The Oncology Institute(US:TOI)2023-05-12 20:52Financial Data and Key Metrics Changes - The consolidated revenue for Q1 2023 was $76 million, representing a 38.1% increase compared to Q1 2022 and a 6.7% increase compared to Q4 2022 [9] - Gross profit for Q1 2023 was $14 million, an increase of 14% compared to Q1 2022 [9] - The net loss for Q1 2023 was $30 million, a decrease of $49 million compared to Q1 2022, primarily due to changes in fair value of earn-out liabilities and an increase in operating revenue [9] - Adjusted EBITDA was negative $7.9 million, with a modified calculation that now includes cash compensation paid to the Board of Directors [9][10] - Cash and cash equivalents at the end of the quarter were $15 million, with total cash, cash equivalents, and investments amounting to $114 million [10] Business Line Data and Key Metrics Changes - Fee-for-service revenue, dispensary revenue, and oral drugs dispensed all reached record levels, with oral drugs dispensed increasing by 34% compared to Q1 2022 [4][8] - Organic growth rate was 25%, and same-store sales growth was 21%, indicating strong demand for the company's model [5] - Total patient visits increased by 17% compared to Q1 2022 [8] Market Data and Key Metrics Changes - The company signed two new value-based contracts, one in Southern California and another in Texas, marking a significant expansion in value-based care [5] - The recent contract in Texas is notable as it is the first total cost of care contract with a primary care partner in that market [5] Company Strategy and Development Direction - The company aims to refine and optimize its model and expansion markets, grow legacy markets, and reduce cash burn through improved efficiency and technology solutions [11] - The focus remains on expanding the patient base and increasing the number of value-based partnerships while delivering high-quality outcomes [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory despite challenges with IV drug margins, expecting adjusted EBITDA margins to trend favorably as the year progresses [11] - The company anticipates ending 2023 with 1.75 million to 2.0 million lives under capitation, with revenue guidance of $290 million to $320 million, representing 15% to 27% growth over 2022 [10] Other Important Information - The company is entering into a Letter of Intent (LOI) to acquire a retail pharmacy in California to enable dispensing of oral drugs to Medi-Cal members [7] - The company has received data showing over 50% referral capture and over 30% cost savings from a value-based partner in Florida, highlighting the effectiveness of its model [6] Q&A Session Summary Question: Interest in total cost of care contracts - Management noted an increase in interest from primary care partners in total cost of care arrangements, indicating a broader trend in oncology [14][16] Question: Cost savings from oncology GPO - Management stated that they are not ready to quantify expected cost savings from the oncology GPO initiative but do not anticipate it affecting full-year guidance [17] Question: Guidance and revenue growth - Management expressed confidence in their guidance, noting that the Q1 results were strong and that the guidance does not include any acquisitions for the year [21] Question: Acquihire environment and market multiples - Management observed that sellers are becoming more realistic about valuation multiples, with some adjustments in expectations due to market conditions [23]