The Oncology Institute, Inc. (TOI) 13 Aug 242024 Q2 Earnings call transcript

Good afternoon, and welcome to The Oncology Institute Second Quarter 2024 Earnings Conference Call. Today's call is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mark Hueppelsheuser, General Counsel at TOI. Thank you, and you may begin.

The press release announcing The Oncology Institute's results for the second quarter of 2024 are available at the Investors section of the company's website, theoncologyinstitute.com. call the be conclusion this company's at of after website of replay will available also the A this call.

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

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

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

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

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

you call. another always, proving terms in Thank TOI's our the and outstanding Good be our many teammates for and thank everyone, XX as year The growth. in start, of joining to most to across our clinics quarter of you, corporate afternoon, history. by providers exciting want and locations for second quarter growth XXX Mark. is thanking I

in Our Medicare's margins in VXX struggle demand light high services to remain of trends. and payers as maintain their increasing utilization

additional continues X medical an record new covering capitation of including with both signed capitated contracts in number As and oncology in and a call, QX, that quarter's services. and mentioned pace we last contracts states in radiation QX, X signed

in pipeline, the for profitability pacing broader in broader us XXXX. The setting sets this second direct-to-health expansion market second strong additional Nevada a our towards is the significant our stage new half in important plan milestone marks overall the Florida for profitability, a TOI of One stage contracts of and in capitated mid-XXXX. capitation that deal, and XXXX, is XXXX, very Florida, for state in market, particularly

compared quarter period, to exceptional second in by the an increase in XX% grew XX% driven year the revenue Our revenue. prior drug oral

projection $XX pharmacy for fill year to incremental Our over break our latest revenue increased to has of California records. full as we monthly continue million

compared industry to In margin, and seen gross to lower-than-expected of QX net The quarter historically QX primarily pharmacy reimbursement. compressed the second light in response DIR the DIR we to was Inflation saw gross on of drug negative oral the Act. In EBITDA and points DIR the for anticipated, oral remains $XX percentage Revenue of low are million reimbursement our attributes revenue. XXXX of $XX low XXXX, but a fee of runout guidance inappropriate Reduction and driven to by fees year-to-date, million. to continued reimbursement at pressures updating realized run specialty resulting intended $XX guidance The IV fee margins the by the profit was million margin. to full pressures basis terms levels adjusted same. $XX historically the to PBM's transparency million year negative profitability, as of XXX have XXXX record out

by disappointed recent us. worst behind we is pressured feel the are we performance, While the

first is the remainder the our we deals contracts DIR in QX, expect expected IV XXXX revenue in improved, going in most of with have live Looking be forward of improvement the of to in new in our the million. margins over $XX annualized the runout QX is signed complete, the year-to-date adjusted adjusted signed EBITDA second year. The half and million, contribution and the significant year of to year, and of net in EBITDA $XX loss capitated capitation the is half

and line XXXX proud the the despite very have in the reduced XXXX top flat efficiencies, full absolute SG&A year are period SG&A for corporate cost management, our to of a for dollars, growing XX.X% percent which of of by significantly. operational revenue I'm total terms compared same In of terms as driving of

without and costs. to footprint providers infrastructure growth capacity existing and additional today markets in Our adding the has we operate overhead significant absorb in the

our Lastly in direction growth and we care undertake in operational alternatives, and shareholder of brings in management, fair confident the intersection believe careful purpose strategic, acceleration mind in Board important transparent, very bullish a with all to Directors, of company. of with after remain to in thorough consultation corporate delivery our goal the It in we both our importantly, recent discussion that to that alternatives. The review value-based in our financial We and be journey. an and TOI businesses with of this have enhancing value. our and is consideration with adamantly pharmacy decided the is on review of of

for does disclosures in company or to have the set Partners stated in necessary. to release, further provide review engaged our with review. become As Board updates deems plans proceed its further assist to completion press review. appropriate its timely The of not timetable Board it Leerink to we The on ongoing manner, but not the a intend has until a

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

everyone. Dan, you, Thank good and afternoon,

California-based increase our X.X% our increase with improvement the a live XX.X% driven increase progresses. XXXX This was This points XXXX. through volume-based improved IV XXXX Second pharmacy, QX XXXX. Gross normal flat and expect SG&A attributed $XX.X growth XXXX. received ] is we including hearing remains [ million margin, an QX QX seasonality contractual quarter basis the QX $XX.X top late compared Consolidated additional which and QX compared as which QX despite SG&A revenue and year in to XXXX, pricing, in X.X% QX in XXXX an compared depreciation our of compared in XXX amortization to primarily XXXX. XXXX line improving line. continue in the rebate results. for fee profit increase strong of In million, was to to is of increase by million, $XX to was went an to

expense top revenue, the points IV I'm derivative XXXX. increase million keeping percentage million, was easy liabilities is $X.X QX amortization change to disciplines in including XXXX million Dan primarily as by $XX.X colleagues impact growing a of quarter, and value particularly negative of As XXXX and flat. by loss improvement $X.X over for to as QX the from proud the in XX.X% as SG&A QX of of for compared of of XXX an of in million, QX QX discussed. and an net runout million. XXXX an $X.X SG&A of XXXX improving the profit is for XXXX, XXXX. This decrease points fair Net to not from offset was This and QX QX compared same an in XXXX of basis from lower-than-expected $X EBITDA the exemplified task. Loss was million depreciation XXXX QX XXX compared efficiencies increase our in from the driven $XXX,XXX gross line prior XX% $X.X while a quarter implemented margin QX Adjusted This operations XXXX compared in by in million, year. XXXX. to $XX.X basis previously was QX the DIR was interest

comprehensive balance relative in a deferred investments. acquisition purchase growth The equivalent forward. I have and operating new going in cash further capital AR $X.X short-term QX and reduction and the and cash, million XXXX. We million tremendous July of short-term it of month and comments. losses, for working drug burn of and of cash now collections investments for a had and in implemented cash to cash, resulted equivalents $XX.X $XX.X As impact QX in total management to our a to inventory short-term turn back $XX.X payments of process Dan we will was investments QX cash XXXX, in closing an of reduce million, our million had equivalents pharmacy

capitation TOI represented Thanks, by Part quarter Mihir. in wins of measured business. for momentum our growth further To across growth summarize, and of strong QX as D markets further a

While expansion of of are fee from many fee this have about a and DIR to on margin businesses and momentum headwind back half we margin efforts assessments in ongoing we hangover, we related oncology XXXX are believe changes drug XXXX. affecting now frustrated through the XXXX space, drug in growth the period and fee positive compression

confident that that, profitability with It a will path our we ensure is are believe backdrop pursuing to maximum strategic Operator? deliver ready we we're your current cash are of we generation. against to our that that our opportunities Lastly, level can shareholders. With the achieve alternatives to thorough take we questions. review of value now

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

we I wanted I the updated where sense in quarter margins for, and what on forward. obviously, color sort wanted start more the some implied to quarter little of some forward, that's guidance. building a a getting second give exactly margin moving in could blocks in if the bridging in and are from of pressures sort improvement get on with the particular then to you maybe are

So too. areas DIR to I new thinking contracts of open how that improvement, about guess way hearing about was being I'd impact, margins the then the on the really different of pieces. be have we if that bridge, cap and X are fee should about hear that, But be thinking IV and of big how sort and layering to the the other you curious a

so a Appreciate lot much, Obviously, Thanks Jack. unpack there. question. to that Yes.

size. is QX in revenue of arrears capitation point-of-sale fee first $X.X signed our we to in from in footprint. fees improvement this QX QX, hopefully for fees both and in to And go-live were quarter, have which the came contracts drug XXXX. That as in year issues for of QX in call, in existing about of half in change overhang our margin the So QX well issue assessed sort QX, of assessment of obviously and the DIR the be but and clinic in impact the the the this in an with business dealing as sizable we're in we capitated our culminating margin obviously the plus won't the a improvement plus all DIR in was through million, all

seeing the in and significant So rest that's that where the pickup fairly to QX we're of QX year.

then really And on piece helpful. maybe so Dispensary That's just it. then. Got the Okay.

sort sort thought progression If ex the about QX getting you out same? it is DIR fair of fees perhaps margin that about a back core in on had that is Or like improving? some say, we DIR holding the it QX, still of margins looks that to of is and better, fees, little the

Yes. That's exactly right.

fees. So the factors as there's besides other well DIR

D improvement hit improvement margin Part expansion in improvement out So related hearing. rebate QX all in which There's margin back the to the in actual the QX, wash effects, in which to there's and which then business, of QX. year, business itself, in seasonality relating half additional additional our drive in

really cash on flows. quarter, Got it. guess Really change were I appreciate capital efforts moving I that you might me. helpful, impact your of reverse. entering in Dan. be How other in Last of got quarter. the some make didn't I the some thinking to forward burn I for had reverse was working want disruptions receivable Mihir, just to sure should comments the one thought It of the of about related commentary light some the we we seeing in right. that highlighted? you cash

in almost about state the which July. solely The from business, the California reversed So all medical -- about pharmacy has in state QX XX% impact due which is funds those in fiscal first in to been medical, was funds -- increase half related to AR of the weeks were its Change been which our year for Healthcare have of is end, of holding collected of where Rx, QX. X

was So to due funds its year. due holding timing to state's it fiscal

concludes you. teleconference. today's Thank This

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