Full Press Release Details
| Financial Statements | 2 |
| Condensed Consolidated Balance Sheets (Unaudited) | 3 |
| Condensed Consolidated Statements of Operations (Unaudited) | 4 |
| Condensed Consolidated Statements of Convertible Preferred Shares and Changes in Stockholders' Deficit (Unaudited) | 5 |
| Condensed Consolidated Statements of Cash Flows (Unaudited) | 6 |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 7 |
Condensed Consolidated Financial Statements
As of September 30, 2021 and December 31,
2020 and For the Nine Months Ended September 30, 2021 and 2020
Condensed Consolidated Balance Sheets
(In US Dollars, except share data)
| September 30, 2021 | December 31, 2020 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 11,531,997 | $ | 5,997,530 | ||||
| Accounts receivable | 22,256,605 | 17,145,910 | ||||||
| Other receivables | 581,451 | 112,663 | ||||||
| Inventories, net | 5,756,578 | 4,354,232 | ||||||
| Prepaid expenses | 2,077,045 | 2,109,256 | ||||||
| Deferred transaction costs | 9,094,029 | - | ||||||
| Total current assets | 51,297,705 | 29,719,591 | ||||||
| Property and equipment, net | 3,517,179 | 2,104,225 | ||||||
| Intangible assets, net | 18,156,667 | 19,515,569 | ||||||
| Goodwill | 15,680,160 | 14,226,674 | ||||||
| Other assets | 250,420 | 122,509 | ||||||
| Deferred income taxes asset | 1,925,196 | - | ||||||
| Total assets | $ | 90,827,327 | $ | 65,688,568 | ||||
| Liabilities and stockholders' deficit | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 4,895,275 | $ | 5,367,758 | ||||
| Accounts payable | 19,013,532 | 12,643,024 | ||||||
| Income taxes payable | 6,159,079 | 1,143,956 | ||||||
| Accrued expenses and other current liabilities | 11,758,211 | 9,452,120 | ||||||
| Total current liabilities | 41,826,097 | 28,606,858 | ||||||
| Long-term debt, net of unamortized debt issuance costs and current portion | - | 6,561,238 | ||||||
| Other non-current liabilities | 1,517,844 | 806,186 | ||||||
| Deferred income taxes liability | - | 1,612,769 | ||||||
| Total liabilities | 43,343,941 | 37,587,051 | ||||||
| 6% cumulative preferred shares, $0.001 par value. Authorized 20,000 shares; 11,451 shares issued and outstanding at September 30, 2021 and 10,000 issued and outstanding at December 31, 2020 | 100,113,700 | 80,113,700 | ||||||
| Stockholders' deficit: | ||||||||
| Common shares, $0.0001 par value. Authorized 400,000 shares; 100 shares issued and outstanding at September 30, 2021 and December 31, 2020 | - | - | ||||||
| Additional paid-in capital | 447,030 | 294,413 | ||||||
| Accumulated deficit | (53,077,344 | ) | (52,306,596 | ) | ||||
| Total stockholders' deficit | (52,630,314 | ) | (52,012,183 | ) | ||||
| Total liabilities, cumulative preferred shares and stockholders' deficit | $ | 90,827,327 | $ | 65,688,568 |
Note: The Company's unaudited condensed consolidated
balance sheets include the assets and liabilities of its consolidated variable interest entities ("VIEs"). The unaudited condensed
consolidated balance sheets include total assets that can be used only to settle obligations of the Company's consolidated VIEs totaling
$31,261,239 and $22,638,470 as of September 30, 2021 and December 31, 2020, respectively, and total liabilities of the Company's
consolidated VIEs for which creditors do not have recourse to the general credit of the primary beneficiary of $57,055,742 and $40,426,148
as of September 30, 2021 and December 31, 2020, respectively. See Note 17 - Variable Interest Entities for further details.
See accompanying notes to the unaudited condensed consolidated financial statements.
Condensed Consolidated Statement of Operations
(In US Dollars, except share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | ||||||||||||||||
| Patient services | $ | 32,967,401 | $ | 29,663,884 | $ | 92,375,768 | $ | 86,985,513 | ||||||||
| Dispensary | 17,918,035 | 16,162,528 | 53,317,877 | 46,347,096 | ||||||||||||
| Clinical trials & other | 1,389,522 | 1,423,032 | 5,004,889 | 5,216,372 | ||||||||||||
| Total operating revenue | 52,274,958 | 47,249,444 | 150,698,534 | 138,548,981 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Direct costs - patient services | 25,390,950 | 24,078,152 | 72,050,631 | 72,830,254 | ||||||||||||
| Direct costs - dispensary | 15,279,173 | 13,431,738 | 45,639,083 | 38,896,324 | ||||||||||||
| Direct costs - clinical trials & other | 182,230 | 166,238 | 493,988 | 786,992 | ||||||||||||
| Selling, general and administrative expense | 12,729,425 | 9,492,069 | 35,119,854 | 26,861,651 | ||||||||||||
| Depreciation and amortization | 850,199 | 792,475 | 2,421,577 | 2,388,219 | ||||||||||||
| Total operating expenses | 54,431,977 | 47,960,672 | 155,725,133 | 141,763,440 | ||||||||||||
| Loss from operations | (2,157,019 | ) | (711,228 | ) | (5,026,599 | ) | (3,214,459 | ) | ||||||||
| Other non-operating (income) expense | ||||||||||||||||
| Interest expense | 77,983 | 107,143 | 259,894 | 259,013 | ||||||||||||
| Gain on debt extinguishment | - | - | (5,186,341 | ) | - | |||||||||||
| Other, net | (53,383 | ) | (119,233 | ) | (1,125,527 | ) | 6,328,119 | |||||||||
| Total other non-operating (income) expense | 24,600 | (12,090 | ) | (6,051,974 | ) | 6,587,132 | ||||||||||
| (Loss) income before provision for income taxes | (2,181,619 | ) | (699,138 | ) | 1,025,375 | (9,801,591 | ) | |||||||||
| Income tax (expense) benefit | (798,504 | ) | 23,190 | (1,796,123 | ) | 298,102 | ||||||||||
| Net loss | $ | (2,980,123 | ) | $ | (675,948 | ) | $ | (770,748 | ) | $ | (9,503,489 | ) | ||||
| Loss per share attributable to TOI Parent, Inc. common stockholders: | ||||||||||||||||
| Basic and diluted | $ | (26.03 | ) | $ | (67.59 | ) | $ | (6.73 | ) | $ | (950.35 | ) | ||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic and diluted | 114,510 | 10,000 | 114,510 | 10,000 |
See accompanying notes to the unaudited condensed consolidated financial statements.
Condensed Consolidated Statements of Convertible
Preferred Shares and Changes in Stockholders' Deficit
(In US Dollars, except share data)
| Cumulative Preferred Shares | Common Shares | Additional Paid in | Total Stockholders' | ||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Accumulated Deficit | Deficit | |||||||||||||||||
| Balance at December, 31, 2019 | 10,000 | $ | 48,143,362 | - | - | $ | 94,007 | $ | (6,015,023 | ) | $ | (5,921,016 | ) | ||||||||||
| Net loss | - | - | - | - | - | (9,845,729 | ) | (9,845,729 | ) | ||||||||||||||
| Share-based compensation expense | - | - | - | - | 34,106 | - | 34,106 | ||||||||||||||||
| Balance at March 31, 2020 | 10,000 | 48,143,362 | - | - | 128,113 | (15,860,752 | ) | (15,732,639 | ) | ||||||||||||||
| Net income | - | - | - | - | - | 1,018,188 | 1,018,188 | ||||||||||||||||
| Share-based compensation expense | - | - | - | - | 42,220 | - | 42,220 | ||||||||||||||||
| Balance at June 30, 2020 | 10,000 | 48,143,362 | - | - | 170,333 | (14,842,564 | ) | (14,672,231 | ) | ||||||||||||||
| Net loss | - | - | - | - | - | (675,948 | ) | (675,948 | ) | ||||||||||||||
| Share-based compensation expense | - | - | - | - | 36,343 | - | 36,343 | ||||||||||||||||
| Balance at September 30, 2020 | 10,000 | $ | 48,143,362 | - | - | $ | 206,676 | $ | (15,518,512 | ) | $ | (15,311,836 | ) |
| Cumulative Preferred Shares | Common Shares | Additional Paid in | Total Stockholders' | ||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Accumulated Deficit | Deficit | |||||||||||||||||
| Balance at December, 31, 2020 | 10,000 | $ | 80,113,700 | 100 | - | $ | 294,413 | $ | (52,306,596 | ) | $ | (52,012,183 | ) | ||||||||||
| Net loss | - | - | - | - | - | (994,650 | ) | (994,650 | ) | ||||||||||||||
| Series A Preferred Shares issued | 1,451 | 20,000,000 | - | - | - | - | - | ||||||||||||||||
| Share-based compensation expense | - | - | - | - | 41,667 | - | 41,667 | ||||||||||||||||
| Balance at March 31, 2021 | 11,451 | 100,113,700 | 100 | - | 336,080 | (53,301,246 | ) | (52,965,166 | ) | ||||||||||||||
| Net income | - | - | - | - | - | 3,204,025 | 3,204,025 | ||||||||||||||||
| Share-based compensation expense | - | - | - | - | 51,272 | - | 51,272 | ||||||||||||||||
| Balance at June 30, 2021 | 11,451 | 100,113,700 | 100 | - | 387,352 | (50,097,221 | ) | (49,709,869 | ) | ||||||||||||||
| Net loss | - | - | - | - | - | (2,980,123 | ) | (2,980,123 | ) | ||||||||||||||
| Share-based compensation expense | - | - | - | - | 59,678 | - | 59,678 | ||||||||||||||||
| Balance at September 30, 2021 | 11,451 | $ | 100,113,700 | 100 | - | $ | 447,030 | $ | (53,077,344 | ) | $ | (52,630,314 | ) |
See accompanying notes to the unaudited condensed consolidated financial statements.
Condensed Consolidated Statement of Cash Flows
| Nine Months Ended September 30 | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (770,748 | ) | $ | (9,503,489 | ) | ||
| Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 2,421,577 | 2,388,219 | ||||||
| Amortization of debt issuance costs | 52,787 | 41,950 | ||||||
| Impairment loss | - | 7,500,000 | ||||||
| Share-based compensation | 152,617 | 112,669 | ||||||
| Deferred taxes | (3,537,965 | ) | (888,897 | ) | ||||
| Gain on debt extinguishment | (5,186,341 | ) | - | |||||
| Bad debt recovery, net | (667,099 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (4,194,781 | ) | (4,142,477 | ) | ||||
| Inventories | (1,339,690 | ) | (782,278 | ) | ||||
| Other receivables | (319,390 | ) | 55,906 | |||||
| Prepaid expenses | 32,211 | (982,021 | ) | |||||
| Other current assets | (9,094,029 | ) | - | |||||
| Other assets | (127,911 | ) | (16,075 | ) | ||||
| Accrued expenses and other current liabilities | 1,431,749 | 5,067,777 | ||||||
| Income taxes payable | 5,015,123 | 532,044 | ||||||
| Accounts payable | 6,250,508 | 2,084,374 | ||||||
| Other non-current liabilities | 536,674 | (83,991 | ) | |||||
| Net cash (used in) provided by operating activities | (9,344,708 | ) | 1,383,711 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (1,975,629 | ) | (835,539 | ) | ||||
| Purchases of intangible asset in acquisition | (200,000 | ) | - | |||||
| Cash paid for acquisition, net | (827,457 | ) | (150,000 | ) | ||||
| Issuance of notes receivable | - | (7,500,000 | ) | |||||
| Net cash used in investing activities | (3,003,086 | ) | (8,485,539 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of long-term debt, net | - | 12,399,008 | ||||||
| Principal payments on long-term debt | (2,093,750 | ) | (93,750 | ) | ||||
| Principal payments on capital leases | (23,989 | ) | (26,251 | ) | ||||
| Deferred offering costs | - | (342,500 | ) | |||||
| Issuance of preferred stock | 20,000,000 | - | ||||||
| Net cash provided by financing activities | 17,882,261 | 11,936,507 | ||||||
| Net increase in cash | 5,534,467 | 4,834,679 | ||||||
| Cash at beginning of period | 5,997,530 | 2,446,201 | ||||||
| Cash at end of period | $ | 11,531,997 | $ | 7,280,880 | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Interest and principal forgiven from Paycheck Protection Program loans | $ | 5,186,341 | $ | - | ||||
| Cash paid for: | ||||||||
| Income taxes | $ | 428,537 | $ | 58,500 | ||||
| Interest | 193,096 | 168,530 |
See accompanying notes to the unaudited condensed consolidated financial statements.
Notes to Condensed Consolidated Financial Statements
As of September 30, 2021 and December 31,
2020 and For the Nine Months Ended September 30, 2021 and 2020
Note 1. Description of the Business
Founded in 2018, TOI Parent, Inc. ("TOI
Parent") is the successor entity to The Oncology Institute CA, a Professional Corporation ("TOI CA"), which was founded
in 2007. TOI Parent is a community oncology practice that operates value-based oncology services platforms. TOI Parent has three wholly-owned
subsidiaries, TOI Acquisition, LLC ("TOI Acquisition"), TOI Management, LLC ("TOI Management"), and Hope, Health,
and Healing Center, LLC ("HHHC"). Additionally, TOI Management holds master services agreements that confer controlling financial
interests to TOI CA and its wholly-owned subsidiary Innovative Clinical Research Institute, LLC ("ICRI") as well as The Oncology
Institute FL, LLC ("TOI FL," together with TOI Parent, TOI CA, and ICRI, the "Company").
Concurrent with its founding in 2018, TOI Parent
entered into a purchase agreement among TOI Acquisition, TOI Management, HHHC, Richy Agajanian Holdings, TOI CA, ICRI, and Richy
Agajanian, M.D., not individually but in his capacity as the representative of the shareholders of TOI CA. As a result of the purchase,
a portion of TOI Parent was sold to TOI HC I, LLC; M33 Growth I L.P.; TOI M, LLC; and OncologyCare Partners, LLC.
Operationally, the Company's medical centers
provide a complete suite of medical oncology services including: physician services, in-house infusion and pharmacy, clinical trials,
educational seminars, support groups, counseling, and 24/7 patient assistance. TOI's mission is to heal and empower cancer patients
through compassion, innovation, and state-of-the-art medical care. The Company brings comprehensive, integrated cancer care into the community
setting, including clinical trials, palliative care programs, stem cell transplants, transfusions, and other care delivery models traditionally
associated with non-community-based academic and tertiary care settings. In addition, the Company, through ICRI, performs cancer clinical
trials through a network of experienced cancer care specialists. ICRI conducts clinical trials for a broad range of pharmaceutical and
medical device companies from around the world.
The Company has 90 oncologists and mid-level professionals
across 62 clinic locations located within four states: California, Nevada, Arizona, and Florida. TOI CA is comprised of the clinic locations
in California, Nevada, and Arizona and TOI FL is comprised of the clinic locations in Florida. The Company has contractual relationships
with multiple payors, serving Medicare, including Medicare Advantage, MediCal, and commercial patients.
Note 2. Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The accompanying interim condensed consolidated
financial statements are unaudited and have been prepared in accordance with Article 10 of Regulation S-X issued by the Securities
and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and note disclosures required by U.S.
generally accepted accounting principles ("GAAP") for complete financial statements. However, the Company believes that the
disclosures are adequate to make that information not misleading. In the opinion of management, all adjustments (of normal and recurring
nature) considered necessary for fair presentation have been reflected in these interim statements. As such, the information included
in the accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company's
audited consolidated financial statements and notes as of, and for the year ended December 31, 2020, issued on June 27, 2021.
Principles of Consolidation
The accompanying unaudited condensed consolidated
financial statements include the accounts of TOI Parent, its subsidiaries, all of which are controlled by the Parent through majority
voting control or are variable interest entities ("VIEs") for which TOI Parent (through TOI Management) is the primary beneficiary.
The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity or voting
interest model. All significant intercompany balances and transactions have been eliminated in consolidation.
Variable Interest Entities
The Company consolidates entities for which it
has a variable interest and is determined to be the primary beneficiary. Noncontrolling interests in less-than-wholly-owned consolidated
subsidiaries of the Company are presented as a component of total equity, to the extent they are material, to distinguish between the
interests of the Company and the interests of the noncontrolling owners. Revenues, expenses, and income from these subsidiaries are included
in the consolidated amounts as presented on the consolidated statements of operations.
The Company holds variable interests in clinical
practices, for which it cannot legally own, as a result of entering into master services agreements ("MSAs") with such practices.
TOI Parent holds a variable interest in TOI CA, which is a VIE. The Company is the primary beneficiary of TOI CA and thus, consolidates
TOI CA in its financial statements. Further, as a result of the February 2021 acquisition, discussed in Note 16, the Company holds
an additional variable interest in TOI FL, which was determined to be a VIE. The Company determined that it is a primary beneficiary of
TOI FL and thus, consolidates the entity in its financial statements. As discussed in Note 17, the shareholders of the Company's consolidating
VIEs own a minority of the issued and outstanding common shares of the Company.
Business Combinations
The Company accounts for all transactions that
represent business combinations using the acquisition method of accounting under Accounting Standards Codification Topic No. 805,
Business Combinations ("ASC 805"). Per ASC 805, the identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquired entity are recognized and measured at their fair values on the date an entity obtains control of the acquiree.
Such fair values that are not finalized for reporting periods following the acquisition date are estimated and recorded as provisional
amounts. Adjustments to these provisional amounts during the measurement period (defined as the date through which all information required
to identify and measure the consideration transferred, the assets acquired, the liabilities assumed, and the noncontrolling interests
obtained, limited to one year from the acquisition date) are recorded when identified. Goodwill is determined as the excess of the fair
value of the consideration exchanged in the acquisition over the fair value of the net assets acquired.
The Company presents the financial statements
by segment in accordance with Accounting Standard Codification Topic No. 280, Segment Reporting ("ASC 280") to provide
investors with transparency into how the chief operating decision maker ("CODM") manages the business. The Company determined
the CODM is its Chief Executive Officer. The CODM reviews financial information and allocates resources across three operating segments:
patient services, dispensary, and clinical trials & other. Each of the operating segments is also a reporting segment as described
The preparation of consolidated financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities