American Oncology Network (AONC) 28 Mar 242023 Q4 Earnings call transcript

Good morning, and welcome to American Oncology Network's Fourth Quarter and Full Year 2023 Earnings Conference Call. Today's call is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Dave Gould, Chief Financial Officer at AON. Thank you, and you may begin.

Good morning everyone and thank you for joining us to discuss American Oncology Network's fourth quarter and full year results.

would include remind forward-looking we conference that begin, may call statements. we like you to this Before These statements, differ which and -- assumptions are these subject to cause from actual various our results to statements. materially those could from risks, uncertainties in website and well release at filings the investors.aoncology.com. detailed our be can morning's SEC, press These risks, which are found this uncertainties with assumptions as as on our statements no We law. revise or forward-looking information to any by except obligation undertake update required as or

information reference be also press this its certain presented and to financial of non-GAAP During intended net a our GAAP non-GAAP will call not be we as or they measures which the as Reconciliations from considered in we as our isolation measures, accordance such for of the derived morning's information to substitute income. measures believe can The EBITDA, GAAP supplement are closest non-GAAP release filing. adjusted with believe and non-GAAP today, information, GAAP. presentation measure they financial useful SEC's we and financial investors. We to is in use in prepared is GAAP found our

the our Schonherz. CEO, today me call Todd Joining on is

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

Thank quarter us everyone. and you, Dave. call. Thank fourth Good joining on full earnings our morning you for year XXXX

the results, off encounters ended the we the we patient in prior strong build from of full year and platform to Operationally, in XXXX. practices We addition year are our our year. that benefited pleased very a position integrated onboarded and with several increased in care

strategic our continue to growth quarter, fourth plan great make the we progress to executing priorities. and Turning

over platform year. new the AON the added providers we XX and quarter, the full During to XX

to limited significant enhanced preserve ensures that with As we've are community practices remain a by oncology long-term. ensuring located markets lifeline AON provide remain practices our in end, to viable our Arkansas an of practices in have new of solution the existing we remain XXXX, is entered before, competitive including that much in the oncologists a presence In competitive markets to to in expanded Texas markets, with access our and year. resources capacity for and markets and our our and also services Georgia and strategic number that needed discussed the the of model during care. To the Florida. community we

The network patients our We and growth have been to which the over are immediately past provides unique, platform ability benefit able in in novel and of we care better as our population well excited integrated ongoing practices we the the providers. advantages the in year the is operate. All to and serve to as number that patient national a that operate acquired states true about physician from platform. we quarter that a we've in built

M&A Our key administrative integrated our our which as services, centralized specialty reduce and pipeline care. value operations in-house straightforward our economics, lab support longer strategy. differentiators well helps drive allow important, and technology physicians on like what high-quality most better include to practice clinical This to is growth but delivering as our pharmacy and platform, burden and term differentiated proposition patient fuel focus

services. of in and growth we the can we've the achieved positive strategic quarter to providers the already made the to our We I efforts generated progress very driving starting XX results business am accretive the of of ancillary as initiatives. forward proud during the and also the growth year. addition these investments pay the we quarter infrastructure our clinical made this our of by our the markets, utilization services in see year-over-year of development expansion are demonstrated starting during We of through our first and appropriate see dividends

one being the the Enhancing be to participate called cancer by practices in is only in which of CMS' Oncology programs transformative demonstrated for payment country continue care, alternative We program XX leader Model. the to in payment

together clinical made as note implementation us our cycle We the system investments of new new that very the that the also our as care our and us to allowed health to cycle for this am team implementation management research well players is many quarter during recent have revenue of platform trial deploying demand. proud the we've navigate I have platform, revenue outages new everything in enterprise has expanding successfully well plagued It important industry. All-in-all, platform, a achieved of year. our positioning future including in

providers option for urologists and to times our of outcomes offering XX patients foremost, new by pharmacy for challenging creating network, lives. our almost of X of experiences states $X.X we've offerings and billion, We the top line increase Growth most during their revenues addition the an as optimal strategic for service of XX%. a First and option new an of expanded the record the well achieved MSA now as platform. join

multimillion-dollar offerings expanding made infrastructure and and business oncology in way to almost in cost-effective We in demonstrated Since from fifth this been we billion inception then successfully XXXX. have a the and anniversary We've landscape September. platform. by our highly strategy, scalable care in successful past founding, celebrated integrated growing disrupting $X.X our service in company community growing publicly-traded existing our a have the XXXX our investments became finally, our September. And we

Columbia with XX patients the cutting-edge United to XXX the delivery partner spanning plus high-quality care providers of District Today, of States. states across XX sites across cancer we to service, the ensure over of

pipeline on continue are We to efficiencies maximize momentum our our to continue in XXXX, execute excited our and robust opportunities. of improve growth,

over more results. Dave detail the to Now, I'll financial provide our to on turn call

is to evaluate quarterly to result want our key Growth of after encounter. in of a outside based our it to the business. cost performance report practices financial important they highlight and AON's per I communities that the metrics, we platform, to live. cohorts even our continue the we highest efforts framework the on growth encounters, it as where in everyone quality how the revenue marketing on deliver of joint metrics key providers of outreach. we and remind basis Todd. basis metrics annual This The those the Thanks, and statement patient core with per encounter care our patients of where ability as demonstrates years need make grow community demonstrates our and join a

of we upgrade revenue billing AthenaIDX out to Operationally, our cycle completed October claims X, system system XXXX. and on began this

to restored feeds a the within and react of XX% Healthcare and benefits such We have information improved Change efficiently we during outage to the of we already the had quickly reach, related no seen that week. access, patient as able technology are were our affected the

period $XX.X X.X% dive attributable $XXX.X concessions legacy revenue XX, $X.X December resulting part period driving increase. drove associated incremental primarily an in patient of in by receivable with for to X.X%, a was decrease per quarterly XXXX of million was of Revenue million to Now from $XX.X of patient the some $XX.X $X.X the into the results. encounter for which growth compared of let's decrease increase X-month periods, million XXXX, was X million a price encounters X.X%. The increased and revenue revenues. This revenue implicit comparable million system. billing months was as approximately accounts in million offset million XX, primarily The between or increase ended ended $XXX.X the overall December decrease

cost million XXXX. of in of cost During to $XXX.X $XX.X and cost of driven by driven costs, the encounter. revenue revenue $XX.X of of cost The cost of primarily patients QX $XXX.X encounter due as drug million, increase was and increased a and encounters we encounters drug per $XX patient million supply costs required. increased per mix fourth was volume by a drove patient encounters from The medical million to while increased increased the service increase. by as The increased drug combination patient supply the quarter, well higher experienced and million

$X.X related revenue and XX, million of due $X or to of higher XX%, measures year from acquisitions primarily increase remaining adjusted into to quarter entered EBITDA. can financial million $X of drug non-GAAP fourth on during compared on was for The as million the decrease information fourth EBITDA million cost of Adjusted -- costs. supply ended a you keep for for XXXX, $X quarter see the the And costs to of and agreements more December affiliate drug XXXX. XXXX for

and million incremental and of comprised that Moving $XXX.X At liquidity the our the of of of cash of liquidity. on million have. under capacity $X under end $XX.X PNC balance Credit sheet of Line $XX.X Facility of the the of cash marketable equivalents had incremental $XX.X total securities to and borrowing capacity million we PNC short-term we fourth borrowing quarter, million, million,

back the Credit to at PNC under We also the PNC was Loan now turn for undrawn. I'll $XX.X it X.X% outstanding of closing Facility approximately some debt of Line and remarks. million Todd bearing interest had

all we proud percentage accomplished year-over-year, Dave. of X.X% I areas, The saw To recap, of growth visits including you, this year. that past growth visit patient across including growth quarter-over-quarter top business organization X.X% and $XXX.X line growth. million Thank same-store in double-digit am all strong

our us company, to to a position of to public platform transitioning the to continued investments significant addition organization industry-leading In make in success. for services future

the and better true open line I'll of oncology we the successfully any the it choice only excited them that, national turn grow questions. to community their operator be for treat over in the practices, are destination oncology to enabling As platform, to community. With patients to for

Benchmark question Company. first The go line of comes the the Please Instructions] ahead. Sutherland with Bill [Operator from

Just the about prices, of direction a this the was drug backdrop year. last wondering the given couple the of margin really. cetera, I higher year, EBITDA et

given strategies, a directionally, as They're continue the direction the on company industry. is purchasing overall in So too we're far manage et GPO growth through to haven't good feel strategies, try much we But Margins, that. concerned. cetera. yet a the like for definitely of to we heading challenge guidance we as

year, we're guidance yet we through see as expect margins of giving grow, scale to expand GPO. the rest Unfortunately, economies not for However, with we though. the our of just

regimens just this -- the in the care, an in able obviously of some full the them reflect they move up is issue cost of cost of not of So cost? being as to

just I pricing them. the the right? of of costs. if reimbursement a pricing So your trying and you increased No, think optimize lag margins, between I It's the to, capturing the drug we're there's way really think the matter all guess, about a works,

of forward as what a example So to have manage et that purchasing, strategy. doing do cetera, one to lag you try by is

And not good by we're a to constrained the opportunities lot end sometimes are get the opportunities other And of ROIs do We're the able those fact purchases. quarter. that. at on that we those available have just times, to of

today? you. M&A there is levels buyers, Got competition looking from environment cetera? private equity, particularly increasing What financial Is et like the of

Bill, Todd Hey, it's Schonherz.

the the organizations that differentiates and model during unique a shared we from that we as think other there remarks, are AON out very aggregators we have I today. think other

that out AON optimistic fairly will continue remain choice. itself So ultimately of be to and the we destination differentiate there

I of XXXX. comments, added As grow during to growth. a as had it see it a we business shared continue expect into to the already, providers pipeline we We've robust number our fairly good continue relates to and and development to QX very

And you what AON last I call about then model. curious was your Okay. one, light

a you kind what plan If color your that? of on provide could just for little is

pharmacy The focused practices to oncology offering lighter but on Good with Yes. within thank groups. is pharmacy to primarily us community community scale extend these AON allows service activities model. MSA size limited of what oncology question, AON really our you. and the we supporting This a consider

MSA you how financially, that does an number? It's all? just work kind And for of

Yes.

scale total that think about MSA practices opportunity economies the and purchasing, -- opportunity you're think I whole it I practices is when advantage comes Dave, it's work without opportunity of practice. taking our an a with This cetera, there the MSAs, to practices our full not thinking to to the as because smaller for of meet it's leverage well. actually and running quite with gives suite et of Bill, new

pipeline. So creates

Okay.

your for it. Thanks questions. Appreciate Bill

Thank concludes teleconference. today's you. This

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