[Management View]
The Oncology Institute reported strong performance in Q2 2025, driven by new risk contracts and pharmacy expansion. Key metrics include $62.6 million in pharmacy revenue (up 41% YoY), $55.9 million in patient services revenue (up 7% YoY), and a gross profit of $17.5 million (up 34% YoY). Strategic priorities focus on expanding capitation contracts and leveraging AI for operational improvements.

[Outlook]
Management provided performance guidance for FY2025, projecting full-year revenue between $460 million and $480 million, with adjusted EBITDA loss guidance between $17 million and $8 million. Future plans include expanding capitation contracts in Florida and Nevada, launching AI-enabled projects, and opening new pharmacy locations.

[Financial Performance]
Q2 2025 saw a 21.5% increase in consolidated revenue compared to Q2 2024. Pharmacy revenue grew 41% YoY and 27% sequentially. Patient services revenue increased 7% YoY. Gross profit increased 34% YoY, with a gross margin of 14.6%. SG&A expenses decreased 12% YoY after normalizing for a one-time write-off.

[Q&A Highlights]
Question 1: Can you talk a little bit about the dispensing gross margin? Are there any specific drugs driving this?
Answer: Dispensary margin improved due to better drug procurement and incremental rebates. The focus is on Part D medications, primarily oral specialty or self-injectables.

Question 2: Any thoughts on the potential impact of drug pricing reform, the Inflation Reduction Act, and most favored nation comments?
Answer: The Oncology Institute expects a net positive impact from drug pricing reform, benefiting capitated margins and potentially providing rebates for fee-for-service practices.

Question 3: Are there any specific drugs that might impact your business significantly in the back half of the year or into 2026?
Answer: No significant risks from specific drugs are foreseen. The Oncology Institute's diverse drug portfolio mitigates such risks.

Question 4: Can you talk more about the pressure on the gross patient service margin and the timeline for improvement?
Answer: The pressure is primarily related to new capitation contracts. Margins are expected to improve as patients transition to The Oncology Institute's care model over the next three months.

Question 5: What was your observation on oncology spend in Q2 2025, and can you manage costs at a relatively low level in the second half of 2025?
Answer: The Oncology Institute saw stable MLR due to narrow networks and value-based therapeutic decision-making, despite overall increases in drug costs.

Question 6: Can you comment on the timeline for recognizing revenue from the Elevance contract in Florida?
Answer: Revenue recognition for the Elevance contract is expected to start in Q4 2025.

Question 7: Have you noticed any impact from PBMs shifting infusion drugs from clinic to their own pharmacy benefit coverage?
Answer: Shifting drugs from Part B to Part D would be net positive for The Oncology Institute, reducing risk costs.

Question 8: Can you provide details on the new patients from contracts announced in the first half and those coming online in the second half?
Answer: Growth is primarily outside California, with higher utilization rates and PMPMs. Florida is expected to have around 100,000 Medicare Advantage lives by year-end.

Question 9: Can you explain the fully delegated risk arrangements?
Answer: Fully delegated risk arrangements involve The Oncology Institute taking risk for Part B oncology spend and managing utilization, network design, and claims adjudication for broader populations.

[Sentiment Analysis]
Analysts expressed positive sentiment regarding The Oncology Institute's performance and strategic initiatives. Management's tone was confident, emphasizing growth and operational improvements.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|---------------------------|-----------------|-----------------|------------------|
| Consolidated Revenue | $119.8 million | $98.6 million | +21.5% |
| Pharmacy Revenue | $62.6 million | $44.4 million | +41% |
| Patient Services Revenue | $55.9 million | $52.2 million | +7% |
| Gross Profit | $17.5 million | $13.0 million | +34% |
| SG&A Expenses | $26.9 million | $27.9 million | -3.5% |
| Adjusted EBITDA | -$4.1 million | -$8.7 million | +52.9% |

[Risks and Concerns]
Risks include potential impacts from drug pricing reform and the integration of new capitation contracts. Concerns about managing costs and maintaining margins as new contracts mature were addressed by management.

[Final Takeaway]
The Oncology Institute demonstrated strong performance in Q2 2025, driven by pharmacy growth and new capitation contracts. Management's strategic focus on expanding risk-based contracting and leveraging AI initiatives positions the company for continued growth and profitability. Positive sentiment from analysts and confident management guidance support a favorable outlook for the remainder of the year.