Q1 2026 The Oncology Institute Inc Earnings Call

May 7, 2026

Speaker #3: Hello and welcome, everyone, joining the Oncology Institute first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. Later, you'll have the opportunity to ask questions during the question-and-answer session.

Operator: Hello and welcome everyone joining The Oncology Institute Q1 2026 earnings call. It is now my pleasure to turn the meeting over to Minh Merchant, Chief Legal Officer. Please go ahead.

Speaker #3: To register to ask a question at any time, please press star one on your telephone keypad. Please note this call is being recorded, and we are standing by should you need any assistance.

Speaker #3: It is now my pleasure to turn the meeting over to Min Merchant, chief legal officer. Please go ahead. The press release announcing the oncology institute's results for the first quarter of 2026 are available at the Investor section of the company's website.

Minh Merchant: The press release announcing The Oncology Institute's results for Q1 2026 are available at the investor section of the company's website, theoncologyinstitute.com. A replay of this call will also be available at the company's website after the conclusion of this call. Before we get started, I'd like to remind you of the company's safe harbor language included within the company's press release for Q1 2026. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risk and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our filings with the SEC. This call will also discuss non-GAAP financial measures such as adjusted EBITDA and free cash flow.

Speaker #3: The oncology institute.com. A replay of this call will also be available at the company's website after the conclusion of this call. Before we get started, I'd like to remind you of the company's Safe Harbor Language included within the company's press release for the first quarter of 2026.

Speaker #3: Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially.

Minh Merchant: Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risk and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our filings with the SEC. This call will also discuss non-GAAP financial measures such as adjusted EBITDA and free cash flow.

Speaker #3: For a further discussion of risks related to our business, see our filings with the SEC. This call will also discuss non-GAAP financial measures such as adjusted EBITDA and free cash flow.

Speaker #3: Reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website.

Minh Merchant: Reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website. Joining me on the call today are our CEO, Daniel Virnich, and our CFO, Rob Carter. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Daniel.

Speaker #3: Joining me on the call today are our CEO, Dan Vernitch, and our CFO, Rob Carter. Following our prepared remarks, we'll open the call for your questions.

Speaker #3: With that, I'll turn the call over to Dan.

Speaker #2: Thank you, Min. Good afternoon, everyone, and thank you for joining our first quarter 2026 earnings call. I'm pleased to report a strong start to 2026 in the first quarter.

Daniel Virnich: Thank you, Lynn. Good afternoon, everyone, and thank you for joining our Q1 2026 earnings call. I'm pleased to report a strong start to 2026 in the Q1, driven by continued expansion and performance of our value-based contracts across markets and the ongoing growth of ancillary services, particularly our pharmacy business, which provides us with confidence to reaffirm our 2026 outlook for revenue and full-year adjusted EBITDA profitability. As noted in our earnings release, we are also pleased to meaningfully update our free cash flow projections for the year to a positive range of $5 to 15 million, reflecting our ongoing performance and improving economies of scale as we grow. None of this would be possible without the continued commitment to high-quality oncology care by our physicians and staff across the five states we operate in every day.

Speaker #2: Driven by continued expansion and performance of our value-based contracts across markets, and the ongoing growth of ancillary services, particularly our pharmacy business, which provides us with confidence to reaffirm our 2026 outlook for revenue and full-year adjusted EBITDA profitability.

Speaker #2: As noted in our earnings release, we are also pleased to meaningfully update our free cash flow projections for the year to a positive range of 5 to 15 million, reflecting our ongoing performance and improving economies of scale as we grow.

Daniel Virnich: As noted in our earnings release, we are also pleased to meaningfully update our free cash flow projections for the year to a positive range of $5 to 15 million, reflecting our ongoing performance and improving economies of scale as we grow. None of this would be possible without the continued commitment to high-quality oncology care by our physicians and staff across the five states we operate in every day.

Speaker #2: None of this would be possible without the continued commitment to high quality oncology care by our physicians and staff across the five states we operate in every day.

Speaker #2: There are a few key highlights in the quarter that I would like to now review. First, revenue of $147 million was up 41% year over year, driven by strong capitated revenue growth and record performance from our specialty pharmacy business.

Daniel Virnich: There are a few key highlights from the quarter that I would like to now review. First, revenue of $147 million was up 41% year over year, driven by strong capitated revenue growth and record performance from our specialty pharmacy business. Record Part D fills drove pharmacy revenue up 78% in the quarter compared to Q1 2025, reflecting overall growth in patient encounters and continued operational execution on prescription fills. As a testament to the durability and replicability of our clinical model, we saved nearly $2 million in Medicare spending as part of the CMS Enhancing Oncology Model performance program in period 3, increasing the savings generated from the previous period while maintaining the high-quality care we deliver to the members we serve in the community.

Speaker #2: Record Part B fills drove pharmacy revenue up 78% in the quarter compared to the first quarter of 2025. Reflecting overall growth in patient encounters, and continued operational execution on prescription fills.

Speaker #2: As a testament to the durability and replicability of our clinical model, we saved nearly $2 million in Medicare spending as part of the TMS enhancing oncology model performance program in period three.

Daniel Virnich: As a testament to the durability and replicability of our clinical model, we saved nearly $2 million in Medicare spending as part of the CMS Enhancing Oncology Model performance program in period 3, increasing the savings generated from the previous period while maintaining the high-quality care we deliver to the members we serve in the community.

Speaker #2: Increasing the savings generated from the previous period while maintaining the high quality care we deliver to the members we serve in the community. We believe this ongoing recognition from CMS underscores the clinical and economic value of TOI's integrated approach to oncology care applied to all patient populations not just cavitated members.

Daniel Virnich: We believe this ongoing recognition from CMS underscores the clinical and economic value of TOI's integrated approach to oncology care applies to all patient populations, not just capitated members. Turning now to operations, I would like to walk through some key updates from Q1. Our work in Florida continues to be a critical proof point for our model in one of our newer markets, and I'm pleased to share meaningful progress on several fronts. We are now generating a profit in the Florida market. This is an important milestone that reflects the maturation of our capitated relationships in the state and validates the model we have been building. Our initial members under delegated capitation partnerships continue to show data points demonstrating excellent clinical outcomes, with MLR performing in line to slightly better than plan.

Speaker #2: Turning now to operations, I would like to walk through some key updates from the first quarter. Our work in Florida continues to be a critical proof point for our model and one of our newer markets, and I'm pleased to share meaningful progress on several fronts.

Speaker #2: We are now generating a profit in the Florida market. This is an important milestone that reflects the maturation of our cavitated relationships in the state, and validates the model we have been building.

Daniel Virnich: We are now generating a profit in the Florida market. This is an important milestone that reflects the maturation of our capitated relationships in the state and validates the model we have been building. Our initial members under delegated capitation partnerships continue to show data points demonstrating excellent clinical outcomes, with MLR performing in line to slightly better than plan.

Speaker #2: Our initial members under delegated cavitation partnerships continue to show data points demonstrating excellent clinical outcomes with MLR performing in line to slightly better than plan.

Speaker #2: As a reminder, we target a mature MLR of approximately 85% for new delegated cavitation contracts, and we are now achieving that with our 2025 effective contracts in South Florida.

Daniel Virnich: As a reminder, we target a mature MLR of approximately 85% for new delegated capitation contracts, and we are now achieving that with our 2025 effective contracts in South Florida. In terms of further near-term capitation growth, we anticipate expansion of existing plan partnerships across 11 additional counties for Medicare Advantage members in Q3, which will expand our TOI clinic and MSO network to cover effectively the entire Florida market to serve delegated capitation agreements across multiple health plans. This next phase of expansion encompassing Q3 will expand our total MA lives under delegated capitation arrangements to approximately 200,000 total lives across 25 total counties.

Speaker #2: In terms of further near-term cavitation growth, we anticipate expansion of existing planned partnerships across 11 additional counties for Medicare Advantage members in Q3, which will expand our TOI clinic and MSO network to cover effectively the entire Florida market to serve delegated cavitation agreements across multiple health plans.

Speaker #2: This next phase of expansion encompassing Q3 will expand our total MA lives under delegated cavitation arrangements to approximately 200,000 total lives across 25 total counties.

Daniel Virnich: This next phase of expansion encompassing Q3 will expand our total MA lives under delegated capitation arrangements to approximately 200,000 total lives across 25 total counties. In addition to the capitated revenue associated with these new patients, this expansion is also expected to be a meaningful tailwind to our Part D pharmacy business as we capture the prescription volume, which will deliver faster, more convenient fills to our patients and value outside of capitation to our care partners.

Speaker #2: In addition to the cavitated revenue associated with these new patients, this expansion is also expected to be a meaningful tailwind to our Part D pharmacy business as we capture the prescription volume which will deliver faster and more convenient fills to our patients and value outside of cavitation to our care partners.

Daniel Virnich: In addition to the capitated revenue associated with these new patients, this expansion is also expected to be a meaningful tailwind to our Part D pharmacy business as we capture the prescription volume, which will deliver faster, more convenient fills to our patients and value outside of capitation to our care partners. To effectively support these important patient populations, we anticipate opening 7 new TOI clinics over the remainder of the year to ensure we are delivering the high-quality coordinated care that our patients deserve. We will also add meaningfully to our contracted provider footprint across the state. As I mentioned in our last call, we are preparing to launch our proprietary provider portal this summer. I'm excited to share more detail on this important initiative. We see 2 primary benefits of the TOI portal.

Speaker #2: To effectively support these important patient populations, we anticipate opening seven new TOI clinics over the remainder of the year to ensure we are delivering the high quality coordinated care that our patients deserve, and we will also add meaningfully to our contracted provider footprint across the state.

Daniel Virnich: To effectively support these important patient populations, we anticipate opening 7 new TOI clinics over the remainder of the year to ensure we are delivering the high-quality coordinated care that our patients deserve. We will also add meaningfully to our contracted provider footprint across the state. As I mentioned in our last call, we are preparing to launch our proprietary provider portal this summer. I'm excited to share more detail on this important initiative. We see 2 primary benefits of the TOI portal.

Speaker #2: As I mentioned in our last call, we are preparing to launch our proprietary provider portal this summer. And I'm excited to share more detail on this important initiative.

Speaker #2: We see two primary benefits of the TOI portal. First, it is designed to further strengthen contracted provider engagement and drive continued adherence to our clinical pathways and quality initiatives.

Daniel Virnich: First, it is designed to further strengthen contracted provider engagement and drive continued adherence to our clinical pathways and quality initiatives. Pathway adherence is a meaningful lever for MLR performance, and we believe this tool will be an important driver of ongoing improvement. Second, over time, we intend to use the portal to provide access to ancillary services, including Part D dispensing, clinical trials, and care navigation, all key components of our integrated care strategy and key profitability levers as we grow. There may also be an opportunity to pass along savings from our ancillary services to MSO providers, which will further drive engagement. Our specialty pharmacy business delivered an exceptional quarter and continues to be one of the strongest growth drivers across the enterprise.

Speaker #2: Pathway adherence is a meaningful lever for MLR performance, and we believe this tool will be an important driver of ongoing improvement. Second, over time, we intend to use the portal to provide access to ancillary services.

Speaker #2: Including Part D dispensing, clinical trials, and care navigation. All key components of our integrated care strategy and key profitability levers as we grow. There may also be an opportunity to pass on savings from our ancillary services to MSO providers which will further drive engagement.

Daniel Virnich: There may also be an opportunity to pass along savings from our ancillary services to MSO providers, which will further drive engagement. Our specialty pharmacy business delivered an exceptional quarter and continues to be one of the strongest growth drivers across the enterprise.

Speaker #2: Our specialty pharmacy business delivered an exceptional quarter and continues to be one of the strongest growth drivers across the enterprise. We filled a record number of scripts in the first quarter with specialty pharmacy revenue of 78% year over year at $87.5 million for the quarter, delivering 16.8 million of gross profit.

Daniel Virnich: We filled a record number of scripts in Q1, with specialty pharmacy revenue up 78% year-over-year at $87.5 million for the quarter, delivering $16.8 million of gross profit. This growth is being driven by a combination of higher patient volumes, continued optimization of pharmacy workflows across our network, as well as ongoing efforts to reduce avoidable leakage to outside pharmacies. Gross margin in our specialty pharmacy business also came in higher than anticipated in the quarter at 19.2%, driven primarily by efforts in TOI's procurement function to manage drug pricing strategy and capitalize on our developed central clinical infrastructure via formulary pathways within the pharmacy. This is an area where we continue to see the benefit of our scale and distributor relationships, which will only be further enhanced as we grow.

Speaker #2: This growth is being driven by a combination of higher patient volumes, continued optimization of pharmacy workflows across our network, as well as ongoing efforts to reduce avoidable leakage to outside pharmacies.

Speaker #2: Gross margin in our specialty pharmacy business also came in higher than anticipated in the quarter at 19.2%, driven primarily by efforts in TOI's procurement function to manage drug pricing strategy and capitalize on our developed central clinical infrastructure via formulary pathways within the pharmacy.

Daniel Virnich: Gross margin in our specialty pharmacy business also came in higher than anticipated in the quarter at 19.2%, driven primarily by efforts in TOI's procurement function to manage drug pricing strategy and capitalize on our developed central clinical infrastructure via formulary pathways within the pharmacy. This is an area where we continue to see the benefit of our scale and distributor relationships, which will only be further enhanced as we grow.

Speaker #2: This is an area where we continue to see the benefit of our scale and distributor relationships, which will only be further enhanced as we grow.

Speaker #2: We are also working to expand pharmacy access in Florida to our delegated network members, which we believe broadens our ability to capture both Part D and B scripts from our delegated population.

Daniel Virnich: We are also working to expand pharmacy access in Florida to our delegated network members, which we believe broadens our ability to capture both Part D and Part B scripts from our delegated population. We expect this to be available in H2 of this year and view it as an incremental opportunity on top of our core Part D dispensing strategy, not contemplated in our annual revenue guidance. We continue to make meaningful progress on our AI-enabled operational initiatives this quarter. As a reminder, last year, we launched three AI integration efforts focused on revenue cycle management, prior authorization services, and our patient call center. I'm pleased to report that we remain on track to achieve the $2 million in operating expense savings we outlined for 2026.

Speaker #2: We expect this to be available in the second half of this year and view it as an incremental opportunity on top of our core Part D dispensing strategy, not contemplated in our annual revenue guidance.

Speaker #2: We continue to make meaningful progress on our AI-enabled operational initiatives this quarter. As a reminder, last year we launched three AI integration efforts focused on revenue cycle management, prior authorization services, and our patient call center.

Daniel Virnich: We continue to make meaningful progress on our AI-enabled operational initiatives this quarter. As a reminder, last year, we launched three AI integration efforts focused on revenue cycle management, prior authorization services, and our patient call center. I'm pleased to report that we remain on track to achieve the $2 million in operating expense savings we outlined for 2026.

Speaker #2: I'm pleased to report that we remain on track to achieve the $2 million in operating expense savings we outlined for 2026. These initiatives are not just delivering cost efficiencies, they are also improving the experience for our patients, providers, and administrative teams, and we expect to build on them as we continue to scale.

Daniel Virnich: These initiatives are not just delivering cost efficiencies, they are also improving the experience for our patients, providers, and administrative teams, and we expect to build on them as we continue to scale. Finally, I'm pleased to welcome Minh Merchant to the executive team as TOI's new Chief Legal Officer. Min will oversee all legal, compliance, regulatory, and privacy matters as we continue to scale the platform. As a company that is expanding its managed care footprint, delegated arrangements, and operational complexity, having a seasoned legal and compliance leader at the table is critical. Min is a great addition, and we look forward to the contributions she will make as we continue to grow and strengthen the executive team. In summary, we are off to a strong start in 2026.

Speaker #2: Finally, I'm pleased to welcome Min Merchant to the executive team as TOI's new Chief Legal Officer. Min will oversee all legal, compliance, regulatory, and privacy matters as we continue to scale the platform.

Daniel Virnich: Min will oversee all legal, compliance, regulatory, and privacy matters as we continue to scale the platform. As a company that is expanding its managed care footprint, delegated arrangements, and operational complexity, having a seasoned legal and compliance leader at the table is critical. Min is a great addition, and we look forward to the contributions she will make as we continue to grow and strengthen the executive team. In summary, we are off to a strong start in 2026.

Speaker #2: As a company that is expanding its managed care footprint, delegated arrangements, and operational complexity, having a seasoned legal and compliance leader at the table is critical.

Speaker #2: Min is a great addition, and we look forward to the contributions she will make as we continue to grow and strengthen the executive team.

Speaker #2: In summary, we are off to a strong start in 2026. Revenue growth of 41%, record pharmacy performance, profitability in Florida, and a growing pipeline of cavitated lives gives us confidence that the momentum we build throughout 2025 is continuing into the new year.

Daniel Virnich: 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. As we look ahead, our focus remains on operational execution and quality patient care, scaling our delegated capitation model, deepening payer partnerships, and continuing to invest in the technology and operational capabilities that will drive sustainable profitability over the long term. With that, I'll turn the call over to Rob to review the financials in more detail. Rob?

Speaker #2: As we look ahead, our focus remains on operational execution and quality patient care. Scaling our delegated cavitation model, deepening payer partnerships, and continuing to invest in the technology and operational capabilities that will drive sustainable, profitability over the long term.

Speaker #2: With that, I'll turn the call over to Rob to review the financials in more detail. Rob?

Speaker #1: Thanks, Dan, and good afternoon, everyone. I want to echo Dan's comments on the continued momentum we're building across the business as we progress through 2026.

Rob Carter: Thanks, Dan. Good afternoon, everyone. I want to echo Dan's comments on the continued momentum we're building across the business as we progress through 2026. On the call today, I will review our Q1 financial results, provide an update on the balance sheet and liquidity, and close with our updated guidance and outlook. Turning to financial performance, total revenue for Q1 was $147.4 million, compared to $104.4 million in the prior year period, representing 41.2% year over year growth, a continuation of the strong momentum we have been building. Patient services revenue, which includes both our capitated and fee for service arrangements, was $59.1 million, representing 40.1% of total revenue and an 11.3% year over year increase.

Speaker #1: On the call today, I will review our first quarter financial results, provide an update on the balance sheet and liquidity, and close with our updated guidance and outlook.

Speaker #1: Turning to financial performance, total revenue for the first quarter was $147.4 million, compared to $104.4 million in the prior year period. Representing 41.2% year over year growth, a continuation of the strong momentum we have been building.

Rob Carter: Turning to financial performance, total revenue for Q1 was $147.4 million, compared to $104.4 million in the prior year period, representing 41.2% year over year growth, a continuation of the strong momentum we have been building. Patient services revenue, which includes both our capitated and fee for service arrangements, was $59.1 million, representing 40.1% of total revenue and an 11.3% year over year increase.

Speaker #1: Patient service is revenue, which includes both our cavitated and fee-for-service arrangements, was 59.1 million, representing 40.1% of total revenue, and then 11.3% year over year increase.

Speaker #1: Within patient services, cavitated revenue grew 54% year over year, through 26.9 million, driven by new market momentum and the continued ramp of our delegated arrangements in Florida.

Rob Carter: Within patient services, capitated revenue grew 54% year over year to $26.9 million, driven by new market momentum and the continued ramp of our delegated arrangements in Florida. Fee for service was $32.2 million, down approximately 10% year over year despite increasing visit volumes, reflecting the impact of mix driven by active drug formulary management, more conservative reserves against collections, and modest pricing pressure in the IV drug channel. Capitation now represents approximately 45.6% of patient services revenue, up from roughly 33% a year ago, underscoring the ongoing shift in our revenue mix toward value-based care. Specialty pharmacy revenue was $87.5 million, representing 59.4% of total revenue and growing 77.6% year over year.

Speaker #1: Fee-for-service was 32.2 million, down approximately 10% year over year, despite increasing visit volumes. Reflecting the impact of MICS, driven by active drug formulary management, more conservative reserves against collections, and modest pricing pressure in the IV drug channel.

Speaker #1: Cavitation now represents approximately 45.6% of patient services revenue, up from roughly 33% a year ago, underscoring the ongoing shift in our revenue mix towards value-based care.

Rob Carter: Capitation now represents approximately 45.6% of patient services revenue, up from roughly 33% a year ago, underscoring the ongoing shift in our revenue mix toward value-based care. Specialty pharmacy revenue was $87.5 million, representing 59.4% of total revenue and growing 77.6% year over year.

Speaker #1: Specialty pharmacy revenue was 87.5 million, representing 59.4% of total revenue, and growing 77.6% year over year. This was driven by a $103% increase in the number of prescription fills reflecting the continued strength in fill rates as we bring new cavitated lives onto the platform, partly offset by approximately 12% decrease in average revenue per fill as our MICS continues to evolve.

Rob Carter: This was driven by a 103% increase in the number of prescription fills, reflecting the continued strength in fill rates as we bring new capitated lives onto the platform, partly offset by approximately a 12% decrease in average revenue per fill as our mix continues to evolve. Gross profit for Q1 was $23.3 million, compared to $17.2 million in Q1 2025, reflecting continued top line expansion across both segments. Overall gross margin was 15.8%, compared to 16.5% in the prior year. The roughly 80 basis point decline is primarily the result of a non-recurring rebate we recognized in Q1 of last year, as well as the natively lower margin profile of the delegated business as it increases as a proportion of TOI revenue.

Speaker #1: Gross profit for the first quarter was 23.3 million, compared to 17.2 million in the first quarter of 2025, reflecting continued top-line expansion across both segments.

Speaker #2: Overall gross margin was 15.8%, compared to 16.5% in the prior year. The roughly 80 basis point decline is primarily the result of a non-recurring rebate we recognized in the first quarter of last year, as well as the natively lower margin profile of the delegated business as it increases as a proportion of TOI revenue.

Rob Carter: Overall gross margin was 15.8%, compared to 16.5% in the prior year. The roughly 80 basis point decline is primarily the result of a non-recurring rebate we recognized in Q1 of last year, as well as the natively lower margin profile of the delegated business as it increases as a proportion of TOI revenue.

Speaker #1: Patient services gross profit was 5.7 million, compared to 6 million in the first quarter of 2025. Patient services gross margin was 9.7%, compared to 11.3% a year ago, a decrease of approximately 163 basis points.

Rob Carter: Patient services gross profit was $5.7 million, compared to $6 million in Q1 2025. Patient services gross margin was 9.7%, compared to 11.3% a year ago, a decrease of approximately 163 basis points. The year-over-year decline is primarily the result of new ramping delegated contracts and our aforementioned conservative fee-for-service reserve approach. Specialty pharmacy gross profit was $16.8 million, growing 78.1% year-over-year from $9.4 million in the prior year period. Gross margin was essentially flat at 19.2% versus 19.1% a year ago, evidencing TOI's ability to maintain unit economics as the pharmacy scales its distribution and adapts to an evolving pricing environment, including the phase-in of the Inflation Reduction Act.

Speaker #1: The year-over-year decline is primarily the result of the new ramping delegated contracts and our aforementioned conservative fee-for-service reserve approach. Specialty pharmacy gross profit was 16.8 million, growing 78.1% year over year from 9.4 million in the prior year period.

Rob Carter: Specialty pharmacy gross profit was $16.8 million, growing 78.1% year-over-year from $9.4 million in the prior year period. Gross margin was essentially flat at 19.2% versus 19.1% a year ago, evidencing TOI's ability to maintain unit economics as the pharmacy scales its distribution and adapts to an evolving pricing environment, including the phase-in of the Inflation Reduction Act.

Speaker #1: Gross margin was essentially flat at 19.2% versus 19.1% a year ago. Evidencing TOI's ability to maintain unique economics as the pharmacy scales its distribution and adapts to an evolving pricing environment, including the phase-in of the Inflation Reduction Act.

Speaker #1: Our expanded utilization management program, which we refer to as TOI Pathways, now covers our entire drug portfolio, including the pharmacy, versus historically only our Part B drugs.

Rob Carter: Our expanded utilization management program, which we refer to as TOI Pathways, now covers our entire drug portfolio, including the pharmacy, versus historically only our Part B drugs, which continues to support margin state stability, and we see further opportunity in this area as we increase scale. Turning to operating expenses, total SG&A for Q1 was $28.2 million, or 19.1% of total revenue, compared to $25.4 million or 24.3% of revenue in the same period a year ago. That represents approximately a 520 basis point improvement year over year, reflecting continued cost discipline and the operating leverage inherent in our model as we continue to scale.

Speaker #1: This continues to support margin state stability and we see further opportunity in this area as we increase scale. Turning to operating expenses, total SGNA for the first quarter was 28.2 million, or 19.1% of total revenue, compared to 25.4 million or 24.3% of revenue in the same period a year ago.

Rob Carter: Turning to operating expenses, total SG&A for Q1 was $28.2 million, or 19.1% of total revenue, compared to $25.4 million or 24.3% of revenue in the same period a year ago. That represents approximately a 520 basis point improvement year over year, reflecting continued cost discipline and the operating leverage inherent in our model as we continue to scale.

Speaker #1: That represents approximately $520 basis point improvement year over year, reflecting continued cost discipline in the operating leverage inherent in our model as we continue to scale.

Speaker #1: We see further leverage ahead as we scale and are planning to launch AI pilots around prior authorization optimization and a next-generation call center later this year.

Rob Carter: We see further leverage ahead as we scale and are planning to launch AI pilots around prior authorization optimization and a next generation call center later this year. Adjusted EBITDA for Q1 was a loss of $2.4 million, favorable to a loss of $5.1 million a year ago. As we noted on our call last quarter, Q1 is seasonally our most challenging period. Deductible resets and annual drug cost increases create natural headwinds that take time to work through. We are pleased with the year-over-year improvement and remain confident in delivering positive Adjusted EBITDA for the full year, driven by the continued ramp of our Florida delegated arrangements, our growing specialty pharmacy platform, and our continued cost discipline and push towards AI and automation in our central operations.

Speaker #1: Adjusted EBITDA for the first quarter was a loss of 2.4 million, favorable to a loss of 5.1 million a year ago. As we noted on our call last quarter, Q1 is seasonally our most challenging period.

Speaker #1: Deductible resets and annual drug cost increases create natural headwinds that take time to work through. We are pleased with the year-over-year improvement and remain confident in delivering positive adjusted EBITDA for the full year.

Rob Carter: Deductible resets and annual drug cost increases create natural headwinds that take time to work through. We are pleased with the year-over-year improvement and remain confident in delivering positive Adjusted EBITDA for the full year, driven by the continued ramp of our Florida delegated arrangements, our growing specialty pharmacy platform, and our continued cost discipline and push towards AI and automation in our central operations.

Speaker #1: Driven by the continued ramp of our Florida delegated arrangements, our growing specialty pharmacy platform, and our continued cost discipline and push towards AI and automation, and our central operations.

Speaker #1: We ended the quarter with $30.3 million in cash and cash equivalents, compared to $33.6 million a year ago in 2025. Our senior secured convertible note principal outstanding was $85.9 million, unchanged from year-end, with a maturity date of August 9, 2027.

Rob Carter: We ended the quarter with $30.3 million in cash and cash equivalents, compared to $33.6 million at year-end 2025. Our senior secured convertible note principal outstanding was $85.9 million, unchanged from year-end, with a maturity date of 9 August 2027. I want to note that we are in late-stage discussions regarding the refinance of the note and expect to provide an update during Q2. Operating cash flow for the quarter was -$2.3 million, compared to -$5 million in Q1 2025, reflective of the operating losses during each of those respective periods.

Speaker #1: I want to note that we are in late-stage discussions regarding the refinance of the note and expect to provide an update during the second quarter.

Speaker #1: Operating cash flow for the quarter was -$2.3 million, compared to -$5 million in the first quarter of 2025, reflective of the operating losses during each of those respective periods.

Speaker #1: Turning to guidance, we are reiterating our full year 2026 outlook for revenue, gross profit, and adjusted EBITDA. And our raising our free cash flow outlook to reflect favorable terms from vendor renegotiations as we continue to realize the benefits of our scale.

Rob Carter: Turning to guidance, we are reiterating our full year 2026 outlook for revenue, gross profit, and adjusted EBITDA and are raising our free cash flow outlook to reflect favorable terms from vendor renegotiations as we continue to realize the benefits of our scale. For the full year, we expect revenue of $630 to 650 million, with approximately $150 million of capitated revenue, gross profit of $97 to 107 million, adjusted EBITDA of $0 to +9 million, and free cash flow is now in the range of +$5 to 15 million, compared to our previous outlook of -$15 to +$5 million.

Speaker #1: For the full year, we expect revenue of $630 million to $650 million, with approximately $150 million of capitation revenue. Gross profit of $97 million to $107 million, adjusted EBITDA of $0 to positive $9 million, and free cash flow is now in the range of positive $5 million to $15 million, compared to our previous outlook of a loss of $15 million to positive $5 million.

Speaker #2: For the second quarter, we anticipate adjusted EBITDA in the range of a loss of 1 million to positive 1 million, reflecting seasonal improvement as deductibles are satisfied and the continued ramp of our Florida delegated lives.

Rob Carter: For Q2, we anticipate adjusted EBITDA in the range of -$1 million to +$1 million, reflecting seasonal improvement as deductibles are satisfied and the continued ramp of our Florida delegated lives. We expect momentum to build through the remainder of the year and remain confident in our commitment to full year positive adjusted EBITDA. With that, I'll turn the call over to Dan for his closing remarks. Dan?

Speaker #2: We expect momentum to build through the remainder of the year and remain confident in our commitment to full-year positive adjusted EBITDA.

Speaker #1: With that, I'll turn the call over to Dan for his closing remarks. Dan?

Speaker #3: Thank you, Rob. And thank you to everyone for your continued interest in the world-class community oncology solution we are building at TOI. I'm pleased to reaffirm our revenue and EBITDA guidance for the year as well as meaningful improvements in free cash flow.

Daniel Virnich: Thank you, Rob, and thank you to everyone for your continued interest in the world-class community oncology solution we are building at TOI. I'm pleased to reaffirm our revenue and EBITDA guidance for the year, as well as meaningful improvements in free cash flow. Our initiatives on creating a world-class provider portal and using technology to drive OpEx efficiencies will continue to drive our story as a leader in high-quality coordinated oncology care while delivering profitability for shareholders. Before opening the call to questions, I want to thank our patients for putting their trust in our ability to deliver high-quality care and to thank our physicians, clinicians, and employees across The Oncology Institute. Their unwavering focus on delivering high-quality oncology care in the community is what continues to drive the progress we are seeing across the business. With that, I'll turn the call back to the operator for questions. Operator?

Speaker #3: Our initiatives on creating a world-class provider portal and using technology to drive OPEX efficiencies will continue to drive our story as a leader in high-quality, coordinated oncology care while delivering profitability for shareholders.

Speaker #3: Before opening the call to questions, I want to thank our patients for putting their trust in our ability to deliver high-quality care and to thank our physicians, clinicians, and employees across the oncology institute.

Daniel Virnich: Before opening the call to questions, I want to thank our patients for putting their trust in our ability to deliver high-quality care and to thank our physicians, clinicians, and employees across The Oncology Institute. Their unwavering focus on delivering high-quality oncology care in the community is what continues to drive the progress we are seeing across the business. With that, I'll turn the call back to the operator for questions. Operator?

Speaker #3: Their unwavering focus on delivering high-quality oncology care in the community is what continues to drive the progress we are seeing across the business. With that, I'll turn the call back to the operator for questions.

Speaker #3: Operator?

Speaker #4: Thank you. At this time, we will open the floor for questions. If you'd like to ask a question, please press star one on your telephone keypad.

Operator 3: Thank you. At this time, we will open the floor for questions. If you'd like to ask a question, please press star one on your telephone keypad. To remove yourself from the queue, you may press star two. Again, that is star one to ask a question. We'll take our first question from David Larsen with BTIG. Please go ahead. Your line is open.

Operator: Thank you. At this time, we will open the floor for questions. If you'd like to ask a question, please press star one on your telephone keypad. To remove yourself from the queue, you may press star two. Again, that is star one to ask a question. We'll take our first question from David Larsen with BTIG. Please go ahead. Your line is open.

Speaker #4: To remove yourself from the queue, you may press star two. Again, that is star one to ask a question. And we'll take our first question from David Larson with BTIG.

Speaker #4: Please go ahead. Your line is open.

Speaker #5: Hey, congratulations on another great quarter. Can you talk a little bit about your delegated risk arrangements in Florida? Did I hear you correctly when I I think I heard you say you're now cover the entire state, and then just any color around risk, like the trend, the medical expense trend, how it's performing relative to expectations?

David Larsen: Hey, congratulations on another great quarter. Can you talk a little bit about your delegated risk arrangements in Florida? Did I hear you correctly when I I think I heard you say you now cover the entire state? Then just any color around risk, like the trend, the medical expense trend, how it's performing relative to expectations? I think I heard you say that you're profitable in Florida. Thanks.

Speaker #5: And I think I heard you say that your profitable in Florida. Thanks.

Speaker #6: Yeah. Hi, Dave. Thanks for the great questions. Regarding the first question, yes, we will be network adequate across 25 counties by the start of Q3 of this year, so July 1.

Rob Carter: Yeah. Hi, Dave. Thanks for the great questions. Regarding the first question, yes, we will be network adequate across 25 counties by the start of Q3 of this year, so 1 July. That coincides with expansion of multiple health plan agreements, which in total encompass about 200,000 MA lives across those counties in the delegated capitation model. The MLR performance on the delegated capitation book of business, which we mentioned in the earnings call for the 2025 cohort, is performing slightly better than our target MLR of 80%, which is a great data point. We'll continue to update that as these additional lives enter the risk cohort.

Speaker #6: That coincides with expansion of multiple health plan agreements, which in total encompass about 200,000 MA lives across those counties in the delegated cavitation model.

Speaker #6: The MLR performance on the delegated cavitation book of business, which you mentioned in the earnings call for the 2025 cohort, is performing slightly better than our target MLR of 85%, which is a great data point.

Rob Carter: The MLR performance on the delegated capitation book of business, which we mentioned in the earnings call for the 2025 cohort, is performing slightly better than our target MLR of 80%, which is a great data point. We'll continue to update that as these additional lives enter the risk cohort. Yes, on a four-wall EBITDA basis, the Florida market is now profitable due to all this growth.

Speaker #6: And we'll continue to update that as these additional lives enter the risk cohort. And then, yes, on a four-wall EBITDA basis, the Florida market is now profitable due to all this growth.

Rob Carter: Yes, on a four-wall EBITDA basis, the Florida market is now profitable due to all this growth.

David Larsen: Daniel, I didn't quite hear the MLR percent. Did you say it was 85%, slightly better than 85%?

Speaker #5: Daniel, I didn't quite hear the MLR percent. Did you say it was 85%, or slightly better than 85%?

David Larsen: Daniel, I didn't quite hear the MLR percent. Did you say it was 85%, slightly better than 85%?

Speaker #6: That's correct. Yep.

Daniel Virnich: That's correct. Yep.

Speaker #5: Okay. And then Evelyn Health, for example, I think this morning reported an MLR of 93%. What in your view causes such a significant delta?

David Larsen: Okay. Like, Evolent Health, for example, I think this morning reported an MLR of 93%. What in your view causes such a significant delta? Why are you performing so much better than them, in your opinion, at a high level, without obviously having access to their data?

Speaker #5: Why are you performing so much better than them in your opinion at a high level without obviously having access to their data?

Speaker #6: Yeah. I mean, I can't really speak to exactly why they would be at our level. But there is obviously differences in the care delivery model with us having a hybrid employee and network care delivery approach and kind of very tight control over care delivery and patient experience in our employee clinics.

Daniel Virnich: Yeah, I mean, I can't really speak to exactly why they would be at our level, but there is obviously differences in the care delivery model with us having a hybrid employed and network care delivery approach and kind of very tight control over care delivery and patient experience in our employed clinics. I think that would be definitely one aspect of it, as well as the high engagement we're seeing on the network providers through our portal and pathway integration.

Speaker #6: I think that would be definitely one aspect of it, as well as the high engagement we're seeing on the network providers through our portal and pathway integration.

Speaker #5: And then, in the delegated model, are you bearing risk for Part D? And can you push those delegated lives through your own specialty pharmacy?

David Larsen: In the delegated model, are you bearing risk for Part D, and can you push those delegated lives through your own specialty pharmacy? If you don't bear risk, I would imagine that would be a benefit to your pharmacy.

Speaker #5: And if you don't bear risk, I would imagine that would be a benefit to your pharmacy.

Speaker #6: Yes. Exactly right. Yeah. We only take risk on part B, as in boy. Part B, as in dog, is fee-for-service revenue at that little bit over 19% margin that we called out, which flows through our pharmacies and dispensaries.

Daniel Virnich: That's exactly right. Yeah. We only take risk on Part B. Part D is fee for service revenue at that little bit over 19% margin that we called out, which flows through our pharmacies and dispensaries. Those sales apply to both capitated as well as non-capitated lives. It's an additional economic benefit to the capitated members coming to us for care. There is the additional added benefit of us having a pharmacy in that for practices in the network that deliver Part B medications, which are part of our risk, we can deliver those at our pricing, which is beneficial given our scale.

Speaker #6: And those sales apply to both cavitated as well as non-cavitated lives. So it's an additional economic benefit to the cavitated members coming to us for care.

Speaker #6: There is the additional added benefit of us having a pharmacy in that for practices in the network that deliver part B, as in boy, medications, which are part of our risk, we can deliver those at our pricing which is beneficial given our scale.

David Larsen: Just one more. Sorry to keep asking questions. I'll hop back in the queue, just one more. Did I hear you say you were talking to additional health plans in the Florida market beyond Elevance?

Speaker #5: Just one more sorry to keep asking questions. I'll hop back in the queue, but just one more. Did I hear you say you were talking to additional health plans in the Florida market beyond Elevance?

Speaker #6: Yeah, we're talking to additional health plans in Florida as well as other markets as well for the delegated capitation model. So, we'll have additional updates for that in the next earnings call.

Daniel Virnich: Yeah, we're talking to additional health plans in Florida as well as other markets as well for the delegated capitation model. We'll have additional updates for that in the next earnings call. We are seeing a lot of opportunity and momentum around that specific delegated capitation model kind of across markets.

Speaker #6: But we are seeing a lot of opportunity and momentum around that specific delegated cavitation model, kind of across markets.

Speaker #5: Okay. Congrats on a great quarter. I'll hop back in the queue.

David Larsen: Okay, congrats on a great quarter. I'll hop back in the queue.

Speaker #6: Thanks, Dave.

Daniel Virnich: Thanks, Dave.

Speaker #4: Thank you. We'll take our next question from Matthew Shea with Needham. Please go ahead. Your line is open.

Operator 3: Thank you. We'll take our next question from Matthew Shea with Needham & Company. Please go ahead. Your line is open.

Operator: Thank you. We'll take our next question from Matthew Shea with Needham & Company. Please go ahead. Your line is open.

Speaker #7: Hey, thanks for taking the question. And nice start to the year here, guys. Maybe first on dispensary—really, really impressive growth there, and it sounds like volume is driven by a mix of membership and continued attachment rates.

Matthew Shea: Hey, thanks for taking the question and nice start to the year here, guys. You know, maybe first on dispensary, really impressive growth there and sounds like volume driven by a mix of membership and continued attachment rates. I guess, any additional color there? Membership seems pretty self-explanatory, but maybe on the attachment rate side, are these coming in ahead of expectations? If so, my understanding is this is mostly driven by provider education. Is there anything you would call out on the provider education side that's been notable in helping drive this growth?

Speaker #7: I guess any additional color there, membership seems pretty self-explanatory, but maybe on the attachment rate side, are these coming in ahead of expectations? And if so, my understanding is this is mostly driven by provider education.

Speaker #7: So is there anything you would call out on the provider education side that's been notable in helping drive this growth?

Speaker #6: Hey, man. It's Rob. Yeah. Attachment rate has exceeded our expectations in the year. The workflow changes that we implemented last year I think are continuing to pay dividends.

Rob Carter: Hey, Matt, it's Rob. Yeah, attachment rate has exceeded our expectations in the year. You know, the workflow changes that we implemented last year I think are continuing to pay dividends. That work progresses. I think as you look at the rest of the year, I think you can expect some subtle improvement quarter over quarter as we continue to refine those workflows and as additional value-based lives come onto the platform.

Speaker #6: And so that work progresses. I think as you look at the rest of the year, I think you can expect subtle improvement quarter over quarter as we continue to refine those workflows.

Speaker #6: And as additional value-based lives come onto the platform.

Speaker #7: Okay, got it. That's helpful. And then, maybe on the proprietary network portal—good to hear that that remains on track for the Q2 launch.

Matthew Shea: Okay. Got it. That's helpful. Maybe on the proprietary network portal, good to hear that that remains on track for the Q2 launch. Maybe as we think about the pacing of the rollout, I would assume that would be sort of a provider by provider, market by market, but maybe how should we think about the cadence of that, and where are you hoping to get to in terms of provider coverage by year end? Given it can strengthen the provider engagement and drive adherence to the clinical pathway, it seems like a nice lever to drive MLRs. Curious if you've built in any financial benefits to the 2026 guide or if we should think about it that as more of a 2027 event.

Speaker #7: But maybe as we think about the pacing of the rollout, I would assume that will be sort of a provider-by-provider or market-by-market. But maybe how should we think about the cadence of that and where are you hoping to get to in terms of provider coverage by year-end?

Speaker #7: And then given a constraint in the provider engagement and drive adherence to the clinical pathways, it seems like a nice lever to drive MLRs.

Matthew Shea: Given it can strengthen the provider engagement and drive adherence to the clinical pathway, it seems like a nice lever to drive MLRs. Curious if you've built in any financial benefits to the 2026 guide or if we should think about it that as more of a 2027 event.

Speaker #7: So curious if you've built in any financial benefits to the 2026 guide or if we should think about that as more of a 2027 event.

Speaker #6: Yeah. Absolutely. So when we roll out the portal, which we're in spinning in Q3, that's going to be immediately accessible to 100% of the non-employed providers across our delegated contract network.

Daniel Virnich: Yeah, absolutely. When we roll out the portal, which we're anticipating in Q3, that's gonna be immediately accessible to 100% of the non-employed providers across our delegated contract network. Basically, all of Florida will have access to it in the MSO side of our business. We already see good adherence to pathways, our care pathways for Part B medications by those providers, but I think this will drive additional adherence because it'll just create additional visibility and control over those providers' ability to access our formulary and pathways. The, as you called out in the earnings call, the additional, I guess, P&L upside related to that portal, which we anticipate will happen this year but is not contemplated in our current guidance, would be related to Part D fills.

Speaker #6: So basically all of Florida will have access to it in the MSO side of our business. We already see good adherence to pathways our care pathways for part B medications by those providers.

Speaker #6: But I think this will drive additional adherence because it'll just create additional visibility and control over those providers related to access our formulary and pathways.

Daniel Virnich: The, as you called out in the earnings call, the additional, I guess, P&L upside related to that portal, which we anticipate will happen this year but is not contemplated in our current guidance, would be related to Part D fills. Recall that our current Part D fills are all from our employed physician base. There are no Part D fills flowing through to our MSO providers.

Speaker #6: As we call out in the earnings call, the additional, I guess, P&L upside related to that portal, which we anticipate will happen this year, but is not contemplated in our current guidance, would be related to part D fills.

Speaker #6: Recall that our current part D fills are all from our employed physician base. There are no part D fills flowing through to our MSO providers.

Daniel Virnich: Recall that our current Part D fills are all from our employed physician base. There are no Part D fills flowing through to our MSO providers. Through implementation of e-prescribing in the portal, and Part D formulary visibility, we hope to catch some Part D growth as well through our MSO network in H2 of this year. We haven't specifically guided to that or included in the forecast given, you know, timing as well as lack of visibility into attach rate on that.

Speaker #6: Through implementation of e-prescribing in the portal, and part D formulary visibility, we hope to catch some part D growth as well through our MSO network in the second half of this year.

Daniel Virnich: Through implementation of e-prescribing in the portal, and Part D formulary visibility, we hope to catch some Part D growth as well through our MSO network in H2 of this year. We haven't specifically guided to that or included in the forecast given, you know, timing as well as lack of visibility into attach rate on that.

Speaker #6: But we haven't specifically guided to that, or included it in the forecast, given timing as well as lack of visibility into attach rate on that.

Speaker #7: Okay. Got it. Okay. That's super helpful clarification. The patient portal can help with that part D. Okay. And then maybe last one for me before I jump back in the queue.

Matthew Shea: Okay, got it. Okay, that's super helpful clarification that the patient portal can help with that Part D. Okay, maybe last one for me before I jump back in the queue. The 200,000 live target in Florida for 1 July, I guess thinking back to the last earnings call or sort of where I had you guys in Q1, I had 70,000 lives in the Elevance partnership and 22,000 from Humana and CarePlus, so call it, you know, 90,000 and change. Maybe help me bridge the difference from there to 200,000. Is that all Elevance Health? It sounded like maybe you alluded to some other payers in there as well. Just kinda trying to get a sense of ultimately what sort of wins drove that expansion.

Speaker #7: So the 200,000 live target in Florida for July 1st, I guess thinking back to the last earnings call or sort of where I had you guys in Q1, I had 70,000 lives in the Elevance partnership and then 22,000 from Humana and CarePlus.

Speaker #7: So call it 90,000 and change. Maybe help me bridge the difference from there to 200,000. Is that all Elevance? It sounded like maybe you alluded to some other payers in there as well.

Matthew Shea: Maybe help me bridge the difference from there to 200,000. Is that all Elevance Health? It sounded like maybe you alluded to some other payers in there as well. Just kinda trying to get a sense of ultimately what sort of wins drove that expansion.

Speaker #7: Just kind of trying to get a sense of ultimately what sort of wins drove that expansion.

Speaker #6: Yeah. So we've opted not to disclose the specific health plans and additional lives are coming through. But it's effectively an incremental 130,000 MA lives with major carriers in Florida.

Daniel Virnich: Yeah. We've opted not to disclose the specific health plans as additional lives are coming through, but it's been effectively an incremental 130,000 MA lives with major carriers in Florida.

Speaker #7: Okay. Got it. I'll hop back in. Thanks.

Matthew Shea: Okay. Got it. I'll hop back in. Thanks.

Speaker #6: Thanks, Matt.

Daniel Virnich: Thanks, Matthew.

Speaker #4: Thank you. We'll take our next question from Yuanshi with Bee Riley. Please go ahead. Your line is open.

Operator 3: Thank you. We'll take our next question from Yuan Zhi with B. Riley. Please go ahead. Your line is open.

Operator: Thank you. We'll take our next question from Yuan Zhi with B. Riley. Please go ahead. Your line is open.

Speaker #8: Thank you for taking all the questions. And congrats on a strong quarter. Maybe a question to Rob first. Can you give me more color on the substantial $20 million free cash flow improvement since the adjusted EBITDA and the gross margin guidance didn't change?

Yuan Zhi: Thank you for taking our questions, and congrats on a strong quarter. A question to Rob first. Can you give me more color on the substantial $20 million free cash flow improvement since the adjusted EBITDA and the gross margin guidance didn't change? Especially comment on the timing of this cash flow improvement.

Speaker #8: Maybe specifically comment on the timing of this cash flow improvement.

Speaker #6: Yeah. Yeah. Thanks for the question. So this is the direct result of negotiations that have been underway now for several months with some key suppliers.

Rob Carter: Yeah, yeah. Thanks for the question. This is the direct result of negotiations that have been underway now for several months with some key suppliers, in particular on the drug side of things. This is an advantage that we have as we continue to grow and scale. We have, you know, opportunities for leverage, and we're able to take advantage of that in a very, very meaningful way, very excited about the output there.

Speaker #6: In particular, on the drug side of things. This is an advantage that we have as we continue to grow and scale. We have opportunities for leverage.

Speaker #6: And we're able to take advantage of that in a very, very meaningful way, and so very excited about the output there.

Speaker #8: And on the Florida expansion, do you right now have the have your fully owned clinics ready to enter all these 25 counties in Florida under the delegated model?

Yuan Zhi: On the Florida expansion, do you right now have your fully owned clinics ready to enter all these 25 counties in Florida under the delegated model?

Speaker #6: Yeah. Hi, Yuanshi. It's Dan. That is underway right now. We anticipate by the time we go live with those additional lives that we'll have our clinics in place to adhere to our sort of ratio of employed counties where we will be taking risks.

Daniel Virnich: Yeah. Hi, Yuan Zhi. It's Dan. That is underway right now. We anticipate by the time we go live with those additional lives that we'll have our clinics in place, you know, to adhere to our sort of ratio of employed clinics, MSO providers in the additional counties where we will be taking risks.

Speaker #8: Got it. And one last question on the specialty pharmacy can you clarify are you able to dispense drugs outside our oncology considering these patients may have other comorbidity or disease that may need other drugs?

Yuan Zhi: Got it. One last question on the specialty pharmacy. Can you clarify, are you able to dispense drugs outside of oncology, considering, you know, this patient may have other comorbidity or disease that may need other drugs?

Speaker #6: Yeah. So at this time, our specialty pharmacy really focuses on oncology-specific medications. Both oncolytics as well as medications that support chemotherapy pathways or oncolytic pathways exclusively.

Daniel Virnich: Yeah. At this time, our specialty pharmacy really focuses on oncology-specific medications, both oncolytics as well as medications that support chemotherapy pathways or oncolytic pathways, exclusively. We don't prescribe for non-oncology conditions or non-hematology conditions.

Speaker #6: We don't prescribe for non-oncology conditions or non-haematology conditions.

Speaker #8: Got it. I will hop back on with you.

Yuan Zhi: Got it. I will hop back on the queue.

Speaker #4: Thank you. And again, as a quick reminder, if you'd like to ask a question, please press star one now. Our next question comes from Robert Laboyer with Noble Capital Markets.

Operator 3: Thank you. Again, as a quick reminder, if you'd like to ask a question, please press star one now. Our next question comes from Robert Leboyer with Noble Capital Markets. Please go ahead. Your line is open.

Operator: Thank you. Again, as a quick reminder, if you'd like to ask a question, please press star one now. Our next question comes from Robert Leboyer with Noble Capital Markets. Please go ahead. Your line is open.

Speaker #4: Please go ahead. Your line is open.

Speaker #7: Good afternoon, and congratulations on another nice quarter. My question has to do with the CMS Enhancing Oncology Model. You mentioned saving $2 million in Medicare spending as part of the program during one of the periods.

Robert LeBoyer: Good afternoon and congratulations on another nice quarter. My question has to do with the CMS Enhancing Oncology Model. You mentioned saving $2 million in Medicare spending as part of the program during one of the periods. Could you just elaborate on what the model measures and put the $2 million in perspective in terms of spending per patient, spending on the total, maybe tie in the medical loss ratios, and if there's any information on how that compares with other providers, that would be helpful too. Thanks.

Speaker #7: Could you just elaborate on what the model measures and put the $2 million in perspective in terms of spending per patient, spending on the total? Maybe tie in the medical loss ratios, and if there's any information on how that compares with other providers, that would be helpful too.

Speaker #7: Thanks.

Speaker #6: Hi, Robert. Great question. So that the savings performance was in periods two and three of the enhancing oncology model, which, as I think most people know, is the next iteration of the oncology care model that CMMI had for a number of years.

Daniel Virnich: Yeah. Hi, Robert. Great, great question. The savings performance was in periods 2 and 3 of the CMS Enhancing Oncology Model, which, as I think most people know, is the next iteration of the Oncology Care Model that CMMI had for a number of years. It's an episodic total cost of care risk model, a little bit different than Part D capitation, although the principles are the same, adherence to value-based therapeutics, and then implementation of our high-value cancer care program, which is specifically designed for Part A avoidance, which is part of the risk in the EOM model. We don't have numbers off the top of our head in terms of MLR performance or total risk pool for that cohort. We can certainly, you know, follow up on that.

Speaker #6: It's an episodic total cost of care risk model. So a little bit different than part decapitation, although the principles are the same. Adherence to value-based therapeutics, and then implementation of our high-value cancer care program, which is specifically designed for part A avoidance, which is part of the risk in the model.

Daniel Virnich: It's an episodic total cost of care risk model, a little bit different than Part D capitation, although the principles are the same, adherence to value-based therapeutics, and then implementation of our high-value cancer care program, which is specifically designed for Part A avoidance, which is part of the risk in the EOM model. We don't have numbers off the top of our head in terms of MLR performance or total risk pool for that cohort. We can certainly, you know, follow up on that. All we have is that absolute savings amount at this time.

Speaker #6: We don't have numbers off the top of our head in terms of MLR performance or total risk pool for that cohort. We can certainly follow up on that.

Daniel Virnich: All we have is that absolute savings amount at this time.

Speaker #6: So all we have is that absolute savings amount at this time.

Speaker #7: Okay. Great. And in terms of the portal that you mentioned, are there any particular things that you could point to or discuss in terms of how that would change the providers' actions or whether that would save money, keep them on track, monitor what they're doing, or just exactly how that would work?

Robert LeBoyer: Okay, great. In terms of the portal that you mentioned, are there any particular things that you could point to or discuss in terms of how that would change the provider's actions or whether that would save money, keep them on track, monitor what they're doing, or just exactly how that would work?

Speaker #6: Yeah, absolutely. The portal is meant to be a centralized hub for our utilization management efforts. So all network providers that are helping serve our capitated partnerships, in terms of patient care, will be submitting their prior authorizations for care into that portal.

Daniel Virnich: Yeah, absolutely. The portal is meant to be a centralized hub for our utilization management efforts. All network providers that are helping serve our capitated partnerships in terms of patient care will be submitting their prior authorizations for care into that portal to get a UM decision made by our medical directors. Once that decision is made, that authorization is approved or there's a peer-to-peer or a change request. It also offers a centralized hub where we've got a high degree of visibility into all of our pathways to help drive additional formulary adherence. As mentioned, it's got the added benefit of being a path to get network providers to engage in ancillary services like pharmacy and clinical trials.

Speaker #6: To get a decision made by our medical directors, once that decision is made, then that authorization is approved or there's a peer-to-peer or a change request it also offers a centralized hub where we've got a high degree of visibility into all of our pathways to help drive additional formulary adherence.

Daniel Virnich: Once that decision is made, that authorization is approved or there's a peer-to-peer or a change request. It also offers a centralized hub where we've got a high degree of visibility into all of our pathways to help drive additional formulary adherence. As mentioned, it's got the added benefit of being a path to get network providers to engage in ancillary services like pharmacy and clinical trials.

Speaker #6: And then as mentioned, it's got the added benefit of being a path to get network providers to engage in ancillary services like pharmacy and clinical trials.

Speaker #7: Okay. Great. Thank you very much.

Robert LeBoyer: Okay, great. Thank you very much.

Speaker #6: Thanks, Robert.

Daniel Virnich: Thanks, Robert.

Speaker #4: Thank you. We'll take a follow-up question from Matthew Shea with Needham. Please go ahead. Your line is open.

Operator 3: Thank you. We'll take a follow-up question from Matthew Shea with Needham. Please go ahead. Your line is open.

Operator: Thank you. We'll take a follow-up question from Matthew Shea with Needham. Please go ahead. Your line is open.

Speaker #9: Yeah. Thanks. Appreciate the follow-up. Maybe, Dan, thinking longer term, on AI and beyond 2026, sort of last quarter, you noted you're just starting to scratch the surface on use cases.

Matthew Shea: Yeah, thanks. Appreciate the follow-up. Maybe, Dan, thinking longer term on beyond 2026, you know, last quarter you noted you're just starting to scratch the surface on use cases and capabilities of agentic AI, and that there were a number of integration opportunities out into the future. Maybe as we think about you moving beyond those three initial buckets that you've highlighted for 2026, are there any other potential areas that are top of mind? As we think about you maybe going after some of those and looking out to the 2028 targets, is there anything contemplated in those targets in terms of AI efficiencies beyond the initial $2 million that you've outlined for 2026?

Speaker #9: And capabilities of agentic AI and that there were a number of sort of integration opportunities out into the future. So maybe as we think about you moving beyond those three initial buckets that you've highlighted for 2026, are there any other potential areas that are top of mind?

Matthew Shea: Maybe as we think about you moving beyond those three initial buckets that you've highlighted for 2026, are there any other potential areas that are top of mind? As we think about you maybe going after some of those and looking out to the 2028 targets, is there anything contemplated in those targets in terms of AI efficiencies beyond the initial $2 million that you've outlined for 2026?

Speaker #9: And as we think about you maybe going after some of those and looking out to the 2028 targets, is there anything contemplated in those targets in terms of AI efficiencies beyond sort of the initial $2 million that you've outlined for 2026?

Speaker #6: Yeah. So, to hit the second question first, no, our long-range kind of forecast that we issued in January does not contemplate additional AI efficiencies.

Daniel Virnich: Yeah, to hit the second question first, no, our long range kind of forecast that we issued in January did not contemplate additional AI efficiencies, very conservative. The $2 million that we forecast into 2026 is really just scratching the surface on integration into those 3 core functions, call center, RCM, and prior auth. I mean, it's moving quickly in terms of the capabilities of agentic AI in all 3 of those functions. I do believe there'll be substantial opportunity to expand upon those savings and drive additional OpEx efficiencies over the next, you know, 2 to 3 years.

Speaker #6: So, very conservatively, the $2 million that we forecast into 2026 is really just scratching the surface on integration into those three core functions: call center, RCM, and prior auth.

Speaker #6: I mean, it's moving quickly in terms of the capabilities of agentic AI in all three of those functions. So, I do believe there will be substantial opportunity to expand upon those savings and drive additional OPEX efficiencies over the next two to three years.

Speaker #6: Additional use cases at this point, we do believe there's a good use case in the care navigation side of what we do as well with our high-value cancer care program.

Daniel Virnich: Additional use cases at this point, we do believe there's a good use case in the care navigation side of what we do as well with our high-value cancer care program. It's kind of a, because it's highly protocolized, it's perfectly set up for that use case, which would obviously drive efficiencies in terms of labor costs to implement and scale that program over patients that are appropriate. I'm sure there's many others, but I'd say just even the three core use cases that we have going right now, we are far from maximizing the savings and sort of efficiency opportunity amongst those three.

Speaker #6: It's kind of a because it's highly protocolized, it's perfectly set up for that use case which would obviously drive efficiencies in terms of labor costs to implement and scale that program over patients that are appropriate.

Speaker #6: And I'm sure there's many others, but I'd say just even the three core use cases—excuse me, core use cases that we have going right now—we are far from maximizing the savings and sort of efficiency opportunity amongst those three.

Speaker #9: Okay. Great. Thanks.

Matthew Shea: Okay, great. Thanks.

Speaker #4: Thank you. At this time, there are no further questions. Thank you. This brings us to the end of today's meeting. We appreciate your time and participation.

Operator 3: Thank you. At this time, there are no further questions in queue. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Operator: Thank you. At this time, there are no further questions in queue. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.