Oncology Institute Q1 Earnings Call Highlights

Oncology Institute NASDAQ: TOI reported a strong start to 2026, with first-quarter revenue rising 41% year over year as the company expanded value-based care arrangements and posted record specialty pharmacy performance.

Chief Executive Officer Dan Virnich said the quarter was driven by “continued expansion and performance” of value-based contracts across markets and growth in ancillary services, particularly pharmacy. The company reaffirmed its full-year revenue and adjusted EBITDA outlook and raised its free cash flow forecast to a positive range of $5 million to $15 million.

“Revenue growth of 41%, record pharmacy performance, profitability in Florida, and a growing pipeline of capitated lives gives us confidence that the momentum we built throughout 2025 is continuing into the new year,” Virnich said.

Revenue rises as capitation and pharmacy expand

Chief Financial Officer Rob Carter said total revenue for the first quarter was $147.4 million, compared with $104.4 million in the prior-year period, representing 41.2% growth. Patient services revenue totaled $59.1 million, or 40.1% of total revenue, and increased 11.3% from a year earlier.

Within patient services, capitated revenue rose 54% year over year to $26.9 million, driven by new market momentum and the ramp of delegated arrangements in Florida. Fee-for-service revenue was $32.2 million, down about 10% year over year despite higher visit volumes. Carter attributed the decline to mix changes from active drug formulary management, more conservative reserves against collections and modest pricing pressure in the IV drug channel.

Capitation represented about 45.6% of patient services revenue in the quarter, up from roughly 33% a year earlier, Carter said, reflecting the company’s continuing shift toward value-based care.

Specialty pharmacy revenue reached $87.5 million, or 59.4% of total revenue, and increased 77.6% year over year. Carter said the increase was driven by a 103% rise in prescription fills, partly offset by a roughly 12% decrease in average revenue per fill as the mix evolved.

Margins, expenses and EBITDA improve

Gross profit was $23.3 million, up from $17.2 million in the first quarter of 2025. Overall gross margin was 15.8%, compared with 16.5% a year earlier. Carter said the decline reflected a non-recurring rebate recognized in the prior-year quarter and the lower-margin profile of delegated business as it becomes a larger share of revenue.

Patient services gross profit was $5.7 million, compared with $6 million a year earlier, while patient services gross margin fell to 9.7% from 11.3%. Specialty pharmacy gross profit rose 78.1% to $16.8 million, with gross margin essentially flat at 19.2% versus 19.1% a year earlier.

Carter said the company’s expanded utilization management program, TOI Pathways, now covers its full drug portfolio, including pharmacy, compared with a historical focus on Part B drugs. He said the program supports margin stability as the pharmacy business scales.

Selling, general and administrative expenses were $28.2 million, or 19.1% of revenue, compared with $25.4 million, or 24.3% of revenue, in the prior-year period. Carter said the 520-basis-point improvement reflected cost discipline and operating leverage.

Adjusted EBITDA was a loss of $2.4 million, compared with a loss of $5.1 million a year earlier. Carter said the first quarter is seasonally the company’s most challenging period due to deductible resets and annual drug cost increases, but management remains confident in achieving positive adjusted EBITDA for the full year.

Florida reaches profitability as delegated model expands

Virnich said the company is now generating a profit in Florida, calling it an important milestone that reflects the maturation of capitated relationships in one of its newer markets. He said initial members under delegated capitation partnerships continue to show strong clinical outcomes, with medical loss ratio performance in line with or slightly better than plan.

Management said the company targets a mature MLR of about 85% for new delegated capitation contracts and is achieving that with its 2025 effective contracts in South Florida. In response to a question from BTIG analyst David Larsen, Virnich said the 2025 cohort is performing slightly better than the 85% target and that Florida is profitable on a four-wall EBITDA basis.

The company expects to expand existing plan partnerships across 11 additional Florida counties for Medicare Advantage members in the third quarter. Virnich said the expansion will bring the company’s TOI clinic and MSO network to effectively the entire Florida market for delegated capitation agreements across multiple health plans, covering about 200,000 Medicare Advantage lives across 25 counties.

Virnich said the company expects to open seven new TOI clinics over the remainder of the year and expand its contracted provider footprint in the state.

Portal, pharmacy access and AI initiatives remain focus areas

Virnich said the company is preparing to launch a proprietary provider portal this summer. The portal is intended to strengthen contracted provider engagement, improve adherence to clinical pathways and quality initiatives, and eventually provide access to ancillary services such as Part D dispensing, clinical trials and care navigation.

In response to Needham analyst Matthew Shea, Virnich said the portal is expected to be accessible to 100% of non-employed providers across the delegated contract network in Florida when it rolls out in the third quarter. He said potential upside from Part D fills through the MSO network is not included in current guidance.

The company also continues to work on AI-enabled operational initiatives focused on revenue cycle management, prior authorization services and the patient call center. Virnich said the company remains on track to achieve $2 million in operating expense savings in 2026 from those efforts. In a follow-up response to Shea, he said longer-range forecasts issued in January did not include additional AI efficiencies beyond that amount.

Virnich also highlighted the company’s performance in the CMS Enhancing Oncology Model, saying TOI saved nearly $2 million in Medicare spending in performance period 3 while maintaining quality of care. In response to NOBLE Capital Markets analyst Robert LeBoyer, Virnich described the model as an episodic total-cost-of-care risk model and said the company did not have MLR performance or total risk pool figures for that cohort available on the call.

Guidance reiterated; free cash flow outlook raised

For full-year 2026, Carter reiterated the company’s outlook for revenue of $630 million to $650 million, including approximately $150 million of capitated revenue. The company continues to expect gross profit of $97 million to $107 million and adjusted EBITDA of $0 to $9 million.

TOI raised its free cash flow outlook to positive $5 million to $15 million from a prior range of negative $15 million to positive $5 million. Carter said the improvement reflects favorable terms from vendor renegotiations, particularly with key suppliers on the drug side, as the company benefits from scale.

For the second quarter, the company expects adjusted EBITDA to range from a loss of $1 million to positive $1 million, with improvement expected as deductibles are satisfied and Florida delegated lives continue to ramp.

The company ended the quarter with $30.3 million in cash and cash equivalents, compared with $33.6 million at year-end 2025. Carter said the company’s senior secured convertible note principal outstanding was $85.9 million, unchanged from year-end, with a maturity date of Aug. 9, 2027. He added that TOI is in late-stage discussions regarding refinancing the note and expects to provide an update during the second quarter.

About Oncology Institute NASDAQ: TOI

The Oncology Institute, Inc, an oncology company, provides various medical oncology services in the United States. The company operates through three segments: Dispensary, Patient Services, and Clinical Trials & Other. It offers physician services, in-house infusion and dispensary, clinical trial, radiation, outpatient blood product transfusion, and patient support services, as well as educational seminars, support groups, and counseling services. The company also provides managing clinical trials, palliative care programs, stem cell transplants services, and other care delivery models associated with non-community-based academic and tertiary care settings; and conducts clinical trials for a range of pharmaceutical and medical device companies.

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