March 28, 2024 – American Oncology Network, Inc. (NASDAQ: AONC), a
leading oncology platform with an innovative model of
physician-led, community-based oncology management, today announced
financial results for the three- and twelve-month periods ended
December 31, 2023.
Todd Schonherz, AON chief executive officer,
commented, “As a leadership team, we are very proud of our growth
and accomplishments in 2023. The organization experienced
impressive growth across all aspects of our business including
$129.5 million, or 11.3% of top line revenue growth primarily
driven by 7.9% growth in patient encounters. In addition to
becoming a public company during the year, the organization
continued to make significant investments in our industry-leading
platform of services. This was highlighted by our transition
in the fourth quarter to our new enterprise revenue cycle
platform. This strategic investment not only helps to ensure
that AON is well positioned for the future, but also it allows AON
to successfully navigate the recent Change Healthcare outage that
disrupted many other healthcare providers. We believe that AON, as
the only true national oncology platform, will be the destination
of choice for community oncology practices looking to continue to
grow their practices well into the future.”
Three-Month Periods Ended December 31, 2023, and
December 31, 2022
Revenue was $324.2 million for the three-month
period ended December 31, 2023, as compared to $300.4 million for
the three-month period ended December 31, 2022, an increase of
$23.8 million, or 7.9%. The overall increase was primarily
attributable to increased patient encounters of 9.5% between the
comparable periods, driving a $28.4 million revenue increase, which
was offset in part by a $5.8 million decrease in revenue
attributable to an 1.8% decrease in revenue per encounter. The
decrease in revenue per encounter results from $20.7 million of
non-recurring incremental accounts receivable reserves associated
with transitioning from a legacy billing system to a new system in
the fourth quarter of 2023.
Net loss before non-controlling interest was
$22.4 million for the fourth quarter of 2023, as comparted to net
income of $1.4 million for the fourth quarter of 2022, primarily
driven by $20.7 million of incremental accounts receivable reserves
associated with accounts receivable in legacy billing system.
Adjusted EBITDA was $5.0 million for the fourth
quarter of 2023, as compared to $8.0 million for the fourth quarter
of 2022, a decrease of $3.0 million, primarily due to higher drug
costs. See “Key Non-GAAP Financial Measures” Adjusted EBITDA table
below.
Fiscal Years Ended December 31, 2023, and December 31, 2022
Revenue was $1,279.2 million for the fiscal year
ended December 31, 2023, as compared to $1,149.7 million for the
fiscal year ended December 31, 2022, an increase of $129.5 million,
or 11.3%. The overall increase was primarily attributable to
increased patient encounters of 7.9% between the comparable
periods, driving a $148.5 million revenue increase. This revenue
growth was offset in part by a reduction in patient revenue per
encounter resulting from $20.7 million of incremental accounts
receivable reserves associated with a legacy billing system.
Net loss before non-controlling interest was
$63.2 million for fiscal year 2023, as compared to net income of
$2.6 million for fiscal year 2022. The year over year decrease was
primarily attributable to a $27.9 million increase in transaction
expense related to the Company’s business combination, $20.7
million of non-recurring incremental accounts receivable reserves
associated with accounts receivable in legacy billing system, a
$9.3 million increase in non-cash valuation adjustments related to
liability classified equity instruments, and $4.9 million of
incremental non-cash stock compensation expense.
Adjusted EBITDA was $18.0 million for fiscal year 2023,
comparable to fiscal year 2022.
Liquidity, Cash Flow, and
Debt
- As of December 31,
2023, we had total liquidity of $105.3 million, composed of cash
and cash equivalents of $28.5 million, short-term marketable
securities of $35.4 million, $40.4 million of incremental borrowing
capacity under the PNC Loan Facility, and $1.0 million of
incremental borrowing capacity under the PNC Line of Credit.
- Fiscal year 2023
net cash used by operating activities was $18.1 million, which
includes $31.2 million of transaction expenses associated with the
Business Combination.
- As of December 31,
2023, we had $81.3 million outstanding under the PNC Loan Facility
and the PNC Line of Credit was undrawn.
Key Non-GAAP Financial Measures Used to Evaluate
Performance
This press release includes the non-GAAP
financial measure “Adjusted EBITDA”. Management views this metric
as a useful way to look at the performance of AONC operations
between periods and to exclude decisions on capital investment and
financing that might otherwise impact the review of profitability
of the business based on present market conditions. Management
believes this measure provides an additional way of viewing aspects
of AONC’s operations that, when viewed with the GAAP results,
provides a more complete understanding of AONC’s results of
operations and the factors and trends affecting the business.
Adjusted EBITDA is defined as net income prior
to interest income, interest expense, income taxes, and
depreciation and amortization, as adjusted to add back certain
other non-cash charges that may be recorded each year, such as
stock-compensation expense and non-cash valuation adjustments, as
well as non-recurring charges such as revenue cycle transformation
costs and transaction costs related to the Business Combination. We
believe these expenses and non-recurring charges are not considered
an indicator of ongoing company performance. The measures are used
as a supplement to GAAP results in evaluating certain aspects of
AONC business, as described below. We believe Adjusted EBITDA is
useful to investors in evaluating AONC performance because the
measure considers the performance of AONC operations, excluding
decisions made with respect to capital investment, financing, and
other non-recurring charges as outlined above.
AONC includes Adjusted EBITDA because it is an
important measure upon which management uses to assess the results
of operations, to evaluate factors and trends affecting the
business, and to plan and budget future periods. However, non-GAAP
financial measures should be considered a supplement to, and not as
a substitute for, or superior to, the corresponding measures
calculated in accordance with GAAP. Non-GAAP financial measures
used by management may differ from the non-GAAP measures used by
other companies, including AONC’s competitors. Management
encourages investors and others to review AONC’s financial
information in its entirety, and not to rely on any single
financial measure. Adjusted EBITDA should not be considered as an
alternative to net income as an indicator of AONC performance or as
an alternative to any other measure prescribed by GAAP as there are
limitations to using such non-GAAP measures. These limitations are
compensated by providing disclosure of the differences between
Adjusted EBITDA and GAAP results, including providing a
reconciliation to GAAP results, to enable investors to perform
their own analysis of AONC’s operating results.
Adjusted EBITDA for recent comparative periods
is presented at the end of this earnings release.
Conference Call
AONC will host a conference call on Thursday,
March 28, 2024, at 8:30 am. Eastern Time to discuss our fourth
quarter 2023 results. The conference call can be accessed live over
the phone by dialing 1-877-704-4453 (for the U.S.) or
1-201-389-0920 (for International). A telephonic replay of the
conference call will be available two hours after the call and can
be accessed by dialing 1-844-512-2921 (for the U.S.) or
1-412-317-6671 (for International). The passcode for the call and
replay is 13744271. A live webcast of the conference call will also
be available under the Investor Relations section of AONC’s website
at investors.aconology.com.
About American Oncology Network, Inc.
Since its inception in 2018, American Oncology
Network, Inc. (Nasdaq: AONC) has offered an innovative model of
physician-led, community-based oncology management. AONC preserves
and elevates community oncology by helping its physicians navigate
the complex healthcare landscape, providing them an efficient
platform to work autonomously and thrive, and most importantly,
improving the quality of patient care that is being delivered. The
network is an alliance of physicians and veteran healthcare leaders
partnering to ensure the long-term success and viability of
oncology diagnosis and treatment in community-based settings. As of
December 31, 2023, AONC has more than 200 providers across 86
locations in 19 states and the District of Columbia. AONC’s robust
platform provides oncology practices with comprehensive support,
access to revenue- diversifying adjacent services and practice
management expertise to empower physicians to make cancer care
better for every patient.
Forward Looking Statements
This press release contains forward-looking
statements for purposes of the safe harbor provisions under the
United States Private Securities Litigation Reform Act of 1995,
including statements about the financial condition, results of
operations, earnings outlook and prospects of American Oncology
Network, Inc. (“AON”, “AON Inc.”, or the “Company”). Any statements
that refer to projections (including EBITDA, Adjusted EBITDA,
Adjusted Net Income and revenue projections), forecasts or other
characterizations of future events or circumstances, including any
underlying assumptions, are forward-looking statements.
Forward-looking statements are typically identified by words such
as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,”
“estimate,” “forecast,” “project,” “continue,” “could,” “may,”
“might,” “possible,” “potential,” “predict,” “should,” “would” and
other similar words and expressions, but the absence of these words
does not mean that a statement is not forward-looking. The
forward-looking statements are based on current expectations and
projections about future events and various assumptions. AON cannot
guarantee that it will actually achieve the plans, intentions, or
expectations disclosed in its forward-looking statements and you
should not place undue reliance on AON’s forward-looking
statements, which speak only as of the date hereof.
These forward-looking statements involve a
number of risks, uncertainties (many of which are beyond the
control of AON), or other assumptions that may cause actual results
or performance to differ materially from those expressed or implied
by these forward-looking statements.
Factors that could cause actual results to
differ from those implied by the forward-looking statements in this
Form 10-K are more fully described under the heading “Risk Factors”
and elsewhere in this Form 10-K. The risks described under the
heading “Risk Factors” are not exhaustive. Other sections of this
Form 10-K describe additional factors that could adversely affect
the business, financial condition or results of operations of AON.
New risk factors emerge from time to time and it is not possible to
predict all such risk factors, nor can AON assess the impact of all
such risk factors on the business of AON, or the extent to which
any factor or combination of factors may cause actual results to
differ materially from those contained in any forward-looking
statements. Forward-looking statements are not guarantees of
performance. All forward-looking statements attributable to AON or
persons acting on their behalf are expressly qualified in their
entirety by the foregoing cautionary statements. AON undertakes no
obligations to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
The following table summarizes AONC’s
consolidated results of operations for the periods indicated
(amounts in thousands):
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
Patient service revenue, net |
|
$ |
1,265,719 |
|
|
$ |
1,137,932 |
|
|
$ |
938,242 |
|
Other revenue |
|
|
13,466 |
|
|
|
11,738 |
|
|
|
5,505 |
|
Total revenue |
|
|
1,279,185 |
|
|
|
1,149,670 |
|
|
|
943,747 |
|
Costs and
expenses |
|
|
|
|
|
|
Cost of revenue (1) (2) |
|
|
1,196,389 |
|
|
|
1,054,217 |
|
|
|
865,788 |
|
General and administrative expenses |
|
|
100,714 |
|
|
|
86,610 |
|
|
|
77,048 |
|
Transaction expenses |
|
|
31,236 |
|
|
|
3,277 |
|
|
|
- |
|
Total costs and expenses |
|
|
1,328,339 |
|
|
|
1,144,104 |
|
|
|
942,836 |
|
Income (loss) from operations |
|
|
(49,154 |
) |
|
|
5,566 |
|
|
|
911 |
|
Other income
(expense) |
|
|
|
|
|
|
Interest expense |
|
|
(6,417 |
) |
|
|
(3,417 |
) |
|
|
(1,419 |
) |
Interest income |
|
|
1,326 |
|
|
|
151 |
|
|
|
127 |
|
Other (expense) income, net (3) |
|
|
(8,262 |
) |
|
|
289 |
|
|
|
736 |
|
Income (loss) before income taxes, equity loss in affiliate, and
noncontrolling interest |
|
|
(62,507 |
) |
|
|
2,589 |
|
|
|
355 |
|
Income tax expense
(benefit) |
|
|
384 |
|
|
|
- |
|
|
|
460 |
|
Income (loss) before equity loss in affiliate and noncontrolling
interest |
|
|
(62,891 |
) |
|
|
2,589 |
|
|
|
(105 |
) |
Equity in loss of
affiliate |
|
|
(259 |
) |
|
|
- |
|
|
|
- |
|
Net income (loss) before noncontrolling
interest |
|
|
(63,150 |
) |
|
|
2,589 |
|
|
|
(105 |
) |
Net income attributable to noncontrolling interest |
|
|
321 |
|
|
|
- |
|
|
|
- |
|
Net income (loss) before redeemable noncontrolling
interest |
|
|
(63,471 |
) |
|
|
2,589 |
|
|
|
(105 |
) |
Net income (loss) and noncontrolling interest attributable to
Legacy AON Stockholders prior to the reverse recapitalization |
|
|
(27,080 |
) |
|
|
2,589 |
|
|
|
(105 |
) |
Net income (loss) attributable to redeemable noncontrolling
interest |
|
|
(30,849 |
) |
|
|
- |
|
|
|
- |
|
Net loss attributable to Class A Common
Stockholders |
|
$ |
(5,542 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
Loss per share of Class A
Common Stock: |
|
|
|
|
|
|
Basic |
|
$ |
(1.36 |
) |
|
$ |
- |
|
|
$ |
- |
|
Diluted |
|
$ |
(1.36 |
) |
|
$ |
- |
|
|
$ |
- |
|
Weighted average shares of
Class A Common Stock Outstanding: |
|
|
|
|
|
|
Basic |
|
|
6,685,515 |
|
|
|
- |
|
|
|
- |
|
Diluted |
|
|
6,685,515 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
Other comprehensive
income (loss): |
|
|
|
|
|
|
Unrealized gains (losses) on marketable securities |
|
|
510 |
|
|
|
(117 |
) |
|
|
- |
|
Other comprehensive gain (loss) |
|
|
510 |
|
|
|
(117 |
) |
|
|
- |
|
Comprehensive income (loss) |
|
$ |
(62,961 |
) |
|
$ |
2,472 |
|
|
$ |
(105 |
) |
Other comprehensive income (loss) attributable to Legacy AON
Stockholders |
|
|
(26,901 |
) |
|
|
2,472 |
|
|
|
(105 |
) |
Other comprehensive loss attributable to redeemable noncontrolling
interests |
|
|
(30,580 |
) |
|
|
— |
|
|
|
— |
|
Total comprehensive loss attributable to Class A Common
Stockholders |
|
$ |
(5,480 |
) |
|
$ |
— |
|
|
$ |
— |
|
(1) Includes related party inventory expense of
$1,056,343, $922,148, and $718,675 for the years ended
December 31, 2023, 2022, and 2021,
respectively.(2) Includes related party rent of
$2,716, $2,643, and $2,319 for the years ended December 31,
2023, 2022, and 2021, respectively.(3) Includes
non-cash expense of $8,376 related to the fair value adjustment of
the Class A-1 & Class C derivative liability.
|
|
Three Months Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Revenue |
|
|
|
|
Patient service revenue, net |
|
$ |
320,038 |
|
|
$ |
297,425 |
|
Other revenue |
|
|
4,144 |
|
|
|
2,973 |
|
Total revenue |
|
|
324,182 |
|
|
|
300,398 |
|
Costs and
expenses |
|
|
|
|
Cost of revenue |
|
|
315,561 |
|
|
|
273,559 |
|
General and administrative expenses |
|
|
27,882 |
|
|
|
20,455 |
|
Transaction expenses |
|
|
1,351 |
|
|
|
3,126 |
|
Total costs and expenses |
|
|
344,794 |
|
|
|
297,140 |
|
Income (loss) from operations |
|
|
(20,612 |
) |
|
|
3,258 |
|
Other income
(expense) |
|
|
|
|
Interest expense |
|
|
(1,917 |
) |
|
|
(1,382 |
) |
Interest income |
|
|
827 |
|
|
|
47 |
|
Other (expense) income, net |
|
|
(573 |
) |
|
|
(560 |
) |
Income (loss) before income taxes, equity loss in affiliate, and
noncontrolling interest |
|
|
(22,275 |
) |
|
|
1,363 |
|
Income tax expense (benefit) |
|
|
69 |
|
|
|
- |
|
Income (loss) before equity loss in affiliate and noncontrolling
interest |
|
|
(22,344 |
) |
|
|
1,363 |
|
Equity in loss of affiliate |
|
|
(9 |
) |
|
|
- |
|
Net income (loss) before noncontrolling
interest |
|
|
(22,353 |
) |
|
|
1,363 |
|
Net income attributable to noncontrolling interest |
|
|
321 |
|
|
|
- |
|
Net income (loss) before redeemable noncontrolling
interest |
|
|
(22,674 |
) |
|
|
1,363 |
|
Net income (loss) and noncontrolling interest attributable to
Legacy AON Stockholders prior to the reverse recapitalization |
|
|
- |
|
|
|
1,363 |
|
Net income (loss) attributable to redeemable noncontrolling
interest |
|
|
(18,925 |
) |
|
|
- |
|
Net loss attributable to Class A Common
Stockholders |
|
$ |
(3,749 |
) |
|
$ |
- |
|
|
|
|
|
|
Loss per share of Class A Common
Stock: |
|
|
|
|
Basic |
|
$ |
(0.76 |
) |
|
$ |
- |
|
Diluted |
|
$ |
(0.76 |
) |
|
$ |
- |
|
Weighted average shares of Class
A Common Stock Outstanding: |
|
|
|
|
Basic |
|
|
6,685,515 |
|
|
|
- |
|
Diluted |
|
|
6,685,515 |
|
|
|
- |
|
|
|
|
|
|
Other comprehensive
income (loss): |
|
|
|
|
Unrealized gains (losses) on marketable securities |
|
|
320 |
|
|
|
45 |
|
Other comprehensive gain (loss) |
|
|
320 |
|
|
|
45 |
|
Comprehensive income (loss) |
|
$ |
(22,354 |
) |
|
$ |
1,408 |
|
Other comprehensive income (loss) attributable to Legacy AON
Stockholders |
|
|
— |
|
|
|
1,408 |
|
Other comprehensive loss attributable to redeemable noncontrolling
interests |
|
|
(18,666 |
) |
|
|
— |
|
Total comprehensive loss attributable to Class A Common
Stockholders |
|
$ |
(3,688 |
) |
|
$ |
— |
|
The following table provides a reconciliation of net income
(loss), the most closely comparable GAAP financial measure, to
Adjusted EBITDA:
|
|
Year Ended December 31, |
|
Change |
(dollars in thousands) |
|
|
2023 |
|
|
|
2022 |
|
$ |
|
% |
Net income (loss) |
|
$ |
(63,150 |
) |
|
$ |
2,589 |
|
$ |
(65,739 |
) |
|
* |
Interest expense, net |
|
|
5,091 |
|
|
|
3,266 |
|
|
1,825 |
|
|
55.9 |
% |
Depreciation and amortization |
|
|
8,450 |
|
|
|
6,719 |
|
|
1,731 |
|
|
25.8 |
% |
Income tax expense |
|
|
384 |
|
|
|
— |
|
|
384 |
|
|
* |
Non-cash stock compensation |
|
|
4,877 |
|
|
|
— |
|
|
4,877 |
|
|
* |
Revenue cycle transformation (a) |
|
|
21,588 |
|
|
|
1,726 |
|
|
19,862 |
|
|
* |
Non-cash valuation adjustments (b) |
|
|
9,249 |
|
|
|
— |
|
|
9,249 |
|
|
* |
Transaction expenses (c) |
|
|
31,236 |
|
|
|
3,277 |
|
|
27,959 |
|
|
* |
Other (d) |
|
|
316 |
|
|
|
510 |
|
|
(194 |
) |
|
(38.0 |
%) |
Adjusted EBITDA |
|
$ |
18,041 |
|
|
$ |
18,087 |
|
$ |
(46 |
) |
|
(0.3) |
% |
* — % not meaningful(a) During the year-ended
December 31, 2023, represents approximately $20.7 million of
incremental implicit price concessions associated with exiting a
legacy billing system which commenced in the fourth quarter, and
approximately $0.9 million of duplicative billing system costs as
the legacy system is sunset. During the year-ended December 31,
2022, primarily represents personnel costs associated with
restructuring our revenue cycle operations.(b) Primarily represents
valuation adjustments associated with the liability classified
equity instruments.(c) Transaction expenses incurred in connection
with the Business Combination.(d) Costs incurred in 2022 related to
Hurricane Ian.
|
|
Three Months Ended December 31, |
|
Change |
(dollars in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
$ |
|
% |
Net income (loss) |
|
$ |
(22,354 |
) |
|
$ |
1,364 |
|
|
$ |
(23,718 |
) |
|
* |
Interest expense, net |
|
|
1,091 |
|
|
|
1,335 |
|
|
|
(244 |
) |
|
(18.3 |
%) |
Depreciation and amortization |
|
|
2,082 |
|
|
|
1,401 |
|
|
|
681 |
|
|
48.6 |
% |
Income tax expense |
|
|
69 |
|
|
|
— |
|
|
|
69 |
|
|
* |
Non-cash stock compensation |
|
|
2 |
|
|
|
(15 |
) |
|
|
17 |
|
|
* |
Operational transformation |
|
|
21,589 |
|
|
|
317 |
|
|
|
21,272 |
|
|
* |
Loss on derivative liabilities |
|
|
867 |
|
|
|
— |
|
|
|
867 |
|
|
* |
Transaction expenses |
|
|
1,351 |
|
|
|
3,126 |
|
|
|
(1,775 |
) |
|
(56.8 |
%) |
Other |
|
|
316 |
|
|
|
510 |
|
|
|
(194 |
) |
|
(38.0 |
%) |
Adjusted EBITDA |
|
$ |
5,013 |
|
|
$ |
8,038 |
|
|
$ |
(3,025 |
) |
|
(37.6 |
)% |
* — % not meaningful
American Oncology Network (NASDAQ:AONC)
Historical Stock Chart
From Mar 2024 to Apr 2024
American Oncology Network (NASDAQ:AONC)
Historical Stock Chart
From Apr 2023 to Apr 2024