The Oncology Institute, Inc.

Good afternoon and welcome to the Oncology Institute's first quarter 2024 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 would like to turn the conference over to Mihir Shah, Chief Financial Officer at TOI. Thank you. You may begin.

The press release announcing the Oncology Institute's Results for the first quarter of 2024 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 safe harbor language included within the company's press release for the first quarter of 2024. 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 further discussions of risk related to our business, see our filings with 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 Wernick. Following our prepared remarks, we will open the call for your questions. With that, I will turn the call over to Dan.

Thank you, Mihir. Good afternoon, everyone, and thank you for joining our first quarter call. In Q1 2024, our revenue grew 24% compared to Q1 2023, driven by an astounding 64% increase in oral drug revenue in the same period. The first quarter of 2024 saw TOI hit some significant milestones related to growth, with seven new capitation and value-based contracts signed across three states, our highest number ever in a quarter. Full year capitation revenue related to our seven contracts signed in Q1 is estimated to be in the range of $16 million and includes expansion of our risk business in both medical and radiation oncology. We are expecting termination of one legacy capitation contract in California in Q3, which we believe will be offset by better than expected new capitation contract starts and continued growth in our oral drug business. And as a result, we are not changing full year guidance at this time. As noted, Q1 also saw TOI hitting a record amount of prescription fills and revenue through our medically integrated dispensaries and pharmacy with over 4,500 fills representing over 39 million in revenue in Q1. Oral drug gross profit in the segment remains on track to expectations at $31 million for the full year due to outperformance of top line. Our newly acquired pharmacy in California continues to exceed expectations, and our latest projection shows incremental growth of over $45 million from this location from full year 2023. top-line outperformance, the first quarter came with challenges, particularly related to drug margin compression on both Part B and D drugs, with the transition in direct and indirect remuneration, or DIR fees, to point of sale, an intermittent disruption to collections due to the change healthcare cyber attack, which was deemed to be not material. In addition to the industry-wide drug margin compression related to DIR fee changes, we historically see compression in our IV margins in the first quarter, driven by manufacturer price increases and shifts in reimbursement. This year was no exception, and several of our most utilized IV medications saw decreases to reimbursement while costs increased. Our top 10 drugs saw a decline of 130 basis points in margin. This margin compression culminated in operating losses above our expectation for Q1, Although, as with prior years, we expect this trend to improve as the year progresses and have already started to see improvement in margin in April by 70 basis points. We are also proactively making changes to our procurement strategy as it relates to our distributors, which we project to positively impact the second half of the year. Now, I would like to highlight a few operational achievements since our last call. We added seven new clinicians, primarily in Southern California, bringing our total employed physician and advanced practice provider count to 126. We opened two new clinics in South Florida, bringing our total clinic count to 73. One of our new capitated contracts will bring us to a new market, Oregon, with a legacy capitation partner. We expect to commence clinic operations there in Q4. All issues related to the Change Healthcare cyberattack have been mitigated. This incredible effort by our revenue cycle management team has led to record cash collections in the month of April. Finally, before I turn it over to our CFO, Mahir Shah, I have some important updates regarding our leadership team at TOI. On April 1st, we welcomed Jordan McInerney to oversee growth as our new chief development officer. He joins our other outstanding growth executives and joins us from the value-based orthopedics platform, Hopco. where he had a strong track record of driving value-based agreements. We believe his deep network and knowledge of value-based care, particularly in the important Florida market, will further accelerate our growth in upcoming quarters. Now, I'll turn the call over to our CFO, Mahir Shah, to provide additional details on our first quarter financial results.