Greetings and welcome to The Oncology Institute Fourth Quarter 2025 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Hueppelsheuser, General Counsel. Thank you, sir. You may begin.

The press release announcing The Oncology Institute's results for the fourth quarter of 2025 is available at the Investors section of the company's website, theoncologyinstitute.com. A replay of this call will also be available at the company's website after the conclusion of this call. Before we get started, I would like to remind you of the company's safe harbor language included within the company's press release for the fourth quarter of 2025. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our filings with the SEC. This call will also discuss non-GAAP financial measures such as adjusted EBITDA and free cash flow. Reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website. Joining me on the call today are our CEO, Daniel Virnich; and our CFO, Rob Carter. Following our prepared remarks, we'll open up the call for your questions. With that, I'll turn the call over to Dan.

Thank you, Mark. Good afternoon, everyone, and thank you for joining our fourth quarter and full year 2025 earnings call. Before getting into the results, I want to start by thanking our physicians, clinicians, and employees across The Oncology Institute. Their continued focus on delivering high-quality oncology care in the community is what drives the progress we are seeing across the business. Most importantly, the fourth quarter marked an important milestone being our first profitable quarter as a public company from an adjusted EBITDA perspective. Based on the momentum that we have built, we are reaffirming our expectation to achieve full year positive adjusted EBITDA in 2026. The biggest driver of this progress continues to be the expansion of our capitated care model, particularly through our delegated arrangements, which enables us to manage the oncology benefit more comprehensively while aligning incentives with our payer partners across markets and delivering quality clinical outcomes to the patients that we serve. Stepping back, 2025 was a very productive year for TOI and one where we made progress across multiple areas of the organization. From a financial perspective, we delivered strong top-line growth with revenue increasing approximately 28% year-over-year and surpassing $500 million for the first time in our history. We continued expanding our capitated footprint, initiating 9 new capitated contracts during 2025 in California, Florida, and Nevada, representing approximately 260,000 additional patient lives under management. Another key contributor to this growth was our Part D dispensing platform, which remains an important part of our integrated care model as we continue to increase prescription volumes and attachment rates within our network. This segment of our business reached almost $270 million in total revenue and contributed close to $50 million in gross profit for the full year. From an operating standpoint, we continue improving efficiency across the organization. SG&A declined 2% year-over-year, demonstrating the leverage in our model as we scale. During the year, we also outsourced our clinical trials operations, allowing our physicians and care teams to remain focused on delivering high-quality clinical care while still being able to direct our patients to the trials they need in our clinics and supporting more rapid growth and multi-market scalability. And finally, we strengthened our balance sheet during the year. We reduced debt on our convertible preferred note by $24 million and ended the year with $33.6 million in cash after experiencing positive free cash flow in Q4, giving us additional flexibility as we continue to grow the platform. Operationally, we also made meaningful progress expanding our care model. Our delegated capitation partnership with Elevance in Florida continued to ramp during the fourth quarter and remains on track to continue expansion across the state in 2026, which would more than double the current partnership. Today, we have approximately 70,000 lives under capitated arrangements within this partnership. Given the economics of our delegated model, it's also worth highlighting that delegated members represented less than 5% of total capitated lives at the end of 2025, but account for approximately 1/3 of our run rate capitated revenue, reflecting the higher PMPM structure associated with these arrangements and the high-utilizing populations they service. In addition to Elevance, we also initiated capitation agreements with Humana and CarePlus in Florida during the fourth quarter, further expanding payer partnerships and representing approximately 22,000 additional Medicare Advantage lives in South Florida. Our Florida Oncology network platform also continued to grow, with the number of participating providers increasing to approximately 207 physicians and advanced practice providers across our network, supporting what we refer to as our hybrid model of patient care, which allows us to treat our managed populations at a combination of TOI-affiliated as well as independent clinics and our employed clinics under our fully delegated network umbrella. Finally, from an organizational standpoint, we strengthened the leadership team substantially in 2025, with the additions of Jeffrey Langsam as Chief Clinical Officer; and Kristin England as Chief Administrative Officer. Both bring significant experience scaling healthcare organizations and will play an important role as we continue expanding our platform and executing on our growth strategy. As we move into 2026, our focus remains on continuing to scale and drive profitability in our value-based care platform so that we can serve more patients and payers across the country with high-quality oncology care while improving access to therapeutics and reducing the financial burden of that care. First, we expect continued strong growth in our delegated capitation model, having guided in January to over 80% growth in capitated revenue for the year. Second, we are preparing to launch a proprietary new network portal in Q2, which will further strengthen engagement with both our affiliated and independent providers. The platform will improve visibility into the utilization management pathways, support formulary adherence and help drive continued improvement in our medical loss ratio. Importantly, it will also help enable ancillary services engagement such as Part D dispensing adoption across our independent network providers, which remains a meaningful opportunity for incremental growth. Finally, we strengthened our Board of Directors in Q1 with the additions of Mark Stolper and Kim Tzoumakas. Mark brings significant financial leadership and public markets experience as the long-time CFO of RadNet, while Kim brings deep expertise in oncology and pharmacy services through her prior leadership roles as CEO of VytlOne and 21st Century Oncology, respectively. We believe both will add valuable perspectives as we continue scaling the organization. In summary, 2025 was a foundational year for TOI. We showed our ability to grow and manage industry-leading MLR performance under our delegated capitation model in Florida, set records in Part D pharmacy growth, derisked our balance sheet and recorded our first positive adjusted EBITDA quarter as a public company in the fourth quarter. As we enter 2026, our focus is on execution, and we believe we are well-positioned to further expand payer partnerships and deliver sustainable profitability over the long term. With that, I'll turn the call over to Rob to review our financial results.

Thanks, Dan, and good afternoon, everyone. I want to echo Dan's comments on what was a significant year for TOI. In the fourth quarter, we continued to build momentum across both our fee-for-service and capitation businesses as well as dispensing while at the same time moving toward positive adjusted EBITDA. On today's call, I'll start by addressing the expected impact of the Inflation Reduction Act, then review our key financial highlights for 2025, walk through our fourth quarter results, and finally discuss our guidance and outlook for 2026 and beyond. Regarding the Inflation Reduction Act, we expect the impact to IMBRUVICA in 2026 to be minor, representing an unfavorable impact of less than 1% of total pharmacy revenue and gross margin. Importantly, as IMBRUVICA and additional drugs are subject to maximum fair price negotiations under the IRA, we have multiple levers available to help offset this impact, including, but not limited to, optimization of our pharmacy mix via increased utilization of alternative therapies, a function which TOI has significant control over through our centralized utilization management process. Additionally, the reimbursement shift in certain disease state categories introduced by the IRA allows TOI an opportunity to leverage relationships with drug manufacturers and distributors to reassess category economics, discussions which are benefited by TOI's improving purchasing power as we scale as a drug purchasing organization. As a result of the foregoing, we do not expect the IRA specifically to materially alter the long-term economics or trajectory of our platform. Turning to full year 2025. The year marked meaningful operational and financial progress for TOI. We delivered revenue growth of approximately 27.8% year-over-year from $393.4 million to $502.7 million, driven by continued expansion in both patient volumes and services per patient. Our fee-for-service business grew 9% year-over-year, from $136.2 million to $148.5 million, while our capitation business grew 17.2% year-over-year, from $68.7 million to $80.5 million, driven primarily by the launch of our new delegation model in Florida, which I will expand on more in a moment. Pharmacy revenue grew 49.6% year-over-year, from $179.9 million to $269.2 million, primarily the result of improved attachment of prescriptions to our provider visits in both fee-for-service and capitation populations as well as reduced leakage of prescriptions written by TOI providers to outside specialty pharmacies. The successful launch of our new delegation model in Florida produced over $10 million in new capitated revenue in 2025 with an annualized run rate of approximately $50 million as we enter 2026. We believe this new delegated model enhances TOI's ability to efficiently scale in new markets while retaining our ability to both directly control clinical utilization as well as deliver our comprehensive oncology model to populations under the delegated contracts. We accomplished this by serving patients at a mix of network providers and TOI clinics, a dynamic you will hear us refer to as our hybrid model, because it utilizes both independent and captive providers in a hybridized deployment. This hybrid model allows us to optimize for MLR while balancing capital efficiency and operating leverage, all while delivering maximum savings and minimum time-to-launch and network disruption to our payer partners. Most importantly, we ended the year with positive adjusted EBITDA in the fourth quarter, reflecting the operating leverage embedded in our model and the progress we've made towards sustainable profitability. Turning to the fourth quarter. Results were consistent with the trends we've discussed throughout the year. Total revenue for the fourth quarter was $142 million compared to $100.3 million in the prior year period, representing a 41.6% year-over-year growth that was driven by continued patient growth and pharmacy contribution. Patient services revenue, which includes both capitation and fee-for-service arrangements, totaled $59.8 million, or 42.2% of total revenue and increased 19.2% year-over-year. Within the segment, fee-for-service contributed roughly 25.6% of total revenue and capitation accounted for 16.6%, reflecting the significant recurring nature of patient services revenue and steady patient volumes on which we layer new capitation contracts as well as a continuous expansion of our fee-for-service referral base. Pharmacy revenue was $81.4 million, representing 57.4% of total revenue and increased 71.1% year-over-year, driven by higher prescription volumes and expanded pharmacy attachment within our clinics, which was a key operational focus for us over the course of the year. Turning to gross profit. We reported $22.7 million for the quarter compared to $14.6 million in the fourth quarter of 2024. Gross margin was 16% versus 14.6% in the prior year period, reflecting a year-over-year margin increase of approximately 140 basis points. Patient services gross profit was $7.1 million, up from $4.5 million a year ago, representing a 59.5% year-over-year increase with a gross margin of 11.9%, up from 8.9% in the prior year. Pharmacy gross profit totaled $14.9 million compared to $8.1 million in the fourth quarter of 2024, an 84.7% year-over-year increase, driven by higher dispensing volumes and improved drug purchasing. Pharmacy gross margin increased over 130 basis points from the prior year to 18.3%, reflecting ongoing optimization in commercial drug procurement, reflecting a focus on leveraging TOI's increasing scale in supply chain operations. Turning to operating expenses. Excluding depreciation and amortization, the total SG&A was $28 million, or 19.7% of revenue compared to 24.8% of revenue, a reduction of over 500 basis points versus a year ago. The decrease in SG&A reflects continued cost discipline and operating leverage inherent in our model. Adjusted EBITDA was $147,000, improving from negative $7.8 million in the fourth quarter of 2024. We achieved positive adjusted EBITDA in the fourth quarter, a key milestone as we exit 2025. Turning to the balance sheet and cash flow. We ended the quarter with $33.6 million in cash and cash equivalents. Operating cash flow for the quarter was a positive $3.2 million, reflecting investments in drug inventory and working capital to support our scaling dispensing activity. Now turning to guidance. For full year 2026, we are reiterating guidance provided in January 2026 as follows: revenue in the range of $630 million to $650 million, approximately $150 million of capitated revenue; gross profit in the range of $97 million to $107 million; and adjusted EBITDA in the range of $0 million to $9 million; and free cash flow in the range of negative $15 million to $5 million. I want to highlight that the first quarter is seasonally our lowest due to patient deductible resets and annual drug price increases that are not immediately reflected in reimbursement rates as pharmaceutical reimbursement adjustments operate on a lagged basis for pricing. While we always worked hard to mitigate these 2 factors, naturally lead us to anticipate an adjusted EBITDA loss for the first quarter. Based on these factors, we anticipate first quarter adjusted EBITDA to be between a loss of $3 million to $1 million with continued momentum over the course of the year. On a year-over-year comparison basis, the first quarter of 2025 included a one-time benefit of $1.6 million based on a renegotiated drug distribution agreement. On the pharmacy side, we are assuming performance in line with the second half 2025 revenue run rate of approximately $27 million per month, plus a modest incremental growth of 3% to 5% from attachment to new capitation lives we are capturing in TOI clinics through 2026. We believe this capture of capitation lives in TOI clinics is the beginning of a multi-year penetration narrative as we optimize TOI's captive clinic footprint relative to network providers for populations managed under our delegated model, as previously discussed, as part of our hybrid strategy. With respect to overall capitation growth, our outlook remains measured and does not include any contribution from new go-get contract wins. Gross profit is expected to grow slightly ahead of revenue, with gross margins improving by 100 to 200 basis points, primarily the result of improving direct medical expenses in relation to revenue, which is principally supported by improvement in drug spend, the result of our focus on both commercial procurement and clinical utilization management. SG&A is expected to trend down modestly as a percentage of revenue to approximately 16%, reflecting operating leverage, though we will continue to prioritize our growth initiatives. As we invest for growth, we remain focused on capital discipline and cash generation. We expect to achieve free cash flow positivity by the end of 2026, supported by EBITDA growth and improving working capital dynamics. With that, I'll turn the call over to Dan for closing remarks.

Thanks, Rob. In closing, 2025 represented an important step forward for TOI. We delivered impressive growth, strengthened our balance sheet, and exited the year with positive adjusted EBITDA while expanding the number of patients across the country that come to us for high-quality cancer care in the communities that we serve. As we look ahead, our guidance reflects a prudent and disciplined approach while still positioning the company to invest in growth and unlock the long-term value of our platform. With that, I'll turn the call back to the operator for questions.

The first question comes from David Larsen with BTIG.

Congratulations on the good quarter and year. I guess for your dispensing revenue in the quarter, it came in a lot higher than what we were modeling. Just any thoughts or color around the driver of that and what we should expect for '26?

Dave, thanks for the great question. Yes, the fourth quarter was a very strong quarter in terms of dispensing revenue and performance, and that was really driven by two things. One was ongoing operational execution in terms of mitigating leakage of scripts outside of our pharmacies and dispensaries where we could still provide medication. Two was very strong patient encounter growth related to our capitated contract growth across markets.

Okay. And then did I hear you say that you're going to double the size of your Elevance contract in the state of Florida in '26?

Yes, that's our goal.

Okay. And then is the Humana contract, is that a new contract signed in the fourth quarter or in the first quarter? You did not have a deal with Humana previously. Is that correct?

Yes, that went effective in the fourth quarter, and that was for both Humana and CarePlus for Medicare Advantage lives in South Florida on behalf of risk-bearing medical groups that they partner with.

Could you just give us a sense for the size of, I guess, the TAM for Elevance or Humana? Like how much revenue or how many lives could you potentially grow into in those states for Elevance and Humana alone? I would imagine it's pretty significant.

Yes. I mean there's publicly available data on MA penetration in Florida by payer, which, if you look at that versus our current capitated book across the payers that we partner with in that state, is many multiples of our current capitated revenue. So just tremendous opportunity. And really what excites us a lot about that market is many, many years ahead of growth for TOI as we continue to execute.

Okay. And then just one more quick one for me before I hop back in the queue. For the capitated revenue, how are your margins looking? And how are volumes and cost trend looking relative to expectations, I guess, for both the fourth quarter and the first couple of months of '26?

Dave, it's Rob. Performance, both in terms of volume and MLR is coming in exactly as we expect it to be. As you know, we have real-time views into our claims. And so our ability to manage that MLR is materially higher than what you see in the market. So no surprises right now, things are looking quite good.

And then for the lives that started in 4Q of '25, would you expect to get to, say, an 85% MLR by late '26? Is that fair?

So we have two types of contracts. For the delegated contracts that launched in Florida, yes, I think that's fair, 85% MLR. Within the contracts that launched were also some narrow network contracts in California, and we would expect, as we mentioned in our earnings material, a lower MLR with a slightly faster ramp to that MLR as well.

And then do the plans prefer the narrow networks or the broader networks? Do they have a preference? Just any color there would be helpful.

Yes, absolutely. It's really two different customer types. So plans, for the most part, is our delegated capitation model where they prefer a network that is open, inclusive of both our TOI employed clinics as well as the oncology network that we contract and own after delegation. The narrow network legacy capitation model really applies to our customers that are risk-bearing medical groups with the Knox-Keene license that, again, for fully narrowing the network to one oncology provider.

The next question comes from Yuan Zhi with B. Riley.

Rob or Dan, based on the guidance, you will have meaningful growth in the capitated contracts in 2026, almost double there. As you ramp up the capitated contracts in delegated network, should we anticipate a dip in profit margin in mid-2026 because of this patient transition period?

Yes. Rob, could you try that?

Yes, Yuan, it's Rob. Yes, specific to the delegated contracts, yes. Yes. You'll probably see a slightly higher MLR, again, just specific to those contracts. As it relates to total weighted gross margin percentage, no, I don't think that you're going to see a dip at that aggregate level.

Got it. And then on the press release, I think the latest number of affiliated and network clinics are 146. Can you share more details of that? I think the last number we saw was 86.

Yes. So yes, absolutely. So we got our 80 employed sites of care across five states. The network is actually larger than that. So it's over 200 by headcount in the network in Florida now, bringing our total up close to 300 combined.

Got it. And then one last question related to the CAR T. I think in last June, the FDA removed the Risk Evaluation and Mitigation Strategy requirements for all currently approved CAR T therapies. In your next contract updating and signing, do you think you will need to add CAR T into your treatment offerings or contracts? Or have you thought about that?

No. We across the board do not take risk on CAR T simply because it is a very low incidence therapy and not offered currently in a high number of locations in the community. There are some interesting businesses out there that are trying to develop models for CAR T therapy in the community. We view that as very positive for patients if that were to happen in the future. And certainly expanding access if the utilization and indications for that therapy grow over time is definitely something we would consider adding to our value-based contracting platform. But as of right now, we do not take risk on CAR T.

The next question comes from Matthew Shea with Needham & Company.

Congratulations on a strong finish to the year. I wanted to start by highlighting the successes from the quarter, particularly regarding the deals with Humana and CarePlus. Can you provide any details about those agreements? Were they part of a competitive bidding process? I believe the Humana deal represents an expansion; any insights into how success in previous markets contributed to this expansion would be appreciated. For CarePlus, I understand that this is a new partnership. I would like to know how they previously managed oncology and how they decided to partner with TOI.

Yes, Matt, thank you for the question. Both of the patients we now have through Humana and CarePlus are new payer partners, both located in South Florida. These groups are involved in Medicare Advantage populations that work with risk-bearing medical groups in that area. We cannot provide details about the existing oncology provider for these populations, but our success in winning this business was largely due to our reputation for offering access to high-quality care and effectively coordinating with referring primary care physicians, which prompted the initial outreach. We are very excited about these partnerships and our collaborations with their risk-bearing medical group constituents in that market.

Got it. Appreciate that. Maybe hitting on AI. Last quarter, you laid out the three buckets of RCM, prior auth and patient call center. And it sounds like prior auth is the furthest along with your early estimates suggesting $2 million, I believe, in operating expense efficiencies. What are you assuming in terms in the 2026 guide in terms of AI-related efficiencies? And should we expect majority of the near-term unlock to remain focused on prior auth? Or any update on RCM or call center?

Yes. Yes, absolutely. Thanks. That's a great question. So as we mentioned in our last earnings call, we expect in 2026, the impact of AI-related efficiencies across prior authorization, call center and RCM to generate about $2 million in SG&A savings specific to the portions of those departments that they are going to help augment. We really believe we're just starting to scratch the surface on the use cases and capabilities of agentic AI in our business model, which is just very well suited to integration in a number of different aspects. So that savings and efficiency generate over time is going to expand. We're also seeing some tremendous results in terms of metrics that impact patient care and deliver, frankly, better, more error-free patient care as it relates to things like prior authorization turnaround time, call center responsiveness and key call center KPIs, et cetera. So it's really exciting. It's on track and sort of our 2026 estimates in terms of savings impact are on track and haven't changed.

Okay. Great. Maybe this will be my last question for now, and then I'll return to the queue. I appreciate you outlining the essential components for the guidance. As we consider next year, breaking down the information you provided, we have $150 million in capitated revenue. Then, using the $27 million per month for pharmacy with modest growth, we arrive at approximately $330 million for dispensary revenue, which leaves about $150 million for fee-for-service revenue. This suggests that based on your 2025 results, fee-for-service growth would be flat to low single digits. I remember you mentioning earlier that this segment was expected to grow in line with the market, potentially high single digits. Could you help clarify the assumptions behind the fee-for-service revenue outlook?

Yes. Matt, it's Rob. So I think the dynamic that you're seeing here is really about the sheer volume of capitated lives that are coming under management. With that and especially in markets like Florida, there's going to be some minor cannibalization of fee-for-service volumes. And so that's a little bit of the impact that you see there. Beyond that, we do expect to continue to see organic growth from our own practice efforts. A lot of the growth that we saw in 2025 was driven by ramping new markets like Florida and Oregon. And so as Florida and Oregon continue to mature, some of that organic growth is going to erode slightly. But the main area of focus continues to be the capitated revenue line as well as the attachment from pharmacy, and we're very excited about the growth there.

The next question is a follow-up from David Larsen with BTIG.

Can you talk a little bit about your expectations for SG&A in 2026? It looks like for the year, as a percentage of revenue, it improved by 642 basis points. Just any thoughts on how SG&A should trend in '26 as a percentage of revenue? Should we see another significant improvement there?

You will see improvement, not to that degree. As we talked about in the script, there are some investments going on for growth. The level of risk that we're taking at this point as measured by lives under management, which is represented by that significant percent growth in the capitated revenue line, requires some growth. But yes, you'll continue to see the scale there. That's something that Dan and I are keenly focused on and aware of, and you'll continue to see our discipline in that area.

And free cash flow is expected to be positive in '26?

Exiting the second half of the year, yes.

Okay. And then the fee-for-service revenue...

Dave, are you still there? I think we might have lost audio on Dave.

The next question comes from Yuan Zhi with B. Riley.

Can you discuss the underlying assumptions for your $150 million revenue guidance for the capitated contract? Currently, you are in five markets in Florida. Are you planning to expand further? Additionally, how will the delegated model contribute to this meaningful growth in 2026?

Yes. So as we commented on the script, we've got about $50 million of run rate revenue coming from our Florida-based delegated contracts. So beyond that, we have a healthy pipeline within existing markets. And so the simple answer is no, we don't need to expand beyond the markets we're in to hit that number. We are opportunistic about growth. And so if the right opportunity comes for that expansion, then we'll obviously take a very serious look at that.

The next question is a follow-up from Matthew Shea with Needham & Company.

I wanted to maybe take a step back and just ask a bit of a higher-level question. With the Medicare Advantage rate notice for 2027, we effectively saw the whole value-based care sell off, yourselves included, although to a lesser extent. Maybe just speak to TOI's positioning in a potentially lower rate environment. Obviously, payers have already been struggling with oncology trends. So I would expect demand would only accelerate in a time when margins are tighter, but would love to kind of get your thoughts on that topic.

Yes, absolutely. Thanks, Matt. That's actually a very important question and something that we continue to try to drive clarity with our investors on, which is the MA rate cycle and sort of pressure that you've seen health plans and full-risk medical groups that are getting a percent of premium face is actually a tailwind for TOI. Our top line Medicare Advantage reimbursement is not a percent of total premium. It's not impacted by risk adjustment. In fact, pressure on the top line for payers generally causes them to reach out more proactively when it comes to seeking opportunities to provide great care for their patients and good access while also driving improvement in utilization. And so from that perspective, that actually helps our growth. So we tend to get lumped into some of those macro issues with payers, but I just want to make it very clear that that is actually probably a good thing for TOI.

Okay. And then maybe just a quick follow-up on that. We get a lot of investor questions about this. It's just like the converse side of that. Demand is higher, but what happens to margins? And I know you just alluded to this about how pricing is effectively independent of rate cycles. But if the pie is shrinking, there's a thesis out there that it does hit providers somewhere. Maybe just speak to how you can protect contract terms in a potentially lower rate environment. So as we see that higher demand for your offerings come on that we don't need to be concerned about any contract structures loosening or any contracts going underwater, if you will?

Yes, absolutely. I think at this point in time, it's really important to keep in mind that we've got a very unique care model in terms of our combination of both employed and network providers in markets where we're taking population-level Part B capitation. That's both good for patients because it means better access because of our employed clinic model, high-level ancillary services in the community. But it also means we've got much stronger control over the practice patterns of the physicians since a good chunk of them are employed by us, and we own the network of contracted providers. That means we're able to control care delivery and price contracts more competitively, we believe, than anybody else in the market at this point in time. So from that perspective, we are truly the best alternative for a payer, both from a pricing perspective as well as just a care delivery and coordination perspective.

Thank you. At this time, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.