Hello, and welcome everyone joining the Oncology Institute first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. To register to ask a question at any time, please press star 1 on your telephone keypad. Please note this call is being recorded. We are standing by should you need any assistance. It is now my pleasure to turn the meeting over to Min Merchant, Chief Legal Officer. Please go ahead.

The press release announcing the Oncology Institute's results for the first quarter of 2026 are available at the investor section of the company's website, theoncologyinstitute.com. A replay of this call will also be available at the company's website after the conclusion of this call. Before we get started, I'd like to remind you of the company's safe harbor language included within the company's press release for the first quarter of 2026. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risk and uncertainties that could cause actual results to differ materially. For 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, Dan Vernich, and our CFO, Rob Carter. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Dan.

Thank you, Min. Good afternoon, everyone, and thank you for joining our first quarter 2026 earnings call. I'm pleased to report a strong start to 2026 in the first quarter, driven by continued expansion and performance of our value-based contracts across markets and the ongoing growth of ancillary services, particularly our pharmacy business, which provides us with confidence to reaffirm our 2026 outlook for revenue and full-year adjusted EBITDA profitability. As noted in our earnings release, we are also pleased to meaningfully update our free cash flow projections for the year to a positive range of $5 to $15 million, reflecting our ongoing performance and improving economies of scale as we grow. None of this would be possible without the continued commitment to high-quality oncology care by our physicians and staff across the five states we operate in every day. There are a few key highlights from the quarter that I would like to now review. First, revenue of $147 million was up 41% year-over-year, driven by strong, cavalicated revenue growth and record performance from our specialty pharmacy business. Record Part B fills drove pharmacy revenue up 78% in the quarter compared to the first quarter of 2025, reflecting overall growth in patient encounters and continued operational execution on prescription fills. As a testament to the durability and replicability of our clinical model, we saved nearly $2 million in Medicare spending as part of the CMS Enhancing Oncology Model performance program in Period 3, increasing the savings generated from the previous period while maintaining the high-quality care we deliver to the members we serve in the community. We believe this ongoing recognition from CMS underscores the clinical and economic value of TOI's integrated approach to oncology care applies to all patient populations, not just capitated members. Turning now to operations, I would like to walk through some key updates from the first quarter. Our work in Florida continues to be a critical proof point for our model in one of our newer markets, and I'm pleased to share meaningful progress on several fronts. We are now generating a profit in the Florida market. This is an important milestone that reflects the maturation of our capitated relationships in this state and validates the model we have been building. Our initial members under delegated capitation partnerships continue to show data points demonstrating excellent clinical outcomes, with MLR performing in line to slightly better than plan. As a reminder, we target a mature MLR of approximately 85% for new delegated capitation contracts, and we are now achieving that with our 2025 effective contracts in South Florida. In terms of further near-term capitation growth, we anticipate expansion of existing plan partnerships across 11 additional counties for Medicare Advantage members in Q3, which will expand our TOI clinic and MSO network to cover effectively the entire Florida market to serve delegated capitation agreements across multiple health plans. This next phase of expansion encompassing Q3 will expand our total MA lives under delegated capitation arrangements to approximately 200,000 total lives across 25 total counties. In addition to the capitated revenue associated with these new patients, this expansion is also expected to be a meaningful tailwind to our Part D pharmacy business as we capture the prescription volume, which will deliver faster and more convenient fills to our patients and value outside of capitation to our care partners. To effectively support these important patient populations, we anticipate opening seven new TOI clinics over the remainder of the year to ensure we are delivering the high-quality coordinated care that our patients deserve, and we will also add meaningfully to our contracted provider footprint across the state. As I mentioned in our last call, we are preparing to launch our proprietary provider portal this summer, and I'm excited to share more detail on this important initiative. We see two primary benefits of the TOI portal. First, it is designed to further strengthen contracted provider engagement and drive continued adherence to our clinical pathways and quality initiatives. Pathway adherence is a meaningful lever for NLR performance, and we believe this tool will be an important driver of ongoing improvement. Second, over time, we intend to use the portal to provide access to ancillary services, including Part D dispensing, clinical trials, and care navigation, all key components of our integrated care strategy and key profitability levers as we grow. There may also be an opportunity to pass on savings from our ancillary services to MSO providers, which will further drive engagement. Our specialty pharmacy business delivered an exceptional quarter and continues to be one of the strongest road drivers across the enterprise. We filled a record number of scripts in the first quarter with specialty pharmacy revenue of 78% year-over-year at $87.5 million for the quarter, delivering $16.8 million of gross profit. This growth is being driven by a combination of higher patient volumes, continued optimization of pharmacy workflows across our network, as well as ongoing efforts to reduce avoidable leakage to outside pharmacies. Gross margin in our specialty pharmacy business also came in higher than anticipated in the quarter at 19.2%, driven primarily by efforts in TOI's procurement function to manage short-up pricing strategy and capitalize on our developed central clinical infrastructure via formulary pathways within the pharmacy. This is an area where we continue to see the benefit of our scale and distributor relationships, which will only be further enhanced as we grow. We are also working to expand pharmacy access in Florida to our delegated network members, which we believe broadens our ability to capture both Part D and B scripts from our delegated population. We expect this to be available in the second half of this year and view it as an incremental opportunity on top of our core Part D dispensing strategy, not contemplated in our annual revenue guidance. We continue to make meaningful progress on our AI-enabled operational initiatives this As a reminder, last year we launched three AI integration efforts focused on revenue cycle management, prior authorization services, and our patient call center. I'm pleased to report that we remain on track to achieve the $2 million in operating expense savings we outlined for 2026. These initiatives are not just delivering cost efficiencies, they are also improving the experience for our patients, providers, and administrative teams, and we expect to build on them as we continue to scale. Finally, I'm pleased to welcome MN Merchant to the executive team as TY's new chief legal officer. Min will oversee all legal, compliance, regulatory, and privacy matters as we continue to scale the platform. As a company that is expanding its managed care footprint, delegated arrangements, and operational complexity, having a seasoned legal and compliance leader at the table is Min is a great addition, and we look forward to the contributions she will make as we continue to grow and strengthen the executive team. In summary, we are off to a strong start in 2026. Revenue growth of 41%, record pharmacy performance, profitability in Florida, and a growing pipeline of capitated lives gives us confidence that the momentum we build throughout 2025 is continuing into the new year. As we look ahead, our focus remains on operational execution and quality patient care, scaling our delegated capitation model, deepening payer partnerships, and continuing to invest in the technology and operational capabilities that will drive sustainable profitability over the long term. With that, I'll turn the call over to Rob to review the financials in more detail.

Hey, Stan, and good afternoon, everyone. I want to echo Dan's comments on the continued momentum we're building across the business as we progress through 2026. On the call today, I will review our first quarter financial results, provide an update on the balance sheet and liquidity, and close with our updated guidance in that look. Turning to financial performance, total revenue for the first quarter was $147.4 million compared to $104.4 million in the prior year period, representing 41.2% year-over-year growth. the continuation of the strong momentum we have been building. Patient services revenue, which includes both our capitated and fee-for-service arrangements, was $59.1 million, representing 40.1% of total revenue and an 11.3% year-over-year increase. With inpatient services, capitated revenue grew 54% year-over-year to $26.9 million, driven by new market momentum and the continued ramp of our delegated arrangements in Florida. Fever service was $32.2 million, down approximately 10% year-over-year, despite increasing visit volumes, reflecting the impact of mix, driven by active drug formulary management, more conservative reserves against collections, and modest pricing pressure in the IV drug Capitation now represents approximately 45.6% of patient services revenue, up from roughly 33% a year ago, underscoring the ongoing shift in our revenue mix towards value-based Specialty pharmacy revenue was $87.5 million, representing 59.4% of total revenue and growing 77.6% year-over-year. This was driven by a 103% increase in the number of prescription fills, reflecting the continued strength in fill rates as we bring new capitated lives onto the platform, partly offset by approximately a 12% decrease in average revenue per fill as our mix continues to evolve. Gross profit for the first quarter was $23.3 million compared to $17.2 million in the first quarter of 2025, reflecting continued top-line expansion across both segments.

Overall gross margin was 15.8% compared to 16.5% in a prior year. The roughly 80 basis point decline is primarily the result of a non-recurring rebate we recognized in the first quarter of last year, as well as the natively lower margin profile of the delegated business as it increases as a proportion of TOI revenue.

Patient services gross profit was $5.7 million compared to $6 million in the first quarter. This gross margin was 9.7% compared to 11.3% a year ago, a decrease of approximately 163 basis points. The year-to-year decline is primarily the result of the new ramping delegated contracts and our aforementioned conservative fee-for-service reserve approach. Specialty pharmacy gross profit was $16.8 million, growing 78.1% year-over-year from $9.4 million in a prior year period. Gross margin was essentially flat at 19.2% versus 19.1 a year ago. Evidencing TOI's ability to maintain unit economics as the pharmacy scales its distribution and adapts to an evolving pricing environment, including the of the Inflation Reduction Act. Our expanded utilization management program, which we refer to as TOI Pathways, now covers our entire drug portfolio, including the pharmacy, versus historically only our Part B drugs, which continues to support margin-state stability, and we see further opportunity in this area as we increase. Turning to operating expenses, total SG&A for the first quarter was $28.2 million, or 19.1% of total revenue, compared to $25.4 million, or 24.3% of revenue, in the same period a year ago. That represents approximately a 520 basis point improvement year-over-year, reflecting continued cost discipline and the operating leverage inherent in our model as we continue to scale. We see further leverage ahead as we scale and are planning to launch AI pilots around prior authorization, automization, and a next-generation call center later this year. Adjusted EBITDA for the first quarter was a loss of $2.4 million, favorable to a loss of $5.1 million a year ago. As we noted on our call last quarter, we do what is seasonally our most challenging period. Deductible resets and annual drug cost increases create natural headwinds that take time to work through. We are pleased with the year-over-year improvement and remain confident and delivering positive adjustity with us for the whole year, driven by the continued ramp of our Florida delegated arrangements, our growing specialty pharmacy platform, and our continued cost discipline and push towards AI and automation and our central operation. We ended the quarter with $30.3 million in cash and cash equivalents, compared to $33.6 million a year in 2025. Our senior secured convertible note principal outstanding was $85.9 million, unchanged from year end, with a maturity date of August 9th 2027. I want to note that we are in late-day discussions regarding the refinance of the note and expect to provide an update during the second quarter. Operating cash flow for the quarter was negative $2.3 million compared to negative $5 million in the first quarter of 2025, reflective of the operating losses during each of those respective periods. Turning to guidance, we are reiterating our full-year 2026 outlook for revenue, gross profit, and adjusted EBITDA, and are raising our free cash flow outlook to reflect favorable terms from vendor renegotiations as we continue to realize the benefits of our scale. For the full year, we expect revenue of $630 million to $650 million with approximately $150 million of capitated revenue, gross profit of $97 million to $107 million, adjusted EBITDA of zero to positive $9 million, and free cash flow is now in the range of positive $5 million to $15 million, compared to our previous outlook of a loss of $15 million to positive $5 million.

For the second quarter, we anticipate adjusted EBITDA in the range of a loss of $1 million to positive $1 million, reflecting seasonal improvement as deductibles are satisfied and the continued ramp of our Florida-delegated lives. We expect momentum to build through the remainder of the year and remain confident in our commitment to full-year positive adjusted EBITDA.

With that, I'll turn the call over to Dan for his closing remarks.

Thank you, Rob. And thank you to everyone for your continued interest in the world-class community oncology solution we are building at TOI. I'm pleased to reaffirm our revenue and EBITDA guidance for the year, as well as meaningful improvements in free cash flow. Our initiatives on creating a world-class provider portal and using technology to drive OPEX efficiencies will continue to drive our story as a leader in high-quality, coordinated oncology care while delivering profitability for shareholders. Before opening the call to questions, I want to thank our patients for putting their trust in our ability to deliver high-quality care and to thank our physicians, clinicians, and employees across the Oncology Institute. Their unwavering focus on delivering high-quality oncology care in the community is what continues to drive the progress we are seeing across the business. With that, I'll turn the call back to the operator for questions. Operator?

Thank you. At this time, we will open the floor for questions. If you'd like to ask a question, please press star 1 on your telephone keypad. To remove yourself from the queue, you may press star 2. Again, that is star 1 to ask a question. And we'll take our first question from David Larson with BTIG. Please go ahead. Your line is open.

Hey, congratulations on another great quarter. Can you talk a little bit about your delegated risk arrangements in Florida? Did I hear you correctly? I think I heard you say you now cover the entire state. And then just any color around risk, like the trend, the medical expense trend, how it's performing relative to expectations. And I think I heard you say that you're profitable in Florida. Thanks.

Yeah, hi, Dave. Thanks for the great questions. Regarding the first question, yes, we will be network adequate across 25 counties by the start of Q3 of this year, so July 1. And that coincides with expansion of multiple health plan agreements, which in total encompass about 200,000 MA lives across those counties in the delegated capitation model. The MLR performance on the delegated capitation book of business, which we mentioned in the earnings call for the 2025 cohort, is performing slightly better than our target MLR of 85%, which is a great data point. And we'll continue to update that as these additional lives enter the risk cohort. And then, yes, on a four-wall basis, the Florida market is now profitable due to all this growth.

Daniel, I didn't quite hear the MLR percent. Did you say it was 85 percent, slightly better than 85 percent?

That's correct.

Okay. Okay. And then, like, Evelyn Health, for example, I think this morning reported an MLR of 93%. What, in your view, causes such a significant delta? Why are you performing so much better than them, in your opinion, at a high level without obviously having access to their data?

Yeah, I mean, I can't really speak to exactly why they would be at our level. But there is obviously differences in the care delivery model with us having a hybrid employed and network care delivery approach and kind of very tight control over care delivery and patient experience in our employed clinics. I think that would be definitely one aspect of it, as well as the high engagement we're seeing on the network providers through our portal and pathway integration.

And then in the delegated model, are you bearing risk for Part D? And can you push those delegated lives through your own specialty pharmacy? And if you don't bear risk, I would imagine that would be a benefit to your pharmacy.

Yeah, that's exactly right. Yeah, we only take risk on Part B as in boy. Part B as in dog is fee-for-service revenue at that little bit over 19% margin that we called out, which flows through our pharmacies and dispensaries. And those fills apply to both capitated as well as non-capitated lives as an additional economic benefit to the capitated members coming to us for care. There is the additional added benefit of us having a pharmacy in that for practices in the network that deliver part B as in boy medications, which are part of our risk, we can deliver those at our pricing, which is beneficial given our scale.

Just one more. Sorry to keep asking questions. I'll hop back in the queue, but just one more. Did I hear you say you were talking to additional health plans in the Florida market beyond Elevance?

Yeah, we're talking to additional health plans in Florida as well as other markets as well for the delegated capitation model. So we'll have additional updates for that in the next earnings call. But we are seeing a lot of opportunity and momentum around that specific delegated capitation model kind of across markets.

Okay, congrats on a great quarter. I'll hop back on the queue.

Thanks, Dave.

Thank you. We'll take our next question from Matthew Shea with Needham. Please go ahead.

Your line is open. hey thanks for taking the question and a nice start to the year here guys um you know maybe first on dispensary really really impressive growth there and sounds like volume driven by a mix of membership and continued attachment rates i guess any additional color there membership seems pretty self-explanatory but maybe on the attachment rate side are these coming in ahead of expectations and and if so my understanding is this is mostly driven by provider education so So is there anything you would call out on the provider education side that's been notable in helping drive this growth?

Hey, Matt, it's Rob. Yeah, attachment rate has exceeded expectations in the year. You know, the workflow changes that we implemented last year, I think, are continuing to pay dividends, and so that work progresses. I think as you look at the rest of the year, I think you can expect some subtle improvement quarter over quarter. as we continue to refine those workflows and as additional value-based lives come onto the platform.

Got it. That's helpful. And then maybe on the proprietary network portal, good to hear that that remains on track for the Q2 launch, but maybe as we think about the pacing of the rollout, I would assume that will be sort of a provider-by-provider or market-by-market, but maybe how should we think about the cadence of that and where are you hoping to get to in terms of provider coverage by year-end? And then, given it can strengthen the provider engagement and drive adherence to the clinical pathway, it seems like a nice lever to drive MLRs. So, curious if you've built in any financial benefits to the 2026 guide, or if we should think about that as more of a 2027 event.

Yeah, absolutely. So, when we roll out the portal, which we're anticipating in Q3, that's going to be immediately accessible to 100% of the non-employed providers across our delegated contract network. So, basically, all of Florida will have access to it in the MSO side of our business. We already see good adherence to pathways, our care pathways for Part B medications by those providers, but I think this will drive additional adherence because it will just create additional visibility and control over those providers' ability to access our formulary and pathways. As we called out in the earnings call, the additional, I guess, P&L upside related to that portal, which we anticipate will happen this year but is not contemplated in our current guidance, would be related to Part D fills. Recall that our current Part D fills are all from our employed physician base. There are no Part D fills flowing through to our MSO providers through implementation of the e-prescribing in the portal and Part D formulary visibility. We hope to catch some Part D growth as well through our MSO network in the second half of this year, but we haven't specifically guided to that or included in the forecast given, you know, timing as well as lack of visibility and to attach rate on that.

Okay, got it. Okay, that's super helpful clarification that the patient portal can help with that Part D. Okay, and then maybe last one for me before I jump back in the queue. So the 200,000 live target in Florida for July 1st, I guess thinking back to the last earnings call or sort of where I had you guys in Q1, I had 70,000 lives in the Elevents partnership and then 22,000 from Humana and Care Plus. So call it, you know, 90,000 and change. Maybe help me bridge the difference from there to 200,000. Is that all Elevents? It sounded like maybe you alluded to some other payers in there as well, just kind of trying to get a sense of ultimately what sort of wins drove that expansion.

Yeah, so we've opted not to disclose that specific health plans and additional lives are coming through, but it's effectively an incremental 130,000 MA lives with major carriers in Florida.

Okay, got it. I'll hop back in. Thanks. Thanks, Matt.

Thank you. We'll take our next question from Yuan Shi with B. Reilly. Please go ahead. Your line is open.

Thank you for taking our questions and congrats on a strong quarter. Maybe your question to Rob first. Can you give me more color on the substantial $20 million free cash flow improvement since the adjusted EBITDA and the gross margin guidance didn't change? Maybe especially comment on the timing of this cash flow improvement.

Yeah, yeah. Thanks for the question. So, this is the direct result of negotiations that have been underway now for several months with some key suppliers, in particular on the drug side of things. This is an advantage that we have as we continue to grow and scale. We have, you know, opportunities for leverage, and we're able to take advantage of that in a very, very meaningful way.

And so, very excited about the output there. and on the florida expansion do you right now have the have your fully owned clinics ready to enter all these 25 counties in florida under the delegated model yeah hi yuan it's dan that is underway right now i mean to see by the time we go live with those additional lives that we'll have our clinics in place um you know to adhere to our sort of ratio of employee clinics mso providers in the additional counties or where we will be taking risks.

Got it. And one last question on the specialty pharmacy. Can you clarify, are you able to dispense drugs outside of oncology considering, you know, this patient may have other comorbidity or disease that may need oral drugs?

Yeah, so at this time, our specialty pharmacy really focuses on oncology specific medications, both oncolytics as well as medications that support chemotherapy pathways or oncolytic pathways exclusively. We don't prescribe for non-oncology conditions or non-hematology conditions.

I will hop back on, Richard.

Thank you. And again, as a quick reminder, if you'd like to ask a question, please press star one now. Our next question comes from Robert LaBoyer with Noble Capital Markets. Please go ahead. Your line is open.

Good afternoon and Congratulations on another nice quarter. My question has to do with the CMS enhancing oncology model, and you mentioned saving $2 million in Medicare spending as part of the program during one of the periods. Could you just elaborate on what the model measures and put the $2 million in perspective in terms of spending per patient, spending on the total, maybe tie in the medical loss ratios. And if there's any information on how that compares with other providers, that would be helpful too.

Hi, Robert. Great question. So the savings performance was in periods two and three of the enhancing oncology model, which I think most people know is the next iteration of the oncology care model that CMMI had for a number of years. It's an episodic total cost of care risk model, So, a little bit different than Part B cavitation, although the principles are the same, adherence to value-based therapeutics, and then implementation of our high-value cancer care program, which is specifically designed for Part A avoidance, which is part of the risk in the EOM model. We don't have numbers off the top of our head in terms of MLR performance or total risk pool for that cohort. We can certainly, you know, follow up on that. So, all we have is that acid savings amount of this time.

Okay, great. And in terms of the portal that you mentioned, are there any particular things that you could point to or discuss in terms of how that would change the provider's actions or whether that would save money, keep them on track, monitor what they're doing, or just exactly how that would work?

Yeah, absolutely. The portal is meant to be a centralized hub for our utilization management efforts. So, all network providers that are helping serve our capitated partnerships in terms of patient care will be submitting their prior authorizations for care into that portal to get a U.M. decision made by our medical directors. Once that decision is made, then that authorization is approved or there's a peer-to-peer or a change request. It also offers a centralized hub where we've got a high degree of visibility into all of our pathways to help drive additional formulary adherence. And then, as mentioned, it's got the added benefit of being a path to get network providers to engage in ancillary services like pharmacy and clinical trials.

Okay, great. Thank you very much. Thanks, Robert.

Thank you. We'll take a follow-up question from Matthew Shea with Needham. Please go ahead. Your line is open.

Yeah, thanks. appreciate the follow-up. Maybe, Dan, thinking longer term on AI and beyond 2026, sort of, you know, last quarter you noted you're just starting to scratch the surface on use cases and capabilities of agentic AI and that there were a number of sort of integration opportunities out into the future. So maybe as we think about you moving beyond those three initial buckets that you've highlighted for 2026, are there any other potential areas that are top of mind? And And as we think about you maybe going after some of those and looking out to the 2028 targets, is there anything contemplated in those targets in terms of AI efficiencies beyond sort of the initial 2 million that you've outlined for 2026?

Yeah, so to hit the second question first, you know, our long-range kind of forecast that we issued in January did not contemplate additional AI efficiencies, so very conservative. The $2 million that we forecast into 2026 is really just scratching the surface on integration into those three core functions, call center, RCM, and prior auth. I mean, it's moving quickly in terms of the capabilities of Agenda AI in all three of those functions. So I do believe there will be substantial opportunity to expand upon those savings and drive additional OPEX efficiencies over the next, you know, two to three years. Additional use cases at this point, we do believe there's a good use case in the care navigation side of what we do as well with our high-value cancer care program. It's kind of a, because it's highly protocolized, it's perfectly set up for that use case, which would obviously drive efficiencies in terms of labor costs to implement and scale that program over patients that are appropriate. And I'm sure there's many others, but I'd say just even the three core use cases, excuse me, core use cases that we have going right now, we are far from maximizing the savings and sort of efficiency opportunity amongst those three.

Okay, great. Thanks.

Thank you. At this time, there are no further questions in queue. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.