The Oncology Institute, Inc. Q1 FY2025 earnings call

• Revenue for Q1 increased by 10% versus the prior year period, driven by growth in retail Pharmacy and Dispensary business (grew over 20% in Q1 2025 vs prior year, contributing $49.3M in revenue and over $9M in gross profit) and fee-for-service business (grew 9% q-o-q and 2% y-o-y). • Had strong start to the year with new capitated contract wins, adding over 80,000 lives in Q1 on 4 agreements across Florida, California and Nevada markets. Anticipated new capitation contracts in H1 2025 projected to add ~$50M in new annualized revenue. • Started first fully delegated capitation agreement in Florida on March 1 and signed new capitation contract in Nevada in Q1. • Adjusted EBITDA loss of $5.1 million was on upper end of guidance for the quarter; gross profit grew 44.1% y-o-y. • Focus on growing radiation oncology and radiopharmaceutical segments, successful outsourcing of clinical trials program to Helios clinical trials. • Successfully executed partial paydown of convertible preferred debt of $20 million in Q1, followed by capital raise adding $16 million back to balance sheet. • Dr. Jeff Langsam joined as Chief Clinical Officer. • Announced to present clinical trial data at ASCO Annual Meeting later this month.

Consolidated revenue for Q1 2025 was $104.4 million, an increase of 10.3% compared to Q1 2024. The retail Pharmacy and Dispensary business contributed $49.3 million in revenue in Q1 alone, growing over 20% in Q1 2025 versus prior year. The fee-for-service business returned to growth in the quarter, growing 9% quarter-over-quarter and 2% year-over-year. Gross profit in Q1 of 2025 was $17.2 million, an increase of 44.1% 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.

• Reaffirming fiscal year 2025 guidance: revenue in range of $460 million to $480 million; adjusted EBITDA in range of negative $8 million to negative $17 million; free cash flow of negative $12 million to negative $21 million for the year; remain on track to deliver positive adjusted EBITDA in Q4. • Providing select guidance for Q2 2025: adjusted EBITDA loss expected to be in range of negative $4 million to negative $5 million, supported by positive margin contribution of fully delegated Florida contract, increased encounter volume in radiation oncology and continued growth in Dispensary segment. • Outsourcing clinical trials business to Helios will reduce expected revenue by $5 million, but increased revenue from Dispensary segment will offset this impact.

• Currently, no observed impact related to tariffs or drug price inflation, but evaluating country of origin for supply chain. • Executive orders related to pharmaceutical pricing practices may have uncertain impact, but company believes it has ability to mitigate potential impact from tariffs on individual drugs or manufacturers if materialize.

Q: 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?

A: Yes, this is Rob. 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.

Q: How much was the rebate for, please?

A: About $1.5 million.

Q: 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 just similar trends within oncology practice or is it related to some other diseases or surgery practice?

A: 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 we haven't seen a jump to the amount 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.

Q: 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?

A: Yes, exactly. As 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 Medi-Cal 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.

Q: 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?

A: No, it's 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 material [ph], there's a higher PMPM for contracts in Nevada and Florida than there is in California due to the overall cost of care.