Q4 2021 Oncology Institute Inc Earnings Call
Good afternoon, and welcome to the oncology institutes fourth quarter and full year 2021 earnings conference call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A at this time I'd like to turn the conference over to Scott Dudley Chief Financial Officer at the Oncology Institute.
Good afternoon, and welcome to the Oncology Institute's fourth quarter and full year 2021 earnings conference call. Today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Scott Dalglish, Chief Financial Officer at the Oncology Institute. Thank you. You may begin your presentation.
Thank you you may begin your presentation.
Scott Dalglish: Good afternoon, everyone, and thanks for joining us to discuss TOI's fourth quarter and full year 2021 results.
Good afternoon, everyone and thanks for joining us to discuss T O I's fourth quarter and full year 2021 result.
Before we begin we'd like to remind you that this conference call will include forward looking statements.
Scott Dalglish: Before we begin, we would like to remind you that this conference call will include forward-looking statements.
These statements include our future expectations regarding financial results and guidance market opportunities that are growth.
Scott Dalglish: These statements include our future expectations regarding financial results and guidance, market opportunities, and our growth.
Scott Dalglish: These statements, which are subject to various risks, uncertainties, and assumptions, could cause our actual results to differ materially from these statements.
These statements, which are subject to various risks uncertainties and assumptions could cause our actual results to differ materially from these statements.
Scott Dalglish: These risks, uncertainties, and assumptions are detailed in this afternoon's press release, as well as our filings at the SEC, including our registration statement on Form S1 that was filed with the SEC, and the Form 10-K that will be filed, all of which can be found on our website at investors.theoncologyinstitute.com.
These risks uncertainties and assumptions are detailed in this afternoon's press release as well as our filings with the SEC, including our registration statement on form S. One that was filed with the SEC and the Form 10-K that will be filed all of which can be found on our website at investors Dot oncology Institute Dot com.
Scott Dalglish: We undertake no obligation to revise or update any forward-looking statements or information except as required by law.
We undertake no obligation to revise or update any forward looking statements or information, except as required by law.
During our call today, we will also reference certain non-GAAP financial information, including.
Scott Dalglish: During our call today, we will also reference certain non-GAAP financial information.
Scott Dalglish: including adjusted EBITDA, free cash flow, and adjusted diluted EPS, or earnings per share.
Including adjusted EBITDA free cash flow and adjusted diluted EPS or earnings per share.
Scott Dalglish: We use non-GAAP measures in some of our financial discussions.
We use non-GAAP measures in some of our financial discussions as we believe they more accurately represent the true operational performance and underlying results of our business.
Scott Dalglish: as we believe they more accurately represent the true operational performance and underlying results of our business.
Scott Dalglish: The presentation of this non-GAAP financial information is not intended to be considered an isolation or as a substitute for or superior to the financial information prepared and presented in accordance with GAAP.
The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information prepared and presented in accordance with GAAP.
Scott Dalglish: Please note that our non-GAAP measures may be different from non-GAAP measures used by other companies.
Please note that our non-GAAP measures may be different from non-GAAP measures used by other companies.
Reconciliations of GAAP to non-GAAP measures as well as the description limitations and rationale for using each measure can be found in this afternoon's press release and in our SEC filings.
Scott Dalglish: Reconciliations of GAAP to non-GAAP measures, as well as the description, limitations, and rationale for using each measure, can be found in this afternoon's press release and in our SEC file.
Scott Dalglish: Joining me on the call today is our CEO , Brad Hyde.
Joining me on the call today is our CEO , Brad Hi, Blake.
Brad Hyde: Following our prepared remarks, we'll open up the call for your questions. With that, I'll turn the call over to Brad.
Following our prepared remarks, we'll open up the call for your questions with that I'll turn the call over to Brad.
Thanks Scott.
Good afternoon, everyone and thank you for joining us on our fourth quarter and full year 2021 earnings call, which marks our first earnings call as a public company.
Brad Hyde: Good afternoon, everyone, and thank you for joining us on our 4th quarter and full year 2021 earnings call, which marks our 1st earnings call as a public company.
Brad Hyde: I am extremely proud of our team as we took the first step on this new and exciting journey in the public markets while continuing to deliver meaningful care to our patients and communities in 2021.
I am extremely proud of our team as we took the first step on this new and exciting journey in the public markets, while continuing to deliver meaningful care to our patients and communities in 2021.
Brad Hyde: We successfully completed our business combination with DFP Healthcare Acquisition Corporation in November , making us the first value-based specialty provider to go public.
We successfully completed our business combination with DSP Health care acquisition Corporation in November , making us the first value based specialty provider to go public.
Brad Hyde: As a result of this transaction, $130 million were retained on TOI's balance sheet to fund growth initiatives, including de novo clinics and acquisitions, as we continue to expand our unique model of cancer care into new markets.
As a result of this transaction $130 million were retained on balance sheet to fund growth initiatives, including de Novo clinics and acquisitions as we continue to expand our unique model of cancer care into new markets.
Brad Hyde: Before I get into our growth strategy in our fourth quarter and full year highlights, I want to take a moment to walk you through TOI's unique and disruptive value-based oncology care model.
Before I get into our growth strategy in our fourth quarter and full year highlights I want to take a moment to walk you through T. O is unique and disruptive value based oncology care model.
Brad Hyde: While a value based approach to primary care is becoming more widely accepted, our healthcare system still struggles with how to manage the rising cost of specialty.
While the value based approach to primary care is becoming more widely accepted our health care system still struggles with how to manage the rising cost of specialty care.
Brad Hyde: The 200 billion plus oncology market, one of the most expensive and fastest growing special.
The 200 billion plus oncology market one of the most expensive and fastest growing specialties is a major contributor to the unsustainable cost of health care in this country.
Brad Hyde: is a major contributor to the unsustainable cost of health care in this country.
Misalignment between physicians and Payors com.
Brad Hyde: complex and variable clinical pathways, and the high cost of cancer therapies are all notable industry challenges that TLI is reimagining and rebuilding.
Complex and variable clinical pathways and the high cost of cancer therapies are all notable industry challenges that T. O I has re imagining and rebuilding.
Brad Hyde: By replacing costly, inefficient fee-for-service cancer care models with a value-based care approach that aligns physicians and payers with incentives to simultaneously enhance quality and manage costs, TOI improves outcomes and patient satisfaction while reducing costs.
By replacing costly inefficient fee for service cancer care models with a value based care approach that aligns physicians and payors with incentives to simultaneously enhance quality and manage costs.
Improves outcomes and patient satisfaction, while reducing costs.
Toi offers cutting edge evidenced based cancer care to a population of approximately $1 6 million patients, including clinical trials stem cell transplants transfusions and other care delivery models traditionally associated with only the most advanced care delivery organizations.
Brad Hyde: POI offers cutting-edge evidence-based cancer care to a population of approximately 1.6 million patients, including clinical trials, stem cell transplants, transfusions, and other care delivery models traditionally associated with only the most advanced care delivery organizations.
Since our founding in 2007, we have provided high quality cancer care to more than 160000 patients.
Brad Hyde: Since our founding in 2007, we have provided high-quality cancer care to more than 160,000 patients.
Brad Hyde: now with more than 50 locations across California, Nevada, Arizona, and Florida, where we continue to have significant white space for growth.
Now with more than 50 locations across California, Nevada, Arizona, and Florida, where we continue to have significant white space for growth.
Brad Hyde: In the last year alone, we strategically grew in California and Florida.
In the last year alone, we strategically grew in California, and Florida entering new markets in San Diego, and Polk County, all of which we see as exciting markets for us to grow our model of cancer care.
Brad Hyde: entering new markets in San Diego and Polk County, all of which we see as exciting markets for us to grow our model of cancer.
On a broader scale scale, we're also expanding into new geographies with plans to enter Texas in 2022.
Brad Hyde: On a broader scale, we are also expanding into new geographies with plans to enter Texas in 2022.
In conjunction with this growth we have continued to build out the T O I team.
Brad Hyde: In conjunction with this growth, we have continued to build out the TLI team to lay the foundation for our continued success.
The foundation for our continued success.
Brad Hyde: As a public company, we look forward to bringing our proven model of individualized care plans, evidence-based medicine, and symptom management to more patients throughout the nation.
As a public company, we look forward to bringing our proven model of individualized care plans evidence based medicine and symptom management to more patients throughout the nation.
Brad Hyde: some highlights on our progress this past quarter and over the full year.
Some highlights on our progress this past quarter and over the full year.
We recently opened our 54th owned clinic in Lakeland, Florida.
Brad Hyde: We recently opened our 54th owned clinic in Lakeland, Florida.
Our six clinic in Florida, and 11th market for Hawaii.
Brad Hyde: our sixth clinic in Florida, and 11th market for TOI.
Brad Hyde: We acquired six oncology practices in 2021, closing four in the fourth quarter, including our first radiation oncology practice in Los Angeles, which is an exciting new service line for TOI.
We acquired six oncology practices in 2021 closing four in the fourth quarter, including our first radiation oncology practice in Los Angeles, which is an exciting new service line for T O I.
We achieved the 2021 year end target of approximately $1 6 million lives under value based contracts.
Brad Hyde: We achieved the 2021 year-end target of approximately 1.6 million lives under value-based contracts.
Overall, we cared for 50000 unique patients in 2021.
Brad Hyde: Overall, we cared for 50,000 unique patients in 2021 and had over 230,000 patient visits at our own clinic.
Had over 230000 patient visits at our own clinics.
Brad Hyde: Overall, we are pleased with the progress we've made over the past year and are excited about our next phase of growth as a public company and our opportunity to serve more patients with our unique model of oncology care.
Overall, we are pleased with the progress we've made over the past year and are excited about our next phase of growth as a public company and our opportunity to serve more patients with our unique model of oncology care.
Brad Hyde: We look forward to updating you on our progress on our next earnings call. Now, I'll turn the call over to Scott to provide additional detail on our fourth quarter financial results.
We look forward to updating you on our progress on our next earnings call now I'll turn the call over to Scott to provide additional detail on our fourth quarter financial results.
Thanks, Brad.
Scott Dalglish: Since this is our first earnings call, I want to take a quick moment to describe our three operating.
This is our first earnings call I want to take a quick moment to describe our three operating segments.
Scott Dalglish: Our patient services segment includes our capitated revenue where we take risk for medical oncology spend for patient population.
Our patient services segment includes our capitation revenue, where we take risk for medical oncology spend for patient populations as well as their fee for service revenue, where we buy to spend some bill chemotherapy medication for medical oncology and related services.
Scott Dalglish: as well as our fee-for-service revenue, where we buy, dispense, and build chemotherapy medications for medical oncology-related services.
Scott Dalglish: Our dispensary segment includes our purchasing and dispensing of oral oncolytics and related oral medications to our patients at the clinic site or delivery.
Our dispensaries segment includes our purchasing and dispensing of oral on clinics and related oral medications for patients at the clinic site or delivery to the patient's home.
Scott Dalglish: Finally, our clinical trials and other segment encompasses revenue we receive for administering clinical trials on behalf of pharmacy sponsors as well as other revenues such as payer bonuses.
Finally, our clinical trials and other segment encompasses revenue we receive for administering clinical trials on behalf of pharmacy sponsors as well as other revenues such as payer bonuses.
Scott Dalglish: Further details on our segments and how we categorize revenue and expenses can be found in our 10-K.
Further details on our segments and how we categorize revenue and expenses can be found in our 10-K.
Scott Dalglish: Starting with the top line, we achieved $52 million of total revenue in the fourth quarter, a 6.8% increase year-over-year. Notably, we completed four practice acquisitions and ACWA hires in the quarter, which contributed approximately $1 million in the period.
Starting with the topline we achieved $52 million of total revenue in the fourth quarter, a six 8% increase year over year, notably we completed four practice acquisitions and Aqua hires in the quarter, which contributed approximately $1 million in the period for.
Scott Dalglish: For the year, we achieved revenue of $203 million, slightly below the revised guidance range we provide in our October business update.
For the year, we achieved revenue of 203 million slightly below the revised guidance range. We provided in October business update.
Scott Dalglish: As we've discussed, the timing of the D-SPAC transaction occurred later than we initially projected.
As we discussed the timing of the <unk> transaction occurred later than we initially projected.
Scott Dalglish: We also made a strategic decision to terminate a large payer contract in late 2020, which was a headwind to our growth in 2021. Absent this termination, our revenue growth in 2021 would have been 14%.
We also made a strategic decision to terminate a large payer contract in late 2020, which was a headwind to our growth in 2020 . One absent this termination of revenue growth in 2021 would have been 14%.
For the fourth quarter, our gross profit was $8 million and our gross margin was 15, 9% or 23, 1% decline over the prior year period.
Scott Dalglish: For the fourth quarter, our gross profit was $8 million, and our gross margin was 15.9%, a 23.1% decline over the prior year period.
Scott Dalglish: For the full year 2021, we achieved gross profit of $41 million and gross margins of 20.1%.
For the full year 2021, we achieved gross profit of 41 million and gross margins of 21%.
Scott Dalglish: On a gap basis, our loss was $10 million for the quarter and $11 million for the full year of 2021.
On a GAAP basis, our loss was $10 million for the quarter and $11 million for the full year of 2021 for the quarter and full year, our adjusted EBITDA was negative $5 million.
Scott Dalglish: For the quarter and full year, our adjusted EBITDA was negative 5%.
Scott Dalglish: When we talk about adjusted EDA, we're not adjusting out clinic or provider startup costs or acquisition costs as part of this metric.
When we talk about adjusted EBITDA, we're not adjusting out clinic or provider startup costs or acquisition costs as part of this metric.
Scott Dalglish: Further details on how we define adjusted EVDAC can be found in our 10-K.
Further details on how we define adjusted EBITDA can be found in our 10-K.
At year end, our cash balance was $115 million, resulting from the dis back less capex funding for acquisitions nacco higher than expenses.
Scott Dalglish: At year-end, our cash balance was $115 million, resulting from the DSPAC less CAPEX. Funding for acquisitions and acqui-hires and ac-
Scott Dalglish: We expect this capital to be sufficient to support operations and enhance our growth. We finish the year with no debt outstanding.
We expect this capital to be sufficient to support operations and enhance our growth. We finished the year with no debt outstanding.
Now I'll turn it back over to Brad.
Speaker Change: Thanks, Scott. Now, turning to guidance for the full year 2022, we are guiding to a revenue range of 270 to 310M.
Thanks, Scott now turning to guidance for the full year 'twenty 'twenty. Two we are guiding to a revenue range of $270 million to $310 million representing.
Speaker Change: representing 33 to 53 percent growth over 2021 revenue.
Representing 33% to 53% growth over 2021 revenue.
Speaker Change: This is driven by several factors, including the continued expansion of our value-based contracts and volume growth in our Florida market, our anticipated expansion into the.
This is driven by several factors, including the continued expansion of our value based contracts and volume growth in our Florida market.
Our anticipated expansion into the Texas market.
As well as practices in our Aqua hire an acquisition pipeline, we expect to close in the first half of the year.
Speaker Change: As well as practices in our aqua hire and acquisition pipeline, we expect to close in the first half of the year.
As mentioned earlier, we added a new service line in the fourth quarter with the addition of our first radiation oncology practice, which provides a new avenue of potential growth.
Speaker Change: fourth quarter with the addition of our first radiation oncology practice, which provides a new avenue of potential growth.
T O I as projecting to manage a population.
Speaker Change: up between 1.75 million to 2.0 million value-based lives by year-end 2022, representing approximately 9 to 25 percent growth over year-end 2021 lives.
Between $1 75 million to 2.0 million value based lives by year end 2022, representing approximately 925% growth over year end 2021 lives.
Speaker Change: one area we wanted to call out as we think about building our presence in Newmarket.
One area, we wanted to call out as we think about building our presence in new markets.
Speaker Change: Many of TOI's new contracts will feature gain sharing rather than full capitation.
Many of T O I's new contracts will feature a gain sharing rather than full capitation.
Speaker Change: These new gain-sharing contracts, which enable us to work with payers and risk-taking providers as they continue their shift to value-based care, are likely to produce lower revenue in the initial period as compared to full capitation.
These new game sharing contracts, which enable us to work with payers and risk taking providers as they continue their shift to value based care.
Are likely to produce lower revenue in the initial period as compared to full capitation.
Speaker Change: Once payers and risk-bearing providers in these new markets become comfortable with TOI's ability to generate savings and better outcomes, we believe these contracts will shift to capitation.
Once payers and risk bearing providers in these new markets, because I'm comfortable with T O i's ability to generate savings and better outcomes. We believe these contracts will shift to capitation.
Speaker Change: We remain very excited about our new market growth and continue to have very productive conversations with payers and risk-bearing medical.
We remain very excited about our new market growth and continue to have very productive conversations with payers and risk bearing medical groups.
Speaker Change: There is a substantial total addressable market for lives in our priority expansion markets of Florida and Texas. And we believe we are best positioned to help payers in managing the oncology care for their patients.
There is a substantial total addressable market for lives and our priority expansion markets of Florida, and Texas and we believe we are best positioned to help payers and managed in the oncology care for their patients.
I also want to call out a headwind we've been experiencing relating to California's medical Rx program.
Speaker Change: I also want to call out a headwind we've been experiencing relating to California's Medi-Cal Rx program.
Metical recently implemented a new policy regarding reimbursement for pharmacy services.
Speaker Change: Medi-Cal recently implemented a new policy regarding reimbursement for pharmacy services.
Although the policy was not intended to change the way physician administered chemotherapy drugs build under the medical benefit are reimbursed in the early part of this year certain Medicare managed care plans. Nevertheless began to transition some of these claims to be payable as pharmacy benefits.
Speaker Change: Although the policy was not intended to change the way physicians administer chemotherapy drugs billed under the medical benefit are reimbursed, in the early part of this year, certain Medi-Cal managed care plans nevertheless began to transition some of these claims to be payable as pharmacy benefits.
Speaker Change: The California Department of Health Care Services issued clarifying guidance that all medically necessary prescription drugs administered in an outpatient office continue to be available through the medical benefit.
The California Department of Health care services issued clarifying guidance that all medically necessary prescription drugs administered in an outpatient office continues to be available through the medical benefit.
Speaker Change: We believe this guidance will cause there to be limited impact on our IV chemotherapy drug reimbursement going forward.
We believe this guidance what caused there to be limited impact on our IV chemotherapy drug reimbursement going forward.
Speaker Change: With respect to our dispensary, we have historically dispensed oral oncolytics to certain Medi-Cal patients, and some of these scripts are now being covered under Medi-Cal Rx insurance, which we are not.
With respect to our dispensary, we have historically dispense oral onkelinx to certain Medicare patients and some of these scripts are now being covered under Medicare are ex insurance, which we are not currently able to fill so.
Speaker Change: So far this year, we are experiencing fewer script fills related to Medi-Cal patients who are now covered under Medi-Cal RA.
So far this year, we are experiencing fewer scripts bills related to Medicare patients, who are now covered under Medicare Rx overall.
Speaker Change: Overall, we do expect this development to have a negative impact on our dispensary revenue in 2022.
Overall, we do expect this development to have a negative impact on our dispensary revenue in 2022.
Speaker Change: We are actively assessing opportunities for us to mitigate the impact on our business going forward.
We are actively assessing opportunities for us to mitigate the impact on our business going forward <unk>.
Speaker Change: including exploring launching our launching or acquiring a pharmacy. We will update you once.
Including exploring launching are launching or acquiring a pharmacy.
We will update you once more information is available.
Speaker Change: We expect gross profits in the range of $50 to $60 million.
We expect gross profit in the range of $50 million to $60 million in.
Speaker Change: and adjusted EBITDA in the range of negative $20 million to negative $25 million.
And adjusted EBITDA in the range of negative $20 million to negative $25 million.
Speaker Change: As we grow in 2022, we anticipate having a higher mix of fee-for-service revenue as the practices we bring on board through acquisition typically have the vast majority of their existing reimbursement in fee-for-service contracts.
As we grow in 2022, we anticipate having a higher mix of fee for service revenue as the practices. We bring onboard through acquisition typically have the vast majority of their existing reimbursement in fee for service contracts.
Speaker Change: These practices allow us to gain a larger presence in markets rapidly, and over time, we expect to shift the material portion of this revenue to value-based reimbursement, which we expect to be accretive towards the end of the year.
These practices allow us to gain a larger presence in markets rapidly and overtime, we expect to shift a material portion of this revenue to value based reimbursement, which we expect to be accretive to our gross margins.
Speaker Change: In addition, the growth of gain share contracts in new markets will mean we are initially reimbursed on a fee-for-service basis with upside-only gain share and quality bonus payments to occur after an initial.
In addition, the growth of gain share contracts and new markets will mean, we are initially reimbursed on a fee for service basis with upside only gain share and quality bonus payments to occur after an initial settlement period.
Speaker Change: With respect to SG&A, we continue to make targeted investments in our corporate infrastructure, in particular those related to public company costs and supporting our growth.
With respect to SG&A, we continue to make targeted investments in our corporate infrastructure in particular, those related to public company costs and supporting our growth.
Notably our cost related to directors and officers insurance are higher than we initially anticipated.
Speaker Change: Notably, our costs related to directors and officers' insurance are higher than we initially anticipated.
Speaker Change: We should also note that we are not adding back D&O costs to Adjusted EBITDA, nor are we adding back any startup costs related to new sites or new providers.
We should also note that we are not adding back D&O costs to adjusted EBITDA, nor are we adding back any startup costs related to new sites or new providers.
Speaker Change: In summary, 2021 was a pivotal year for TOI, and we are proud of the significant progress we've made in growing our footprint and reaching more lives with our unique care model.
In summary, 2021 was a pivotal year for T O I and we are proud of the significant progress we've made in growing our footprint and reaching more lives with our unique care model.
Speaker Change: we believe the continued shift to value-based care will continue to drive momentum in our business in the near and long term. And we are well positioned to capitalize on this transition.
We believe the continued shift to value based care will continue to drive momentum in our business in the near and long term and we are well positioned to capitalize on this transition.
Speaker Change: As we look to the rest of 2022, we're excited about the opportunities ahead to further grow our business, expand our markets, and deliver excellent care to more patients and communities.
As we look to the rest of 2022, we're excited about the opportunities ahead to further grow our business expand our markets and deliver excellent care to more patients and communities.
Speaker Change: And with that, I'll turn it back over to the operator to open it up for questions.
And with that I'll turn it back over to the operator to open it up for questions.
Thank you at this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue, but participants using speaker equipment it may be necessary.
Speaker Change: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question comes to the line of Brian Tenquillet with Jeffries. You may proceed.
For you to pick up your handset before pressing the star keys, one moment, while we poll for questions. Our first question comes from the line of Brian <unk>.
Quit with Jefferies. You May proceed with your question.
Brian Tenquillet: Hey, good afternoon, guys, and welcome to the Public Markets. I appreciate all the comments today. So I guess I've got a few questions. Number one, you know, as I think about the recruitment of and acquire hires and just the competitive environment, you know, anything you can share with us as.
Hey, good afternoon, guys and welcome to the public markets.
I appreciate all the comments today, so I guess I've got a few questions number one you know as I think about the recruitment of an accurate hires and just the competitive environment. You know anything you can share with us as we've seen more companies pop up in the last several months that are also go into value based oncology. So just curious what you saw.
Brian Tenquillet: We've seen more companies pop up in the last several months that are also going to value-based oncology. So just curious what you're seeing and how trends are going in terms of recruitment and building of capacity as you roll out into new markets. Sure.
Seeing and how trends are going in terms of recruitment and building our capacity.
<unk> rollout into new markets.
Sure. Thanks, Brian I appreciate the question.
Brian Tenquillet: We're actually feeling really good about both our Acquahire pipeline as well as our new physician recruitment pipeline.
We're actually feeling really good about both our aqua hire pipeline as well as our new physician recruitment pipeline.
Brian Tenquillet: You know, as a reminder, when we go into a new market, we generally go in using a mix of de novo clinics, as well as acquires.
As a reminder, when we go into a new market. We generally go in using a mix of de Novo.
De novo clinics, as well as acquirers, and particularly in Florida, and Texas our pipeline for both are quite strong.
Brian Tenquillet: And particularly in Florida and Texas, our pipeline for both are quite strong. You know, just sort of nationally, a lot of people are moving to Florida and Texas, and I think we're benefiting from a little bit of that.
Uh huh.
Sort of nationally a lot of people are moving to Florida, and Texas and I think we're benefiting from a little bit of that.
Brian Tenquillet: But the the aqua hire pipeline is strong as well. We do have a couple of pockets of hard-to-staff geographies And that's just normal. There's always going to be you know, certain geographies that are that are harder to staff than others But overall we're feeling Very good about the pipeline in both Florida and Texas
But the actual higher pipeline is strong as well we do have a couple of pockets of hard to staff geographies.
That's just normal theres always going to be.
Certain geographies that are that are harder to staff than others, but overall, we're feeling.
Very good about the pipeline in both Florida and Texas.
Speaker Change: That's awesome. And then, Brad, you talked about the RADONC strategy here or the new presence in RADONC. So maybe if you can help us understand how you're thinking about that strategy and how it overlays with your existing business and any differences there in the economic model or how you're thinking about capitating that or taking risk in RADONC as well.
That's awesome and then I guess, Brad you talked about the Red Oak.
Our strategy here are the the new presence in Red Oak. So maybe if you can help us.
Understand you know, how youre thinking about that strategy and how it overlays with your existing business and any differences there the economic model or how youre thinking about.
Capitate them that are taking risk in red oak as well.
Brad Hyde: Yeah, so the expansion to RADONC is really a natural extension for us. Many cancer patients are co-managed and receive care from both medical oncologists as well as radiation oncologists. So extending ourselves into RADONC allows us to coordinate care for our patients even better. So we think it's a better patient experience when both of those services are provided under one roof. And also from a payer perspective, the payers are asking us.
Yeah. So the you know the expansion to <unk> is really a natural extension for us.
Many cancer patients are co managed to and receive care from both medical oncologists as well as radiation oncologists.
So extending ourselves into <unk> allows us to coordinate care for our patients even better. So we think it's a better patient experience when both of those services are provided under one roof.
And also from a payer perspective, the payers are asking us to manage it all oncology care for them not just medical oncology. So.
Brad Hyde: to manage all oncology care for them, not just medical oncology. So this was in part a reaction to a patient-focused decision but also in part a reaction to the payers asking us to manage a bigger piece of the pie for them.
This was in part a reaction to a patient focused decision, but also in part a reaction to the payers asking us to manage a bigger piece of the pie for them.
Speaker Change: Got it. And then, Scott, last question for me. As I think about, you know, the profitability ramps for new clinics, maybe if you can just help us, you know, kind of introduce to us or, you know, share with us how, you know, what the economic model looks like as you expand, and also, like, how should we be thinking about cash burn and, you know, just path to breakeven?
Got it and then last question for me as I think about the profitability ramp for new clinics, maybe if you can just help us kind of introduce to us.
Share with us how.
What is the economic model looks like as you expand.
And also like how should we be thinking about cash burn in.
Just path to breakeven.
Yeah.
Scott Dalglish: Yeah, you know, at the clinic level, there's quite a bit of variation. Obviously, some of our clinics, if we're opening them up in existing markets and we have existing contracts, those
The next level.
Quite a bit of variation obviously some of our.
Clinics.
Broken them up in existing markets and we have existing contracts.
Those can be.
Scott Dalglish: Those can be profitable almost immediately in the first quarter or two. And then clinics that we're opening up in more, call it greenfield markets or expansion markets. You know, we would.
Those can be profitable almost immediately in the first quarter or two.
And then clinics that were opening up and more call it greenfield markets or expansion market.
We would expect.
Scott Dalglish: a ramp, you know, in the neighborhood of 12 to 18 months and a cash investment in the range of a million, million and a half.
A ramp.
Had a 12 to 18 months.
Our cash investment in the range of a million million and a half.
Scott Dalglish: for those types of clinics. So, there is a bit of a range, but...
[laughter] poor for those types of clinics. So there was a bit of a range.
But.
Speaker Change: That's how we would think about it, sort of the existing markets and where we've got embedded capacity and embedded demand versus more frontier markets where we're establishing ourselves and needing to drive more volume. Got it. Awesome. Thank you guys. Appreciate it.
That's how we would think about it sort of the existing markets and where we've got embedded capacity at embedded demand.
It's more frontier markets, where we're establishing ourselves in.
And do you need to drive more volume.
Got it awesome. Thank you guys appreciate it.
Yeah, you're welcome Thank you Brad.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: Our next question comes to the line of Bill Sutherland with The Benchmark Company. You may proceed with your...
Our next question comes from the line of Bill Sutherland with Benchmark Company. You May proceed with your question.
Bill Sutherland: Thank you. Thanks for taking the questions. I was wondering, sort of tagging on to Brian's question about the ramped profitability, is there a cohort analysis that would be helpful for us to look at as far, you know, as far as seeing
Thank you thanks for taking the questions I was wondering hum sort.
Sort of tag tagging on to Brian's question about the ramp to profitability is there a cohort analysis that would be helpful for us to look at as far as far as seeing.
Bill Sutherland: what a center, what your clinics look like in year three or whatever year you wanna pick?
What a center you know what your clinics looked like in your three or <unk> or whatever year, you want to pick.
[laughter].
Yeah.
Speaker Change: Yeah, we can perhaps follow up with something like that. I mean, just what I was referencing, you know, we look at the clinics that we've opened over the past year. We have some that are in existing markets, and we have
We can we can probably follow up with something like that I mean, just what I was referencing when we look at the clinics that we've opened over the past year, we have some that are.
Or are in existing markets and we have.
Speaker Change: uh, have that embedded demand. We have capitation volume and
Have that embedded demand, we have capitation volume in <unk>.
Speaker Change: those clinics ramped very quickly. And then we have others where we've opened in new markets like San Diego and Tampa, which are in a cash burn situation and are still ramping. So, we can think about putting something like that together as a follow-up, but that lines up with what we've been seeing this past year with some of our new de novo clinics.
Those clinics ramped very quickly.
And then and then we have others, where we've opened new markets like San Diego and Tampa.
Which are in a cash burn situation and are still ramping.
So we can think about putting something like that together as a as a follow up but.
That's the.
The deadlines up with with what we've been seeing this past year with some of our new de Novo clinics.
Speaker Change: Great. And then this transitioning result of...
Great and then this transitioning.
The result of.
The.
The revenue headwind last year.
Speaker Change: revenue headwind last year. I don't know if it was just the fourth quarter or not, but the declines in fee-for-service revenue. Where are you in that transition? Is that behind you or still ahead?
Fourth quarter or not but.
The declines in fee for service revenue.
Where are you in that transition is that does that.
Beyond you are still ahead.
Yeah, that's yeah. So I'll tell you Scott Oh, sorry go ahead.
Speaker Change: Yeah, that's, yeah, I'll tell you, Scott. Oh, sorry, go ahead. Either one of us, I'm sure we're going to say the same thing.
Either one of us I'm sure we're going to say.
Speaker Change: That so that is almost all the way behind us, not completely behind us. We still have a little bit of runoff revenue associated with that terminated payer, but it's it's it's almost almost done.
So that is almost all the way behind us not completely behind us, we still have a little bit of runoff.
Runoff revenue associated with that terminated payer, but it's it's it's almost almost up.
Speaker Change: Oh, so that was related not to the book of business, but to one payer, a thiefer.
So that was related not to the book of business put to one player.
See for surface transition.
Well I guess, we should clarify what exactly the question is so.
Speaker Change: Well, I guess we should clarify what exactly the question is. So would you clarify your question, make sure I'm answering the right one? Yes. Well, I'm just looking at the release. It says that the declines in fee-for-service as a result of transitioning to capitation in certain contracts.
Would you clarify your question to make sure I'm answering the right ones, yes, well Im just looking at the release it says that the declines from fee for service as a result of transitioning to capitation in certain contracts.
Speaker Change: was also a headwind. Yeah, I see the piece here about the payer that you walked away from.
It was also a headwind I see the piece here about the Payor that you walked away from.
Yes.
I see.
Yes, Scott you want to take a you want me to.
Speaker Change: Yeah, I mean, I'll start, and, Brad, you can fill in. Yeah, so part of the...
Yeah, I mean, I'll start and Brad you can fill that yeah. So part of the part of the impact on our fee for service was that that payer termination and then another piece was transitioning payors to capitation. So.
Speaker Change: Part of the impact on our fee-for-service was that payer termination. And then another piece was transitioning payers to capitation. So we grew our capitation revenue quite substantially over the course of the year, and some of that was payers transitioning. Some of it was net new volume. But that fee-for-service...
We grew our capitation revenue.
Quite substantially over the course of the year and some of that was paid.
Payers transitioning some of it was net new volume.
But that that fee for service decline year over year.
Speaker Change: decline year over year, a good chunk of that was related to the payer termination.
A good chunk of that was related to the payer termination.
Yes.
A combination of both.
Speaker Change: And the one feature I think that you're calling out, I didn't know exactly what you were referring to, but now that I just pulled up the release, I think I know what you're referring to. So sometimes we will transition a payer from fee-for-service to capitation.
And the one the one feature I think that you are calling out I didn't know exactly what you were referring to but now that I just pulled up the release I think I think I know, what you're referring to so sometimes we will transition a payer from fee for service to capitation, Alright, we'll start serving a payer on a fee for service basis will demonstrate our clinical outcomes are our cost saves.
Speaker Change: We'll start serving a payer on a fee-for-service basis, we'll demonstrate our clinical outcomes, our cost savings, and then they will convert us to capitation. And so when that happens, we actually sort of cannibalize the fee-for-service revenue by converting it to capitation. That's what that line is referring to in the release.
And then they will convert us the capitation and so when that happens, we actually sort of cannibalize a fee for service revenue by converting it to competition. That's what that line is referring to in that release.
Oh I see okay.
Speaker Change: Oh, I see. Okay. Yeah, we we we celebrate that, right? Because essentially that means that, you know, the payer is very happy with us. We've demonstrated great outcomes and, you know, they're going to they're going to give us even more business, give us a value based contract. So that's a celebration for us, even though it does sort of cannibalize some of our fee for service revenue.
We celebrate that right because essentially that means that the.
The payers very happy with US we've demonstrated great outcomes, and they're going to they're going to give us even more business gives us a value based contract. So that's a celebration for us even though it does sort of cannibalize some of our fee for service revenue.
Mhm.
Speaker Change: And then the payer mix helped me understand kind of where that stands and where it's headed vis-a-vis Medicare Advantage and commercial and other.
And then the payer mix so help me understand.
Kind of where that stands and where it's headed piece of D.
Medicare advantage commercial and other.
Go ahead, Scott why don't you take that one.
Yeah. So.
We don't disclose specifically, our payer mix, but you know we serve the patient centered community where community based oncology groups. So yeah. We have Medicare we have commercial we have Medicare and Medicaid.
Speaker Change: We don't disclose specifically our pair mix, but, you know, we serve, you know, the patients in our community. We're a community-based oncology group, so, you know, we have Medicare, we have commercial, we have Medi-Cal, Medicaid, and, you know, over the course of this year, we expect that mix in our markets in California, Arizona, Nevada to stay relatively steady. Thank you.
And over the course of this year, we expect that mix in our <unk>.
<unk> and <unk>.
California, Arizona, and Nevada to stay relatively steady.
Speaker Change: As we're looking at our growth in lives, we think that a good chunk of that growth will come from managed Medi-Cal lives that we're looking to win. But as we're looking at the expansion markets, we're in Florida, Texas, where our focus is on.
Yeah.
We're looking at our growth in lives, we think that a good chunk of that growth will come from managed Medicare lives that we're looking to to win.
But as we're looking at the expansion markets.
In Florida, Texas, where our focus is on.
Speaker Change: markets where there's a high amount of Medicare Advantage penetration, so that's...
Markets, where there's a high high amount of Medicare advantage penetration. So that's.
Speaker Change: That's where we can really deliver great results and we think we can grow where we see a lot of demand. So we think that Medicare Advantage portion of our book of business will grow over time as we expand.
That's where we can really deliver.
Great results and we think we can grow and where we see a lot of demand. So we think that Medicare advantage.
A portion of our book of business will grow over time as we expand.
That makes sense okay.
Speaker Change: That makes sense. Okay, I'll get back in queue. Thanks for all the callers.
Get back in queue. Thanks for all the color.
Speaker Change: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Ladies and gentlemen, we have reached the end of today's question and answer session. I would like to turn this call back over to Mr. Brad Hively for closing remarks.
Ladies and gentlemen, we have reached the end of today's question and answer session I would like to turn this call back over to Mr. Brad I believe for closing remarks.
Brad Hively: Okay. Well, thank you all for joining our call today, and thank you for your interest in TOI and our mission to heal and empower cancer patients through compassion, innovation, and state-of-the-art medical care. We are very excited about TOI's path ahead, and we look forward to updating you on our progress on our next earnings call. Have a good evening.
Okay, well. Thank you all for joining our call today and thank you for your interest in <unk> and our mission to heal and empower cancer patients through compassion innovation and state of the art medical care.
We are very excited about <unk> path ahead, and we look forward to updating you on our progress on our next earnings call have a good evening.
Brad Hively: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and enjoy the rest of your day.
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