the 'Russell Reconstitution' section on the FTSE Russell website. About The Oncology Institute Founded in 2007, TOI is advancing oncology by delivering highly specialized, value-based cancer care in the community setting. TOI offers cutting-edge, evidence-based cancer care to a population of over 1.8 million patients including clinical trials, transfusions, and other services traditionally associated with the most advanced care delivery organizations. With over 120 employed clinicians and more than 700 teammates in over 70 clinic locations, TOI is changing oncology for the better. For more information, visit Contacts Media The Oncology Institute, Inc. [email protected] Investors Solebury Strategic Communications [email protected]
Yahoo
15-05-2025
- Business
- Yahoo
Q1 2025 Oncology Institute Inc Earnings Call
Mark Hueppelsheuser; General Counsel; Oncology Institute Inc Daniel Virnich; Chief Executive Officer; Oncology Institute Inc Rob Carter; Chief Financial Officer; Oncology Institute Inc David Larsen; Analyst; BTIG Yuan Zhi; Analyst; B. Riley Securities Bill Sutherland; Analyst; The Benchmark Company Robert LeBoyer; Analyst; NOBLE Capital Markets Operator Good afternoon, and welcome to The Oncology Institute's first quarter 2025 earnings conference call. Today's call is being recorded, and we have allocated 1 hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Mark Hueppelsheuser, General Counsel at TOI. Thank you. You may begin. Mark Hueppelsheuser The press release announcing The Oncology Institute's results for the first quarter of 2025 are available at the Investors section of the company's website, A replay of this call will also be available at the company's website after the conclusion of this call. Before we get started, I would like to remind you of the company's safe harbor language included within the company's press release for the first quarter 2025. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our filings with the SEC. This call will also discuss non-GAAP financial measures such as adjusted EBITDA and free cash flow. Reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website. Joining me on the call today is our CEO, Dan Virnich; and our CFO, Rob Carter. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Dan. Daniel Virnich Thank you, Mark. Good afternoon, everyone, and thank you for joining our first quarter '25 earnings call. Today, we will discuss first quarter 2025 results with a focus on our strong start to the year and momentum on our path to profitability and positive cash flow by the end of 2025. I'd like to start with some key updates on Q1 performance. I'm happy to report that revenues for Q1 increased by 10% versus the prior year period. This was driven by a few important factors. Our retail pharmacy and dispensary business continues to grow rapidly and set fill records, contributing $49.3 million in revenue and over $9 million in gross profit in Q1 alone. This business segment grew over 20% in the first quarter of 2025 versus prior year. As noted on our year-end call in March, we had a very strong start to the year with new capitated contract wins, adding over 80,000 lives in the first quarter on 4 agreements across the Florida, California, and Nevada markets. Anticipated new capitation contracts in the first half of 2025 are projected to add approximately $50 million in new revenue on an annualized basis. We started our first fully delegated capitation agreement with a major health plan in Florida on March 1 where we are delegated for utilization management, claims and network. This is going to be our preferred model for health plan relationships going forward as it gives us differential ability to manage therapeutics with our MSO practice partners as well as engage with them on future high-value opportunities for TOI through our retail pharmacy and clinical trials program. We also signed a new capitation contract in Nevada during the first quarter, which adds over 80,000 Medicaid lives to Clark County with an effective date of July 1. Our fee-for-service business also returned to growth in the quarter, growing 9% quarter-over-quarter and 2% year-over-year, highlighting the impact of our investments in referral relationship management and call center expansion. Achieving profitability and our near-term path to positive free cash flow generation in Q4 remain the management team's North Star. Some highlights from Q1 related to this effort include: adjusted EBITDA loss of $5.1 million, which is on the upper end of our guidance for the quarter; gross profit of $17.2 million, which represents growth of 44.1% year-over-year; continued acceleration of near-term capitation opportunities in the pipeline, with line of sight to an additional 100,000 lives with anticipated effective dates in Q2 and Q3; focus on growing our radiation oncology and radiopharmaceutical segments, which will be accretive to fee-for-service margins; successful outsourcing of our clinical trials for Helios clinical trials. Helios will operate as the site management organization, and we believe their expertise will dramatically accelerate trials growth in existing and new markets in the second half of the year. However, the structure of the transaction will involve deconsolidating clinical research revenue from TOI's income statement, which will modestly impact our full year revenue, which Rob will discuss in more detail shortly. As it stands today, we are not currently projecting a negative impact to drug costs in 2025 related to recently announced tariffs, although we are carefully assessing country of origin for all therapeutics in our portfolio, ensuring we have optionality for all disease classes to protect our margins. Finally, we successfully executed a partial paydown of our convertible preferred debt of $20 million in Q1 with permanent elimination of our minimum cash covenant, followed by a capital raise that added $16 million back to our balance sheet. Combined, these transactions strengthen TOI's financial position and provide us with greater flexibility to execute on our strategic priorities. Finally, this afternoon, we announced that Dr. Jeff Langsam is joining the TOI team as Chief Clinical Officer. Jeff joined us from Cigna, where he led national efforts in oncology and specialty pharmacy, lending to his role at TOI, where he will lead our efforts around therapeutics, utilization management and MSO practice engagement. The Chief Clinical Officer role was conceived as part of TOI's evolution in light of the increasingly complex drug and delegation landscape in which TOI operates, allowing us to further distance our capabilities and delivered value. To this end, Dr. Langsam's role is designed as a net addition to TOI's central clinical infrastructure and is expected to remain collaborative but ultimately distinct from that of TOI's Chief Medical Officer, Dr. Yale Podnos, who will continue to serve as the chief clinician overseeing our provider staff. Last week, we also announced that TOI will be presenting clinical trial data at the American Society of Clinical Oncology, ASCO Annual Meeting later this month, which demonstrates the value and effectiveness of TOI's clinical model at reducing cost of care while driving improvements in Part A utilization for the patients that we serve. With that, I will turn the call over to Rob to provide additional details on our Q1 performance and 2025 outlook. Rob Carter Thanks, Dan, and good afternoon, everyone. Let's begin by reviewing our financial performance for the quarter. Consolidated revenue for Q1 2025 was $104.4 million, an increase of 10.3% compared to Q1 2024. The increase in revenue was driven primarily by a 24.2% growth in TOI dispensary segment due to continued growth in the attachment of prescriptions to our patient visits. Notably, we saw our fee-for-service business return to growth during the first quarter, increasing 2.3% to $35.6 million in 2025 versus the prior year period. We are encouraged by the positive patient and referral feedback on TOI's services. And our strong track record for high-quality care, combined with our value-oriented model, gives us confidence in our continued fee-for-service growth driven by patient choice and health system and community providers' patient referrals. Gross profit in Q1 of 2025 was $17.2 million, an increase of 44.1% compared to Q1 of 2024. This increase is attributed to improvement in revenue and margin in both capitation and fee-for-service with inpatient services as well as improvement in both revenue and margin and TOI's dispensary segment. Margin improvement in the first quarter for both patient services and dispensary businesses is attributable to the recognition of a onetime rebate recognized over the fourth quarter of 2024 and first quarter of 2025 related to the renewal of a 3-year contract with TOI's primary drug supplier. This is not expected to recur in future quarters, although we do expect the benefit of drug price increases to improve over the course of 2025. SG&A, including depreciation and amortization was $27.2 million in Q1 of 2025, a 9% decline compared to Q1 of 2024. As a percentage of revenue, SG&A, including depreciation and amortization, was 26% in the quarter, decreasing 560 basis points from Q1 of 2024. Loss from operations was $9.9 million, an improvement from an $18 million loss in Q1 of 2024. Net loss was $19.6 million in the quarter, an improvement of $303,000 compared to Q1 of 2024. Adjusted EBITDA was negative $5.1 million compared to negative $10.9 million in Q1 of 2024. Free cash flow was negative $3.9 million compared to negative $15.4 million in Q1 of 2024. Moving to the balance sheet. As of the end of Q1 2025, our cash and cash equivalents balance was $39.8 million. This represents an increase of $3.7 million of cash and cash equivalents compared to Q1 of 2024. This is attributable to our capital raise completed in the first quarter as well as efforts to maximize efficiencies in working capital, particularly in accounts receivable and inventory management. Also, we were able to reduce our principal balance on our senior secured convertible note through our debt pay-down and debt-to-equity exchange agreement, reducing our quarterly cash interest payments by approximately $1 million annually. As Dan mentioned, in the first quarter, we successfully closed a private placement that resulted in gross proceeds of approximately $16.5 million and further contributes to our prioritization of organic growth and building working capital and liquidity to find TOI's ongoing growth. In conjunction with this transaction, a major shareholder entered into an exchange agreement, whereby approximately $4.1 million of aggregate principal amount of senior secured convertible notes were exchanged for common equivalent preferred stock and warrants for common stock. Turning to guidance. Following our strong first quarter results, we remain confident in our trajectory for the remainder of the year and are reaffirming our fiscal year 2025 guidance. As Dan mentioned earlier, we are outsourcing our clinical trials business to Helios clinical trials. Under the terms of the new arrangement, TOI will recognize revenue solely for our share of the profit, which will reduce our expected revenue for the year by $5 million. However, we are not revising our full year guidance as we anticipate the increased revenue from the dispensary segment will offset this impact. Therefore, we continue to expect revenue in the range of $460 million to $480 million, adjusted EBITDA in the range of negative $8 million to negative $17 million, and free cash flow of negative $12 million to negative $21 million for the year. Additionally, we remain on track to deliver positive adjusted EBITDA in the fourth quarter. We will also be providing select guidance for the second quarter of 2025. In Q2, we expect adjusted EBITDA loss will be in the range of negative $4 million to negative $5 million. We expect the positive margin contribution of our fully Florida contract combined with increased encounter volume in radiation oncology and continued growth in our dispensary segment will support the quarter-to-quarter improvement in adjusted EBITDA. All in all, we believe our execution to date with accelerating growth and improving profitability sets us up well to achieve our full year targets. Before I wrap up, I'd like to briefly address 2 political headlines that have been topical recently. On the topic of tariffs and any possible impact on TOI, as it currently stands, we have not observed any impact related to tariffs or drug price inflation, and our pricing catalogs are fixed through the second quarter with our suppliers. We do not currently anticipate any trends in drug prices that will create risks to our or business performance, but we are continuing to closely monitor the situation, and we are actively evaluating country of origin for TOI's supply chain. Importantly, due to TOI's significant experience actively managing drug formulary as a core capability of our value-based care model, we do believe our clinical team has the ability to mitigate any potential impact from tariffs on individual drugs or manufacturers or it to materialize. On the topic of executive orders related to pharmaceutical pricing practices, while it's too early to draw any concrete conclusions on the outcome of drug regulation, I believe there are several factors that make TOI less susceptible to drug pricing impact. The size and scale of our capitated business where drug costs are inversely correlated with profits, the ability of TOI to control formulary in our clinics and influence formulary in our delegated network to manage drug pricing risk within clinical guidelines, and the multiple variables that contribute to fee-for-service and pharmacy drug margins, which constitute the spread between costs and reimbursement rather than the absolute cost of the drugs themselves. This spread relationship may or may not be impacted by any drug pricing reform. With that, I'll turn it back to Dan for closing comments. Daniel Virnich Thanks, Rob. Looking to the remainder of the year, we will continue to build on our momentum through strong operational management, increased efficiencies and strategic market expansion. As we discussed today, we are executing against a near-term path to sustained cash flow positivity and profitability in the second half of 2025, setting up well to deliver profitable growth in 2026. Our organic fee-for-service growth, pharmacy attachment and existing value-based contract pipeline give me confidence in our strong trajectory, supporting our progress against our strategic priorities. We appreciate the continued support of our shareholders and the great work from our team as we execute against our plans to drive long-term shareholder value. With that, we're now ready to take your questions. Operator? Operator (Operator Instructions) And our first question comes from David Larsen with BTIG. David Larsen Congratulations on a good start to the year. Can you talk a little bit about the gross profit growth of 44% year-over-year? What was the main driver of that? In my mind, that's obviously a very important metric, considering like, I think for 2024, gross profit actually maybe declined by 9% year-over-year. So thanks very much, driver of gross profit would be great. Rob Carter Yes, David, this is Rob. Thanks for the question. So a couple of things contributing to this. First off the bat is the onetime rebate that we mentioned that was attributable to a new contract signed with our primary distributor. The second piece is that, as you know, drug pricing changes quarterly. January is a big quarter for drug price changes. It was relatively favorable from what we've seen in previous years. So that, combined with some nice volume increases, particularly on the dispensary side contributed to the pickup in overall margin. David Larsen How much was the rebate for, please? Rob Carter About $1.5 million. David Larsen $1.5 million, okay. It looks like your gross profit on a year-over-year basis was up more than $5 million, so there was still a very good growth beyond that. Okay. And then can you talk a little bit about your fee-for-service revenue, please, your patient service revenue? Like the cap revenue, was that down 1% year-over-year and fee-for-service was up 2% year-over-year. I guess I would have thought there would have been more growth than that. And do I see 81 clinics compared to 87 clinics in the year ago period? Was there a change there? Just any thoughts around the patient service revenue growth, a little bit light to me on a year-over-year basis. Rob Carter Yes, I'll start on the cap side. So as we've called out, the pipeline is robust, numerous launches. The most meaningful and impactful launch in March, that's the fully delegated contract in Florida. The impact of that will be seen to a much greater degree later in the year. Also a couple of other launches here in the next upcoming months that will also contribute significantly. Daniel Virnich David, it's Dan Virnich. I can comment on the sites going from 87 to 81. Compared to this quarter a year ago, we closed a couple volume locations that were unprofitable for TOI, and you're seeing that reflected in the change from 87 to 81. However, I will call out that we've added over 30 additional MSO sites of care in the Florida market. So as you move to this hybrid employee MSO model in our delegated contracts, our total available sites of care actually went up. David Larsen Right. I'll take earnings growth over revenue growth all day long, so okay, great. And then can you talk a little bit about your SG&A management? It looks like SG&A costs declined 11% year-over-year and by around 600 basis points of revenue, which is obviously great. Just what are your thoughts in terms of total SG&A savings expectations for 2025? Daniel Virnich Yes. We remain committed to keeping SG&A roughly flat for 2025, which I think is important to note, given our overall projections on growth for the organization. We've been very disciplined in our approach related to vendor and labor management and continue to seek ways to operate our business more efficiently. We have a number of initiatives going on in the technologies as well, where we are going to -- looking to engage agentic AI and some key workflow processes over the next 12 to 18 months, which we believe will drive even greater efficiencies and manage down our SG&A as a percent of revenue. David Larsen Okay. And then in 2024, there was a pretty significant impact from DIR fees. I did not hear you mention those on this call. Are we now past DIR fees or is that still a potential headwind this year? Rob Carter No. We are past DIR fees. DIR fees, as they used to exist, no longer do. It's all priced at a point of sale. The impact that we saw last year was overall reimbursement pressure as that change went into effect. And so that's behind us and things are looking significantly better relative to last year. David Larsen So that was a $15 million drag on revenue and EBITDA last year and you have completely sort of lapped that. Is that correct? Rob Carter That's right, that's right. What we consider as dispensary margins going forward are steady state. David Larsen Okay, good. And then there was 1 large payer contract that I think was maybe 11% of revenue. That kind of disappeared in 2024. I think you've kind of fully lapped that. And what I'm also hearing from you is you're actually entering into -- I think you highlighted 4 new arrangements this quarter, and we should see patient service revenue ramp as we progress through the year because of these new contracts. Is that correct? Daniel Virnich That's correct, yes. That was in reference to the new capitated contracts signed as part of our value-based arrangements. But all of those are tied to fee-for-service revenue that flows through our dispensary. And then we are seeing additional growth in just fee-for-service patient services revenue. David Larsen Can you provide a little color around why that contract ended? And just like the purpose of that question, as you know, are there any other contracts in '25 that might be (inaudible) how is your relationship with some of the largest plans that you're working with? Daniel Virnich Yes. Yes, it was contracted with contract where we had kind of a mutually agreeable termination related to a number of disputes. So we, overall, have a very stable contract portfolio. We've got an incredibly low historical contract turn rate and do a lot to manage our client relationships and show the value that we provide. So I don't anticipate any likely termination as we progress through 2025. David Larsen Okay. And then do you have any thoughts on IV margins? I think that was a little bit of a headwind early last year. Just any thoughts there? Daniel Virnich Yes. Similar to dispensary, what we've seen so far based on the year pricing is favorable to what we were expecting, certainly favorable to 2024. The general progression that we see throughout the year is improvement in overall margins, and so things are going slightly better than planned there. David Larsen Okay, that's great. And then you mentioned tariffs and this executive order and then there's also the most favored nation clause or executive order that may or may not get through. So if drug prices, let's say, go up by 25% across the board, is that good or is that bad for The Oncology Institute? Because higher drug prices would eventually result in more revenue and probably more margin for you in your fee-for-service book. Is that correct? Daniel Virnich Yes. Yes, that's exactly right. David Larsen And in dispensary. And it's mainly Medicare Part B as in boy, not Medicare Part D, is that correct? Daniel Virnich Sorry, mainly in terms of what? David Larsen In terms of reimbursement for fee-for-service revenue and also -- Daniel Virnich Yes, that's correct. I mean, hypothetically, it would impact B and D. David Larsen Okay, okay. It looks like a pretty good quarter. Congrats on a good start to the year. Operator Yuan Zhi, B. Riley Securities. Yuan Zhi Dan, maybe we can start with the recent report by UnitedHealth. It was reported that the seniors within their Medicare Advantage plan used health care services twice as much as last year. I want to check if you noticed similar trends within oncology practice or is it related to some other diseases or surgery practice? Daniel Virnich Yes, I can't speak to what other drivers might be associated with that. What I can say is that we track that on a very close basis for the oncology care needs of the populations we serve and when seeing a jump to the that United mentioned, I don't know if that's driven by other drugs outside of oncology or other utilization trends, which have been more unfavorable than expected. Yuan Zhi Yes, maybe a follow-up question here. So they also reported the enrolled patients are sicker. I guess my question is 2-part. Did you notice similar trends there and to when you negotiate a value-based contract with there, is it based on historical data from insurance companies? Or is it based on your own database and external service to reflect the latest patient profile? Daniel Virnich Yes. So for the first part of the question, we haven't noticed the change in prevalence or average stage of cancer patients we're treating. So that would correlate to a care population that hasn't pivoted that we've noticed. In terms of pricing, we do that based off of historical utilization up through the most recent period before we make a contract effective. So we have a pretty recent trend on utilization. And then we factor in a cost trend related to historical drug price changes as well in our forward-looking utilization. So that's pretty real-time as far as how it's contributing to the pricing of our contracts. Yuan Zhi Yes, got it. So on your new territory part, is there any metrics you can share on the progress to fill up the capacities in your Florida clinics, whether it is the lives under management in terms of overall capacity or patients encountered? Daniel Virnich I'm so sorry, Yuan, could you please repeat the first part of the question? Yuan Zhi Yes. Is there any metrics you can share on the progress to fill up capacities in your Florida clinics? Daniel Virnich Yes, absolutely. So we track -- we project encounters by market and by detail by clinic across our portfolio as we forecast each year. And we are tracking right to plan in terms of capacity fill in both our legacy markets and then the newer markets like Florida. There is some additional upside, we believe, in the back half of this year related to some contract wins which are in the pipeline but not in the forecast. So all is going to plan as far as capacity. Yuan Zhi Yes, got it. Maybe 1 last question from me. Just to clarify, do you aim to have cash flow positivity and profitability in the second half of 2025 versus 4Q 2025 from your last earnings call? Was there any change there? Rob Carter No change to guide. We expect full cash flow and adjusted EBITDA positivity in Q4 of 2025. Operator (Operator Instructions) Bill Sutherland, The Benchmark Company. Bill Sutherland Most of mine have been asked. But going back to a couple of the key business metrics. The slight decline in the lives under value-based contracts, is that related to that contract you were talking about that went away last year? Daniel Virnich Yes, exactly. It's measured by lives, that is a decrease. But I would just keep in mind that there is a product mix in every contract, and that specific contract had a heavy predominance of medical and commercial lives, which are high numbers, but low PMPM reimbursement typically versus our newer markets where we're signing MA-only contracts, which are lower lives but higher reimbursement. Bill Sutherland Got it. Any important renewals coming up as far as contracts? Daniel Virnich Nothing significant to mention, no. Most of our relationships are multiyear. Many of them date back over 10 years. They typically ought to renew. And then yes, there's no significant renewals in the near future. Bill Sutherland And then the guidance for the year, is there any pipeline conversion that you need to execute to do the numbers or is it basically all set up at this point? Rob Carter Yes, we don't need any additional value-based contracts that are in the pipeline to achieve guidance. So any additional wins that are in the pipeline would be upside to what we've guided to. Bill Sutherland Okay. And finally, just an interesting trend, and I'm not sure if -- it's not really part of your model. But I keep hearing from health systems about trying to do more of the cancer cases in the home with everything else. How does that trend kind of segue with your business, if at all? Daniel Virnich Yes. I mean, I think it would be a very positive trend for TOI if more cancer care was delivered in the home. We work pretty closely with our payer partners and trying to find innovative ways to deliver therapeutics in the home. I'd say it's much easier than the oral specialty side than it is with infusables. But that being said, there's no reason why we can't achieve that as a future state. So again, that gets back to our mission to deliver higher level of care in the community and something we would definitely want to be a part of. Bill Sutherland Got it, okay. Nice quarter. Operator Robert LeBoyer, NOBLE Capital Markets. Robert LeBoyer Congratulations on a nice quarter. My question has to do with the number of lives under contract and covered by the managed care policies. The previous number was 1.9 million. It looks like you're adding 100,000 in the first and second quarter and then another 80,000 in Nevada after July 1. So is that just simply additive to the 1.9 million or is there some more nuanced way to project the number of lives that are covered? Rob Carter No, it is additive. That's the right way of thinking about it. The nuance in terms of modeling the financial impact would be where those lives are located. And so as we've talked about before in some of our, there is a higher PMPM for contracts in Nevada and Florida than there is in California due to the overall cost of care. So that would be the 1 nuance to consider. Robert LeBoyer Okay, great. And in terms of seasonality or any kind of other trends that you see throughout the year, have you noticed anything in the first quarter versus other quarters throughout the year at this point? Rob Carter Yes. So our first quarter is always seasonally the lowest in terms of encounter volume. And so that's part of the whole picture when you're looking at the full year guide. We knew that it would be the lowest quarter in terms of revenue, the worst quarter in terms of adjusted EBITDA loss. And so we expect to see progressive improvement quarter-over-quarter both due to seasonality as well as the addition of new contracts and lives and account for growth. Robert LeBoyer Okay, good. And just 1 last question. In terms of the top 3 plans and clients that you have, what would be the percentage of each of the top 3 in terms of revenues? Rob Carter As a percent of cap revenue, it's probably about 20%, if you're looking at the top 3 contracts. Operator (Operator Instructions) Okay, there are no further questions at this time. And with that, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-05-2025
- Business
- Yahoo
The Oncology Institute Reports First Quarter 2025 Financial Results and Reaffirms Full Year 2025 Guidance
CERRITOS, Calif., May 14, 2025 (GLOBE NEWSWIRE) -- The Oncology Institute, Inc. (NASDAQ: TOI) ('TOI' or the 'Company'), one of the largest value-based community oncology groups in the United States, today reported financial results for its three months ended March 31, 2025. Recent Operational Highlights Retail Pharmacy and Dispensary set fill records, contributing $49.3 million revenue and over $9 million in gross profit in Q1. The Pharmacy and Dispensary segment grew over 20% in the first quarter of 2025 vs. prior year Fee-for-service growth of 9% in Q1 2025 over Q4 2024, highlighting the impact of our investments in referral relationship management and call center expansion. Strong start to 2025 with multiple capitated contract wins, adding over 100,000 lives, which will ramp in the first and second quarters of 2025 on four agreements across the Florida, California and Nevada markets Started first fully-delegated capitation agreement with a major health plan in Florida on March 1 with delegation for Utilization Management and Claims and Network Signed a new capitation contract in Nevada during the first quarter, which adds over 80,000 Medicaid lives to Clark County with an effective date of July 1 Started a contract with a new California-based IPA within a geography where TOI has a strong presence Won sole source designation for a major captive provider group within an existing region where TOI was previously dual-sourced with another oncology provider, a contract that will start in the second quarter First Quarter 2025 Financial Highlights Consolidated revenue of $104.4 million, an increase of 10.3% from $94.7 million compared to the prior year quarter Gross profit of $17.2 million, an increase of 44.1% compared to the prior year quarter Net loss of $19.6 million compared to net loss of $19.9 million for the prior year quarter. The positive change in loss from operations from prior year same quarter was offset primarily by non-cash charges related to interest expense and the fair value of derivative liabilities Basic and diluted (loss) earnings per share of $(0.21) compared to $(0.22) for the prior year quarter Adjusted EBITDA of $(5.1) million compared to $(10.9) million for the prior year quarter Cash and cash equivalents of $39.7 million as of March 31, 2025 Successfully closed on a private placement that resulted in gross proceeds of approximately $16.5 million and contributed to our working capital and liquidity to fund TOI's ongoing growth Entered into an exchange agreement, whereby approximately $4.1 million aggregate principal amount of our senior secured convertible notes were exchanged for common-equivalent preferred stock and common warrants Management Commentary Daniel Virnich, CEO of TOI, commented, "We are pleased to report a strong start to 2025, driven by disciplined operational management, increased efficiencies, and strategic market expansion. We are executing against a near-term path to sustained cash flow positivity and profitability in the second half of 2025. We believe our growth momentum positions TOI for full year profitability in 2026, supported by continued strength in value-based contract wins, organic FFS growth, and pharmacy expansion. We see continued acceleration in our near-term capitation pipeline, with anticipated new capitation contracts in the first half of 2025 projected to add approximately $50 million in new revenue on an annualized basis, with line of sight to an additional 100,000 lives in the second half of the year." Outlook for Fiscal Year 2025 TOI uses Adjusted EBITDA and Free Cash flow, each a non-GAAP metric, as an additional tool to assess its operational and financial performance. See "Financial Information: Non-GAAP Financial Measures" below. In reliance on the unreasonable efforts exception provided under Regulation S-K, TOI is not reasonably able to provide a quantitative reconciliation for forward-looking information of Adjusted EBITDA and Free Cash Flow to net (loss) income and net cash provided by operations, respectively, the most directly comparable GAAP financial measures, without unreasonable efforts due to uncertainties regarding taxes, capital expenditures, operating activities, share-based compensation, goodwill impairment charges, change in fair value of liabilities, unrealized (gains) losses on investments, practice acquisition-related costs, consulting and legal fees, transaction costs and other non-cash items. The variability of these items could have an unpredictable, and potentially significant, impact on TOI's future GAAP financial results. Consequently TOI reaffirms its full year 2025 guidance: 2025 Guidance Revenue $460 to $480 million Gross Profit $73 to $82 million Adjusted EBITDA $(8) to $(17) million Free Cash Flow $(12) to $(21) million The Company expects Adjusted EBITDA of approximately $(4) to $(5) million in the second quarter of 2025 primarily due to stabilization of our contracts and initial lower encounter volumes. TOI's achievement of the anticipated results is subject to risks and uncertainties, including those disclosed in its filings with the U.S. Securities and Exchange Commission. The outlook does not take into account the impact of any unanticipated developments in the business or changes in the operating environment, nor does it take into account the impact of TOI's acquisitions, dispositions or financings. TOI's outlook assumes a largely reopened global market, which would be negatively impacted if closures or other restrictive measures persist or are reimplemented. First Quarter 2025 Results Consolidated revenue for Q1 2025 was $104.4 million, an increase of 10.3% compared to Q1 2024. Revenue for patient services was $53.1 million, up 1.2% compared to Q1 2024. Notably, we also saw our fee for service business return to growth during the first quarter, increasing 2.3% to $35.6 million in Q1 2025 versus the prior year period. We are encouraged by the positive patient and referral feedback on TOI's services, and our strong track record for high quality care combined with our value-oriented model gives us confidence in our continued FFS growth driven by patient choice and health system and community providers' patient referrals. Dispensary revenue increased 24.2% compared to Q1 2024 due to continued growth in the attachment of prescriptions to our patient visits. Gross profit in Q1 2025 was $17.2 million, an increase of 44.1% compared to Q1 2024. The increase is attributed to improvement in revenue and margin in both Capitation and Fee For Service within Patient Services, as well as improvement in both revenue and margin in TOI's Dispensary segment. Margin improvement in the first quarter for both Patient Services and Dispensary businesses is primarily related to the contribution of our dispensary segment and the recognition of a one-time rebate recognized over the past two quarters related to the renewal of a three-year contract with TOI's primary drug supplier that is not expected to recur in future quarters, although we do expect the benefit of drug price increases to improve over the course of 2025. Gross profit is calculated by subtracting direct costs of patient services, dispensary, and clinical trials and other from consolidated revenues. Selling, general and administrative ("SG&A") expenses in Q1 2025 were $25.4 million or 24.3% of revenue, compared with $28.5 million, or 30.1% of revenue, in Q1 2024. The decrease in SG&A expenses was due to our cost discipline and operational efficiency. Net loss for Q1 2025 was $19.6 million, an increase of $303 thousand in income compared to Q1 2024. The decrease in loss from operations from the prior year quarter was offset primarily by the increase in non-cash interest expense (write down related to the partial prepayment of convertible note) and the change in the fair value of the conversion option derivative liability (non-cash). Adjusted EBITDA was $(5.1) million, an increase of $5.8 million compared to Q1 2024. Net cash and cash equivalents used in operating activities was $(5.0) million for Q1 2025. Free Cash Flow was $(4.0) million, compared to $(15.4) million in Q1 2024. Webcast and Conference Call TOI will host a conference call on Wednesday, May 14, 2025 at 5:00 p.m. (Eastern Time) to discuss first quarter results and management's outlook for future financial and operational performance. The conference call can be accessed live over the phone by dialing 1-877-407-0789, or for international callers, 1-201-689-8562. A replay will be available two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the live call and the replay is 13752832. The replay will be available until Wednesday, May 21, 2025. Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the Investor Relations section of TOI's website at About The Oncology Institute, Inc. Founded in 2007, TOI is advancing oncology by delivering highly specialized, value-based cancer care in the community setting. TOI offers cutting-edge, evidence-based cancer care to a population of approximately 1.9 million patients including clinical trials, transfusions, and other services traditionally associated with the most advanced care delivery organizations. With nearly 120 employed clinicians and more than 700 teammates in over 70 clinic locations and growing, TOI is changing oncology for the better. For more information visit Forward-Looking Statements This press release includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as 'preliminary,' 'believe,' 'may,' 'will,' 'estimate,' 'continue,' 'anticipate,' 'intend,' 'expect,' 'should,' 'would,' 'plan,' 'project,' 'predict,' 'potential,' 'guidance,' 'approximately,' 'seem,' 'seek,' 'future,' 'outlook,' and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding projections, anticipated financial results, estimates and forecasts of revenue and other financial and performance metrics and projections of market opportunity and expectations. These statements are based on various assumptions and on the current expectations of TOI and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by anyone as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of TOI. These forward-looking statements are subject to a number of risks and uncertainties, including the accuracy of the assumptions underlying the 2025 full fiscal year outlook and the Q2 2025 outlook with respect to Adjusted EBITDA discussed herein, the outcome of judicial and administrative proceedings to which TOI may become a party or investigations to which TOI may become or is subject that could interrupt or limit TOI's operations, result in adverse judgments, settlements or fines and create negative publicity; changes in TOI's patient or payors' preferences, prospects and the competitive conditions prevailing in the healthcare sector; failure to continue to meet stock exchange listing standards; the impact of COVID-19 on TOI's business; those factors discussed in the documents of TOI filed, or to be filed, with the SEC, including the Item 1A. "Risk Factors" section of TOI's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 26, 2025 and any subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that TOI currently is evaluating or does not presently know or that TOI currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect TOI's plans or forecasts of future events and views as of the date of this press release. TOI anticipates that subsequent events and developments will cause TOI's assessments to change. TOI does not undertake any obligation to update any of these forward-looking statements. These forward-looking statements should not be relied upon as representing TOI's assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements. Financial Information; Non-GAAP Financial Measures Some of the financial information and data contained in this press release, such as Adjusted EBITDA and Free Cash Flow, have not been prepared in accordance with United States generally accepted accounting principles ('GAAP'). TOI's non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial measures determined in accordance with GAAP. Because of the limitations of non-GAAP financial measures, you should consider the non-GAAP financial measures presented in this press release in conjunction with TOI's financial statements and the related notes thereto. TOI believes that the use of Free Cash Flow provides an additional tool to assess the Company's financial performance, evaluate its ability to generate cash from operations, and plan for future investments and obligations. Free Cash Flow is useful in understanding the cash available for strategic initiatives. It also helps in comparing TOI's financial performance with other similar companies, many of which use similar non-GAAP financial measures to provide insights into their cash generation capabilities. However, the principal limitation of Free Cash Flow is that it does not account for certain cash outflows or inflows that are required by GAAP to be recorded in TOI's financial statements. TOI defines Free Cash Flow as net cash flow provided by (used in) operations plus cash paid for interest, less capital expenditures. TOI believes that the use of Adjusted EBITDA provides an additional tool to assess operational and results of our performance, to plan and forecast future periods, and factors and trends in, and in comparing our financial measures with, other similar companies, many of which present similar non-GAAP financial measures to investors. The principal limitation of Adjusted EBITDA is that it excludes significant expenses and income that are required by GAAP to be recorded in TOI's financial statements. TOI defines Adjusted EBITDA as net (loss) income plus depreciation, amortization, interest, taxes, non-cash items, share-based compensation, goodwill impairment charges, change in fair value of liabilities, unrealized gains or losses on investments and other adjustments to add-back the following: consulting and legal fees related to acquisitions, one-time consulting and legal fees related to certain advisory projects, software implementations and debt or equity financings, severance expense and temporary labor and recruiting charges to build out our corporate infrastructure. A reconciliation of Adjusted EBITDA to net loss and Free Cash Flow to net cash flow used in operations, the most comparable GAAP metrics, is set forth below: Free Cash Flow Reconciliation Three Months Ended March 31, Change (dollars in thousands) 2025 2024 $ % Net cash and cash equivalents used in operating activities $ (4,988 ) $ (15,883 ) $ 10.895 68.6 % Cash paid for interest 1,290 1,134 156 (13.8 )% Purchases of property and equipment (328 ) (610 ) 282 46.2 % Free Cash Flow $ (4,026 ) $ (15,359 ) $ 11,333 73.8 %Adjusted EBITDA Reconciliation Three Months Ended March 31, Change (dollars in thousands) 2025 2024 $ % Net loss $ (19,585 ) $ (19,888 ) $ 303 (1.5 )% Depreciation and amortization 1,784 1,489 295 19.8 % Interest expense, net 5,570 1,985 3,585 180.6 % Non-cash addbacks(1) (163 ) (39 ) (124 ) 317.9 % Share-based compensation 1,458 4,087 (2,629 ) (64.3 )% Changes in fair value of liabilities 3,352 — 3,352 100.0 % Unrealized (gains) losses on investments 6 (82 ) 88 (107.3 )% Post-combination compensation expense(2) 13 130 (117 ) (90.0 )% Consulting and legal fees(3) 332 176 156 88.6 % Infrastructure and workforce costs(4) 2,124 1,185 939 79.2 % Transaction costs(5) — 18 (18 ) (100.0 )% Adjusted EBITDA $ (5,109 ) $ (10,940 ) $ 5,831 (53.3 )% (1) During the three months ended March 31, 2025, non-cash addbacks were primarily comprised of non-cash rent of $(163). During the three months ended March 31, 2024, non-cash addbacks were primarily comprised of net credit losses of $12 and non-cash rent of $(51). (2) Deferred consideration payments for practice acquisitions that are contingent upon the seller's future employment at the Company. (3) Consulting and legal fees were comprised of a subset of the Company's total consulting and legal fees, and related to certain advisory projects during the three months ended March 31, 2025. During the three months ended March 31, 2024, these fees related to advisory projects and software implementations. (4) Infrastructure and workforce costs were comprised of recruiting expenses to build out corporate infrastructure of $277 and $376, software implementation fees of $0 and $16, severance expenses resulting from cost rationalization programs of $140 and $10, temporary labor of $180 and $252, and legal fees related to infrastructure build out of $782 and $529 during the three months ended March 31, 2025 and 2024, respectively. (5) Transaction costs incurred during the three months ended March 31, 2024 were comprised of consulting, legal, administrative and regulatory fees associated with non-recurring due diligence Business Metrics Three Months Ended March 31, (dollars in thousands) 2025 2024 Clinics(1) 81 87 Markets 18 14 Lives under value-based contracts (millions) 1.9 2.0 Net loss $ (19,585 ) $ (19,888 ) Adjusted EBITDA (in thousands) $ (5,109 ) $ (10,940 ) (1) Includes independent oncology practices to which we provide limited management services, but do not bear the operating Balance Sheets (Unaudited)(in thousands except share data) March 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 39,739 $ 49,669 Accounts receivable, net 49,320 48,335 Other receivables 346 346 Inventories 12,308 10,039 Prepaid expenses and other current assets 5,107 4,029 Total current assets 106,820 112,418 Property and equipment, net 11,116 11,888 Operating right of use assets 24,209 25,782 Intangible assets, net 14,036 14,810 Goodwill 7,230 7,230 Other assets 591 589 Total assets $ 164,002 $ 172,717 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 29,291 $ 24,324 Current portion of operating lease liabilities 6,816 6,798 Accrued expenses and other current liabilities 23,434 21,093 Total current liabilities 59,541 52,215 Operating lease liabilities 21,596 23,223 Derivative warrant liabilities 59 17 Conversion option derivative liabilities 3,694 385 Long-term debt, net of unamortized debt issuance costs 73,894 93,131 Other non-current liabilities 117 125 Deferred income taxes liability 32 32 Total liabilities 158,933 169,128 Stockholders' equity: Common Stock, 0.0001 par value, authorized 500,000,000 shares; 90,661,800 and 77,470,886 shares issued and outstanding at March 31, 2025 and 77,470,886 shares issued and 75,737,112 shares outstanding at December 31, 2024 9 8 Series A Convertible Preferred Stock, 0.0001 par value, authorized 10,000,000 shares; 202,278 shares issued and outstanding at March 31, 2025 and 165,045 shares issued and outstanding at December 31, 2024 — — Additional paid-in capital 236,477 215,413 Treasury Stock at cost, 1,733,774 shares at March 31, 2025 and December 31, 2024 (1,019 ) (1,019 ) Accumulated deficit (230,398 ) (210,813 ) Total stockholders' equity 5,069 3,589 Total liabilities and stockholders' equity $ 164,002 $ 172,717 Consolidated Statements of Operations (Unaudited)(in thousands except share data) Three Months Ended March 31, 2025 2024 Revenue Patient services $ 53,068 $ 52,453 Dispensary 49,293 39,679 Clinical trials & other 2,045 2,534 Total operating revenue 104,406 94,666 Operating expenses Direct costs – patient services 47,080 49,497 Direct costs – dispensary 39,863 32,809 Direct costs – clinical trials & other 214 391 Selling, general and administrative expense 25,376 28,452 Depreciation and amortization 1,784 1,489 Total operating expenses 114,317 112,638 Loss from operations (9,911 ) (17,972 ) Other non-operating expense (income) Interest expense, net 5,570 1,985 Change in fair value of derivative warrant liabilities 43 — Change in fair value of conversion option derivative liabilities 3,309 — Other, net 752 (68 ) Total other non-operating loss 9,674 1,917 Loss before provision for income taxes (19,585 ) (19,889 ) Income tax expense — — Net loss $ (19,585 ) $ (19,889 ) Net loss per share attributable to common stockholders: Basic $ (0.21 ) $ (0.22 ) Diluted $ (0.21 ) $ (0.22 ) Weighted-average number of shares outstanding: Basic 77,098,825 74,234,287 Diluted 77,098,825 74,234,287 Consolidated Statements of Cash Flows (Unaudited)(in thousands) Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net loss $ (19,585 ) $ (19,889 ) Adjustments to reconcile net loss to cash and cash equivalents used in operating activities: Depreciation and amortization 1,784 1,489 Amortization of debt issuance costs and debt discount 4,874 1,559 Share-based compensation 1,458 4,087 Change in fair value of liability classified warrants 43 — Change in fair value of liability classified conversion option derivatives 3,309 — Unrealized (gain) loss on investments — (85 ) Accretion of discount on investment securities — (324 ) Loss on disposal of property and equipment — 12 Changes in operating assets and liabilities: Accounts receivable (985 ) (16,400 ) Other receivables — 183 Inventories (2,269 ) 2,124 Prepaid expenses (1,078 ) (629 ) Operating right-of-use assets 1,447 1,753 Other assets (2 ) (7 ) Accounts payable 5,057 6,357 Operating lease liabilities (1,609 ) (1,399 ) Accrued expenses and other current liabilities 2,567 5,368 Other non-current liabilities 1 (82 ) Net cash and cash equivalents used in operating activities (4,988 ) (15,883 ) Cash flows from investing activities: Purchases of property and equipment (328 ) (610 ) Proceeds from asset disposition 126 Sales of marketable securities/investments — 19,998 Net cash and cash equivalents (used in) provided by investing activities (202 ) 19,388 Cash flows from financing activities: Proceeds from private placement, net of offering costs 15,359 — Payments made for financing of insurance payments (226 ) (1,002 ) Principal payments on long-term debt (20,000 ) — Principal payments on financing leases (10 ) (9 ) Common stock issued for options exercised 137 73 Net cash and cash equivalents used in financing activities (4,740 ) (938 ) Net (decrease) increase in cash and cash equivalents (9,930 ) 2,567 Cash and cash equivalents at beginning of period 49,669 33,488 Cash and cash equivalents at end of period $ 39,739 $ 36,055 Contacts Media The Oncology Institute, Virnich, MDdanielvirnich@ 735-3226 x 81125 Investors Solebury Strategic Communicationsinvestors@
