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The Oncology Institute (NASDAQ:TOI) reported fourth-quarter and full-year 2025 results highlighted by what management described as its first profitable quarter as a public company on an adjusted EBITDA basis, alongside continued growth in its capitated and pharmacy dispensing businesses.
CEO Daniel Virnich said the company is reaffirming its expectation to achieve full-year positive adjusted EBITDA in 2026, citing momentum from expanding its capitated care model—particularly delegated arrangements intended to more comprehensively manage the oncology benefit while aligning incentives with payer partners.
2025 growth milestones and operating initiatives
- TOI initiated nine new capitated contracts in 2025 across California, Florida, and Nevada, representing about 260,000 additional patient lives under management, according to Virnich.
- The Part D dispensing platform reached nearly $270 million in revenue and contributed close to $50 million in gross profit for the year, management said.
- SG&A declined 2% year over year for 2025, which Virnich said demonstrated operating leverage as the company scales.
- The company outsourced its clinical trials operations during the year, which Virnich said was intended to keep physicians and care teams focused on clinical care while maintaining patient access to trials and supporting scalability.
- TOI reduced debt on its convertible preferred note by $24 million and ended 2025 with $33.6 million in cash, following positive free cash flow in the fourth quarter, management said.
Delegated capitation model expansion in Florida
Management repeatedly emphasized delegated capitation as a key driver of its progress. Virnich said TOI’s delegated capitation partnership with Elevance Health in Florida continued to ramp in the fourth quarter and is expected to continue expanding across the state in 2026, which he said would “more than double” the current partnership. The company reported approximately 70,000 lives under capitated arrangements within the Elevance partnership.
Virnich also noted that delegated members represented less than 5% of total capitated lives at the end of 2025 but accounted for about a third of run-rate capitated revenue, reflecting the higher per-member-per-month (PMPM) structure of delegated arrangements and the higher-utilizing populations they serve.
In addition, management said it initiated capitation agreements with Humana and CarePlus in Florida during the fourth quarter, representing about 22,000 additional Medicare Advantage lives in South Florida. During Q&A, the company described both Humana and CarePlus as net new payer partner adds, delegated to risk-bearing medical groups in the market. Management declined to comment on the incumbent oncology provider for those populations, but said it believed TOI won the business due to its reputation for access, quality care, and coordination with referring primary care physicians.
TOI also discussed its Florida Oncology Network “hybrid model,” which combines care delivery across TOI-affiliated clinics and independent clinics under a delegated network umbrella. Virnich said the number of participating providers in Florida increased to about 207 physicians and advanced practice providers. In another exchange, management said it has “80 employed sites of care across five states” and that the Florida network is “over 200 by head count,” bringing totals to “close to 300 combined.”
Fourth-quarter results: revenue, margins, and adjusted EBITDA
CFO Rob Carter reported fourth-quarter revenue of $142.0 million, up from $100.3 million in the prior-year period, for 41.6% year-over-year growth. Patient services revenue (capitation and fee-for-service) was $59.8 million, up 19.2% year over year, and represented 42.2% of total revenue. Pharmacy revenue was $81.4 million, up 71.1% year over year, and represented 57.4% of total revenue.
Gross profit in the quarter was $22.7 million, compared with $14.6 million in the fourth quarter of 2024. Gross margin was 16.0% versus 14.6% a year ago. Patient services gross profit was $7.1 million (11.9% margin) compared with $4.5 million (8.9% margin) in the prior-year quarter. Pharmacy gross profit was $14.9 million (18.3% margin) compared with $8.1 million a year ago, with Carter citing higher dispensing volumes and improved drug purchasing as drivers.
SG&A (excluding depreciation and amortization) was $28.0 million, or 19.7% of revenue, compared with 24.8% of revenue a year ago, reflecting a reduction of more than 500 basis points. Adjusted EBITDA was $147,000, improving from -$7.8 million in the fourth quarter of 2024.
In response to an analyst question about dispensing outperformance, management attributed the strong quarter to execution on reducing “leakage” of prescriptions to outside specialty pharmacies and to growth in patient encounters tied to capitation contract expansion across markets.
2026 outlook, IRA commentary, and margin expectations
For full-year 2026, the company reiterated guidance previously provided in January, calling for:
- Revenue of $630 million to $650 million
- Capitated revenue of approximately $150 million
- Gross profit of $97 million to $107 million
- Adjusted EBITDA of $0 million to $9 million
- Free cash flow of -$15 million to $5 million
Carter said the first quarter is seasonally the lowest due to patient deductible resets and annual drug price increases that are not immediately reflected in reimbursement rates. As a result, the company expects first-quarter adjusted EBITDA to be a loss of $3 million to $1 million. He also noted that the first quarter of 2025 included a one-time $1.6 million benefit from a renegotiated drug distribution agreement.
On the pharmacy side, the company’s 2026 assumptions include performance in line with the second-half 2025 revenue run rate of about $27 million per month, plus modest incremental growth of 3% to 5% tied to pharmacy attachment from new capitation lives captured in TOI clinics.
Management said gross profit is expected to grow slightly ahead of revenue, with gross margin improving 100 to 200 basis points, driven primarily by improving direct medical expenses relative to revenue, supported by improvements in drug spend through commercial procurement and utilization management. SG&A is expected to trend down modestly as a percentage of revenue to about 16%, though Carter said the company will continue to prioritize growth initiatives and that improvements should continue “not to that degree” seen in 2025.
Addressing the Inflation Reduction Act, Carter said TOI expects the 2026 impact to IMBRUVICA to be minor—less than 1% of total pharmacy revenue and gross margin. He added that TOI has “multiple levers” to offset IRA impacts, including pharmacy mix optimization through centralized utilization management and reassessing category economics with manufacturers and distributors as the company’s purchasing power increases. As a result, the company said it does not expect the IRA to materially alter long-term economics or the platform’s trajectory.
In Q&A, management also discussed medical loss ratio (MLR) expectations for newly launched contracts. Carter said performance on volume and MLR is tracking as expected. For delegated contracts launched in Florida, management said an 85% MLR by late 2026 was a fair expectation, while noting narrow network contracts in California are expected to have lower MLR with a faster ramp.
Management added that it currently does not take risk on CAR T therapy, citing low incidence and limited community availability, but said it would consider adding it to value-based contracting if community models expand and utilization grows over time.
Looking at industry dynamics, Virnich argued that pressure on Medicare Advantage rates is a tailwind for TOI, saying its Medicare Advantage reimbursement is not a percentage of premium and is not impacted by risk adjustment. He added that tighter payer economics can increase demand for care models that improve utilization management, and said TOI’s employed-plus-network model provides stronger control over physician practice patterns and allows it to price contracts competitively.
About Oncology Institute (NASDAQ:TOI)
The Oncology Institute, Inc, an oncology company, provides various medical oncology services in the United States. The company operates through three segments: Dispensary, Patient Services, and Clinical Trials & Other. It offers physician services, in-house infusion and dispensary, clinical trial, radiation, outpatient blood product transfusion, and patient support services, as well as educational seminars, support groups, and counseling services. The company also provides managing clinical trials, palliative care programs, stem cell transplants services, and other care delivery models associated with non-community-based academic and tertiary care settings; and conducts clinical trials for a range of pharmaceutical and medical device companies.
