AONC - Earnings call transcript Q3 2023 | American Oncology Network, Inc.

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Operator

Good morning, and welcome to American Oncology Networks Third Quarter 2023 Earnings Conference Call. Today's call is being recorded, and we have allocated 1 hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Dave Gould, Chief Financial Officer at Aon. Thank you.

You may begin.

David Gould

thank third joining quarter and American to everyone, Networks Oncology year-to-date morning, you us for discuss Good results.

statements, found SEC, include any on Before to we revise assumptions and as materially statements. could assumptions may to website actual well press as uncertainties risks, which in can uncertainties as from with filings or remind like or detailed subject These forward-looking differ We you be that cause various are investors.aoncology.com. begin, this conference and we risks, which are except would release these results the our to at by undertake forward-looking These this our to our obligation law. required call information, morning's no statements update statements.

today, intended investors. not non-GAAP GAAP morning's presented the can found accordance information and of be considered income. as certain release this substitute press from During non-GAAP use as information useful income, we information, in in such adjusted reference they believe net EBITDA financial derived measures prepared is to isolation which to for filings. Reconciliations measures, we and are GAAP. non-GAAP The of with in they a will are SEC our measure in financial We also measures adjusted GAAP supplement presentation non-GAAP and GAAP net believe and these this we as closest our or their be to call our

Schonherz. Joining me today on CEO, the our call is Todd

call questions. that, remarks, Following I'll open your turn we'll the to our over With the for call Todd. prepared

Todd Schonherz

company. our a Thank us everyone. morning, as joining Dave. traded call earnings on Thank you, publicly first for Good you

where you unique forward a drive every our our exciting to care by our live public to step forward. quarter report our was look day. each and I in milestone, very more quality, strategy Aon's patients oncology value one mission inception our to communities it listing proposition. are bring third our unique while mission has strong providing to to results, September XXXX, in Since in a work begin, the our the continues and us differentiated We was and just journey. about cost-effective been that highest To approach And and company, within happy important and telling

Star North an outcomes remains for in their patients most and times going creating are our through Our often experience optimal challenging lives. who the

to Oncology large Before in we more operational I share market estimated developments want and performance, take the it color our into and and market I operate be expensive to well is above a that spend the growing the a $XXX significant moment fragmented portion care on is our and makes mission. is why get inefficient. drives care up and to United every day. that U.S. States, health one very also and in a Cancer billion of total in but care is complex

expected indications, a facing and created of shortage explosion headwinds coming personalized we increased new of years. is demand complexity to only for drugs are of providers by today As there macro are illness. by aging driven oncology more an of becoming chronic terminal a result, is the population, further many services, pressure These on and And which an oncologists, new placed detection currently by medicine. the for factors worsen increasing cancer earlier that, for on versus compounded factors a top and condition in demand reimbursement like

the closed small overall off With cost or their a hospitals, when not still by not to or choice this that and hospitals need do are often measured sold that providers number pressure, most practices while have number will a care. about groups of answer sites. consolidation the position friendly as make believe future. they practices are number of increase of oncology fairly To to large of small a end, we are a And

Aon have practices access Our a with markets practices resources for remain lifeline with oncology by the solution limited long located to model remain enhance to capacity to markets ensuring term. in the community preserve community ensures significant viable the are of media and the remain number that and competitive is a in care. to oncologists and provide

to model. Turning our business

are built novel scalable practice our the deliver largest things one inception, physician differently providers and advantages way. across national unique and and done a cost-effective community States, in have a cancer through we we We care number care helping oncology country. that high-quality, building to in the fastest-growing patients landscape of our we've disrupt integrated platform. United to Since of all existing that the in oncology is The community a true cost-effective platform network networks operate to the provides

care. differentiators growth strategy and XXX the states the allow revenue key highly physicians business in of to to ensure Columbia high-quality, partner LTM lab our XX $X.X include District specialty today, drive like by cutting-edge centralized We've plus on basis. to to the our with pharmacy from billion Our across technology services is most we care high-quality platform, sites burden an United providers in-house of over successful -- service, of XXXX Together States. of economics, $X and delivering our the patients as cancer demonstrated which spanning practice across delivery operations XX integrated well as on growing reduce patient better and administrative important, what focus

Transformation included of number quarter. to become traded completion to publicly business our as of celebration company as Digital well with a a our Turning significant of notably highlights, QX Opportunities successful fifth Corporation anniversary. the combination the the

year-to-date. XX markets, including Texas during perspective, imperatives. From the We into have growth great quarter we and and executing new strategic progress made Aon Florida this platform and our the priorities expanded XX during quarter growth added QX. Aon providers to strategic the

driven of demand of expanded these Both service and complement significant our adjacent specialties. offerings growth, by traditional oncology respective our Aon markets growth opportunities and represent populations increasing services. their demographics complementary to To the also

Crown Triple providers Urology the from X in the quarter, Arkansas. During we welcomed

services. the will now by providers to the In and cutting-edge benefit at Crown services urology, to access and our medically from by in-house pathology Triple therapies provided imaging addition the provided cutting-edge patients pharmacy, services team integrated clinical

executing continues a on do job imperatives. great to strategic Overall, Aon our

continue year-over-year positive our and imaging services growth same-store of ancillary accretive utilization services, appropriate and We expansion our research. of across including through experience clinical markets, growth to

transformative model. program be continue payment demonstrated being by participate leader a to in enhanced the only Aoncology cancer the We to in programs country payment care, in one practices CMS's of alternative XX for

team, Susan Officer; joined of also Sabo-Wagner and Vice made Innovation. Strategy Chief bringing joined our Alti strengthen to July, our to We Aon the Clinical innovation. growth on as have as our in Rahman President strategy investments ambitious In us leadership support needed talent significant further and and Innovation focus

our We since part are significant joining team. They of Alti have Aon. and excited have to made in Susan advancing both contributions as strategy our

growth in highlighted in and continued revenue focus by to year-over-year has the led has XX%. investments our These strong patient-first results scores quarter, best-in-class patient business engagement generated of and

to results. Now more the call financial provide turn I'll Dave our third over to quarter detail on

David Gould

patient cohorts patients our metrics, joint Since result demonstrates our continues of our the and metrics a platform, quality ability per we call Todd. framework encounter for it of company, to even revenue important providers performance public This provide this care key per our the Thanks, a evaluate to as in statement practices our outreach. on basis to how to marketing business. make will a the I earnings as outside The years needed of financial on continue join of that community is highest demonstrate encounters, the we and where we want first after they report growth key Aon's those as is growth metrics based quarterly organic the grow communities a cost encounter. and with efforts to live. core deliver in our note Organic

to a that in they mission our practice improve help remain results can oncology to to so our cancer firm testament are care, community We access and expand this.

a to like results I'd firm. of a with entered private partnership end prior our items are: highlight this quarter AEA discussion world-class quarter, into Growth, of into second couple strategic we equity a of the to the At the a for year, diving Now

become traded also on publicly a DTOC merger September company our XX We reverse this of completed to year. with

million operationally, to tremendous the drive AON stock system cycle reverse strategy opportunistic cutting announced Athena to merger, to which program proud on share completed to our we announce we that ensure revenue we to And is that represents upgrade of is part technology the our $XX as up IDX, our Following overall value. I'm performance. an always repurchase of believe of edge

the $XX results. XX.X% financial to or This compared growth patient third was resulting increased increase quarter, $XX QX million the in million year encounters, as Switching to million X% respect in gears, primarily million increased XX.X% to our a by to to million let's in million a for performance X.X% Approximately encounters. quarter $XXX.X and revenues organic increase from million dive million of $XXX.X 'XX. compared of revenues. the driven increase overall $XXX.X $XXX revenues Year-to-date, increase our into in to was patient year-to-date attributable an prior. With in as increase or of $XXX.X $XX.X resulting in overall

XX, was million X reflected months addition ended impact XXXX, X to XXXX. during in XXXX, fully which X the X ended as by $XX.X the are Additionally, September increase of the as of driven adding practices months our practices the in of results well the platform

drug of cost increase $XXX.X million [Colster] was we to and encounters The up $XX.X driven per increased from increasing. costs patient by During experienced the result a medical encounter and as of supply million quarter, primarily revenues million, QX $XXX.X in XXXX. both

increased $XX.X The drug was supply the drug patient service increase. encounter require a at combination encounters higher medical volume The of by of and our per patients as cost their by of as mix cost for revenue million well pricing $XX.X of patient and drove encounters million treatments. in a driven increased cost practices

driven addition during out X to expense added a stock The remaining Aon quarter. the current We had compensation practices paid related $X.X team increase the our our platform million by to noncash was to members. also of

prior million in again and cost attributable increase patient encounters as from increase drug encounter. $XXX.X the year-to-date, $XXX.X costs cost to $XXX.X an our up to And an revenue which in million well to in per was increased both as The due supply million, increased of primarily medical year. increase is

of cost the costs XXXX, September months the $XX.X supply million medical in as the cost XX, addition per of to as of Specifically, encounters encounter September the the our by X the XXXX. million in XX, of increase X volume million addition the results which revenue $XX.X well from during drug at XXXX, and a practices and ended reflected of of in are practices fully practices related additional X revenue cost increased months X ended the increase. An drove patient $XX.X

previously, we expense. incurred stock compensation noted noncash from the also As $X.X million

the to compared X costs and $XX.X as were period million XXXX, ended September same with $XX.X revenue X to million well function. optimization for related that platform our prior X and and expenses $X revenue $X.X cycle XX, $XX.X same amortization. the A in $X.X million as associated and and the the ended the administrative optimization was million of a increase X growth related $X.X During in months year. increase million, the $XX.X costs to for The and million and million depreciation growth of ended of million during months general with months associated as the respectively, cycle increase

of the X well and incurred of company and and driven incurred costs XXXX, XX, were the fees of as consulting behalf combination. respectively. by ended were were accounting X These as that business September million, $XX.X costs the on the the the $XX.X transaction closing For months by costs [indiscernible]as million legal

and prior was total X million, increase for months to in The million million other as year. charges $X.X eliminated and compared to respectively, that the attributable ended the X of closing as liabilities adjustments and $X.X million of and and XXXX, $X.X the ended the $X.X mark-to-market related $X.X X expense certain respectively, other on the of the $XX.X XX, expense to for September X business noncash is combination. derivative million months in million Now were

Reserve Federal year. X million the million and months rate respectively, the the by interest and $X.X for Additionally, interest driven X increased expense by over hikes ended, numerous last the $X.X

well year the noncash the $X.X million was fees EBITDA and as the income nonrecurring the for and stock For during was transaction XXXX, million, Adjusted $X.X increase $X quarter. as net months adjusting September prior adjusted DIR costs X $X.X an expense. to is from which quarter for X the XX, and ended noncash compensation respectively, million from after in down due million, relative

for up the is prior million EBITDA $X year million from $XX Adjusted in $XX year. reported million, the

comments. it report. the now turn over back million for of healthy quarter As liquidity was to Todd end, our a closing [indiscernible] $XX.X I will the

Todd Schonherz

Dave. new double-digit you, new that of suite growth. I We in we our proud this and markets recap, To We revenue Thank solid have am expanded operator the I'll for made strengthen entered the services. questions. accomplished over quarter. of that, team, delivered our all it to market. We to entered turn strategic line open With and we public hires any to the

Operator

questions Instructions] to this call the back David closing no be remarks. at appears [Operator Gould time. There can over I for to turn

David Gould

Thank you, operator.

excited about forward are our committed value day, our partners and we opportunities call. delivering to We everyone. of and next are to and us, look have updating on earnings We patients, results you our year full wonderful on a the ahead Thank you, shareholders. to

Operator

This concludes conference. today's

your disconnect may for lines You you time. participation. Thank your at this

American Oncology Network (AONC) 14 Nov 232023 Q3 Earnings call transcript