Oncology Institute Inc

Previous wording

The Company is a leading value-based oncology company that manages community-based oncology practices that serve patients at 87 clinic locations across 14 markets andfour states throughout the United States. Our community-based oncology practices are staffed with 137 oncologists andadvanced practice providers. 73 of these clinics are staffed with 126 providers employed by our affiliated physician-owned professional corporations, referred to as the "TOI PCs", which provided care for more than 64,000 patients in 2024 and managed a population of approximately 2.0 million patients under value-based agreements as of March 31, 2024. The Company also provides management services on behalf of 14 clinic locations owned by independent oncology practices. The Company's mission is to heal and empower cancer patients through compassion, innovation, and state-of-the-art medical care.

Current wording

The Company is a leading value-based oncology company that manages community-based oncology practices that serve patients at 87 clinic locations across 14 markets andfour states throughout the United States. Our community-based oncology practices are staffed with 137 oncologists andadvanced practice providers. 73 of these clinics are staffed with 126 providers employed by our affiliated physician-owned professional corporations, referred to as the "TOI PCs", which provided care for more than 64,000 patients in 2024 and managed a population of approximately 2.1 million patients under value-based agreements as of June 30, 2024. The Company also provides management services on behalf of 14 clinic locations owned by independent oncology practices. The Company's mission is to heal and empower cancer patients through compassion, innovation, and state-of-the-art medical care.

Previous wording

Selling, general and administrative expenses include employee-related expenses, including both clinic and field support staff as well as central administrative and corporate staff. These expenses include salaries and related costs and stock-based compensation for our executives and physicians. The Company's selling, general and administrative expenses also includes occupancy costs, technology infrastructure, operations, clinical and quality support, finance, legal, human resources, and business development. Following the consummation of the Business Combination, general and administrative expenses have increased, and the Company expects continued increases over time, due to the additional legal, accounting, insurance, investor relations and other costs that the Company incurs as a public company, as well as other costs associated with continuing to grow the business. While the Company expects its selling, general and administrative expenses to increase in absolute dollars in the foreseeable future. such expenses are on average expected to decrease as a percentage of revenue over the long term.

Current wording

Selling, general and administrative expenses include employee-related expenses, including both clinic and field support staff as well as central administrative and corporate staff. These expenses include salaries and related costs and stock-based compensation for our executives and physicians. The Company's selling, general and administrative expenses also include occupancy costs, technology infrastructure, operations, clinical and quality support, finance, legal, human resources, and business development. Following the consummation of the Business Combination, general and administrative expenses have increased, and the Company expects continued increases over time, due to the additional legal, accounting, insurance, investor relations and other costs that the Company incurs as a public company, as well as other costs associated with continuing to grow the business. While the Company expects its selling, general and administrative expenses to increase in absolute dollars in the foreseeable future. Such expenses are on average expected to decrease as a percentage of revenue over the long term.

Previous wording

Comparison of the Three Months Ended March 31, 2024 and 2023

Current wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

The increase in dispensary revenue was primarily due to a 70.3% increase in the number of prescriptions filled, offset by a 3.9% decrease in the average revenue per fill.

Current wording

The increase in dispensary revenue was primarily due to a 89.9% increase in the number of prescriptions filled primarily related to the California pharmacy, offset by a 7.1% decrease in the average revenue per fill.

Previous wording

The increase in patient services cost was primarily due to a 9.3% increase in intravenous drug costs, driven by the Company's patient mix and volume, as well as 4.7% increase in clinical payroll costs due to the growth in clinic count.

Current wording

The increase in patient services cost was primarily due to a 5.2% increase in clinical payroll costs due to growth and provider count as well as a 4.2% increase in intravenous drug costs, driven by the Company's patient mix and volume.

Previous wording

The increase in dispensary cost was primarily due to a 70.3% increase in the number of prescriptions filled and by a 0.6% increase in the average cost of the prescriptions filled.

Current wording

The increase in dispensary cost was primarily due to a 89.9% increase in the number of prescriptions filled and by a 1.6% increase in the average cost of the prescriptions filled.

Previous wording

The decrease in selling, general and administrative expense was primarily driven by a decrease in share-based compensation expense of 3.0%, a decrease in insurance of 2.1%, and a decrease in deferred purchase price of 1.6%, offset by a 1.8% increase to real estate and development, and a 3.5% increase in office expenses related to the continued growth of our business.

Current wording

The decrease in selling, general and administrative expense was primarily driven by a 8.3% decrease in salaries and benefits, a 2.7% decrease in business development expenses, offset by a 8.0% increase in operational expenses due to the growth of CA pharmacy business.

Previous wording

The increase in interest expense was the result of higher interest and amortization related to the Senior Secured Convertible Note during the first quarter of 2024, offset by accretion related to marketable treasury securities.

Current wording

The increase in interest expense for the three and six months ended June 30, 2024 was the result of the decrease in interest income related to marketable treasury securities.

Previous wording

The decrease in non-operating (income) expense was primarily due to no changes in the fair value of earnout liabilities, derivative warrant, and conversion option derivative liabilities for the three months ended March 31, 2024, compared to a gain of $4,213 as a result of an increase in the fair value of earnout liabilities, derivative warrant, and conversion option derivative liabilities for the three months ended March 31, 2023.

Current wording

The decrease in change in fair value of liabilities was primarily due to a $2,568 gain as a result of the decrease in fair value of conversion option derivative liabilities for the three months ended June 30, 2024, compared to $0 gain for the three months ended June 30, 2023.

Previous wording

The change in other, net was primarily due to unrealized gains on marketable securities compared to the same quarter in 2023.

Current wording

The change in other, net was primarily due to unrealized gains on marketable securities compared to the same period in 2023.

Previous wording

Management believes that this measure provides an additional tool to assess operational performance and trends in, and comparing our financial measures with, other similar companies, many of which present similar non-GAAP financial measures to investors. Be aware that the Company’s non-GAAP financial measure may be different from the non-GAAP financial measures used by other companies, including the Company’s competitors. The use of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial measures determined in accordance with

Current wording

Management believes that this measure provides an additional tool to assess operational performance and trends in, and comparing our financial measures with, other similar companies, many of which present similar non-GAAP financial measures to investors. Be aware that the Company’s non-GAAP financial measure may be different from the non-GAAP financial measures used by other companies, including the Company’s competitors. The use of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial measures determined in accordance with GAAP. Management encourages investors and others to review the Company's financial information in its entirety, including the financial statements and the related notes thereto, and not to rely on any single financial measure.

Previous wording

The following tables provide a reconciliation of net income (loss), the most closely comparable GAAP financial measure, to Adjusted EBITDA:

Current wording

The following tables provide a reconciliation of net loss, the most closely comparable GAAP financial measure, to Adjusted EBITDA:

Previous wording

(1)During the three months ended March 31, 2024, non-cash addbacks were primarily comprised of non-cash rent of $51 and net credit losses of $12. During the three months ended March 31, 2023, non-cash addbacks were primarily comprised of net credit losses of $1 and non-cash rent of $140.

Current wording

(1)During the three months ended June 30, 2024, non-cash addbacks were primarily comprised of non-cash rent of $107 offset by net credit loss of $37. During the three months ended June 30, 2023, non-cash addbacks were primarily comprised of net credit recovery of $2 and non-cash rent of $26.

Previous wording

(4)Consulting and legal fees were comprised of a subset of the Company’s total consulting and legal fees, and related to certain advisory projects during the three months ended March 31, 2024. During the three months ended March 31, 2023, these fees related to advisory projects and software implementations.

Current wording

(4)Consulting and legal fees were comprised of a subset of the Company’s total consulting and legal fees, and related to certain non-recurring advisory projects during the three months ended June 30, 2024. During the three months ended June 30, 2023, these fees related to non-recurring advisory projects and software implementations.

Previous wording

(5)Infrastructure and workforce costs were comprised of recruiting expenses to build out corporate infrastructure of $376 and $462, software implementation fees of $16 and $29, severance expenses resulting from cost rationalization programs of $10 and $15, temporary labor of $252 and $568 and legal fees related to infrastructure build out of $529 and $0 during the three months ended March 31, 2024 and 2023, respectively.

Current wording

(5)Infrastructure and workforce costs were comprised of recruiting expenses to build out corporate infrastructure of $336 and $430, software implementation fees of $36 and $22, severance expenses resulting from cost rationalization programs of $141 and $250, temporary labor of $74 and $339 and non-recurring legal fees related to infrastructure build out of $1,830 and $0 during the three months ended June 30, 2024 and 2023, respectively.

Previous wording

(6)Transaction costs incurred during the three months ended March 31, 2024 and 2023 were comprised of consulting, legal, administrative and regulatory fees associated with non-recurring due diligence projects.

Current wording

(6)Transaction costs incurred during the three months ended June 30, 2023 were comprised of consulting, legal, administrative and regulatory fees associated with non-recurring due diligence projects.

Previous wording

To date, the Company has financed its operations principally through debt facilities, issuances of equity securities and payments received from various payors. As of March 31, 2024, the Company had $36,055 of cash and cash equivalents and current marketable securities of $29,777.

Current wording

To date, the Company has financed its operations principally through debt facilities, issuances of equity securities and payments received from various payors. As of June 30, 2024, the Company had $36,424 of cash and cash equivalents and current marketable securities of $9,939.

Previous wording

Management believes that the cash on hand and investments in marketable securities will be sufficient to fund the Company's operating and capital needs for at least the next 12 months. Management's assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties. The Company's actual results could vary because of, and its future capital requirements will depend on, many factors, including our growth rate, the timing and extent of spending to open or acquire new clinics and expand into new markets and the expansion of sales and marketing activities. The Company may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. The Company has based this estimate on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than management currently expects. The Company may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, the Company may not be able to raise it on terms acceptable to management or at all. If unable to raise additional capital when desired, or if the Company cannot expand operations or otherwise capitalize on business opportunities because the Company's lack of sufficient capital, the Company's business, results of operations, and financial condition would be adversely affected.

Current wording

Management believes that its cash on hand and investments in marketable securities will be sufficient to fund the Company's operating and capital needs for at least the next 12 months. Management's assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties. The Company's actual results could vary because of, and its future capital requirements will depend on, many factors, including our growth rate, the timing and extent of spending to open or acquire new clinics and expand into new markets and the expansion of sales and marketing activities. The Company may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. The Company has based this estimate on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than management currently expects. The Company may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, the Company may not be able to raise it on terms acceptable to management or at all. If unable to raise additional capital when desired, or if the Company cannot expand operations or otherwise capitalize on business opportunities because the Company's lack of sufficient capital, the Company's business, results of operations, and financial condition would be adversely affected.

Previous wording

Significant changes impacting net cash and cash equivalents used in operating activities for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 were as follows:

Current wording

Significant changes impacting net cash and cash equivalents used in operating activities for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 were due to $11,527 reduction in net loss offset by the following changes to the non-cash net loss adjustments:

Previous wording

•Net loss of $19,889 for the three months ended March 31, 2024 compared to net loss of $29,998 for the three months ended March 31, 2023, primarily as the result of goodwill impairment of $16,867 for the three months ended March 31, 2023 that did not occur in the current year, and a gain of $4,213 related to the change in the fair value of liabilities for the three months ended March 31, 2023 with no change occurring in the current quarter;

Current wording

•Goodwill impairment of $16,867 for the six months ended June 30, 2023 that did not occur in the current year,

Previous wording

•Share based compensation for the three months ended March 31, 2024 decreased by $878 compared to the three months ended March 31, 2023;

Current wording

•Share based compensation for the six months ended June 30, 2024 decreased by $1,598 compared to the six months ended June 30, 2023;

Previous wording

•Cash used by accounts receivable increased $10,259 for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 due to the growth in the Company's business and overall delays in the collection of accounts receivable;

Current wording

•Cash used by accounts receivable increased $5,081 for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 due to timing and the growth in the Company's pharmacy business;

Previous wording

•Cash provided by accounts payable, accrued expenses and income taxes payable increased $9,956 for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to an increase in vendor payables resulting from the growth in the Company's business; and

Current wording

•Cash provided by accounts payable, accrued expenses and income taxes payable decreased $2,228 for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 primarily due to the timing of the payment activities; and

Previous wording

•Cash used by prepaid and other current assets increased $605 for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to the amortization of the D&O policy during 2024.

Current wording

•Cash used by prepaid and other current assets increased $1,199 for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 primarily due to timing.

Previous wording

Net cash used in financing activities decreased $771 for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to a decrease of $280 related to payments made for financing of insurance payments along with no payments related to deferred consideration liabilities related to acquisition during the three months ended March 31, 2024 as compared to $409 of payments for the three months ended March 31, 2023.

Current wording

Net cash used in financing activities decreased $1,225 for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 primarily due to a decrease of $1,574 related to payments made for financing of insurance payments and a $894 decrease in common stock repurchase offset by a $1,381 increase of deferred consideration liability payments during the six months ended June 30, 2024 .

Previous wording

The Company evaluates whether an arrangement is or contains a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of an identified asset for a period of time in exchange for consideration. Upon lease commencement, the date on which a lessor makes the underlying asset available to the Company for use, the Company classifies the lease as either an operating or finance lease. The Company applied certain practical expedients permitted under the transition guidance, including the package of practical expedients, which permits the Company not to reassess its prior conclusions related to lease identification, lease classification, and initial direct costs capitalization. The Company solely acts as a lessee and its leases primarily consist of operating leases for its real estate in the states in which the Company operates. The Company has other operating or financing leases for various clinical and non-clinical equipment.

Current wording

Upon lease commencement, the date on which a lessor makes the underlying asset available to the Company for use, the Company classifies the lease as either an operating or finance lease. The Company applied certain practical expedients permitted under the transition guidance, including the package of practical expedients, which permits the Company not to reassess its prior conclusions related to lease identification, lease classification, and initial direct costs capitalization. The Company solely acts as a lessee and its leases primarily consist of operating leases for its real estate in the states in which the Company operates. The Company has other operating or financing leases for various clinical and non-clinical equipment.

Previous wording

The Company consolidates entities for which it has a variable interest and is determined to be the primary beneficiary. The Company holds variable interests in the TOI PCs, comprised of TOI CA, TOI FL, and TOI TX all of which the Company cannot legally own due to jurisdictional laws governing the corporate practice of medicine. The TOI PCs employ physicians and other clinicians in order to provide professional services to patients of our managed clinics, and under substantially similar MSAs, we serve as the exclusive manager and administrator of the TOI PCs’ non-medical functions and services. The TOI PCs are considered variable interest entities (“VIEs”) as they do not have sufficient equity to finance their activities without additional financial support from the Company. An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it has both power and benefits — that is, it has (1) the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance (power), and (2) the obligation to absorb the losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power to control all financial activities of the TOI PCs, the rights to receive substantially all benefits from the VIEs, and consequently consolidates the TOI PCs. Revenues, expenses, and income along with the balance sheet accounts from the TOI PCs are included in the consolidated amounts as presented on the Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets.

Current wording

The Company consolidates entities for which it has a variable interest and is determined to be the primary beneficiary. The Company holds variable interests in the TOI PCs, comprised of TOI CA, TOI FL, TOI OR, and TOI TX all of which the Company cannot legally own due to jurisdictional laws governing the corporate practice of medicine. The TOI PCs employ physicians and other clinicians in order to provide professional services to patients of our managed clinics, and under substantially similar MSAs, we serve as the exclusive manager and administrator of the TOI PCs’ non-medical functions and services. The TOI PCs are considered variable interest entities (“VIEs”) as they do not have sufficient equity to finance their activities without additional financial support from the Company. An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it has both power and benefits — that is, it has (1) the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance (power), and (2) the obligation to absorb the losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power to control all financial activities of the TOI PCs, the rights to receive substantially all benefits from the VIEs, and consequently consolidates the TOI PCs. Revenues, expenses, and income along with the balance sheet accounts from the TOI PCs are included in the consolidated amounts as presented on the Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets.