BTIG has begun its coverage of Oncology Institute (TOI, Financial) with a positive perspective, assigning a Buy rating and a price target of $7. The company is renowned for its innovative approach to cancer care, employing a combination of fee-for-service, capitated, and value-based-care agreements. Analysts emphasize that as the population ages and healthcare costs rise, particularly within Medicare Advantage plans, there will be an increase in fee-for-service revenues for TOI through 2025.
Furthermore, BTIG predicts a growing demand for capitated and managed care options, alongside an uptick in sub-contracted risk models. This anticipated growth positions TOI favorably within the evolving landscape of healthcare, aiming to address complex care needs effectively.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 1 analysts, the average target price for The Oncology Institute Inc (TOI, Financial) is $2.00 with a high estimate of $2.00 and a low estimate of $2.00. The average target implies an downside of 15.61% from the current price of $2.37. More detailed estimate data can be found on the The Oncology Institute Inc (TOI) Forecast page.
Based on the consensus recommendation from 1 brokerage firms, The Oncology Institute Inc's (TOI, Financial) average brokerage recommendation is currently 1.0, indicating "Buy" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
TOI Key Business Developments
Release Date: May 14, 2025
- Revenue: $104.4 million in Q1 2025, a 10.3% increase compared to Q1 2024.
- Dispensary Revenue: $49.3 million in Q1 2025, with over 20% growth year-over-year.
- Fee-for-Service Revenue: $35.6 million in Q1 2025, a 2.3% increase year-over-year.
- Gross Profit: $17.2 million in Q1 2025, a 44.1% increase compared to Q1 2024.
- Adjusted EBITDA: Negative $5.1 million in Q1 2025, improved from negative $10.9 million in Q1 2024.
- Net Loss: $19.6 million in Q1 2025, an improvement of $303,000 compared to Q1 2024.
- Free Cash Flow: Negative $3.9 million in Q1 2025, improved from negative $15.4 million in Q1 2024.
- SG&A Expenses: $27.2 million in Q1 2025, a 9% decline compared to Q1 2024.
- Cash and Cash Equivalents: $39.8 million at the end of Q1 2025, an increase of $3.7 million compared to Q1 2024.
- Capitation Contracts: Added over 80,000 lives in Q1 2025, with anticipated $50 million in new annualized revenue.
- Debt Paydown: $20 million partial paydown of convertible preferred debt in Q1 2025.
- Capital Raise: $16.5 million gross proceeds from a private placement in Q1 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenues for Q1 2025 increased by 10% compared to the prior year, driven by strong performance in the retail pharmacy and Dispensary business.
- The Dispensary segment grew over 20% in Q1 2025, contributing significantly to revenue and gross profit.
- New capitated contract wins added over 80,000 lives in the first quarter, with anticipated new contracts projected to add approximately $50 million in annualized revenue.
- Gross profit increased by 44.1% year-over-year, attributed to improved revenue and margins in both capitation and fee-for-service segments.
- The company successfully executed a partial paydown of convertible preferred debt and completed a capital raise, strengthening its financial position.
Negative Points
- Adjusted EBITDA loss was $5.1 million, although it was within the upper end of guidance.
- The outsourcing of clinical trials to Helios will result in deconsolidating clinical research revenue, modestly impacting full-year revenue.
- SG&A, including depreciation and amortization, was $27.2 million, representing a significant portion of revenue.
- Net loss for the quarter was $19.6 million, although it showed a slight improvement compared to the previous year.
- Free cash flow remained negative at $3.9 million, despite improvements from the previous year.
