☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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DFP HEALTHCARE ACQUISITIONS CORP.
(Exact name of registrant as specified in its charter)
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Delaware |
| 84-3562323 | |||||||||
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) | |||||||||
| 18000 Studebaker Rd, Suite 800 | Cerritos | California | 90703 | ||||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||
345 Park Avenue South
New York, New York10010
(Address of Principal Executive Offices, including zip code)
(212) 551-1600
Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered The Nasdaq Stock Market LLC The Nasdaq Stock Market LLC Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company Financial Statements and Supplementary Data June 30, 2021 December 31, 2020 (unaudited) Assets: Current assets: Cash $ 620,731 $ 916,987 Prepaid expenses 126,450 152,474 Total current assets 747,181 1,069,461 Cash and investments held in Trust Account 230,006,825 230,254,149 Total assets $ 230,754,006 $ 231,323,610 Liabilities and Stockholders’ Equity: Current liabilities: Accounts payable $ 961,659 $ — Accrued expenses 1,520,000 50,000 Accrued expenses - related parties 17,500 17,500 Franchise tax payable 19,228 200,050 Total current liabilities 2,518,387 267,550 Deferred underwriting commissions 6,300,000 6,300,000 Derivative warrant liabilities 16,406,170 18,791,170 Total liabilities 25,224,557 25,358,720 Commitments and Contingencies Class A common stock, $0.0001 par value; 20,052,944 and 20,096,488 shares subject to possible redemption at $10.00 per share as of June 30, 2021 and December 31, 2020, respectively 200,529,440 200,964,880 Stockholders’ Equity: Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding — — Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 2,947,056 and 2,903,512 shares issued and outstanding (excluding 20,052,944 and 20,096,488 shares subject to possible redemption) as of June 30, 2021 and December 31, 2020, respectively 295 290 Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 5,750,000 shares issued and outstanding as of June 30, 2021 and December 31, 2020 575 575 Additional paid-in capital 13,776,784 13,341,349 Accumulated deficit (8,777,645) (8,342,204) Total stockholders’ equity 5,000,009 5,000,010 Total liabilities and stockholders’ equity $ 230,754,006 $ 231,323,610 INCOME (OPERATIONS) For the Three Months Ended June 30, For the Six Months Ended June 30, 2021 2020 2021 2020 General and administrative expenses $ 2,533,427 $ 92,008 $ 2,668,889 $ 112,582 General and administrative expenses - related party 52,500 52,500 105,000 70,000 Franchise tax expense 49,863 50,050 99,228 99,750 Loss from operations (2,635,790) (194,558) (2,873,117) (282,332) Other income (expense) Interest income from investments in Trust Account 6,719 78,823 52,676 121,508 Change in fair value of derivative warrant liabilities (3,491,670) (2,503,000) 2,385,000 (2,919,670) Financing cost - derivative warrant liabilities — — — (315,080) Income (loss) before income tax expense (6,120,741) (2,618,735) (435,441) (3,395,574) Income tax expense — — — Net loss $ (6,120,741) $ (2,618,735) $ (435,441) $ (3,395,574) Weighted average shares outstanding of Class A common stock 23,000,000 23,000,000 23,000,000 2,300,000 Basic and diluted net income (loss) per share, Class A $ — $ — $ — $ — Weighted average shares outstanding of Class B common stock 5,750,000 5,750,000 5,750,000 5,453,297 Basic and diluted net loss per share, Class B $ (1.06) $ (0.46) $ (0.08) $ (0.62) Common Stock Class A Class B Additional Paid-In Accumulated Total Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance - December 31, 2020 2,903,512 $ 290 5,750,000 $ 575 $ 13,341,349 $ (8,342,204) $ 5,000,010 Common stock subject to possible redemption (568,530) (57) — — (5,685,243) — (5,685,300) Net income — — — — — 5,685,300 5,685,300 Balance - March 31, 2021 2,334,982 $ 233 5,750,000 $ 575 $ 7,656,106 $ (2,656,904) $ 5,000,010 Common stock subject to possible redemption 612,074 62 — — 6,120,678 — 6,120,740 Net income — — — — — (6,120,741) (6,120,741) Balance - June 30, 2021 2,947,056 $ 295 5,750,000 $ 575 $ 13,776,784 $ (8,777,645) $ 5,000,009 (DEFICIT) Common Stock Class A Class B Additional Paid-In Accumulated Total Stockholders' Shares Amount Shares Amount Capital Deficit Equity Balance - December 31, 2019 — $ — 5,750,000 $ 575 $ 24,425 $ (2,300) $ 22,700 Sale of units in initial public offering, less allocation to derivative warrant liabilities 23,000,000 2,300 — — 223,270,200 — 223,272,500 Offering costs — — — — (10,110,406) — (10,110,406) Sale of private placement warrants to Sponsor in private placement, less allocation to derivative warrant liabilities — — — — 1,120,000 — 1,120,000 Common stock subject to possible redemption (20,852,795) (2,085) — — (208,525,865) — (208,527,950) Net loss — — — — — (776,839) (776,839) Balance - March 31, 2020 2,147,205 215 5,750,000 $ 575 $ 5,778,354 $ (779,139) $ 5,000,005 Common stock subject to possible redemption 261,874 26 — — 2,618,714 — 2,618,740 Net loss — — — — — (2,618,735) (2,618,735) Balance - June 30, 2020 2,409,079 $ 241 5,750,000 $ 575 $ 8,397,068 $ (3,397,874) $ 5,000,010 For the Six Months Ended June 30, 2021 2020 Cash Flows from Operating Activities: Net income (loss) $ (435,441) $ (3,395,574) Adjustments to reconcile net income (loss) to net cash used in operating activities: Interest earned on investments held in Trust Account (52,676) (121,508) Financing cost - derivative warrant liabilities — 315,080 Change in fair value of derivative warrant liabilities (2,385,000) 2,919,670 Changes in operating assets and liabilities: Prepaid expenses 26,024 (242,370) Accounts payable 961,659 — Accrued expenses 1,470,000 (23,622) Accrued expenses - related parties — 17,500 Franchise tax payable (180,822) 99,300 Net cash used in operating activities (596,256) (431,524) Cash Flows from Investing Activities Cash deposited in Trust Account — (230,000,000) Investment income released from Trust Account for working capital 300,000 — Net cash used in investing activities 300,000 (230,000,000) Cash Flows from Financing Activities: Proceeds received from note payable to related party — 200,000 Repayment of note payable to related party — (200,000) Proceeds received from initial public offering, gross — 230,000,000 Proceeds received from private placement — 5,600,000 Offering costs paid — (4,090,364) Net cash provided by financing activities — 231,509,636 Net change in cash (296,256) 1,078,112 Cash - beginning of the period 916,987 25,000 Cash - end of the period $ 620,731 $ 1,103,112 Supplemental disclosure of noncash activities: Prepaid expenses included in accounts payable $ — $ — Offering costs included in accounts payable $ — $ — Offering costs included in accrued expenses $ — $ 35,122 Deferred underwriting commissions in connection with the initial public offering $ — $ 6,300,000 Initial value of Class A common stock subject to possible redemption $ — $ 208,956,930 Change in value of Class A common stock subject to possible redemption $ (435,440) $ (3,047,720) the Business The Oncology Institute, Inc. (“TOI”) is the successor entity to DFP Healthcare Acquisitions Corp. originally formed in the earnout shares in Note 14). For the periods presented, the public and private placement warrants are out of the money; therefore, the public and private placement warrants are antidilutive and excluded from diluted net income per share. On which are applied on a prospective basis and others on a retrospective basis with earlier application permitted. The For the Three Months Ended June 30, For the Six Months Ended June 30, 2021 2020 2021 2020 Class A common stock Numerator: Income allocable to Class A common stock Interest income from investments in Trust Account $ 6,719 $ 78,823 $ 52,676 $ 121,508 Less: Company's portion available to be withdrawn for working capital and to pay taxes (6,719) (78,823) (52,676) (121,508) Net income attributable to Class A common stock $ 0 $ 0 $ 0 $ 0 Denominator: Weighted average Class A common stock Basic and diluted weighted average shares outstanding, Class A common stock 23,000,000 23,000,000 23,000,000 2,300,000 Basic and diluted net income per share, Class A common stock $ — $ — $ — $ — Class B common stock Numerator: Net income (loss) minus net income allocable to Class A common stock Net loss $ (6,120,741) $ (2,618,735) $ (435,441) $ (3,395,574) Net income allocable to Class A common stock — — — — Net loss attributable to Class B common stock $ (6,120,741) $ (2,618,735) $ (435,441) $ (3,395,574) Denominator: weighted average Class B common stock Basic and diluted weighted average shares outstanding, Class B common stock 5,750,000 5,750,000 5,750,000 5,453,297 Basic and diluted net income (loss) per share, Class B common stock $ (1.06) $ (0.46) $ (0.08) $ (0.62) In August 2020, the accounts receivable, other receivables, and accounts payable approximate fair value because of the short maturity and high liquidity of these instruments. condensed consolidated statements of operations. Quoted Prices in Significant Other Significant Other Active Markets Observable Inputs Unobservable Inputs Description (Level 1) (Level 2) (Level 3) Assets Investments held in Trust Account $ 230,006,825 $ — $ — Liabilities Derivative warrant liabilities - Public Warrants $ 9,947,500 $ — $ — Derivative warrant liabilities - Private Warrants $ — $ — $ 6,458,670 Quoted Prices in Significant Other Significant Other Active Markets Observable Inputs Unobservable Inputs Description (Level 1) (Level 2) (Level 3) Assets Assets held in Trust Account: U.S. Treasury securities $ 230,253,395 $ — $ — Cash equivalents - money market funds 754 — — $ 230,254,149 $ — $ — Liabilities Derivative warrant liabilities - Public Warrants $ 11,212,500 $ — $ — Derivative warrant liabilities - Private Warrants $ — $ — $ 7,578,670 noncontrolling interest, respectively. For the three months ended As of June 30, 2021 As of December 31, 2020 Stock Price $ 9.95 $ 10.80 Volatility 24.0 % 24.0 % Expected life of the options to convert 5.25 5.75 Risk-free rate 0.92 % 0.47 % Dividend yield 0.0 % 0.0 % Level 3 - Derivative warrant liabilities at December 31, 2020 $ 7,578,670 Change in fair value of derivative warrant liabilities (2,426,670) Level 3 - Derivative warrant liabilities at March 31, 2021 $ 5,152,000 Change in fair value of derivative warrant liabilities 1,306,670 Level 3 - Derivative warrant liabilities at June 30, 2021 $ 6,458,670 (Registrant’scode)code N/A(Former name, former address and former fiscal year, if changed since last report)Units, each consisting of oneCommon Stock, $0.0001 par value per share of Class A common stock and one-fourth of one redeemable warrantTOI DFPHUClass AWarrants to purchase common stock par value $0.0001 per shareTOIIW DFPHWarrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per shareDFPHWThe Nasdaq Stock Market LLCregistrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),; and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☐☐ ☐☒ ☒☐ ☒ ☒ Exchange Act):. Yes ☐ No ☒ No ☐August 16, 2021, 23,000,000 Class A ordinaryMay 9, 2022, the registrant had 73,276,230 shares $0.0001 par value, and 5,750,000 Class B ordinary shares, $0.0001 par value, were issued andof common stock outstanding.UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSDFP HEALTHCARE ACQUISITIONS CORP.March 31, 2022 December 31, 2021 (Unaudited) Assets Current assets: Cash (includes restricted cash of $875 and $875 as of March 31, 2022 and December 31, 2021) $ 95,534 $ 115,174 Accounts receivable 24,513 20,007 Other receivables 1,279 1,237 Inventories, net 7,770 6,438 Prepaid expenses 10,744 11,200 Total current assets 139,840 154,056 Property and equipment, net 4,909 4,192 Operating right of use assets 17,233 — Intangible assets, net 17,572 18,245 Goodwill 26,626 26,626 Other assets 332 320 Total assets $ 206,512 $ 203,439 Liabilities and stockholders’ equity Current liabilities: Current portion of operating lease liabilities $ 4,277 $ — Current portion of long-term debt — 183 Accounts payable 12,596 15,559 Income taxes payable 132 132 Accrued expenses and other current liabilities 14,516 13,924 Total current liabilities 31,521 29,798 Operating lease liabilities 14,409 — Derivative warrant liabilities 3,654 2,193 Derivative earnout liabilities 20,578 60,018 Other non-current liabilities 3,801 6,900 Deferred income taxes liability 551 371 Total liabilities 74,514 99,280 Commitments and contingencies (Note 15) — — Stockholders’ equity: 7 7 TOI Convertible Series A Common Equivalent Preferred Shares, $0.0001 par value. Authorized 10,000,000 shares; 163,510 shares issued and outstanding at March 31, 2022 and December 31, 2021 — — Additional paid-in capital 175,939 167,386 Accumulated deficit (43,948) (63,234) Total stockholders’ equity 131,998 104,159 Total liabilities, cumulative preferred shares and stockholders’ equity $ 206,512 $ 203,439 are an integral part of these unauditedto the condensed consolidated financial statements.1DFP HEALTHCARE ACQUISITIONS CORP.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSThree Months Ended March 31, 2022 2021 Revenue Patient services $ 35,057 $ 29,622 Dispensary 18,679 17,618 Clinical trials & other 1,425 1,340 Total operating revenue 55,161 48,580 Operating expenses Direct costs – patient services 27,378 23,086 Direct costs – dispensary 15,324 15,123 Direct costs – clinical trials & other 137 169 Selling, general and administrative expense 29,806 11,178 Depreciation and amortization 987 777 Total operating expenses 73,632 50,333 Loss from operations (18,471) (1,753) Other non-operating expense (income) Interest expense 74 101 Change in fair value of derivative warrant liabilities 1,461 — Change in fair value of earnout liabilities (39,440) — Gain on debt extinguishment (183) — Other, net 151 (1,076) Total other non-operating income (37,937) (975) Income before provision for income (loss) taxes 19,466 (778) Income tax expense (180) (218) Net income (loss) $ 19,286 $ (996) Net income (loss) per share attributable to common stockholders: Basic $ 0.22 $ (0.02) Diluted $ 0.21 $ (0.02) Weighted-average number of shares outstanding: Basic 73,252,365 62,853,419 Diluted 76,247,966 62,853,419 Theare an integral part of these unauditedto the condensed consolidated financial statements.2For the Three and Six Months Ended June 30, 2021Common stock Preferred stock Shares Amount Shares Amount Additional paid in capital Retained Earnings/ (Accumulated Deficit) Total Stockholders’ Equity (Deficit) Balance at December 31, 2021 73,249,042 $ 7 163,510 $ — $ 167,386 $ (63,234) $ 104,159 Net Income — — — — — 19,286 19,286 Issuance of common stock upon vesting of RSUs 27,188 — — — — — — Share-based compensation expense — — — — 8,553 — 8,553 Balance at March, 31, 2022 73,276,230 $ 7 163,510 $ — $ 175,939 $ (43,948) $ 131,998 Legacy TOI preferred stock Legacy TOI common stock Common stock Preferred stock Shares Amount Shares Amount Shares Amount Shares Amount Additional paid in capital Retained Earnings/ (Accumulated Deficit) Total Stockholders’ Equity (Deficit) Balance at December, 31, 2020 (as previously reported) 11,451 $ 100 — $ — — $ — — $ — $ 294 $ (52,307) $ (52,013) Retroactive application of the recapitalization due to the Business Combination (refer to Note 1) (11,451) (100) — — 59,160,192 6 — — 80,108 — 80,114 Balance at December 31, 2020, effect of Business Combination (refer to Note 1) — $ — — $ — 59,160,192 $ 6 — $ — $ 80,402 $ (52,307) $ 28,101 Net loss — — — — — — — — — (996) (996) Legacy TOI preferred stock issued and issuance of common stock — — — — 6,861,637 1 — — 19,998 — 19,999 Share-based compensation expense — — — — — — — — 42 — 42 Balance at March, 31, 2021 — $ — — $ — 66,021,829 $ 7 — $ — $ 100,442 $ (53,303) $ 47,146 For the Three and Six Months Ended June 30, 2020Theare an integral part of these unauditedto the condensed consolidated financial statements.3TheThree Months Ended March 31, 2022 2021 Cash flows from operating activities: Net income (loss) $ 19,286 $ (996) Adjustments to reconcile net loss to cash (used in) provided by operating activities: Depreciation and amortization 987 777 Amortization of debt issuance costs — 18 Share-based compensation 8,553 42 Increase in fair value of liability classified warrants 1,461 — Decrease in fair value of liability classified earnouts (39,440) — Deferred taxes 180 221 Gain on debt extinguishment (183) — Bad debt expense 154 — Loss on disposal of property and equipment 14 — Changes in operating assets and liabilities: Accounts receivable (4,660) (550) Inventories (1,332) 10 Other receivables (42) (20) Prepaid expenses 456 56 Other current assets — (353) Operating lease right-of-use assets 942 — Other assets (11) (37) Accrued expenses and other current liabilities 526 358 Income taxes payable — 102 Accounts payable (2,963) 474 Current and long-term operating lease liabilities (909) — Other non-current liabilities — 362 Net cash and restricted cash (used in) provided by operating activities (16,981) 464 Cash flows from investing activities: Purchases of property and equipment (1,002) (619) Cash paid for practice acquisitions, net — (827) Net cash and restricted cash used in investing activities (1,002) (1,446) Cash flows from financing activities: Advances from line of credit — 2,500 Payments made for financing of insurance payments (1,235) — Payment of deferred consideration liability for acquisition (409) — Principal payments on long-term debt — (94) Principal payments on financing leases (13) (10) Issuance of Legacy TOI preferred stock — 20,000 Net cash and restricted cash (used in) provided by financing activities (1,657) 22,396 Net (decrease) increase in cash and restricted cash (19,640) 21,414 Cash and restricted cash at beginning of period 115,174 5,998 Cash and restricted cash at end of period $ 95,534 $ 27,412 Supplemental disclosure of cash flow information: Interest and principal forgiven from Paycheck Protection Program loans $ 183 $ — Cash paid for: Income taxes $ — $ 4 Interest $ 74 $ — are an integral part of these unauditedto the condensed consolidated financial statements..4 UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSOrganization,Description of the Business Operations and BasisPresentation.Incorporation(the “Company”("DFPH") was incorporated as. DFPH is a Delaware corporation on November 1, 2019.Sponsor2019The Company’s sponsor is DFP Sponsor LLC, as a Delaware limited liabilitypublicly-traded special purpose acquisition company (the “Sponsor”).Business PurposeThe Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar business combination with one or more operating businesses (“("Business Combination”Combination"). TOI was originally founded in 2007 and is a community oncology practice that operates value-based oncology services platforms. TOI has 3 wholly-owned subsidiaries, TOI Parent, Inc. ("TOI Parent"), TOI Acquisition, LLC (“TOI Acquisition”) and TOI Management, LLC (“TOI Management”). Additionally, TOI Management holds master services agreements with affiliated physician-owned professional entities ("TOI PCs") that confer controlling financial interest over the professional entities and their wholly-owned subsidiaries (TOI PCs, together with TOI, the “Company”).neither engaged84 oncologists and mid-level professionals across 53 clinic locations located within 4 states: California, Nevada, Arizona, and Florida. The Oncology Institute CA, a Professional Corporation ("TOI CA"), one of the TOI PCs, is comprised of the clinic locations in any operations nor generated revenue to date.As of June 30, 2021, the Company had not commenced any operations. All activity for the period from November 1, 2019 (inception) through June 30, 2021 relates to the Company’s formationCalifornia, Nevada, and the initial public offering (the “Initial Public Offering”) described below, and since the Initial Public Offering, identifying a target company for a Business Combination.Arizona. The Company will not generate any operating revenues until after the completionhas contractual relationships with multiple payors, serving Medicare, including Medicare Advantage, MediCal, and commercial patients.its initial Business Combination, at the earliest. Significant Accounting PoliciesCompany generates non-operating incomeaccompanying interim condensed consolidated financial statements are unaudited and have been prepared in the formaccordance with Article 10 of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering.The Company’s management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering, although substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward completing a Business Combination. Furthermore, there is no assurance that the Company will be able to successfully complete a Business Combination.FinancingThe registration statement for the Company’s Initial Public Offering was declared effectiveRegulation S-X issued by the Securities and Exchange Commission (the “SEC”) on March 10, 2020. On March 13, 2020, the Company consummated its Initial Public Offering of 23,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), including 3,000,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $10.4 million, inclusive of approximately $6.3 million in deferred underwriting commissions (Note 3). Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 3,733,334 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to the Sponsor, generating proceeds of $5.6 million (Note 4).Trust AccountUpon the closing of the Initial Public Offering and the Private Placement, $230.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (the “Trust Account”) and invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, which the Company refers to as the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act that invest only in direct U.S. government treasury obligations.5DFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe Company’s second amended and restated certificate of incorporation provides that, other than the withdrawal of interest earned on the funds that may be released to the Company to pay taxes, none of the funds held in Trust Account will be released until the earlier of: (i) the completion of the Business Combination; (ii) the redemption of the Public Shares to its holders (the “Public Stockholders”) properly tendered in connection with a stockholder vote to amend the Company’s second amended and restated certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares or with respect to any other material provision relating to stockholders’ rights or pre-initial Business Combination activity, or (iii) the redemption of 100% of the Public Shares if the Company does not complete a Business Combination within 24 months from the closing of the Initial Public Offering.The Company, after signing a definitive agreement for a Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to fund its working capital requirements (subject to an annual limit of $500,000) and/or to pay its taxes, or (ii) provide the Public Stockholders with the opportunity to sell their shares to the Company by means of a tender offer for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to commencement of the tender offer, including interest earned on the funds held in the Trust Account and not previously released to the Company to fund its working capital requirements (subject to an annual limit of $500,000) and/or to pay taxes. The decision as to whether the Company will seek stockholder approval of the Business Combination or will allow stockholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval. If the Company seeks stockholder approval, it will complete its Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001.If the Company holds a stockholder vote in connection with a Business Combination, a Public Stockholder will have the right to redeem its shares for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to fund its working capital requirements (subject to an annual limit of $500,000) and/or to pay its taxes. As a result, such common stock is recorded at redemption amount and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with ASC 480, “Distinguishing Liabilities from Equity.” The amount in the Trust Account is initially anticipated to be $10.00 per public share ($230.0 million held in the Trust Account divided by 23,000,000 public shares).The Company will have 24 months from the closing of the Initial Public Offering, or until March 13, 2022, to complete its initial Business Combination (the “ Combination Period”("SEC"). If the Company does not complete a Business Combination within this period of time, it will (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares for a per share pro rata portion of the Trust Account, including interest and not previously released to the Company to fund its working capital requirements (subject to an annual limit of $500,000) (less taxes payable and up to $100,000 of such net interest to pay dissolution expenses) and (iii) as promptly as possible following such redemption, liquidate and dissolve the balance of the Company’s net assets to its remaining stockholders, as part of its plan of dissolution and liquidation. The Sponsor and the Company’s officers and directors (the “initial stockholders”) have entered into a letter agreement with the Company, pursuant to which they have waived their rights to participate in any redemption with respect to their Founder Shares (as defined below); however, if the initial stockholders acquire shares of common stock in or after the Initial Public Offering, they will be entitled to a pro rata share of the Trust Account upon the Company’s redemption of common stock or liquidation in the event the Company does not complete a Business Combination within the required time period. In the event of such a liquidating distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial price per Unit in the Initial Public Offering.6DFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSBasis of Presentation and Principles of ConsolidationThe accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotesnote disclosures required by GAAP.U.S. generally accepted accounting principles ("GAAP") for complete financial statements. However, the Company believes that the disclosures are adequate to ensure the information is not misleading. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments which include only(of normal and recurring adjustmentsnature) considered necessary for fair presentation have been reflected in these interim statements. As such, the fair statement ofinformation included in the balances and results for the period presented. Operating results for the period for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the period ending December 31, 2021 or any future period.The unaudited condensed consolidated financial statements of the Company include its wholly owned subsidiaries in connection with the proposed business combination (as described below). All inter-company accounts and transactions are eliminated in consolidation.The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes theretoas of, and for the year ended December 31, 2021, issued on March 11, 2022.Form 10-K/A filedconsolidated amounts as presented on the condensed consolidated statements of operations.withhas net losses, diluted net loss per share is the SECsame as basic net loss per share because inclusion of potential common shares in the diluted net loss per share calculation has an antidilutive effect.May 24, 2021.Theisqualifies as an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart ourOur Business Startups Act of 2012 (the “JOBS Act”), and it mayhas elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements ofcompanies. 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended)Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such an election to opt out is irrevocable. We haveThe Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we,the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company's unaudited condensed consolidatedCompany’s financial statements with those of another public company which is neither an emerging growth company, nor an emerging growth company which has opted out of using the extended transition period, difficult or impossible because of the potential differences in accountantaccounting standards used.Proposed Business CombinationJune 28, 2021,January 1, 2022, the Company entered intoadopted Accounting Standards Update 2016-02, Leases, with various amendments issued in 2018 and 2019 (collectively, “ASC 842”) using the modified retrospective approach, for leases that existed on January 1, 2022. ASC 842 requires lessees to recognize assets and liabilities for most leases. The Company evaluates whether an Agreement and Planarrangement is or contains a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of Merger by and among DFP, Orion Merger Sub I, Inc.,an identified asset for a Delaware corporation and a direct, wholly-owned subsidiaryperiod of DFP, Orion Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of) and TOI Parent, Inc., a Delaware corporation, as disclosed in a Form 8-K filed on June 29, 2021.Going ConcernAs of June 30, 2021, the Company had approximately $0.6 million in its operating bank account and a working capital deficit of approximately $1.8 million.The Company’s liquidity needs to date have been satisfied through a $25,000 contribution from the Sponsortime in exchange for consideration. Upon lease commencement, the issuancedate on which a lessor makes the underlying asset available to the Company for use, the Company classifies the lease as either an operating or finance lease. The Company applied certain practical expedients permitted under the transition guidance, including the package of practical expedients, which permits the Company not to reassess its prior conclusions related to lease identification, lease classification, and initial direct costs capitalization. The Company solely acts as a lessee and its leases primarily consist of operating leases for its real estate in the states in which the Company operates. The Company has other operating and financing leases for various clinical and non-clinical equipment.Founder Sharesremaining, fixed lease payments at lease commencement. The Company uses its incremental borrowing rate, based on the information available at the later of adoption, inception, or modification in determining the present value of lease payments. ROU assets are measured at an amount equal to the Sponsor,initial lease liability, plus any prepaid lease payments (less any incentives received) and initial direct costs, at the Note (defined below)lease commencement date. The Company has elected to account for lease and non-lease components as a single lease component for all underlying classes of $200,000 fromassets. As a result, the Sponsor,fixed payments that would otherwise be allocable to the non-lease components are accounted for as lease payments and the proceeds from the consummation of the Private Placement not heldincluded in the Trust Account. On March 13, 2020, the Company repaid the Note in full to the Sponsor. In7DFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSaddition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certainmeasurement of the Company’s officersright-of-use asset and directors may, butlease liability.obligatedrecorded on the balance sheet. The operating lease payments are recognized as an expense on a straight-line basis over the lease term. The leasewith Working Capital Loans (see Note 4). Asfor annual and interim periods in fiscal years beginning after December 15, 2022. An entity may early adopt ASU 2016-13, as amended, for annual and interim periods in fiscal years beginning after December 15, 2018. While the Company expects its allowance for credit losses to increase upon adoption of June 30, 2021 andASU 2016-13, the Company does not expect the adoption of ASU 2016-13 to have a material effect on its consolidated financial statements.31, 2020, there were 0 Working Capital Loans outstanding.In connection with2019, the Company's assessment of going concern considerations in accordance withFASB issued ASU 2019-12, Topic 205-40, "Presentation of Financial Statements - Going Concern," management has determined that the liquidity condition and date740, Income Taxes. This new standard is intended to simplify accounting for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company's ability to continue as a going concern. No adjustments have been madeincome taxes by removing certain exceptions to the carrying amountsgeneral principles in ASC 740 and amending existing guidance to improve consistent application of assets or liabilities shouldASC 740. The new standard is effective for the Company be required to liquidate after March 13, 2022.2. Significant Accounting Policies.Usebeginning January 1, 2022, and for interim periods beginning January 1, 2023. The guidance in the new standard has various elements, some of EstimatespreparationCompany is currently evaluating the effect of unaudited condensed consolidated financial statements in conformity with GAAP requiresASU 2019-12 on the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these unaudited condensed financial statements is the determination of the fair value of the derivative warrant liabilities. Accordingly, the actual results could differ significantly from those estimates.Concentration of Credit Riskrelated disclosures.Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation limit of $250,000, and investments held in Trust Account. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.Investments Held in Trust AccountThe Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in interest income on investments held in the Trust Account in the accompanying unaudited condensed consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.Cash and Cash EquivalentsThe Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had 0 cash equivalents as of June 30, 2021 and December 31, 2020.Fair Value of Financial InstrumentsThe fair value of the Company's assets and liabilities which qualify as financial instruments under the FASB ASC Topic 820, "Fair Value Measurements," equal or approximate the carrying amounts represented in the condensed consolidated balance sheets.8DFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFair Value MeasurementsFair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:●Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;●Level 2: Quoted prices in markets that are not active or financial instruments for which significant inputs to models are observable (including but not limited to quoted prices for similar securities, interest rates, foreign exchange rates, volatility and credit risk), either directly or indirectly;●Level 3: Prices or valuations that require significant unobservable inputs (including the Management’s assumptions in determining fair value measurement).In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.As of June 30, 2021, the carrying values of cash, accounts payable, accrued expenses, prepaid expenses and franchise tax payable approximate their fair values due to the short-term nature of the instruments. The Company’s investments held in Trust Account are comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less or investments in money market funds that comprise only U.S. Treasury securities and are recognized at fair value. The fair value of investments held in Trust Account is determined using quoted prices in active markets.Derivative Warrant LiabilitiesThe Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, "Derivatives and Hedging" ("ASC 815"). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.The 5,750,000 Public Warrants and the 3,733,334 Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s unaudited condensed consolidated statements of operations. The fair value of the Public Warrants issued in connection with the Public Offering and Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model each measurement date. The fair value of Public Warrants issued in connection with the Initial Public Offering have subsequently been measured based on the listed market price of such warrants.Offering Costs Associated with the Initial Public OfferingOffering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities were expensed as incurred and presented as non-operating expenses in the condensed statements of operations.9DFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSOffering costs associated with the Class A common stock issued were charged to stockholders’ equity upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.Class A Common Stock Subject to Possible RedemptionThe Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Shares of conditionally redeemable Class A common stock (including Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, shares of Class A common stock are classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of June 30, 2021 and December 31, 2020, 20,052,944 and 20,096,488 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s condensed consolidated balance sheets, respectively.Net Income (Loss) Per Share of Common StockThe Company’s unaudited condensed consolidated statements of operations include a presentation of net income (loss) per share for Class A common stock subject to possible redemption in a manner similar to the two-class method of net income (loss) per common stock. Net income (loss) per common stock, basic and diluted, for Class A common stock is calculated by dividing the interest income earned on the Trust Account, less interest available to be withdrawn for the payment of taxes, by the weighted average number of Class A common stock outstanding for the periods. Net income (loss) per common stock, basic and diluted, for Class B common stock is calculated by dividing the net income (loss), adjusted for income attributable to Class A common stock, by the weighted average number of Class B common stock outstanding for the periods. Class B common stock include the Founder Shares as these common stocks do not have any redemption features and do not participate in the income earned on the Trust Account.The calculation of diluted net income (loss) per common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering and Private Placement since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion would be anti-dilutive under the treasury stock method.The following table reflects the calculation of basic and diluted net income (loss) per share of common stock:10DFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSIncome TaxesThe Company complies with the accounting and reporting requirements of Financial Accounting Standards Board Accounting Standard Codification, or ASC, 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.There were 0 unrecognized tax benefits as of June 30, 2021 and as of December 31, 2020 or 2019. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. NaN amounts were accrued for the payment of interest and penalties as of June 30, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.Recent Accounting PronouncementsFinancial Accounting Standards BoardFASB issued Accounting Standard Update ("ASU") No.ASU 2020-06, Debt—DebtDebt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—ContractsHedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU 2020-06"), which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. The ASU 2020-06 also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The new standard is effective for the Company beginning January 1, 2024. The Company is currently evaluating the effect of ASU 2020-06 on the Company’s consolidated financial statements and related disclosures.adopted theadoption permitted. The Company will adopt ASU 2021-08 on January 1, 2021. Adoption2024 on a prospective basis. The Company does not expect the adoption of the ASU did notthis standard to have a material impact on the Company’s consolidated financial statements and related disclosures.Three Months Ended March 31, 2022 2021 Percentage of Net Revenue: Payor A 16 % 17 % Payor B 17 % 13 % March 31, 2022 December 31, 2021 Percentage of Gross Receivables: Payor B 21 % 19 % Payor C 13 % 14 % Three Months Ended March 31, 2022 2021 Percentage of Cost of Sales: Vendor A 51 % 48 % Vendor B 47 % 50 % March 31, 2022 December 31, 2021 Percentage of Gross Payables: Vendor B 55 % 47 % Vendor A 28 % 39 % All others 17 % 14 % (in thousands) March 31, 2022 December 31, 2021 Oral drug accounts receivable $ 2,535 $ 2,097 Capitated accounts receivable 721 665 FFS accounts receivable 15,518 12,530 Clinical trials accounts receivable 1,849 1,823 Other trade receivables 3,890 2,892 Total $ 24,513 $ 20,007 (in thousands) Three Months Ended March 31, 2022 2021 Patient services Capitated revenue $ 14,516 $ 12,330 FFS revenue 20,541 17,292 Subtotal 35,057 29,622 Dispensary revenue 18,679 17,618 Clinical research trials and other revenue 1,425 1,340 Total $ 55,161 $ 48,580 (in thousands) March 31, 2022 December 31, 2021 Oral drug inventory $ 2,787 $ 1,484 IV drug inventory 4,983 4,954 Total $ 7,770 $ 6,438 position, resultsinstruments at March 31, 2022 and December 31, 2021:(in thousands) March 31, 2022 December 31, 2021 Financial assets: Cash and restricted cash $ 95,534 $ 115,174 Accounts receivable 24,513 20,007 Other receivables 1,279 1,237 Financial liabilities: Accounts payable $ 12,596 $ 15,559 Derivative warrant liabilities 3,654 2,193 Earnout liabilities 20,578 60,018 operations or cash, flows.management does not believeLevel 3 liabilities that are measured at fair value on a recurring basis at March 31, 2022:(in thousands) Derivative Warrant Liability Earnout Liability Balance at December 31, 2021 $ 2,193 $ 60,018 Change in fair value included in other expense 1,461 (39,440) Balance at March 31, 2022 $ 3,654 $ 20,578 March 31, 2022 December 31, 2021 Derivative Warrant Liability First Tranche Earnout Second Tranche Earnout Derivative Warrant Liability First Tranche Earnout Second Tranche Earnout Unit price $ 7.13 $ 7.13 $ 7.13 $ 9.75 $ 9.75 $ 9.75 Term (in years) 4.62 1.27 1.75 4.87 1.87 2.87 Volatility 36.10 % 35.00 % 35.00 % 12.80 % 35.00 % 35.00 % Risk-free rate 2.41 % 2.38 % 2.38 % 1.24 % 0.94 % 0.94 % Dividend yield 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Cost of equity — 13.20 % 13.20 % — 11.14 % 11.14 % other recently issued, but not yet effective, accounting standards updates, if currently adopted, would haveof those inputs in isolation can result in a material effect on the accompanying unaudited condensed consolidated financial statements.3. Initial Public Offering.Public UnitsOn March 13, 2020, the Company consummated its Initial Public Offering of 23,000,000 Units, including 3,000,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $10.4 million, inclusive of approximately $6.3 million in deferred underwriting commissions. Of the Units soldsignificant change in the Initial Public Offering, 5,000,000 Units were purchased by certain domestic private pooled investment vehicles managed by Deerfield Management Company, L.P. and its affiliates (the “Deerfield Funds”).Each Unit consists of 1fair value measurement.Class A common stock, $0.0001an increase in the volatility of the Company’s shares of common stock, and an increase in the remaining term of the derivative liabilities would each result in a directionally similar change in the estimated fair value of the Company’s derivative liabilities. Such changes would increase the associated liability while decreases in these assumptions would decrease the associated liability. An increase in the risk-free interest rate would result in a decrease in the estimated fair value measurement and thus a decrease in the associated liability. The Company has not, and does not plan to, declare dividends on its common stock and, as such, there is no change in the estimated fair value of the derivative warrant liabilities due to the dividend assumption.(in thousands) Useful lives March 31, 2022 December 31, 2021 Computers and software 60 months $ 1,144 $ 961 Office furniture 80 months 378 343 Leasehold improvements Shorter of lease term or estimated useful life 4,168 3,387 Medical equipment 60 months 885 805 Construction in progress 423 518 Finance lease ROU assets Shorter of lease term or estimated useful life 205 162 Less: accumulated depreciation (2,294) (1,984) Total property and equipment, net $ 4,909 $ 4,192 (in thousands) March 31, 2022 December 31, 2021 Compensation, including bonuses, fringe benefits, and payroll taxes $ 4,186 $ 3,325 Contract liabilities and refund liabilities 220 592 Directors and officers insurance premiums 5,057 5,009 Deferred acquisition consideration (see Note 16) 2,050 2,359 Other liabilities 3,003 2,639 Total accrued expenses and other current liabilities $ 14,516 $ 13,924 (in thousands) Three Months Ended March 31, 2022 Operating lease costs: $ 1,168 Finance lease costs: Amortization of ROU asset $ 14 Interest expense 1 Other lease costs: Short-term lease costs $ 109 Variable lease costs 205 (in thousands) Operating Leases Finance Leases 2022 $ 3,717 $ 42 2023 4,734 46 2024 4,089 38 2025 3,370 4 2026 2,442 1 Thereafter 2,505 — Total future lease payment $ 20,857 $ 131 Less: amount representing interest (2,171) (7) Present value of future lease payment (lease liability) $ 18,686 $ 124 Reported as: Lease liabilities, current $ 4,277 $ 50 Lease liabilities, noncurrent 14,409 74 Total lease liabilities $ 18,686 $ 124 March 31, 2022 Weighted-average remaining lease term (in years) Operating 4.81 Finance 2.58 Weighted-average discount rate Operating 4.21 % Finance 4.39 % (in thousands) Three Months Ended March 31, 2022 Supplemental cash flow information Cash paid for amounts included in the measurement of lease liabilities: Operating cash payment from operating leases $ 1,145 Financing cash payments for finance leases 17 Lease liabilities arising from obtaining right-of-use assets: Operating leases $ 19,598 Finance leases 40 one-fourthliquidation preference of $0.0001 per share. The Company’s board of directors has the authority, without further action by the stockholders to issue such shares of preferred stock in one redeemableor more series, to establish, from time to time the number of shares to be included in each such series, and to fix the dividend, voting, and other rights, preferences, and privileges of the shares. Immediately following the Closing Date and as of March 31, 2022, there were 163,510 shares of preferred stock outstanding. (the “Warrants”). Each whole Warrant entitles the holder to purchase 1 share of Class A common stock at a price offor $11.50 per share. The exercise price and number of shares of Class A common stock issuable upon exercise ofPrivate warrants held by the Warrantsinitial purchaser or certain permitted transferees may be adjusted in certain circumstances including inexercised on a cashless basis.event of a stock dividend, or recapitalization, reorganization, merger or consolidation.4. Related Party Transactions.Founder SharesOn December 30, 2019, the Sponsor received 4,312,500 shares of Class B common stock (the “Founder Shares”) in exchange for a capital contribution of $25,000, or approximately $0.004 per share. In January 2020, the Sponsor transferred 100,000 Founder Shares to each of Steven Hochberg, the Company’s President and Chief Executive Officer, Christopher Wolfe, the Company’s Chief Financial11DFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSOfficer and Secretary, and Richard Barasch, the Company’s Executive Chairman, and 30,000 Founder Shares to each of Dr. Jennifer Carter, Dr. Mohit Kaushal and Dr. Gregory Sorensen, the Company’s independent director nominees, for the same per-share price initially paid by the Sponsor, resulting in the Sponsor holding 3,922,500 Founder Shares. On February 19, 2020, the Company effected a split of its Class B common stock resulting in the Sponsor holding 5,360,000 Founder Shares, resulting in an increase in the total number of Founder Shares from 4,312,500 to 5,750,000.The Founder Shares are identical to the shares of Class A common stock included in the Units being sold in the Initial Public Offering except that the Founder Shares are subject to certain transfer restrictions.The initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the Company’s initial Business Combination, or earlier if, subsequent to the Company’s initial Business Combination, the closingreported last sale price of the Company’s common stock equals or exceeds $12.00$18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-tradinga 30-trading day period commencing at least 150ending 3 business days after the Company’s initial Business Combination and (B) the date on whichbefore the Company completes a liquidation, merger, capital stock exchange or other similar transaction aftersends the initial Business Combination that results in allnotice of redemption to the Company’s stockholders having the right to exchange their common stock for cash, securities or other property.Private Placement WarrantsSimultaneously with the closing of the Initial Public Offering,warrant holders, the Company sold 3,733,334 Private Placement Warrants tomay redeem all the Sponsorpublic warrants at a price of $1.50$0.01 per Private Placement Warrant in a Private Placement, generating proceeds of $5.6 million.Each Private Placement Warrant entitles the holder to purchase 1 share of Class A common stock at $11.50 per share. Certain proceeds of the Private Placement Warrants were added to the proceeds from the Initial Public Offering held in the Trust Account. warrant upon not less than 30 days’ prior written notice.does not complete a Business Combination,calls the proceeds of the Private Placementpublic warrants for redemption, management will be part of the liquidating distribution to the Public Stockholders and the Warrants issued to the Sponsor will expire worthless.Sponsor LoanThe Sponsor agreed to loan the Company up to an aggregate of $200,000 by the issuance of an unsecured promissory note (the “Note”) to cover expenses related to this Initial Public Offering. The Note was payable, without interest, upon the completion of the Initial Public Offering. The Company received the $200,000 proceeds under the Note and repaid this Note in full on March 13, 2020. Subsequent to the repayment, the facility was no longer available to the Company.Administrative Services AgreementCommencing on the date that the Company’s securities were first listed on Nasdaq, the Company has paid and will pay the Sponsor $10,000 per month for office space, secretarial and administrative services provided to members of the Company’s management team. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying such monthly fees. The Company incurred $30,000 and $60,000, in expenses in connection with such services during the three and six months ended June 30, 2021, respectively, as included in general and administrative expenses - related party on the accompanying unaudited condensed consolidated statements of operations. During the three and six months ended June 30, 2020, the Company had incurred $30,000 and $60,000 in expenses in connection with such services, respectively. As of June 30, 2021 and December 31, 2020, the Company had $10,000 and $10,000 in connection with such services in accrued expenses to related parties, respectively, as included in the accompanying condensed consolidated balance sheets.Wolfe Strategic Services AgreementCommencing on the date that the Company’s securities were first listed on Nasdaq, the Company will pay and has paid its Chief Financial Officer, Christopher Wolfe, $7,500 per month for his services prior to the initial Business Combination. The Company incurred $22,500 and $45,000 in expenses in connection with such services during the three and six months ended June 30, 2021, as included in general and administrative expenses - related party on the accompanying unaudited condensed consolidated statements of operations,12DFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSrespectively. During the three and six months ended June 30, 2020, the Company had incurred $22,500 and $30,000 in expenses in connection with such services, respectively. As of June 30, 2021 and December 31, 2020, the Company had $7,500 and $7,500 in connection with such services in accrued expenses to related parties, respectively, as included in the accompanying condensed consolidated balance sheets.Working Capital LoansIn order to finance transaction costs in connection with an intended initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required for working capital (the “Working Capital Loans”). Up to $1.1 million of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant athave the option of the lender. Such warrants would be identical to the Private Placement Warrants. As of June 30, 2021 and December 31, 2020, except for the foregoing, the terms of such loans, if any, have not been determined, no written agreements exist with respect to such loans and 0 amounts have been borrowed under such loans to date.5. Commitments and Contingencies.Registration RightsThe initial stockholders andrequire all holders of the Private Placement Warrants are entitled to registration rights pursuant to a registration rights agreement. The initial stockholders and holders of the Private Placement Warrants will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by the Company. The Company will bear the expenses incurred in connection with the filing of any such registration statements.Underwriting AgreementThe Company granted the underwriters a 45-day option to purchase up to 3,000,000 additional Units to cover any over-allotments, at the initial public offering price less the underwriting discounts and commissions. The warrants that were issued in connection with the 3,000,000 over-allotment Units are identical to the Public Warrants and have no net cash settlement provisions. The underwriters exercised the over-allotment option in full on March 13, 2020.The underwriters did not receive any underwriting discounts or commission on the Units purchased by the Deerfield Funds. The Company paid an underwriting discount of 2.0% of the per Unit offering price, or $3.6 million, at the closing of the Initial Public Offering, with an additional fee (the “Deferred Underwriting Fees”) of 3.5% of the gross offering proceeds, or $6.3 million, payable upon the Company's completion of an Initial Business Combination. The Deferred Underwriting Fees will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.Risks and uncertaintiesManagement continues to evaluate the impact of the COVID-19 pandemic on its industry and has concluded that, while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or close of the proposed transaction, the specific impact is not readily determinable as of the date of these unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.6. Derivative Warrant Liabilities.As of June 30, 2021 and December 31, 2020, the Company has 9,483,334 Public Warrants and Private Placement Warrants outstanding.Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the13DFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTScompletion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or the Company permits holderswish to exercise their Public Warrants on a cashless basis under certain circumstances). The Company has agreed that, as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the SEC and have declared effective a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of the initial Business Combination, warrantholders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Company’s shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise theirpublic warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, thecashless basis. The Company will not be required to file or maintain in effectnet cash settle the warrants.registration statement,cashless basis and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of the initial Business Combination and they will be non-redeemable for cash so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees. If the Private Placement Warrantsprivate warrants are held by someone other than the initial purchasers of the Private Placement Warrants or their permitted transferees, the Private Placement Warrantsprivate warrants will be redeemable by the Company and exercisable by such holders on the same basis as the warrants includedpublic warrants.Unitsownership and further growth of the Company. The 2019 Plan provides for the grant of options (the “Stock Options”) to acquire common shares of the Company.soldachieved,Initial Public Offering.The Company may callperiod they occur, on a straight-line basis over the Public Warrants for redemption:●in whole and not in part;●at a price of $0.01 per warrant;●upon a minimum of 30 days’ prior written notice of redemption; and
requisite service period.●if, and only if, the last reported sales price of the Class A common stock equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within the 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.Ifcallsamended and fully restated the Public Warrants for redemption, management will have2019 Plan through the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.In addition, commencing ninety days after the warrants become exercisable, the Company may redeem the outstanding warrants for shares of Class A common stock:●in whole and not in part;●at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table set forth under “Description of Securities—Warrants—Public Stockholders’ Warrants” based on the redemption14DFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSdate and the “fair market value” of our Class A common stock (as defined below) except as otherwise described in “Description of Securities—Warrants—Public Stockholders’ Warrants”;●if, and only if, the last reported sale price of its Class A common stock equals or exceeds $10.00 per share (as adjusted per stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which it sends the notice of redemption to the warrant holders;●if, and only if, the Private Placement Warrants are also concurrently exchanged at the same price (equal to a number of shares of Class A common stock) as the outstanding Public Warrants, as described above; and●if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given.The “fair market value”establishment of the Company’s Class A common stock shall mean2021 Incentive Plan (“2021 Plan”). Pursuant to the average last reported sale price of its Class A common stock for2021 Plan, each remaining legacy Stock Option from the 10 trading days ending on the third trading day2019 Plan that was outstanding immediately prior to the date on which the noticeBusiness Combination, whether vested or unvested, was converted into an option to purchase a number of redemption is sentshares of common stock (each such option, an “Exchanged Option”) equal to the holders of warrants. This redemption feature differs from the typical warrant redemption features used in other blank check offerings.No fractional shares of Class A common stock will be issued upon redemption. If, upon redemption, a holder would be entitled to receive a fractional interest in a share, the Company will roundproduct (rounded down to the nearest whole numbernumber) of (i) the number of shares of Class A common stockLegacy TOI stockholders subject to such Stock Option immediately prior to the Business Combination, and (ii) an exercise price per share equal to (A) the exercise price per share of such Stock Option immediately prior to the consummation of the Business Combination, divided by (B) the Common Stock Exchange Ratio ("Stock Option Exchange Ratio"). Following the Business Combination, each Exchanged Option that was previously subject to time vesting only, will continue to be issuedgoverned by the same terms and conditions (including vesting and exercisability terms) as were applicable to the holder.Pursuantcorresponding former old Stock Option immediately prior to the warrant agreement, references aboveconsummation of the Business Combination. Each Exchanged Option that was previously subject to Class A common stock shallperformance vesting, will no longer be subject to the sale of the Company, and was modified to include a security other than Class A common stock intoservice requirements only, under which, the Class A commonExchange Options will vest on a monthly-basis, so long as the optionee has remained continuously employed by the Company from the date of the Business Combination through the third anniversary of the Closing Date. The Company treated the Exchanged Options that were previously subject to performance conditions as a new award granted at the Closing Date. The Exchanged Options that were previously subject to service vesting only were not modified as a result of the Business Combination. All stock option activity was retroactively restated to reflect the Exchanged Options.converted or exchangedretroactively adjusted throughout the Company's condensed consolidated financial statements.eventBlack-Scholes-Merton option-pricing model for the units granted during the three months ended March 31, 2022 and three months ended March 31, 2021 Stock Options are provided in the following table:2022 2021 Valuation assumptions: Expected dividend yield — % — % Expected volatility 35.00 % 38.60% to 40.20% Risk-free interest rate 2.33% to 2.44% 0.76% to 1.12% Expected term (years) 6.07 to 6.65 7.00 Stock options Number of shares Weighted average exercise price Weighted average remaining contractual term Aggregate intrinsic value (in thousands) Balance at January 1, 2022 6,921,180 $ 0.88 Granted 1,385,108 7.09 Exercised/Cashed-Out — — Forfeited (190,621) 1.23 Expired (526) 0 8,115,141 $ 1.94 8.87 $ 42,151 1,858,885 $ 0.86 7.58 $ 11,662 Stock options Number of shares Weighted average exercise price Weighted average remaining contractual term Aggregate intrinsic value (in thousands) Balance at January 1, 2021 8,683,952 $ 0.85 Granted 407,903 0.86 Exercised — — Forfeited (385,697) 0.86 Expired — — Balance at March 31, 2021 8,706,158 $ 0.85 8.73 $ 80 Vested Options Exercisable at March 31, 2021 1,014,914 $ 0.85 8.15 $ — is notso long as the surviving company in its initial Business Combination.In no event willgrantee remains continuously and actively employed by the Company be requiredCompany’s subsidiaries through the vesting date.net cash settle any warrant. If the Company does not complete a Business Combination, withinwhether vested or unvested, was converted into an RSU equal to the Combination Period andproduct (rounded down to the Company liquidates the funds held in the Trust Account, holdersnearest whole number) of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.7. Stockholder’s Equity.Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share. As of June 30, 2021 and December 31, 2020, there are 0 shares of preferred stock issued or outstanding.Class A Common Stock — The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of June 30, 2021 and December 31, 2020, there were 23,000,000 shares of Class A common stock issued or outstanding, including 20,052,944 and 20,096,488 shares of Class A common stock subject to possible redemption, respectively.Class B Common Stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of the Company's Class B common stock are entitled to 1 vote for each share. As of June 30, 2021 and December 31, 2020, there were 5,750,000 shares of Class B common stock issued outstanding.The Class B common stock will automatically convert into Class A common stock at the time of the Initial Business Combination on a one-for-1 basis, subject to adjustment. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with the initial Business Combination,(i) the number of shares of ClassRSAs immediately prior to the Business Combination, (ii) conversion rate of 1:10 of the Series A common stock issuable upon conversionPreferred Shares of all Class B common stockLegacy TOI, and (iii) the Common Stock Exchange Ratio. Following the Business Combination, each RSU will equal,no longer be subject to the sale of the Company event in order to vest, but was modified to include service requirements only. The service vesting requirement states that: (i) 16.67% of the aggregate,RSUs shall vest on the sixth month anniversary of the Closing Date, and (ii) the remaining 83.33% shall vest on an as-converted basis, 20% ofequal quarterly-basis, so long as the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by Public Stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued,grantee has remained continuously employed by the Company from the date of the award through the third anniversary of the grant date. The Company treated the RSUs that were previously subject to performance conditions as a new award granted at the Closing Date. All RSAs activity was retroactively restated to reflect the RSUs.Number of shares Balance at January 1, 2022 1,291,492 Granted 727,424 Vested (27,188) Forfeited — 1,991,728 Number of shares Balance at January 1, 2021 1,390,839 Granted — Vested — Forfeited — Balance at March 31, 2021 1,390,839 November 12, 2021 Valuation assumptions Expected dividend yield — % Expected volatility 35.00 % Risk-free interest rate 0.85 % Number of shares Balance at January 1, 2022 $ 1,602,435 Granted — Forfeited (41,578) Balance at March 31, 2022 $ 1,560,857 relationconnection with any proceeding against the individual with respect to which the individual may be entitled to indemnification by the Company. The Company also indemnifies its lessor in connection with its facility lease for certain claims arising from the use of the facilities. These indemnities do not provide for any limitation of the maximum potential future payments it could be obligated to make. Historically, the Company has not incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities in the accompanying condensed consolidated balance sheets.initialBusiness Combination.excluding anythe Company incurred $39,914 of equity issuance costs, consisting of advisory, legal, deferred underwriting, share registration, and other professional fees, of which $6,769 was ascribed to the earnout liability and expensed with the remainder being netted against additional paid-in capital.Class ADFPH common stock or equity-linked15Tablethat were not otherwise redeemed as part of ContentsDFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSsecurities or rights exercisable for or convertiblethe DFPH public stockholder vote were automatically converted into shares of Class ATOI common stock on a 1-for-one basis. Further, PIPE Shares as well as DFPH common stock that was not otherwise forfeited or subject to earnout automatically converted into TOI common stock on a 1-for-one basis. Additionally, holders of DFPH forfeited 555,791 Private Placement Warrants.issued,paid in 2 equal installments on the first and second anniversary of the transaction closing date (February 12, 2022 and 2023, respectively). During thethree months ended March 31, 2022, the Company transferred the first installment of deferred consideration of $409. Considering the Company's incremental borrowing rate, the present value of the deferred cash consideration is not materially different than its stated value.any sellerthe Acquisition, the Company filed an amendment to the articles of incorporation of PCC to legally change the name to The Oncology Institute FL, LLC (TOI FL). The change was solely nominal, and the legal form, tax attributes, and books and records of PCC all remained.initial Business Combinationform of clinical contracts with a weighted average amortization period of 10 years The Buyers transferred cash consideration of $849 and any Private Placement Warrants issueddeferred consideration of $200 to Dr. Grant for the purchase. The deferred cash consideration is to be paid in 2 equal installments on the first and second anniversary of the transaction closing date (November 12, 2022 and 2023, respectively). Considering the Company's incremental borrowing rate, the present value of the deferred cash consideration is not materially different than its stated value.Sponsor, officers or directors upon conversionacquisition in the form of Working Capital Loans, providedclinical contracts with a weighted average amortization period of 10 years The Buyers transferred cash consideration of $816 and deferred consideration of $200 to Dr. Orr for the purchase. The deferred cash consideration is to be paid in 2 equal installments on the first and second anniversary of the transaction closing date (November 12, 2022 and 2023, respectively). Considering the Company's incremental borrowing rate, the present value of the deferred cash consideration is not materially different than its stated value.conversionas the use of Founder Shares will never occur onour existing infrastructure to support the added membership, and future economic benefits arising from the assembled workforce. The purchase consideration for the acquisitions has been allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired including a less than one-for-one basis.residual amount of tax deductible goodwill of $1,454 for the Raiker acquisition, $550 for the Grant acquisition, $837 for the Orr acquisition, $2,645 for the for the Dave acquisition, and $6,913 for the Yang acquisition.8. Fair Value Measurements.presents information aboutsummarizes the Company’sprovisional fair values assigned to assets that are measured at fair value on a recurring basisacquired and indicate the fair value hierarchyliabilities assumed.Acquisition (in thousands) Raiker Grant Orr Dave Yang Total Consideration: Cash $ 892 $ 849 $ 816 $ 2,000 $ 4,615 $ 9,172 Deferred 818 200 200 750 2,500 4,468 Fair value of total consideration transferred $ 1,710 $ 1,049 $ 1,016 $ 2,750 $ 7,115 $ 13,640 Estimated fair value of assets acquired and liabilities assumed: Cash $ 65 $ — $ — $ — $ — $ 65 Accounts receivable 398 — 183 — — 581 Inventory 62 49 16 — 115 242 Property and equipment, net — — 13 35 19 67 Clinical contracts — 450 150 77 68 745 Goodwill 1,454 550 837 2,645 6,913 12,399 Total assets acquired 1,979 1,049 1,199 2,757 7,115 14,099 Accounts payable 120 — — — — 120 Accrued liabilities — — — 7 — 7 Current portion of long term debt 149 — 183 — — 332 Total liabilities assumed 269 — 183 7 — 459 Net assets acquired $ 1,710 $ 1,049 $ 1,016 $ 2,750 $ 7,115 $ 13,640 valuation techniquesallocation to goodwill requires the extensive use of accounting estimates and management judgement. The fair values assigned to the assets acquired are based on estimates and assumptions from data that is readily available.(in thousands) March 31, 2022 December 31, 2021 Assets Current assets: Cash and restricted cash $ 2,248 $ 1,618 Accounts receivable 24,513 20,007 Other receivables 1,028 935 Inventories, net 7,770 6,438 Prepaid expenses 1,146 781 Total current assets 36,705 29,779 Property and equipment, net 44 — Other assets 273 276 Intangible assets, net 1,120 1,181 Goodwill 11,096 11,096 Total assets $ 49,238 $ 42,332 Liabilities Current liabilities: Accounts payable $ 11,876 $ 14,204 Income taxes payable 132 132 Accrued expenses and other current liabilities 5,228 5,539 Current portion of long-term debt — 183 Amounts due to affiliates 76,960 56,312 Total current liabilities 94,196 76,370 Other non-current liabilities 1,917 3,203 Deferred income taxes liability 16 6 Total liabilities $ 96,129 $ 79,579 utilized to determineretain equity ownership in TOI CA and TOI FL, which represents nominal noncontrolling interests. The noncontrolling interests do not participate in the profit or loss of TOI CA or TOI FL, however. As such, fair value.June 30, 2021December 31, 2020Transfers to/from Levels 1, 2, and 3 are recognized atfor the beginning of the reporting period. Therewere 0 transfers between levels for three and six months ended June 30, 2021.Level 1 assets include investments in money market funds that invest solely in U.S. government securitiesMarch 31, 2022, net income of $19,286 and investments in U.S. Treasury Securities. The Company uses inputs such as actual trade data, quoted market prices from dealers or brokers,$0 were attributable to TOI and other similar sources to determine the fair value of its investments.The fair value of Public Warrants issued in connection with the Initial Public Offering are measured based on the listed market price of such warrants, a quoted price in an active market, a Level 1 measurement. The fair value of the Private Placement Warrants has been estimated using a Monte Carlo simulation model each measurement date.June 30,March 31, 2021, net loss of $996 and 2020,$0 were attributable to TOI and to the noncontrolling interest, respectively.(in thousands) Weighted average amortization period Gross carrying amount Accumulated amortization Net carrying amount Intangible assets Amortizing intangible assets: Payor contracts 10 years $ 19,400 $ (6,623) $ 12,777 Trade names 10 years 4,170 (1,451) 2,719 Clinical contracts 9 years 2,909 (833) 2,076 Total intangible assets $ 26,479 $ (8,907) $ 17,572 (in thousands) Weighted average amortization period Gross carrying amount Accumulated amortization Net carrying amount Intangible assets Amortizing intangible assets: Payor contracts 10 years $ 19,400 $ (6,152) $ 13,248 Trade names 10 years 4,170 (1,350) 2,820 Clinical contracts 10 years 2,909 (732) 2,177 Total intangible assets $ 26,479 $ (8,234) $ 18,245 (in thousands) Amount Year ending December 31: 2022 $ 2,011 2023 2,639 2024 2,639 2025 2,639 2026 2,617 Thereafter 5,027 Total $ 17,572 recognized a lossis at the level of the reportable segments, dispensary, patient services, and clinical trials & other. The goodwill allocated to each of the unaudited condensed consolidated statementsreporting units as of operations resulting from a increaseMarch 31, 2022 and December 31, 2021 is as follows:(in thousands) March 31, 2022 December 31, 2021 Patient services $ 21,443 $ 21,443 Dispensary 4,551 4,551 Clinical trials & other 632 632 Total goodwill $ 26,626 $ 26,626 fair valuecarrying amount of liabilities of approximately $3.5 million and approximately $2.5 million, respectively, presented as change in fair value of derivative warrant liabilities ongoodwill for the accompanying unaudited condensed consolidated statements of operations.For the sixthree months ended June 30,March 31, 2022 and for the year ended December 31, 2021 and 2020, the Company recognized a benefit of approximately $2.4 million and a loss of approximately $2.9 million to the unaudited condensed consolidated statements of operations resulting from a decrease and increase in16DFP HEALTHCARE ACQUISITIONS CORP.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSthe fair value of liabilities, respectively, presented as change in fair value of derivative warrant liabilities on the accompanying unaudited condensed consolidated statements of operations.The estimated fair value of the Private Placement Warrants is determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.(in thousands) 2022 2021 Balance as of January 1: Gross goodwill $ 26,626 $ 14,227 Goodwill acquired during the period — 12,399 Accumulated impairment losses — — Goodwill, net as of March 31 and December 31 $ 26,626 $ 26,626 provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:The change insets forth the fair valuecomputation of the warrant liabilities measured with Level 3 inputsCompany's basic net income (loss) per share to common stockholders for the three and six months ended June 30, 2021 is summarized as follows:9. Subsequent Events.Management has evaluated subsequent eventsMarch 31, 2022 and transactions that occurred after2021.(in thousands, except share data) Three Months Ended March 31, 2022 2021 Net income (loss) attributable to TOI $ 19,286 $ (996) Less: Net income attributable to participating securities, basic 3,519 — Net income (loss) attributable to common stockholders, basic $ 15,767 $ (996) Weighted average common shares outstanding, basic 73,252,365 62,853,419 Net income (loss) per share attributable to common stockholders, basic $ 0.22 $ (0.02) balance sheet date upcomputation of the Company's diluted net income (loss) per share to common stockholders for the datethree months ended March 31, 2022 and 2021.(in thousands, except share data) Three Months Ended March 31, 2022 2021 Net income (loss) attributable to TOI $ 19,286 $ (996) Less: Net income attributable to participating securities, diluted 3,405 — Net income (loss) attributable to common stockholders, diluted $ 15,881 $ (996) Weighted average shares outstanding, diluted 76,247,966 62,853,419 Net income (loss) per share attributable to common stockholders, diluted $ 0.21 $ (0.02) unaudited condensed consolidated financial statements were issued. Based upon this review, the Company did not identify any subsequent events thatcomputation of diluted net loss per share because their effect would have required adjustment or disclosurebeen anti-dilutive for the periods presented:Three Months Ended March 31, 2022 2021 Stock options 4,609,124 8,706,158 RSUs 1,991,728 1,390,839 Earnout Shares 1,560,857 — Public Warrants 5,749,986 — Private Warrants 3,177,542 — unaudited condensed consolidated financial statements.17(in thousands) Three Months Ended March 31, 2022 2021 Revenue Patient services $ 35,057 $ 29,622 Dispensary 18,679 17,618 Clinical trials & other 1,425 1,340 Consolidated revenue 55,161 48,580 Direct costs Patient services 27,378 23,086 Dispensary 15,324 15,123 Clinical trials & other 137 169 Total segment direct costs 42,839 38,378 Depreciation expense Patient services 250 127 Dispensary — — Clinical trials & other 47 29 Total segment depreciation expense 297 156 Amortization of intangible assets Patient services 621 560 Dispensary — — Clinical trials & other 53 53 Total segment amortization 674 613 Operating income Patient services 6,808 5,849 Dispensary 3,355 2,495 Clinical trials & other 1,188 1,089 Total segment operating income 11,351 9,433 Selling, general and administrative expense 29,806 11,178 Non-segment depreciation and amortization 16 8 Total consolidated operating loss $ (18,471) $ (1,753) (in thousands) March 31, 2022 December 31, 2021 Assets Patient services $ 47,086 $ 44,223 Dispensary 6,172 4,277 Clinical trials & other 13,717 14,504 Non-segment assets 139,537 140,435 Total assets $ 206,512 $ 203,439 (in thousands) Three Months Ended March 31, Type 2022 2021 American Institute of Research Consulting $ 40 $ 24 Karen M Johnson Board Fees 19 — Richard Barasch Board Fees 5 — Anne M. McGeorge Board Fees 19 — Mohit Kaushal Board Fees 19 — Ravi Sarin Board Fees 19 — Maeve O'Meara Duke Board Fees 19 — Richy Agajanian MD Clinical Trials 16 4 Veeral Desai Board Fees — 13 Total $ 156 $ 41
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to DFP Healthcare Acquisitions Corp. References to our “management” or our “management team” refer to our officers
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)amended. Such statements are based upon current expectations, as well as management's beliefs and assumptions and involve a high degree of risk and uncertainty. Any statements contained herein that are not statements of historical facts,fact may be deemed to be forward-looking statements. Statements that include the words "believes," "anticipates," "plans," "expects." "intends," and involve risks and uncertaintiessimilar expressions that could causeconvey uncertainty of future events or outcomes are forward-looking statements. Our actual results tocould differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future eventsdiscussed or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipatedsuggested in the forward-looking statements please referherein. Factors that could cause or contribute to such differences include those described under the Risk Factors section of the Company’s 10-K/Aheading "Risk Factors" in our Annual Report on Form 10-K for the fiscal year 2020 filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 24, 2021 (the “FY 2020 10-K/A”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whetherended December 31, 2021. In addition, as a result of newthese and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements in this document are based on information future events or otherwise.
Overview
We are a blank check company incorporated on November 1, 2019available to us as a Delaware corporation and formed forof the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). We intend to focus our investment effort broadly across the entire healthcare industry, which encompasses services, therapeutics, devices, diagnostics and animal health. We intend to effectuate our initial Business Combination using cash from the proceedsfiling date of this offeringQuarterly Report on Form 10-Q and the private placement of the private placement warrants, the proceeds of the sale of our shares in connection with our initial Business Combination (pursuantwe assume no obligation to forward purchase agreements or backstop agreements we may enter into following the consummation of our initial public offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lendersupdate any forward-looking statements or the owners of the target, or a combination of the foregoing. Our sponsor is DFP Sponsor LLC, a Delaware limited liability company (the “Sponsor”).
Our registration statement forreasons why our initial public offering (the “Initial Public Offering”) was declared effective by the SEC on March 10, 2020. On March 13, 2020, we consummated our Initial Public Offering of 23,000,000 units (the “Units” and, with respect to the Class A common stock includedactual results may differ. All dollar values are expressed in the Units being offered, the “Public Shares”), including 3,000,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $10.4 million, inclusive of approximately $6.3 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 3,733,334 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to our Sponsor, generating proceeds of $5.6 million.
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UponThe Company is a leading value-based oncology company that manages community-based oncology practices that serve patients at 67 clinic locations across 11 markets and four states throughout the closing of the Initial Public Offering and the Private Placement, $230.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (the “Trust Account”) and was invested in permitted United States, “government securities” within the meaningwhich are staffed with 96 oncologists and advanced practice providers. 53 of Section 2(a)(16) of the Investment Company Act of 1940, as amended,these clinics are staffed with 84 providers employed by our affiliated physician-owned professional corporations, which we refermanagement refers to as the Investment"TOI PCs", which have provided care for more than 51,000 patients in 2021 and managed a population of approximately 1.5 million patients under value-based agreements as of March 31, 2022. The Company Act, havingalso provides management services on behalf of 14 clinic locations owned by independent oncology practices. The Company's mission is to heal and empower cancer patients through compassion, innovation, and state-of-the-art medical care.
We have only have 24 months from the closing of the Initial Public Offering, or March 13, 2022, to complete our initial Business Combination (the “Combination Period”). If we do not complete a Business Combination within this period of time, it will (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares for a per share pro rata portion of the Trust Account, including interest and not previously released to us to fund our working capital requirements (subject to an annual limit of $500,000) (less taxes payable and up to $100,000 of such net interest to pay dissolution expenses) and (iii) as promptly as possible following such redemption, liquidate and dissolve the balance of our net assets to our remaining stockholders, as part of our plan of dissolution and liquidation.
The issuance of additional shares in connectioninconsistent with a Business Combination to the ownerspatient’s goals of the target or other investors:
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Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
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As indicated in the accompanying unaudited condensed consolidated financial statements as of June 30, 2021, we had approximately $0.6 million in our operating bank account. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete our initialThe Business Combination will be successful.
Proposed Business Combination
On June 28, 2021, the Company entered into an Agreement and Plan of Merger by and among DFP Healthcare Acquisition Corp. ("DFPH"), Orion Merger Sub I, Inc., a Delaware corporation ("First Merger Sub") and a direct, wholly-owned subsidiary of DFP, Orion Merger Sub II, LLC a Delaware limited liability company("Second Merger Sub") entered into an agreement and a direct, wholly-owned subsidiary of) andplan of merger ("Merger Agreement") with TOI Parent, Inc. ("TOI Parent") (collectively, the "Business Combination"). In connection with the Business Combination, DFPH entered into subscription agreements with certain investors (the “PIPE Investors”), a Delaware corporation, as disclosed in a Form 8-K filed on June 29, 2021.
Liquiditywhereby it issued 17.5 million shares of common stock at $10.00 per share and Going Concern Considerations
Our liquidity needs to date have been satisfied through a $25,000 contribution from our Sponsor in exchange100,000 shares of preferred stock at $1,000.00 per share (“PIPE Shares”) for the issuancean aggregate investment of our founder shares to our Sponsor, the promissory note of $200,000 from our Sponsor, and the proceeds from$275,000 (“PIPE Investment”), which closed simultaneously with the consummation of the Private Placement not held in the Trust Account. On March 13, 2020, we repaid the promissory note in full to our Sponsor. In addition, in order to finance transaction costs in connection with aBusiness Combination.
Management continues to evaluatebusiness activities. The Company cannot predict the impactongoing impacts of the COVID-19 pandemic or the distribution of vaccines on our industryits business or operations, but will continue to actively monitor the related issues and has concludedmay take further action that whilealters its business operations, including as may be required by federal, state, local or foreign authorities or that it is reasonably possible thatdetermines are in the virus could have a negative effect on the Company’s financial position, resultsbest interests of its operations and/or closeemployees, payors, partners and stockholders.
In connection with our assessment of going concern considerations in accordance with FASB ASC Topic 205-40, "Presentation of Financial Statements - Going Concern," management has determined that the liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial doubt about our ability to continue as a going concern. No adjustments have been made$4,993 pursuant to the carrying amountsCARES Act; $2,727 under the Accelerated and Advance Payment Program; and $2,001 from Provider Relief Funding under the CARES Act. Additionally, the Company obtained loans of assets or liabilities should we be required to liquidate after March 13, 2022.
Results of Operations
Our entire activity since inception through June 30, 2021 related to our formation,$332 under the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial Business Combination. We will generate non-operating income in the form of interest income and dividends on investments held in Trust Account. We expect to incur increased expensesCARES Act as a result of being acquisitions of physician practices. As of March 31, 2022, all loans obtained by the Company had been forgiven.
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
Clinics (1) | 67 | 55 | |||||||||
| Markets | 11 | 8 | |||||||||
| Lives under value-based contracts (millions) | 1.5 | 1.2 | |||||||||
| Adjusted EBITDA (in thousands) | $ | (5,184) | $ | 69 | |||||||
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| (dollars in thousands) | 2022 | 2021 | $ | % | |||||||||||||||||||
| Net income (loss) | $ | 19,286 | $ | (996) | $ | 20,282 | (2036.3) | % | |||||||||||||||
| Depreciation and amortization | 987 | 777 | 210 | 27.0 | % | ||||||||||||||||||
| Interest expense | 74 | 101 | (27) | (26.7) | % | ||||||||||||||||||
| Income tax expense | 180 | 218 | (38) | (17.4) | % | ||||||||||||||||||
| Board and management fees | 45 | 106 | (61) | (57.5) | % | ||||||||||||||||||
Non-cash addbacks(1) | 197 | (13) | 210 | (1615.4) | % | ||||||||||||||||||
| Share-based compensation | 8,552 | 42 | 8,510 | 20261.9 | % | ||||||||||||||||||
| Change in fair value of liabilities | (37,979) | — | (37,979) | N/A | |||||||||||||||||||
Practice acquisition-related costs(2) | 422 | 90 | 332 | 368.9 | % | ||||||||||||||||||
Consulting and legal fees(3) | 655 | 387 | 268 | 69.3 | % | ||||||||||||||||||
Other, net(4) | 953 | (643) | 1,596 | (248.2) | % | ||||||||||||||||||
| Public company transaction costs | 1,444 | — | 1,444 | N/A | |||||||||||||||||||
| Adjusted EBITDA | $ | (5,184) | $ | 69 | $ | (5,253) | (7613.0) | % | |||||||||||||||
Fortemporary labor of $485 and $223, recruiting expenses to build out corporate infrastructure of $424 and $155 and other miscellaneous charges of $26 and $0 during the sixthree months ended June 30,March 31, 2022 and 2021, respectively. During the three months ended March 31, 2022 and 2021 such expenses were partially offset by $0 and $1,023, respectively, of stimulus funds received under the CARES Act.
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Revenue | |||||||||||
| Patient services | 63.6 | % | 61.0 | % | |||||||
| Dispensary | 33.8 | % | 36.2 | % | |||||||
| Clinical trials & other | 2.6 | % | 2.8 | % | |||||||
| Total operating revenue | 100.0 | % | 100.0 | % | |||||||
| Operating expenses | |||||||||||
| Direct costs – patient services | 49.6 | % | 47.5 | % | |||||||
| Direct costs – dispensary | 27.8 | % | 31.1 | % | |||||||
| Direct costs – clinical trials & other | 0.2 | % | 0.3 | % | |||||||
| Selling, general and administrative expense | 54.0 | % | 23.0 | % | |||||||
| Depreciation and amortization | 1.8 | % | 1.6 | % | |||||||
| Total operating expenses | 133.4 | % | 103.5 | % | |||||||
| Loss from operations | (33.4) | % | (3.5) | % | |||||||
| Other non-operating expense (income) | |||||||||||
| Interest expense | 0.1 | % | 0.2 | % | |||||||
| Change in fair value of derivative warrant liabilities | 2.6 | % | — | % | |||||||
| Change in fair value of earnout liabilities | (71.5) | % | — | % | |||||||
| Gain on debt extinguishment | (0.3) | % | — | % | |||||||
| Other, net | 0.3 | % | (2.2) | % | |||||||
| Total other non-operating income | (68.8) | % | (2.0) | % | |||||||
| Income before provision for income (loss) taxes | 35.4 | % | (1.5) | % | |||||||
| Income tax (expense) benefit | (0.3) | % | (0.4) | % | |||||||
| Net income (loss) | 35.1 | % | (1.9) | % | |||||||
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| (dollars in thousands) | 2022 | 2021 | $ | % | |||||||||||||||||||
| Patient services | $ | 35,057 | $ | 29,622 | $ | 5,435 | 18.3 | % | |||||||||||||||
| Dispensary | 18,679 | 17,618 | 1,061 | 6.0 | % | ||||||||||||||||||
| Clinical trials & other | 1,425 | 1,340 | 85 | 6.3 | % | ||||||||||||||||||
| Total operating revenue | $ | 55,161 | $ | 48,580 | $ | 6,581 | 13.5 | % | |||||||||||||||
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| (dollars in thousands) | 2022 | 2021 | $ | % | |||||||||||||||||||
| Direct costs – patient services | $ | 27,378 | $ | 23,086 | $ | 4,292 | 18.6 | % | |||||||||||||||
| Direct costs – dispensary | 15,324 | 15,123 | 201 | 1.3 | % | ||||||||||||||||||
| Direct costs – clinical trials & other | 137 | 169 | (32) | (18.9) | % | ||||||||||||||||||
| Selling, general and administrative expense | 29,806 | 11,178 | 18,628 | 166.6 | % | ||||||||||||||||||
| Depreciation and amortization | 987 | 777 | 210 | 27.0 | % | ||||||||||||||||||
| Total operating expenses | $ | 73,632 | $ | 50,333 | $ | 23,299 | 46.3 | % | |||||||||||||||
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| (dollars in thousands) | 2022 | 2021 | $ | % | |||||||||||||||||||
| Interest expense | $ | 74 | $ | 101 | $ | (27) | (26.7) | % | |||||||||||||||
| Change in fair value of derivative warrant liabilities | 1,461 | — | 1,461 | N/A | |||||||||||||||||||
| Change in fair value of earnout liabilities | (39,440) | — | (39,440) | N/A | |||||||||||||||||||
| Gain on debt extinguishment | (183) | — | (183) | N/A | |||||||||||||||||||
| Other, net | 151 | (1,076) | 1,227 | (114.0) | % | ||||||||||||||||||
| Total other non-operating (income) expense | $ | (37,937) | $ | (975) | $ | (36,962) | 3791.0 | % | |||||||||||||||
Forfair value of derivative earnout liabilities, respectively, which were created as part of the sixBusiness Combination.
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| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| (dollars in thousands) | 2022 | 2021 | $ | % | |||||||||||||||||||
| Net cash and restricted cash (used in) provided by operating activities | $ | (16,981) | $ | 464 | $ | (17,445) | (3,760) | % | |||||||||||||||
| Net cash and restricted cash used in investing activities | (1,002) | (1,446) | 444 | (31) | % | ||||||||||||||||||
| Net cash and restricted cash (used in) provided by financing activities | (1,657) | 22,396 | (24,053) | (107) | % | ||||||||||||||||||
| Net (decrease) increase in cash and restricted cash | $ | (19,640) | $ | 21,414 | $ | (41,054) | (192) | % | |||||||||||||||
| Cash and restricted cash at beginning of period | 115,174 | 5,998 | 109,176 | 1,820 | % | ||||||||||||||||||
| Cash and restricted cash at end of period | $ | 95,534 | $ | 27,412 | $ | 68,122 | 249 | % | |||||||||||||||
franchise tax expense, approximately $315,000 in offering costs associated with derivative warrant liabilitiesSignificant changes impacting net cash (used in) provided by operating activities for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 were as follows:
Contractual Obligations
Wefair value of warrant liabilities;
| Material Cash Requirements Due by the Year Ended December 31, | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2022 | 2023-2024 | 2025-2026 | Thereafter | Total | |||||||||||||||||||||||||||
| Operating leases | $ | 3,717 | $ | 8,823 | $ | 5,812 | $ | 2,505 | $ | 20,857 | ||||||||||||||||||||||
| Deferred acquisition consideration | 2,050 | 2,309 | — | — | 4,359 | |||||||||||||||||||||||||||
Other1 | 3,961 | 3,132 | 5 | — | 7,098 | |||||||||||||||||||||||||||
| Total material cash requirements | $ | 9,728 | $ | 14,264 | $ | 5,817 | $ | 2,505 | $ | 32,314 | ||||||||||||||||||||||
Registration Rights
The initial stockholders and holdersopt out of the Private Placement Warrants are entitledextended transition period and comply with the requirements that apply to registration rights pursuantnon-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a registration rights agreement. The initial stockholdersstandard is issued or revised and holdersit has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company that is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the Private Placement Warrants will be entitled to make up to three demands, excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securitiespotential differences in other registration statements filed by us. We will bear the expenses incurred in connection with the filingaccounting standards used.
Underwriting Agreement
The underwriters did not receive any underwriting discounts or commission on the 5,000,000 Units purchased in the Initial Public Offering by certain domestic private pooled investment vehicles managed by Deerfield Management Company, L.P. We paid an underwriting discount of 2.0% of the per Unit offering price, or $3.6 million, at the closing of the Initial Public Offering, with an additional fee (the “Deferred Underwriting Fees”) of 3.5% of the gross offering proceeds, or $6.3 million, payable upon our completion of an Initial Business Combination. The Deferred Underwriting Fees will become payable to the underwriters from the amounts held in the Trust Account solely in the event we complete our initial Business Combination.
Contents
Use of Estimates
Investments Heldinformation available at the later of adoption, inception, or modification in determining the present value of lease payments. ROU assets are measured at an amount equal to the initial lease liability, plus any prepaid lease payments (less any incentives received) and initial direct costs, at the lease commencement date. The Company has elected to account for lease and non-lease components as a single lease component for all underlying classes of assets. As a result, the fixed payments that would otherwise be allocable to the non-lease components are account for as lease payments and included in the Trust Account
Our portfoliomeasurement of investments heldthe Company’s right-of-use asset and lease liability.
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Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemptionfinancial statements by segment in accordance with the guidancerelevant accounting literature to provide investors with transparency into how the chief operating decision maker (“CODM”) manages the business. The Company's
Net Income (Loss) Per Share of Common Stock
Our unaudited condensed consolidated statements of operations include a presentation of net income (loss) per share for Class A common stock subject to possible redemption in a manner similar to the two-class method of net income (loss) per common stock. Net income (loss) per common stock, basic and diluted, for Class A common stocksuch asset, an impairment loss is calculated by dividing the interest income earned on the Trust Account, less interest available to be withdrawnrecognized for the payment of taxes, by the weighted average number of Class A common stock outstanding for the periods. Net income (loss) per common stock, basic and diluted, for Class B common stock is calculated by dividing the net income (loss), adjusted for income attributable to Class A common stock, by the weighted average number of Class B common stock outstanding for the periods. Class B common stock include the Founder Shares as these common stocks do not have any redemption features and do not participate in the income earned on the Trust Account.
The calculation of diluted net income (loss) per common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering and Private Placement since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion would be anti-dilutive under the treasury stock method.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The Public Warrants and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, we recognize the warrant instruments as liabilities atdifference between estimated fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in faircarrying value. Fair value is recognized in our unaudited condensed consolidated statements of operations. The fair value of the Public Warrants issued in connection with the Public Offering and Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model each measurement date. The fair value of Public Warrants issued in connection with the Initial Public Offering have subsequently been measureddetermined based on the listed market price of such warrants.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. We early adopted the ASU on January 1, 2021. Adoption of the ASU did not have a material impact on our financial position, results of operations or cash flows.
Our management does not believe that any other recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.
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Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We do not believe that inflation had a material impact on our business, revenues or operating results during the period presented.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the unaudited condensed consolidated financial statements may not be comparable to those of companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the unaudited condensed consolidated financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
ITEM
AsQuantitative and Qualitative Disclosures About Market Risk
Weassurance that future inflation will not have not engaged in any hedging activities sincean adverse impact on our inception,operating results and we do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
ITEM
Controls and Procedures
Disclosure
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We do not expect thatIn designing and evaluating our disclosure controls and procedures, will prevent all errorsmanagement, including the Chief Executive Officer and all instances of fraud. DisclosureChief Financial Officer, recognizes that any controls and procedures, no matter how well conceiveddesigned and operated, can provide only reasonable not absolute, assurance thatof achieving the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs.desired control objectives. Because of the inherent limitations in all disclosure controls and procedures,control systems, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficienciesissues and instances of fraud, if any.any, within the company have been detected. The design of disclosureany system of controls and procedures also is based partly onin part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Management’s Report on Internal Controls over Financial Reporting
This report does not include Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a report of management’s assessment regarding internalcost-effective control over financial reporting or an attestation report of our registered public accounting firmsystem, misstatements due to a transition period established by the rules of the Commission for newly public companies.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the three months ended June 30, 2021, covered by this Quarterly Report on Form 10-Q that has materially affected,error or is reasonably likely to materially affect, our internal control over financial reporting, other than described herein. Management has implemented remediation steps to address the material weaknessfraud may occur and to improve our internal control over financial reporting. Specifically, we expanded and improved our review process for complex securities and related accounting standards. As of June 30, 2021, this has not been fully remediated.
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ITEM
ITEM
Risk Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our FY 2020 10-K/A filed with the SEC on May 24, 2021. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there
ITEM
None.
ITEMUnregistered Sales of Equity Securities and Use of Proceeds
ITEM
Mine Safety Disclosures
ITEM
None.
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ITEM
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
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| Incorporated by Reference | Filed or Furnished Herewith | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exhibit Number | Description | Form | File Number | Exhibit | Filing Date | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2.1 | S-4/A | 333-258152 | 2.1 | October 20, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.1 | 8-K | 001-39248 | 3.1 | November 18, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.2 | 8-K | 001-39248 | 3.2 | November 18, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.3 | 8-K/A | 001-39248 | 3.3 | November 22, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4.1 | 8-K | 001-39248 | 4.1 | March 13, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4.2 | 8-K/A | 001-39248 | 4.2 | November 22, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10.1 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 31.1 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 31.2 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 32.1 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 32.2 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 101 | Interactive Data File — the following financial statements from The Oncology Institute's Quarterly Report on Form 10-Q formatted in inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income (Operations), (iii) the Condensed Consolidated Statements of Convertible Preferred Shares and Changes in Stockholders’ Equity (Deficit), (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 101.INS | XBRL Instance Document | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| THE ONCOLOGY INSTITUTE, INC. | |||||||
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| By: |
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| Mihir Shah | |||||||
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| Chief Financial Officer (Principal Financial Officer and | ||||||
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