Oncology Institute, Inc. ((TOI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Oncology Institute, Inc. conveyed an optimistic sentiment, highlighting robust revenue growth and significant expansion in capitated contracts. Despite facing some challenges, such as an adjusted EBITDA loss and a sequential gross margin decline, the company remains confident in its strategic focus on leadership, technology, and pharmacy business growth, which positions it favorably for the future.
Strong Revenue Growth
The Oncology Institute reported a remarkable year-over-year revenue growth of more than 20%, with second-quarter revenue reaching $120 million. This growth was primarily driven by record performances in the pharmacy business and a 10% increase in the fee-for-service business, showcasing the company’s strong market position and operational efficiency.
Capitated Contract Expansion
The company achieved significant milestones in expanding its capitated contracts, adding over 50,000 capitated lives in Nevada and California. This expansion includes 49,000 Medicaid patient lives in Nevada, reflecting the company’s successful strategy in broadening its partnerships and enhancing its value-based care offerings.
Pharmacy Business Growth
Oncology Institute’s pharmacy business demonstrated impressive growth, with over 40% increase in Q2 compared to the same period in 2024. The company forecasts a continuation of this trend, expecting over 35% growth for the full year, underscoring the pharmacy segment’s critical role in the company’s overall growth strategy.
SG&A Reduction
The company reported a 3.5% decrease in SG&A expenses year-over-year, amounting to $26.9 million in Q2. When normalizing for one-time items, SG&A would have decreased by 12%, highlighting the company’s focus on cost management and operational efficiency.
Positive Adjusted EBITDA Outlook
Despite an adjusted EBITDA loss of $4.1 million in Q2, the company remains optimistic about achieving positive adjusted EBITDA by the fourth quarter of 2025. This outlook is supported by ongoing improvements in operational discipline and organic growth.
Leadership and Technology Enhancements
Oncology Institute has introduced new leadership roles and launched AI initiatives aimed at driving transformation and reducing operational expenses. These enhancements are expected to play a pivotal role in the company’s strategic growth and efficiency improvements.
Adjusted EBITDA Loss
The adjusted EBITDA loss of $4.1 million in Q2 represents an improvement compared to the previous year, indicating progress in the company’s financial health and operational strategies.
Gross Margin Decline
The company experienced a sequential gross margin decline of approximately 190 basis points, attributed to the absence of a one-time rebate from Q1. This decline highlights the challenges faced in maintaining margin stability amidst fluctuating operational conditions.
Forward-Looking Guidance
During the earnings call, Oncology Institute reiterated its guidance for 2025, projecting revenue between $460 million and $480 million and an adjusted EBITDA loss between $17 million and $8 million. The company anticipates achieving positive adjusted EBITDA in the fourth quarter, with sequential revenue growth expected in Q3 and Q4, reflecting a strong outlook for continued financial improvement.
In summary, the earnings call for Oncology Institute, Inc. presented a predominantly positive outlook, with strong revenue growth and strategic expansions in capitated contracts. Despite some challenges, the company’s focus on leadership, technology, and pharmacy business growth positions it well for future success. The forward-looking guidance further underscores the company’s confidence in achieving its financial targets and delivering value to stakeholders.