The Oncology Institute, Inc. (TOI) 14 May 242024 Q1 Earnings call transcript

Good afternoon, and welcome to The Oncology Institute's First Quarter 2024 Earnings Conference Call. Today's call is being recorded. And we have allocated 1 hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Mihir Shah, Chief Financial Officer at TOI. Thank you.

You may begin.

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

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

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

further GAAP our business, of will reconciliation of with website. are earnings the measures on as For to also discussions our call A comparable risks EBITDA. this related included SEC in non-GAAP such our SEC. This and furnished measures, available adjusted see release to measures discuss to the financial non-GAAP most filings the

the Joining Virnich. me is Dan on our CEO, call today

will that, the call prepared the for remarks, our questions. With over we call your Following turn open to will I Dan.

Good Mihir. thank oral same our our quarter compared afternoon, and you, revenue by in astounding the Thank drug joining XX% to XXXX, in grew XX% an increase call. In revenue XXXX period. you first driven QX for QX everyone,

X business hit of some our signed QX with first of saw to in contracts in to oncology. and related in contracts quarter. Full and year of medical radiation milestones states, ever a million XXXX $XX range revenue The new includes our in both capitation the is estimated expansion our related to X be quarter risk growth capitation across significant TOI X signed value-based and highest number

are QX, contract legacy offset changing will drug full guidance continued X in starts this by And our result, expecting in at year better-than-expected termination We capitation believe contract we capitation a of be as in business. time. growth not oral and new we are which California

fills hitting dispensaries a million for year at representing million of pharmacy remains with saw also prescription drug in expectations X,XXX due on medically-integrated track QX. Oral profit our record segment over and top outperformance and line. to in gross revenue revenue the full to As through noted, of amount over the QX TOI in sales $XX $XX

our newly continues incremental quarter related from Our top full first over to year shows expectations, particularly of growth this and California in line million projection outperformance, $XX margin location to challenges, latest exceed came the acquired from which pharmacy drug XXXX. Despite with both an of or Part remuneration on point material. with was transition and to DIR to direct compression B intermittent to drugs and sale, D deemed be cyberattack, the Change fees Healthcare due to not disruption in collections the indirect

In quarter, first industry-wide see saw and fee decreases in to compression addition increased. the driven IV historically compression DIR we our exception, was most year while IV and several This reimbursement. related reimbursement no price margins to of our in shifts by changes, to in costs manufacturer margin drug utilized increases the medications

losses QX. drugs a margin. for XX in margin of points basis our compression XXX top Our expectation culminated operating in decline saw above This

progresses. And year Although, already by improvement margin April the expect in have improve points. in prior as basis we to trend years, to started this with as see XX

of are to relates we impact to it which strategy project proactively changes distributors, second to the procurement We also our our as half positively year. making the

total bringing primarily Now and employed We in call. few X We practice I total provider clinics new X Florida, to XX. XXX. to physicians California, our a count added would South our like last our to opened since in achievements advanced bringing operational clinic highlight count Southern clinicians, new

capitation of with new new partner. One will Oregon, capitated bring legacy our contracts market, to a us a

month to the there our in led incredible in record have revenue cycle team related effort issues We Change the QX. All cyberattack to management expect by This has April. to Healthcare been of cash operations commence collections clinic mitigated.

Jordan value-based driving other platform, us quarters. I turn outstanding our leadership our joins April knowledge CFO, will oversee team strong Development particularly in Officer. He a of growth the over he we HOPCo, accelerate Florida We executives important our where and it from TOI. new at regarding agreements. joins his record welcomed Chief as track updates value-based some value-based to network On before X, our Shah, the had in orthopedics and further deep growth I have care Finally, McInerney Mihir important growth believe of to upcoming market our

call additional on our to CFO, the quarter to Shah, our over details Mihir turn I'll provide Now results. first financial

XXXX, million, increase Consolidated compared compared and XXXX. in points $XX.X an you, top XXXX This QX XXXX. XX despite decrease for million to increase XX.X% of revenue of XXXX. to and everyone. compared QX compared SG&A, to attributed and $XX.XX reimbursement Thank QX lower strong million, flat QX in previously XX.X% our line. Gross the IV basis a depreciation was a QX remains XXXX to good growth decrease QX of is was to Dan oral the XXXX and $XX.X decrease amortization, Dan, mentioned. SG&A in QX afternoon, was XX.X% a profit including

amortization, negative for of As QX to million, impairment quarter, points quarter was an million, of QX XXX in charges did in the QX operations from that XXXX, XXX of QX points XXXX. a was down XXXX the not to million compared was QX QX XX.X% million $X.X liabilities primarily SG&A a occur $XX.X XXXX. Loss earnout in decrease revenue, in loss $XX.X did $XX.X basis percentage Net from XXXX and XXXX of improvement EBITDA prior from by for gains the of compared QX XXXX QX million and for basis including was $XX.X goodwill $XX.X current year. Adjusted million that same depreciation and XXXX. XXXX of in fair the $XX quarter value the of in Offset to year due occur derivative not million. QX

$XX in cash, in equivalent reduction $XX.X investments short-term a end operating of losses, investments. The $XX.X million of of and without cash QX had equivalent collections, to related and it back the Change resulted be lag response pharmacy Dan situation closing cash of AR total XXXX, QX one-off for to pharmacy year and impact in our project impact around impact for million and As will timing swift equivalents short-term of million, and Change cash $XX.X Healthcare impact cash of simply XXXX. Healthcare the was new we QX cash cash to our our Thanks balance million turn we now cash and to work full of flow on flow. I to comments.

key want Institute. Priority burn. providing an our priorities at by update our progress Thanks, close number Oncology Mihir. I towards to eliminate cash X strategic The call on one,

burn to QX the in result QX. drug improvement use than in While in QX margin XXXX, higher compressions year-over-year relative we had cash did of

of result percent SG&A our We near-term already drive following year. Priority new restructure our down ensure will we confident markets. that a grow and contracts, of efforts our in improvement efforts legacy procurement signed this as are growth tightly over XXXX as the margin in remainder to of and last and manage improve both a two, ongoing revenue number

legacy with to through oncology. Our oncology our contracts our California partnerships, medical and will California newly and continue on help medical risk orals of partnerships, radiation signed Nevada in and radiation our new markets. both outperformance new represent an across profitability coupled These in pharmacy drive important expansion

by staffing new adjust three, improving contract related markets. will terminating one served margin number to areas to variable We our compression. Priority mitigate

with our we new of has Our Elevance near-term gone well to other patients quarter and several in we capitation Florida as welcomed capitation first this in clinics, arrangements market. full anticipate

seen tremendous we represents capitation this deal to market. value-based opportunity mentioned, quarter. deal and versus this services in already four, QX quality oncology signed As through are number also This Oregon the utilization leading new high in market. Priority in rate starting another legacy new the improve

capitation to believe toward questions. contract payers represents for now next in updating groups the of as patients that, signed lead the continued cost and risk-bearing key continued primary on model plans serve, partnership and priorities manage with TOI ready and our our progress call. With Our in to advance significant uptick our we in oncology. We to unsustainable Operator? strongly and new new continue trends that we forward to we're health we seek validity contracts payers your earnings help with pipeline momentum take on our can look our you this care

Jefferies. of with from first line [Operator Slevin the Instructions] question The comes Jack

both impacts I and want the DIR to side. on dispensary IV the in start with

terms in one QX? side Did about is. you of the sort year. a than Just what Obviously, get more thinking give if that margins areas? Is of a little of services for progression it just headwinds. those the more you're to you're down there a want I'm sense maybe more the bit can thinking some heavily of how just how how was under those in little of Is of as throughout thinking pretty using color for jumping wondering progress. see point each that's sort of in then margins off back that to next? And to way snap came gradual? a trying going a understand significantly I weighted patient

Jack, the thanks great question. for

there's improved think course see drug throughout expect the factors the that our impacted a of I in QX we to margins that couple fee-for-service business of on year.

deal we every year is call. which as about commented factor, we on earnings with first The seasonality, our

impact. The margins that is and on there's to major So year. throughout bringing fee-for-service issue, trend in procurement other we've rest to we of the in the both year, driven the we're seasonality our improve improve of see on drugs. in industry-wide April predict already that level the that to hard point. of to compressed the and Again, the expect by change is time QX, course continue of the momentum that to that think which really driving fee this at which sophistication over factor started changes course just DIR in that I faced But

X hard and issue factors again, fee improvement but pace resolve year say in trying expect to the that quarters to control we those the DIR of margins, So it's we're remaining drive will to at the what can itself.

Should really That's want saw that the Change that about impact. AR right I to it. drag million of over $XX helpful. think on just the Is to sort of the next, ask you the Mihir, way Got up And to sort reversal in now snapback that? issue. see you've in think decent the we of first a a just that that that of XQ resolved about quarter. to way how Is size

Yes.

So we timing. will million related be of believe, million that seen. increased we -- revenue be that, the $XX Couple about we have will to of

pharmacy working revenue adding the just in we more to the for QX. it's So that capital added slightly

to helpful. when still touch could a revenue. number. on the we sounds the got bit how all really launch it those of those million Really it. the X incremental Is commentary good. more the of one on far contracts. And front last of have the Got little like all It I Or looking? how is I annualized contracts. I cap heard was you And should the $XX sure sounds Should Maybe little it maybe like just we call. commentary for XQ want then of on loaded to there's pipeline make pacing announcements? X spoke -- closing next, to flow It a I just great as new the then on Okay. strong? the And if XQ -- as sounds XXXX? deals it expect sort a appreciate bit steady a

Yes.

question, Another Jack. great

The ever contracts terms year. I at this we've versus live. QX. of pipeline the mean, in I to timing all and in our So of go point QX revenue And is, full say those the for this were on pipeline think signed robust on start executed of the X question, seen the as them about majority are year impact as that -- the it. that's to would contracts, way pacing

think lot of So lot rest the we've a of near-term in stuff different there's the for continue year expect which of pipeline, announce to got this. XXXX. a to I the And over good reasons we

[ sort with increasing work in we groups think, is model sophistication beyond delegated and that our one, with markets, our team expanding of employer then our I medical just MLR range groups. And their costs. are new of resulted ways to growth a finding plans clients manage implementing just lastly, and think specialty lot related of finding try taking now has in even other groups to can [ ] ] that to ways drag D-XX top better through of I to risks, the line their pressure

I of pipeline pretty signed. quarter, So exact again, of for number seeing ahead we promise are second phenomenal in QX a the contracts terms of us. tremendous number but can't

great color, And here. me for then one That's last Okay. Dan.

regress does things it all burn really Change. we're to cash looks the sort right think we what's ballpark sort Change, Normalizing considering point strong. The 'XX? area burn? there, performance like of rest on I Or the in the for considered, outlook cash this as the feel at of of

Yes.

from our margin reverse we and pharmacy compression improve both margin see QX in burn QX much continue should in QX. will also cash -- had right? saw, QX of the AR and in increase in QX growth reverse also So and We that change in faster QX related some to AR revenue compression or and in them

So say potentially our of -- would be QX would extreme would this I scenario this have be -- cash the burn.

gentlemen, to that session. Daniel like comments. our would over to and floor concludes closing I turn the Ladies question-and-answer Virnich for now

to start everyone quarters. live near-term forward as updating saw QX. they in throughout able Thank thanks, also is and about the and in of growth who And of to remainder for today. you you of those margin our at partnerships so look patients new we incredibly compression you everyone, in combat joining drug much, joined the to Thank call management call business again, excited QX. I of to related which to some that much. the would all our earnings about is team number prospects as in to so the activities side like taking forward as that on TOI go team well with thank our serving subsequent excited the we today were business, effectively pipeline associated the our continued in XXXX. We're The very our new progress look contracts on

teleconference. you. Thank today's concludes This

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