• Revenue: Q4 2024 revenue was $100.3 million, a 17% increase from Q4 2023. Full year 2024 revenue was $393 million, up 21.3% from 2023.
• Gross Profit: Q4 2024 gross profit was $14.6 million, a 2% increase from Q4 2023. Full year 2024 gross profit was $54 million, a 9.4% decrease from 2023.
• SG&A Expenses: Q4 2024 SG&A decreased by 12% compared to Q4 2023. Full year 2024 SG&A was $114 million, a $5.6 million decrease from 2023.
• Net Loss: Q4 2024 net loss was $13 million, an improvement of $5.6 million compared to Q4 2023. Full year 2024 net loss was $64.6 million, a decrease of $18.4 million from 2023.
• Adjusted EBITDA: Q4 2024 adjusted EBITDA was negative $7.8 million. Full year 2024 adjusted EBITDA was negative $35.7 million.
• Cash and Cash Equivalents: End of Q4 2024 cash and cash equivalents were $49.7 million, an increase of $2.3 million from Q3 2024.
• Cash Flow from Operations: Q4 2024 positive cash flow from operations was $4.2 million.
• Debt Reduction: Outstanding principal balance of debt reduced from $110 million at year-end to $86 million.
• 2025 Revenue Guidance: Expected revenue of $460 million to $480 million, representing 17% to 22% growth over 2024.
• 2025 Gross Profit Guidance: Expected gross profit of $73 million to $82 million, an increase from $54 million in 2024.
• 2025 Adjusted EBITDA Guidance: Expected range of negative $8 million to negative $17 million, with positive EBITDA anticipated in Q4 2025.
• 2025 Free Cash Flow Guidance: Expected range of negative $12 million to negative $21 million, with cash flow breakeven anticipated in Q4 2025.

• Warning! GuruFocus has detected 7 Warning Signs with TOI.

Release Date: March 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Revenue increased by 21% over the previous year, driven by growth in value-based patient services and pharmacy operations.
• The company signed six new contracts covering over 270,000 lives, expanding its reach and proving its model outside of California.
• Pharmacy and medically integrated dispensaries grew rapidly, with a 73% annualized growth in 2024.
• The company achieved a sequential improvement in adjusted EBITDA in the second half of the year through capitated contract growth and drug margin improvement.
• TOI successfully restructured its facility agreement, reducing outstanding debt and eliminating certain financial covenants, enhancing financial flexibility.

Negative Points

• Overall financial performance in 2024 did not meet expectations, with a net loss of $64.6 million for the year.
• Adjusted EBITDA for Q4 2024 was negative $7.8 million, worse than the negative $6.3 million in Q4 2023.
• Gross profit for 2024 decreased by 9.4% compared to 2023, largely due to lower infusion drug margins and higher clinical payroll costs.
• The company experienced a $3 million onetime reduction in fee-for-service revenue unrelated to Q4 dates of service.
• Despite improvements, the company still anticipates negative adjusted EBITDA for 2025, with expected losses in the first half of the year.

Q & A Highlights

Q: For 2025 guidance, what are the significant moving factors? Do you need to sign new contracts to achieve the revenue and gross profit targets? A: Rob Carter, CFO: Growth in capitation contracts is integral to hitting our targets. We also plan for organic growth in both fee-for-service and dispensary. Additionally, reducing clinical payroll as a percentage of revenue will contribute to our growth in 2025.

Q: How do we think about the contribution from the patient service segment and/or dispensary? Will patient service be a meaningful growth driver in 2025? A: Rob Carter, CFO: The capitation segment within patient services will be the primary driver of profitability improvement. We expect organic growth in fee-for-service to continue at market rates, but the main contribution will be from capitation.

Q: Can you provide operational metrics comparing new territories like Florida versus the established market in California? A: Daniel Virnich, CEO: Florida and other new markets offer higher benchmark oncology utilization and are primarily Medicare Advantage risk markets, which present significant opportunities. California clinics operate at about 75% capacity, while Florida clinics are at 40%, indicating room for growth.

Q: What are your thoughts on the recent reimbursement landscape and any changes with the new administration? A: Daniel Virnich, CEO: Macro trends in oncology are favorable for us. Potential changes related to IRA and 340B pricing could benefit us by pushing volume from hospital-based centers to community settings, aligning with our value-based model.

Q: Can you provide revenue expectations and growth for patient services, dispensary, and clinical trials? A: Rob Carter, CFO: We are not guiding specific segments, but capitation will be the greatest contributor to profitability, followed by dispensary and fee-for-service. We expect organic growth from both dispensary and fee-for-service.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.