Good morning, and welcome to American Oncology Network's Fourth Quarter and Full Year 2023 Earnings Conference Call. Today's call is being recorded and we have allocated one 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, and you may begin.

Good morning everyone and thank you for joining us to discuss American Oncology Network's fourth quarter and full year results. Before we begin, we would like to remind you that this conference call may include forward-looking statements. These statements, which are subject to various risks, uncertainties, and assumptions could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are detailed in this morning's press release as well as our filings with the SEC, which can be found on our website at investors.aoncology.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we will also reference certain non-GAAP financial information, such as adjusted EBITDA, which is derived from its closest GAAP measure net income. We use non-GAAP measures as we believe they supplement GAAP measures and we believe they are useful to our investors. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Reconciliations of GAAP to non-GAAP measures can be found in this morning's press release and our SEC filings. Joining me on the call today is our CEO, Todd Schonherz. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn it over to Todd.

Thank you, Dave. Good morning everyone. Thank you for joining us on our fourth quarter and full year 2023 earnings call. We are very pleased with our full year results and we ended the year in a strong position to build off in 2024. Operationally, our integrated care platform increased patient encounters and benefited from the addition of several practices that we onboarded in the prior year. Turning to the fourth quarter, we continue to make great progress executing our growth plan and strategic priorities. During the quarter, we added 14 new providers to the AON platform and 20 over the full year. As we've discussed before, our model ensures that our practices that are located in markets with a significant number of oncologists remain competitive and our practices in markets with limited capacity remain viable for the long-term. AON is the lifeline to preserve an enhanced community of oncology by ensuring practices have a competitive solution to remain in the community and the resources to provide access to much needed TAM. To that end, we expanded our presence and services in our existing markets of Georgia and Arkansas during the year. In 2023, we also entered new strategic markets including Texas and Florida. We are excited about our ongoing growth and ability to better serve the patient population in the states in which we operate. All the practices that we acquired in the quarter as well as over the past year have been able to immediately benefit from our integrated care platform. The platform we've built is unique and that we operate a true national physician network that provides a number of novel advantages to patients and providers. Our key differentiators include our integrated in-house clinical services like specialty pharmacy and lab as well as our centralized operations and technology platform, which drive better practice economics, reduce administrative burden, and allow physicians to focus on what is most important, delivering high-quality patient care. This straightforward but differentiated value proposition helps to fuel our M&A pipeline and support our longer term growth strategy. We are also starting to see the investments made during the quarter in business development and our infrastructure starting to pay dividends as demonstrated by the addition of 13 providers already during the first quarter of this year. I am very proud of the progress we've made driving forward our strategic initiatives. We can see the results of these efforts and the positive year-over-year growth we achieved in our markets, the accretive growth we generated through appropriate utilization of our ancillary services and the expansion of our clinical services. We continue to be the leader in transformative payment programs demonstrated by being one of only 44 practices in the country to participate in CMS' alternative payment program for Cancer Care, which is called the enhancing oncology model. We have also made investments during the quarter in expanding our research platform, including the implementation of a new clinical trial management system as well as deploying our new enterprise revenue cycle platform, positioning us well for future demand. It is important to note that, the implementation of our new revenue cycle platform has allowed us to successfully navigate recent outages that have plagued many players in the health care industry. All-in-all, I am very proud of our team and everything we've achieved together this year. First and foremost, creating optimal experiences and outcomes for our patients during the most challenging times of their lives. We achieved record top line revenues of almost $1.3 billion, an increase of 13%. Growth of 20 new providers and the addition of two new strategic states or the network, we've expanded our service offerings by now offering a pharmacy MSA option as well as an option for urologists to join the platform. We have made multimillion-dollar investments in expanding our infrastructure and service offerings and successfully became a publicly traded company in September. And then finally, we celebrated our fifth anniversary this past September. Since our founding, we have been disrupting the existing community oncology landscape in a cost-effective and scalable way by growing our integrated care platform. We've demonstrated our highly successful strategy, growing the business from inception in 2018 to almost $1.3 billion in 2023. Today, we partner with over 220 providers across 77 sites of service, spanning 20 states plus the District of Columbia to ensure the delivery of high-quality cutting-edge cancer care to patients across the United States. We are excited to continue our momentum in 2024, maximize our growth, improve efficiencies and continue to execute on our robust pipeline of opportunities. Now, I'll turn the call over to Dave to provide more detail on our financial results.

Thanks, Todd. I want to remind everyone of the framework of our key performance metrics and how we evaluate the business. The key metrics we report on a quarterly basis and annual basis outside of the core financial statement metrics, our growth based on patient encounters, revenue per encounter and cost per encounter. Growth is important to highlight as it demonstrates that even here after practices join our platform, those cohorts continue to grow as a result of the joint efforts we make with our providers in marketing and community outreach. This demonstrates AON's ability to deliver the highest quality of care where our patients need it in the communities where they live. Operationally, we completed our revenue cycle system upgrade to Athena IDX [ph] and began billing claims out of this system on October 1, 2023. We have already seen the benefits of the improved technology as during the outage related to the Change Healthcare reach we had no patient information access, and we are able to quickly and efficiently react such that 90% of our affected feeds were restored in a week. Now, let's dive into some quarterly results. Revenue was $324.2 million for the three-month period ended December 31, 2023, as compared to $300.4 million for the three months 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 $28.4 million of the revenue increase. The revenue growth was offset in part by a decrease in revenue per encounter of 1.8%, which drove a $5.6 million decrease in patient revenues. This $5.6 million decrease was primarily resulting from approximately $20.7 million of incremental implicit price concessions associated with accounts receivable and legacy billing system. During the fourth quarter, cost of revenue increased $42 million to $315.6 million from $273.6 million in Q4 of 2022. The increase we experienced was primarily driven by drug and medical supply costs, due to increased patient encounters and increased cost per encounter. The volume of patient encounters increased cost of revenue by $14.2 million, while the cost per encounter drove a $17.4 million increase. The increased cost of patient encounters was driven by a combination of higher drug and supply costs as well as the drug and service mix patients required. The remaining increase of cost for revenue related to drug and supply costs of $9.4 million from acquisitions and affiliate agreements entered into during the year ended December 31, 2023. Adjusted EBITDA was $5 million for the fourth quarter of 2023 as compared to $8 million for the fourth quarter of 2022, a decrease of $3 million or 38%, primarily due to higher drug costs. And you can see – keep on non-GAAP financial measures for more information on adjusted EBITDA. Moving on to our balance sheet and liquidity. At the end of the fourth quarter, we had total liquidity of $105.3 million comprised 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 facility and $1 million of incremental borrowing capacity under the PNC Line of Credit that we have. We also had $81.3 million of outstanding debt under the PNC Loan Facility bearing interest at approximately 7.2% and the PNC Line of Credit was undrawn. I'll now turn it back to Todd for some closing remarks.

Thank you, Dave. To recap, I am proud of all that we accomplished this past year. The organization saw strong growth across all business areas, including double-digit percentage top line growth of $129.5 million and 7.9% growth in patient visits year-over-year, including 9.2% quarter-over-quarter same-store visit growth. In addition to transitioning to a public company, the organization continued to make significant investments in our industry-leading platform of services to position us for future success. As the only true national oncology platform, we are excited to be the destination of choice for community oncology practices, enabling them to successfully grow and better treat patients in their community. With that, I'll turn it over to the operator to open the line for any questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] The first question comes from the line of Bill Sutherland with the Benchmark Company. Please go ahead.

Thank you, and good morning. Thank you for taking the questions. Just a couple really. I was wondering about the direction of the EBITDA margin this year, given the backdrop of the higher drug prices, et cetera, last year.

So we haven't given too much guidance yet on that. But directionally, we feel like we're heading in a good direction as far as the growth of the company is concerned. Margins, we continue to try to manage through GPO strategies, purchasing strategies, et cetera. They're definitely a challenge for the overall industry. However, as we grow, we expect to see margins expand through economies of scale with our GPO. Unfortunately, we're not giving guidance just yet for the rest of the year, though.

So is this an issue of -- in the cost of care, just not being able to reflect the full cost of the regimens as they obviously some of the move up in cost?

No, I think we're capturing all the costs. It's really just a matter of trying to, I guess, optimize your margins, right? So if you think about the way the drug pricing works, there's a lag between the increased pricing and the reimbursement of them. So what you have to do is try to manage that lag by doing forward purchasing, et cetera, as one example of a strategy. And sometimes we have a lot of opportunities to do that. We're able to get good ROIs on those purchases. And other times, we're just constrained by the fact that those opportunities are not available at the end of the quarter.

Got you. What is the M&A environment looking like today? Is there increasing levels of competition from particularly financial buyers, private equity, et cetera?

Hey, Bill, it's Todd Schonherz. I think as we shared during the remarks, we think we have a very unique model that differentiates AON from the other aggregators and other organizations that are out there today. So we remain fairly optimistic that AON will continue to differentiate itself out there and ultimately be the destination of choice. As I shared during the comments, we had a very good Q1 as it relates to business development growth. We've added a number of providers already, and we continue to see our pipeline fairly robust and expect it to continue to grow into 2024.

Okay. And then last one, I was curious about what you call your AON light model. If you could just provide a little color on kind of what your plan is for that? Thanks.

Yes. Good question, but thank you. The AON lighter is really what we consider our pharmacy MSA model. This allows us to extend the size and scale of AON to community oncology practices with a limited service offering primarily focused on supporting pharmacy activities within these community oncology groups

And financially, how does that work for you all? It's just an MSA kind of number?

Yes. I think Bill, it's Dave, I think that it's not quite a total MSA opportunity there because with MSAs, you're thinking about running the whole practice. This is an opportunity for smaller practices to leverage our economies of scale when it comes to purchasing, et cetera, without taking advantage of the full suite of our practices and gives the opportunity to meet and actually work with new practices as well.

So creates pipeline. Okay. Thanks guys.

Thanks Bill for your questions. Appreciate it.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.