The Oncology Institute, a prominent value-based community oncology group in the United States, announced its financial results for the third quarter (Q3) and nine months ending on September 30, 2023, and reiterated its full-year 2023 guidance. This announcement has led to a significant surge in the company’s stock value.
At the time of this publication, Oncology Institute Inc stock (TOI) has witnessed a surge.
Oncology Institute Inc
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The Oncology Institute Q3 2023 Financial Results
For the Q3 of 2023, the Oncology Institute reported consolidated revenue of $82.0 million, marking a substantial increase of 26.3% compared to the same period in 2022. Additionally, this quarter saw a 2.3% rise in revenue compared to the second quarter of 2023.
Patient services revenue totaled $53.6 million, demonstrating a notable increase of 20.2% compared to the third quarter of the previous year. This growth was attributed to the acquisition of a practice, an overall expansion in clinic count, and augmented capitation revenue from capitation contracts. Dispensary revenue surged by an impressive 42.2% in comparison to Q3 2022, primarily due to an upswing in the number of filled prescriptions and the average revenue per filled prescription. Furthermore, clinical trials and other revenue experienced a 6.5% increase from the same period in 2022, primarily propelled by heightened California Proposition 56 revenue and TOI Clinical Research revenue.
The gross profit for Q3 2023 amounted to $16.0 million, marking a notable uptick of 22.9% compared to Q3 2022. This boost was primarily attributed to enhanced cost management of oral and IV drugs, as well as improved rebate opportunities.
Selling, general, and administrative expenses for Q3 2023 totaled $28.2 million, accounting for 34.4% of revenue. This represented a reduction from the same period in 2022, where expenses were $32.0 million or 49.2% of revenue. The decline was primarily attributed to a decrease in share-based compensation expense and post-combination expense.
However, the net loss for Q3 2023 was reported at $17.4 million, reflecting an increase of $14.7 million compared to the same period in 2022. This surge in net loss was primarily due to a $19 million gain recognized in Q3 2022 related to the change in fair value of earnout liabilities and conversion option derivative liabilities, offset by a $1.9 million decrease in change of share-based compensation expense and a $1.7 million decrease in change of post-combination compensation expense. Adjusted EBITDA was reported at $(5.4) million in Q3 2023, compared to $(6.7) million in Q3 2022.
The Oncology Institute Nine Months 2023 Financial Results
For the nine months ending September 30, 2023, the institute reported consolidated revenue of $238.5 million, marking a substantial increase of 31.7% compared to the same period in 2022. Patient services revenue for this period totaled $157.3 million, demonstrating a notable increase of 32.4% compared to the nine months ended 2022.
Gross profit for the nine months ended 2023 was $45.2 million, representing an increase of 23.9% compared to the nine months ended 2022. This increase was primarily driven by improved cost management of oral and IV drugs and enhanced rebate opportunities.
SG&A expenses in the nine months ended 2023 were $85.8 million or 36.0% of revenue, compared with $90.1 million, or 49.8% of revenue, in the nine months ended 2022. During the nine months ended 2023, share-based compensation expense was $14 million compared to $22 million for the same period of 2022.
The net loss for the nine months ended 2023 was $64.3 million compared to net income of $11.2 million for the nine months ended 2022. This decrease of $75.5 million in income was primarily due to a $53 million decrease in the change in fair value of earnout liabilities and a $13 million decrease in change in fair value of conversion option derivative liabilities, as well as a goodwill impairment charge of $17 million in the nine months ended 2023 that did not occur in the same period of 2022. Adjusted EBITDA was $(19.6) million, a decrease of $1 million compared to the nine months ended 2022.
The Oncology Institute reaffirmed its outlook for fiscal year 2023, utilizing Adjusted EBITDA as an additional metric to assess operational performance. The institute expects interest expense in the range of $4 million to $5 million, other adjustment add backs in the range of $2 million to $4 million, and depreciation and amortization in the range of $4 million to $6 million. It is important to note that new clinic startup or acquisition costs will not be included in this non-GAAP metric.
