The Oncology Institute(US:TOI)2025-08-13 21:12Part I – Financial Information Financial Statements (unaudited) For the six months ended June 30, 2025, The Oncology Institute, Inc. reported total operating revenue of $224.2 million, a 16% increase year-over-year, driven primarily by a 33% growth in dispensary revenue, while recording a net loss of $36.6 million, slightly higher than the $35.4 million loss in the prior-year period, with cash and cash equivalents decreasing to $30.3 million from $49.7 million at year-end 2024, and net cash used in operating activities improving significantly to $15.2 million from $31.5 million Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $159.8 million from $172.7 million at December 31, 2024, primarily due to a $19.4 million reduction in cash and cash equivalents, while total liabilities remained relatively stable at $168.8 million, shifting the company's financial position from a total stockholders' equity of $3.6 million to a total stockholders' deficit of $9.0 million Condensed Consolidated Balance Sheet Summary | Financial Item | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 30,292 | 49,669 | | Total current assets | 104,792 | 112,435 | | Total assets | 159,798 | 172,717 | | Liabilities | | | | Total current liabilities | 64,778 | 52,231 | | Long-term debt, net | 75,023 | 93,131 | | Total liabilities | 168,783 | 169,128 | | Stockholders' Equity (Deficit) | | | | Total stockholders' equity (deficit) | (8,985) | 3,589 | Condensed Consolidated Statements of Operations For the three months ended June 30, 2025, total operating revenue increased by 21.5% to $119.8 million year-over-year, driven by a 40.8% surge in dispensary revenue, with loss from operations improving to $11.2 million from $16.4 million in Q2 2024, though the net loss widened to $17.0 million from $15.5 million due to a $4.0 million unfavorable change in the fair value of conversion option derivative liabilities, resulting in a six-month revenue growth of 16% to $224.2 million and a net loss of $36.6 million Condensed Consolidated Statements of Operations Summary | Metric ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenue | 119,802 | 98,578 | 224,208 | 193,244 | | Patient services revenue | 55,891 | 52,461 | 108,959 | 104,914 | | Dispensary revenue | 62,573 | 44,440 | 111,866 | 84,119 | | Loss from operations | (11,211) | (16,364) | (21,122) | (34,336) | | Net loss | (17,009) | (15,479) | (36,594) | (35,368) | | Net loss per share, basic & diluted | (0.15) | (0.17) | (0.35) | (0.39) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities significantly improved to $15.2 million from $31.5 million in the prior-year period, despite a similar net loss, driven by changes in working capital and non-cash adjustments, while net cash used in investing activities was $1.4 million, a sharp contrast to the $37.6 million provided in the prior year, and financing activities used $2.8 million, primarily for a $20 million debt repayment partially offset by $15.4 million in private placement proceeds, leading to an overall $19.4 million decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows Summary | Cash Flow Activity ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | (15,190) | (31,543) | | Net cash (used in) provided by investing activities | (1,410) | 37,564 | | Net cash used in financing activities | (2,777) | (3,085) | | Net (decrease) increase in cash | (19,377) | 2,936 | | Cash at beginning of period | 49,669 | 33,488 | | Cash at end of period | 30,292 | 36,424 | Notes to Condensed Consolidated Financial Statements The notes detail the company's business operations, significant accounting policies, and financial activities, including a Research Services Agreement with Helios to operate the Clinical Trials segment, a February 2025 debt amendment involving a $20 million prepayment and covenant removal, and a March 2025 private placement raising $16.5 million in gross proceeds, with the company concluding it has sufficient liquidity to operate as a going concern for at least one year, and providing breakdowns of revenue, debt, share-based compensation, and segment performance, showing strong growth in the Dispensary segment - On March 31, 2025, the Company entered into a Research Services Agreement with Helios CR, Inc., under which the Clinical Trials segment will be operated by Helios in a profit-sharing arrangement, which resulted in a $2.4 million loss from the write-off of the segment's net assets23 - The company evaluated its financial condition and concluded it has sufficient liquidity to fund operations for at least one year from the issuance date of the financial statements, supported by a debt amendment, a private placement, and cost reduction initiatives293031 - In February 2025, the company amended its Facility Agreement, making a $20 million partial debt prepayment and removing a covenant that required maintaining a $40 million cash balance102103 - In March 2025, the company completed a private placement (PIPE) resulting in gross proceeds of approximately $16.5 million and an associated exchange of $4.1 million in debt for equity and warrants139 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 21.5% year-over-year revenue growth in Q2 2025 to a 40.8% increase in dispensary revenue and a 6.5% rise in patient services revenue, with dispensary growth driven by a 102.8% increase in prescription fills, while successfully reducing SG&A expenses by 3.5% in Q2 2025 through cost discipline and operational efficiency initiatives, including planned AI pilots for automation, leading to significant Adjusted EBITDA improvement with a loss of $4.1 million in Q2 2025 compared to a loss of $8.7 million in Q2 2024, and believing it has sufficient liquidity for the next year, supported by a recent private placement, debt restructuring, and improved cash flow from operations Results of Operations For Q2 2025, total operating revenue increased 21.5% to $119.8 million from $98.6 million in Q2 2024, driven by a 40.8% increase in Dispensary revenue and a 6.5% increase in Patient Services revenue, with operating expenses as a percentage of revenue decreasing from 116.6% to 109.4%, leading to an improved operating loss of $11.2 million versus $16.4 million in the prior-year quarter, aided by a 3.5% reduction in SG&A expenses due to cost discipline Operating Revenue by Category | Revenue Category ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Patient services | 55,891 | 52,461 | 3,430 | 6.5% | | Dispensary | 62,573 | 44,440 | 18,133 | 40.8% | | Clinical trials & other | 1,338 | 1,677 | (339) | (20.2)% | | Total operating revenue | 119,802 | 98,578 | 21,224 | 21.5% | - The increase in dispensary revenue was primarily due to a 102.8% increase in the number of prescription fills, offset by a 30.6% decrease in average revenue per fill206 - Selling, general and administrative (SG&A) expenses decreased by 3.5% in Q2 2025 compared to Q2 2024, reflecting cost discipline and operational efficiency, with the company planning to launch AI pilots for prior-authorization and denial automation to further improve efficiency211 Key Business Metrics Management uses key metrics including the number of clinics, lives under value-based contracts, and Adjusted EBITDA to evaluate performance, with the company operating 80 clinics and managing 1.9 million lives under value-based contracts as of Q2 2025, and Adjusted EBITDA, a non-GAAP measure, showing significant improvement with a loss of $4.1 million for the three months ended June 30, 2025, compared to a loss of $8.7 million in the same period of 2024, driven by higher revenue and lower operating expenses Key Performance Indicators | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Clinics | 80 | 87 | | Lives under value-based contracts | 1.9 million | 2.0 million | | Adjusted EBITDA ($ in thousands) | (4,089) | (8,709) | Adjusted EBITDA Reconciliation | Reconciliation to Adjusted EBITDA ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss | (17,009) | (15,479) | | Depreciation and amortization | 1,805 | 1,518 | | Interest expense, net | 1,870 | 2,119 | | Share-based compensation | 752 | 3,387 | | Changes in fair value of liabilities | 4,040 | (3,120) | | Other adjustments | 4,513 | 2,274 | | Adjusted EBITDA | (4,089) | (8,709) | Liquidity and Capital Resources The company asserts it has sufficient liquidity to fund operations for at least one year, supported by its cash balance of $30.3 million as of June 30, 2025, a March 2025 private placement that raised $16.5 million, and a February 2025 debt amendment that removed a restrictive cash covenant, with cash flow from operations improving by $16.4 million for the first six months of 2025 compared to the prior year due to better working capital management, and material future cash requirements including debt service of $94.1 million and operating lease payments of $32.7 million - The company concluded it has sufficient liquidity for at least one year, citing its cash balance, a recent private placement raising ~$16.5M, a debt amendment removing a $40M cash covenant, and improved operational cash flow223224225 - Net cash used in operating activities improved by $16.4 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to better working capital management and non-cash adjustments229233 Material Cash Requirements | Material Cash Requirements (Total) | Amount ($ in thousands) | | :--- | :--- | | Convertible note (principal & interest) | 94,105 | | Operating leases | 32,738 | | Deferred acquisition and contingent consideration | 143 | | Other (finance leases, D&O insurance) | 407 | | Total | 127,393 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate risk, inflation risk, and impairment risk, with interest rate risk considered minimal due to the short-term nature of its cash holdings, while inflation poses a risk by potentially increasing the costs of drugs, labor, and other business expenses faster than forecasted, and impairment risk relates to the potential for writing down goodwill or intangible assets if economic conditions worsen, interest rates rise, or reporting units underperform - The company identifies its main market risks as interest rate risk, inflation risk, and impairment risk257 - Inflation is a key concern as it can increase costs for drugs, labor, and administration, potentially causing the company to use cash faster than planned259 - There is a risk of goodwill or intangible asset impairment if reporting units underperform, the economy enters a recession, or interest rates continue to rise260 Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes to the company's internal control over financial reporting during the quarter, while acknowledging the inherent limitations of any control system, noting it can provide only reasonable, not absolute, assurance of achieving its objectives - Based on an evaluation as of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective261 - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting262 Part II – Other Information Legal Proceedings The company is not currently involved in any legal proceedings that would have a material adverse effect on its business, financial condition, or results of operations266 Risk Factors No material changes have been made to the risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2024267 Other Information During the quarter, a director by deputization, M33 Growth I L.P., adopted a Rule 10b5-1 trading plan for the sale of up to 3 million shares of common stock, and subsequent to the quarter end, on August 13, 2025, the company entered into At-the-Market (ATM) Sales Agreements to sell, at its option, up to $15 million of its common stock - On June 12, 2025, director M33 Growth I L.P. adopted a Rule 10b5-1 trading plan for the sale of up to 3,000,000 shares of common stock through May 18, 2026271 - On August 13, 2025, the company established an At-the-Market (ATM) offering program, allowing it to sell up to $15 million in common stock through agents BTIG, LLC and B. Riley Securities, Inc272 Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and interactive data files (XBRL), also referencing previously filed documents such as the merger agreement, corporate bylaws, and various warrant and debt agreements