The Oncology Institute, Inc. Q3 FY2025 earnings call

Business Momentum

• Strong Q3 results with 23% revenue growth YOY. Achieved adjusted EBITDA profitability in September.

Capitation Model

• Progress in Florida with Elevance Health, expanding to over 40,000 delegated capitated lives, adding more MA lives in Q4. MSO network in Florida expanded to over 200 providers; Florida pharmacy opened.

AI Initiatives

• Expecting offices and authorizations to be fully transitioned to AI model in Q4, reducing submission time and saving ~$2M in OpEx.

Cybersecurity Incident

• Managed through by pivoting to new platform, minimal impact on operations, but will affect Q4/Q1 collections.

Total revenue for the third quarter was $136.6 million, up 36.7% YOY. Patient services revenue (including capitation and fee-for-service) was $60.2 million (44.1% of total revenue), up 21% YOY; capitation revenue up 38.9% YOY. Pharmacy revenue was $75.9 million (55.6% of total revenue), up 57.4% YOY. Gross profit was $18.9 million, with an adjusted $1.8 million bad debt reserve, normalized gross profit would be $20.7 million. Patient services gross profit was $5.6 million (+21% YOY), pharmacy gross profit was $12.8 million (+58% YOY). SG&A excluding D&A was $25.3 million (18.5% of revenue), down from 26.7% YOY. Adjusted EBITDA was -$3.5 million, improving from -$8.2 million YOY, with September being the first adjusted EBITDA positive month.

Full Year 2025

• Raised revenue outlook from $460M-$480M to $495M-$505M. Adjusted EBITDA outlook revised from -$17M to -$8M to -$13M to -$11M.

Fourth Quarter 2025

• Expecting adjusted EBITDA breakeven to positive $2M, and free cash flow positive in Q4.

Cybersecurity incident led to billing disruption, affecting Q4/Q1 collections.

Q: Rob, can you describe the reserve for fee-for-service revenue?

A: $1.8 million reserve taken, normalized gross profit would be higher.

Q: David Larsen on delegated contract MLR?

A: Overall MLR in high 60s, delegated model slightly higher, mid-70s.

Q: Why TOI manages MLR better than other plans?

A: Unique care delivery model with employee clinics and wrap network of non-employee providers for control over care consistency.

Q: Dispensing revenue growth?

A: Not unusual, due to minimized leakage and script attachment improvement.

Q: Impact of payer changes like Cigna removing drug rebates?

A: Net favorable, as it eases reimbursement and lowers drug costs.

Q: PMPM trend on new contracts?

A: PMPM depends on market, contracts have escalators, growth rate expected to continue.

Q: Pluvicto adoption in California clinics?

A: Certified last year, seen increased requests, expect expansion of use cases.

Q: Pipeline for new contracts?

A: $19M revenue from 2025 deals, $10M-$15M remaining, opportunities in 2026.

Q: Impact of ACA debate?

A: Minimal impact as most patients in capitated arrangements already have access.