The Oncology Institute, Inc.

Good afternoon, and welcome to the Oncology Institute's fourth quarter 2023 and full year 2023 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 Mark Peplheiser, General Counsel at TLI. Thank you. You may begin.

The press release announcing the Oncology Institute's results for the fourth quarter and full year 2023 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 would like to remind you of the company's safe harbor language included in the company's press release for the fourth quarter and full year 2023. 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. 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. 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 is our CEO, Dan Vernick, and our CFO, Mihir Shah. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Dan.

Thank you, Mark. Good afternoon, everyone, and thank you for joining our fourth quarter full-year call. To start, I'm pleased with our performance during 2023, including several important milestones which will set us up to drive value to our shareholders in 2024 and beyond. As always, none of this would be possible without the contributions of our many physicians, clinical staff, and teammates who deliver outstanding care to the patients that we serve each day. Our strong performance led to year-over-year revenue growth of 20% in q4 2023 versus q4 2022 and 28 for the full year 2023 we exceeded the high end of our annual revenue guidance range by over four million dollars with both patient services and dispensary segments contributing to our outperformance gross profit came in at the low end of our annual guidance range, primarily due to the negative impact of unusually high direct and indirect remuneration, or DIR, fees on our Part D drug margins. Our experience with pharmacy benefit managers, or PBMs, generated DIR fees in the fourth quarter is being felt across the oncology industry and is related to the point of sale DIR mandates that went into effect on January 1st. Importantly, we expect to help offset this margin compression in 2024 as our California pharmacy and medically integrated specialty drug dispensaries across markets have been significantly outperforming expectations on fills and revenue contribution. For 2024, we are forecasting our California pharmacy to generate over $30 million in incremental revenue and we expect full-year growth of approximately 50% in our Part D business. The strong revenue performance we have generated so far in Q1 gives us confidence that we will achieve our gross margin target for Part D fills. On that note, I want to provide some encouraging updates about the growth of our value-based contracts as we begin 2024. First, demand for our services has never been stronger, leading to a highly successful start to the year for our business development team. We have signed for a near completion on six new full-risk contracts in Q1. These new relationships will benefit several existing and new markets and include risk that extends beyond our historic Part B medical oncology capitation to include Part D and radiation oncology services. Due to the higher utilization patterns we see outside of California, as well as the predominance of Medicare Advantage only contracting opportunities, many of these new relationships have a significant improvement in economics on a per member basis versus the highly competitive rate environment in California. In an effort to provide more clarity to analysts and our shareholders on our performance, We have moved from reporting value-based members to reporting revenue per value-based member. We believe this change is important because we are evolving our business to take on adjacent specialty risk and establishing more Medicare Advantage-only contracts outside of California. This will provide a clearer picture of the impact of incremental contracts signed and growth across markets on a quarterly basis. Now, I would like to highlight a few operational achievements since our last call. On January 1st, we started our first capitation contract in Florida with a health plan that is a member of the Elevance Network. This relationship is off to a very good start, and we are encouraged by the strong operational and clinical performance from serving their members. During Q1, we signed our first three independent practices to our MSO model in Florida, as we scale our ability to provide value-based oncology services to patients outside of our employed clinic model. In the fourth quarter, we added seven new employed physicians, primarily in Southern California, bringing our total employed physician and advanced practice provider count to 119. We successfully acquired and launched our California-based pharmacy in December and have already completed over 1,300 specialty medication fills. We recently announced a new partnership with MaxHealth in Florida to take on medical oncology Part B and D and radiation oncology cost of care risk across five Florida counties for their Medicare Advantage members. This will be a service fund contract. We also announced a partnership with Carom Health in Nevada on our new prospective bundle payment model for breast cancer patients, which is our first partnership to serve patients on behalf of employer groups. Finally, before I turn it over to our CFO, Mihir Shah, I would like to walk you through our 2024 guidance. For the full year 2024, we expect revenue of $400 to $415 million. representing 23 to 28 percent growth over full year 2023. This growth is driven by several factors, including our dispensary business, particularly our pharmacy, as well as the continued expansion of our value-based contracts and organic growth, especially in Florida. We expect gross profit in the range of 68 to 79 million dollars and adjusted EBITDA in the range of negative 18 to negative $8 million, reducing our EBITDA loss in the range of 30 to nearly 70%. Finally, while we've been impacted by the recent change healthcare cyber attack, which has caused disruptions to healthcare companies across the US, our team has been actively collaborating with our practice management vendor to swiftly establish alternate channels for transmitting claims to payers. Significant progress has been made in successfully submitting claims to commercial payers, and we've completed applications for Medicare and Medicaid agencies to accept our claims through a new intermediary, which is pending approval. It's anticipated that the delays in claim submissions will lead to an increase in our day's sales outstanding, DSO, and temporarily impact our cash flow in the first and second quarters of 2024. Nevertheless, we do not believe the impact to be material and remain confident in our ability to resolve these challenges. Now, I'll turn the call over to our CFO, Mihir Shah, to provide additional details on our fourth quarter and 2023 financial results.