Executive Summary

Q2 revenue grew 21.5% year over year to $119.8M, with pharmacy the key driver (up 41% YoY) and fee-for-service up ~10% YoY; gross profit rose 34% to $17.5M and gross margin reached 14.6% (+140 bps YoY) despite sequential pressure from a Q1 one-time rebate phasing out .
Adjusted EBITDA loss improved by more than half to $(4.1)M (from $(8.7)M) on scale benefits and tighter SG&A; EPS was $(0.15) vs $(0.17) YoY; cash ended at $30.3M .
Full-year 2025 guidance reaffirmed (Revenue $460–$480M, Gross Profit $73–$82M, Adj. EBITDA $(8)–$(17)M, FCF $(12)–$(21)M), with management leaning to the high end on revenue and guiding Q3 Adj. EBITDA to $(2.5)–$(3.5)M; FCF expected near the low end of the range given rebate timing and rising pharmacy AR .
Strategic catalysts: fully delegated Florida expansion (verbal agreement adding >40k MA lives in Q4), Medicaid expansion in NV effective July 1 (~80k lives), and AI enablement in RCM/prior auth/call center; board leadership transition to Anne McGeorge as Chair .

What Went Well and What Went Wrong

What Went Well
- Pharmacy strength: “Retail Pharmacy and Dispensary set fill records, contributing $62.6 million revenue and over $11 million in gross profit in Q2” .
- Operating leverage and margin mix: Gross margin 14.6% (+140 bps YoY), driven by dispensary margin expansion; SG&A down 3.5% YoY (or ~12% YoY ex one-time) with revenue scale .
- Value-based momentum and delegated model: CEO cited 50k+ new capitated lives and fully delegated expansion in Florida slated to more than double lives at a key payer; “we remain confident in achieving positive adjusted EBITDA in the fourth quarter” .
What Went Wrong
- Patient services capitation margin pressure from new launches (continuity-of-care phase); CFO expects margins to improve over the next three months as patients transition and programs mature .
- Sequential gross margin dip vs Q1 due to a non-recurring supplier rebate in Q1; ex-rebate, Q2 gross margin would have increased sequentially .
- Net loss widened modestly to $(17.0)M (vs $(15.5)M), reflecting non-cash fair value changes and contract ramp costs; cash used in operations for 1H improved but remained negative, with working capital tied up in drug rebates and pharmacy AR .

Financial Results

Consolidated performance (oldest → newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	$100.3	$104.4	$119.8
Gross Profit ($M)	$15.0	$17.2	$17.5
Gross Margin (%)	N/A	N/A	14.6%
Net Loss ($M)	$(13.2)	$(19.6)	$(17.0)
Diluted EPS ($)	$(0.14)	$(0.21)	$(0.15)
Adjusted EBITDA ($M)	$(7.8)	$(5.1)	$(4.1)
Cash & Equivalents ($M)	$49.7	$39.7	$30.3

Segment revenue ($M)

Segment	Q4 2024	Q1 2025	Q2 2025
Patient Services	$50.2	$53.1	$55.9
Dispensary	$47.6	$49.3	$62.6
Clinical Trials & Other	$2.5	$2.0	$1.3
Total Revenue	$100.3	$104.4	$119.8

KPIs and business mix

KPI	Q4 2024	Q1 2025	Q2 2025
Clinics	86	81	80
Markets	16	18	20
Lives under value-based contracts (M)	1.9	1.9	1.9

Versus estimates (S&P Global)

Consensus (revenue, EPS, EBITDA) was unavailable via S&P Global for TOI at the time of query; thus, we cannot quantify beats/misses for Q2 2025. Values retrieved from S&P Global.*

Metric	Q2 2025 Actual	Q2 2025 Consensus	Variance
Revenue ($M)	$119.8	N/A	N/A
Diluted EPS ($)	$(0.15)	N/A	N/A
Adjusted EBITDA ($M)	$(4.1)	N/A	N/A

Operating detail and non-GAAP

Pharmacy gross profit “over $11M” in Q2; dispensary margins benefited from scale, better procurement, and rebates; Q2-24 dispensary margin was depressed by a 2023 DARP clawback .
SG&A included a ~$2.4M write-off from outsourcing clinical trials to Helios; added back to Adjusted EBITDA .
Free Cash Flow for 1H25 was $(14.6)M, a 54.1% YoY improvement; operating cash usage improved 52% YoY as rebate timing and AR growth absorb working capital .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$460–$480M	$460–$480M; bias to high end	Maintained (skew higher)
Gross Profit	FY 2025	$73–$82M	$73–$82M	Maintained
Adjusted EBITDA	FY 2025	$(8)–$(17)M	$(8)–$(17)M	Maintained
Free Cash Flow	FY 2025	$(12)–$(21)M	$(12)–$(21)M; tracking to lower end	Maintained (skew lower)
Adjusted EBITDA	Q3 2025	N/A	$(2.5)–$(3.5)M	New quarterly guide
Adjusted EBITDA	Q2 2025	$(4)–$(5)M (issued at Q1)	Actual $(4.1)M	In line

Note: Management reiterated path to positive Adjusted EBITDA in Q4 2025 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
AI/Technology enablement	New supplier agreement to improve drug discounts (foundation for purchasing analytics)	Launching AI pilots in Q3 for RCM, prior auth, and call center to cut OpEx and improve performance	Increasing adoption
Drug costs and supply chain	Supplier contract renewal drove one-time rebate in Q1; expected price benefits in 2025	Dispensary margin up on better procurement and rebates; sequential gross margin impacted by Q1 one-time rebate	Margin mix improving ex one-time
Value-based care expansion	Six new contracts launched in 2H’24 totaling >250k lives	50k+ new lives added; SilverSummit Medicaid (NV) effective 7/1; fully delegated Florida expansion in Q4 (>40k MA lives)	Accelerating outside CA
Delegated model	First fully-delegated FL agreement effective Mar 1 (UM, claims, network)	Fully-delegated oncology Part B risk; tighter control on UM/network/claims; lever for MSO/pharmacy/clinical trials	Model scaling
Capitation margins	New contracts initially dilute cap margins; maturation expected	Cap margin pressure in Q2; margin to improve over next three months as patients transfer	Near-term headwind; medium-term tailwind
Regulatory/pricing	2024 margins compressed by DIR fee changes	IRA/drug pricing reform seen as net positive for capitated margins; FFS likely made whole	Constructive policy read

Management Commentary

Strategy and outlook: “We remain confident in achieving positive adjusted EBITDA in the fourth quarter… momentum we’re seeing in new contract signings, combined with continued strength in pharmacy” .
Pharmacy drivers: “Our scale is providing new opportunities… incremental rebates as well as other pricing considerations… yielding better rebates and margin overall” .
Delegated model: “We are taking risk for Part B… and are delegated for utilization management, network design, and claims adjudication” enabling broader control and scalability .
Margin cadence: “When a new capitation contract begins… we tend to experience lower margin… expect margin… to improve over time as these new populations are conformed” .

Q&A Highlights

Dispensary margin expansion: 2024 Q2 margin was depressed by a DARP clawback; beyond that, scale-driven procurement and rebates support double-digit margin improvement YoY .
Capitation margin timing: Large Florida contract launched in March; continuity-of-care period dampened cap margins in Q2; margins should lift over next three months as patients transition .
Drug pricing reform (IRA): Management views as net positive—lower drug costs improve capitated margins; FFS practices likely offset via rebates or other mechanisms .
PBM site-of-care shifts: Most TOI risk is Part B; shifting to Part D would remove costs from risk—net positive if compliant .
Florida growth: Verbal agreement to expand fully delegated arrangement in Q4, adding >40k MA lives; Florida MA risk lives expected to reach ~100k by year-end .

Estimates Context

S&P Global consensus estimates for Q2 2025 (revenue, EPS, EBITDA) were unavailable for TOI at the time of retrieval; we cannot quantify beats/misses. Values retrieved from S&P Global.*

Implications: Sell-side models may raise 2H pharmacy contributions and delegated revenue ramps, while adjusting Q3 Adj. EBITDA to the $(2.5)–$(3.5)M range and skewing FCF assumptions toward the lower end of guidance given working capital dynamics .

Key Takeaways for Investors

Pharmacy is the growth and margin engine: +41% YoY revenue and >$11M gross profit in Q2; scale-driven procurement and rebates underpin durable margin expansion in dispensary .
Delegated risk model is a structural differentiator: Control over UM/network/claims should improve medical cost management and unlock ancillary revenue (MSO, pharmacy, trials) as it scales outside CA .
Near-term margin cadence: Capitation margins temporarily compressed by new contract launches, with a clear path to improvement over the next quarter as patients transition and programs mature .
2025 setup: Guidance reaffirmed with revenue bias to high end; Q3 Adj. EBITDA guide implies continued sequential improvement; Q4 targeted for positive Adj. EBITDA .
Cash/FCF: Working capital tied to rebates and pharmacy AR suggests FCF toward the low end of guidance in 2025; watch rebate collection cadence and AR turns .
Execution watch items: Florida delegated expansion go-live in Q4, NV Medicaid scaling, pharmacy location expansion in Florida, and delivery of AI-enabled OpEx efficiencies in 2H .
Governance: Chair transition to Anne McGeorge adds healthcare finance depth and oversight during a scale-up phase .

Additional Relevant Press Releases (Q2 timeframe)

SilverSummit Healthplan NV Medicaid partnership effective July 1 (exclusive oncology provider for >80k Medicaid members) .
Doctors HealthCare Plans (FL) partnership for delegated UM and clinical advisory support announced Aug 18 .
Board chair transition to Anne McGeorge announced Aug 13 .

Notes

All figures are GAAP unless noted; Adjusted EBITDA and Free Cash Flow are non-GAAP measures with reconciliations provided in filings .
Consensus estimates: unavailable via S&P Global at retrieval time. Values retrieved from S&P Global.*

Oncology Institute, Inc. (TOI)·Q2 2025 Earnings Summary