Topicus.com Inc. — Call Transcript 2025

Ladies and gentlemen, greetings and welcome to The Oncology Institute's Second Quarter 2025 Earnings Call. At this time, all participants are in the listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Hueppelsheuser, General Counsel at TOI. Please go ahead. The press release announcing The Oncology Institute's results for the second quarter of 2025 is available at the Investor section of the company's website, theoncologyinstitute.com. A replay of this call will also be available at the company's website after the conclusion of this call. Before we get started, I would like to remind you of the company's safe harbor language included within the company's press release for the second quarter of 2025. Management may make forward-looking statements, including guidance on underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our filings with the SEC. This call will also discuss non-GAAP financial measures such as adjusted EBITDA and free cash flow. Reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in the earnings release furnished to the SEC and available on our website. Joining me on the call today are our CEO, Daniel Virnich, and our CFO, Rob Carter. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Dan. Thank you, Mark. Good afternoon, everyone, and thank you for joining our second quarter 2025 earnings call. I'm pleased to report another strong quarter of performance for TOI on our path to profitability, driven by the contributions of our over 650 outstanding clinicians and teammates. The strong momentum we saw in the first quarter continued into the second quarter, with year-over-year revenue growth of more than 20%. Our second quarter revenue of $120 million was driven by monthly records set in our pharmacy business, as well as 10% year-over-year growth in our fee-for-service business, driven by strong organic growth performance in Florida and Oregon. Our value-based contract pipeline remains equally strong, with contracts effective in Q2 adding over 50,000 capitated lives in Nevada and California. We anticipate new value-based partnerships to continue strong momentum in the second half of the year through several new contracts, which I will provide more detail on shortly. At this point in the year, we remain confident in achieving positive adjusted EBITDA in the fourth quarter. Adjusted EBITDA loss of $4.1 million in Q2 represents a $4.6 million improvement compared to the same quarter last year, reducing the EBITDA loss by more than half, which was primarily the result of organic fee-for-service and pharmacy revenue growth, discipline in clinical payroll and SG&A across higher volumes, as well as improving drug margins across IV and pharmacy, as TOI leverages its increased buying power and distributor relationships. Turning first to our patient service business, we delivered several new capitated contract wins and expansions in the second quarter and continue to work through a robust pipeline of future opportunities, which will go effective in Q3 and Q4. In addition to the two contracts which went effective in Q2 in Nevada and California, on July 1st, we went effective on an expanded capitation relationship with Silver Summit Health Plan in Nevada to serve all of their Medicaid patients in Clark County, adding an additional 49,000 patient lives to this market. The integration is underway and tracking according to plan. Additionally, in the quarter, we received exclusivity on a capitation contract for another key Optum region in California, which we attribute to our high-quality outcomes and ongoing strength of this important partnership. Finally, we have reached a verbal agreement on expansion of our existing fully delegated capitation partnership in Florida with Elevance Health into two new counties in Central Florida starting in Q4 of this year, which will add over 40,000 additional Medicare Advantage lives, more than doubling our current relationship with this payer and bringing our total Medicare Advantage lives under capitation in the Florida market across all payers to over 100,000. This contract expansion will allow us to increase utilization of the existing clinic investments The Oncology Institute has made in the state without adding significant SG&A and further validates the compelling value proposition of The Oncology Institute's fully delegated model in Florida, where we are now capable of delivering high-quality coordinated cancer care across our hybrid employed clinic and MSO model. As a reminder, our fully delegated offering gives TOI control over utilization management, network design, and claims adjudication for the patients that we serve. We believe this will be our primary model of delivering value-based care in markets outside of California, where we will work more directly with health plans and risk arrangements. It increases our ability to not just deliver outstanding quality care and utilization improvement, but also enables access to ancillary services such as pharmacy and clinical trials for our MSO practice partners, which will drive value for them as well as TOI. As we look at the remainder of 2025 and beyond, we see opportunity in nearly every market where we operate to add new capitated relationships or expand upon existing partnerships. In regards to our pharmacy business, we experienced impressive growth of over 40% in the quarter versus Q2 of 2024. We are currently forecasting that our pharmacy will grow over 35% for the full year versus prior. The primary drivers of this impressive growth are an increase in patient volumes leading to additional fill opportunities, as well as a reduction in leakage of prescriptions written by TOI providers to outside pharmacies through operational discipline. We are expecting an additional TOI pharmacy location to open in Florida in the second half of this year, which will help fill both Part B and Part D medications where appropriate to our MSO affiliate practices. This will drive down the unit cost of medications where TOI has risk and offer a convenient alternative for our MSO providers to fill Part D medications where appropriate. Now, I would like to turn to leadership and culture. On our last call, we shared the addition of Dr. Jeff Langsam, our new Chief Clinical Officer, who is focused on leading our efforts around therapeutics, utilization management, and MSO practice engagement. This is the core of our value proposition at TOI and will enable scalability of our delegated model across geographies, as well as unlock tremendous value for TOI and our payer partners. I'm also pleased to announce that Kristen England joined us in July as TOI's new Chief Administrative Officer. Ms. England brings over two decades of leadership experience in healthcare management and operations, most recently serving as a Senior Executive within McKesson's U.S. Oncology Network. She will be overseeing our enterprise central business operations and technology strategy. Her role will be instrumental in driving our transformation into a technology and AI-enabled care delivery organization. This will not only drive a better patient and physician experience, but further reduce OpEx as a percentage of revenue as we grow, driving margin and profitability. We are launching three AI enablement efforts in Q3 to make meaningful changes in performance and cost for revenue cycle management, prior authorization services, and our patient call center. Lastly, our current Chairman, Richard Barish, has decided to retire and will be stepping down effective August 12th. Richard has been an incredible mentor for the management team, and we thank him for his steady leadership of our board through our first years as a public company. I'm very pleased to announce that the board has voted unanimously to elect Anne McGeorge as our new Chair. Anne has been a TOI board member and Chair of our Audit Committee since we went public in 2021. Anne has a wealth of public and private company experience as both a Senior Executive and board member. She was the former National Managing Partner of Healthcare for Grant Thornton, and prior to that, a Partner at Deloitte. We are thrilled that Anne has been promoted into her new role and look forward to continuing to build on the success of TOI under her mentorship. I'll now turn the call over to our Chief Financial Officer, Rob Carter, to cover the second quarter financials in more detail. Rob? Thanks, Dan, and good afternoon, everyone. I want to echo Dan's enthusiasm about our solid second quarter results. In the quarter, we've seen continued momentum across our business, demonstrated margin expansion, and improved working capital, all while making meaningful progress on achieving adjusted EBITDA and free cash flow positivity by year-end. I'll start today with a review of the Q2 results, and then close my prepared remarks by reviewing our financial outlook. Consolidated revenue of $119.8 million increased 21.5% compared to Q2 of 2024. Patient services revenue, which represents 47% of total revenue this quarter, was $55.9 million. This growth represents a 7% increase compared to a year ago, driven by fee-for-service revenue and a 5% sequential increase driven by capitation and fee-for-service revenue. Pharmacy revenue of $62.6 million increased 41% compared to Q2 of last year and 27% sequentially, and now represents 52% of total revenue. This strong growth was driven by increases in both our capitated and fee-for-service lives and improved performance of our retail and medically integrated dispensaries. Clinical trials and other revenue was $1.3 million at the quarter. Recall that we outsourced our clinical trials business to Helios in the middle of the second quarter. Moving down to P&L, our gross profit in the quarter of $17.5 million increased 34% year-over-year and 1.5% sequentially. Gross margin of 14.6% increased 140 basis points year-over-year, driven by the expansion in our dispensary gross margin, partially offset by a slight decline in patient services gross margin. Within patient services, TO saw a decrease in margin on capitation revenue and an increase in margin on fee-for-service revenue. As a reminder, when a new capitation contract begins, as several did in Q2 2025, we tend to experience lower margin as TOI generates value in our risk business through discrete and active management of patient populations, which includes utilization management, formulary, and steerage activities, which take time to operationalize and mature. As a result, we expect margin in our capitation business to improve over time as these new populations are conformed to TOI medical model. Meanwhile, we are seeing better profitability in the fee-for-service business, driven by increased provider utilization on higher patient volumes and improving drug margin performance due to the increasing scale and sophistication of TOI's drug inventory management system. On a sequential basis, you may note that gross margin declined approximately 190 basis points from 1Q. Recall that last quarter benefited from a one-time rebate from a drug supplier partner. If not for that, Q2 would have increased sequentially. SG&A of $26.9 million in Q2 of 2025 decreased from $27.9 million in a similar period last year, representing a 3.5% decrease. SG&A includes a $2.4 million one-time write-off of net assets related to outsourcing our clinical trials business, as mentioned earlier, which was added back to adjusted EBITDA in the quarter. Normalizing from this one-time item, SG&A would have decreased 12% year-over-year. The operating leverage in our platform represents another lever pull on our path to profitability. SG&A represented 22% of total revenue, a 580 basis point reduction year-over-year. We think there is further leverage in the model with increased scale, as well as the adoption of AI enablement we noted on our first quarter call. We are planning to launch AI pilots around prior auth, patient advocacy, and a next-gen call center in the third quarter, and we'll keep you posted on their progress. Loss from operations was $11.2 million, an improvement from a $16.4 million loss in Q2 of 2024. Adjusted EBITDA was -$4.1 million, compared favorably to -$8.7 million in Q2 of 2024. Moving on to the balance sheet and cash flow, as of the end of Q2 2025, our cash and cash equivalents were $30.3 million. Cash flow from operations for the first half of 2025 was a loss of $15.2 million, representing a 52% improvement in the first half of 2024. Free cash flow was -$14.6 million for the first six months ended June 30, 2025, a reduction of 54.1% from the same quarter in the prior year. Integral to our management of rising drug costs, we're maximizing our drug rebates through strategic purchasing, as well as more active formulary management. The net effect is improved drug margins, a temporary use of cash, and an increase to our rebate AR as payment of rebates varies by manufacturer, but generally extends for multiple subsequent quarters. Additionally, with multiple months of concerted increases to our pharmacy revenue, pharmacy AR has also increased. All positive indicators for where the business is trending, but as such, we expect to end the year at the lower end of free cash flow guidance. Finally, turning to guidance, for the full year, we are reiterating our full year 2025 outlook. Specifically, we expect revenue of $460 million-$480 million. Given the growth we've seen in the first half of the year, we believe that we will reach the high end of that range. Adjusted EBITDA of a loss of $17 million to a loss of $8 million. At this point in the year, we have a solid line of sight to the midpoint of that range, as our four oncology networks are just starting to ramp. I'd also like to take a moment to talk about some of the assumptions that support second half growth. In terms of revenue, we expect quarterly revenue to continue to increase sequentially in Q3 and Q4. Driving this is the initiation of new risk contracts, particularly our delegated network deal in Florida, continued growth in our pharmacy business, and a substantial positive year-over-year organic fee-for-service performance in Florida and Oregon. As we think about gross margin in the back half of the year, we anticipate sequential improvement as we further optimize risk margins, partially offset by the start of new contracts, and benefit from natural expansion in drug pricing spread through year-end and continue our process of optimizing our drug supply chain and clinical formulary management. Specifically, our increased scale allows us to work more effectively with our drug distributor and manufacturer partners, and our investments in personnel and clinical technology allow us to be more active and precise in managing patient utilization of drug formulary. For adjusted EBITDA, we anticipate further sequential improvement. In Q3, we expect adjusted EBITDA of -$2.5 million to -$3.5 million, and as Dan noted, we are on track to show positive results in Q4. With that, I'll turn the call back over to Dan for closing comments. Thanks, Rob. In closing, in the second quarter, we delivered solid top-line growth in all lines of our business while driving meaningful year-over-year reduction in EBITDA loss. We made meaningful progress expanding our capitated partnerships, saw strong growth in our pharmacy and fee-for-service business, reduced SG&A over 12% from the same quarter prior year, and set a path for further efficiencies in our cost structure as we scale through technology enablement. We anticipate these efforts will continue to gain momentum through the rest of the year and remain on track to deliver adjusted EBITDA positivity in Q4. Operator, at this point, let's open the call to questions. Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press Star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from David Michael Larsen with BTIG. Please go ahead. Hey, congratulations on the very good quarter. Can you talk a little bit about the dispensing gross margin? That looked like it was up a lot year over year, maybe almost 600 basis points. Just any thoughts on what's driving that? Are there any specific drugs? Is it Part B or is it Part D? Just any color there would be very helpful. Thank you. Hey, Dave, it's Rob. Q2 of last year was the worst impact from the DARP clawback. That's the quarter specifically where we took a 2023 date of service reduction. Dispensary margin in Q2 of 2024 was, I would say, artificially low because of that. Even normalizing for that, though, you're looking at double-digit growth year-over-year. That actually has a lot to do with the way in which we're procuring drugs at this point. Our scale at this point is providing new opportunities for us, including incremental rebates, as well as some other pricing considerations that's just yielding better rebates and margin overall. Are these infused oncology medications dispensed in the office as part of, like, Part B, as in boy? No. Hey, Dave, it's Dan Virnich. No, we're talking about Part D medications, so primarily oral specialty or self-injectables where they can be compliantly given in a Part D. Okay, great. Any thoughts on the potential impact for drug pricing reform, the Inflation Reduction Act, most favored nation comments, just any thoughts on how that would impact your business, if at all? We continue to follow that very closely, and we continue to believe that it's going to be net positive for TOI for a couple of reasons. One, reduction in pricing on our capitated business is obviously favorable for capitated margins and for our patients. On the fee-for-service side of the house, which is what most practices in the country are doing exclusively, we believe there will be some sort of make-hold through rebates or another mechanism to help keep those practices afloat. In totality, those two forces will be net positive for TOI. Okay. Just like OptionCare as an example, they've been talking about a certain drug like Stelara. There are some changes in pricing for that medication. It's not even an oncology drug. I think that's more like in the gut. That one drug, changes in pricing for that one drug, is having a significant impact on OptionCare's EBIT. Is there anything like that in your book of business that investors should be aware of as we get to the back half of the year or into 2026? Are there any one or two or three drugs that might be going on like biosimilar with one manufacturer? Any thoughts there would be helpful. No, not that we forecast. We've looked very extensively at our current drug portfolio. I think oncology benefits from the fact that within any given class, there's multiple different options that can be clinically equivalent, including biosimilar and non, as well as other combinations. Within that, we see no situation where we have a single drug that is placing substantial risk on TOI portfolio related to that sort of situation. Just one more quick one for me before I hop in the queue. Can you talk a little bit more about the pressure on the gross patient service margin? How much of that gross profit is, we'll call it, capitated versus how much is fee-for-service? How much time will it take for that margin to kind of pick back up? Thank you. Yeah, it's primarily related to CAC margin. We had a pretty sizable contract launch in March. This is in our Florida oncology network. We are barely through the continuity of care period where patients are remaining with the existing provider before moving over to TOI. It wasn't a surprise at all. It's at this point where we expect to see the patients being transferred over to us. The margin will correspond and pick up over the next three months. No surprise there. That's one of the main catalysts for future margin progression, these new CAC contracts maturing as they age. I think what I heard you say is you are now responsible for those members. You're collecting the TMPM rate, but they're getting their care where they had been originally, and they haven't yet transferred their care into The TOI clinics. Once they do that, we'll see the margins improve. Did I hear that correctly? That's right. Okay, I got a bunch more, but I'm going to hop back in the queue. Thanks. Thanks, Dave. Thank you. Our next question comes from Yuan Zhi with B. Riley Securities. Please go ahead. Thank you for taking our questions and congrats on a good quarter. I got a couple. First, one of your value-based care peers experienced the highest level of oncology spend in history and continued to forecast a high level of spend in the second half of 2025. What was your observation in Q2 2025, and will you be able to continue managing the cost at a relatively low level in the second half of 2025? Yeah. Hi, Yuan. It's Dan. Thanks for the great question. 2025 was no surprise in the sense that we saw another year of huge increases in drug cost trend, driven by, again, overutilization as well as just increase in cost overall for procurement. That benefits TOI in the sense that there is more opportunity for us to provide value to our payer partners. We, as a whole, have seen our MLR remain relatively stable. That's due to a couple of different things. One is our ability to narrow networks to drive care to lower cost sites of care and the high degree of control that our program provides over ensuring NCCN compliance, but also value-based therapeutic decision-making. While the overall oncology-wide cost trend went up, that provides opportunity for us to engage and provide more value to payer partners. Internally, when we look at our drug cost trend, it's been stable. Got it. Can you quickly comment on the timeline of this opportunity with Elevance Health in Florida? I think it starts in 4Q. Can you recognize revenue in 4Q, or is it more in the first half of 2026? We are tracking towards Q4 at this point, and that's when we would start recognizing revenue. Got it. One last question from me, maybe related to the prior question from David, that some PBMs are shifting infusion drugs from clinics to their own pharmacy as a way to shift margin, basically from provider-administered drugs to from medical benefits to pharmacy benefit coverage. Did you notice that, and will that be a negative impact to you for any oncology infusion drug? Yeah, are you referencing you said PBMs is the game? Are you saying is that an opportunity for TOI to fill under pharmacy benefit versus Part B as a way to manage our risk, or am I misinterpreting the question? Some of the PBMs are shifting infusion drugs, which are provider-administered and medical benefits, to their own pharmacy benefit coverage. It could be to your pharmacy, but it could also be, for example, CVS pharmacy out there. I'm just curious, have you noticed such a trend, and will that have a negative impact on you? Almost without exception, our risk contracts are Part B, as in boy, risk only. Shifting drugs from Part B to Part D would shift them out of risk. That would remove cost that was at risk to The Oncology Institute, so that would be net positive for us, assuming you could compliantly fill a medication under Part D and the PBM drove that change. Got it. Thank you for taking our question. Thanks. Thank you. Our next question comes from Robert LeBoyer with Noble Capital Markets. Please go ahead. Congratulations on a very nice quarter. I had a question about the new patients that are coming on from the contracts you had previously announced, as well as the ones that you mentioned for the second half. I was wondering if you could give any details about the ones that are online and getting the monthly payment compared with those left to go from the first half or contracts signed in the first half and the ones that will be coming on in the second half, just to get an idea of the additional patient lives that will be added going forward and who are the startups at the higher cost compared with who's going to be in the continuing care at the slightly improved costs? Hey, Robert. It's Dan. Thanks for the great question. Our growth in the second half of 2025 is primarily occurring outside of California. It's primarily Medicare Advantage, but we also just, as we discussed, started a new Medicaid risk contract outside of California. Because of the nature of utilization outside of California being much higher across product lines, these are at higher utilization, therefore higher PMPMs, still generating substantial savings for our payer partners. You would expect on a per-member basis higher revenue contribution. Okay, great. You mentioned Florida and the expansion there. Is there any percentages of the new people compared with continuing patients, or any sense of how much expansion in the number of lives that there will be in Florida or in the entire network? Yeah, I mean, just broadly speaking, we project that Florida will end the year for TOI with right around 100,000 Medicare Advantage lives for Medicare Advantage that we're taking risk on. We have some non-Medicare Advantage risk in that market as well. Versus current, it's about half that. That's a substantial amount of growth just within Florida. If you look at the total number of lives that TOI has under risk right now, we're right around 1.9 million. That 50,000 in Florida that we're going to see in the second half of this year represents an incremental 2.5% on our total portfolio, roughly. Great. Thank you for that detail. Thank you. Our next question is a follow-up from David Larsen with BTIG. Please go ahead. Can you talk a little bit more about your, you used the phrase fully delegated risk arrangements. What does that mean? Are you taking full risk for all services being provided to those members, including non-oncology care? Great question, David. Thanks for bringing it up. When we say fully delegated, what we are saying specifically is we are taking risk for Part B for oncology, medical and radiation oncology spend, but the delegation part of that refers to TOI is now given authority by our payer partner for three services. Utilization management, not just for TOI employed physicians, but on behalf of the physicians in our network outside of our employed four walls, so the independent oncologists who are providing care for those patients. Two is network design, meaning we work closely with our payer partners to get high-cost centers out of the network that show poor clinical care, poor utilization, and align more closely with providers that have a value-based orientation. Ultimately, that contract exists between TOI and the independent provider, not the payer and the provider. Three, claims adjudication. TOI is getting prepaid capitation for the risk that we're taking, and then we are paying the claims for those non-TOI employed providers in the network. Because it's a great degree of control over oncology spend across broader populations, it allows the faster, more cash-efficient scalability of our MSO model. As we develop that MSO, it allows us to provide value to those independent practices and TOI by engaging with them not just on value-based care, but also engagement with our pharmacy services and clinical trials support. It's a much more robust model in terms of being able to provide scaled value-based care than the legacy model in California, where we simply have a narrow network, TOI is the only oncology provider in the network, and we're not delegated. We're just given risk and managing our four walls. It's frankly better for patients and our payer partners. What I'm hearing is you've been doing a really good job for the plans. They're giving you more lives and more responsibility to continue to manage the care for those lives. You also have the power of prior auth, I'm assuming, and the ability to narrow the network and influence formulary. You have a high level of control, more control over the care that will be delivered over this expanded base, right? That's absolutely right. Okay. It's not like an agilon, for example, where that stock has been under enormous pressure because they're bearing risk for everything in the world. You're focused in on oncology where you know how to basically drive margin and improve clinical care. Okay, thanks very much. Just one last comment on that. We're taking the exact same risk. We're just given additional tools to help manage that risk and drive performance. Okay, thanks very much. I'll hop back in the queue. Thank you. At this time, there are no further questions. The conference of The Oncology Institute has now concluded. Thank you for your participation. You may now disconnect your lines. Thank you.

Speaker 2: Ladies and gentlemen, greetings and welcome to The Oncology Institute's Second Quarter 2025 Earnings Call. At this time, all participants are in the listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Hueppelsheuser, General Counsel at TOI. Please go ahead. Ladies and gentlemen, greetings and welcome to The Oncology Institute's Second Quarter 2025 Earnings Call. ladies and gentlemen greetings and welcome to the oncology institute's second quarter 2025 earnings call At this time, all participants are in the listen-only mode. at this time all participants are in the listen-only mode A brief question- and- answer session will follow the formal presentation. a brief question- and- answer session will follow the formal presentation If anyone should require operator assistance during the conference, please press Star and zero on your telephone keypad. if anyone should require operator assistance during the conference please press star and zero on your telephone keypad As a reminder, this conference is being recorded. as a reminder this conference is being recorded It is now my pleasure to introduce your host, Mark Hueppelsheuser, General Counsel at TOI. it is now my pleasure to introduce your host mark hueppelsheuser general counsel at toi Please go ahead. please go ahead The press release announcing The Oncology Institute's results for the second quarter of 2025 is available at the Investor section of the company's website, theoncologyinstitute.com. A replay of this call will also be available at the company's website after the conclusion of this call. Before we get started, I would like to remind you of the company's safe harbor language included within the company's press release for the second quarter of 2025. Management may make forward-looking statements, including guidance on underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our filings with the SEC. This call will also discuss non-GAAP financial measures such as adjusted EBITDA and free cash flow. The press release announcing The Oncology Institute's results for the second quarter of 2025 is available at the Investor section of the company's website, theoncologyinstitute.com. the press release announcing the oncology institute's results for the second quarter of 2025 is available at the investor section of the company's website theoncologyinstitute.com A replay of this call will also be available at the company's website after the conclusion of this call. a replay of this call will also be available at the company's website after the conclusion of this call Before we get started, I would like to remind you of the company's safe harbor language included within the company's press release for the second quarter of 2025. before we get started i would like to remind you of the company's safe harbor language included within the company's press release for the second quarter of 2025 Management may make forward-looking statements, including guidance on underlying assumptions. management may make forward-looking statements including guidance on underlying assumptions Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially For a further discussion of risks related to our business, see our filings with the SEC. for a further discussion of risks related to our business see our filings with the sec This call will also discuss non-GAAP financial measures such as adjusted EBITDA and free cash flow. this call will also discuss non-gaap financial measures such as adjusted ebitda and free cash flow Reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in the earnings release furnished to the SEC and available on our website. Joining me on the call today are our CEO, Daniel Virnich, and our CFO, Rob Carter. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Dan. Reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in the earnings release furnished to the SEC and available on our website. reconciliation of these non-gaap measures to the most comparable gaap measures is included in the earnings release furnished to the sec and available on our website Joining me on the call today are our CEO, Daniel Virnich, and our CFO, Rob Carter. joining me on the call today are our ceo daniel virnich and our cfo rob carter Following our prepared remarks, we'll open the call for your questions. following our prepared remarks we'll open the call for your questions With that, I'll turn the call over to Dan. with that i'll turn the call over to dan

Speaker 1: Thank you, Mark. Good afternoon, everyone, and thank you for joining our second quarter 2025 earnings call. I'm pleased to report another strong quarter of performance for TOI on our path to profitability, driven by the contributions of our over 650 outstanding clinicians and teammates. The strong momentum we saw in the first quarter continued into the second quarter, with year-over-year revenue growth of more than 20%. Our second quarter revenue of $120 million was driven by monthly records set in our pharmacy business, as well as 10% year-over-year growth in our fee-for-service business, driven by strong organic growth performance in Florida and Oregon. Our value-based contract pipeline remains equally strong, with contracts effective in Q2 adding over 50,000 capitated lives in Nevada and California. Thank you, Mark. thank you mark Good afternoon, everyone, and thank you for joining our second quarter 2025 earnings call. good afternoon everyone and thank you for joining our second quarter 2025 earnings call I'm pleased to report another strong quarter of performance for TOI on our path to profitability, driven by the contributions of our over 650 outstanding clinicians and teammates. i'm pleased to report another strong quarter of performance for toi on our path to profitability driven by the contributions of our over 650 outstanding clinicians and teammates The strong momentum we saw in the first quarter continued into the second quarter, with year-over-year revenue growth of more than 20%. the strong momentum we saw in the first quarter continued into the second quarter with year-over-year revenue growth of more than 20% Our second quarter revenue of $120 million was driven by monthly records set in our pharmacy business, as well as 10% year-over-year growth in our fee-for-service business, driven by strong organic growth performance in Florida and Oregon. our second quarter revenue of $120 million was driven by monthly records set in our pharmacy business as well as 10% year-over-year growth in our fee-for-service business driven by strong organic growth performance in florida and oregon Our value-based contract pipeline remains equally strong, with contracts effective in Q2 adding over 50,000 capitated lives in Nevada and California. our value-based contract pipeline remains equally strong with contracts effective in q2 adding over 50,000 capitated lives in nevada and california We anticipate new value-based partnerships to continue strong momentum in the second half of the year through several new contracts, which I will provide more detail on shortly. At this point in the year, we remain confident in achieving positive adjusted EBITDA in the fourth quarter. Adjusted EBITDA loss of $4.1 million in Q2 represents a $4.6 million improvement compared to the same quarter last year, reducing the EBITDA loss by more than half, which was primarily the result of organic fee-for-service and pharmacy revenue growth, discipline in clinical payroll and SG&A across higher volumes, as well as improving drug margins across IV and pharmacy, as TOI leverages its increased buying power and distributor relationships. We anticipate new value-based partnerships to continue strong momentum in the second half of the year through several new contracts, which I will provide more detail on shortly. we anticipate new value-based partnerships to continue strong momentum in the second half of the year through several new contracts which i will provide more detail on shortly At this point in the year, we remain confident in achieving positive adjusted EBITDA in the fourth quarter. at this point in the year we remain confident in achieving positive adjusted ebitda in the fourth quarter Adjusted EBITDA loss of $4.1 million in Q2 represents a $4.6 million improvement compared to the same quarter last year, reducing the EBITDA loss by more than half, which was primarily the result of organic fee-for-service and pharmacy revenue growth, discipline in clinical payroll and SG&A across higher volumes, as well as improving drug margins across IV and pharmacy, as TOI leverages its increased buying power and distributor relationships. adjusted ebitda loss of $4.1 million in q2 represents a $4.6 million improvement compared to the same quarter last year reducing the ebitda loss by more than half which was primarily the result of organic fee-for-service and pharmacy revenue growth discipline in clinical payroll and sg&a across higher volumes as well as improving drug margins across iv and pharmacy as toi leverages its increased buying power and distributor relationships Turning first to our patient service business, we delivered several new capitated contract wins and expansions in the second quarter and continue to work through a robust pipeline of future opportunities, which will go effective in Q3 and Q4. In addition to the two contracts which went effective in Q2 in Nevada and California, on July 1st, we went effective on an expanded capitation relationship with Silver Summit Health Plan in Nevada to serve all of their Medicaid patients in Clark County, adding an additional 49,000 patient lives to this market. The integration is underway and tracking according to plan. Additionally, in the quarter, we received exclusivity on a capitation contract for another key Optum region in California, which we attribute to our high-quality outcomes and ongoing strength of this important partnership. Turning first to our patient service business, we delivered several new capitated contract wins and expansions in the second quarter and continue to work through a robust pipeline of future opportunities, which will go effective in Q3 and Q4. turning first to our patient service business we delivered several new capitated contract wins and expansions in the second quarter and continue to work through a robust pipeline of future opportunities which will go effective in q3 and q4 In addition to the two contracts which went effective in Q2 in Nevada and California, on July 1st, we went effective on an expanded capitation relationship with Silver Summit Health Plan in Nevada to serve all of their Medicaid patients in Clark County, adding an additional 49,000 patient lives to this market. in addition to the two contracts which went effective in q2 in nevada and california on july 1st we went effective on an expanded capitation relationship with silver summit health plan in nevada to serve all of their medicaid patients in clark county adding an additional 49,000 patient lives to this market The integration is underway and tracking according to plan. the integration is underway and tracking according to plan Additionally, in the quarter, we received exclusivity on a capitation contract for another key Optum region in California, which we attribute to our high-quality outcomes and ongoing strength of this important partnership. additionally in the quarter we received exclusivity on a capitation contract for another key optum region in california which we attribute to our high-quality outcomes and ongoing strength of this important partnership Finally, we have reached a verbal agreement on expansion of our existing fully delegated capitation partnership in Florida with Elevance Health into two new counties in Central Florida starting in Q4 of this year, which will add over 40,000 additional Medicare Advantage lives, more than doubling our current relationship with this payer and bringing our total Medicare Advantage lives under capitation in the Florida market across all payers to over 100,000. This contract expansion will allow us to increase utilization of the existing clinic investments The Oncology Institute has made in the state without adding significant SG&A and further validates the compelling value proposition of The Oncology Institute's fully delegated model in Florida, where we are now capable of delivering high-quality coordinated cancer care across our hybrid employed clinic and MSO model. Finally, we have reached a verbal agreement on expansion of our existing fully delegated capitation partnership in Florida with Elevance Health into two new counties in Central Florida starting in Q4 of this year, which will add over 40,000 additional Medicare Advantage lives, more than doubling our current relationship with this payer and bringing our total Medicare Advantage lives under capitation in the Florida market across all payers to over 100,000. finally we have reached a verbal agreement on expansion of our existing fully delegated capitation partnership in florida with elevance health into two new counties in central florida starting in q4 of this year which will add over 40,000 additional medicare advantage lives more than doubling our current relationship with this payer and bringing our total medicare advantage lives under capitation in the florida market across all payers to over 100,000 This contract expansion will allow us to increase utilization of the existing clinic investments The Oncology Institute has made in the state without adding significant SG&A and further validates the compelling value proposition of The Oncology Institute's fully delegated model in Florida, where we are now capable of delivering high-quality coordinated cancer care across our hybrid employed clinic and MSO model. this contract expansion will allow us to increase utilization of the existing clinic investments the oncology institute has made in the state without adding significant sg&a and further validates the compelling value proposition of the oncology institute's fully delegated model in florida where we are now capable of delivering high-quality coordinated cancer care across our hybrid employed clinic and mso model As a reminder, our fully delegated offering gives TOI control over utilization management, network design, and claims adjudication for the patients that we serve. We believe this will be our primary model of delivering value-based care in markets outside of California, where we will work more directly with health plans and risk arrangements. It increases our ability to not just deliver outstanding quality care and utilization improvement, but also enables access to ancillary services such as pharmacy and clinical trials for our MSO practice partners, which will drive value for them as well as TOI. As we look at the remainder of 2025 and beyond, we see opportunity in nearly every market where we operate to add new capitated relationships or expand upon existing partnerships. In regards to our pharmacy business, we experienced impressive growth of over 40% in the quarter versus Q2 of 2024. As a reminder, our fully delegated offering gives TO I control over utilization management, network design, and claims adjudication for the patients that we serve. as a reminder our fully delegated offering gives to i control over utilization management network design and claims adjudication for the patients that we serve We believe this will be our primary model of delivering value-based care in markets outside of California, where we will work more directly with health plans and risk arrangements. we believe this will be our primary model of delivering value-based care in markets outside of california where we will work more directly with health plans and risk arrangements It increases our ability to not just deliver outstanding quality care and utilization improvement, but also enables access to ancillary services such as pharmacy and clinical trials for our MSO practice partners, which will drive value for them as well as TO I. it increases our ability to not just deliver outstanding quality care and utilization improvement but also enables access to ancillary services such as pharmacy and clinical trials for our mso practice partners which will drive value for them as well as to i As we look at the remainder of 2025 and beyond, we see opportunity in nearly every market where we operate to add new capitated relationships or expand upon existing partnerships. as we look at the remainder of 2025 and beyond we see opportunity in nearly every market where we operate to add new capitated relationships or expand upon existing partnerships In regards to our pharmacy business, we experienced impressive growth of over 40% in the quarter versus Q2 of 2024. in regards to our pharmacy business we experienced impressive growth of over 40% in the quarter versus q2 of 2024 We are currently forecasting that our pharmacy will grow over 35% for the full year versus prior. The primary drivers of this impressive growth are an increase in patient volumes leading to additional fill opportunities, as well as a reduction in leakage of prescriptions written by TOI providers to outside pharmacies through operational discipline. We are expecting an additional TOI pharmacy location to open in Florida in the second half of this year, which will help fill both Part B and Part D medications where appropriate to our MSO affiliate practices. This will drive down the unit cost of medications where TOI has risk and offer a convenient alternative for our MSO providers to fill Part D medications where appropriate. Now, I would like to turn to leadership and culture. We are currently forecasting that our pharmacy will grow over 35% for the full year versus prior. we are currently forecasting that our pharmacy will grow over 35% for the full year versus prior The primary drivers of this impressive growth are an increase in patient volumes leading to additional fill opportunities, as well as a reduction in leakage of prescriptions written by TO I providers to outside pharmacies through operational discipline. the primary drivers of this impressive growth are an increase in patient volumes leading to additional fill opportunities as well as a reduction in leakage of prescriptions written by to i providers to outside pharmacies through operational discipline We are expecting an additional TO I pharmacy location to open in Florida in the second half of this year, which will help fill both Part B and Part D medications where appropriate to our MSO affiliate practices. we are expecting an additional to i pharmacy location to open in florida in the second half of this year which will help fill both part b and part d medications where appropriate to our mso affiliate practices This will drive down the unit cost of medications where TOI has risk and offer a convenient alternative for our MSO providers to fill Part D medications where appropriate. this will drive down the unit cost of medications where toi has risk and offer a convenient alternative for our mso providers to fill part d medications where appropriate Now, I would like to turn to leadership and culture. now i would like to turn to leadership and culture On our last call, we shared the addition of Dr. Jeff Langsam, our new Chief Clinical Officer, who is focused on leading our efforts around therapeutics, utilization management, and MSO practice engagement. This is the core of our value proposition at TOI and will enable scalability of our delegated model across geographies, as well as unlock tremendous value for TOI and our payer partners. I'm also pleased to announce that Kristen England joined us in July as TOI's new Chief Administrative Officer. Ms. England brings over two decades of leadership experience in healthcare management and operations, most recently serving as a Senior Executive within McKesson's U.S. Oncology Network. She will be overseeing our enterprise central business operations and technology strategy. Her role will be instrumental in driving our transformation into a technology and AI-enabled care delivery organization. On our last call, we shared the addition of Dr. Jeff Langsam, our new Chief Clinical Officer, who is focused on leading our efforts around therapeutics, utilization management, and MSO practice engagement. on our last call we shared the addition of dr jeff langsam our new chief clinical officer who is focused on leading our efforts around therapeutics utilization management and mso practice engagement This is the core of our value proposition at TOI and will enable scalability of our delegated model across geographies, as well as unlock tremendous value for TOI and our payer partners. this is the core of our value proposition at toi and will enable scalability of our delegated model across geographies as well as unlock tremendous value for toi and our payer partners I'm also pleased to announce that Kristen England joined us in July as TOI's new Chief Administrative Officer. i'm also pleased to announce that kristen england joined us in july as toi's new chief administrative officer Ms. England brings over two decades of leadership experience in healthcare management and operations, most recently serving as a Senior Executive within McKesson's U.S. ms england brings over two decades of leadership experience in healthcare management and operations most recently serving as a senior executive within mckesson's u.s Oncology Network. oncology network She will be overseeing our enterprise central business operations and technology strategy. she will be overseeing our enterprise central business operations and technology strategy Her role will be instrumental in driving our transformation into a technology and AI-enabled care delivery organization. her role will be instrumental in driving our transformation into a technology and ai-enabled care delivery organization This will not only drive a better patient and physician experience, but further reduce OpEx as a percentage of revenue as we grow, driving margin and profitability. We are launching three AI enablement efforts in Q3 to make meaningful changes in performance and cost for revenue cycle management, prior authorization services, and our patient call center. Lastly, our current Chairman, Richard Barish, has decided to retire and will be stepping down effective August 12th. Richard has been an incredible mentor for the management team, and we thank him for his steady leadership of our board through our first years as a public company. I'm very pleased to announce that the board has voted unanimously to elect Anne McGeorge as our new Chair. Anne has been a TOI board member and Chair of our Audit Committee since we went public in 2021. This will not only drive a better patient and physician experience, but further reduce OpEx as a percentage of revenue as we grow, driving margin and profitability. this will not only drive a better patient and physician experience but further reduce opex as a percentage of revenue as we grow driving margin and profitability We are launching three AI enablement efforts in Q3 to make meaningful changes in performance and cost for revenue cycle management, prior authorization services, and our patient call center. we are launching three ai enablement efforts in q3 to make meaningful changes in performance and cost for revenue cycle management prior authorization services and our patient call center Lastly, our current Chairman, Richard Barish, has decided to retire and will be stepping down effective August 12th. lastly our current chairman richard barish has decided to retire and will be stepping down effective august 12th Richard has been an incredible mentor for the management team, and we thank him for his steady leadership of our board through our first years as a public company. richard has been an incredible mentor for the management team and we thank him for his steady leadership of our board through our first years as a public company I'm very pleased to announce that the board has voted unanimously to elect Anne McGeorge as our new Chair. i'm very pleased to announce that the board has voted unanimously to elect anne mcgeorge as our new chair Anne has been a TOI board member and Chair of our Audit Committee since we went public in 2021. anne has been a toi board member and chair of our audit committee since we went public in 2021 Anne has a wealth of public and private company experience as both a Senior Executive and board member. She was the former National Managing Partner of Healthcare for Grant Thornton, and prior to that, a Partner at Deloitte. We are thrilled that Anne has been promoted into her new role and look forward to continuing to build on the success of TOI under her mentorship. I'll now turn the call over to our Chief Financial Officer, Rob Carter, to cover the second quarter financials in more detail. Rob? Anne has a wealth of public and private company experience as both a Senior Executive and board member. anne has a wealth of public and private company experience as both a senior executive and board member She was the former National Managing Partner of Healthcare for Grant Thornton, and prior to that, a Partner at Deloitte. she was the former national managing partner of healthcare for grant thornton and prior to that a partner at deloitte We are thrilled that Anne has been promoted into her new role and look forward to continuing to build on the success of TOI under her mentorship. we are thrilled that anne has been promoted into her new role and look forward to continuing to build on the success of toi under her mentorship I'll now turn the call over to our Chief Financial Officer, Rob Carter, to cover the second quarter financials in more detail. i'll now turn the call over to our chief financial officer rob carter to cover the second quarter financials in more detail Rob? rob

Speaker 6: Thanks, Dan, and good afternoon, everyone. I want to echo Dan's enthusiasm about our solid second quarter results. In the quarter, we've seen continued momentum across our business, demonstrated margin expansion, and improved working capital, all while making meaningful progress on achieving adjusted EBITDA and free cash flow positivity by year-end. I'll start today with a review of the Q2 results, and then close my prepared remarks by reviewing our financial outlook. Consolidated revenue of $119.8 million increased 21.5% compared to Q2 of 2024. Patient services revenue, which represents 47% of total revenue this quarter, was $55.9 million. This growth represents a 7% increase compared to a year ago, driven by fee-for-service revenue and a 5% sequential increase driven by capitation and fee-for-service revenue. Pharmacy revenue of $62.6 million increased 41% compared to Q2 of last year and 27% sequentially, and now represents 52% of total revenue. Thanks, Dan, and good afternoon, everyone. thanks dan and good afternoon everyone I want to echo Dan's enthusiasm about our solid second quarter results. i want to echo dan's enthusiasm about our solid second quarter results In the quarter, we've seen continued momentum across our business, demonstrated margin expansion, and improved working capital, all while making meaningful progress on achieving adjusted EBITDA and free cash flow positivity by year-end. in the quarter we've seen continued momentum across our business demonstrated margin expansion and improved working capital all while making meaningful progress on achieving adjusted ebitda and free cash flow positivity by year-end I'll start today with a review of the Q2 results, and then close my prepared remarks by reviewing our financial outlook. i'll start today with a review of the q2 results and then close my prepared remarks by reviewing our financial outlook Consolidated revenue of $119.8 million increased 21.5% compared to Q2 of 2024. consolidated revenue of $119.8 million increased 21.5% compared to q2 of 2024 Patient services revenue, which represents 47% of total revenue this quarter, was $55.9 million. patient services revenue which represents 47% of total revenue this quarter was $55.9 million This growth represents a 7% increase compared to a year ago, driven by fee-for-service revenue and a 5% sequential increase driven by capitation and fee-for-service revenue. this growth represents a 7% increase compared to a year ago driven by fee-for-service revenue and a 5% sequential increase driven by capitation and fee-for-service revenue Pharmacy revenue of $62.6 million increased 41% compared to Q2 of last year and 27% sequentially, and now represents 52% of total revenue. pharmacy revenue of $62.6 million increased 41% compared to q2 of last year and 27% sequentially and now represents 52% of total revenue This strong growth was driven by increases in both our capitated and fee-for-service lives and improved performance of our retail and medically integrated dispensaries. Clinical trials and other revenue was $1.3 million at the quarter. Recall that we outsourced our clinical trials business to Helios in the middle of the second quarter. Moving down to P&L, our gross profit in the quarter of $17.5 million increased 34% year-over-year and 1.5% sequentially. Gross margin of 14.6% increased 140 basis points year-over-year, driven by the expansion in our dispensary gross margin, partially offset by a slight decline in patient services gross margin. Within patient services, TO saw a decrease in margin on capitation revenue and an increase in margin on fee-for-service revenue. This strong growth was driven by increases in both our capitated and fee-for-service lives and improved performance of our retail and medically integrated dispensaries. this strong growth was driven by increases in both our capitated and fee-for-service lives and improved performance of our retail and medically integrated dispensaries Clinical trials and other revenue was $1.3 million at the quarter. clinical trials and other revenue was $1.3 million at the quarter Recall that we outsourced our clinical trials business to Helios in the middle of the second quarter. recall that we outsourced our clinical trials business to helios in the middle of the second quarter Moving down to P&L, our gross profit in the quarter of $17.5 million increased 34% year-over-year and 1.5% sequentially. moving down to p&l our gross profit in the quarter of $17.5 million increased 34% year-over-year and 1.5% sequentially Gross margin of 14.6% increased 140 basis points year-over-year, driven by the expansion in our dispensary gross margin, partially offset by a slight decline in patient services gross margin. gross margin of 14.6% increased 140 basis points year-over-year driven by the expansion in our dispensary gross margin partially offset by a slight decline in patient services gross margin Within patient services, TO saw a decrease in margin on capitation revenue and an increase in margin on fee-for-service revenue. within patient services to saw a decrease in margin on capitation revenue and an increase in margin on fee-for-service revenue As a reminder, when a new capitation contract begins, as several did in Q2 2025, we tend to experience lower margin as TOI generates value in our risk business through discrete and active management of patient populations, which includes utilization management, formulary, and steerage activities, which take time to operationalize and mature. As a result, we expect margin in our capitation business to improve over time as these new populations are conformed to TOI medical model. Meanwhile, we are seeing better profitability in the fee-for-service business, driven by increased provider utilization on higher patient volumes and improving drug margin performance due to the increasing scale and sophistication of TOI's drug inventory management system. On a sequential basis, you may note that gross margin declined approximately 190 basis points from 1Q. Recall that last quarter benefited from a one-time rebate from a drug supplier partner. As a reminder, when a new capitation contract begins, as several did in Q2 2025, we tend to experience lower margin as TO I generates value in our risk business through discrete and active management of patient populations, which includes utilization management, formulary, and steerage activities, which take time to operationalize and mature. as a reminder when a new capitation contract begins as several did in q2 2025 we tend to experience lower margin as to i generates value in our risk business through discrete and active management of patient populations which includes utilization management formulary and steerage activities which take time to operationalize and mature As a result, we expect margin in our capitation business to improve over time as these new populations are conformed to TO I medical model. as a result we expect margin in our capitation business to improve over time as these new populations are conformed to to i medical model Meanwhile, we are seeing better profitability in the fee-for-service business, driven by increased provider utilization on higher patient volumes and improving drug margin performance due to the increasing scale and sophistication of TO I's drug inventory management system. meanwhile we are seeing better profitability in the fee-for-service business driven by increased provider utilization on higher patient volumes and improving drug margin performance due to the increasing scale and sophistication of to i's drug inventory management system On a sequential basis, you may note that gross margin declined approximately 190 basis points from 1Q. on a sequential basis you may note that gross margin declined approximately 190 basis points from 1q Recall that last quarter benefited from a one-time rebate from a drug supplier partner. recall that last quarter benefited from a one-time rebate from a drug supplier partner If not for that, Q2 would have increased sequentially. SG&A of $26.9 million in Q2 of 2025 decreased from $27.9 million in a similar period last year, representing a 3.5% decrease. SG&A includes a $2.4 million one-time write-off of net assets related to outsourcing our clinical trials business, as mentioned earlier, which was added back to adjusted EBITDA in the quarter. Normalizing from this one-time item, SG&A would have decreased 12% year-over-year. The operating leverage in our platform represents another lever pull on our path to profitability. SG&A represented 22% of total revenue, a 580 basis point reduction year-over-year. We think there is further leverage in the model with increased scale, as well as the adoption of AI enablement we noted on our first quarter call. If not for that, Q2 would have increased sequentially. if not for that q2 would have increased sequentially SG&A of $26.9 million in Q2 of 2025 decreased from $27.9 million in a similar period last year, representing a 3.5% decrease. sg&a of $26.9 million in q2 of 2025 decreased from $27.9 million in a similar period last year representing a 3.5% decrease SG&A includes a $2.4 million one-time write-off of net assets related to outsourcing our clinical trials business, as mentioned earlier, which was added back to adjusted EBITDA in the quarter. sg&a includes a $2.4 million one-time write-off of net assets related to outsourcing our clinical trials business as mentioned earlier which was added back to adjusted ebitda in the quarter Normalizing from this one-time item, SG&A would have decreased 12% year-over-year. normalizing from this one-time item sg&a would have decreased 12% year-over-year The operating leverage in our platform represents another lever pull on our path to profitability. the operating leverage in our platform represents another lever pull on our path to profitability SG&A represented 22% of total revenue, a 580 basis point reduction year-over-year. sg&a represented 22% of total revenue a 580 basis point reduction year-over-year We think there is further leverage in the model with increased scale, as well as the adoption of AI enablement we noted on our first quarter call. we think there is further leverage in the model with increased scale as well as the adoption of ai enablement we noted on our first quarter call We are planning to launch AI pilots around prior auth, patient advocacy, and a next-gen call center in the third quarter, and we'll keep you posted on their progress. Loss from operations was $11.2 million, an improvement from a $16.4 million loss in Q2 of 2024. Adjusted EBITDA was -$4.1 million, compared favorably to -$8.7 million in Q2 of 2024. Moving on to the balance sheet and cash flow, as of the end of Q2 2025, our cash and cash equivalents were $30.3 million. Cash flow from operations for the first half of 2025 was a loss of $15.2 million, representing a 52% improvement in the first half of 2024. Free cash flow was -$14.6 million for the first six months ended June 30, 2025, a reduction of 54.1% from the same quarter in the prior year. We are planning to launch AI pilots around prior auth, patient advocacy, and a next-gen call center in the third quarter, and we'll keep you posted on their progress. we are planning to launch ai pilots around prior auth patient advocacy and a next-gen call center in the third quarter and we'll keep you posted on their progress Loss from operations was $11.2 million, an improvement from a $16.4 million loss in Q2 of 2024. loss from operations was $11.2 million an improvement from a $16.4 million loss in q2 of 2024 Adjusted EBITDA was -$4.1 million, compared favorably to -$8.7 million in Q2 of 2024. adjusted ebitda was -$4.1 million compared favorably to -$8.7 million in q2 of 2024 Moving on to the balance sheet and cash flow, as of the end of Q2 2025, our cash and cash equivalents were $30.3 million. moving on to the balance sheet and cash flow as of the end of q2 2025 our cash and cash equivalents were $30.3 million Cash flow from operations for the first half of 2025 was a loss of $15.2 million, representing a 52% improvement in the first half of 2024. cash flow from operations for the first half of 2025 was a loss of $15.2 million representing a 52% improvement in the first half of 2024 Free cash flow was -$14.6 million for the first six months ended June 30, 2025, a reduction of 54.1% from the same quarter in the prior year. free cash flow was -$14.6 million for the first six months ended june 30 2025 a reduction of 54.1% from the same quarter in the prior year Integral to our management of rising drug costs, we're maximizing our drug rebates through strategic purchasing, as well as more active formulary management. The net effect is improved drug margins, a temporary use of cash, and an increase to our rebate AR as payment of rebates varies by manufacturer, but generally extends for multiple subsequent quarters. Additionally, with multiple months of concerted increases to our pharmacy revenue, pharmacy AR has also increased. All positive indicators for where the business is trending, but as such, we expect to end the year at the lower end of free cash flow guidance. Finally, turning to guidance, for the full year, we are reiterating our full year 2025 outlook. Specifically, we expect revenue of $460 million-$480 million. Given the growth we've seen in the first half of the year, we believe that we will reach the high end of that range. Integral to our management of rising drug costs, we're maximizing our drug rebates through strategic purchasing, as well as more active formulary management. integral to our management of rising drug costs we're maximizing our drug rebates through strategic purchasing as well as more active formulary management The net effect is improved drug margins, a temporary use of cash, and an increase to our rebate AR as payment of rebates varies by manufacturer, but generally extends for multiple subsequent quarters. the net effect is improved drug margins a temporary use of cash and an increase to our rebate ar as payment of rebates varies by manufacturer but generally extends for multiple subsequent quarters Additionally, with multiple months of concerted increases to our pharmacy revenue, pharmacy AR has also increased. additionally with multiple months of concerted increases to our pharmacy revenue pharmacy ar has also increased All positive indicators for where the business is trending, but as such, we expect to end the year at the lower end of free cash flow guidance. all positive indicators for where the business is trending but as such we expect to end the year at the lower end of free cash flow guidance Finally, turning to guidance, for the full year, we are reiterating our full year 2025 outlook. finally turning to guidance for the full year we are reiterating our full year 2025 outlook Specifically, we expect revenue of $460 million- $480 million. specifically we expect revenue of $460 million- $480 million Given the growth we've seen in the first half of the year, we believe that we will reach the high end of that range. given the growth we've seen in the first half of the year we believe that we will reach the high end of that range Adjusted EBITDA of a loss of $17 million to a loss of $8 million. At this point in the year, we have a solid line of sight to the midpoint of that range, as our four oncology networks are just starting to ramp. I'd also like to take a moment to talk about some of the assumptions that support second half growth. In terms of revenue, we expect quarterly revenue to continue to increase sequentially in Q3 and Q4. Driving this is the initiation of new risk contracts, particularly our delegated network deal in Florida, continued growth in our pharmacy business, and a substantial positive year-over-year organic fee-for-service performance in Florida and Oregon. Adjusted EBITDA of a loss of $17 million to a loss of $8 million. adjusted ebitda of a loss of $17 million to a loss of $8 million At this point in the year, we have a solid line of sight to the midpoint of that range, as our four oncology networks are just starting to ramp. at this point in the year we have a solid line of sight to the midpoint of that range as our four oncology networks are just starting to ramp I'd also like to take a moment to talk about some of the assumptions that support second half growth. i'd also like to take a moment to talk about some of the assumptions that support second half growth In terms of revenue, we expect quarterly revenue to continue to increase sequentially in Q3 and Q4. in terms of revenue we expect quarterly revenue to continue to increase sequentially in q3 and q4 Driving this is the initiation of new risk contracts, particularly our delegated network deal in Florida, continued growth in our pharmacy business, and a substantial positive year-over-year organic fee-for-service performance in Florida and Oregon. driving this is the initiation of new risk contracts particularly our delegated network deal in florida continued growth in our pharmacy business and a substantial positive year-over-year organic fee-for-service performance in florida and oregon As we think about gross margin in the back half of the year, we anticipate sequential improvement as we further optimize risk margins, partially offset by the start of new contracts, and benefit from natural expansion in drug pricing spread through year-end and continue our process of optimizing our drug supply chain and clinical formulary management. Specifically, our increased scale allows us to work more effectively with our drug distributor and manufacturer partners, and our investments in personnel and clinical technology allow us to be more active and precise in managing patient utilization of drug formulary. For adjusted EBITDA, we anticipate further sequential improvement. In Q3, we expect adjusted EBITDA of -$2.5 million to -$3.5 million, and as Dan noted, we are on track to show positive results in Q4. With that, I'll turn the call back over to Dan for closing comments. As we think about gross margin in the back half of the year, we anticipate sequential improvement as we further optimize risk margins, partially offset by the start of new contracts, and benefit from natural expansion in drug pricing spread through year-end and continue our process of optimizing our drug supply chain and clinical formulary management. as we think about gross margin in the back half of the year we anticipate sequential improvement as we further optimize risk margins partially offset by the start of new contracts and benefit from natural expansion in drug pricing spread through year-end and continue our process of optimizing our drug supply chain and clinical formulary management Specifically, our increased scale allows us to work more effectively with our drug distributor and manufacturer partners, and our investments in personnel and clinical technology allow us to be more active and precise in managing patient utilization of drug formulary. specifically our increased scale allows us to work more effectively with our drug distributor and manufacturer partners and our investments in personnel and clinical technology allow us to be more active and precise in managing patient utilization of drug formulary For adjusted EBITDA, we anticipate further sequential improvement. for adjusted ebitda we anticipate further sequential improvement In Q3, we expect adjusted EBITDA of -$2.5 million to -$3.5 million, and as Dan noted, we are on track to show positive results in Q4. in q3 we expect adjusted ebitda of -$2.5 million to -$3.5 million and as dan noted we are on track to show positive results in q4 With that, I'll turn the call back over to Dan for closing comments. with that i'll turn the call back over to dan for closing comments

Speaker 1: Thanks, Rob. In closing, in the second quarter, we delivered solid top-line growth in all lines of our business while driving meaningful year-over-year reduction in EBITDA loss. We made meaningful progress expanding our capitated partnerships, saw strong growth in our pharmacy and fee-for-service business, reduced SG&A over 12% from the same quarter prior year, and set a path for further efficiencies in our cost structure as we scale through technology enablement. We anticipate these efforts will continue to gain momentum through the rest of the year and remain on track to deliver adjusted EBITDA positivity in Q4. Operator, at this point, let's open the call to questions. Thanks, Rob. thanks rob In closing, in the second quarter, we delivered solid top-line growth in all lines of our business while driving meaningful year-over-year reduction in EBITDA loss. in closing in the second quarter we delivered solid top-line growth in all lines of our business while driving meaningful year-over-year reduction in ebitda loss We made meaningful progress expanding our capitated partnerships, saw strong growth in our pharmacy and fee-for-service business, reduced SG&A over 12% from the same quarter prior year, and set a path for further efficiencies in our cost structure as we scale through technology enablement. we made meaningful progress expanding our capitated partnerships saw strong growth in our pharmacy and fee-for-service business reduced sg&a over 12% from the same quarter prior year and set a path for further efficiencies in our cost structure as we scale through technology enablement We anticipate these efforts will continue to gain momentum through the rest of the year and remain on track to deliver adjusted EBITDA positivity in Q4. we anticipate these efforts will continue to gain momentum through the rest of the year and remain on track to deliver adjusted ebitda positivity in q4 Operator, at this point, let's open the call to questions. operator at this point let's open the call to questions

Speaker 7: Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press Star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from David Michael Larsen with BTIG. Please go ahead. Thank you. thank you Ladies and gentlemen, we will now be conducting a question- and- answer session. ladies and gentlemen we will now be conducting a question- and- answer session If you would like to ask a question, please press Star and one on your telephone keypad. if you would like to ask a question please press star and one on your telephone keypad A confirmation tone will indicate your line is in the question queue. a confirmation tone will indicate your line is in the question queue You may press Star and two if you would like to remove your question from the queue. you may press star and two if you would like to remove your question from the queue For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. for participants using speaker equipment it may be necessary to pick up your handset before pressing the star keys Ladies and gentlemen, we will wait for a moment while we poll for questions. ladies and gentlemen we will wait for a moment while we poll for questions Our first question comes from David Michael Larsen with BTIG. our first question comes from david michael larsen with btig Please go ahead. please go ahead

Speaker 5: Hey, congratulations on the very good quarter. Can you talk a little bit about the dispensing gross margin? That looked like it was up a lot year over year, maybe almost 600 basis points. Just any thoughts on what's driving that? Are there any specific drugs? Is it Part B or is it Part D? Just any color there would be very helpful. Thank you. Hey, congratulations on the very good quarter. hey congratulations on the very good quarter Can you talk a little bit about the dispensing gross margin? can you talk a little bit about the dispensing gross margin That looked like it was up a lot year over year, maybe almost 600 basis points. that looked like it was up a lot year over year maybe almost 600 basis points Just any thoughts on what's driving that? just any thoughts on what's driving that Are there any specific drugs? are there any specific drugs Is it Part B or is it Part D? is it part b or is it part d Just any color there would be very helpful. just any color there would be very helpful Thank you. thank you

Speaker 6: Hey, Dave, it's Rob. Q2 of last year was the worst impact from the DARP clawback. That's the quarter specifically where we took a 2023 date of service reduction. Dispensary margin in Q2 of 2024 was, I would say, artificially low because of that. Even normalizing for that, though, you're looking at double-digit growth year-over-year. That actually has a lot to do with the way in which we're procuring drugs at this point. Our scale at this point is providing new opportunities for us, including incremental rebates, as well as some other pricing considerations that's just yielding better rebates and margin overall. Hey, Dave, it's Rob. hey dave it's rob Q2 of last year was the worst impact from the DARP clawback. q2 of last year was the worst impact from the darp clawback That's the quarter specifically where we took a 2023 date of service reduction. that's the quarter specifically where we took a 2023 date of service reduction Dispensary margin in Q2 of 2024 was, I would say, artificially low because of that. dispensary margin in q2 of 2024 was i would say artificially low because of that Even normalizing for that, though, you're looking at double-digit growth year- over- year. even normalizing for that though you're looking at double-digit growth year- over- year That actually has a lot to do with the way in which we're procuring drugs at this point. that actually has a lot to do with the way in which we're procuring drugs at this point Our scale at this point is providing new opportunities for us, including incremental rebates, as well as some other pricing considerations that's just yielding better rebates and margin overall. our scale at this point is providing new opportunities for us including incremental rebates as well as some other pricing considerations that's just yielding better rebates and margin overall

Speaker 5: Are these infused oncology medications dispensed in the office as part of, like, Part B, as in boy? Are these infused oncology medications dispensed in the office as part of, like, Part B, as in boy? are these infused oncology medications dispensed in the office as part of like part b as in boy

Speaker 1: No. Hey, Dave, it's Dan Virnich. No, we're talking about Part D medications, so primarily oral specialty or self-injectables where they can be compliantly given in a Part D. No. no Hey, Dave, it's Dan Virnich. hey dave it's dan virnich No, we're talking about Part D medications, so primarily oral specialty or self-injectables where they can be compliantly given in a Part D. no we're talking about part d medications so primarily oral specialty or self-injectables where they can be compliantly given in a part d

Speaker 5: Okay, great. Any thoughts on the potential impact for drug pricing reform, the Inflation Reduction Act, most favored nation comments, just any thoughts on how that would impact your business, if at all? Okay, great. okay great Any thoughts on the potential impact for drug pricing reform, the Inflation Reduction Act, most favored nation comments, just any thoughts on how that would impact your business, if at all? any thoughts on the potential impact for drug pricing reform the inflation reduction act most favored nation comments just any thoughts on how that would impact your business if at all

Speaker 1: We continue to follow that very closely, and we continue to believe that it's going to be net positive for TOI for a couple of reasons. One, reduction in pricing on our capitated business is obviously favorable for capitated margins and for our patients. On the fee-for-service side of the house, which is what most practices in the country are doing exclusively, we believe there will be some sort of make-hold through rebates or another mechanism to help keep those practices afloat. In totality, those two forces will be net positive for TOI. We continue to follow that very closely, and we continue to believe that it's going to be net positive for TOI for a couple of reasons. we continue to follow that very closely and we continue to believe that it's going to be net positive for toi for a couple of reasons One, reduction in pricing on our capitated business is obviously favorable for capitated margins and for our patients. one reduction in pricing on our capitated business is obviously favorable for capitated margins and for our patients On the fee-for-service side of the house, which is what most practices in the country are doing exclusively, we believe there will be some sort of make-hold through rebates or another mechanism to help keep those practices afloat. on the fee-for-service side of the house which is what most practices in the country are doing exclusively we believe there will be some sort of make-hold through rebates or another mechanism to help keep those practices afloat In totality, those two forces will be net positive for TOI. in totality those two forces will be net positive for toi

Speaker 5: Okay. Just like OptionCare as an example, they've been talking about a certain drug like Stelara. There are some changes in pricing for that medication. It's not even an oncology drug. I think that's more like in the gut. That one drug, changes in pricing for that one drug, is having a significant impact on OptionCare's EBIT. Is there anything like that in your book of business that investors should be aware of as we get to the back half of the year or into 2026? Are there any one or two or three drugs that might be going on like biosimilar with one manufacturer? Any thoughts there would be helpful. Okay. okay Just like OptionCare as an example, they've been talking about a certain drug like Stelara. There are some changes in pricing for that medication. just like optioncare as an example they've been talking about a certain drug like stelara. there are some changes in pricing for that medication It's not even an oncology drug. it's not even an oncology drug I think that's more like in the gut. i think that's more like in the gut That one drug, changes in pricing for that one drug, is having a significant impact on OptionCare's EBIT. that one drug changes in pricing for that one drug is having a significant impact on optioncare's ebit Is there anything like that in your book of business that investors should be aware of as we get to the back half of the year or into 2026? is there anything like that in your book of business that investors should be aware of as we get to the back half of the year or into 2026 Are there any one or two or three drugs that might be going on like biosimilar with one manufacturer? are there any one or two or three drugs that might be going on like biosimilar with one manufacturer Any thoughts there would be helpful. any thoughts there would be helpful

Speaker 1: No, not that we forecast. We've looked very extensively at our current drug portfolio. I think oncology benefits from the fact that within any given class, there's multiple different options that can be clinically equivalent, including biosimilar and non, as well as other combinations. Within that, we see no situation where we have a single drug that is placing substantial risk on TOI portfolio related to that sort of situation. No, not that we forecast. no not that we forecast We've looked very extensively at our current drug portfolio. we've looked very extensively at our current drug portfolio I think oncology benefits from the fact that within any given class, there's multiple different options that can be clinically equivalent, including biosimilar and non, as well as other combinations. i think oncology benefits from the fact that within any given class there's multiple different options that can be clinically equivalent including biosimilar and non as well as other combinations Within that, we see no situation where we have a single drug that is placing substantial risk on TO I portfolio related to that sort of situation. within that we see no situation where we have a single drug that is placing substantial risk on to i portfolio related to that sort of situation

Speaker 5: Just one more quick one for me before I hop in the queue. Can you talk a little bit more about the pressure on the gross patient service margin? How much of that gross profit is, we'll call it, capitated versus how much is fee-for-service? How much time will it take for that margin to kind of pick back up? Thank you. Just one more quick one for me before I hop in the queue. just one more quick one for me before i hop in the queue Can you talk a little bit more about the pressure on the gross patient service margin? can you talk a little bit more about the pressure on the gross patient service margin How much of that gross profit is, we'll call it, capitated versus how much is fee-for-service? how much of that gross profit is we'll call it capitated versus how much is fee-for-service How much time will it take for that margin to kind of pick back up? how much time will it take for that margin to kind of pick back up Thank you. thank you

Speaker 6: Yeah, it's primarily related to CAC margin. We had a pretty sizable contract launch in March. This is in our Florida oncology network. We are barely through the continuity of care period where patients are remaining with the existing provider before moving over to TOI. It wasn't a surprise at all. It's at this point where we expect to see the patients being transferred over to us. The margin will correspond and pick up over the next three months. No surprise there. That's one of the main catalysts for future margin progression, these new CAC contracts maturing as they age. Yeah, it's primarily related to CAC margin. yeah it's primarily related to cac margin We had a pretty sizable contract launch in March. we had a pretty sizable contract launch in march This is in our Florida oncology network. this is in our florida oncology network We are barely through the continuity of care period where patients are remaining with the existing provider before moving over to T O I. we are barely through the continuity of care period where patients are remaining with the existing provider before moving over to t o i It wasn't a surprise at all. it wasn't a surprise at all It's at this point where we expect to see the patients being transferred over to us. it's at this point where we expect to see the patients being transferred over to us The margin will correspond and pick up over the next three months. the margin will correspond and pick up over the next three months No surprise there. no surprise there That's one of the main catalysts for future margin progression, these new CAC contracts maturing as they age. that's one of the main catalysts for future margin progression these new cac contracts maturing as they age

Speaker 5: I think what I heard you say is you are now responsible for those members. You're collecting the TMPM rate, but they're getting their care where they had been originally, and they haven't yet transferred their care into The TOI clinics. Once they do that, we'll see the margins improve. Did I hear that correctly? I think what I heard you say is you are now responsible for those members. i think what i heard you say is you are now responsible for those members You're collecting the TMPM rate, but they're getting their care where they had been originally, and they haven't yet transferred their care into The TOI clinics. you're collecting the tmpm rate but they're getting their care where they had been originally and they haven't yet transferred their care into the toi clinics Once they do that, we'll see the margins improve. once they do that we'll see the margins improve Did I hear that correctly? did i hear that correctly

Speaker 6: That's right. That's right. that's right

Speaker 5: Okay, I got a bunch more, but I'm going to hop back in the queue. Thanks. Okay, I got a bunch more, but I'm going to hop back in the queue. okay i got a bunch more but i'm going to hop back in the queue Thanks. thanks

Speaker 6: Thanks, Dave. Thanks, Dave. thanks dave

Speaker 7: Thank you. Our next question comes from Yuan Zhi with B. Riley Securities. Please go ahead. Thank you. thank you Our next question comes from Yuan Zhi with B. our next question comes from yuan zhi with b Riley Securities. riley securities Please go ahead. please go ahead

Speaker 3: Thank you for taking our questions and congrats on a good quarter. I got a couple. First, one of your value-based care peers experienced the highest level of oncology spend in history and continued to forecast a high level of spend in the second half of 2025. What was your observation in Q2 2025, and will you be able to continue managing the cost at a relatively low level in the second half of 2025? Thank you for taking our questions and congrats on a good quarter. thank you for taking our questions and congrats on a good quarter I got a couple. i got a couple First, one of your value-based care peers experienced the highest level of oncology spend in history and continued to forecast a high level of spend in the second half of 2025. first one of your value-based care peers experienced the highest level of oncology spend in history and continued to forecast a high level of spend in the second half of 2025 What was your observation in Q2 2025, and will you be able to continue managing the cost at a relatively low level in the second half of 2025? what was your observation in q2 2025 and will you be able to continue managing the cost at a relatively low level in the second half of 2025

Speaker 1: Yeah. Hi, Yuan. It's Dan. Thanks for the great question. 2025 was no surprise in the sense that we saw another year of huge increases in drug cost trend, driven by, again, overutilization as well as just increase in cost overall for procurement. That benefits TOI in the sense that there is more opportunity for us to provide value to our payer partners. We, as a whole, have seen our MLR remain relatively stable. That's due to a couple of different things. One is our ability to narrow networks to drive care to lower cost sites of care and the high degree of control that our program provides over ensuring NCCN compliance, but also value-based therapeutic decision-making. While the overall oncology-wide cost trend went up, that provides opportunity for us to engage and provide more value to payer partners. Yeah. yeah Hi, Yuan. hi yuan It's Dan. it's dan Thanks for the great question. 2025 was no surprise in the sense that we saw another year of huge increases in drug cost trend, driven by, again, overutilization as well as just increase in cost overall for procurement. That benefits TO I in the sense that there is more opportunity for us to provide value to our payer partners. thanks for the great question 2025 was no surprise in the sense that we saw another year of huge increases in drug cost trend driven by again overutilization as well as just increase in cost overall for procurement. that benefits to i in the sense that there is more opportunity for us to provide value to our payer partners We, as a whole, have seen our MLR remain relatively stable. we as a whole have seen our mlr remain relatively stable That's due to a couple of different things. that's due to a couple of different things One is our ability to narrow networks to drive care to lower cost sites of care and the high degree of control that our program provides over ensuring NCCN compliance, but also value-based therapeutic decision-making. one is our ability to narrow networks to drive care to lower cost sites of care and the high degree of control that our program provides over ensuring nccn compliance but also value-based therapeutic decision-making While the overall oncology-wide cost trend went up, that provides opportunity for us to engage and provide more value to payer partners. while the overall oncology-wide cost trend went up that provides opportunity for us to engage and provide more value to payer partners Internally, when we look at our drug cost trend, it's been stable. Internally, when we look at our drug cost trend, it's been stable. internally when we look at our drug cost trend it's been stable

Speaker 3: Got it. Can you quickly comment on the timeline of this opportunity with Elevance Health in Florida? I think it starts in 4Q. Can you recognize revenue in 4Q, or is it more in the first half of 2026? Got it. got it Can you quickly comment on the timeline of this opportunity with Elevance Health in Florida? can you quickly comment on the timeline of this opportunity with elevance health in florida I think it starts in 4Q. i think it starts in 4q Can you recognize revenue in 4Q, or is it more in the first half of 2026? can you recognize revenue in 4q or is it more in the first half of 2026

Speaker 1: We are tracking towards Q4 at this point, and that's when we would start recognizing revenue. We are tracking towards Q4 at this point, and that's when we would start recognizing revenue. we are tracking towards q4 at this point and that's when we would start recognizing revenue

Speaker 3: Got it. One last question from me, maybe related to the prior question from David, that some PBMs are shifting infusion drugs from clinics to their own pharmacy as a way to shift margin, basically from provider-administered drugs to from medical benefits to pharmacy benefit coverage. Did you notice that, and will that be a negative impact to you for any oncology infusion drug? Got it. got it One last question from me, maybe related to the prior question from David, that some PBMs are shifting infusion drugs from clinics to their own pharmacy as a way to shift margin, basically from provider-administered drugs to from medical benefits to pharmacy benefit coverage. one last question from me maybe related to the prior question from david that some pbms are shifting infusion drugs from clinics to their own pharmacy as a way to shift margin basically from provider-administered drugs to from medical benefits to pharmacy benefit coverage Did you notice that, and will that be a negative impact to you for any oncology infusion drug? did you notice that and will that be a negative impact to you for any oncology infusion drug

Speaker 1: Yeah, are you referencing you said PBMs is the game? Are you saying is that an opportunity for TOI to fill under pharmacy benefit versus Part B as a way to manage our risk, or am I misinterpreting the question? Yeah, are you referencing you said PBMs is the game? yeah are you referencing you said pbms is the game Are you saying is that an opportunity for TOI to fill under pharmacy benefit versus Part B as a way to manage our risk, or am I misinterpreting the question? are you saying is that an opportunity for toi to fill under pharmacy benefit versus part b as a way to manage our risk or am i misinterpreting the question

Speaker 3: Some of the PBMs are shifting infusion drugs, which are provider-administered and medical benefits, to their own pharmacy benefit coverage. It could be to your pharmacy, but it could also be, for example, CVS pharmacy out there. I'm just curious, have you noticed such a trend, and will that have a negative impact on you? Some of the PBMs are shifting infusion drugs, which are provider-administered and medical benefits, to their own pharmacy benefit coverage. some of the pbms are shifting infusion drugs which are provider-administered and medical benefits to their own pharmacy benefit coverage It could be to your pharmacy, but it could also be, for example, CVS pharmacy out there. it could be to your pharmacy but it could also be for example cvs pharmacy out there I'm just curious, have you noticed such a trend, and will that have a negative impact on you? i'm just curious have you noticed such a trend and will that have a negative impact on you

Speaker 1: Almost without exception, our risk contracts are Part B, as in boy, risk only. Shifting drugs from Part B to Part D would shift them out of risk. That would remove cost that was at risk to The Oncology Institute, so that would be net positive for us, assuming you could compliantly fill a medication under Part D and the PBM drove that change. Almost without exception, our risk contracts are Part B, as in boy, risk only. almost without exception our risk contracts are part b as in boy risk only Shifting drugs from Part B to Part D would shift them out of risk. shifting drugs from part b to part d would shift them out of risk That would remove cost that was at risk to The Oncology Institute, so that would be net positive for us, assuming you could compliantly fill a medication under Part D and the PBM drove that change. that would remove cost that was at risk to the oncology institute so that would be net positive for us assuming you could compliantly fill a medication under part d and the pbm drove that change

Speaker 3: Got it. Thank you for taking our question. Got it. got it Thank you for taking our question. thank you for taking our question

Speaker 1: Thanks. Thanks. thanks

Speaker 7: Thank you. Our next question comes from Robert LeBoyer with Noble Capital Markets. Please go ahead. Thank you. thank you Our next question comes from Robert LeBoyer with Noble Capital Markets. our next question comes from robert leboyer with noble capital markets Please go ahead. please go ahead

Speaker 4: Congratulations on a very nice quarter. I had a question about the new patients that are coming on from the contracts you had previously announced, as well as the ones that you mentioned for the second half. I was wondering if you could give any details about the ones that are online and getting the monthly payment compared with those left to go from the first half or contracts signed in the first half and the ones that will be coming on in the second half, just to get an idea of the additional patient lives that will be added going forward and who are the startups at the higher cost compared with who's going to be in the continuing care at the slightly improved costs? Congratulations on a very nice quarter. congratulations on a very nice quarter I had a question about the new patients that are coming on from the contracts you had previously announced, as well as the ones that you mentioned for the second half. i had a question about the new patients that are coming on from the contracts you had previously announced as well as the ones that you mentioned for the second half I was wondering if you could give any details about the ones that are online and getting the monthly payment compared with those left to go from the first half or contracts signed in the first half and the ones that will be coming on in the second half, just to get an idea of the additional patient lives that will be added going forward and who are the startups at the higher cost compared with who's going to be in the continuing care at the slightly improved costs? i was wondering if you could give any details about the ones that are online and getting the monthly payment compared with those left to go from the first half or contracts signed in the first half and the ones that will be coming on in the second half just to get an idea of the additional patient lives that will be added going forward and who are the startups at the higher cost compared with who's going to be in the continuing care at the slightly improved costs

Speaker 1: Hey, Robert. It's Dan. Thanks for the great question. Our growth in the second half of 2025 is primarily occurring outside of California. It's primarily Medicare Advantage, but we also just, as we discussed, started a new Medicaid risk contract outside of California. Because of the nature of utilization outside of California being much higher across product lines, these are at higher utilization, therefore higher PMPMs, still generating substantial savings for our payer partners. You would expect on a per-member basis higher revenue contribution. Hey, Robert. hey robert It's Dan. it's dan Thanks for the great question. thanks for the great question Our growth in the second half of 2025 is primarily occurring outside of California. our growth in the second half of 2025 is primarily occurring outside of california It's primarily Medicare Advantage, but we also just, as we discussed, started a new Medicaid risk contract outside of California. it's primarily medicare advantage but we also just as we discussed started a new medicaid risk contract outside of california Because of the nature of utilization outside of California being much higher across product lines, these are at higher utilization, therefore higher PMPMs, still generating substantial savings for our payer partners. because of the nature of utilization outside of california being much higher across product lines these are at higher utilization therefore higher pmpms still generating substantial savings for our payer partners You would expect on a per-member basis higher revenue contribution. you would expect on a per-member basis higher revenue contribution

Speaker 4: Okay, great. You mentioned Florida and the expansion there. Is there any percentages of the new people compared with continuing patients, or any sense of how much expansion in the number of lives that there will be in Florida or in the entire network? Okay, great. okay great You mentioned Florida and the expansion there. you mentioned florida and the expansion there Is there any percentages of the new people compared with continuing patients, or any sense of how much expansion in the number of lives that there will be in Florida or in the entire network? is there any percentages of the new people compared with continuing patients or any sense of how much expansion in the number of lives that there will be in florida or in the entire network

Speaker 1: Yeah, I mean, just broadly speaking, we project that Florida will end the year for TOI with right around 100,000 Medicare Advantage lives for Medicare Advantage that we're taking risk on. We have some non-Medicare Advantage risk in that market as well. Versus current, it's about half that. That's a substantial amount of growth just within Florida. If you look at the total number of lives that TOI has under risk right now, we're right around 1.9 million. That 50,000 in Florida that we're going to see in the second half of this year represents an incremental 2.5% on our total portfolio, roughly. Yeah, I mean, just broadly speaking, we project that Florida will end the year for TO I with right around 100,000 Medicare Advantage lives for Medicare Advantage that we're taking risk on. yeah i mean just broadly speaking we project that florida will end the year for to i with right around 100,000 medicare advantage lives for medicare advantage that we're taking risk on We have some non-Medicare Advantage risk in that market as well. we have some non-medicare advantage risk in that market as well Versus current, it's about half that. versus current it's about half that That's a substantial amount of growth just within Florida. that's a substantial amount of growth just within florida If you look at the total number of lives that TOI has under risk right now, we're right around 1.9 million. if you look at the total number of lives that toi has under risk right now we're right around 1.9 million That 50,000 in Florida that we're going to see in the second half of this year represents an incremental 2.5% on our total portfolio, roughly. that 50,000 in florida that we're going to see in the second half of this year represents an incremental 2.5% on our total portfolio roughly

Speaker 4: Great. Thank you for that detail. Great. great Thank you for that detail. thank you for that detail

Speaker 7: Thank you. Our next question is a follow-up from David Larsen with BTIG. Please go ahead. Thank you. thank you Our next question is a follow-up from David Larsen with BTIG. our next question is a follow-up from david larsen with btig Please go ahead. please go ahead

Speaker 5: Can you talk a little bit more about your, you used the phrase fully delegated risk arrangements. What does that mean? Are you taking full risk for all services being provided to those members, including non-oncology care? Can you talk a little bit more about your, you used the phrase fully delegated risk arrangements. can you talk a little bit more about your you used the phrase fully delegated risk arrangements What does that mean? what does that mean Are you taking full risk for all services being provided to those members, including non-oncology care? are you taking full risk for all services being provided to those members including non-oncology care

Speaker 1: Great question, David. Thanks for bringing it up. When we say fully delegated, what we are saying specifically is we are taking risk for Part B for oncology, medical and radiation oncology spend, but the delegation part of that refers to TOI is now given authority by our payer partner for three services. Utilization management, not just for TOI employed physicians, but on behalf of the physicians in our network outside of our employed four walls, so the independent oncologists who are providing care for those patients. Two is network design, meaning we work closely with our payer partners to get high-cost centers out of the network that show poor clinical care, poor utilization, and align more closely with providers that have a value-based orientation. Ultimately, that contract exists between TOI and the independent provider, not the payer and the provider. Three, claims adjudication. Great question, David. great question david Thanks for bringing it up. thanks for bringing it up When we say fully delegated, what we are saying specifically is we are taking risk for Part B for oncology, medical and radiation oncology spend, but the delegation part of that refers to TOI is now given authority by our payer partner for three services. when we say fully delegated what we are saying specifically is we are taking risk for part b for oncology medical and radiation oncology spend but the delegation part of that refers to toi is now given authority by our payer partner for three services Utilization management, not just for TO I employed physicians, but on behalf of the physicians in our network outside of our employed four walls, so the independent oncologists who are providing care for those patients. utilization management not just for to i employed physicians but on behalf of the physicians in our network outside of our employed four walls so the independent oncologists who are providing care for those patients Two is network design, meaning we work closely with our payer partners to get high-cost centers out of the network that show poor clinical care, poor utilization, and align more closely with providers that have a value-based orientation. two is network design meaning we work closely with our payer partners to get high-cost centers out of the network that show poor clinical care poor utilization and align more closely with providers that have a value-based orientation Ultimately, that contract exists between TO I and the independent provider, not the payer and the provider. ultimately that contract exists between to i and the independent provider not the payer and the provider Three, claims adjudication. three claims adjudication TOI is getting prepaid capitation for the risk that we're taking, and then we are paying the claims for those non-TOI employed providers in the network. Because it's a great degree of control over oncology spend across broader populations, it allows the faster, more cash-efficient scalability of our MSO model. As we develop that MSO, it allows us to provide value to those independent practices and TOI by engaging with them not just on value-based care, but also engagement with our pharmacy services and clinical trials support. It's a much more robust model in terms of being able to provide scaled value-based care than the legacy model in California, where we simply have a narrow network, TOI is the only oncology provider in the network, and we're not delegated. We're just given risk and managing our four walls. TOI is getting prepaid capitation for the risk that we're taking, and then we are paying the claims for those non-TO I employed providers in the network. toi is getting prepaid capitation for the risk that we're taking and then we are paying the claims for those non-to i employed providers in the network Because it's a great degree of control over oncology spend across broader populations, it allows the faster, more cash-efficient scalability of our MSO model. because it's a great degree of control over oncology spend across broader populations it allows the faster more cash-efficient scalability of our mso model As we develop that MSO, it allows us to provide value to those independent practices and TO I by engaging with them not just on value-based care, but also engagement with our pharmacy services and clinical trials support. as we develop that mso it allows us to provide value to those independent practices and to i by engaging with them not just on value-based care but also engagement with our pharmacy services and clinical trials support It's a much more robust model in terms of being able to provide scaled value-based care than the legacy model in California, where we simply have a narrow network, TO I is the only oncology provider in the network, and we're not delegated. it's a much more robust model in terms of being able to provide scaled value-based care than the legacy model in california where we simply have a narrow network to i is the only oncology provider in the network and we're not delegated We're just given risk and managing our four walls. we're just given risk and managing our four walls It's frankly better for patients and our payer partners. It's frankly better for patients and our payer partners. it's frankly better for patients and our payer partners

Speaker 5: What I'm hearing is you've been doing a really good job for the plans. They're giving you more lives and more responsibility to continue to manage the care for those lives. You also have the power of prior auth, I'm assuming, and the ability to narrow the network and influence formulary. You have a high level of control, more control over the care that will be delivered over this expanded base, right? What I'm hearing is you've been doing a really good job for the plans. what i'm hearing is you've been doing a really good job for the plans They're giving you more lives and more responsibility to continue to manage the care for those lives. they're giving you more lives and more responsibility to continue to manage the care for those lives You also have the power of prior auth, I'm assuming, and the ability to narrow the network and influence formulary. you also have the power of prior auth i'm assuming and the ability to narrow the network and influence formulary You have a high level of control, more control over the care that will be delivered over this expanded base, right? you have a high level of control more control over the care that will be delivered over this expanded base right

Speaker 1: That's absolutely right. That's absolutely right. that's absolutely right

Speaker 5: Okay. It's not like an agilon, for example, where that stock has been under enormous pressure because they're bearing risk for everything in the world. You're focused in on oncology where you know how to basically drive margin and improve clinical care. Okay, thanks very much. Okay. okay It's not like an agilon, for example, where that stock has been under enormous pressure because they're bearing risk for everything in the world. it's not like an agilon for example where that stock has been under enormous pressure because they're bearing risk for everything in the world You're focused in on oncology where you know how to basically drive margin and improve clinical care. you're focused in on oncology where you know how to basically drive margin and improve clinical care Okay, thanks very much. okay thanks very much

Speaker 1: Just one last comment on that. We're taking the exact same risk. We're just given additional tools to help manage that risk and drive performance. Just one last comment on that. just one last comment on that We're taking the exact same risk. we're taking the exact same risk We're just given additional tools to help manage that risk and drive performance. we're just given additional tools to help manage that risk and drive performance

Speaker 5: Okay, thanks very much. I'll hop back in the queue. Okay, thanks very much. okay thanks very much I'll hop back in the queue. i'll hop back in the queue

Speaker 7: Thank you. At this time, there are no further questions. The conference of The Oncology Institute has now concluded. Thank you for your participation. You may now disconnect your lines. Thank you. Thank you. thank you At this time, there are no further questions. at this time there are no further questions The conference of The Oncology Institute has now concluded. the conference of the oncology institute has now concluded Thank you for your participation. thank you for your participation You may now disconnect your lines. you may now disconnect your lines Thank you. thank you