The Oncology Institute Reports Third Quarter 2022 Financial Results and Updates Full Year 2022 GuidanceNovember 09, 2022 at 16:05 PM EST
CERRITOS, Calif., Nov. 09, 2022 (GLOBE NEWSWIRE) -- The Oncology Institute, Inc. (NASDAQ: TOI), one of the largest value-based community oncology groups in the United States, today reported financial results for its third quarter ended September 30, 2022. Recent Operational Highlights
Third Quarter 2022 Financial Highlights
Management Commentary Brad Hively, CEO of TOI, commented, “We delivered another quarter of strong double-digit growth as demand for our services remained robust. We continued our expansion into new markets through a combination of acquisitions and de novo clinics in California, Florida, Texas and Nevada. As our organization expands, we continue to strengthen our leadership team. In the third quarter, we added two seasoned executives overseeing our enterprise-wide technology and data initiatives as well as our clinical research strategy. We are also pleased to have recently completed an important $110 million strategic investment from Deerfield to continue executing our growth strategy. We remain confident in our ability to continue to expand our value-based care model and deliver affordable and high-quality care to more patients in more markets.” Outlook for Fiscal Year 2022 TOI is updating its full-year 2022 guidance as we have experienced slower than expected revenue growth primarily related to delays in closing acquisitions. We are constantly evaluating opportunities to create efficiencies and reduce costs, while ensuring we maintain the infrastructure needed to continue to provide quality patient care and support our growth. To ensure that our cost structure remains aligned with our revenue growth, we are taking a multi-pronged approach to cost reduction, including a reduction of vendor and contract spend and a difficult, but necessary, workforce reduction. We expect to realize benefits from these efforts beginning in the fourth quarter of 2022.
TOI's achievement of the anticipated results is subject to risks and uncertainties, including those disclosed in our filings with the U.S. Securities and Exchange Commission. The outlook does not take into account the impact of any unanticipated developments in the business or changes in the operating environment, nor does it take into account the impact of TOI's acquisitions, dispositions or financings during 2022. TOI's outlook assumes a largely reopened global market, which would be negatively impacted if closures or other restrictive measures persist or are reimplemented. Third Quarter 2022 Results Consolidated revenue for Q3 2022 was $65 million, an increase of 24.3% increase compared to Q3 2021, and a 6.7% increase compared to Q2 2022. Revenue for patient services was $45 million, up 35.4% compared to Q3 2021. Growth in patient services was driven by an increase in capitated contracts entered into during 2022 and in the latter half of 2021 as well as growth in FFS revenue due to practice acquisitions and an overall increase in clinic count. Dispensary revenue growth lagged the growth in patient services revenue largely due to the Medi-Cal Rx transition. Despite the Medi-Cal Rx transition, dispensary revenue increased 5.1% compared to Q3 2021 due to an increase in the number of filled prescriptions as well as an increase in the average revenue per filled prescription. Clinical trials & other revenue increased by 8.7% compared to Q3 2021 due to an increase in miscellaneous contract revenue. Gross profit in Q3 2022 was $13 million, an increase of 13.8% compared to Q3 2021. The increase was primarily driven by improved cost management of oral and IV drugs and enhanced rebate opportunities. Gross profit is calculated by subtracting direct costs of patient services, dispensary, and clinical trials & other from consolidated revenues. Selling, general and administrative ("SG&A") expenses in Q3 2022 were $32 million or 49.2% of revenue, compared with $13 million, or 24.4% of revenue, in Q3 2021. During Q3 2022, share-based compensation expense was $7 million and SG&A-related transaction costs was $1 million. The remainder of the increase in SG&A expenses was due to headcount and other costs associated with operating as a public company and to support revenue growth and expansion into new markets. Net loss for Q3 2022 was $3 million, a decrease of $0.3 million compared to Q3 2021 primarily due to the increase in gross profit and the change in fair value of the warrant, earnout and conversion option derivative liabilities, offset by increased operating expenses. Adjusted EBITDA was $(6.7) million, a decrease of $7 million compared to Q3 2021, primarily as a result of our growth in SG&A. Year to Date 2022 Results for the Nine Months Ended September 30, 2022 Consolidated revenue for the nine months ended September 30, 2022 was $181 million, an increase of 20.1% compared to the comparable prior year period. Revenue for patient services was $119 million, an increase of 28.6% compared to the comparable prior year period. Growth in patient services revenue was primarily driven by an increase in capitated contracts entered into during the nine months ended September 30, 2022 and in the latter half of 2021 as well as growth in revenue from fee-for-service contracts due to practice acquisitions and an overall increase in clinic count. Dispensary revenue growth lagged the growth in revenue from patient services largely due to the Medi-Cal Rx transition. Despite the Medi-Cal Rx transition, dispensary revenue increased 8.3% compared to the comparable prior year period due to an increase in the average revenue per filled prescription. Clinical trials & other revenue decreased by 9.5% compared to the comparable prior year period due to a decline in miscellaneous contract revenue. Gross profit for the nine months ended September 30, 2022 was $36 million, an increase of 12.1% compared to the comparable prior year period. The increase was driven by improved cost management of our oral and IV drugs and enhanced rebate opportunities. SG&A expenses for the nine months ended September 30, 2022 were $90 million or 49.8% of revenue, compared with $35 million, or 23.3% of revenue, in the comparable prior year period. During 2022, share-based compensation expense was $22 million and SG&A related to transaction costs was $3 million. The remainder of the SG&A growth was due to headcount and other costs associated with operating as a public company and to support revenue growth and expansion into new markets. Net income for the nine months ended September 30, 2022 was $11 million, an increase of $12 million compared to the comparable prior year period, primarily due to the increase in gross profit and the change in the fair value of the warrant, earnout and conversion option derivative liabilities, offset by increased operating expenses. Adjusted EBITDA was $(19) million, a decrease of $19 million compared to the comparable prior year period, primarily as a result of our growth in SG&A. Webcast and Conference Call TOI will host a conference call on Wednesday, November 9, 2022 at 5:00 p.m. (Eastern Time) to discuss third quarter results and management’s outlook for future financial and operational performance. The conference call can be accessed live over the phone by dialing 1-877-407-0789, or for international callers, 1-201-689-8562. A replay will be available two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the live call and the replay is 13732555. The replay will be available until November 16, 2022. Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the Investor Relations section of TOI's website at https://investors.theoncologyinstitute.com. About The Oncology Institute, Inc. Founded in 2007, TOI is advancing oncology by delivering highly specialized, value-based cancer care in the community setting. TOI offers cutting-edge, evidence-based cancer care to a population of approximately 1.7 million patients including clinical trials, transfusions, and other care delivery models traditionally associated with the most advanced care delivery organizations. With 100+ employed clinicians and more than 700 teammates in over 60 clinic locations and growing, TOI is changing oncology for the better. For more information visit www.theoncologyinstitute.com. Forward-Looking Statements This press release includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “preliminary,” “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “project,” “predict,” “potential,” “guidance,” “approximately,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding projections, anticipated financial results, estimates and forecasts of revenue and other financial and performance metrics and projections of market opportunity and expectations. These statements are based on various assumptions and on the current expectations of TOI and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by anyone as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of TOI. These forward-looking statements are subject to a number of risks and uncertainties, including the accuracy of the assumptions underlying the 2022 outlook discuss herein, the outcome of judicial and administrative proceedings to which TOI may become a party or governmental investigations to which TOI may become subject that could interrupt or limit TOI’s operations, result in adverse judgments, settlements or fines and create negative publicity; changes in TOI’s clients’ preferences, prospects and the competitive conditions prevailing in the healthcare sector; failure to continue to meet stock exchange listing standards; the impact of COVID-19 on TOI’s business; those factors discussed in the documents of TOI filed, or to be filed, with the SEC, including the Item 1A. "Risk Factors" section of TOI's Annual Report on Form 10-K for the year ended December 31, 2021. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that TOI does not presently know or that TOI currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect TOI’s plans or forecasts of future events and views as of the date of this press release. TOI anticipates that subsequent events and developments will cause TOI’s assessments to change. TOI does not undertake any obligation to update any of these forward-looking statements. These forward-looking statements should not be relied upon as representing TOI’s assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements. Financial Information; Non-GAAP Financial Measures Some of the financial information and data contained in this press release, such as Adjusted EBITDA, have not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). TOI believes that the use of Adjusted EBITDA provides an additional tool to assess operational performance and trends in, and in comparing our financial measures with, other similar companies, many of which present similar non-GAAP financial measures to investors. TOI’s non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial measures determined in accordance with GAAP. The principal limitation of Adjusted EBITDA is that it excludes significant expenses and income that are required by GAAP to be recorded in TOI's financial statements. Because of the limitations of non-GAAP financial measures, you should consider the non-GAAP financial measures presented in this press release in conjunction with TOI’s financial statements and the related notes thereto. TOI defines Adjusted EBITDA as net (loss) income plus depreciation, amortization, interest, taxes, non-cash items, share-based comp and other adjustments to add-back the following: board fees, consulting and legal fees related to acquisitions, one-time consulting and legal fees related to certain advisory projects, software implementations and debt or equity financings, severance expense and temp labor and recruiting charges to build out our corporate infrastructure. A reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP metric, is set forth below.
Condensed Consolidated Balance Sheets
Media The Oncology Institute, Inc. Revive Michael Petrone Investors Solebury Strategic Communications 
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