STLNW Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Total Revenue: $147.4 million, up 41.2% year-over-year from $104.4 million.

Patient Services Revenue: $59.1 million, accounting for 40.1% of total revenue, with capitated revenue growing 54% year-over-year to $26.9 million.

Specialty Pharmacy Revenue: $87.5 million, representing 59.4% of total revenue and a 77.6% increase year-over-year.

Gross Profit: $23.3 million, up from $17.2 million in Q1 2025; overall gross margin at 15.8%, down from 16.5% year-over-year.

Adjusted EBITDA: Loss of $2.4 million, an improvement from a loss of $5.1 million in the prior year.

Free Cash Flow: Updated guidance to a positive range of $5 million to $15 million, significantly improved from the previous outlook of a loss of $15 million to a positive $5 million.

2Strategic Updates and Business Highlights

Continued expansion of value-based contracts and growth in ancillary services, particularly in the pharmacy sector.

Achieved profitability in the Florida market, with plans to expand to 25 counties and cover approximately 200,000 Medicare Advantage lives by Q3 2026.

Launched a proprietary provider portal aimed at enhancing provider engagement and adherence to clinical pathways, expected to go live in Q3 2026.

Strong performance in Specialty Pharmacy, with a record number of prescriptions filled and a gross profit of $16.8 million.

3Forward Guidance and Outlook

Reaffirmed full-year 2026 revenue guidance of $630 million to $650 million, with gross profit projected between $97 million and $107 million.

Adjusted EBITDA guidance remains at $0 to positive $9 million for the year, with expectations for seasonal improvement in Q2.

Anticipated continued momentum in revenue and profitability driven by growth in delegated capitation arrangements and Specialty Pharmacy.

4Bad News, Challenges, or Points of Concern

Fee-for-service revenue declined approximately 10% year-over-year despite increased visit volumes, attributed to conservative reserves and pricing pressures.

Overall gross margin decreased due to a nonrecurring rebate from the previous year and the lower margin profile of the growing delegated business.

The company faces ongoing operational challenges typical of the first quarter, including deductible resets and annual drug cost increases.

5Notable Q&A Insights

The company is expanding its delegated risk arrangements in Florida, achieving a medical loss ratio (MLR) slightly better than the target of 85%.

Discussions are ongoing with additional health plans in Florida beyond current partnerships, indicating potential for further growth.

The Specialty Pharmacy currently focuses on oncology-specific medications, with no plans to dispense drugs for non-oncology conditions.

The proprietary provider portal is expected to enhance adherence to clinical pathways and improve operational efficiencies, but financial benefits from this initiative are not included in the current guidance. Overall, STLNW demonstrated strong growth in Q1 2026, particularly in revenue and Specialty Pharmacy performance, while also addressing challenges in fee-for-service revenue and margin pressures. The company remains optimistic about its strategic initiatives and future profitability.