STLN 10-Q
Starling Oncology, Inc. (STLN)
10-Q
2025-08-13
For: 2025-06-30
View Original
Added on
April 06, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2025
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _____ to _____
Commission file number 001-39248
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of Principal Executive Offices) | (Zip Code) | ||||||||||
(562 ) 735-3226
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
| ý | Smaller reporting company | ||||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý
1
As of August 6, 2025, the registrant had 93,504,767 shares of common stock outstanding.
2
THE ONCOLOGY INSTITUTE, INC.
Form 10-Q
For the Period Ended June 30, 2025
Table of Contents
| Page | |||||
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE ONCOLOGY INSTITUTE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (US Dollars in thousands, except share data) | |||||||||||
| June 30, 2025 | December 31, 2024 | ||||||||||
| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Other receivables | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Operating right of use assets | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Current portion of operating lease liabilities | |||||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Operating lease liabilities | |||||||||||
| Derivative warrant liabilities | |||||||||||
| Conversion option derivative liabilities | |||||||||||
| Long-term debt, net of unamortized debt issuance costs | |||||||||||
| Other non-current liabilities | |||||||||||
| Deferred income taxes liability | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 15) | |||||||||||
| Stockholders’ equity (deficit): | |||||||||||
Common Stock, $ | |||||||||||
Series A Convertible Preferred Stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
Treasury Stock at cost, | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders’ equity (deficit) | ( | ||||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | |||||||||
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Note: The Company’s condensed consolidated balance sheets include the assets and liabilities of its consolidated variable interest entities (“VIEs”). The condensed consolidated balance sheets include total assets that can be used only to settle obligations of the Company’s consolidated VIEs totaling $84,385 and $70,804 as of June 30, 2025 and December 31, 2024, respectively, and total liabilities of the Company’s consolidated VIEs for which creditors do not have recourse to the general credit of the Company totaling $284,128 and $274,001 as of June 30, 2025 and December 31, 2024, respectively. See Note 16 for further details.
See accompanying notes to the condensed consolidated financial statements.
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THE ONCOLOGY INSTITUTE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(US Dollars in thousands, except share data)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Patient services | $ | $ | $ | $ | |||||||||||||||||||
| Dispensary | |||||||||||||||||||||||
| Clinical trials & other | |||||||||||||||||||||||
| Total operating revenue | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Direct costs – patient services | |||||||||||||||||||||||
| Direct costs – dispensary | |||||||||||||||||||||||
| Direct costs – clinical trials & other | |||||||||||||||||||||||
| Selling, general and administrative expense | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
| Other non-operating expense (income) | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Change in fair value of derivative warrant liabilities | ( | ( | |||||||||||||||||||||
| Change in fair value of conversion option derivative liabilities | ( | ( | |||||||||||||||||||||
| Other, net | |||||||||||||||||||||||
| Total other non-operating loss (income) | ( | ||||||||||||||||||||||
| Loss before provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Income tax benefit (expense) | |||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net loss attributable to common stockholders, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net loss per share attributable to common stockholders: | |||||||||||||||||||||||
| Basic | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted-average number of shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
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THE ONCOLOGY INSTITUTE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(US Dollars in thousands, except share data)
(Unaudited)
| Common Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Treasury Stock | Additional Paid in Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting RSUs | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon private placement, net | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock upon exchange of debt for equity | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting RSUs | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred stock to common stock | — | ( | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||
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| Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Treasury Stock | Additional Paid in Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting RSUs | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
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THE ONCOLOGY INSTITUTE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (US Dollars in thousands) (Unaudited) | |||||||||||
| Six Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to cash and cash equivalents used in operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of debt issuance costs and debt discount | |||||||||||
| Write-off of assets from clinical trials segment | |||||||||||
| Share-based compensation | |||||||||||
| Change in fair value of liability classified warrants | ( | ||||||||||
| Change in fair value of liability classified conversion option derivatives | ( | ||||||||||
| Unrealized loss (gain) on investments | ( | ||||||||||
| Accretion of discount on investment securities | ( | ||||||||||
| Deferred taxes | ( | ||||||||||
| Loss on disposal of property and equipment | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Other receivables | ( | ||||||||||
| Inventories | ( | ||||||||||
| Prepaid expenses and other current assets | ( | ||||||||||
| Other assets | ( | ||||||||||
| Accounts payable | |||||||||||
| Change in operating leases | ( | ||||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Other non-current liabilities | ( | ( | |||||||||
| Net cash and cash equivalents used in operating activities | ( | ( | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Proceeds from asset disposition | |||||||||||
| Sales of marketable securities/investments | |||||||||||
| Net cash and cash equivalents (used in) provided by investing activities | ( | ||||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from private placement, net of offering costs | |||||||||||
| Payments made for financing of insurance payments | ( | ( | |||||||||
| Payment of deferred consideration liability for acquisition | ( | ||||||||||
| Principal payments on long-term debt | ( | ||||||||||
| Principal payments on financing leases | ( | ( | |||||||||
| Common stock issued for options exercised | |||||||||||
| Net cash and cash equivalents used in financing activities | ( | ( | |||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental disclosure of noncash investing and financing activities: | |||||||||||
| Right-of-use assets in connection with operating lease modifications | $ | $ | |||||||||
| Principal exchange of convertible note for preferred stock | $ | $ | |||||||||
| Purchases of property and equipment included in accounts payable | $ | $ | |||||||||
| Financed insurance premiums | $ | $ | |||||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Cash paid for: | |||||||||||
| Interest | $ | $ | |||||||||
See accompanying notes to the condensed consolidated financial statements.
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THE ONCOLOGY INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
As of June 30, 2025 and December 31, 2024, and for the three and six months ended June 30, 2025 and 2024
(US Dollars in thousands, except share data)
Note 1. Description of the Business
Overview of the Business
The Oncology Institute, Inc. (“TOI”) was formerly known as DFP Healthcare Acquisitions Corp. ("DFPH"). DFPH was a Delaware corporation originally formed in 2019 as a publicly-traded special purpose acquisition company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination ("Business Combination"). TOI was originally founded in 2007 and is a leading, national platform delivering integrated direct care and cost management to patients and payors who are experiencing or managing members undergoing treatment for cancer and other complex medical conditions.
Through wholly-owned subsidiaries and affiliated entities, TOI operates combined community clinics and infusion suites staffed with providers who administer latest-generation cancer treatments including chemotherapy, immunotherapy, oncolytics, and radiation oncology. Additionally, TOI provides coordinated case management, drug formulary management, and fully-delegated networks of care providers, all of which we use to drive improved treatment outcomes at the lowest possible cost to our patients and payors. Additionally, TOI operates a specialty pharmacy that includes both in-office and mail-order dispensing for complementary oral and self-injectable medications taken by our patients concurrent with their in-office cancer therapies. Given the scale, breadth, and depth of our oncological expertise, TOI also contributes significantly to clinical research in the fields of oncology, hematology, and supportive medications and devices.
On March 31, 2025, the Company entered into a Research Services Agreement ("RSA") with Helios CR, Inc. ("Helios"), effective May 5, 2025, in which the Clinical Trials segment will be operated by Helios in its entirety under a profit sharing arrangement with the Company. As part of the RSA, there is a Transition Services Agreement, in which certain administrative and professional services are provided by Helios for a certain period of time. Additionally, the Company will pay a management fee to Helios on a periodic basis for certain shared services. The Company recognized a $2,398 loss due to the write-off of the segment's net assets for three months ended June 30, 2025.
The Company has 121 oncologists and mid-level professionals across 66 clinic locations located within five states: California, Florida, Arizona, Oregon and Nevada. The Company has contractual relationships with multiple payors, serving Medicare, including Medicare Advantage, Medi-Cal, and commercial patients.
Note 2. Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with Article 10 of Regulation S-X issued by the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles ("GAAP") for complete consolidated financial statements. However, the Company believes that the disclosures are adequate to ensure the information is not misleading. In the opinion of management, all adjustments (of normal and recurring nature) considered necessary for fair presentation have been reflected in these interim statements. As such, the information included in the accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes as of and for the year ended December 31, 2024, issued on March 26, 2025 in the Company's Annual Report on Form 10-K.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of TOI, its subsidiaries, all of which are controlled by TOI through majority voting control, and variable interest entities (“VIEs”) for which TOI (through TOI Management) is the primary beneficiary. The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity or voting interest model. All significant intercompany balances and transactions have been eliminated in consolidation.
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Variable Interest Entities
The Company consolidates entities for which it has a variable interest and is determined to be the primary beneficiary. Revenues, expenses, and net income (loss) from these subsidiaries are included in the consolidated amounts as presented on the Condensed Consolidated Statements of Operations.
The Company holds, as a result of entering into master services agreements ("MSAs"), variable interests in TOI PCs, which it cannot legally own. As of June 30, 2025, TOI held variable interests in TOI CA, The Oncology Institute FL, LLC, a Professional Corporation ("TOI FL"), The Oncology Institute OR, a Professional Corporation ("TOI OR"), and The Oncology Institute TX, a Professional Corporation ("TOI TX"), all of which are VIEs. The Company is the primary beneficiary of the TOI PCs and thus, consolidates the TOI PCs in its financial statements. As discussed in Note 16, the noncontrolling shareholders hold nominal interests in the VIEs and do not participate in the income or loss of the VIEs.
Liquidity
The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. In connection with the preparation of the condensed consolidated financial statements for the three and six months ended June 30, 2025, the Company conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to its ability to continue as a going concern within one year after the date of the issuance of such financial statements. The Company had cash and cash equivalents of $30,292 and an accumulated deficit of $247,407 at June 30, 2025, and a net loss of $36,594 and net cash used in operations of $15,190 for the six months ended June 30, 2025. On February 26, 2025, the Company entered into an Amendment to the Facility Agreement (see Note 11 - Debt) in which the Company made a partial prepayment of approximately $20,000 together with accrued and unpaid interest. Among other items, the Amendment provided for the removal of the financial covenant that required the Company to hold at least $40,000 of cash and cash equivalents. Additionally, on March 24, 2025, the Company entered into a securities purchase agreement for a private placement that resulted in gross proceeds of approximately $16,500 to the Company before deducting placement agent fees and offering expenses (see Note 13 - Stockholders' Equity).
The Company has also taken a number of other actions to increase cash flow. As one of the Company’s strategic priorities in 2024 and beyond, the Company implemented initiatives to reduce costs and more effectively manage working capital, which resulted in a 3.5 % reduction in SG&A expenses compared to the prior year same quarter (unaudited).
Accordingly, the Company has concluded that it will have sufficient liquidity to fund its operations for at least one year from the date these consolidated financial statements are issued. Although the Company currently expects its sources of capital to be sufficient to meet its near-term liquidity needs, there can be no assurance that such sources will be sufficient to satisfy its liquidity requirements in the future. If the Company cannot generate or obtain needed funds, it might be forced to make substantial reductions in its operating and capital expenses or pursue restructuring plans, which could adversely affect its business operations and ability to execute its current business strategy.
Segment Reporting
The Company presents the financial statements by segment in accordance with ASC Topic No. 280, Segment Reporting (“ASC 280”) to provide investors with transparency into how the chief operating decision maker (“CODM”) manages the business. The Company determined the CODM is its Chief Executive Officer. The CODM reviews financial information and allocates resources across three
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates under different assumptions or conditions. Significant items subject to such estimates and assumptions include judgements related to fee-for-service ("FFS") revenue recognition, estimated FFS accounts receivable and the allowance for credit losses, and recoverability of long-lived and intangible assets, recoverability of goodwill, fair values of acquired identifiable assets and assumed liabilities in business combinations, fair value of intangible assets and goodwill, fair value of share-based compensation, fair value of liability classified instruments, and judgments related to deferred income taxes.
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Net Loss Per Share
Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. The Company's Series A Convertible Preferred Stock is classified as a participating security in accordance with ASC 260. Under the two-class method, basic and diluted net loss per share attributable to common stockholders is computed by dividing the basic and diluted net loss attributable to common stockholders by the basic and diluted weighted-average number of shares of common stock outstanding during the period. Diluted net income per share attributable to common stockholders adjusts basic net income per share for the potentially dilutive impact of stock options, restricted stock units, Medical RSUs (defined in Note 14), earnout shares (defined in Note 14), public warrants, private placement warrants, and Senior Secured Convertible Notes (defined in Note 11).
The treasury stock method is used to calculate the potentially dilutive effect of stock options, RSUs, public warrants, and private placement warrants. The if-converted method is used to calculate the potentially dilutive effect of the Senior Secured Notes. In both methods, diluted net income (loss) attributable to common stockholders and diluted weighted-average shares outstanding are adjusted to account for the impact of the assumed issuance of potential common shares that are dilutive, subject to dilution sequencing rules. The earnout shares are contingently issuable; therefore, the earnout shares are excluded from basic and diluted net income (loss) per share until the market conditions have been met (see more detail on the earnout shares in Note 14). The Medical RSUs are also contingently issuable; therefore, they are excluded from basic net income (loss) per share until the performance and service conditions have been met (see more detail in Note 14). Further, the number of contingently issuable Medical RSUs included in diluted net income (loss) per share is based on the number of shares, if any, that would be issuable if the end of the reporting period were the end of the contingency period and if the result would be dilutive. For the periods presented, the public and private placement warrants are out of the money; therefore, the public and private placement warrants are anti-dilutive and excluded from diluted net loss per share.
Fair Value Measurements
The Company accounts for fair value measurements under ASC Topic No. 820, Fair Value Measurements (“ASC 820”). The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels (see Note 7 for further discussion):
Level 1inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
The Company's fair value measurement methodology for cash and cash equivalents, accounts receivable, other receivables, and accounts payable approximates fair value because of the short maturity and high liquidity of these instruments. Fair value measurement of investment securities available for sale is based upon quoted prices from active markets, if available (Level 1). If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation methodologies. Level 2 investment securities include US Treasuries purchased in the secondary market that use pricing inputs other than quoted prices in active markets and fair value is determined using pricing models or other valuation methodologies such as broker price indications, which are based on quoted prices for identical or similar notes, which are Level 2 input measures. Contingent considerations are valued using a present value factor using credit rating yields which are considered to be a Level 3 fair value measurement. Fair value measurements used for the goodwill and intangible assets are based on the discounted cash flow method within the income approach and guideline public company method to value the reporting units, which is considered to be a Level 3 fair value measurement. The unobservable inputs utilized in determining the fair value of goodwill based on the income approach primarily include estimated future cash flows, discounted at a rate that approximates the cost of capital of a market participant. Inputs used to calculate the fair value based on the market approach include the revenue and EBITDA multiples based on guidelines for similar publicly traded companies and recent transactions. Fair value measurements of derivative warrants liability are based on Binomial Lattice and Monte-Carlo Simulation Models, respectively, which are considered to be Level 3 fair value measurements. The primary unobservable input utilized in determining the fair value of the derivative warrants is the expected volatility of the common stock. Fair value measurements of the convertible note
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Cash and Cash Equivalents
Accounts Receivable and Allowance for Credit Losses
Goodwill
The Company accounts for goodwill under Accounting Standards Codification Topic No. 350, Intangibles - Goodwill and Other (“ASC 350”). Goodwill represents the excess of the aggregate purchase price paid over the fair value of the net assets acquired in the Company's business combinations.
Goodwill is not amortized but is required to be evaluated for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company performs its annual testing of impairment for goodwill in the fourth quarter of each year. When impairment indicators are identified, the Company compares the reporting unit’s fair value to its carrying amount, including goodwill. An impairment loss is recognized as the difference, if any, between the reporting unit’s carrying amount and its fair value to the extent the difference does not exceed the total amount of goodwill allocated to the reporting unit.
Debt
The Company accounts for debt net of debt issuance costs and debt discount. Debt issuance costs and debt discount are capitalized, netted against the related debt for presentation purposes, and amortized to interest expense over the terms of the related debt using the effective interest method.
Investments in Marketable Securities
The Company's investments in marketable securities are classified as available-for-sale and are carried at fair value. The Company accounts for its investment securities available for sale using the fair value election pursuant to ASC 825, Financial Instruments ("ASC 825"), where changes in fair value are recorded in unrealized gains (losses), net on the Company's Condensed Consolidated Statements of Operations. The Company determines the appropriate classification of these investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company’s marketable securities are classified as current assets if the maturity date is less than one year from the balance sheet date.
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Interest income and accretion on marketable securities are included in interest income in the Consolidated Statements of Operations. Realized gains and losses on sales of securities, and other-than-temporary declines in the fair value of marketable securities, if any, are included as a component of other income (expense), net in the Condensed Consolidated Statements of Operations. The cost of securities sold is based on the First In, First Out method.
Emerging Growth Company
The Company qualifies as an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended ("Securities Act"), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and has elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company, nor an emerging growth company which has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used. The Company will exit emerging growth company status on December 31, 2025.
Comprehensive Loss
Comprehensive loss includes net loss to common stockholders as well as other changes in equity that result from transactions and economic events other than those with stockholders. There was no difference between comprehensive loss and net loss to common stockholders for the periods presented.
Recently Issued and Adopted Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures ("ASU 2023-09"). The new standard requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the year ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all periods presented. The Company is currently evaluating the disclosure requirements and its effect on the Consolidated Financial Statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).” ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement; rather it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 requires footnote disclosure about specific expenses to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization and (5) depreciation, depletion and amortization recognized as part of oil- and gas-production activities or other types of depletion expenses. The tabular disclosure would also include certain other expenses, when applicable. ASU 2024-03 does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnotes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option
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for retrospective application. Early adoption is permitted. The Company will adopt ASU 2024-03 at the beginning of fiscal year 2027. The Company is currently evaluating the disclosure requirements and its effect on the Consolidated Financial Statements
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Note 3. Significant Risks and Uncertainties Including Business and Credit Concentrations
Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, accounts receivable, and investment securities.
Cash accounts in a financial institution may, at times, exceed the Federal Deposit Insurance Corporation coverage of $250 per account ownership category. The Company has not experienced losses on these accounts, and management believes the Company is not exposed to significant risks on such accounts.
The Company’s accounts receivable has implicit collection risk. The Company grants credit without collateral to their patients, most of whom are local residents and are insured under third-party payor agreements. The Company believes this risk is partially mitigated by the Company’s establishment of long-term agreements and relationships with third-party payors that provide the Company with insight into historic collectability and improve the collections process.
Revenue Concentration Risk
The concentration of net revenue on a percentage basis for major payors for the three and six months ended June 30, 2025 and 2024 are as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Percentage of Patient Services Net Revenue: | |||||||||||||||||||||||
| Payor A | % | % | % | N/A | |||||||||||||||||||
| Payor B | N/A | % | N/A | % | |||||||||||||||||||
The concentration of gross receivables on a percentage basis for major payors at June 30, 2025 and December 31, 2024.
| June 30, 2025 | December 31, 2024 | ||||||||||
| Percentage of Gross Receivables of Patient Services Revenue: | |||||||||||
| Payor A | % | N/A | |||||||||
All of the Company’s revenue is generated from customers located in the United States.
Vendor Concentration Risk
The concentration of cost of sales on a percentage basis for major vendors for the three and six months ended June 30, 2025 and 2024 are as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Percentage of Direct Costs: | |||||||||||||||||||||||
| Vendor A | % | % | % | % | |||||||||||||||||||
The concentration of gross payables on a percentage basis for major payors at June 30, 2025 and December 31, 2024 are as follows:
| June 30, 2025 | December 31, 2024 | ||||||||||
| Percentage of Gross Payables: | |||||||||||
| Vendor A | % | % | |||||||||
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Note 4. Accounts Receivable
The Company’s accounts receivable consists primarily of amounts due from third-party payors and patients. See Note 2 for a summary of the Company’s policies relating to accounts receivable and allowance for credit losses.
Accounts Receivable as of June 30, 2025 and December 31, 2024 consist of the following:
| (in thousands) | June 30, 2025 | December 31, 2024 | |||||||||
| Oral drug accounts receivable (Dispensary) | $ | $ | |||||||||
| Capitated accounts receivable (Patient Services) | |||||||||||
| FFS accounts receivable, net (Patient Services) | |||||||||||
| Clinical trials accounts receivable | |||||||||||
| Other trade receivables | |||||||||||
| Total | $ | $ | |||||||||
There was no
As of January 1, 2024, the accounts receivable balance amounted to $42,360 .
During the three and six months ended June 30, 2025 and 2024, the Company had no
Note 5. Revenue
The Company recognizes revenue in accordance with ASC 606 on the basis of its satisfaction of outstanding performance obligations. The Company typically fulfills its performance obligations over time, either over the course of a single treatment (fee-for-service or "FFS"), a month (capitation), or a number of months (clinical research). The Company also has revenue that is satisfied at a point in time (dispensary).
Disaggregation of Revenue
The Company categorizes revenue based on various factors such as the nature of contracts, payors, order to billing arrangements, and cash flows received by the Company, as follows:
| (in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Patient services | |||||||||||||||||||||||
| Capitated revenue | $ | $ | $ | $ | |||||||||||||||||||
| FFS revenue | |||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||
| Dispensary revenue | |||||||||||||||||||||||
| Clinical research trials and other revenue | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Refer to Note 19 for Segment Reporting for disaggregation of revenue by reporting segment.
Contract Asset and Liabilities
Under ASC 606, contract assets represent rights to payment for performance contingent on something other than the passage of time and accounts receivable are rights to payment for performance without contingencies. The Company does not
Contract liabilities represent cash that has been received for contracts, but for which performance is still unsatisfied. Contract liabilities consist of estimated deductions and expenses related to capitation contracts. As of June 30, 2025 and
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December 31, 2024, contract liabilities amounted to $5,198 and $2,351 , respectively. As of January 1, 2024, the contract liabilities amounted to $545 . During the three and six months periods ended June 30, 2025 and 2024, the Company recognized revenue of $0 489
Remaining Unsatisfied Performance Obligations
The accounting terms for the Company’s patient services and dispensary contracts do not extend past a year in duration. Additionally, the Company applies the ‘as invoiced’ practical expedient to its clinical research contracts.
Note 6. Inventories
The Company purchases intravenous chemotherapy drugs and oral prescription drugs from various suppliers.
The Company’s inventories as of June 30, 2025 and December 31, 2024 were as follows:
| (in thousands) | June 30, 2025 | December 31, 2024 | |||||||||
| Oral drug inventory | $ | $ | |||||||||
| IV drug inventory | |||||||||||
| Total | $ | $ | |||||||||
Note 7. Marketable Securities and Fair Value Measurements
Marketable Securities
The Company accounted for its investment securities as available for sale using the fair value election pursuant to ASC 825, where changes in fair value are recorded in Other, net non-operating income (expense) on the Company's Condensed Consolidated Statements of Operations. As of June 30, 2025, the Company no longer has investments or cash equivalents. The Company’s investments in marketable securities at December 31, 2024 is as follows:
| December 31, 2024 | |||||||||||||||||||||||
| (in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| U.S. Treasury Bills | $ | $ | $ | $ | |||||||||||||||||||
The contractual maturities of the Company's investments in cash equivalents and marketable securities as of December 31, 2024 is as follows:
December 31, 2024 (in thousands) | Due in One Year or Less | Due After One Year through Five Years | Due After Five Years | Total | |||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| U.S. Treasury Bills | $ | $ | $ | $ | |||||||||||||||||||
The Company recorded a net unrealized loss of $6
Accrued interest receivable on cash equivalents and marketable securities was $68 and $37 , respectively, at June 30, 2025 and December 31, 2024, and is included within in the Condensed Consolidated Balance Sheets.
Fair Value Measurements
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| June 30, 2025 | |||||||||||||||||||||||
| (in thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||
| Derivative warrant liabilities | $ | $ | $ | $ | |||||||||||||||||||
| Conversion option derivative liabilities | |||||||||||||||||||||||
There were no transfers between levels for the three and six months ended June 30, 2025 and twelve months ended December 31, 2024.
| December 31, 2024 | |||||||||||||||||||||||
| (in thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||
| Cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||
| Derivative warrant liabilities | $ | $ | $ | $ | |||||||||||||||||||
| Conversion option derivative liabilities | |||||||||||||||||||||||
The carrying amounts of cash, accounts receivable, other receivables, and accounts payable approximate fair value because of the short maturity and high liquidity of these instruments.
The Company measures its investments (including cash equivalents, marketable securities, and non-current investments) at fair value on a recurring basis and classifies those instruments within Level 2 of the fair value hierarchy. Investment securities, including U.S. Treasury Bills purchased in the secondary market and U.S. Treasury bonds, are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined using models or other valuation methodologies.
The Company measures its private derivative warrants at fair value on a recurring basis and classifies those instruments within Level 2 of the fair value hierarchy because the valuation is based on an observable input of a similar instrument. The Company measures its convertible note warrant derivative liability, optional redemption derivative liability and conversion option derivative liability on a recurring basis and classifies those instruments within Level 3 of the fair value hierarchy because unobservable inputs are used to measure fair value. See Note 2 for a summary of the Company’s policies relating to fair value measurements, and Note 11 for more detail on the convertible note warrant, optional redemption, and conversion option derivative liabilities.
The Company measures goodwill at fair value on a nonrecurring basis and classifies goodwill within Level 3 of the fair value hierarchy. It was concluded in connection with the preparation of these financial statements that, based on the results of our most recent qualitative assessment performed for the three months ended June 30, 2025, there was no
The following table presents information about the Company’s financial liabilities that are measured at fair value on a recurring basis at June 30, 2025:
| (in thousands) | Conversion Option Derivative Liabilities | |||||||||||||||||||
| Balance at December 31, 2023 | $ | |||||||||||||||||||
| Decrease in fair value included in other expense | ( | |||||||||||||||||||
| Balance at December 31, 2024 | $ | |||||||||||||||||||
| Change in fair value included in other expense | ||||||||||||||||||||
| Balance at June 30, 2025 | $ | |||||||||||||||||||
As of June 30, 2025 and December 31, 2024, the conversion option derivative was valued using a Binomial Lattice, which is considered to be a Level 3 fair value measurement. A summary of the level 3 fair value measurements inputs used in the valuations is as follows:
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| June 30, 2025 | ||||||||||||||
| Convertible Note Warrant Derivative Liability | Conversion Option Derivative Liabilities | |||||||||||||
| Unit price | $ | $ | ||||||||||||
| Term (in years) | ||||||||||||||
| Volatility | % | % | ||||||||||||
| Risk-free rate | % | % | ||||||||||||
| Dividend yield | ||||||||||||||
| Cost of equity | ||||||||||||||
| December 31, 2024 | |||||||||||||||||
| Convertible Note Warrant Derivative Liability | Conversion Option Derivative Liability | ||||||||||||||||
| Unit price | $ | $ | |||||||||||||||
| Term (in years) | |||||||||||||||||
| Volatility | % | % | |||||||||||||||
| Risk-free rate | % | % | |||||||||||||||
| Dividend yield | |||||||||||||||||
| Cost of equity | |||||||||||||||||
Uncertainty of Fair Value Measurement from Use of Significant Unobservable Inputs
The inputs to estimate the fair value of the Company’s convertible note warrant and conversion option derivative liabilities were the market price of the Company’s common stock, their remaining expected term, the volatility of the Company’s common stock price and the risk-free interest rate over the expected term. Significant changes in any of those inputs in isolation can result in a significant change in the fair value measurement.
Generally, an increase in the market price of the Company’s shares of common stock, an increase in the volatility of the Company’s shares of common stock, and an increase in the remaining term of the derivative liabilities would each result in a directionally similar change in the estimated fair value of the Company’s derivative liabilities. Such changes would increase the associated liability while decreases in these assumptions would decrease the associated liability. An increase in the risk-free interest rate would result in a decrease in the estimated fair value measurement and thus a decrease in the associated liability. The Company has not, and does not plan to, declare dividends on its common stock and, as such, there is no change in the estimated fair value of the derivative warrant liabilities due to the dividend assumption.
Note 8. Property and Equipment, Net
The Company accounts for property and equipment at historical cost less accumulated depreciation.
Property and equipment, net, consist of the following:
| (in thousands) | Useful lives | June 30, 2025 | December 31, 2024 | ||||||||||||||
| Computers and software | $ | $ | |||||||||||||||
| Office furniture | |||||||||||||||||
| Leasehold improvements | Shorter of lease term or estimated useful life | ||||||||||||||||
| Medical equipment | |||||||||||||||||
| Construction in progress | |||||||||||||||||
| Finance lease ROU assets | Shorter of lease term or estimated useful life | ||||||||||||||||
| Less: accumulated depreciation | ( | ( | |||||||||||||||
| Total property and equipment, net | $ | $ | |||||||||||||||
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Note 9. Accrued Expenses and Other Current and Non-Current Liabilities
Accrued expenses and other current liabilities as of June 30, 2025 and December 31, 2024 consist of the following:
| (in thousands) | June 30, 2025 | December 31, 2024 | |||||||||
| Compensation, including bonuses, fringe benefits, and payroll taxes | $ | $ | |||||||||
| Contract liabilities | |||||||||||
| Directors and officers insurance premiums | |||||||||||
| Deferred acquisition and contingent consideration | |||||||||||
| Accrued interest | |||||||||||
| Repayments on advances | |||||||||||
| Accrued Cap Leakage | |||||||||||
| Other liabilities | |||||||||||
| Total accrued expenses and other current liabilities | $ | $ | |||||||||
Contract liabilities as of June 30, 2025 and December 31, 2024 consist of cumulative adjustments made to capitated revenue recognized in prior periods.
Note 10. Leases
The Company leases clinics, office buildings, and certain equipment under noncancellable financing and operating lease agreements that expire at various dates through June 2033.
The initial terms of operating leases range from 1 to 10 years and certain leases provide for free rent periods, periodic rent increases, and renewal options. Monthly payments for these leases range from $0 to $64 . All lease agreements generally require the Company to pay maintenance, repairs, property taxes, and insurance costs, which are generally variable amounts based on actual costs incurred during each applicable period.
The Company has determined that periods covered by options to extend the Company's leases are excluded from the lease terms as it is not reasonably certain the Company will exercise such options.
Lease Expense
The components of lease expense were as follows for the three and six months ended June 30, 2025 and 2024:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Operating lease costs: | $ | $ | $ | $ | |||||||||||||||||||
| Finance lease costs: | |||||||||||||||||||||||
| Amortization of ROU asset | $ | $ | $ | $ | |||||||||||||||||||
| Interest expense | $ | $ | $ | $ | |||||||||||||||||||
| Other lease costs: | |||||||||||||||||||||||
| Short-term lease costs | $ | $ | $ | $ | |||||||||||||||||||
| Variable lease costs | $ | $ | $ | $ | |||||||||||||||||||
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Operating and other lease costs are presented as part of selling, general, and administrative expenses. The components of finance lease costs appear in depreciation and amortization and interest expense.
Maturity of Lease Liabilities
The aggregate future lease payments for the Company's leases in years subsequent to June 30, 2025 are as follows:
| (in thousands) | Operating Leases | Finance Leases | ||||||
| 2025 (remaining six months) | $ | $ | ||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| Thereafter | ||||||||
| Total future lease payment | $ | $ | ||||||
| Less: amount representing interest | ( | ( | ||||||
| Present value of future lease payment (lease liabilities) | $ | $ | ||||||
| Reported as: | ||||||||
| $ | $ | |||||||
| Total lease liabilities | $ | $ | ||||||
Lease Term and Discount Rate
The following table provides the weighted average remaining lease terms and weighted average discount rates for the Company's leases as of June 30, 2025 and 2024:
| June 30, 2025 | June 30, 2024 | |||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Operating | ||||||||
| Finance | ||||||||
| Weighted-average discount rate | ||||||||
| Operating | % | % | ||||||
| Finance | % | % | ||||||
Supplemental Cash Flow Information
The following table provides certain cash flow and supplemental noncash information related to the Company's lease liabilities for the six months ended June 30, 2025 and 2024.
| (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash payment from operating leases | $ | $ | ||||||
| Financing cash payments for finance leases | ||||||||
| Lease liabilities arising from obtaining right-of-use assets: | ||||||||
| Operating leases | $ | $ | ||||||
Lease Modifications
During the three months ended June 30, 2025, the Company extended its lease terms for one clinic in California and one clinic in Arizona. These extensions constitute lease modifications that qualify as a change of accounting for the original leases and not separate contracts. Accordingly, in the three months ended June 30, 2025, the Company recognized the difference of
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Note 11. Debt
Senior Secured Convertible Note
On August 9, 2022, TOI entered into a Facility Agreement (the “Facility Agreement”) with certain lenders (“Lenders”) and Deerfield Partners L.P. (“Agent”), pursuant to which, TOI borrowed cash loans from the Lenders in the amount of $110,000 , in exchange for which, TOI issued to each Lender a secured convertible promissory note (“Senior Secured Convertible Note”), which is payable to such Lenders in an amount equal to the unpaid principal amount of loans held by such Lender.
The Senior Secured Convertible Note will mature on August 9, 2027 (the “Maturity Date”) and shall bear interest at the rate of 4.00 % per annum from August 9, 2022, on the outstanding principal amount, any overdue interest and any other amounts and obligations. The interest shall be paid in cash quarterly in arrears commencing on October 1, 2022. In case of any prepayment, repayment or redemption of the Senior Secured Convertible Note, the Company shall pay any accrued and unpaid interest on the principal, along with a make whole amount and an exit fee.
The Facility Agreement requires the Company to meet certain operational and reporting requirements, including, but not limited to, customary regulatory, financial reporting, and disclosure requirements. Additionally, limitations are placed on the Company's ability to merge with other companies and enter into other debt arrangements and permitted investments are limited to amounts specified in the Facility Agreement. The Facility Agreement also provides certain restrictions on dividend payments and equity transactions and requires the Company to make prepayments under specified circumstances. Financial covenants in the Facility Agreement require the Company to maintain minimum net quarterly revenues of $75,000 during fiscal year 2024 and $100,000 during fiscal year 2025 and thereafter. Additionally, the registration rights agreement between the Company and certain stockholders entered into in connection with the Business Combination requires the Company to have an effective registration statement and calls for payment should the registration statement cease to remain effective. The Company was in compliance with the covenants of the Facility Agreement as of December 31, 2024.
On February 26, 2025, the Company, the Lenders, and the Agent, entered into the Limited Consent and Amendment No. 1 to Facility Agreement (the “Consent and Amendment”), which amended the Facility Agreement, dated as of August 9, 2022. The Consent and Amendment, among other things, provided for (i) Lenders’ consents to the waiver of certain restrictions imposed by the Facility Agreement regarding the issuance and sale of the Company’s equity and equity-linked securities, (ii) the removal of a financial covenant that required the Company to hold at least $40,000 of cash or cash equivalents in accounts that were subject to control agreements in favor of the Agent, (iii) amendment and restatement of the Company’s financial reporting covenant under the Facility Agreement in its entirety, and (iv) granting participation rights permitting the Lenders to purchase common stock and/or warrants exercisable for common stock in up to two equity offerings that occur by no later than the one-year anniversary of the modification date (“Participation Rights”). The Consent and Amendment was accounted for as a debt modification in accordance with ASC 470.
In connection with the Consent and Amendment, the Company executed the Optional Redemption feature (as described below) and made a partial prepayment of the Senior Secured Convertible Notes issued pursuant to the Facility Agreement in an aggregate principal amount of approximately $20,000 together with accrued and unpaid interest thereon. As part of the prepayment, the Lenders also waived any and all Make Whole Amounts that would otherwise be due and owing thereto under the Facility Documents in respect of the prepayment. As a result of the prepayment, the Company recognized a loss on extinguishment of debt within interest expense of $2,900 during the quarter ended March 31, 2025, which consisted of a proportionate write-off of unamortized financing costs related to the Facility Agreement.
Additionally, in connection with the Private Placement (described in Note 13. Stockholders’ Equity) certain Lenders exercised participation rights and entered into an exchange agreement pursuant to which such Lenders agreed to exchange approximately $4,100 aggregate principal amount of the Company’s Senior Secured Convertible Notes for 37,232.83 shares of common-equivalent Preferred Stock (convertible into 3,723,283 shares of Common Stock) and warrants to purchase 1,861,642 shares of Common Stock at the same prices being paid by the investors in the Private Placement. The fair value of the common-equivalent Preferred Stock and warrants issued was $4,100 . The exchange was accounted for as a partial debt extinguishment under ASC 470. As a result, the Company recognized a loss on extinguishment of debt within interest expense of $600 during the quarter ended March 31, 2025, which consisted of a proportionate write-off of unamortized financing costs related to the Facility Agreement.
The Company was in compliance with the amended covenants of the Facility Agreement as of June 30, 2025.
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Conversion Options
The Senior Secured Convertible Note contains several embedded conversion options (the “Conversion Options”) that grant the holders of the Senior Secured Convertible Note the ability to convert the Senior Secured Convertible Note at any time on or after date of issuance of the note. The Conversion Options are convertible into shares of the Company’s common stock (such converted shares, “Conversion Shares”) and, in certain circumstances, a combination of cash and shares of the Company’s common stock, or a combination of cash, other assets and securities or other property of any Company successor entity. The Conversion Shares or settlement amounts shall be computed on the basis of a predefined formula, with a set conversion price of $8.567 as one of the inputs and a conversion cap of 14,663,019 shares. The if-converted value did not exceed the principal amount as of June 30, 2025. No Conversion Shares were issued as of June 30, 2025.
The Company evaluated the Conversion Options of the Senior Secured Convertible Note under ASC 815 and concluded that they require bifurcation from the host contract as a separate unit of account. The Conversion Options do not meet the criteria to be classified in shareholders’ equity and hence, are accounted for as a derivative liability remeasured at fair value at each balance sheet date with changes in fair value reported in earnings.
The Conversion Options contain certain limits on exercise if, after giving effect to the exercise, the Lender would beneficially own a number of shares of common stock of the Company in excess of those permissible under the terms of the Senior Secured Convertible Note. The number of shares to be issued against these notes and conversion price are each subject to adjustments provided under the terms of Senior Secured Convertible Note.
The holder shall receive dividends on the Senior Secured Convertible Note and distributions of any kind made to the holders of common stock, other than dividends of, or distributions in, shares, to the same extent as if the holder had converted the Senior Secured Convertible Note into such shares and had held such shares on the record date for such dividends and distributions any limitations on conversion options.
Optional Redemption
The Facility Agreement also provides the Company the right to redeem the outstanding principal amount of each note (“Optional Redemption”) for the Optional Redemption Price. The Company shall not affect any Optional Redemption under this Senior Secured Convertible Note unless along with this, the Company effects an optional redemption under all other notes in accordance with the terms thereof, on a pro rata basis, based upon the respective applicable original principal amount of each of the notes outstanding as of the date the notice for Optional Redemption is delivered to the holders.
The Company evaluated the Optional Redemption feature of the Senior Secured Convertible Note under ASC 815 and concluded that it requires bifurcation from the host contract as a separate unit of account. The Optional Redemption feature does not meet the criteria to be classified in shareholders’ equity and hence, is accounted for as a derivative liability remeasured at fair value at each balance sheet date with changes in fair value reported in earnings. The fair value of the Optional Redemption feature is de minimis.
If the principal redemption amount specified in an Optional Redemption notice is less than the entire principal amount then outstanding, the principal amount specified in each conversion notice shall be applied (i) first, to reduce, on a dollar-for-dollar basis, the principal amount of the note in excess of the principal redemption amount until such excess principal amount is reduced to zero and (ii) to reduce, on a dollar-for-dollar basis, the principal redemption amount until all of such principal redemption amount shall have been converted.
Convertible Note Warrants
The Facility Agreement also provides for the issuance of warrants (the “Convertible Note Warrants”) on each date any principal amount of any Senior Secured Convertible Note is paid, repaid, redeemed, or prepaid at any time prior to the Maturity Date. Convertible Note Warrants are exercisable from their original issue date to August 9, 2027, for purchase of an aggregate amount of Conversion Shares into which such principal amount of Senior Secured Convertible Note was convertible into, immediately prior to such payment, at an exercise price of $8.567 . The holder of Convertible Note Warrants may pay the exercise price in cash or exercise the warrant on a cashless basis or through a reduction of an amount of principal outstanding under any Senior Secured Convertible Note held by such holder. In the event that the Convertible Note Warrant has not been exercised in full as of the last business day during its term, the holder shall be deemed to have exercised the purchase rights represented by the Convertible Note Warrant in full as a cashless exercise, in which event the Company shall issue the number of shares to the holder computed on the basis of a predefined formula.
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The Company evaluated the Convertible Note Warrants of the Senior Secured Convertible Note under ASC 815 and concluded that they require bifurcation from the host contract as a separate unit of account. The Convertible Note Warrants do not meet the criteria to be classified in shareholders’ equity and hence, are accounted for as a derivative liability remeasured at fair value at each balance sheet date with changes in fair value reported in earnings.
The Convertible Note Warrant holder shall be entitled to receive any dividend or distribution made by the Company to the holders of common stock to the same extent as if the holder had exercised the Convertible Note Warrants in full in a cash exercise.
The number of shares to be issued against these warrants and exercise price are each subject to adjustments provided under the terms of Convertible Note Warrants. The Convertible Note Warrants contain certain limits on exercise if, after giving effect to the exercise, the Lender would beneficially own a number of shares of common stock of the Company in excess of those permissible under the terms of the Convertible Note Warrants. Further, the Convertible Note Warrants can be fully or partially settled in cash in certain cases in accordance with the terms of issuance such as when shares issuable upon exercise of the warrants exceed a predefined number, upon occurrence of predefined event of default and upon occurrence of predefined events that will bring a fundamental change in the Company such as merger, consolidation, business combination, recapitalization, reorganization, reclassification or other similar event.
As of June 30, 2025 and December 31, 2024, there were 10,842,525 and 12,839,967 Convertible Note Warrants outstanding, respectively.
Allocation of Proceeds
The Company has allocated total issuance proceeds of $110,000 among the Senior Secured Convertible Note and Convertible Note Warrants based on fair value. Upon issuance of the Convertible Note Warrants, the Company recorded Convertible Note Warrants, Optional Redemption, and Conversion Options of $0 , $0 and $28,160 , which were recorded as a debt discount to the Senior Secured Convertible Note of $110,000 . The Company will amortize the debt discount over a period of 5 years (of which 2.11 years remain).
The total issuance costs of $4,924 were allocated among the Senior Secured Convertible Note, Convertible Note Warrants, Optional Redemption, and Conversion Options, by allocating costs of $0 , $0 , and $1,261 to the Convertible Note Warrants, Optional Redemption, and Conversion Options with the residual cost of $3,663 being allocated to the Senior Secured Convertible Note (in addition to the debt discount). The Company expensed issuance costs allocated to Warrants, Optional Redemption, and Conversion Options at inception and will amortize the costs allocated to the Senior Secured Convertible Note over a period of 5 years (of which 2.11 remain).
Amounts Outstanding and Recognized during the Periods Presented
The Senior Secured Convertible Note as of June 30, 2025 and December 31, 2024 consists of the following:
| (in thousands) | June 30, 2025 | December 31, 2024 | |||||||||
| Senior Secured Convertible Note, due August 9, 2027 | $ | $ | |||||||||
| Less: Unamortized debt issuance costs | |||||||||||
| Less: Unamortized debt discount | |||||||||||
| Long-term debt, net of unamortized debt discount and issuance costs | $ | $ | |||||||||
The amortization of the debt issuance costs was charged to interest expense for all periods presented. For the three months ended June 30, 2025 and 2024, the effective yield was 10.64 % and 13.38 %, respectively. The amount of debt issuance costs included in interest expense for the three and six months ended June 30, 2025 was $1,129 and $6,003 , respectively. The amount of debt issuance costs included in interest expense for the three and six months ended June 30, 2024 was $1,565 and $3,124 , respectively. The Company had interest expense of $863 and $1,878 on the Facility Agreement term loan for the three and six months ended June 30, 2025. The Company had interest expense of $1,112 and $2,224 on the Facility Agreement term loan for the three and six months ended June 30, 2024. There was $868 and $1,124 accrued interest as of June 30, 2025 and 2024, respectively. There was $1,136 accrued interest as of December 31, 2024.
On August 9, 2022, the Company also entered into the Guarantee and Security Agreement (“Guarantee Agreement”) with the Agent for the purpose of providing a guarantee of all the obligations under the Facility Agreement (refer to Note 15. Commitments and Contingencies for detail).
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Additionally, the Lenders' Agent holds shares of common and preferred stock within the Company as of June 30, 2025, and December 31, 2024.
Debt Maturities
The following table summarizes the stated debt maturity related to the Senior Secured Convertible Note as of June 30, 2025:
| (in thousands) | ||||||||
| 2025 (remaining six months) | $ | |||||||
| 2026 | ||||||||
| 2027 | ||||||||
| Total debt | $ | |||||||
Note 12. Income Taxes
The Company recorded an income tax benefit of $131 0.8 % and 0 % for the three months ended June 30, 2025 and 2024, respectively. The Company's effective tax rate was 0.4 % and 0 % for the six months ended June 30, 2025 and 2024, respectively.
Note 13. Stockholders' Equity
Common Stock
As of June 30, 2025, there were 95,013,596 shares issued and 93,279,822 shares outstanding of common stock. As of December 31, 2024, there were 77,470,886 shares issued and 75,737,112 shares outstanding of common stock.
Voting
The holders of the Company’s common stock are entitled to one vote for each share of common stock held at all meetings of stockholders (and written actions in lieu of meetings), and there is no cumulative voting.
Dividends
Common stockholders are entitled to receive dividends whenever funds are legally available and when declared by the board of directors. No
Preferred Stock
Upon the Closing Date of the Business Combination, pursuant to the terms of the Amended and Restated Certificate of Incorporation, the Company authorized 10,000,000 shares of Series A Common Equivalent Preferred Stock (“preferred stock”) with a par value and liquidation preference of $0.0001 193,706 shares and 165,045 of preferred stock outstanding, respectively.
Conversion
Each share of preferred stock is convertible, at any time on the part of the holder except with respect to the Beneficial Ownership Limitation (defined below), into 100 shares of common stock.
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Blocker/Beneficial Ownership Limitation
The preferred stock is subject to a beneficial ownership limitation such that the preferred stock may not, at any time, be convertible into more than 4.9 % of the total number of shares of common stock outstanding (“Beneficial Ownership Limitation”).
Voting
The holders of preferred stock do not have voting rights in the Company.
Dividends
The holders of preferred stock are entitled to receive dividends whenever funds are legally available and when declared by the board of directors on an as-converted basis. No dividends have been declared as of June 30, 2025.
Assumed Public Warrants and Private Placement Warrants
As a result of the Business Combination, holders of the public warrants and private placement warrants are entitled to acquire common stock of the Company. The warrants became exercisable 30 days from the completion of the Business Combination, on December 12, 2021, and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation. As of June 30, 2025, there are 5,749,986 public warrants outstanding and 2,187,283 private placement warrants outstanding.
Each warrant entitles the holder to purchase one share of common stock for $11.50 per share. Private warrants held by the initial purchaser or certain permitted transferees may be exercised on a cashless basis.
If the reported last sale price of the common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 -trading day period ending three business days before the Company sends the notice of redemption to the warrant holders, the Company may redeem all the public warrants at a price of $0.01 per warrant upon not less than 30 days’ prior written notice.
If the Company calls the public warrants for redemption, management will have the option to require all holders that wish to exercise the public warrants to do so on a cashless basis. The Company will not be required to net cash settle the warrants.
The private warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the private warrants are held by someone other than the initial purchasers of their permitted transferees, the private warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants.
Private Placement Offering and Exchange Agreement
On March 24, 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with accredited investors for a private placement that resulted in gross proceeds of approximately $16,500 before deducting placement agent fees and offering expenses (the “PIPE”). Pursuant to the terms of the Securities Purchase Agreement, the Company issued to purchasers in the PIPE units consisting of two shares of common stock (or pre-funded warrants in lieu thereof) and common warrants to purchase one share of common stock (or pre-funded warrants) of the Company at a price of $2.2084 per unit (or $2.2082 in the case of units consisting of prefunded warrants). As a result of the PIPE the Company issued an aggregate of: (i) 12,006,510 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), (ii) pre-funded warrants (the “pre-funded Warrants”) to purchase up to an aggregate of 2,886,614 shares of common stock and (iii) accompanying common warrants (the “Common Warrants,”) to purchase up to an aggregate of 7,446,562 shares of common stock (collectively, the “PIPE”). In connection with the PIPE, certain Lenders under the Company’s Facility Agreement exercised their Participation Rights and entered into an exchange agreement pursuant to which such Lenders agreed to exchange approximately $4,100 aggregate principal amount of the Company’s senior secured convertible notes for 37,232.83 shares of common-equivalent preferred stock (convertible into 3,723,283 shares of common stock) and Common Warrants to purchase 1,861,642 shares of common stock. The exercise price and terms of these Common Warrants mirror the terms of the Common Warrants offered to investors in the PIPE.
The pre-funded Warrants have an exercise price of $0.0001 per share, and the Common Warrants have an exercise price of $1.1980 per share. The pre-funded Warrants and Common Warrants are subject to customary anti-dilution adjustments following certain events. The pre-funded Warrants and Common Warrants are exercisable at any time by the holder on a cash or cashless basis until the respective warrants are registered, provided that the holder may not exercise the warrants if the holder
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would own more than 4.9 % of the Company immediately following the exercise. The warrants are equity classified in accordance with ASC 815-40.
Note 14. Share-Based Compensation
Non-Qualified Stock Option Plan
On January 2, 2019, the Company issued and adopted the 2019 Non-Qualified Stock Option Plan (the “2019 Plan”) to incentivize directors, consultants, advisors, and other key employees of the Company and its subsidiaries to continue their association by providing opportunities to participate in the ownership and further growth of the Company. The 2019 Plan provides for the grant of options (the “Stock Options”) to acquire common shares of the Company. In conjunction with the Business Combination, the Company amended and fully restated the 2019 Plan through the establishment of the 2021 Incentive Plan (“2021 Plan”).
Stock Options are exercised from the pool of shares designated by the appropriate Committee of the Board of Directors. The grant-date fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. The grant date fair value of the service vesting and the performance vesting options is recognized as an expense over the requisite service period and upon the achievement of the performance condition deemed probable of being achieved, respectively. The exercise price of each Stock Option shall be determined by the Committee and may not be less than the fair market value of the common shares on the date of grant. Stock Options have 10-year terms, after which they expire and are no longer exercisable.
The total number of shares of common stock for which Stock Options may be granted under the 2021 Plan shall not exceed 15,640,000 .
Stock Options become vested upon fulfillment of either service vesting conditions, performance vesting conditions, or both, as determined by the award agreement entered into by the Company and optionee. The service vesting requirement states that: (i) 25 % of the service vesting options shall vest on the first anniversary of the grant date and (ii) the remaining 75 % shall vest on an equal monthly-basis, so long as the optionee has remained continuously employed by the Company from the date of the award through the fourth anniversary of the grant date. The performance vesting requirement states that Stock Options shall vest upon sale of the Company only if the optionee has been continuously employed by the Company or its subsidiaries from the grant date through the date of such sale of the Company. For the awards vesting based on service conditions only and that have a graded vesting schedule, the Company recognizes compensation expense for vested awards in earnings, net of actual forfeitures in the period they occur, on a straight-line basis over the requisite service period.
As of June 30, 2025, the total number of shares of common stock remaining available for future awards (e.g., non-qualified stock options, incentive stock options, restricted stock units, restricted stock awards) under the 2021 Plan is 3,404,908 . There were no
The weighted average assumptions used in the Black-Scholes-Merton option-pricing model for the Stock Option units granted during the six months ended June 30, 2024 are provided in the following table:
| June 30, 2024 | ||||||||
| Valuation assumptions: | ||||||||
| Expected dividend yield | % | |||||||
| Expected volatility | % | |||||||
| Risk-free rate | % | |||||||
| Expected term (years) | ||||||||
The Company used the simplified method to calculate the expected term of stock option grants because sufficient historical exercise data was not available to provide a reasonable basis for the expected term. Under the simplified method, the expected term is estimated to be the mid-point between the vesting date and the contractual term of the option.
Stock option activity during the six months ended June 30, 2025 and 2024 is as follows:
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| Stock options | Number of shares | Weighted average exercise price | Weighted average remaining contractual term (years) | Aggregate intrinsic value (in thousands) | ||||||||||||||||||||||
| Balance at January 1, 2025 | $ | |||||||||||||||||||||||||
| Granted | ||||||||||||||||||||||||||
Exercised | ( | |||||||||||||||||||||||||
| Forfeited | ( | |||||||||||||||||||||||||
| Expired | ( | |||||||||||||||||||||||||
Balance at June 30, 2025 | $ | $ | ||||||||||||||||||||||||
Vested Options Exercisable at June 30, 2025 | $ | $ | ||||||||||||||||||||||||
| Stock options | Number of shares | Weighted average exercise price | Weighted average remaining contractual term (years) | Aggregate intrinsic value (in thousands) | ||||||||||||||||||||||
| Balance at January 1, 2024 | $ | |||||||||||||||||||||||||
| Granted | ||||||||||||||||||||||||||
| Exercised | ( | |||||||||||||||||||||||||
| Forfeited | ( | |||||||||||||||||||||||||
| Expired | ( | |||||||||||||||||||||||||
Balance at June 30, 2024 | $ | $ | ||||||||||||||||||||||||
Vested Options Exercisable at June 30, 2024 | $ | $ | ||||||||||||||||||||||||
Total share-based compensation expense related to stock options during the three and six months ended June 30, 2025 was $107 and $213 , respectively. Total share-based compensation expense relating to stock options during the three and six months ended June 30, 2024 was $1,989 and $4,331 . The total intrinsic value of options exercised during three and six months ended June 30, 2025, was $7,100 and $7,277 , respectively. The total intrinsic value of options exercised during the three and six months ended June 30, 2024 was $3 and $164 , respectively.
At June 30, 2025, there was $540 of total unrecognized compensation cost related to unvested service stock options granted under the 2021 Plan that are expected to vest. That cost is expected to be recognized over a weighted average period of 2.22 years as of June 30, 2025. During the six months ended June 30, 2025, the Company received $2,340 in cash and $4,937 tax benefit from the stock options exercised. The total fair value of common shares vested during the six months ended June 30, 2025 and 2024 was $791 and $427 , respectively.
Restricted Stock Units (“RSUs”)
The Company has 3,356,047 and 1,509,737 RSUs outstanding as of June 30, 2025 and December 31, 2024, respectively. The RSUs are service vesting and are valued based on the fair value of the Company’s common stock at the date of grant. The weighted-average grant date fair values of the RSUs granted during six months ended June 30, 2025 and 2024, were determined to be $1.19 and $0.60 , respectively, based on the fair value of the Company’s common stock at the grant date.
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A summary of the activity for the RSUs for the six months ended June 30, 2025 and 2024, respectively, are shown in the following table:
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||
| Unvested at beginning of year | $ | $ | ||||||||||||||||||||||||
| Granted | ||||||||||||||||||||||||||
| Vested | ( | ( | ||||||||||||||||||||||||
| Forfeited | ( | ( | ||||||||||||||||||||||||
| Unvested at end of year | $ | $ | ||||||||||||||||||||||||
The total share-based compensation expense related to RSUs was $644 and $860 , respectively, during the three and six months ended June 30, 2025. The total share-based compensation expense related to RSUs was $1,141 and $2,852 , respectively, during the three and six months ended June 30, 2024.
As of June 30, 2025 there was $4,119 of unrecognized compensation expense related to the RSUs that are expected to vest. That cost is expected to be recognized over a weighted average period of 3.41 years as of June 30, 2025.
RSUs granted to Medical Employees and Nonemployees
In 2022, the Company entered into arrangements with certain medical directors and supervisors of advanced practice providers employed by or engaged as independent contractors of TOI to issue RSUs of the Company (“Medical RSUs”). Vesting on each annual Medical RSU award is dependent on the participant performing a specified minimum number of service hours during the calendar year (“One-Year Term”) and further contingent upon the participant’s continued service to, or employment by, the Company through the grant date. The Company’s regular grant date for these Medical RSU awards is in the first quarter of the calendar year following the one-Year Term. During the six months ended June 30, 2025 and 2024, 997,806 and 387,797 Medical RSU awards were granted, respectively.
The number of Medical RSUs granted to each such participant is determined by the fair market value of the Company's stock price at the grant date and vest immediately. There were no
A summary of the activity for the equity-classified Medical RSUs for the six months ended June 30, 2025 and 2024, respectively, is shown in the following table:
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Balance at beginning of period | ||||||||
| Granted | ||||||||
| Vested | ( | ( | ||||||
| Forfeited | ||||||||
| Balance at end of period | ||||||||
Total compensation costs for Medical RSUs was $0 and $1,137 for the three and six months ended June 30, 2025, respectively. Total compensation costs for Medical RSUs was $237
Earnout Shares granted to Employees
In connection with the Business Combination in 2019, The Company issued Employee Earnout Shares. Employee Earnout Shares vest upon the Company common stock achieving the price per share as provided for in the agreement, so long as the optionee has remained continuously employed by the Company at that date and may be subject to other vesting requirements. Earnout shares were forfeited in November 2024 due to failure to meet earnout targets of TOI's stock price.
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A summary of the activity for the Employees Earnout Shares for the six months ended June 30, 2025 and 2024 is shown in the following table:
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Outstanding at beginning of period | ||||||||
| Granted | ||||||||
| Vested | ||||||||
| Forfeited | ( | |||||||
| Outstanding at end of period | ||||||||
The total share-based compensation expense, related to the Employee Earnout Shares during the three and six months ended June 30, 2025 was $0 20 and $55 , respectively.
Note 15. Commitments and Contingencies
The Company evaluates contingencies based upon available evidence. In addition, allowances for losses are provided each year for disputed items which have continuing significance. The Company believes that allowances for losses have been provided to the extent necessary, and that its assessment of contingencies is reasonable. Due to the inherent uncertainties and subjectivity involved in accounting for contingencies, there is at least a reasonable possibility that recorded estimates will change by a material amount in the near term. To the extent that the resolution of contingencies results in amounts which vary from management’s estimates, future operating results will be charged or credited. The principal commitments and contingencies are described below.
Legal Matters
The Company is subject to certain outside claims and litigation arising in the ordinary course of business. In the opinion of Management, the outcome of such matters will not have a material effect on the Company’s condensed consolidated financial statements. Loss contingencies entail uncertainty and a possibility of loss to an entity. If the loss is probable and the amount of loss can be reasonably estimated, the loss should be accrued according to ASC No. 450-20, Disclosure of Certain Loss Contingencies.
Indemnities
The Company’s Amended and Restated Certificate of Incorporation and amended and restated bylaws require it, among other things, to indemnify any director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines, and settlements, paid by the individual in connection with any action, suit, or proceeding arising out of the individual’s status or service as its director or officer, other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification by the Company. The Company also indemnifies its lessors in connection with its facility leases for certain claims arising from the use of the facilities. These indemnities do not provide for any limitation of the maximum potential future payments it could be obligated to make. Historically, the Company has not incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities in the accompanying condensed consolidated balance sheets.
The Health Insurance Portability and Accountability Act
The Health Insurance Portability and Accountability Act (“HIPAA”) assures health insurance portability, reduces healthcare fraud and abuse, guarantees security and privacy of health information, and enforces standards for health information. Organizations are required to be in compliance with HIPAA provisions. The Health Information Technology for Economic and Clinical Health Act (“HITECH”) imposes notification requirements in the event of certain security breaches relating to protected health information. Organizations are subject to significant fines and penalties if found not to be compliant with the provisions outlined in the regulations. The Company believes it is in compliance with these laws.
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Regulatory Matters
Laws and regulations governing the Medicare program and healthcare generally, are complex and subject to interpretation. The Company believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrongdoing. While no regulatory inquiries have been made, compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from the Medicare and Medi-Cal programs.
Many of the Company’s payor and provider contracts are complex in nature and may be subject to differing interpretations regarding amounts due for the provision of medical services. Such differing interpretations may not come to light until a substantial period of time has passed following contract implementation. Liabilities for claims disputes are recorded when the loss is probable and can be estimated. Any adjustments to reserves are reflected in current operations. The Company does not have any reserves for regulatory matters as of June 30, 2025 and December 31, 2024.
Liability Insurance
The Company believes that its insurance coverage is appropriate based upon the Company’s claims experience and the nature and risks of the Company’s business. In addition to the known incidents that have resulted in the assertion of claims, the Company cannot be certain that its insurance coverage will be adequate to cover liabilities, arising out of claims asserted against the Company or the Company’s affiliated professional organizations, in the future where the outcomes of such claims are unfavorable.
The Company believes that the ultimate resolution of all pending claims, including liabilities in excess of the Company’s insurance coverage, will not have a material adverse effect on the Company’s financial position, results of operations or cash flows; however, there can be no assurance that future claims will not have such a material adverse effect on the Company’s business. Contracted physicians are required to obtain their own insurance coverage.
Guarantees
The Company, along with certain of the Company's subsidiaries from time to time party to the Facility Agreement (“Guarantors”), have pledged a first priority perfected lien on substantially all of their respective personal and real property, as collateral security for the payment of outstanding obligations, under the Facility Agreement.
Note 16. Variable Interest Entities
The Company prepares its condensed consolidated financial statements in accordance with Accounting Standards Codification Topic No. 810, Consolidations (“ASC 810”), which provides for the consolidation of VIEs of which an entity is the primary beneficiary.
Pursuant to the MSAs established with the TOI PCs, TOI Management is entitled to receive a management fee, which represents a variable interest in and the right to receive the benefits of the TOI PCs. Through the terms of the MSAs, TOI Management receives the right to direct the most significant activities of the TOI PCs. Therefore, the TOI PCs are variable interest entities and TOI Management is the primary beneficiary that consolidates the TOI PCs, and their subsidiaries.
The condensed consolidated financial statements include the accounts of TOI and its subsidiaries and VIEs. All inter-company profits, transactions, and balances have been eliminated upon consolidation. The following summarizes the assets and liabilities of the VIEs included in the accompanying condensed consolidated balance sheets.
| (in thousands) | June 30, 2025 | December 31, 2024 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Other receivables | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
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| (in thousands) | June 30, 2025 | December 31, 2024 | |||||||||
| Property and equipment, net | |||||||||||
| Other assets | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Amounts due to affiliates | |||||||||||
| Total current liabilities | |||||||||||
| Other non-current liabilities | |||||||||||
| Total liabilities | $ | $ | |||||||||
Note 17. Goodwill and Intangible Assets
The Company accounts for goodwill at acquisition-date fair value and other intangible assets at acquisition-date fair value less accumulated amortization. See Note 2 for a summary of the Company’s policies relating to goodwill.
Intangible Assets
As of June 30, 2025, the Company’s intangible assets, net consists of the following:
| (in thousands) | Weighted average amortization period | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||||||||||
| Intangible assets | |||||||||||||||||||||||
| Amortizing intangible assets: | |||||||||||||||||||||||
| Payor contracts | $ | $ | ( | $ | |||||||||||||||||||
| Trade names | ( | ||||||||||||||||||||||
| Noncompete agreements | ( | ||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | |||||||||||||||||||
As of December 31, 2024, the Company’s intangible assets, net consists of the following:
| (in thousands) | Weighted average amortization period | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||||||||||
| Intangible assets | |||||||||||||||||||||||
| Amortizing intangible assets: | |||||||||||||||||||||||
| Payor contracts | $ | $ | ( | $ | |||||||||||||||||||
| Trade names | ( | ||||||||||||||||||||||
| Clinical contracts and noncompete agreements | ( | ||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | |||||||||||||||||||
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The estimated aggregate amortization expense for each of the five succeeding fiscal years as of June 30, 2025 is as follows:
| (in thousands) | Amount | ||||
| Year ending December 31: | |||||
| 2025 (remaining six months) | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total | $ | ||||
The aggregate amortization expense during the three months ended June 30, 2025 and 2024 was $773 1,547
Goodwill
The Company evaluates goodwill at the reporting unit level, which, for the Company, is at the level of the reportable segments, dispensary, patient services, and clinical trials & other. The goodwill allocated to each of the reporting units as of June 30, 2025 and December 31, 2024 is as follows:
| (in thousands) | June 30, 2025 | December 31, 2024 | |||||||||
| Patient services | $ | $ | |||||||||
| Dispensary | |||||||||||
| Clinical trials & other | |||||||||||
| Total goodwill | $ | $ | |||||||||
There was $7,230
Note 18. Net Loss Per Share
The following table sets forth the computation of the Company's basic and diluted net loss per share to common stockholders for the three and six months ended June 30, 2025 and 2024.
| (in thousands, except share data) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net loss attributable to TOI | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net loss attributable to TOI available for distribution | ( | ( | ( | ( | |||||||||||||||||||
| Net loss attributable to participating securities, basic and diluted | ( | ( | ( | ( | |||||||||||||||||||
| Net loss attributable to common stockholders, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted average common shares outstanding, basic and diluted | |||||||||||||||||||||||
| Net loss income per share attributable to common stockholders, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
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The following potentially dilutive outstanding securities were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Convertible note | |||||||||||||||||||||||
| Stock options | |||||||||||||||||||||||
| RSUs | |||||||||||||||||||||||
| Earnout Shares | |||||||||||||||||||||||
| Public Warrants | |||||||||||||||||||||||
| Private Warrants | |||||||||||||||||||||||
| Common Warrants in connection with private placement | |||||||||||||||||||||||
| Pre-Funded Warrants in connection with private placement | |||||||||||||||||||||||
Note 19. Segment Information
The Company operates its business and reports its results through three
Summarized financial information for the Company’s segments is shown in the following tables:
| (in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Patient services | $ | $ | $ | $ | |||||||||||||||||||
| Dispensary | |||||||||||||||||||||||
| Clinical trials & other | |||||||||||||||||||||||
| Consolidated revenue | $ | $ | $ | $ | |||||||||||||||||||
| Direct costs | |||||||||||||||||||||||
| Intravenous (IV) drug costs | $ | $ | $ | $ | |||||||||||||||||||
| Clinician salaries and benefits | |||||||||||||||||||||||
| Medical supplies and other | |||||||||||||||||||||||
| Total patient services (A) | $ | $ | $ | $ | |||||||||||||||||||
| Dispensary (B) | |||||||||||||||||||||||
| Clinical trials & other (C) | |||||||||||||||||||||||
| Total segment direct costs | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation expense | |||||||||||||||||||||||
| Patient services | $ | $ | $ | $ | |||||||||||||||||||
| Dispensary | |||||||||||||||||||||||
| Clinical trials & other | |||||||||||||||||||||||
| Total segment depreciation expense | $ | $ | $ | $ | |||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Patient services | $ | $ | $ | $ | |||||||||||||||||||
| Clinical trials & other | |||||||||||||||||||||||
| Total segment amortization | $ | $ | $ | $ | |||||||||||||||||||
| Operating income | |||||||||||||||||||||||
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| (in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Patient services | $ | $ | $ | $ | |||||||||||||||||||
| Dispensary | |||||||||||||||||||||||
| Clinical trials & other | |||||||||||||||||||||||
| Total segment operating income | $ | $ | $ | $ | |||||||||||||||||||
| Other items not allocated to segments: | |||||||||||||||||||||||
| Selling, general and administrative expense | $ | $ | $ | $ | |||||||||||||||||||
| Non-segment depreciation and amortization | |||||||||||||||||||||||
| Total consolidated operating loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Change in fair value of derivative warrant liabilities | ( | ( | |||||||||||||||||||||
| Change in fair value of conversion option derivative liabilities | ( | ( | |||||||||||||||||||||
| Other, net | |||||||||||||||||||||||
| Consolidated loss before provision for income taxes | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| (in thousands) | June 30, 2025 | December 31, 2024 | |||||||||
| Assets | |||||||||||
| Capitated accounts receivable | $ | $ | |||||||||
| FFS accounts receivable | |||||||||||
| IV drug inventory | |||||||||||
| Other assets | |||||||||||
| Patient services | |||||||||||
| Oral drug accounts receivable | |||||||||||
| Oral drug inventory | |||||||||||
| Other assets | |||||||||||
| Dispensary | |||||||||||
| Clinical trials & other | |||||||||||
| Non-segment assets | |||||||||||
| Total assets | $ | $ | |||||||||
The Company’s chief operating decision maker "or CODM" is the Chief Executive Officer. The CODM uses segment operating income to allocate resources (including employees, property, and financial or capital resources) for each segment predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a monthly basis when making decisions about allocating capital and personnel to the segments. The CODM also uses segment operating income for evaluating drug pricing to assess each segment’s performance by comparing the results and return on assets of each segment with one another and in the compensation of specific employees.
(A) Direct costs - patient services primarily includes chemotherapy drug costs, clinician salaries and benefits, and medical supplies. Clinicians include oncologists, advanced practice providers such as physician assistants and nurse practitioners, and registered nurses employed by the TOI PCs. These costs are regularly provided to the CODM to evaluate IV drug costs and clinician performance.
(B) Direct costs - dispensary primarily includes the cost of oral medications dispensed in the TOI PCs’ clinic locations. The CODM regularly reviews these costs evaluate drug margins, compression, and to evaluate suppliers.
(C) Direct costs - clinical trials & other primarily includes costs related to clinical trial contracts and medical supplies.
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Note 20. Related Party Transactions
Related party transactions include payments for consulting services provided to the Company, clinical trials, board fees and expenses. Related party payments for the three and six months ended June 30, 2025 and 2024 were as follows:
| (in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||
| Type | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
| Karen M Johnson | Board Fees | $ | $ | $ | $ | |||||||||||||||||||||
| Richard Barasch | Board Fees | |||||||||||||||||||||||||
| Anne M. McGeorge | Board Fees | |||||||||||||||||||||||||
| Mohit Kaushal | Board Fees | |||||||||||||||||||||||||
| Maeve O'Meara Duke | Board Fees | |||||||||||||||||||||||||
| M33 Growth LLC (Gabe Ling) | Board Fees | |||||||||||||||||||||||||
| Mark L. Pacala | Board Fees | |||||||||||||||||||||||||
| Brad Hively | Board Fees | |||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of the consolidated results of operations and financial condition of The Oncology Institute, Inc. ("TOI") along with its consolidating subsidiaries (the "Company"). The discussion should be read together with the unaudited condensed consolidated financial statements and the related notes that are included elsewhere in this Report. The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements are based upon current expectations, as well as management's beliefs and assumptions and involve a high degree of risk and uncertainty. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Statements that include the words "believes," "anticipates," "plans," "expects." "intends," and similar expressions that convey uncertainty of future events or outcomes are forward-looking statements. Our actual results could differ materially from those discussed or suggested in the forward-looking statements herein. Factors that could cause or contribute to such differences include those described under the heading "Risk Factors" (Item 1A) in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed on March 26, 2025. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements in this document are based on information available to us as of the filing date of this Quarterly Report on Form 10-Q and we assume no obligation to update any forward-looking statements or the reasons why our actual results may differ. All dollar values are expressed in thousands, unless otherwise noted.
Unless the context dictates otherwise, references in this Report on Form 10-Q to the “Company,” “we,” “us,” “our,” and similar words are references to The Oncology Institute, Inc., a Delaware corporation (“TOI”), and its consolidated subsidiaries and affiliated entities, as appropriate, including its consolidated variable interest entities (“VIEs”).
Overview
The Oncology Institute, Inc. (“TOI”), originally founded in 2007, is a leading, national platform delivering integrated direct care and cost management to patients and payors who are experiencing or managing members undergoing treatment for cancer and other complex medical conditions.
Through wholly-owned subsidiaries and affiliated entities, TOI operates combined community clinics and infusion suites staffed with providers who administer latest-generation cancer treatments including chemotherapy, immunotherapy, oncolytics, and radiation oncology. Additionally, TOI provides coordinated case management, drug formulary management, and fully-delegated networks of care providers, all of which we use to drive improved treatment outcomes at the lowest possible cost to our patients and payors. Additionally, TOI operates a specialty pharmacy that includes both in-office and mail-order dispensing for complementary oral and self-injectable medications taken by our patients concurrent with their in-office cancer therapies. Given the scale, breadth, and depth of our oncological expertise, TOI also contributes significantly to clinical research in the fields of oncology, hematology, and supportive medications and devices.
The Company has 121 oncologists and mid-level professionals across 66 clinic locations located within five states: California, Florida, Arizona, Oregon and Nevada. The Company has contractual relationships with multiple payors, serving Medicare, including Medicare Advantage, Medi-Cal, and commercial patients.
Components of Results of Operations
Revenue
The Company receives payments from the following sources for services rendered: (i) commercial insurers; (ii) pharmacy benefit managers (“PBMs”), (iii) the federal government under the Medicare program administered by the Centers for Medicare and Medicaid Services (“CMS”); (iv) state governments under Medicaid and other programs; (v) other third-party payors and managed care organizations (e.g., risk bearing organizations and independent practice associations (“IPAs”)); and (vi) individual patients and clients.
Revenue primarily consists of capitation revenue, fee-for-service (“FFS”) revenue, dispensary revenue, and clinical trials revenue. Capitation and FFS revenue comprise the revenues within the Company’s patient services segment and are presented together in the results of operations. The following paragraphs provide a summary of the principal forms of our billing arrangements and how revenue is recognized for each type of revenue.
Capitation
Capitation revenues consist primarily of fees for medical services provided by the TOI PCs to the Company's patients under a capitated arrangement with various managed care organizations. Capitation revenue is paid monthly based on the
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number of enrollees by the contracted managed care organization (per member per month or “PMPM”). Capitation contracts generally have a legal term of one year or longer. Payments in capitation contracts are variable since they primarily include PMPM fees associated with unspecified membership that fluctuates throughout the term of the contract; however, based on our experience, our total underlying membership generally increases over time as penetration of Medicare Advantage products grows. Certain contracts include terms for a capitation deduction where the cost of out-of-network referrals of members are deducted from the future payment. Revenue is recognized in the month services are rendered on the basis of the transaction price established at that time.
Fee-for-service revenue
FFS revenue represents revenue earned under contracts in which we bill and collect for specific medical services rendered by the TOI PCs’ employed physicians. The terms for FFS contracts are short in duration and only last for the period over which services are rendered (typically, one day). FFS revenue consists of fees for medical services provided to patients. As specialist providers, our FFS revenue is dependent on referrals from other physicians, such as primary care physicians. The Company's affiliated providers build trusted, professional relationships with these physicians and their associated medical groups, which can lead to recurring FFS volume; however, this volume is subject to numerous factors the Company cannot control and can fluctuate over time. The Company also receives FFS revenue for capitated patients that receive medical services which are excluded from the Company's capitation contracts. Under the FFS arrangements, third-party payors and patients are billed for patient care services provided by the TOI PCs. Payments for services provided are generally less than billed charges. The Company records revenue net of an allowance for contractual adjustments, which represents the net revenue expected to be collected from third-party payors (including managed care, commercial, and governmental payors such as Medicare and Medicaid), and patients. These expected collections are based on fees and negotiated payment rates in the case of third-party payors, the specific benefits provided for under each patient’s healthcare plan, mandated payment rates in the case of Medicare and Medicaid programs, and historical cash collections (net of recoveries). The recognition of net revenue (gross charges less contractual allowances) from such services is dependent on certain factors, such as the proper completion of medical charts following a patient visit, the forwarding of such charts to our billing center for medical coding and entering into the Company's billing system, and the verification of each patient’s submission or representation at the time services are rendered as to the payor(s) responsible for payment of such services. Revenue is recorded on the date the services are rendered based on the information known at the time of entering of such information into the Company's billing systems as well as an estimate of the revenue associated with medical services.
Dispensary and pharmacy
Oral prescription drugs prescribed by doctors to their patients are sold directly through the TOI PCs’ dispensaries. Revenue for the prescriptions is based on fee schedules set by various PBMs and other third-party payors. The fee schedule is often subject to direct and indirect remuneration (“DIR”) fees, which are based primarily on pre-established metrics. DIR fees may be assessed in the periods after payments are received against future payments. The Company recognizes revenue, deducted by estimated DIR fees, at the time the patient takes possession of the oral drug.
Clinical trials & other revenue
The TOI PCs also enter into contracts to perform clinical research trials. The terms for clinical trial contracts last many months as the clinical research is performed. Each contract represents a single, integrated set of research activities that are satisfied over time as the output of results from the trial is captured for the trial sponsor to review. Under the clinical trial contracts, the TOI PCs receive a fixed payment for administrative, set-up, and close-down fees; a fixed amount for each patient site visit; and certain expense reimbursements. The Company recognizes revenue for these arrangements on the fees earned to date based on the state of the trial, as established under contract with the customer.
Operating Expenses
Direct costs - patient services
Direct costs - patient services primarily includes chemotherapy drug costs, clinician salaries and benefits, and medical supplies. Clinicians include oncologists, advanced practice providers such as physician assistants and nurse practitioners, and registered nurses employed by the TOI PCs.
Direct costs - dispensary
Direct costs - dispensary primarily includes the cost of oral medications dispensed in the TOI PCs’ clinic locations.
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Direct costs - clinical trials & other
Direct costs - clinical trials & other primarily includes costs related to clinical trial contracts and medical supplies.
Selling, general and administrative expense
Selling, general and administrative expenses include employee-related expenses, including both clinic and field support staff as well as central administrative and corporate staff. These expenses include salaries and related costs and stock-based compensation for our executives and physicians. The Company's selling, general and administrative expenses also includes occupancy costs, technology infrastructure, operations, clinical and quality support, finance, legal, human resources, and business development. Following the consummation of the Business Combination, general and administrative expenses have increased, and the Company expects continued increases over time, due to the additional legal, accounting, insurance, investor relations and other costs that the Company incurs as a public company, as well as other costs associated with continuing to grow the business. While the Company expects its selling, general and administrative expenses to increase in absolute dollars in the foreseeable future. such expenses are on average expected to decrease as a percentage of revenue over the long term.
Results of Operations
The following table sets forth our Condensed Consolidated Statements of Operations data expressed as a percentage of total revenues for the periods indicated. The Company’s management is not aware of material events or uncertainties that would cause the financial information below to not be indicative of future operating results or results of future financial condition, although past results should not be relied upon as an indication of future performance or future financial condition.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Patient services | 46.7 | % | 53.2 | % | 48.6 | % | 54.3 | % | |||||||||||||||
| Dispensary | 52.2 | % | 45.1 | % | 49.9 | % | 43.5 | % | |||||||||||||||
| Clinical trials & other | 1.1 | % | 1.7 | % | 1.5 | % | 2.2 | % | |||||||||||||||
| Total operating revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Direct costs – patient services | 42.7 | % | 47.2 | % | 43.8 | % | 49.7 | % | |||||||||||||||
| Direct costs – dispensary | 42.6 | % | 39.4 | % | 40.6 | % | 37.1 | % | |||||||||||||||
| Direct costs – clinical trials & other | 0.1 | % | 0.2 | % | 0.1 | % | 0.3 | % | |||||||||||||||
| Selling, general and administrative expense | 22.5 | % | 28.3 | % | 23.3 | % | 29.1 | % | |||||||||||||||
| Depreciation and amortization | 1.5 | % | 1.5 | % | 1.6 | % | 1.6 | % | |||||||||||||||
| Total operating expenses | 109.4 | % | 116.6 | % | 109.4 | % | 117.8 | % | |||||||||||||||
| Loss from operations | (9.4) | % | (16.6) | % | (9.4) | % | (17.8) | % | |||||||||||||||
| Other non-operating expense (income) | |||||||||||||||||||||||
| Interest expense, net | 1.6 | % | 2.1 | % | 3.3 | % | 2.1 | % | |||||||||||||||
| Change in fair value of derivative warrant liabilities | — | % | (0.6) | % | (0.3) | % | |||||||||||||||||
| Change in fair value of earnout liabilities | — | % | — | % | |||||||||||||||||||
| Change in fair value of conversion option derivative liabilities | 3.3 | % | (2.6) | % | 3.3 | % | (1.3) | % | |||||||||||||||
| Other, net | — | % | 0.1 | % | 0.4 | % | 0.1 | % | |||||||||||||||
| Total other non-operating loss (income) | 4.9 | % | (1.0) | % | 7.0 | % | 0.6 | % | |||||||||||||||
| Loss before provision for income taxes | (14.3) | % | (15.6) | % | (16.4) | % | (18.4) | % | |||||||||||||||
| Income tax benefit | 0.1 | % | — | % | 0.1 | % | — | % | |||||||||||||||
| Net loss | (14.2) | % | (15.6) | % | (16.3) | % | (18.4) | % | |||||||||||||||
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Comparison of the Three and Six Months Ended June 30, 2025 and 2024
Revenue
| Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | |||||||||||||||||||||||||||||||||||||||
| Patient services | $ | 55,891 | $ | 52,461 | $ | 3,430 | 6.5 | % | $ | 108,959 | $ | 104,914 | $ | 4,045 | 3.9 | % | |||||||||||||||||||||||||||||||
| Dispensary | 62,573 | 44,440 | 18,133 | 40.8 | % | 111,866 | 84,119 | 27,747 | 33.0 | % | |||||||||||||||||||||||||||||||||||||
| Clinical trials & other | 1,338 | 1,677 | (339) | (20.2) | % | 3,383 | 4,211 | (828) | (19.7) | % | |||||||||||||||||||||||||||||||||||||
| Total operating revenue | $ | 119,802 | $ | 98,578 | $ | 21,224 | 21.5 | % | $ | 224,208 | $ | 193,244 | $ | 30,964 | 16.0 | % | |||||||||||||||||||||||||||||||
Patient services
The increase in patient services revenue for the three and six months ended June 30, 2025 compared to the same periods in the prior year was primarily due to a 9.6% and 5.8% increase in FFS revenue, respectively. This was driven by momentum in new markets in addition to the impact of our investments in referral relationship management and call center expansion.
Dispensary
The increase in dispensary revenue for three months ended June 30, 2025 as compared to the same quarter prior year was primarily due to a 102.8% increase in the number of fills due to the continued growth in the attachment of prescriptions to our patient visits, offset by a 30.6% decrease in the average revenue per fill. Dispensary revenue increased 33.0% for the six months ended June 30, 2025 as compared to same quarter prior year primarily driven by increases in both our capitated and fee-for-service lives, and improved performance of our retail and MID pharmacies.
Clinical trials & other
The decrease in clinical trials and other revenue was due to the profit sharing agreement as described in Note 1 of the financial statements, compared to the three and six months ended June 30, 2024.
Operating Expenses
| Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | |||||||||||||||||||||||||||||||||||||||
| Direct costs – patient services | $51,150 | $ | 46,522 | $ | 4,628 | 9.9 | % | $98,230 | $ | 96,019 | $ | 2,211 | 2.3 | % | |||||||||||||||||||||||||||||||||
| Direct costs – dispensary | 51,086 | 38,801 | 12,285 | 31.7 | % | 90,949 | 71,610 | 19,339 | 27.0 | % | |||||||||||||||||||||||||||||||||||||
| Direct costs – clinical trials & other | 65 | 229 | (164) | (71.6) | % | 279 | 620 | (341) | (55.0) | % | |||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expense | 26,907 | 27,872 | (965) | (3.5) | % | 52,283 | 56,324 | (4,041) | (7.2) | % | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 1,805 | 1,518 | 287 | 18.9 | % | 3,589 | 3,007 | 582 | 19.4 | % | |||||||||||||||||||||||||||||||||||||
| Total operating expenses | $131,013 | $ | 114,942 | $ | 16,071 | 14.0 | % | $245,330 | $ | 227,580 | $ | 17,750 | 7.8 | % | |||||||||||||||||||||||||||||||||
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Patient services cost
The increase in patient services cost for the three months ended June 30, 2025 as compared to the same quarter prior year was primarily due to a 5.1% increase in intravenous drug costs, driven by the Company's patient mix and volume, as well as 1.8% decrease in clinical payroll costs as the Company adjusts physician compensation to better match performance, as well as increases use of advanced practice providers which results in a more efficient labor mix. Patient service costs for the six months ended June 30, 2025 as compared to the same period prior year were relatively stable as both revenue and margin in both capital and fee-for-service increased.
Dispensary cost
The increase in dispensary cost for the three months ended June 30, 2025 was primarily due to a 102.8% increase in the number of prescriptions filled offset by a 35.1% decrease in the average cost of the prescriptions filled, as compared to the three months ended June 30, 2024. The increase in dispensary cost for the six months ended June 30, 2025 was primarily due to a 84% increase in the number of prescriptions filled offset by a 30.1% decrease in the average cost of the prescriptions filled, as compared to the six months ended June 30, 2024.
Selling, general and administrative expense
Selling, general and administrative ("SG&A") expenses in Q2 2025 were $26.9 million, compared with $27.9 million, in Q2 2024. SG&A for the three months ended June 30, 2025 decreased 3.5% as compared to the same quarter prior year. SG&A for the six months ended June 30, 2025 decreased 7.2% as compared to the same quarters prior year. The decrease in SG&A expenses was due to our cost discipline and operational efficiency. We think there is further leverage in the model with increased scale, as well as the adoption of AI enablement we noted on our first quarter call. We are planning to launch AI pilots around prior-authorization and denial automation, and to launch a next-generation call center in the third quarter.
Other Non-Operating Expense (Income)
| Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | |||||||||||||||||||||||||||||||||||||||
| Interest expense, net | $ | 1,870 | $ | 2,118 | $ | (248) | (11.7) | % | $ | 7,440 | $ | 4,103 | $ | 3,337 | 81.3 | % | |||||||||||||||||||||||||||||||
| Change in fair value of derivative warrant liabilities | 53 | (552) | 605 | (109.6) | % | 96 | (552) | 648 | (117.4) | % | |||||||||||||||||||||||||||||||||||||
| Change in fair value of conversion option derivative liabilities | 3,987 | (2,568) | 6,555 | (255.3) | % | 7,296 | (2,568) | 9,864 | (384.1) | % | |||||||||||||||||||||||||||||||||||||
| Other, net | 19 | 117 | (98) | (83.8) | % | 771 | 49 | 722 | 1473.5 | % | |||||||||||||||||||||||||||||||||||||
| Total other non-operating loss | $ | 5,929 | $ | (885) | $ | 6,814 | (769.9) | % | $ | 15,603 | $ | 1,032 | $ | 14,571 | 1,411.9 | % | |||||||||||||||||||||||||||||||
Interest expense, net
The increase in interest expense for the six months ended June 30, 2025 compared to the prior year same quarter was primarily the result of a prepayment related to the Senior Secured Convertible Note in which the Company recognized a loss of extinguishment of debt of $2,900 during the first quarter of 2025, offset by accretion related to marketable treasury securities. The decrease in interest expense for the three months ended June 30, 2025 as compared to the prior year same quarter was primarily the result of the February 2025 prepayment related to the Senior Secured Convertible Note causing a decrease in interest expense related to the debt.
Change in fair value of liabilities
The increase in the fair value of liabilities was primarily due to a $3,987 and $7,296 unfavorable increase in the fair value of conversion option derivative liabilities for the three and six months ended June 30, 2025, respectively, compared to $(2,568) change in the fair value of the conversion option derivative liabilities for the three and six months ended June 30, 2024.
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Key Business Metrics
In addition to our financial information, the Company's management reviews a number of operating and financial metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||
Clinics (1) | 80 | 87 | 80 | 87 | ||||||||||||||||
| Markets | 20 | 14 | 20 | 14 | ||||||||||||||||
| Lives under value-based contracts (millions) | 1.9 | 2.0 | 1.9 | 2.0 | ||||||||||||||||
Adjusted EBITDA (in thousands) (2) | $ | (4,089) | $ | (8,709) | $ | (9,198) | $ | (19,650) | ||||||||||||
(1) Includes independent oncology practices to which we provide limited management services, but do not bear the operating costs.
(2) Adjusted EBITDA is a "non-GAAP" financial measure within the meaning of Item 10 of Regulation S-K promulgated by the SEC. The Company defines Adjusted EBITDA as net income (loss) adjusting for:
•Depreciation and amortization,
•Interest expense, net,
•Income tax and other taxes
•Non-cash addbacks,
•Share-based compensation,
•Goodwill impairment charges
•Changes in fair value of liabilities,
•Unrealized (gains) losses on investments
•Practice acquisition-related costs,
•Post combination compensation expense,
•Consulting and legal fees,
•Infrastructure and workforce costs, and
•Transaction costs.
The Company includes Adjusted EBITDA because it is an important measure which our management uses to assess the results of operations, to evaluate factors and trends affecting the business, and to plan and forecast future periods.
Management believes that this measure provides an additional tool to assess operational performance and trends in, and comparing our financial measures with, other similar companies, many of which present similar non-GAAP financial measures to investors. Be aware that the Company’s non-GAAP financial measure may be different from the non-GAAP financial measures used by other companies, including the Company’s competitors. The use of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial measures determined in accordance with GAAP. Management encourages investors and others to review the Company's financial information in its entirety, including the financial statements and the related notes thereto, and not to rely on any single financial measure.
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The following tables provide a reconciliation of net loss, the most closely comparable GAAP financial measure, to Adjusted EBITDA:
| Three Months Ended June 30, | Change | ||||||||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Net loss | $ | (17,009) | $ | (15,479) | $ | (1,530) | 9.9 | % | |||||||||||||||
| Depreciation and amortization | 1,805 | $ | 1,518 | 287 | 18.9 | % | |||||||||||||||||
| Interest expense, net | 1,870 | $ | 2,119 | (249) | (11.8) | % | |||||||||||||||||
| Income tax and other taxes | (61) | $ | — | (61) | — | % | |||||||||||||||||
Non-cash addbacks(1) | 2,222 | $ | (69) | 2,291 | (3,320.3) | % | |||||||||||||||||
| Share-based compensation | 752 | $ | 3,387 | (2,635) | (77.8) | % | |||||||||||||||||
| Changes in fair value of liabilities | 4,040 | $ | (3,120) | 7,160 | (229.5) | % | |||||||||||||||||
| Unrealized (gains) losses on investments | — | $ | (34) | 34 | (100.0) | % | |||||||||||||||||
Post-combination compensation expense(2) | 13 | $ | 186 | (173) | (93.0) | % | |||||||||||||||||
Consulting and legal fees(3) | 507 | $ | 244 | 263 | 107.8 | % | |||||||||||||||||
Infrastructure and workforce costs(4) | 1,771 | $ | 2,539 | (768) | (30.2) | % | |||||||||||||||||
Transaction costs(5) | 1 | $ | — | 1 | — | ||||||||||||||||||
| Adjusted EBITDA | $ | (4,089) | $ | (8,709) | $ | 4,620 | (53.0) | % | |||||||||||||||
(1) During the three months ended June 30, 2025, non-cash addbacks was primarily comprised of the write-off of the net assets of the Clinical Trials segment of $2,398.
(2) Deferred consideration payments for practice acquisitions that are contingent upon the seller’s future employment at the Company.
(3) Consulting and legal fees were comprised of a subset of the Company’s total consulting and legal fees, and related to certain advisory projects during the three months ended June 30, 2025. During the three months ended June 30, 2024, these fees related to advisory projects and software implementations.
(4) Infrastructure and workforce costs were comprised of recruiting expenses to build out corporate infrastructure of $150 and $336, software implementation fees of $0 and $36, severance expenses resulting from cost rationalization programs of $49 and $141, temporary labor of $35 and $74, stop-loss contract timing of approximately $1,099 and $0, and legal fees related to infrastructure build out of $487 and $1,830 during the three months ended June 30, 2025 and 2024, respectively.
(5) Transaction costs incurred during the three months ended June 30, 2025 were comprised of consulting, legal, administrative and regulatory fees associated with non-recurring due diligence projects.
| Six Months Ended June 30, | Change | ||||||||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Net loss | $ | (36,594) | $ | (35,368) | $ | (1,226) | 3.5 | % | |||||||||||||||
| Depreciation and amortization | 3,589 | 3,007 | 582 | 19.4 | % | ||||||||||||||||||
| Interest expense, net | 7,440 | 4,103 | 3,337 | 81.3 | % | ||||||||||||||||||
| Income tax and other taxes | (61) | — | (61) | — | % | ||||||||||||||||||
Non-cash addbacks(1) | 2,059 | (108) | 2,167 | (2,006.5) | % | ||||||||||||||||||
| Share-based compensation | 2,210 | 7,474 | (5,264) | (70.4) | % | ||||||||||||||||||
| Changes in fair value of liabilities | 7,392 | (3,120) | 10,512 | (336.9) | % | ||||||||||||||||||
| Unrealized (gains) losses on investments | 6 | (116) | 122 | (105.2) | % | ||||||||||||||||||
Post-combination compensation expense(2) | 26 | 316 | (290) | (91.8) | % | ||||||||||||||||||
Consulting and legal fees(3) | 839 | 420 | 419 | 99.8 | % | ||||||||||||||||||
Infrastructure and workforce costs(4) | 3,895 | 3,724 | 171 | 4.6 | % | ||||||||||||||||||
Transaction costs(5) | 1 | 18 | (17) | (94.4) | % | ||||||||||||||||||
| Adjusted EBITDA | $ | (9,198) | $ | (19,650) | $ | 10,452 | (53.2) | % | |||||||||||||||
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(1) During the six months ended June 30, 2025, non-cash addbacks was primarily comprised of the write-off of the net assets of the Clinical Trials segment of $2,398. During the six months ended June 30, 2024, non-cash addbacks were primarily comprised of non-cash rent of $158, offset by net reversal of bad debt recovery of $50.
(2) Deferred consideration payments for practice acquisitions that are contingent upon the seller’s future employment at the Company.
(3) Consulting and legal fees were comprised of a subset of the Company’s total consulting and legal fees, and related to certain non-recurring advisory projects during the six months ended June 30, 2025 and 2024.
(4) Infrastructure and workforce costs were primarily comprised of non-recurring legal fees related to infrastructure build out of $1,269 and $2,359, recruiting expenses to build out corporate infrastructure of $427 and $712, severance expenses resulting from cost rationalization programs of $189 and $151, stop-loss contract timing of approximately $1,099, and temporary labor of $215 and $326 during the six months ended June 30, 2025 and 2024, respectively.
(5) Transaction costs incurred during the six months ended June 30, 2025 and 2024 were comprised of consulting, legal, administrative and regulatory fees associated with non-recurring due diligence projects.
Liquidity and Capital Resources
General
The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. In connection with the preparation of the condensed consolidated financial statements for the three and six months ended June 30, 2025, the Company conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to its ability to continue as a going concern within one year after the date of the issuance of such financial statements. The Company had cash and cash equivalents of $30,292 and an accumulated deficit of $247,407 at June 30, 2025, and a net loss of $36,594 and net cash used in operations of $15,190 for the six months ended June 30, 2025. In February 2025, the Company entered into an Amendment to the Facility Agreement (see Note 11 - Debt) in which the Company made a partial prepayment of approximately $20,000 together with accrued and unpaid interest. Among other items, the Amendment provided for the removal of the financial covenant that required the Company to hold at least $40,000 of cash and cash equivalents in accounts that are subject to control agreements in favor of the Agent. Additionally, on March 24, 2025, the Company entered into a securities purchase agreement for a private placement that resulted in gross proceeds of approximately $16,500 to the Company before deducting placement agent fees and offering expenses (see Note 13 - Stockholders' Equity). Additionally, the Company's lender and existing investor, entered into an exchange agreement, in which approximately $4,100 aggregate principal amount of the Company's senior secured convertible notes was exchanged for common-equivalent preferred stock and warrants for common stock.
The Company has also taken a number of other actions to increase cash flow. As one of our strategic priorities in 2024 and beyond, the Company implemented an initiative to eliminate cash burn. Due to efforts towards working capital management that saw improvements across receivables, inventory, and payables, the Company was able to improve cash flow from operations of approximately $16,353 for the six months ended June 30, 2025 over the prior year same period. Additionally, we generated a 3.5% reduction in SG&A expenses compared to the prior year same quarter directly as a result of our ongoing efforts to streamline operations, improve efficiency, and optimize our overhead resourcing.
Accordingly, the Company has concluded that it will have sufficient liquidity to fund its operations for at least one year from the date these consolidated financial statements are issued.
Although the Company currently expects its sources of capital to be sufficient to meet its near-term liquidity needs, there can be no assurance that such sources will be sufficient to satisfy its liquidity requirements in the future. If the Company cannot generate or obtain needed funds, it might be forced to make substantial reductions in its operating and capital expenses or pursue restructuring plans, which could adversely affect its business operations and ability to execute its current business strategy.
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Cash Flows
The following table presents a summary of the Company's consolidated cash flows from operating, investing, and financing activities for the periods indicated.
| Six Months Ended June 30, | Change | ||||||||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Net cash and cash equivalents used in operating activities | $ | (15,190) | $ | (31,543) | $ | 16,353 | (52) | % | |||||||||||||||
| Net cash and cash equivalents (used in) provided by investing activities | (1,410) | 37,564 | (38,974) | (104) | % | ||||||||||||||||||
| Net cash and cash equivalents used in financing activities | (2,777) | (3,085) | 308 | (10) | % | ||||||||||||||||||
| Net (decrease) increase in cash and cash equivalents | $ | (19,377) | $ | 2,936 | $ | (22,313) | (760) | % | |||||||||||||||
| Cash and cash equivalents at beginning of period | 49,669 | 33,488 | 16,181 | 48 | % | ||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 30,292 | $ | 36,424 | $ | (6,132) | (17) | % | |||||||||||||||
Operating Activities
Significant changes impacting net cash and cash equivalents used in operating activities for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 were as follows:
•Increase in amortization of debt issuance cost and debt discount of $2,879 due to the decrease of the convertible note principal in connection with the debt amendment and exchange agreement;
•Write-off of net assets related to the clinical trials segment of $2,398.
•Increase in loss of $10,512 related to the change in the fair value of liabilities for the three months ended June 30, 2025 with no change occurring in the same quarter prior year;
•Share based compensation for the six months ended June 30, 2025 decreased by $5,264 compared to the six months ended June 30, 2024 due to the cancellation of earnout shares in November 2024;
•Cash used by accounts receivable decreased $2,688 for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 due to improvements in revenue cycle management in the current quarter and overall delays in the collection of accounts receivable in the same quarter prior year; and
•Cash provided by accounts payable and accrued expenses decreased by $10,878 for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 primarily due to the drug supply buy-in at quarter end.
Investing Activities
Net cash provided by investing activities decreased $38,974 for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 due to the increase in sales of marketable securities of $40,000 during the same period in the prior year, which did not occur in the current period.
Financing Activities
Net cash used in financing activities increased $308 for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to principal payments on the convertible note of $20,000, partially offset by proceeds from the private placement offering of $15,359 during the six months ended June 30, 2025. Prior year same period was primarily comprised of payments made for financing of insurance payments and payment of deferred consideration related to acquisitions of approximately $1,002 and $2,140, respectively.
Material Cash Requirements
The Company's material cash requirements for the following five years consist of debt servicing requirements, operating leases and other miscellaneous administrative expenses. Additionally, the Company is subject to certain outside claims and litigation arising out of the ordinary course of business, however, no such litigation requires future cash expenditure as of June 30, 2025.
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| Material Cash Requirements Due by the Year Ended December 31, | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2025 | 2026-2027 | 2028-2029 | Thereafter | Total | |||||||||||||||||||||||||||
Convertible note1 | $ | 1,756 | $ | 92,349 | $ | — | $ | — | $ | 94,105 | ||||||||||||||||||||||
Operating leases | 4,283 | 15,655 | 8,997 | 3,803 | 32,738 | |||||||||||||||||||||||||||
| Deferred acquisition and contingent consideration | 143 | — | — | — | 143 | |||||||||||||||||||||||||||
Other2 | 339 | 68 | — | — | 407 | |||||||||||||||||||||||||||
| Total material cash requirements | $ | 6,521 | $ | 108,072 | $ | 8,997 | $ | 3,803 | $ | 127,393 | ||||||||||||||||||||||
(1) Includes principal and interest payments due.
(2) Other is comprised of finance leases and D&O insurance premiums.
JOBS Act
The Company qualifies as an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and has elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company that is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ significantly from these estimates under different assumptions or conditions.
Our significant accounting policies are more fully described in the notes to our unaudited condensed consolidated financial statements elsewhere in this Quarterly Report on Form 10-Q. We believe that the following accounting policies reflects the most critical judgments and estimation uncertainty used in the preparation of our Condensed Consolidated Financial Results.
Variable Interest Entities
The Company consolidates entities for which it has a variable interest and is determined to be the primary beneficiary. The Company holds variable interests in the TOI PCs, comprised of TOI CA, TOI FL, TOI OR and TOI TX all of which the Company cannot legally own due to jurisdictional laws governing the corporate practice of medicine. The TOI PCs employ physicians and other clinicians in order to provide professional services to patients of our managed clinics, and under substantially similar MSAs, we serve as the exclusive manager and administrator of the TOI PCs’ non-medical functions and services. The TOI PCs are considered variable interest entities (“VIEs”) as they do not have sufficient equity to finance their activities without additional financial support from the Company. An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it has both power and benefits — that is, it has (1) the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance (power), and (2) the obligation to absorb the losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power to control all financial activities of the TOI PCs, the rights to receive substantially all benefits from the VIEs, and consequently consolidates the TOI PCs. Revenues, expenses, and income along
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with the balance sheet accounts from the TOI PCs are included in the consolidated amounts as presented on the Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets.
Segment Reporting
The Company presents the condensed consolidated financial statements by segment in accordance with the relevant accounting literature to provide investors with transparency into how the chief operating decision maker “or CODM” manages the business. The Company's CODM is our Chief Executive Officer. The CODM reviews financial information and allocates resources across two operating segments: dispensary and patient care.
Revenue Recognition
The Company recognizes consolidated revenue based upon the principle of the transfer of control of our goods and services to customers in an amount that reflects the consideration to which it expects to be entitled. This principle is achieved through applying the following five-step approach:
1.Identification of the contract, or contracts, with a customer.
2.Identification of the performance obligations in the contract.
3.Determination of the transaction price.
4.Allocation of the transaction price to the performance obligations in the contract.
5.Recognition of revenue when, or as, the entity satisfies a performance obligation.
Consolidated revenue primarily consists of capitation revenue, fee-for-service (FFS) revenue, dispensary revenue, and clinical trials revenue. Revenue is recognized in the period in which services are rendered or the period in which the TOI PCs are obligated to provide services. The form of billing and related risk of collection for such services may vary by type of revenue and the payor. The following paragraphs provide a summary of the principal forms of billing arrangements and how revenue is recognized for each.
Capitation
Capitation contracts have a single performance obligation that is a stand ready obligation to perform specified healthcare services to the population of enrolled members and constitutes a series for the provision of managed healthcare services for the term of the contract, which is deemed to be one month since the mix of patient-customers can and do change month over month. The transaction price for capitation contracts is variable as it primarily includes PMPM fees associated with unspecified membership that fluctuates throughout the term of the contract. Further, we adjust the transaction price for capitation deductions based on historical experience. Revenue is recognized in the month services are rendered on the basis of the transaction price established at that time. If subsequent information resolves uncertainties related to the transaction price, adjustments will be recognized in the period they are resolved. When payment has been received but services have not yet been rendered, the payment is recognized as a contract liability.
Fee For Service
FFS revenue consists of fees for medical services actually provided to patients. These medical services are distinct since the patient can benefit from the medical services on their own. Each service constitutes a single performance obligation for which the patient accepts and receives the benefit of the medical services as they are performed.
The transaction price from FFS arrangements is variable in nature because fees are based on patient encounters, credits due to patients, and reimbursement of provider costs, all of which can vary from period to period. The Company estimates the transaction price using the most likely methodology and amounts are only included in the net transaction price to the extent that it is probable that a significant reversal of cumulative revenue will not occur once any uncertainty is resolved. As a practical expedient, the Company adopted a portfolio approach to determine the transaction price for the medical services provided under FFS arrangements. Under this approach, the Company bifurcated the types of services provided and grouped health plans with similar fees and negotiated payment rates.
At these levels, portfolios share the characteristics conducive to ensuring that the results do not materially differ from the standard applied to individual patient contracts related to each medical service provided.
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Revenue is recorded on the date the services are rendered based on the information known at the time of entering of such information into our billing systems as well as an estimate of the revenue associated with medical services. When the performance obligation is not satisfied, the billing is recognized as a contract liability.
Dispensary
Dispensed prescriptions that are filled and delivered to the patient are considered a distinct performance obligation. The transaction price for the prescriptions is based on fee schedules set by PBMs and other third-party payors. The fee schedule is often subject to DIR fees, which are based primarily on pre-established metrics. DIR fees may be assessed in periods after payments are received against future payments. The Company estimates DIR fees to arrive at the transaction price for prescriptions. Revenue is recognized based on the transaction at the time the patient takes possession of the oral drug.
Clinical Research & Other
Clinical research contracts represent a single, integrated set of research activities and thus are a single performance obligation. The performance obligation is satisfied over time as the output is captured in data and documentation that is available for the customer to consume over the course of arrangement and furthers progress of the clinical trial. The Company has elected to recognize revenue for clinical trials using the ‘as-invoiced’ practical expedient. The customer is invoiced periodically based on the progress of the trial such that each invoice captures the revenue earned to date based on the state of the trial as established under contract with the customer.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse.
A valuation allowance is required when there is significant uncertainty as to whether certain deferred tax assets can be realized. The ability to realize deferred tax assets is dependent upon our ability to generate sufficient taxable income within the carryforward periods provided for in the tax law for each tax jurisdiction. We have considered the following possible sources of taxable income when assessing the realization of our deferred tax assets:
•future reversals of existing taxable temporary differences;
•future taxable income or loss, exclusive of reversing temporary differences and carryforwards;
•tax-planning strategies; and
•taxable income in prior carryback years.
We will continue to reevaluate the continued need for a valuation allowance. Relevant factors include:
•current financial performance;
•our ability to meet short-term and long-term financial and taxable income projections;
•the overall market environment; and
•the volatility and trends in the industry in which we operate.
Goodwill and Intangible Assets
The Company accounts for goodwill and intangible assets under Accounting Standards Codification Topic No. 350, Goodwill and Other (“ASC 350”). Goodwill represents the excess of the fair value of the consideration conveyed in acquisition over the fair value of net assets acquired.
Goodwill is not amortized but is required to be evaluated for impairment at the same time every year. The Company performs annual testing of impairment for goodwill in the fourth quarter of each year or earlier if potential impairment indicators exist. When impairment indicators are identified, the Company compares the reporting unit’s fair value to its carrying amount, including goodwill. An impairment loss is recognized as the difference, if any, between the reporting unit’s carrying amount and its fair value to the extent the difference does not exceed the total amount of goodwill allocated to the reporting unit.
Under ASC 350, finite-lived intangible assets are stated at acquisition-date fair value. Intangible assets are amortized using the straight-line method.
Finite-lived intangible assets are stated at acquisition-date fair value. Intangible assets are amortized using the straight-line method. Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that
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the carrying amount of an asset may not be recoverable. When circumstances indicate that recoverability may be impaired, the Company assesses its ability to recover the carrying value of the asset group from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. Fair value is determined based on appropriate valuation techniques.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure due to potential changes in inflation or interest rates. We do not hold financial instruments for trading purposes.
Interest Rate Risk
We held cash of $30,292 as of June 30, 2025, consisting of bank deposits. Such interest-earning instruments carry a degree of interest rate risk. The goals of our investment policy are liquidity and capital preservation. We believe that we do not have any material exposure to changes in the fair value of these assets as a results of changes in interest rates due to the short-term nature of our cash.
Inflation Risk
Recently, inflation has increased throughout the U.S. economy. Inflation can adversely affect us by increasing the costs of drugs, clinical trials and research, administration and other costs of doing business. We may experience increases in the prices of labor and other costs of doing business. In an inflationary environment, cost increases may outpace our expectations, causing us to use our cash and other liquid assets faster than forecasted. If this happens, we may need to raise additional capital to fund our operations, which may not be available in sufficient amounts or on reasonable terms, if at all, sooner than expected.
Impairment Risk
Impairment risk refers to the risk that the Company will write down a material amount of its goodwill or intangible assets. This risk is assessed at least annually in the fourth quarter each year when the Company performs its impairment testing. To the extent that, among other factors, (i) there is underperformance in one or more reporting units (ii) a potential recession further disrupts the economic environment or (iii) interest rates continue to rise in response to persistent inflation, the fair value of one or more of the reporting units could fall below their carrying value, resulting in a goodwill or intangible impairment charge.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that the information relating to our Company, including our consolidated subsidiaries, that are required to be disclosed in our SEC reports, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure. We conducted an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2025. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2025, our disclosure controls and procedures were effective in our internal control over financial reporting. Management, including our Chief Executive Officer and Chief Financial Officer, who serve as our principal executive officer and principal financial officer, respectively, believe the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly represent, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with GAAP.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting that occurred during the three and six months ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Limitations on Effectiveness of Disclosure Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management, including the Chief Executive Officer and Chief Financial Officer, recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be involved in various legal proceedings and subject to claims that arise in the ordinary course of business. Although the results of litigation and claims are inherently unpredictable and uncertain, we are not currently a party to any legal proceedings the outcome of which, if determined adversely to us, are believed to, either individually or taken together, have a material adverse effect on our business, operating results, cash flows or financial condition.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. These risk factors describe some of the assumptions, risks, uncertainties and other factors that could adversely affect our business or that could otherwise result in changes that differ materially from our expectations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the quarter ended June 30, 2025, M33 Growth I L.P ., a director by deputization , adopted a Rule 10b5-1 trading plan as of June 12, 2025 providing for the sale of up to an aggregate amount of 3,000,000 shares of common stock during the period until May 18, 2026 . This trading plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934 and our policies regarding transactions in our securities.
On August 13, 2025, we entered into At-the-Market Sales Agreements (the “Sales Agreements”) with each of BTIG, LLC (“BTIG”) and B. Riley Securities, Inc. (together with BTIG, the “Agents” and each an “Agent”), pursuant to which we may sell, at our option, up to an aggregate of $15 million in shares of our common stock through an Agent, as sales agent (the “ATM Offering”). We are not required to sell any shares under the Sales Agreements. We will pay the Agents up to 4% of the aggregate gross sales proceeds we receive from all sales of shares of common stock under the Sales Agreements. The Sales Agreements continue until the earlier of selling all shares available under the Sales Agreement or termination by written notice from either of the parties. No sales have been made under the Sales Agreements.
The ATM Offering is being made under a prospectus supplement dated June 18, 2025, and filed with the SEC on June 6, 2025, as amended by the amendment no. 1 to prospectus supplement to be dated August 13, 2025, and filed with the SEC on August 13, 2025, and the related prospectus contained in our shelf registration statement on Form S-3 (Registration No. 333- 287848), which was declared effective on June 18, 2025.
The description of the Sales Agreements does not purport to be complete and is qualified in its entirety by reference to the Sales Agreements that are filed as Exhibits 10.1 and 10.2 hereto.
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Item 6. Exhibits
| Incorporated by Reference | Filed or Furnished Herewith | |||||||||||||||||||||||||||||||||||||
| Exhibit Number | Description | Form | File Number | Exhibit | Filing Date | |||||||||||||||||||||||||||||||||
| 2.1 | S-4/A | 333-258152 | 2.1 | October 20, 2021 | ||||||||||||||||||||||||||||||||||
| 3.1 | 8-K | 001-39248 | 3.1 | November 18, 2021 | ||||||||||||||||||||||||||||||||||
| 3.2 | 8-K | 001-39248 | 3.2 | November 18, 2021 | ||||||||||||||||||||||||||||||||||
| 3.3 | 8-K/A | 001-39248 | 3.3 | November 22, 2021 | ||||||||||||||||||||||||||||||||||
| 3.4 | 8-K | 001-39248 | 3.1 | March 25, 2025 | ||||||||||||||||||||||||||||||||||
| 3.5 | 8-K | 001-39248 | 3.2 | March 25, 2025 | ||||||||||||||||||||||||||||||||||
| 4.1 | 8-K | 001-39248 | 4.1 | March 13, 2020 | ||||||||||||||||||||||||||||||||||
| 4.2 | 8-K/A | 001-39248 | 4.2 | November 22, 2021 | ||||||||||||||||||||||||||||||||||
| 4.3 | 8-K | 001-39248 | 4.1 | August 10, 2022 | ||||||||||||||||||||||||||||||||||
| 4.4 | 8-K | 001-39248 | 4.2 | August 10, 2022 | ||||||||||||||||||||||||||||||||||
| 4.5 | 8-K | 001-39248 | 4.1 | March 25, 2025 | ||||||||||||||||||||||||||||||||||
| 4.6 | 8-K | 001-39248 | 4.2 | March 25, 2025 | ||||||||||||||||||||||||||||||||||
| 4.7 | 8-K | 001-39248 | 4.3 | March 25, 2025 | ||||||||||||||||||||||||||||||||||
| 5.1 | X | |||||||||||||||||||||||||||||||||||||
| 10.1 | X | |||||||||||||||||||||||||||||||||||||
| 10.2 | X | |||||||||||||||||||||||||||||||||||||
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| Incorporated by Reference | Filed or Furnished Herewith | |||||||||||||||||||||||||||||||||||||
| Exhibit Number | Description | Form | File Number | Exhibit | Filing Date | |||||||||||||||||||||||||||||||||
| 10.3 | X | |||||||||||||||||||||||||||||||||||||
| 23.1 | X | |||||||||||||||||||||||||||||||||||||
| 31.1* | X | |||||||||||||||||||||||||||||||||||||
| 31.2* | X | |||||||||||||||||||||||||||||||||||||
| 32.1** | X | |||||||||||||||||||||||||||||||||||||
| 32.2** | X | |||||||||||||||||||||||||||||||||||||
| 101* | Interactive Data File — the following financial statements from The Oncology Institute's Quarterly Report on Form 10-Q formatted in inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Convertible Preferred Stock and Changes in Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements (Unaudited). | X | ||||||||||||||||||||||||||||||||||||
101.INS | XBRL Instance Document | |||||||||||||||||||||||||||||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | |||||||||||||||||||||||||||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||||||||||||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||||||||||||||||||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101) | |||||||||||||||||||||||||||||||||||||
| * | Filed herewith. | |||||||||||||||||||||||||||||||||||||
| ** | Furnished herewith. | |||||||||||||||||||||||||||||||||||||
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned hereunto duly authorized, on August 13, 2025.
THE ONCOLOGY INSTITUTE, INC. | |||||
| By: | /s/ Robert Carter | ||||
| Robert Carter | |||||
Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) | |||||
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