TOIIW

• During Q3, built on momentum from first half, with strong results across business, including MLR performance on delegated capitation model in Florida and pipeline wins.
• Q3 revenue $137 million, up 23% y-o-y, driven by 42% growth in Pharmacy and 13% growth in fee-for-service. Adjusted EBITDA loss $3.5 million in Q3, $4.7 million improvement y-o-y.
• Material progress on integration of care and MLR performance in initial 40,000 delegated capitated lives in Florida, expanding relationship with Elevance Health in Q4. MSO network in Florida expanded to over 200 providers, and TOI Florida pharmacy location opened.
• New capitation contracts signed in 2025 contribute ~$19M full-year revenue, margins expected to mature. Launched AI enablement efforts in revenue cycle, prior authorization, and patient call center; expect offices and authorizations fully transitioned to agentic AI model in Q4, saving ~$2M in operating expenses.
• Addressed cybersecurity incident at vendor, pivoted and managed schedules through EHR, minimizing impact on operations.

• Raised full-year 2025 revenue outlook from $460M-$480M to $495M-$505M.
• Adjusted EBITDA guidance: lower end of range shifted from loss of -$17M to -$8M to -$13M to -$11M. Expect Q4 adjusted EBITDA to be between breakeven and positive $2M. Expect profitability in Q4 and free cash flow positive in 2026.
• First adjusted EBITDA positive month in September 2025.

Total revenue for the third quarter was $136.6 million, up 36.7% year-over-year. Patient services revenue (including capitation and fee-for-service) was $60.2 million, 44.1% of total revenue, up 21% year-over-year. Fee-for-service contributed ~66% of total revenue, capitation ~34%. Pharmacy revenue was $75.9 million, 55.6% of total revenue, up 57.4% year-over-year. Capitated revenue for full year 2025 is estimated at $19 million, a 29% increase vs 2024. Pharmacy gross profit was $12.8 million in Q3 2025, up 58% year-over-year. Adjusted EBITDA was negative $3.5 million in Q3 2025, improving from negative $8.2 million in Q3 2024.

• Cybersecurity incident at a key vendor for billing and practice management caused a period of unable to bill for fee-for-service claims, but team pivoted and managed through it, with impact on collections in late Q4 and early Q1.

Q: Congratulations on a very good quarter. Rob, you mentioned an impact to the cost of goods, I think, for a reserve. Can you just describe what that was again, please? What was the amount? And was that unfavorable impact included in your reported adjusted EBITDA for the quarter?

A: Dave, yes. So it was a $1.8 million reserve to fee-for-service revenue, right? So that flows directly to adjusted EBITDA and was included in the adjusted EBITDA figures that we gave. And so we normalized for that in the script to show what sort of the normalized performance was, which was obviously significantly better than what we reported.

Q: And then you said that you had your first month of profitability in September. I guess, how sustainable do you think that is? Was there anything unusual in September? And it sounds like you're on track for at least breakeven EBITDA in the fourth quarter?

A: Yes. No, that's exactly right. So we're fully expecting breakeven for the quarter. Obviously, we haven't put out full year guidance for next year yet. But as we've talked about before, are expecting full year positive adjusted EBITDA in 2026.

Q: And then will you have a positive free cash flow in 4Q of '25 as well?

A: In 4Q, we will, yes. Yes. In terms of free cash flow, it will be positive in Q4. Not from a run rate basis, we expect free cash flow positivity, mid-2026.

Q: And then can you talk a little bit about the delegated contract? And I think you mentioned like a very good MLR actually. Just any more color there? What was that MLR? I think I heard mid-60%. Is that correct? Just any more thoughts there would be very helpful.

A: Yes. So thanks, Dave. So we will be filing an updated investor deck after hours today, which will kind of go into great detail on the MLRs between different contract types. But yes, the rough way to think about it is kind of an overall MLR for TOI across all markets and contract types in the high 60s with the delegated model being slightly higher. So typically, we would be kind of mid-70s and then the narrow network model being slightly better. And again, that's due the differences in engaging with non-employee providers in the delegated model but a much greater TAM in that model. So we expect long term, both the growth rate and total gross profit contribution to that model to be much greater.

Q: There's a lot of, we'll call them, generalist health care investors. Watching the managed care plans just come under enormous pressure because of pressure on their MLRs. Can you maybe just remind us why you're able to manage trends so much better than some of these other like MA plans and the value that you bring to them?

A: Yes, absolutely. I think really, the core of our value proposition is the fact that we have a very unique care delivery model because we've got a backbone of employee clinics and providers with a wrap network of nonemployee providers in select markets where we work with health plans which just gives us a much greater degree of control over consistency of care and NCCN guideline adherence and prescribing patterns across all encounter types. So that gives us a differential ability to drive better value for patients and payers.

Q: The dispensing revenue was fantastic, up almost 60% year-over-year. Was there anything unusual driving that?

A: Not unusual. As we've talked about before, we've done quite a bit of work around minimizing leakage in our script attachment. And so I think that we've gotten that to a level that, quite frankly, we weren't expecting to get to. So it's been fantastic to see. I think there's a little bit of juice to be squeezed from here, but I wouldn't expect that level of growth, at least sequentially into Q4.

Q: Just a quick follow-up. In terms of like the new contracts that you won that are being deployed in 2025, just any thoughts on how much of that has been recognized. I think the annualized value was like $50 million. And of that, like how much has been deployed? And just any thoughts on what we could expect for '26?

A: Yes. So I think Dan mentioned this in the script. So deals that have launched this year have generated about $19 million in revenue. That's got a good $10 million to $15 million left in it. So that's again deals signed within the year not contemplating deals that are in the pipeline that are going to be launching over the course of the next 3 months and into 2026.

Q: Maybe a quick follow-up here. So now we have this ACA debate, as the ACA change debate, we are not sure whether we will get credit for that. How will that impact your patient population or the broad business?

A: Sorry, Yuan. Can you clarify a bit more like what aspects of the ACA specifically?

Q: So for the ACA, if the patient cannot get their credit or cannot pay the insurance themselves, how will that impact your patient population?

A: Yes. I don't think there will be much impact in our model broadly speaking. I think most of the patients that would qualify under that new rule are already in capitated arrangements to us. So they would have access regardless. I don't really foresee it as a major shift in volume or sort of patient mix for TOI at this point.