The Oncology Institute stock initiated with Buy rating at B.Riley

Investing.com - The Oncology Institute Inc. (NASDAQ:TOI), currently trading at $2.97, received a Buy rating from B.Riley as the firm initiated coverage with a $6.00 price target. The stock has shown remarkable momentum, gaining over 860% year-to-date according to InvestingPro data.

B.Riley based its valuation on 1.2x EV/2025E sales for the company, which is described as one of the largest oncology specialty value-based healthcare services providers. With a market capitalization of $268 million and annual revenue of $403 million, TOI has established a significant presence in the healthcare sector. The firm highlighted TOI’s unique position as a publicly traded company integrating utilization management and oncology care in community settings.

The research note pointed to TOI’s expansion from its California origins into Florida and other markets. B.Riley emphasized the company’s approach to addressing unsustainable oncology spending, noting the U.S. spends over $200 billion on oncology with drug expenditures expected to rise at more than 10% CAGR in the near term. Despite strong revenue growth of 17.6%, InvestingPro analysis indicates the company is not yet profitable.

TOI’s integrated utilization management approach delivers cost-effective oncology care, helping address challenges faced by payors like UNH and CNC who struggle with increased utilization of high-cost drugs and compressed margins.

The firm acknowledged TOI stock faced pressure in the fourth quarter of 2024 due to investor concerns about cash levels approaching the $40 million minimum covenant threshold, but noted a recent debt facility amendment has eliminated this financial concern.

In other recent news, The Oncology Institute reported its financial results for the first quarter of 2025, highlighting a 10.3% year-over-year increase in revenue, totaling $104.4 million. Despite the revenue growth, the company posted an earnings per share (EPS) loss of -$0.21, missing market expectations. The Oncology Institute also announced it will become the exclusive oncology provider for over 80,000 Medicaid patients associated with SilverSummit Healthplan in Nevada, effective July 1. Additionally, the company has joined the Russell 2000 and 3000 indexes, a significant milestone reflecting its growth and value-based approach to cancer care.

Analyst firm BTIG initiated coverage on The Oncology Institute with a Buy rating and a price target of $7.00, noting the company’s diversified revenue model and potential for growth in capitated and managed care. The firm highlighted the high margins from capitated contracts and the company’s strategic focus on expanding its market presence. The Oncology Institute has also improved its adjusted EBITDA and free cash flow compared to the previous year, demonstrating operational efficiency despite ongoing challenges in achieving profitability.

The company reaffirmed its full-year 2025 guidance, projecting revenue between $460 million and $480 million and aiming for positive adjusted EBITDA by the fourth quarter. The Oncology Institute’s inclusion in the Russell indexes is expected to enhance its visibility among investment managers and institutional investors. These developments reflect the company’s commitment to expanding its reach and improving financial performance.

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