Oncology Institute, Inc. Reports Robust Q3 Earnings

Oncology Institute, Inc. ((TOI)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call of Oncology Institute, Inc. (TOI) conveyed a strong positive sentiment, highlighting robust financial performance and strategic advancements. The company reported significant revenue growth and improvements in adjusted EBITDA, alongside successful expansion efforts, particularly in Florida. Despite challenges such as a cybersecurity incident and a one-time reserve impact, the positives, including increased guidance, substantially outweighed the negatives.

Revenue Growth

In the third quarter, TOI achieved a remarkable revenue of $137 million, marking a 23% increase compared to the previous year. This growth was driven by a 42% surge in the Pharmacy business and a 13% year-over-year growth in the fee-for-service business.

Pharmacy Business Success

The Pharmacy segment of TOI recorded a stellar performance, with revenue increasing by 57.4% year-over-year. This success was attributed to higher prescription volumes and improved pharmacy attachment, underscoring the segment’s robust growth trajectory.

Adjusted EBITDA Improvement

TOI reported an adjusted EBITDA loss of $3.5 million for Q3, a significant improvement of $4.7 million compared to the same quarter last year. Notably, the company achieved its first adjusted EBITDA profitability in September, marking a pivotal moment in its financial journey.

Expansion in Florida

TOI made significant strides in Florida, expanding its Medicare Advantage lives and opening a new pharmacy location in collaboration with Elevance Health. This expansion underscores the company’s strategic focus on growth in key markets.

AI Enablement Efforts

The introduction of AI in revenue cycle management and patient call centers has been a game-changer for TOI. By reducing submission time from 18 minutes to 5 seconds, the company expects to save over $2 million in operating expenses, showcasing its commitment to operational efficiency.

Increased Guidance for 2025

TOI raised its full-year revenue guidance to $495-505 million and improved its adjusted EBITDA loss guidance to a range of negative $13 million to negative $11 million. This optimistic outlook reflects the company’s confidence in its continued growth and strategic initiatives.

Cybersecurity Incident

A cybersecurity incident at a key vendor temporarily affected TOI’s billing and practice management systems, causing a disruption in billing for fee-for-service claims. Despite this challenge, the company remains focused on strengthening its cybersecurity measures.

Adjusted EBITDA Still Negative

Despite the improvements, TOI’s adjusted EBITDA for Q3 remained negative at $3.5 million. However, the company is optimistic about achieving profitability in the near future.

One-Time Reserve Impact

TOI recorded a $1.8 million reserve against fee-for-service revenue due to potential future bad debt, impacting the reported adjusted EBITDA. This one-time impact highlights the company’s prudent financial management.

Forward-Looking Guidance

TOI’s forward-looking guidance is optimistic, with expectations of achieving profitability in Q4 and becoming free cash flow positive by 2026. The company anticipates a 29% increase in capitated revenue for the full year compared to 2024, supported by new capitation contracts expected to contribute $19 million in revenue. These projections underscore TOI’s strategic growth initiatives and operational efficiencies.

In summary, the earnings call of Oncology Institute, Inc. highlighted a strong financial performance and strategic advancements, with significant revenue growth and improvements in adjusted EBITDA. Despite challenges such as a cybersecurity incident and a one-time reserve impact, the company’s increased guidance and strategic initiatives indicate a positive outlook. TOI’s commitment to operational efficiency and expansion in key markets positions it well for future growth.