David Larson's questions to Oncology Institute Inc (TOI) leadership • Q2 2025
Question
David Larson of BTIG inquired about the drivers of the significant increase in dispensing gross margin, the impact of drug pricing reform, potential single-drug concentration risks, the cause of pressure on patient service gross margin, and the specifics of TOI's 'fully delegated' risk arrangements.
Answer
CFO Rob Carter explained that the year-over-year dispensing margin comparison was favorably impacted by a DARP clawback in the prior year, but even normalized, margins improved due to better drug procurement from increased scale. CEO Dan Vernick clarified these were Part D drugs and stated that drug pricing reform is viewed as a net positive. Mr. Vernick also confirmed there is no significant single-drug risk in their portfolio. Mr. Carter attributed patient service margin pressure to the initial, lower-margin phase of new capitated contracts, which he expects to improve. Finally, Mr. Vernick detailed that 'fully delegated' risk involves TOI managing utilization, network design, and claims for Part B oncology spend, providing greater control without taking on global risk.