The Oncology Institute, Inc. Q1 FY2025 earnings call

• Revenue for Q1 2025 increased 10% YoY, driven by retail pharmacy/dispensary growth, new capitation contract wins, and fee-for-service growth.
• Added over 80,000 lives in Q1 on 4 capitation agreements across Florida, California, and Nevada; anticipated new contracts to add ~$50M annualized revenue.
• Started a fully delegated capitation agreement in Florida on March 1 and a new Nevada contract effective July 1.
• Fee-for-service business returned to growth, up 9% QoQ and 2% YoY, due to investments in referral management and call centers.
• Aim to be profitable and have positive free cash flow by end of 2025; adjusted EBITDA loss in Q1 was $5.1 million, upper end of guidance.
• Outsourced clinical trials program to Helios, impacting revenue but expected offset by dispensary growth.
• Dr. Jeff Langsam joined as Chief Clinical Officer; TOI to present clinical trial data at ASCO Annual Meeting showing cost reduction and Part A utilization improvement.

Consolidated revenue for Q1 2025 was $104.4 million, up 10.3% vs Q1 2024. Retail Pharmacy and Dispensary business contributed $49.3 million in revenue in Q1, growing over 20% YoY with over $9 million in gross profit. Capitated contracts added over 80,000 lives in Q1 on 4 agreements; anticipated new capitation contracts in H1 2025 projected to add ~$50M annualized revenue. Fee-for-service business returned to growth, up 9% QoQ and 2% YoY. Gross profit in Q1 2025 was $17.2 million, up 44.1% YoY, driven by a one-time rebate and favorable drug price changes.

• Reaffirming fiscal year 2025 guidance: revenue $460M-$480M; adjusted EBITDA -$8M to -$17M; free cash flow -$12M to -$21M. Expect positive adjusted EBITDA in Q4.
• Q2 2025 adjusted EBITDA loss expected to be -$4M to -$5M, supported by the Florida contract, radiation oncology volume, and dispensary growth.
• Outsourcing clinical trials reduces revenue by $5M, but dispensary growth offsets this impact.

• Tariffs: No current impact observed, but monitoring supply chain country of origin for therapeutics.
• Drug Pricing Reform: TOI believes its clinical model and capitated business make it less susceptible, but monitoring potential impacts.
• Contract Turn Rate: Low historical contract turn rate, but no significant near-term renewals to note.

Q: Discuss gross profit growth of 44% YoY.

A: Driven by a $1.5M one-time rebate from a drug supplier and favorable drug price changes, plus volume increases in dispensary.

Q: Fee-for-service revenue and clinic count.

A: Fee-for-service up 2% YoY; clinics decreased from 87 to 81 due to closing unprofitable locations, but added over 30 MSO sites in Florida.

Q: SG&A management and DIR fees.

A: SG&A down 11% YoY, 600 basis points of revenue; DIR fees are in the past, margins are steady.

Q: UnitedHealth trends and value-based contracts.

A: No significant jump in oncology utilization; value-based contracts priced based on recent utilization and cost trends.

Q: Lives under value-based contracts and contract renewals.

A: Decrease in lives due to a contract with lower reimbursement; most contracts are multiyear, no significant near-term renewals.

Q: Guidance pipeline and home healthcare trend.

A: No additional value-based contracts needed for guidance; home healthcare delivery is a positive trend for TOI.