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The Oncology Institute(TOI) - 2024 Q4 - Annual Report
TOIThe Oncology Institute(TOI)2025-03-25 22:55
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Patient Care and Services - In 2024, the company provided care for over 72,000 patients and managed a population of approximately 1.9 million patients under value-based agreements[24]. - The company operates 72 clinics across 16 markets in 5 states, employing 130 providers and contracting with 11 additional providers in independently-owned clinics[23]. - The company has developed a High Value Cancer Care program that aligns treatment regimens with National Comprehensive Cancer Network guidelines[45]. - The company operates specialty and retail pharmacies to fill medication orders related to oncology care, billing pharmacy benefit managers for these services[28]. - The average patient rating based on 3,500+ Google reviews is 4.6 out of 5 stars, indicating high patient satisfaction[51]. - The company employs a continuous feedback mechanism to ensure superior patient experience and satisfaction among affiliated providers[50]. - The company aims to provide top-quality oncology care and has implemented initiatives for talent acquisition, diversity, and employee engagement[95]. - The company’s ability to attract and retain patients is dependent on providing high-quality care, which is essential for maintaining its reputation and financial condition[160]. Financial Performance and Revenue - More than 46% of the company's revenue in 2024 was generated from patients covered by value-based contracts, primarily capitated contracts[33]. - More than 50% of the company's revenue in 2024 was generated from value-based contracts, with the largest customer representing approximately 16% of patient services revenue[64][65]. - The Patient Services revenue constituted about 52% of total revenue for the year ended December 31, 2024, highlighting the significance of this revenue stream[150]. - The company achieved over 25% lower median total healthcare costs from diagnosis to death[46]. - The company received approximately 16% of its Patient Services revenue directly from Medicare in 2024, emphasizing dependence on government reimbursement[132]. - About 17% of the company's revenue for 2024 was derived from fixed fees paid by payors under capitation agreements, highlighting reliance on value-based contracts[122]. - The company anticipates significant increases in operating expenses as it continues to hire additional personnel and expand its infrastructure[109]. - The company incurred a net loss of 64,663,000in2024,withexpectationsofcontinuedlossesduetoheavyinvestmentsinexpandingpatientbaseandoperations[108].MarketOpportunitiesandGrowthStrategy−Thecompanyhasasubstantialopportunitytocaptureaportionofapproximately81millioncommercial,Medicaid,andMedicareAdvantagelivesacrossitsactivestates[40].−Thecompanyplanstoleverageexistingpayorrelationshipstoenternewmarkets,focusingonMedicareAdvantageandvalue−basedreimbursementmodels[58].−Thecompanyanticipatessignificantgrowthpotentialinexistingmarketsbyexpandingserviceswithexistingpartnersandsecuringnewcontracts[58].−Thecompanyhasarobustanddata−drivenapproachtoacquisitions,withastrongpipelineoftargetsinbothexistingandnewmarkets[67].−ThegrowthstrategyreliesonbuildingoracquiringnewTOIPCclinics,whichisdependentonvariousfactorsincludingobtainingreferralsandenteringcontractswithadditionalpayors[102].RegulatoryandComplianceRisks−Thecompanyissubjecttovariousfederalandstatelawsgoverningthecollectionandprotectionofpersonalinformation,includinghealth−relateddata[89].−Thecompanyissubjecttoextensivefraud,waste,andabuselaws,whichmayleadtoauditsandinvestigationsthatcouldadverselyaffectoperations[103].−Thecompanyissubjecttoauditsbypayors,includinggovernmentalauditsofMedicareclaims,whichmayrequirerepaymentifincorrectreimbursementsareidentified[119].−Theoperationsofthemanagedclinicsaresubjecttoextensivefederal,state,andlocalregulations,whichincludecompliancewithMedicareandMedicaidprograms[196].−Changesinhealthcarelawsandregulations,includingthoseaffectingtelehealth,couldadverselyimpactthecompany′sfinancialconditionandoperationalresults[121].−Thecompanyfacesrisingenforcementactionsfornoncompliancewithprivacyanddataprotectionlaws,whicharecomplexandrapidlyevolving[198].CompetitionandMarketChallenges−Thecompanyfacescompetitionforpayorrelationshipswithotherhealthcareorganizations,whichmayincreasecostsandimpactrevenue[110].−Thecompanyfacescompetitionfromotheroncologyproviders,whichcouldhinderitsabilitytoattractnewpatientsandpayors,impactingrevenuegrowth[118].−Apandemicoroutbreakofinfectiousdiseasecouldsignificantlyimpactthecompany′soperationsandfinancialcondition,withpotentialdelaysinpatientcareandincreasedcosts[112].−Thetransitionfromvolumetovalue−basedreimbursementmodelsmayadverselyaffectoperationsandfinancialresults[1].OperationalandFinancialManagement−Thecompanyhasexperiencedrapidgrowthandorganizationalchange,whichhasplacedsignificantdemandsonmanagementandresources[106].−Thecompanymaypursueacquisitionsofoncologyandotherphysicianpractices,whichcouldinvolvesignificantcashexpendituresandoperationallosses[173].−Thecompanymayneedadditionalcapitaltofundoperationsandfinancegrowth,whichmaynotbeobtainableonacceptableterms,potentiallylimitinggrowthstrategies[219].−Thecompanyissubstantiallydependentonasinglesourceofdrugsupplies,whichposesrisksifthesupplierfailstomeetneedsoriftherearematerialpriceincreases[162].−Thecompany’sinformationtechnologystrategyiscriticalformaintainingeffectiveoperationsandmeetingregulatorydemands,withpotentialcompliancechallengesifnotproperlymanaged[164].TaxandFinancialReporting−AsofDecember31,2024,thecompanyhadfederalincometaxNOLsof64,663,000 in 2024, with expectations of continued losses due to heavy investments in expanding patient base and operations[108]. Market Opportunities and Growth Strategy - The company has a substantial opportunity to capture a portion of approximately 81 million commercial, Medicaid, and Medicare Advantage lives across its active states[40]. - The company plans to leverage existing payor relationships to enter new markets, focusing on Medicare Advantage and value-based reimbursement models[58]. - The company anticipates significant growth potential in existing markets by expanding services with existing partners and securing new contracts[58]. - The company has a robust and data-driven approach to acquisitions, with a strong pipeline of targets in both existing and new markets[67]. - The growth strategy relies on building or acquiring new TOI PC clinics, which is dependent on various factors including obtaining referrals and entering contracts with additional payors[102]. Regulatory and Compliance Risks - The company is subject to various federal and state laws governing the collection and protection of personal information, including health-related data[89]. - The company is subject to extensive fraud, waste, and abuse laws, which may lead to audits and investigations that could adversely affect operations[103]. - The company is subject to audits by payors, including governmental audits of Medicare claims, which may require repayment if incorrect reimbursements are identified[119]. - The operations of the managed clinics are subject to extensive federal, state, and local regulations, which include compliance with Medicare and Medicaid programs[196]. - Changes in healthcare laws and regulations, including those affecting telehealth, could adversely impact the company's financial condition and operational results[121]. - The company faces rising enforcement actions for noncompliance with privacy and data protection laws, which are complex and rapidly evolving[198]. Competition and Market Challenges - The company faces competition for payor relationships with other healthcare organizations, which may increase costs and impact revenue[110]. - The company faces competition from other oncology providers, which could hinder its ability to attract new patients and payors, impacting revenue growth[118]. - A pandemic or outbreak of infectious disease could significantly impact the company's operations and financial condition, with potential delays in patient care and increased costs[112]. - The transition from volume to value-based reimbursement models may adversely affect operations and financial results[1]. Operational and Financial Management - The company has experienced rapid growth and organizational change, which has placed significant demands on management and resources[106]. - The company may pursue acquisitions of oncology and other physician practices, which could involve significant cash expenditures and operational losses[173]. - The company may need additional capital to fund operations and finance growth, which may not be obtainable on acceptable terms, potentially limiting growth strategies[219]. - The company is substantially dependent on a single source of drug supplies, which poses risks if the supplier fails to meet needs or if there are material price increases[162]. - The company’s information technology strategy is critical for maintaining effective operations and meeting regulatory demands, with potential compliance challenges if not properly managed[164]. Tax and Financial Reporting - As of December 31, 2024, the company had federal income tax NOLs of 184,835,785 and state income tax NOLs of $175,187,277 available to offset future taxable income[209]. - The deferred tax asset associated with the company's NOLs is fully offset by a valuation allowance, meaning future changes in unrecognized tax benefits will not impact the effective tax rate[209]. - Future changes in tax laws and regulations could adversely affect the company's business, financial condition, and results of operations[210]. - The company may face additional tax liabilities due to audits by taxing authorities, which could materially affect its financial condition and results of operations[213]. Legal and Liability Risks - Legal proceedings and litigation could materially harm the company’s business and results of operations, with significant costs associated with defending against such claims[167]. - Medical liability claims against TCR and TOI PCs could result in substantial damage awards, impacting financial condition and increasing insurance costs[184]. - Changes in accounting standards by FASB could adversely affect the consolidation of total revenues derived from TOI PCs, impacting financial reporting[186]. Cybersecurity and Data Protection - Cybersecurity risks remain a concern, as breaches could lead to significant reputational and financial harm[165]. - The Federal Trade Commission expects reasonable data security measures, and failure to comply may result in claims of unfair or deceptive practices[204].