STLN

• Corporate Rebranding

  • The company rebranded from its legacy name to Starling Oncology, as the prior name no longer reflected its current scope as a national value-based oncology leader.
  • The new name symbolizes the firm's focus on coordinated care, community access, and technology-driven innovation; the company's core mission remains unchanged.
  • A targeted communication campaign has been launched to minimize partner and patient confusion around the name change.

• Financial & Operational Performance

  • Q2 2026 total revenue reached $161.3 million, a 34.6% year-over-year increase, marking the second profitable quarter as a public company with positive adjusted EBITDA at the top end of prior guidance.
  • Overall gross margin improved 220 basis points year-over-year to 16.8%, and SG&A as a percentage of revenue decreased 390 basis points to 18.6% due to operating leverage and cost discipline.
  • The company completed a strategic refinancing: it repaid an $86 million 2027-maturing convertible note using a $75 million new 2031 term loan from OrbiMed plus $11 million in cash, with no new equity issuance or shareholder dilution. This extended debt maturities, improved liquidity and increased operational flexibility.
  • The company negotiated annualized OPEX savings of over $1 million via fee reductions with a key vendor, lowering collection costs for non-capitated encounters.
  • The capitated model medical loss ratio (MLR) for Q2 2026 was 85.5%, up from 71% year-over-year due to new member onboarding; management expects MLR to stay in the 80% to 90% range over the next 12 months.

• New Product & Contract Growth

  • The new Starling Nexus provider portal is on track for a phased launch starting mid-August 2026, with onboarding of MSO-affiliated physicians in September and employed physicians later in the year. The portal will unify treatment order submission and pre-authorization, drive clinical pathway adherence, support ancillary service offerings, and generate actionable practice and patient care data to improve future MLR performance.
  • Three new delegated capitation contracts are expected to launch in Q4 2026, including the company's first such contracts outside of Florida (one in Nevada, one in Oregon). These contracts add 80,000 total lives and $50 million annualized capitated revenue, excluding additional wraparound pharmacy revenue.
  • The company gained exclusivity for all delegated medical groups with a large California health plan partner (previously a split contract), adding 230,000 capitated lives and $6 million annualized capitated revenue, plus associated Part B pharmacy growth.
  • A previously announced statewide Florida payer contract has been pushed from a Q3 2026 to Q4 2026 effective date due to payer-side process delays.

• Full-year 2026 guidance has been revised upward: total revenue is now guided to $650 million to $670 million (including ~$150 million in capitated revenue), up from prior ranges. Gross profit is guided to $105 million to $110 million, also an upward revision.
• Adjusted EBITDA guidance for full-year 2026 is narrowed to a range of positive $2 million to positive $7 million, maintaining the expectation that 2026 will be the company's first full year of positive adjusted EBITDA as a public company. Free cash flow is still expected to be positive $5 million to positive $15 million.
• Q3 2026 adjusted EBITDA is expected to be positive but muted, in the range of $500,000 to $1.5 million, due to ramp-up of the 230,000 new California capitated members.
• Management expects 100% growth in annualized capitated revenue (to ~$300 million) in 2027, based on already announced contract launches, with additional upside from the robust contract pipeline.

1. Patient Services Revenue (includes capitated and fee-for-service arrangements): $58.8 million, representing 36.5% of total Q2 2026 revenue. This reflects a 5.3% year-over-year increase. Gross profit for this segment was $2.1 million, a 57% decline from $4.7 million in Q2 2025.
2. Specialty Pharmacy Revenue: $98.6 million, representing 61.1% of total Q2 2026 revenue. This reflects a 57.6% year-over-year increase, driven by growing prescription volumes from new capitated lives and ramp-up of Florida delegated arrangements. Gross profit for this segment was $21.3 million, an 85.1% year-over-year increase from $11.5 million in Q2 2025, with gross margin improving 320 basis points to 21.6%.

• MLR is expected to fluctuate as the company onboards large volumes of new delegated capitated members, and could run higher than fully ramped levels in the near term.
• Macro-level changes to Medi-Cal membership eligibility (such as work requirements) may create uncertainty around total covered lives in California for 2027, with unknown net impact.
• Recent specialty pharmacy margin improvements are partially driven by one-time procurement initiatives, and margins are expected to decline slightly in future quarters from Q2 2026 levels.

Q: What is the background of the new Nevada and Oregon capitation expansions, and how does your guided MLR range compare to industry benchmarks? / A: The two new contracts are one per state, both direct delegated capitation agreements with health plan partners, totaling 80,000 new lives and $50 million annualized capitated revenue. Oregon's contract is statewide, while Nevada's is centered in Clark County. Management notes that the 80-90% 12-month guided MLR range includes temporary increases from new member onboarding; fully ramped delegated contracts are expected to hit 75-85% MLR, and out-of-state narrow network products run 70-75% MLR, both better than typical industry 95% MLR figures.

Q: What drove the timing of the company's rebrand, and do you expect confusion from the name change? / A: The legacy name caused frequent confusion among payers, patients and providers, as it was misinterpreted as a clinical trials or specialty care organization that did not reflect the company's current value-based oncology focus. Management chose this timing because the company just achieved profitability as a public company and is launching the new Starling Nexus portal, aligning the brand with the evolved business. A targeted communication campaign to existing and future partners is already underway, and no material growth disruptions are expected.

Q: What drove the California exclusivity win, and is this part of a broader trend of consolidating split oncology contracts? / A: The win came from outperforming the incumbent on member access, care coordination with primary care and referring providers for the partner. Most of the new 230,000 lives are lower-cap-rate Medi-Cal members, so incremental annualized capitated revenue is relatively small, but the win demonstrates payer confidence in the model and will generate additional Part D pharmacy revenue. Management notes that most of their new business comes from winning competitor contracts generally, rather than broad industry consolidation of split arrangements.

Q: What drove the strong Q2 2026 specialty pharmacy margin improvement, and is this level sustainable? / A: The margin increase was driven by specific procurement optimization initiatives, which have temporary effects. The current margin outpaces market averages, and management expects margins will decline slightly in coming quarters but remain in the high teens, with the team continuously working to identify new margin expansion opportunities.