The Oncology Institute, Inc. (TOI) 9 Mar 232022 Q4 Earnings call transcript

Good afternoon, and welcome to The Oncology Institute's Fourth Quarter and Year-End 2022 Earnings Conference Call. Today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A.

At this time, I'd like to turn the conference over to Mark Hueppelsheuser, General Counsel at TOI. Thank you.

You may begin.

The XXXX results Investors are the website, announcing quarter the section release company's year-end and available theoncologyinstitute.com. press Oncology for Institute's fourth of The at the the will call. this be call conclusion this of after the replay available A at company's website of also

harbor started, guidance safe and Management we underlying the get remind of forward-looking would assumptions. I Before may to make like you company's language. including statements,

results risks are and that uncertainties to based differ cause could statements materially. Forward-looking involve actual on that expectations

our to related see risks of discussion further a with filings SEC. business, the For our

call financial to This furnished these measures, as adjusted included most will to comparable are website. release measures earnings the of reconciliation SEC such in also discuss the measures GAAP and non-GAAP EBITDA. available non-GAAP the our A on

call and today Brad the Shah. CEO, our our Mihir on Hively; is me CFO, Joining

call remarks, our prepared Following open we'll your questions. for the

to turn over With that, call Brad. I'll the

will of our touch a thank performance and Thanks, start I'll Mark on everyone, Mihir with more today. and joining We'll our then XXXX financial us results. provide you detail review XXXX. to then XXXX around

and the revised profit, prescriptions to gross of patients, surpassed our guidance top XXXX in we during growth. for for Medi-Cal pleased facing first of oral from a California revenue, end our I'm public both company. with made the and tight a growth progress as and preventing delays lives. our portion we organic us EBITDA, acquired revenue, a labor from was full driving headwinds market contributions including achieved covered acquired and year certain our guidance XXXX adjusted the with year, revised strategy, Despite our dispensing

guidance and original our gross for achieved EBITDA, profit, covered lives. also adjusted We

acqui-hire of two to including a network in clinics South XXX record across in year increase in trained the revenue the Annually, providers and XX fourth Florida. a represents the number growth growth quarter, strong, opening new adding a in the This novo physicians California Chino, XX% We and practice expands TOI's this specialty clinics clinic de and states. achieving clinics providers. advanced of five of ended

As market, of into third practices, Florida of call, Associates mentioned Associates Hematology/Oncology recently we expansion acquisition through our two our the XXth on and South Miami. quarter Broward our opened Oncology with

a announced opened Plantation de in Florida also which novo in We clinic new December.

pleased the of gain are announce we addition Florida. to share our Finally, to ChenMed in partners

value-based these with to partnership Florida. to Our helps our oncology bringing advance of goal groups care

duties with cash, I'll on convertible Management some Deerfield provide senior increased We cash $XXX highlights secured Company California, close XXXX. strategic in of remediated count now additional to disclosed material August and the XXXX. XX investment segregation year, and review new two notes at from of equivalents investments. weaknesses market in year-end over completed $XXX and through million We ended XXXX revenue from We X, million markets including and of in process. reporting the Florida We prior from controls our XX previously the surrounding financial Texas. within

six contracts XXX,XXX safety lives assistance capitated patient the co-pay earned certification three we the weakness We program. dispensary address practice We $X.X We remaining and the a through patients of has disclosed grew million Research weakness, material gain our new by over continues accredited to for as execute in one and plan remediation membership acquisitions. Agency savings Healthcare treatment accounting generated to AHRQ, organization. complex developed share to the an Quality around For added management Florida. material previously over transactions. and in completed We

fourth detail financial full to quarter on Now Mihir to year and our I'll results. the additional turn provide call over

Thanks Brad.

was XXXX a QX to million, QX of was an for Gross to to XXXX. XXXX increase increase XXXX XXXX, Now an increase compared $XX to [ph]. and QX QX of XX.X% $X compared XX.X% turning XXXX million Consolidated X.X% decrease fourth was to million, in QX Net quarter $X.X for XXXX. of QX of results. QX compared an XXXX compared $XX revenue million, profit loss

was negative EBITDA $X.X Adjusted million.

associated Our Further acquisitions. on in calculation consulting adjusted adjusted details can we how EBITDA includes define found EBITDA provider fees and as be well costs with our start-up as XX-K. legal

our modified cash have adjusted calculation to We of EBITDA Board include compensation. Directors'

to in Now XXXX. profit the and to December and million, XX, December prior due intangible for ended for XX, of million, XX.X% XXXX Net the $X.X year ended XXXX negative EBITDA conversion year. year change the and increase earnout increase asset offset full year profit operating the an warrants, XX.X% in December an year. was XXXX the the compared $XX for income an to was Consolidated was talking gross liabilities Gross XX, about goodwill million, revenue compared in year $XXX and charges ended value Adjusted was increase year-over-year. million impairment expenses. was option This the increased increase primarily by million. $XX in derivative $XX.X of fair prior

XX, ended compared $XXX million revenue, XX.X% December year or $XX or XX.X% of expenses prior million revenue with in of the were SG&A XXXX year. for

transaction related share-based million. compensation XXXX, cost and or million $XX During expense $X to was -- was SG&A

The investment. was with year-end, we operating and cash had was a costs markets. new our of company equivalent other and cash the SG&A as into balance growth in $XX associated public million expansion our remainder support million growth At due headcount and revenue and $XXX to to and

operations expect enhance to support We growth and be and to our capital sufficient for XXXX. this our XXXX

turning to guidance. Now XXXX

to to to the XX% of revenue $XXX are guiding XXXX. This million. For year $XXX XXXX, represents range growth full over million XX% a we

Our range $XX profit million. negative from to adjusted ranged gross million. $XX $XX guidance negative million $XX to million guidance And our from EBITDA

year capitation. to to X.X under million with the expect X.XX lives million end We

it turn remarks. Brad back to some summary now over will for I

Mihir. pivotal for was TOI. year a XXXX you, Thank

by publicly employed the partners. APPs a company, our into innovative our traded solutions provided and in to and as creative to invested XXth markets, year practice. market expanded portfolio physicians our first our growth share gain During drive we XXX We expanded our priority surpassed in and

a position organization. ended clinical by with We year strong launching safety a liquidity the outcomes patient and prioritized

another be to and progress growth. XXXX expect of year We

success, referral gain markets optimizing technology population by with counties; clinics expansion capture that first, focus efficiency growing our aligned contracts in second, areas; expanding optimizing transitioning to burn on new ensure three new drug margins optimizing model legacy To approach cash solutions, market new markets, risk and expanding by taking our is and and to including more primary improving our refining agreements; finally, and and existing to entry. offerings service sustainable reducing and share a

optimistic look about summary, In through our as are sharing year. very we the and forward to progress XXXX move we

open the And with that, to over it for you. questions. back turn to I'll Thank operator up it

Thank you.

question-and-answer first Brian Tanquilut a Please with Your comes question We will go now Instructions] [Operator be from Jefferies. conducting ahead. session.

guys. you Good doing? Hi. afternoon, are How

Good. How are you doing?

to that guess, Good. any Good. any hear us on my question you of anything issue, that Brad on or forward? if going on what's I California you like cures color going since the there share going kind could issue first will with just to and wanted address alluded

Yes.

drug operated with integrated So around us first to a to respect because not to our the of last year patients drugs California as new Medi-Cal pharmacy. from prescribing prescribing. portion issue year last When dispensary as vendor a a – Medi-Cal California a medically it we certain the transitioned essentially precluded

we've as able pharmacy we as drugs discussed become then a be would so we patients. on licensed prescribe calls, to And and if to previous when those

now. ownership a too that our right It in our though to turns become We have pharmacy. is practice high endeavoring physician been out

those wait access So in then, And physician to until we goes then, a can ownership fills. But need to a we below scripts. apply until can't pharmacy we certain practice our those and our will threshold. become reaccess

So that's the latest on that issue.

into EBITDA Got this moving understand. changed? just are as And say, for of then for stack I the the year, this guess guidance QX your during relative does to you. parts? that budget how you I out that the about leaseback, And beginning year? the versus maybe And expectations the at laid say, what has what I curious think heading

tried out Yes, guidance that we achieve. to I we put we can believe have think

we're of a as projected that haven't guidance. on all as grown some view we grow, categories So, fast are in conservative our quite, realities expansion taking to to we markets. certain There four

why to the expansion of had And one so, scale of we SG&A some and our about our is needed fixed markets. is heard talk expenses, growth cover which revenue you priorities we that had optimizing expected, haven't those me

also on year. margins, to drug IV we is started little our as of a seen That the compression control. have out bit of a We large extent,

little of on and partially on-patent off-patent. a bit going IV is the partially drug pressure or see things we That reimbursement so to buy-and-bill mix to and margins. just And changes due due

view guidance. I beat conservative originally to that's we why on Obviously we So EBITDA taken than slightly see hope predicted. lower had a you it. think we've But

unannounced right any acquisitions to to check, just now? what's And just embedded Brad maybe assumptions or there in for in the guide, clarify

you to take one? that Mihir, want

Hi, Sure. Brian.

unannounced any include not does XXXX. do now right guidance that the point, your might to So we acquisitions in

now. where we So upside be that right would from are

it. Got

Awesome. right. you, Thank All Okay. guys.

Brian. you, Thank

with Next question Sandy Guggenheim. Draper go Please ahead.

guess follow-up I that's a Thanks to pushed first you so quarter very the as out. I that, the the question. from got first close acquisitions guess, that fourth much. as

So...

Yes go ahead.

Yes.

we any that We announced. have XXXX, not -- have not this in closed acquisitions

But talked are announced now the Okay. the last caused, that about that and quarter fourth year, in revenue close? you that got were ones those lower that the third delays

we those believe, of to Both No. see. ever. unlikely I are close

Okay.

sounds they're your -- sounds never was included. those So your if make are so sure, trying they're they've even -- those like in in just not were to not I It happened. It like not.

are those not That probably think right to is We likely Yes. of they're come that happen. likely can both now Never, but always never. different for back, to our happen. view say reasons, not

And in gross why the little your relative what's a little -- interesting of XXXX. in to margin bit improvement and it. then the lower. you XXXX stronger a finished model, Got it's here gross my maybe actually appreciate is, I me and different is bit around a guide little to in Okay. EBITDA margin for a comment But,

want any are cost about a drivers midpoint I'm below in at trying talking of not then And incremental just basis lot points. of -- in SG&A? all the sure like those down it's And and but goods? so of XX costs What just to below to goods the there? make are Are you're cost I XX to it's they

in Mihir you start. IV can -- anything. if sold. bill I The goods that's fill compression on of miss please of cost in I margins buy the and Yeah, drug

our in guidance. reflected that's So profit gross

and our our SG&A department research areas have We hit clinical department. most chosen to invest importantly in several our technology that including

those scaling. investing in We're also departments our hope -- is to get SG&A. some adding we which of we're both to So better

patients our up of with is does variable scale the SG&A of Some number we treat. and

of So obviously on get percent lower and year every trying a as revenue. to we focus lower that

think our chosen we've that also to get better of SG&A And we future. there are SG&A fixed in clinical opportunities invest scaling out some but the research and there's within so some to technology for

maybe And question. or updates? And that too remember, know it's helpful. and then your new guess still Any maybe been of three Thanks. are research. can't early, on maybe me updates I being leads only division That's into final any or six but head of a trials clinical Great. but too hired maybe early. sort I my sort you it's made of months going? changes that that's how clinical I

we though to along practices been think untapped oncology there's a of seen on much we are community differentiator research. respect that we've We've most clinical practices. think focused further along real sure. time model. advanced very of further lot TOI's community lot a of out clinical even examples spending we Yeah, are there are. it's With than potential business of a We than Also research,

be to endeavor best. the we so And

targets high clinical And department. goals so really set for we've and research our

entire of have we Some things the we've division. done rebranded the that

a be ICRI to for. we from earlier to TOI more a we that our patient call about used think identification is of we've can innovative processes talking perspective. start so We changed patients and they clinical trials may that lot rebranded understandable also And protocols We patient around which clinical research. it research, clinical that eligible

aggressive very targets. growth have We

clinical that we will XXXX. lot doing that of good. expect TOI of But we -- the so growth year a We research. around see we're those throughout things feels the strong some started So are

Great. Thanks.

Gary & next Your ahead. Instructions] Please Cowen question comes with Company. from [Operator Taylor go

the acquisitions on just the run million $XX is to closed How One that that the $XX questions. you if have or XXXX million much revenue because will of guidance. pickup bag you the year-over-year couple true and XXXX? to pickup sort of the just A guys. the rate in Hi, of of get annual in already pickup

rate. exited XXXX look at quarter you we -- mean about I if fourth [ph] Yeah. run our revenue with $XXX

but exit that's a stronger. way already So that of rate. there our annualization, a a significant you sense. the gives it's so not little run Fourth There's with bit portion quarter perfect of is a seasonality a bit just

there in not. there the of were quarter On deals all or or full share in different contracts are But what the the so deals if the payers helpful. providing? know or gain ChenMed, that's those for the in full ChenMed didn't those was Florida were I your one Okay. new fourth three -- with are all for with

of ChenMed, Just yeah. those was one with

And of multiple counties, is I mean, a that states. pilot? like obviously county are kind multiple single there

is what's the that larger? So could outlook there relationship -- that get

of I to Florida. in ChenMed. partnering Florida and expand with focus Central Yeah. that where many Florida. elsewhere optimism we we other for overlap with on that we is example mean, we'll have a have them follow for hope Central lot We've the that with other locations South but places initial started And And market then, to relationship.

liquidity use maybe Can to of of $XX the to do something I what us investments, tell right you would million sense earn more you'll plenty a then away little that in? presume, And because got than more more. that's put just made non-current and you've

to want trade you Do or...

can that. Yes. Yes. I take

it's the But us So and it available accounting acquisition most way to of the in is that but mostly GAAP it, T-bills, use. our in be operations non-current. needs allows to for it recognize

you. Thank Okay.

Thank you.

you. over remarks. closing the turn for Thank to Hively to Brad like I floor would

good Okay. to progress we're on And you TOI's look for to forward everybody ahead. today. excited our weeks. forward you earnings Thank our very path have Well joining call. look updating about the next up the And in call you you. with thank we on We And coming evening. a following

This concludes teleconference. today's

thank participation. your you lines your may for And disconnect this time. at You