Starling Oncology — Third Quarter 2026 Earnings Summary

Financial Performance

• Consolidated revenue for the quarter ended September 30, 2026, was $169.8 million, a 24.3% increase from $136.6 million in the prior year period.
• Gross profit increased 62.1% to $30.7 million.
• Net loss narrowed to $15.7 million from $16.5 million in the prior year quarter.
• Basic and diluted loss per share was $(0.13), compared to $(0.14) in the prior year.
• Adjusted EBITDA turned positive at $3.4 million, compared to a loss of $(3.5) million in the prior year.
• Cash and cash equivalents totaled $36.9 million as of September 30, 2026.
• Specialty Pharmacy revenue reached $109 million, up 44% year over year, with a gross margin of 24%.
• Capitated revenue grew 40% year over year.
• Medical Loss Ratio (MLR) for capitated contracts improved sequentially to 81.0% in Q3 2026, compared to 85.5% in Q2 2026 and 67.8% in the prior year period.
• Free Cash Flow for the nine months ended September 30, 2026, was $20.2 million, a significant improvement from $(26.9) million in the prior year period.
• Total operating expenses were $172.7 million for the quarter, compared to $144.6 million in the prior year.
• Long-term debt, net of unamortized costs, was $72.5 million as of September 30, 2026, down from $77.4 million at December 31, 2025.
• The company recorded a $11.6 million loss on debt extinguishment in the quarter.

Guidance and Future Outlook

• Full-year 2026 revenue guidance was updated to $650 million to $660 million (previously $650 million to $670 million).
• Full-year 2026 gross profit guidance was updated to $107 million to $110 million (previously $105 million to $110 million).
• Full-year 2026 Adjusted EBITDA guidance was updated to $4 million to $6 million (previously $2 million to $7 million).
• Full-year 2026 Free Cash Flow guidance was updated to $5 million to $10 million (previously $5 million to $15 million).
• Fourth Quarter 2026 Adjusted EBITDA is anticipated to be between $3 million and $5 million, driven by the onboarding and ramp-up of Florida delegated lives.
• The company expects approximately $110 million in capitated revenue for the full year 2026.
• Medical Loss Ratio is projected to be in the range of 85% to 90% in 2027 with the onboarding of new lives.
• Management affirmed full-year 2026 guidance based on year-to-date performance and expressed confidence in continued growth into 2027.

Business Segments and Product Lines

• Specialty Pharmacy revenue grew 44% year over year, primarily driven by an increased capture rate of fills written by Starling physicians.
• Capitated revenue grew 40% year over year.
• Starling Nexus, a proprietary utilization management portal, is now live for network providers in all markets with delegated capitation arrangements, serving as the interface for prior authorization submissions.
• The company operates 322 affiliated and network clinics, up from 80 in the prior year period.
• The company serves 2.2 million lives under value-based contracts, up from 1.9 million in the prior year period.
• The company operates in 17 markets, down from 22 in the prior year period.

Market and Competitive Landscape

• Starling Oncology is described as one of the largest value-based community oncology groups in the United States.
• The company serves a population of approximately 2.2 million patients across five states.
• The company has over 400 employed and network clinicians and over 100 clinics and network locations.
• Management noted that the outlook assumes a largely stable global market, which could be negatively impacted if recent tariff rate increases and exchange rate changes persist.

Risks and Challenges

• Actual results may differ materially from forward-looking statements due to uncertainties regarding capitated lives, direct costs, taxes, capital expenditures, share-based compensation, and other non-cash items.
• Risks include the accuracy of assumptions underlying the 2026 full fiscal year and Q4 2026 outlook.
• Potential adverse impacts from judicial and administrative proceedings, investigations, or changes in patient or payor preferences.
• Risks related to failure to meet stock exchange listing standards.
• The variability of non-GAAP adjustments (such as consulting fees, transaction costs, and debt extinguishment) could have an unpredictable impact on future GAAP financial results.

Management Commentary and Tone

• CEO Daniel Virnich characterized the third quarter as "another strong quarter," highlighting revenue growth and positive Adjusted EBITDA.
• Management noted that Adjusted EBITDA of $3.4 million exceeded the third quarter outlook range of $0.50 million to $1.5 million.
• Virnich stated that the capitated business continues to deliver growth with MLR performing at expectations.
• Management expressed confidence that the company is "well positioned for continued growth into 2027."
• The tone of the commentary was positive, emphasizing consecutive quarters of positive Adjusted EBITDA and strong segment growth.

Other Key Points

• The company issued $75 million in proceeds from the issuance of long-term debt during the nine months ended September 30, 2026.
• The company utilized an asset-based revolving credit facility, with $5 million in advances recorded in the nine-month period.
• The company incurred $5.5 million in exit fees and make-whole payments related to debt extinguishment.
• A conference call to discuss results and outlook was held on November 5, 2026.
• The company is formerly known as The Oncology Institute.
• The company offers clinical trials, transfusions, and other care delivery models traditionally associated with advanced care delivery organizations.