Oncology Institute, Inc. (TOI)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue grew 10.3% year over year to $104.4M, with gross profit up 44.1% to $17.2M, driven by dispensary growth (+24.2% YoY) and a one-time drug supplier rebate; adjusted EBITDA improved to $(5.1)M versus $(10.9)M last year .
• Management reaffirmed FY 2025 guidance: revenue $460–$480M, gross profit $73–$82M, adjusted EBITDA $(8)–$(17)M, free cash flow $(12)–$(21)M; provided Q2 adjusted EBITDA loss guide of $(4)–$(5)M and reiterated an aim for positive adjusted EBITDA and cash flow in Q4 2025 .
• Strategic contracting momentum: first fully-delegated Florida capitation agreement launched March 1; new Nevada capitation adds >80k Medicaid lives from July 1; multiple Q1 wins add >100k lives overall, with an annualized ~$50M revenue contribution expected from recent capitation contracts .
• Liquidity strengthened: $16.5M private placement and $4.1M debt-for-equity exchange; $20M debt paydown in Q1 removed the minimum cash covenant, supporting working capital and growth priorities .
• Near-term stock catalysts: execution on delegated capitation in Florida and Nevada, continued dispensary margin stability post-DIR changes, and progress toward Q4 EBITDA/cash flow breakeven .

What Went Well and What Went Wrong

What Went Well

• Dispensary/retail pharmacy set fill records: $49.3M revenue and >$9M gross profit in Q1; segment up >20% YoY, supporting margin expansion .
• SG&A discipline: SG&A fell to $25.4M (24.3% of revenue) versus $28.5M (30.1%) last year, lowering operating loss to $(9.9)M from $(18.0)M .
• Value-based contracting momentum: launched first fully-delegated Florida capitation (utilization management, claims, network) and signed Nevada capitation adding >80k Medicaid lives (effective July 1); additional >100k lives across four Q1 agreements .

Management quotes:

• “We are executing against a near-term path to sustained cash flow positivity and profitability in the second half of 2025.”
• “Anticipated new capitation contracts in the first half of 2025 are projected to add approximately $50 million in new revenue on an annualized basis.”
• “We remain on track to deliver positive adjusted EBITDA in the fourth quarter.”

What Went Wrong

• Non-GAAP uplift partly driven by non-recurring supplier rebate; management quantified the rebate at ~$1.5M, not expected to recur beyond Q1/Q4 .
• Net loss remained elevated at $(19.6)M, impacted by non-cash interest expense from debt actions and derivative fair value changes .
• Clinics declined to 81 from 87 YoY due to closure of unprofitable locations; while MSO sites expanded, lower clinic count may constrain near-term throughput until delegated network ramps fully .

Financial Results

Sequential trend vs prior quarters

Notes: Q4 cash from operations was +$4.186M, reflecting disciplined working capital management . Q1 cash from operations was $(4.988)M; Free Cash Flow was $(4.026)M .

Year-over-year comparison (Q1 2025 vs Q1 2024)

Segment breakdown

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Prepared remarks emphasized a “strong start to 2025” and “near-term path to sustained cash flow positivity and profitability in the second half of 2025” supported by capitation wins, FFS growth, and pharmacy expansion .
• CFO highlighted gross profit expansion to $17.2M (+44.1% YoY) with dispensary strength and a non-recurring supplier rebate across Q4/Q1; SG&A decreased 9% YoY in Q1, and loss from operations improved to $(9.9)M .
• Strategic update: fully delegated Florida capitation (utilization management, claims, network) is the preferred model going forward; Nevada capitation adds >80k Medicaid lives; outsourcing clinical trials to Helios expected to accelerate growth albeit with revenue deconsolidation .

Selected quotes:

• “We are executing against a near-term path to sustained cash flow positivity and profitability in the second half of 2025.” — CEO Daniel Virnich
• “We remain on track to deliver positive adjusted EBITDA in the fourth quarter.” — CFO Rob Carter
• “Agentic AI…will drive even greater efficiencies and manage down our SG&A as a percent of revenue.” — CEO Daniel Virnich
• “Onetime rebate…about $1.5 million.” — CFO Rob Carter

Q&A Highlights

• Gross profit drivers: ~$1.5M one-time rebate from a renewed drug supplier contract and favorable Q1 price changes, plus volume increases in dispensary .
• DIR fee impact: last year’s DIR headwind is lapped; fees now priced at point of sale; dispensary margins viewed as “steady state” going forward .
• Contract and capacity: clinic count down due to closure of unprofitable sites; delegated MSO network expanded (e.g., Florida) to increase available sites; Florida capacity currently ~40% utilization with potential to reach California-like productivity as contracts ramp .
• Seasonality/guidance cadence: Q1 is seasonally lowest encounters and worst adjusted EBITDA; progressive quarter-over-quarter improvement expected through new lives and seasonality toward Q4 EBITDA/cash flow positivity .
• Tariffs/drug pricing risk: no observed tariff impact; fixed pricing catalogs through Q2; formulary management capabilities viewed as mitigating potential pricing changes .

Estimates Context

• Wall Street consensus estimates for revenue and EPS were unavailable via S&P Global for Q3 2024, Q4 2024, and Q1 2025; consequently, formal beat/miss analysis vs consensus cannot be provided (S&P Global data unavailable) [functions.GetEstimates].
• Implications: Analysts may reassess gross profit trajectory upward given dispensary momentum and Q1/Q4 non-recurring rebate, while normalizing for the rebate going forward; Q2 adjusted EBITDA guide $(4)–$(5)M sets expectations for stabilization before H2 improvement .

Key Takeaways for Investors

• Dispensary strength and SG&A discipline are driving tangible improvement in adjusted EBITDA, with Q1 loss narrowing to $(5.1)M; monitor dispensary margins as rebate benefit sunsets .
• Delegated capitation is a structural catalyst: Florida model expands margin control via utilization and network management; Nevada Medicaid adds scale starting July 1 .
• Path to Q4 EBITDA and cash flow breakeven hinges on ramping lives and encounter volumes; seasonality suggests sequential improvement from Q1 lows .
• Balance sheet flexibility improved via $20M debt paydown, covenant removal, and capital raise, lowering cash interest and supporting growth investments .
• Clinical trials outsourcing should accelerate expansion with modest top-line impact; management expects dispensary offset and thus maintained FY guidance .
• Emerging AI initiatives may further compress SG&A as a percent of revenue over the next 12–18 months—an incremental margin lever .
• Without published consensus, frame expectations around company guidance and operational KPIs (lives, dispensary growth, SG&A %), and watch quarterly conversion of pipeline into revenue/EBITDA .

Additional Relevant Press Releases (Q1 context)

• Florida Oncology Network launch (fully delegated model with PNS), expanding value-based care footprint in Florida .
• Nevada SilverSummit Healthplan partnership: exclusive oncology provider for >80k Medicaid patients, effective July 1 .
• Index inclusion: TOI set to join Russell 2000/3000 post-reconstitution (June 27), potentially broadening investor base .