Oncology Institute Inc
For the period ended Sep 30, 2024. Filed Nov 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 13, 2024
STLN$3.62-46.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001799191-24-000022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001799191-24-000030
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 157 previous paragraphs and 158 current paragraphs.
117 unchanged; 39 reworded; 2 added; 0 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
Intravenous drug costs are in line with normal seasonality and we expect improvement in the margins as the year progresses as additional rebates are achieved through volume-based tiering in our contractual pricing.
Current report
We have implemented targeted initiatives to optimize our working capital going forward. We are improving our receivables management and are in the process of renegotiating payment terms with key suppliers. The goal is to reduce our days sales outstanding (DSO), while also extending our days payable outstanding (DPO) through ongoing negotiations with our vendors. These efforts are for long and short-term improvement in cash flow from operations and improving liquidity.
Reworded paragraphs (39)
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 2.1 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.
Current wording
The Company is a leading value-based oncology company that manages community-based oncology practices for the Company and for independent oncology practices that together serve patients at 86 clinic locations across 14 markets andfour states throughout the United States. Additionally, the Company has commenced operations in Oregon in October 2024. Our community-based oncology practices are staffed with 131 oncologists andadvanced practice providers. 72 of these clinics are staffed with 120 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 1.9 million patients under value-based agreements as of September 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
Comparison of the Three and Six Months Ended June 30, 2024 and 2023
Current wording
Comparison of the Three and Nine Months Ended September 30, 2024 and 2023
Previous wording
The decrease in patient services revenue was primarily due to a 5.7% decrease in FFS revenue offset by a 3.9% increase in capitation revenue during the second quarter of 2024.
Current wording
The decrease in patient services revenue was primarily due to a 1.6% decrease in FFS revenue and a 5.6% decrease in capitation revenue during the third quarter of 2024. This was primarily due to fluctuations in members and loss of contract. During the three months ended September 30, 2024, we signed an additional 3 capitated contracts across 2 states, including both medical and radiation oncology services. We added a second capitation contract in Florida which is direct to a health plan partner, as well as our first capitation contract in Oregon. Year to date, we have now signed 13 new capitation contracts across the organization. We also achieved certification to begin radio-pharmaceutical therapy in our California radiation oncology practice. This will be an important driver of growth and margin for our radiation oncology business going forward, and we are one of the few community-based practices on the West Coast to offer this service which traditionally occurs in the hospital setting. We are targeting a December 2024 go-live for this important new therapeutic service at TOI. With the recent execution of our capitation contracts, we expect significant improvement in our net loss in Q4 and beyond. We are well-positioned to handle substantial growth in the markets we serve without needing to add more providers or increase overhead costs.
Previous wording
The increase in patient services revenue was primarily due to a 2.8% increase in capitation revenue offset by a 1.8% decrease in FFS revenue.
Current wording
The decrease in patient services revenue was primarily due to a 1.7% decrease in FFS revenue.
Previous wording
The increase in dispensary revenue was primarily due to a 80.5% increase in the number of prescriptions filled primarly related to the California pharmacy, offset by a 5.7% decrease in the average revenue per fill.
Current wording
The increase in dispensary revenue was primarily due to a 86.5% increase in the number of prescriptions filled primarily related to the California pharmacy, offset by a 3.5% decrease in the average revenue per fill. We are continuing to set new monthly fill records and now project revenue of more than $75 million from our California Pharmacy.
Previous 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.
Current wording
The increase in dispensary revenue was primarily due to a 82.5% increase in the number of prescriptions filled primarily related to the California pharmacy, offset by a 4.9% decrease in the average revenue per fill.
Previous wording
The increase in clinical trials and other revenue was primarily due to an increase in other revenue compared to the six months ended June 30, 2023.
Current wording
The increase in clinical trials and other revenue was primarily due to an increase in other revenue compared to the nine months ended September 30, 2023.
Previous wording
The increase in patient services cost was primarily due to a 4.8% increase in clinical payroll costs due to growth and provider count offset by a 0.5% decrease in intravenous drug costs, as well as a 1.0% decrease in medical supply cost.
Current wording
The increase in patient services cost was primarily due to a 4.8% increase in clinical payroll costs due to growth and provider count offset by a 4.0% decrease in intravenous drug costs, as well as a 0.9% decrease in medical supply cost.
Previous 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.
Current wording
The increase in patient services cost was primarily due to a 5.1% increase in clinical payroll costs due to growth and provider count as well as a 1.5% 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 89.9% increase in the number of prescriptions filled and by a 1.6% increase in the average cost of the prescriptions filled.
Current wording
The increase in dispensary cost was primarily due to a 86.5% increase in the number of prescriptions filled and by a 2.0% increase in the average cost of the prescriptions filled.
Previous wording
The increase in dispensary cost was primarily due to a 80.5% increase in the number of prescriptions filled and by a 1.1% increase in the average cost of the prescriptions filled.
Current wording
The increase in dispensary cost was primarily due to a 82.5% increase in the number of prescriptions filled and by a 1.4% increase in the average cost of the prescriptions filled.
Previous wording
The goodwill impairment charges were $0 during the three and six months ended June 30, 2024, compared to $0 and $16,867 during the three and six months ended June 30, 2023. See Note 18 for additional detail.
Current wording
The goodwill impairment charges were $0 during the three and nine months ended September 30, 2024, compared to $0 and $16,867 during the three and nine months ended September 30, 2023. See Note 18 for additional detail.
Previous wording
The decrease in selling, general and administrative expense was primarily driven by a 5.8% decrease in salaries and benefits, a 2.4% decrease in business development expenses, offset by a 6.1% increase in operational expenses due to the growth of CA pharmacy business.
Current wording
The decrease in selling, general and administrative expense was primarily driven by a 12.2% decrease in salaries and benefits, a 2.1% decrease in business development expenses, offset by a 8.8% increase in operational expenses due to the growth of CA pharmacy business. This decrease is a direct result of our ongoing efforts to streamline operations, improve efficiency, and optimize our cost structure. We are confident that these cost-management efforts, combined with our robust top-line growth, will continue to strengthen our financial performance and position in the quarters ahead.
Previous 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.
Current wording
The decrease in selling, general and administrative expense was primarily driven by a 7.9% decrease in salaries and benefits, a 2.3% decrease in business development expenses, offset by a 7.0% increase in operational expenses due to the growth of CA pharmacy business.
Previous 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.
Current wording
The increase in net interest expense for the three and nine months ended September 30, 2024 was the result of the decrease in interest income related to marketable treasury securities.
Previous 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.
Current wording
The decrease in change in fair value of liabilities was primarily due to no change in the fair value of conversion option derivative liabilities for the three months ended September 30, 2024, compared to $1,284 loss for the three months ended September 30, 2023.
Previous wording
The increase in change in fair value of liabilities was primarily due to a $1,228 reduction in gain as a result of the decrease in fair value of derivative warrant and conversion option derivative liabilities for the six months ended June 30, 2024.
Current wording
The increase in change in fair value of liabilities was primarily due to a $256 reduction in gain as a result of the decrease in fair value of derivative warrant and conversion option derivative liabilities for the nine months ended September 30, 2024.
Previous 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.
Current wording
(1)During the three months ended September 30, 2024, non-cash addbacks were primarily comprised of non-cash rent of $104 offset by net credit loss of $2. During the three months ended September 30, 2023, non-cash addbacks were primarily comprised of net bad debt expense of $32 offset by non-cash rent of $45.
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 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.
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 September 30, 2024. During the three months ended September 30, 2023, these fees related to non-recurring advisory projects, including software implementations.
Previous 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.
Current wording
(5)Infrastructure and workforce costs were comprised of recruiting expenses to build out corporate infrastructure of $218 and $701, software implementation fees of $0 and $37, severance expenses resulting from cost rationalization programs of $67 and $633, temporary labor of $142 and $310 and non-recurring legal fees related to infrastructure build out of $948 and $2 during the three months ended September 30, 2024 and 2023, respectively.
Previous wording
(1)During the six months ended June 30, 2024, non-cash addbacks were primarily comprised of non-cash rent of $158, offset by net reversal of bad debt recovery of $50. During the six months ended June 30, 2023, non-cash addbacks were primarily comprised of non-cash rent of $166 offset by net credit losses of $1 .
Current wording
(1)During the nine months ended September 30, 2024, non-cash addbacks were primarily comprised of non-cash rent of $261, offset by net reversal of bad debt recovery of $51. During the nine months ended September 30, 2023, non-cash addbacks were primarily comprised of non-cash rent of $120 and net credit losses of $31 .
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 non-recurring advisory projects during the six months ended June 30, 2024. During the six months ended June 30, 2023, these fees related to certain advisory projects.
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 nine months ended September 30, 2024. During the nine months ended September 30, 2023, these fees related to non-recurring advisory projects, including software implementations.
Previous wording
(5) Infrastructure and workforce costs were primarily comprised of non-recurring legal fees related to infrastructure build out of $2,359 and $0, recruiting expenses to build out corporate infrastructure of $712 and $892, severance expenses resulting from cost rationalization programs of $151 and $265, and temporary labor of $326 and $907 during the six months ended June 30, 2024 and 2023, respectively.
Current wording
(5) Infrastructure and workforce costs were primarily comprised of non-recurring legal fees related to infrastructure build out of $3,307 and 2,035, recruiting expenses to build out corporate infrastructure of $930 and $1,593, severance expenses resulting from cost rationalization programs of $219 and $898, and temporary labor of $468 and $1,217 during the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
(6)Transaction costs incurred during the six months ended June 30, 2024 were comprised of consulting, legal, administrative and regulatory fees associated with non-recurring due diligence projects.
Current wording
(6)Transaction costs incurred during the nine months ended September 30, 2024 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 June 30, 2024, the Company had $36,424 of cash and cash equivalents and current marketable securities of $9,939.
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 September 30, 2024, the Company had $47,402 of cash and cash equivalents.
Previous 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.
Current wording
Management believes that its cash and cash equivalents on hand 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 of the Company's lack of sufficient capital, the Company's business, results of operations, and financial condition would be adversely affected.
Previous wording
Outside of the aforementioned, and any routine transactions made in the ordinary course of business, there have been no significant changes to our material cash requirements as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
Outside of the aforementioned, and any transactions made in the ordinary course of business, there have been no significant changes to our material cash requirements as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous 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:
Current wording
Significant changes impacting net cash and cash equivalents used in operating activities for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 was due to $12,833 reduction in net loss and the following changes to the non-cash net loss adjustments:
Previous wording
•Goodwill impairment of $16,867 for the six months ended June 30, 2023 that did not occur in the current year,
Current wording
•Goodwill impairment of $16,867 for the nine months ended September 30, 2023 that did not occur in the current year,
Previous wording
•A $1,228 reduction in gains related to the change in the fair value of liabilities for the six months ended June 30, 2024;
Current wording
•A $256 reduction in gains related to the change in the fair value of liabilities for the nine months ended September 30, 2024;
Previous 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;
Current wording
•Share based compensation for the nine months ended September 30, 2024 decreased by $3,868 compared to the nine months ended September 30, 2023;
Previous 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;
Current wording
•Cash used by accounts receivable increased $3,485 for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 due to timing and the growth in the Company's pharmacy business;
Previous wording
•Cash used by inventories decreased $5,263 for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 due to reduction in inventory days on hands.
Current wording
•Cash used by inventories decreased $6,485 for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 due to reduction in inventory days on hands.
Previous 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
Current wording
•Cash provided by accounts payable, accrued expenses and income taxes payable increased $8,751 for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 primarily due to the timing of the payment activities; and
Previous 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.
Current wording
•Cash used by prepaid and other current assets increased $2,736 for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 primarily due to timing.
Previous wording
Net cash provided by investing activities decreased $5,740 for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 due to a $10,380 decrease in net sales of marketable securities, offset by a $4,640 decrease in cash used in practice acquisitions in and purchases of property and equipment.
Current wording
Net cash provided by investing activities decreased $3,047 for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 due to a $9,019 decrease in net sales of marketable securities, offset by a $5,972 decrease in cash used in practice acquisitions in and purchases of property and equipment.
Previous 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 .
Current wording
Net cash used in financing activities decreased $1,738 for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 primarily due to a decrease of $2,008 related to payments made for financing of insurance payments and a $1,019 decrease in common stock repurchases offset by a $1,413 increase of deferred consideration liability payments during the nine months ended September 30, 2024.
Previous wording
The Company's material cash requirements for the following five years consist of debt servicing requirements, operating leases and other miscellaneous administrative expenses. Additionally, the Company is subject to certain outside claims and litigation arising out of the ordinary course of business, however, no such litigation requires future cash expenditure as of June 30, 2024.
Current wording
The Company's material cash requirements for the following five years consist of debt servicing requirements, operating leases and deferred acquisition and contingent consideration. Additionally, the Company is subject to certain outside claims and litigation arising out of the ordinary course of business, however, no such litigation requires future cash expenditure as of September 30, 2024.
Previous 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.
Current 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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.