Starling Oncology, Inc.
For the period ended Dec 31, 2024. Filed Mar 26, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 26, 2025
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-K
Period ended 2023-12-31; filed 2024-03-28.
0001628280-24-013444
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-26.
0001799191-25-000014
Item 7. 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 148 previous paragraphs and 143 current paragraphs.
103 unchanged; 19 reworded; 21 added; 26 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 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 (21)
Current report
The decrease in patient services revenue was primarily due to a 5.0% decrease in FFS revenue and a 1.3% decrease in capitation revenue as a result of a terminated contract during the year, partially offset by other contract starts.
Current report
•Tax payments and penalties,
Current report
The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. In connection with the preparation of the consolidated financial statements for the year ended December 31, 2024, the Company conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to its ability to continue as a going concern within one year after the date of the issuance of such financial statements. The Company had cash and cash equivalents of $49,669 and an accumulated deficit of $210,813 at December 31, 2024, and a net loss of $64,663 and net cash used in operating and investing activities of $26,538 for the year ended December 31, 2024. In February 2025, the Company entered into an Amendment to the Facility Agreement (see Note 11 - Debt) in which the Company made a partial prepayment of approximately $20 million together with accrued and unpaid interest. Among other items, the Amendment provided for the removal of the financial covenant that required the Company to hold at least $40 million of cash and cash equivalents (see Note 22 — Subsequent Events). Additionally, in March 2025, the Company entered into a securities purchase agreement for a private placement that resulted in gross proceeds of approximately $16.5 million, before deducting placement agent fees and offering expenses. Additionally, the Company's lender and existing investor, entered into an exchange agreement, in which approximately $4.1 million aggregate principal amount of the Company's senior secured convertible notes would be exchanged for common-equivalent preferred stock and warrants for common stock.
Current report
The Company has also taken a number of other actions to increase cash flow. As one of our strategic priorities in 2024 and beyond, the Company implemented an initiative to eliminate cash burn. Due to efforts towards working capital management that saw improvements across receivables, inventory, and payables, the Company was able to generate a positive cash flow from operations in Q4 2024 of approximately $4 million. Additionally, we generated an 11% reduction in SG&A expenses compared to the prior year directly as a result of our ongoing efforts to streamline operations, improve efficiency, and optimize our overhead resourcing.
Current report
Accordingly, the Company has concluded that it will have sufficient liquidity to fund its operations for at least one year from the date these consolidated financial statements are issued.
Current report
Although the Company currently expects its sources of capital to be sufficient to meet its near-term liquidity needs, there can be no assurance that such sources will be sufficient to satisfy its liquidity requirements in the future. If the Company cannot generate or obtain needed funds, it might be forced to make substantial reductions in its operating and capital expenses or pursue restructuring plans, which could adversely affect its business operations and ability to execute its current business strategy.
Current report
•Net loss decreased of $18,405, primarily as a result of a $16,900 reduction of operation loss and a $1,921 decrease in the fair value of warrant, earnout and conversion option liabilities of for the year ended December 31, 2024 as compared to the year ended December 31, 2023;
Current report
Critical Accounting Policies and Estimates
Current report
Our significant accounting policies are more fully described in the notes to our audited consolidated financial statements elsewhere in this Annual Report on Form 10-K. We believe that the following accounting policies reflects the most critical judgments and estimation uncertainty used in the preparation of our Consolidated Financial Results.
Current report
Income Taxes
Current report
The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse.
Current report
A valuation allowance is required when there is significant uncertainty as to whether certain deferred tax assets can be realized. The ability to realize deferred tax assets is dependent upon our ability to generate sufficient taxable income within the carryforward periods provided for in the tax law for each tax jurisdiction. We have considered the following possible sources of taxable income when assessing the realization of our deferred tax assets:
Current report
•future reversals of existing taxable temporary differences;
Current report
•future taxable income or loss, exclusive of reversing temporary differences and carryforwards;
Current report
•tax-planning strategies; and
Current report
•taxable income in prior carryback years.
Current report
We will continue to reevaluate the continued need for a valuation allowance. Relevant factors include:
Current report
•current financial performance;
Current report
•our ability to meet short-term and long-term financial and taxable income projections;
Current report
•the overall market environment; and
Current report
•the volatility and trends in the industry in which we operate.
Removed paragraphs (26)
Previous report
2023 Highlights
Previous report
•Consolidated revenue of $324.2 million, an increase of 28% compared to the prior year
Previous report
•Gross profit of $59.6 million, an increase of 14% compared to the prior year, and gross margin of 18.4%, a decrease from 20.6% the prior year
Previous report
•Adjusted EBITDA of $(25.8) million compared to $(23.5) million for the prior year
Previous report
•Ended the fiscal year 2023 with $83 million in cash, cash equivalents, and investments
Previous report
•Signed full-risk capitated contract in South Florida, effective January 1, 2024 and have now successful onboarded the membership and the IPA providers.
Previous report
•Successfully acquired and launched our California-based pharmacy in November and have already completed over 1,300 specialty medication fills
Previous report
The increase in patient services revenue was primarily due to a 22.7% increase in FFS revenue as a result of practice acquisitions and an overall increase in clinic count as well as a 4.5% increase in capitation revenue due to new capitation contracts entered into during 2023 and in the latter half of 2022.
Previous report
Dispensary cost
Previous report
Gain on loan forgiveness
Previous report
There was no gain on loan forgiveness during the year ended December 31, 2023. During the year ended December 31, 2022, gain on loan forgiveness of $183 was a result of forgiveness of all CARES Act loans, including those obtained through physician practice acquisition.
Previous report
Other, net
Previous report
The change in other, net was primarily due to Provider Relief Funding received under the CARES Act during the year ended December 31, 2022 that did not occur in 2023.
Previous report
•Income tax expense,
Previous report
To date, the Company has financed its operations principally through debt facilities, issuances of equity securities and payments received from various payors. As of December 31, 2023, the Company had $33,488 of cash and cash equivalents, none of which are restricted cash, as well as $49,367 of current marketable securities.
Previous report
The Company expects to incur operating losses and generate negative cash flows from operations for the foreseeable future due to the investments; management intends to continue to make in expanding operations and sales and marketing and due to additional general and administrative expenses management expects to incur in connection with operating as a public company. As a result, the Company may require additional capital resources to execute strategic initiatives to grow the business.
Previous report
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.
Previous report
•Net loss increased to $83,220, primarily as a result of a decrease in the fair value of liabilities of $1,395 for the year ended December 31, 2023 as compared to a decrease in fair value of liabilities of $85,258 during the year ended December 31, 2022;
Previous report
•Share based compensation for the year ended December 31, 2023 decreased by $9,873 as compared to the year ended December 31, 2022;
Previous report
Critical Accounting Policies
Previous report
Leases
Previous report
On January 1, 2022, the Company adopted ASU 2016-02, Leases, with various amendments issued in 2018 and 2019 (collectively, “ASC 842”) using the modified retrospective approach, for leases that existed on January 1, 2022. ASC 842 requires lessees to recognize assets and liabilities for most leases. 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.
Previous report
Generally, upon the commencement of a lease, the Company will record a right-of-use (“ROU”) asset and lease liability. An ROU asset represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are measured at the present value of the remaining, fixed lease payments at lease commencement. The Company uses its incremental borrowing rate, based on the information available at the later of adoption, inception, or modification in determining the present value of lease payments. ROU assets are measured at an amount equal to the initial lease liability, plus any prepaid lease payments (less any incentives received) and initial direct costs, at the lease commencement date. The Company has elected to account for lease and non-lease components as a single lease component for all underlying classes of assets. As a result, the fixed payments that would otherwise be allocable to the non-lease components are account for as lease payments and included in the measurement of the Company’s right-of-use asset and lease liability.
Previous report
Lease arrangements with an initial term of 12 months or less are considered short-term leases and are not recorded on the balance sheet. The short-term lease payments are recognized as an expense on a straight-line basis over the lease term. The lease term includes any period covered by renewal options available that the Company is reasonably certain to exercise and any options to terminate the lease that the Company is not reasonably certain to exercise.
Previous report
Direct Costs of Sales
Previous report
Direct cost of sales primarily consists of wages paid to clinical personnel and other health professionals, oral and IV drug costs, and other medical supplies used to provide patient care. Costs for clinical personnel wages are expensed as incurred and costs for inventory and medical supplies are expensed when used, generally by applying the specific identification method.
Reworded paragraphs (19)
Previous wording
The Company is a leading value-based oncology company that manages community-based oncology practices that serve patients at 83 clinic locations across 15 markets andfive states throughout the United States. As of December 31, 2023, our community-based oncology practices are staffed with 130 oncologists and advanced practice providers. 69 of these clinics are staffed with 119 providers employed by our affiliated physician-owned professional corporations, referred to as the "TOI PCs," which provided care for more than 64,000 and 72,000 patients in 2022 and 2023, respectively, and managed a population of approximately 1.8 million patients under value-based agreements as of December 31, 2023. The Company also provides management services to 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 16 markets andfive states throughout the United States. The Company commenced operations in Oregon in October 2024. As of December 31, 2024, our community-based oncology practices are staffed with 130 oncologists and advanced practice providers. 72 of these clinics are staffed with 119 providers employed by our affiliated physician-owned professional corporations, referred to as the "TOI PCs," which provided care for more than 72,000 patients in 2023 and 2024, respectively, and managed a population of approximately 1.9 million patients under value-based agreements as of December 31, 2024. The Company also provides management services to 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
The increase in dispensary revenue was primarily due to a 31.5% increase in the number of fills offset by 0.5% decrease in the average revenue per fill.
Current wording
The increase in dispensary revenue was primarily due to a 85.9% increase in the number of fills offset by 6.8% decrease in the average revenue per fill.
Previous wording
The increase in patient services cost was primarily due to a 26.1% increase in intravenous drug costs, primarily driven by the Company's patient mix and volume, as well as the rising rate of inflation during 2023. In addition, clinical payroll costs increased 8.1% from the prior year due to the growth in clinic count.
Current wording
The increase in patient services cost was primarily due to a 13.9% increase in clinical payroll costs due to the expectation of growth from additional contracts, partially offset by a 0.4% decrease in intravenous drug costs, primarily driven by the Company's patient mix and volume.
Previous wording
The increase in dispensary cost was primarily due to a 31.5% increase in the number of prescriptions filled offset by a 3.0% decrease in the average cost of the prescriptions filled.
Current wording
The increase in dispensary cost was primarily due to a 85.9% increase in the number of prescriptions filled offset by a 2.1% decrease in the average cost of the prescriptions filled.
Previous wording
During the years ended December 31, 2023 and 2022, impairment charges of $16,867 and $9,944 were recorded related to goodwill, respectively. See Note 2 and Note 18 in Item. 8 Financial Statements and Supplementary Data for additional detail.
Current wording
During the years ended December 31, 2024 and 2023, impairment charges of $0 and $16,867 were recorded related to goodwill, respectively. See Note 2 and Note 18 in Item. 8 Financial Statements and Supplementary Data for additional detail.
Previous wording
The decrease in selling, general and administrative expense was primarily driven by a 8.5% decrease in share-based compensation expense, a 2.6% decrease in transaction costs and a 1.7% decrease in professional fees offset by 1.9% increase in salaries and benefits due to the growth in the Company's management and corporate team, as well as a 3.1% increase in office expenses, and a 1.4% increase in real estate and equipment expenses.
Current wording
The decrease in selling, general and administrative expense was primarily driven by a 5.6% decrease in share-based compensation expense, a 2.1% decrease in non-clinical payroll, a 2.2% decrease in insurance expense, and a 1.5% decrease in deferred purchase price expense offset by a 2.2% increase in professional fees, a 1.6% increase in real estate and equipment expenses and a 5.1% increase in office expenses and supplies due to the growth in the Company's management and corporate teams.
Previous wording
The decrease in non-operating (income) expense was primarily due to the decrease in gains of $58,412 and $23,322, respectively during the year ended December 31, 2023, as a result of decreases in the fair value of earnout liabilities and conversion option derivative liabilities, which were created as part of the Business Combination and the issuance of the Senior Secured Convertible Note, respectively.
Current wording
The decrease in non-operating (income) expense was primarily due to the decrease in gains of $803 and $1,819, respectively during the year ended December 31, 2024, as a result of decreases in the fair value of earnout liabilities and conversion option derivative liabilities, which were created as part of the Business Combination and the issuance of the Senior Secured Convertible Note, respectively.
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 year ended December 31, 2023, non-cash addbacks were primarily comprised of net bad debt write-offs of $2,020. During the year ended December 31, 2022, non-cash addbacks were primarily comprised of a $476 of net bad debt write-off, deferred rent of $711, and other miscellaneous charges of $22.
Current wording
(1)During the year ended December 31, 2024, non-cash addbacks were primarily comprised of non-cash rent of $411 and $259 loss on disposal of fixed assets. During the year ended December 31, 2023, non-cash addbacks were primarily comprised of a $2,020 of net bad debt write-off.
Previous wording
(5) Infrastructure and workforce costs were comprised of recruiting expenses to build out corporate infrastructure of $2,227 and $2,835, software implementation fees of $105 and $116, severance expenses resulting from cost rationalization programs of $979 and $248, temporary labor of $1,365 and $1,829, and lease terminations, settlements, and penalty addbacks of $1,289 and $0 during the years ended December 31, 2023 and 2022, respectively.
Current wording
(5) Infrastructure and workforce costs were primarily comprised of recruiting expenses to build out corporate infrastructure of $1,294 and $2,227, severance expenses resulting from cost rationalization programs of $343 and $979, temporary labor of $748 and $1,365, and lease terminations, settlements, and penalty addbacks of $3,921 and $1,289 during the years ended December 31, 2024 and 2023, respectively.
Previous wording
(6)Transaction costs were comprised of consulting, legal, administrative and regulatory fees associated with share repurchases and practice acquisitions during the year ended December 31, 2023, and related to the Senior Secured Convertible Note during the year ended December 31, 2022.
Current wording
(6)Transaction costs were comprised of consulting and legal fees associated with non-recurring due diligence projects during the year ended December 31, 2024, and related to consulting, legal, administrative and regulatory fees associated with share repurchases and practice acquisitions during the year ended December 31, 2023.
Previous wording
•Cash used by accounts receivable decreased $15,721 for the year ended December 31, 2023 as compared to the year ended December 31, 2022 due to the collection stabilization of the Company's receivables;
Current wording
•Cash used by accounts receivable increased $1,411 for the year ended December 31, 2024 as compared to the year ended December 31, 2023 due to new contract wins and therefore more services being provided and billed.
Previous wording
•Cash provided by accounts payable, accrued expenses and income taxes payable increased $11,874 for the year ended December 31, 2023 as compared to the year ended December 31, 2022 primarily due to an increase in vendor payables resulting from the growth in the Company's business;
Current wording
•Cash provided by accounts payable and accrued expenses increased $10,527 for the year ended December 31, 2024 as compared to the year ended December 31, 2023 primarily due to an increase in vendor payables resulting from the growth in the Company's business and strategic cash management;
Previous wording
•Cash used by purchasing inventory increased $2,653 for the year ended December 31, 2023 as compared to the year ended December 31, 2022 as a result of an increase in inventory acquired through practice acquisition; and
Current wording
•Cash used by purchasing inventory decreased $8,024 for the year ended December 31, 2024 as compared to the year ended December 31, 2023 as a result of favorable payment terms with suppliers and improved inventory management;
Previous wording
•Cash provided by prepaid and other current assets decreased $1,154 for the year ended December 31, 2023 as compared to the year ended December 31, 2022 primarily due to the financing of the Company's directors and officers insurance policy that occurred in 2022.
Current wording
•Cash provided by prepaid and other current assets decreased $1,952 for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Previous wording
Net cash used by investing activities decreased $194,254 for the year ended December 31, 2023 as compared to the year ended December 31, 2022 due to $107,913 reduction in purchases of marketable securities and a decrease in cash used for purchases of property and equipment of $962 for new clinic builds and clinic remodels, and a decrease in cash used for purchases of practice acquisitions and intangibles of $4,121.
Current wording
Net cash provided by investing activities decreased $16,429 for the year ended December 31, 2024 as compared to the year ended December 31, 2023 due to the decrease in sale of marketable securities of $31,258, offset by $9,595 reduction in purchases of marketable securities, and a decrease in cash used for purchases of practice acquisitions and intangibles of $4,456.
Previous wording
Net cash provided by financing activities decreased $99,053 for the year ended December 31, 2023 as compared to the year ended December 31, 2022 primarily due to $110,000 of proceeds from the issuance of the Senior Secured Convertible during the year ended December 31, 2022, offset by $7,981 decrease in common stock repurchase, and by deferred cash consideration and finance insurance premium payments of $2,584 and $3,269, respectively, during year ended December 31, 2023.
Current wording
Net cash used by financing activities decreased $3,355 for the year ended December 31, 2024 as compared to the year ended December 31, 2023 primarily due to a $1,019 decrease in the common stock repurchase that was done in the prior year, and a $2,113 decrease in finance insurance premium payments during year ended December 31, 2024.
Previous wording
The Company's material cash requirements for the following five years consist of principal and interest due on the convertible note, 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 December 31, 2023.
Current wording
The Company's material cash requirements for the following five years consist of principal and interest due on the convertible note, operating leases and other miscellaneous items. 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 December 31, 2024.
Previous wording
The Company prepares its financial statements in accordance with generally accepted accounting principles in the United States ("U.S. GAAP,"), which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates under different assumptions or conditions.
Current wording
Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ significantly from these estimates under different assumptions or conditions.