The Oncology Institute, Inc. (NASDAQ: TOI) (“TOI” or the
“Company”), one of the largest value-based community oncology
groups in the United States, today reported financial results for
its three months ended March 31, 2024.
Recent Operational Highlights
Include:
- Successfully completed integration
of first capitated risk contract direct to a health plan, and
launched MSO model to enhance employed clinic locations, in the
Florida market, effective January 1, 2024
- Partnered with MaxHealth to expand
value-based care and assume clinical and financial responsibility
to patients in five Florida counties
- 7 new capitation and value-based
contracts signed across 3 states, our highest number ever in a
quarter
- Increase of 70% in scripts
dispensed compared to prior year quarter
- Welcomed Jordan McInerney as new
Chief Development Officer
- Hired 7 new providers in the
quarter and ended the quarter with 73 clinics and 126 employed
providers
First Quarter 2024 Financial
Highlights
- Consolidated revenue of $95
million, an increase of 24.2% from $76 million compared to the
prior year quarter
- Gross profit of $12 million, a
decrease of 15.1% compared to the prior year quarter, and gross
margin of 12.6%, a decrease from 18.5% the prior year quarter
- Net loss of $19.9 million compared
to net loss of $30.0 million for the prior year quarter
- Basic and diluted (loss) earnings
per share of $(0.22) and $(0.22), respectively, compared to $(0.33)
and $(0.33), respectively, for the prior year quarter
- Adjusted EBITDA of $(10.9) million
compared to $(7.4) million for the prior year quarter
- Cash, cash equivalents, and
short-term investments of $66 million as of March 31,
2024
First Quarter 2024 Results
Management Commentary
Daniel Virnich, CEO of TOI, commented, "I am
very pleased with our performance in the first quarter of 2024, as
we delivered strong growth in revenue, while further reducing
SG&A. Our full-risk capitated contract in South Florida is a
significant milestone for TOI and we are excited to prove our model
through this partnership. Our demonstrated ability to concurrently
grow top line through both new value-based partnerships and
expansion of our oral specialty drug business lays the groundwork
for continued success in 2024 and beyond."
Outlook for Fiscal Year
2024
TOI uses Adjusted EBITDA, a non-GAAP metric, as
an additional tool to assess its operational performance. See
"Financial Information: Non-GAAP Financial Measures" below. In
reliance on the unreasonable efforts exception provided under
Regulation S-K, TOI is not reasonably able to provide a
quantitative reconciliation for forward-looking information of
Adjusted EBITDA to net (loss) income, the most directly comparable
GAAP financial measure, without unreasonable efforts due to
uncertainties regarding taxes, share-based compensation, goodwill
impairment charges, change in fair value of liabilities, unrealized
(gains) losses on investments, practice acquisition-related costs,
consulting and legal fees, transaction costs and other non-cash
items. The variability of these items could have an unpredictable,
and potentially significant, impact on TOI’s future GAAP financial
results. TOI expects interest expense in the range of $4 million to
$5 million, other adjustment add backs in the range of $2 million
to $4 million, and depreciation and amortization in the range of $4
million to $6 million. Consequently TOI reaffirms its full year
2024 guidance as follows:
2024 Guidance |
Revenue |
$400 to $415 million |
Gross Profit |
$68 to $79 million |
Adjusted EBITDA |
$(8) to $(18) million |
|
|
TOI's achievement of the anticipated results is
subject to risks and uncertainties, including those disclosed in
its filings with the U.S. Securities and Exchange Commission. The
outlook does not take into account the impact of any unanticipated
developments in the business or changes in the operating
environment, nor does it take into account the impact of TOI's
acquisitions, dispositions or financings. TOI's outlook assumes a
largely reopened global market, which would be negatively impacted
if closures or other restrictive measures persist or are
reimplemented.
First Quarter 2024 Results
Consolidated revenue for Q1 2024 was $95
million, an increase of 24.2% compared to Q1 2023, and a 10.3%
increase compared to Q4 2023.
Revenue for patient services was $52 million, up
4.3% compared to Q1 2023. Growth in patient services revenue was
driven by an increase in capitated contracts entered into during
2023 and 2024 as well as growth in fee-for-service ("FFS") revenue
due to practice acquisitions and an overall increase in clinic
count. Dispensary revenue increased 63.7% compared to Q1 2023 due
to an increase in the number of filled prescriptions, offset by a
slight decrease in the average revenue per filled prescription.
Clinical trials & other revenue increased by 50.9% compared to
Q1 2023 primarily due to an increase in California Proposition 56
revenue and TOI Clinical Research revenue.
Gross profit in Q1 2024 was $12 million, a
decrease of 15.1% compared to Q1 2023. The decrease was primarily
driven by ongoing cost management fluctuations of oral and IV
drugs. Gross profit is calculated by subtracting direct costs of
patient services, dispensary, and clinical trials and other from
consolidated revenues.
Selling, general and administrative ("SG&A")
expenses in Q1 2024 were $28 million or 30.1% of revenue, compared
with $29 million, or 37.8% of revenue, in Q1 2023. During Q1 2024,
share-based compensation expense was $4 million. The decrease in
SG&A expenses was due to a re-alignment of our vendors.
Net loss for Q1 2024 was $19.9 million, an
increase of $10.1 million in income compared to Q1 2023 primarily
due to a goodwill impairment charge of $16.9 million in Q1 2023
that did not occur in Q1 2024, offset by a $4.2 million decrease in
the change in fair value of earnout and derivative liabilities in
Q1 2024 compared to Q1 2023.
Adjusted EBITDA was $(10.9) million, a decrease
of $3.6 million compared to Q1 2023, primarily as a result of a
change in the fair value of earnout and derivative liabilities and
goodwill impairment charges in Q1 2023 that did not occur in the
same quarter of the current year.
Webcast and Conference Call
TOI will host a conference call on Tuesday, May
14, 2024 at 5:00 p.m. (Eastern Time) to discuss first quarter
results and management’s outlook for future financial and
operational performance.
The conference call can be accessed live over
the phone by dialing 1-877-407-0789, or for international callers,
1-201-689-8562. A replay will be available two hours after the call
and can be accessed by dialing 1-844-512-2921, or for international
callers, 1-412-317-6671. The passcode for the live call and the
replay is 13744947. The replay will be available until May 21,
2024.
Interested investors and other parties may also
listen to a simultaneous webcast of the conference call by logging
onto the Investor Relations section of TOI's website at
https://investors.theoncologyinstitute.com.
About The Oncology Institute,
Inc.
Founded in 2007, TOI is advancing oncology by
delivering highly specialized, value-based cancer care in the
community setting. TOI offers cutting-edge, evidence-based cancer
care to a population of approximately 2.0 million patients
including clinical trials, transfusions, and other services
traditionally associated with the most advanced care delivery
organizations. With nearly 130 employed clinicians and more than
700 teammates in over 70 clinic locations and growing, TOI is
changing oncology for the better. For more information visit
www.theoncologyinstitute.com.
Forward-Looking Statements
This press release includes certain statements
that are not historical facts but are forward-looking statements
for purposes of the safe harbor provisions under the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements generally are accompanied by words such as
“preliminary,” “believe,” “may,” “will,” “estimate,” “continue,”
“anticipate,” “intend,” “expect,” “should,” “would,” “plan,”
“project,” “predict,” “potential,” “guidance,” “approximately,”
“seem,” “seek,” “future,” “outlook,” and similar expressions that
predict or indicate future events or trends or that are not
statements of historical matters. These forward-looking statements
include, but are not limited to, statements regarding projections,
anticipated financial results, estimates and forecasts of revenue
and other financial and performance metrics and projections of
market opportunity and expectations. These statements are based on
various assumptions and on the current expectations of TOI and are
not predictions of actual performance. These forward-looking
statements are provided for illustrative purposes only and are not
intended to serve as, and must not be relied on by anyone as, a
guarantee, an assurance, a prediction or a definitive statement of
fact or probability. Actual events and circumstances are difficult
or impossible to predict and will differ from assumptions. Many
actual events and circumstances are beyond the control of TOI.
These forward-looking statements are subject to a number of risks
and uncertainties, including the accuracy of the assumptions
underlying the 2024 outlook discussed herein, the outcome of
judicial and administrative proceedings to which TOI may become a
party or investigations to which TOI may become or is subject that
could interrupt or limit TOI’s operations, result in adverse
judgments, settlements or fines and create negative publicity;
changes in TOI’s patient or payors' preferences, prospects and the
competitive conditions prevailing in the healthcare sector; failure
to continue to meet stock exchange listing standards; the impact of
COVID-19 on TOI’s business; those factors discussed in the
documents of TOI filed, or to be filed, with the SEC, including the
Item 1A. "Risk Factors" section of TOI's Annual Report on Form 10-K
for the year ended December 31, 2023 filed with the SEC on March
28, 2024 and any subsequent Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K. If the risks materialize or
assumptions prove incorrect, actual results could differ materially
from the results implied by these forward-looking statements. There
may be additional risks that TOI currently is evaluating or does
not presently know or that TOI currently believes are immaterial
that could also cause actual results to differ from those contained
in the forward-looking statements. In addition, forward-looking
statements reflect TOI’s plans or forecasts of future events and
views as of the date of this press release. TOI anticipates that
subsequent events and developments will cause TOI’s assessments to
change. TOI does not undertake any obligation to update any of
these forward-looking statements. These forward-looking statements
should not be relied upon as representing TOI’s assessments as of
any date subsequent to the date of this press release. Accordingly,
undue reliance should not be placed upon the forward-looking
statements.
Financial Information; Non-GAAP
Financial Measures
Some of the financial information and data
contained in this press release, such as Adjusted EBITDA, have not
been prepared in accordance with United States generally accepted
accounting principles (“GAAP”). TOI’s non-GAAP financial measures
may be different from non-GAAP financial measures used by other
companies. The presentation of non-GAAP financial measures is not
intended to be considered in isolation or as a substitute for, or
superior to, financial measures determined in accordance with GAAP.
Because of the limitations of non-GAAP financial measures, you
should consider the non-GAAP financial measures presented in this
press release in conjunction with TOI’s financial statements and
the related notes thereto.
TOI believes that the use of Adjusted EBITDA
provides an additional tool to assess operational performance and
results of our performance to plan and forecast future periods, and
factors and trends in, and in comparing our financial measures
with, other similar companies, many of which present similar
non-GAAP financial measures to investors. The principal limitation
of Adjusted EBITDA is that it excludes significant expenses and
income that are required by GAAP to be recorded in TOI's financial
statements.
TOI defines Adjusted EBITDA as net (loss) income
plus depreciation, amortization, interest, taxes, non-cash items,
share-based compensation, goodwill impairment charges, change in
fair value of liabilities, unrealized gains or losses on
investments and other adjustments to add-back the following:
consulting and legal fees related to acquisitions, one-time
consulting and legal fees related to certain advisory projects,
software implementations and debt or equity financings, severance
expense and temporary labor and recruiting charges to build out our
corporate infrastructure. A reconciliation of Adjusted EBITDA to
net loss, the most comparable GAAP metric, is set forth below.
|
Adjusted EBITDA Reconciliation |
|
Three Months Ended March 31, |
|
Change |
(dollars in thousands) |
2024 |
|
2023 |
|
$ |
|
% |
Net loss |
$ |
(19,889 |
) |
|
$ |
(29,998 |
) |
|
$ |
10,109 |
|
|
(33.7 |
)% |
Depreciation and amortization |
|
1,489 |
|
|
|
1,269 |
|
|
|
220 |
|
|
17.3 |
% |
Interest expense, net |
|
1,985 |
|
|
|
1,443 |
|
|
|
542 |
|
|
37.6 |
% |
Income tax expense |
|
— |
|
|
|
(26 |
) |
|
|
26 |
|
|
(100.0 |
)% |
Non-cash addbacks(1) |
|
(39 |
) |
|
|
141 |
|
|
|
(180 |
) |
|
(127.7 |
)% |
Share-based compensation |
|
4,087 |
|
|
|
4,965 |
|
|
|
(878 |
) |
|
(17.7 |
)% |
Goodwill impairment charges |
|
— |
|
|
|
16,867 |
|
|
|
(16,867 |
) |
|
(100.0 |
)% |
Changes in fair value of liabilities |
|
— |
|
|
|
(4,214 |
) |
|
|
4,214 |
|
|
(100.0 |
)% |
Unrealized (gains) losses on investments |
|
(82 |
) |
|
|
(143 |
) |
|
|
61 |
|
|
(42.7 |
)% |
Practice acquisition-related costs(2) |
|
— |
|
|
|
16 |
|
|
|
(16 |
) |
|
(100.0 |
)% |
Post-combination compensation expense(3) |
|
130 |
|
|
|
581 |
|
|
|
(451 |
) |
|
(77.6 |
)% |
Consulting and legal fees(4) |
|
176 |
|
|
|
585 |
|
|
|
(409 |
) |
|
(69.9 |
)% |
Infrastructure and workforce costs(5) |
|
1,185 |
|
|
|
1,143 |
|
|
|
42 |
|
|
3.7 |
% |
Transaction costs(6) |
|
18 |
|
|
|
8 |
|
|
|
10 |
|
|
125.0 |
% |
Adjusted EBITDA |
$ |
(10,940 |
) |
|
$ |
(7,363 |
) |
|
$ |
(3,577 |
) |
|
48.6 |
% |
(1) |
During the three months ended March 31, 2024, non-cash addbacks
were primarily comprised of non-cash rent of $51 and net credit
losses of $12. During the three months ended March 31, 2023,
non-cash addbacks were primarily comprised of net credit losses of
$1 and non-cash rent of $140. |
(2) |
Practice acquisition-related costs were comprised of consulting and
legal fees incurred to perform due diligence, execute, and
integrate acquisitions of various oncology practices. |
(3) |
Deferred consideration payments for practice acquisitions that are
contingent upon the seller’s future employment at the Company. |
(4) |
Consulting and legal fees were comprised of a subset of the
Company’s total consulting and legal fees, and related to certain
advisory projects during the three months ended March 31, 2024.
During the three months ended March 31, 2023, these fees related to
advisory projects and software implementations. |
(5) |
Infrastructure and workforce costs were comprised of recruiting
expenses to build out corporate infrastructure of $376 and $462,
software implementation fees of $16 and $29, severance expenses
resulting from cost rationalization programs of $10 and $15,
temporary labor of $252 and $568, and legal fees related to
infrastructure build out of $529 and $0 during the three months
ended March 31, 2024 and 2023, respectively. |
(6) |
Transaction costs incurred during the three months ended March 31,
2024 and 2023 were comprised of consulting, legal, administrative
and regulatory fees associated with non-recurring due diligence
projects. |
|
|
Key Business Metrics |
|
Three Months Ended March 31, |
|
2024 |
|
2023 |
Clinics (1) |
|
87 |
|
|
|
77 |
|
Markets |
|
14 |
|
|
|
15 |
|
Lives under value-based contracts (millions) |
|
2.0 |
|
|
|
1.8 |
|
Net loss |
$ |
(19,889 |
) |
|
$ |
(29,998 |
) |
Adjusted EBITDA (in thousands) |
$ |
(10,940 |
) |
|
$ |
(7,363 |
) |
(1) |
Includes independent oncology practices to which we provide limited
management services, but do not bear the operating costs. |
|
|
Consolidated Balance Sheets
(Unaudited) (in thousands except share data)
|
March 31, 2024 |
|
December 31, 2023 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
36,055 |
|
|
$ |
33,488 |
|
Marketable securities |
|
29,777 |
|
|
|
49,367 |
|
Accounts receivable, net |
|
58,760 |
|
|
|
42,360 |
|
Other receivables |
|
368 |
|
|
|
551 |
|
Inventories |
|
11,554 |
|
|
|
13,678 |
|
Prepaid expenses and other current assets |
|
4,678 |
|
|
|
4,049 |
|
Total current assets |
|
141,192 |
|
|
|
143,493 |
|
Property and equipment, net |
|
10,995 |
|
|
|
10,883 |
|
Operating right of use assets |
|
27,416 |
|
|
|
29,169 |
|
Intangible assets, net |
|
17,131 |
|
|
|
17,904 |
|
Goodwill |
|
7,230 |
|
|
|
7,230 |
|
Other assets |
|
568 |
|
|
|
561 |
|
Total assets |
$ |
204,532 |
|
|
$ |
209,240 |
|
Liabilities and stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
21,015 |
|
|
$ |
14,429 |
|
Current portion of operating lease liabilities |
|
6,390 |
|
|
|
6,363 |
|
Accrued expenses and other current liabilities |
|
18,363 |
|
|
|
13,996 |
|
Total current liabilities |
|
45,768 |
|
|
|
34,788 |
|
Operating lease liabilities |
|
25,060 |
|
|
|
26,486 |
|
Derivative warrant liabilities |
|
636 |
|
|
|
636 |
|
Conversion option derivative liabilities |
|
3,082 |
|
|
|
3,082 |
|
Long-term debt, net of unamortized debt issuance costs |
|
88,385 |
|
|
|
86,826 |
|
Other non-current liabilities |
|
273 |
|
|
|
365 |
|
Deferred income taxes liability |
|
32 |
|
|
|
32 |
|
Total liabilities |
|
163,236 |
|
|
|
152,215 |
|
Stockholders’ equity: |
|
|
|
Common Stock, 0.0001 par value, authorized 500,000,000 shares;
76,046,694 and 75,879,025 shares issued and outstanding at
March 31, 2024 and December 31, 2023 |
|
8 |
|
|
|
8 |
|
Series A Convertible Preferred Stock, 0.0001 par value, authorized
10,000,000 shares; 165,045 shares issued and outstanding at
March 31, 2024 and December 31, 2023 |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
208,346 |
|
|
|
204,186 |
|
Treasury Stock at cost, 1,733,774 shares at March 31, 2024 and
December 31, 2023 |
|
(1,019 |
) |
|
|
(1,019 |
) |
Accumulated deficit |
|
(166,039 |
) |
|
|
(146,150 |
) |
Total stockholders’ equity |
|
41,296 |
|
|
|
57,025 |
|
Total liabilities and stockholders’ equity |
$ |
204,532 |
|
|
$ |
209,240 |
|
|
|
|
|
|
|
|
|
Consolidated Statements of Operations
(Unaudited) (in thousands except share data)
|
Three Months Ended March 31, |
|
2024 |
|
2023 |
Revenue |
|
|
|
Patient services |
$ |
52,453 |
|
|
$ |
50,273 |
|
Dispensary |
|
39,679 |
|
|
|
24,240 |
|
Clinical trials & other |
|
2,534 |
|
|
|
1,679 |
|
Total operating revenue |
|
94,666 |
|
|
|
76,192 |
|
Operating expenses |
|
|
|
Direct costs – patient services |
|
49,497 |
|
|
|
42,814 |
|
Direct costs – dispensary |
|
32,809 |
|
|
|
19,145 |
|
Direct costs – clinical trials & other |
|
391 |
|
|
|
134 |
|
Goodwill impairment charges |
|
— |
|
|
|
16,867 |
|
Selling, general and administrative expense |
|
28,452 |
|
|
|
28,830 |
|
Depreciation and amortization |
|
1,489 |
|
|
|
1,269 |
|
Total operating expenses |
|
112,638 |
|
|
|
109,059 |
|
Loss from operations |
|
(17,972 |
) |
|
|
(32,867 |
) |
Other non-operating expense (income) |
|
|
|
Interest expense, net |
|
1,985 |
|
|
|
1,443 |
|
Change in fair value of derivative warrant liabilities |
|
— |
|
|
|
(143 |
) |
Change in fair value of earnout liabilities |
|
— |
|
|
|
(752 |
) |
Change in fair value of conversion option derivative
liabilities |
|
— |
|
|
|
(3,318 |
) |
Other, net |
|
(68 |
) |
|
|
(143 |
) |
Total other non-operating (income) loss |
|
1,917 |
|
|
|
(2,913 |
) |
Loss before provision for income taxes |
|
(19,889 |
) |
|
|
(29,954 |
) |
Income tax expense |
|
— |
|
|
|
(44 |
) |
Net loss |
$ |
(19,889 |
) |
|
$ |
(29,998 |
) |
Net loss per share attributable to common
stockholders: |
|
|
|
Basic |
$ |
(0.22 |
) |
|
$ |
(0.33 |
) |
Diluted |
$ |
(0.22 |
) |
|
$ |
(0.33 |
) |
Weighted-average number of shares
outstanding: |
|
|
|
Basic |
|
74,234,287 |
|
|
|
73,449,132 |
|
Diluted |
|
74,234,287 |
|
|
|
73,449,132 |
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows
(Unaudited) (in thousands)
|
Three Months Ended March 31, |
|
2024 |
|
2023 |
Cash flows from operating activities: |
|
|
|
|
|
Net loss |
$ |
(19,889 |
) |
|
$ |
(29,998 |
) |
Adjustments to reconcile net loss to cash and cash equivalents used
in operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
1,489 |
|
|
1,269 |
|
Amortization of debt issuance costs and debt discount |
1,559 |
|
|
1,523 |
|
Goodwill impairment charges |
— |
|
|
16,867 |
|
Share-based compensation |
4,087 |
|
|
4,965 |
|
Change in fair value of liability classified warrants |
— |
|
|
(143 |
) |
Change in fair value of liability classified earnouts |
— |
|
|
(752 |
) |
Change in fair value of liability classified conversion option
derivatives |
— |
|
|
(3,318 |
) |
Unrealized gain on investments |
(85 |
) |
|
(143 |
) |
Accretion of discount on investment securities |
(324 |
) |
|
(920 |
) |
Deferred taxes |
— |
|
|
(26 |
) |
Credit losses |
— |
|
|
1 |
|
Loss on disposal of property and equipment |
12 |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
(16,400 |
) |
|
(6,141 |
) |
Other receivables |
183 |
|
|
189 |
|
Inventories |
2,124 |
|
|
(993 |
) |
Prepaid expenses |
(629 |
) |
|
(24 |
) |
Operating right-of-use assets |
1,753 |
|
|
1,400 |
|
Other assets |
(7 |
) |
|
(50 |
) |
Accounts payable |
6,357 |
|
|
2,574 |
|
Current and long-term operating lease liabilities |
(1,399 |
) |
|
(1,243 |
) |
Accrued expenses and other current liabilities |
5,368 |
|
|
(805 |
) |
Other non-current liabilities |
(82 |
) |
|
316 |
|
Net cash and cash equivalents used in operating
activities |
(15,883 |
) |
|
(15,452 |
) |
Cash flows from investing activities: |
|
|
|
|
|
Purchases of property and equipment |
(610 |
) |
|
(1,839 |
) |
Purchases of marketable securities/investments |
— |
|
|
(9,759 |
) |
Sales of marketable securities/investments |
19,998 |
|
|
29,999 |
|
Net cash and cash equivalents provided by investing
activities |
19,388 |
|
|
18,401 |
|
Cash flows from financing activities: |
|
|
|
|
|
Payments made for financing of insurance payments |
(1,002 |
) |
|
(1,282 |
) |
Payment of deferred consideration liability for acquisition |
— |
|
|
(409 |
) |
Principal payments on financing leases |
(9 |
) |
|
(18 |
) |
Common stock issued for options exercised |
73 |
|
|
— |
|
Net cash and cash equivalents used in financing
activities |
(938 |
) |
|
(1,709 |
) |
Net increase in cash and cash equivalents |
2,567 |
|
|
1,240 |
|
Cash and cash equivalents at beginning of
period |
33,488 |
|
|
14,010 |
|
Cash and cash equivalents at end of period |
$ |
36,055 |
|
|
$ |
15,250 |
|
|
|
|
|
|
|
|
|
Contacts
Media
The Oncology Institute, Inc. Daniel Virnich, MD
danielvirnich@theoncologyinstitute.com (562) 735-3226 x 81125
Revive Michael Petrone mpetrone@reviveagency.com
(615) 760-4542
Investors
Solebury Strategic Communications
investors@theoncologyinstitute.com
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