Summary of Starling Oncology Q2 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: $161.3 million, a 34.6% increase year-over-year (Q2 2025: $119.8 million).

Gross Profit: $27.2 million, up from $17.5 million in Q2 2025; gross margin improved to 16.8% from 14.6%.

Adjusted EBITDA: Positive $0.2 million, a significant improvement from a loss of $4.1 million in the prior year.

Cash Position: Ended the quarter with $41.1 million in cash, up from $33.6 million at year-end 2025.

Free Cash Flow: Approximately $12.5 million for Q2, bringing year-to-date free cash flow to $9.5 million, a turnaround from a $14.6 million cash use in the first half of 2025.

2Strategic Updates and Business Highlights

Rebranding: The company rebranded from Oncology Institute of Hope and Innovation to Starling Oncology to better reflect its focus on value-based oncology care.

Provider Portal Launch: The new provider portal, Starling Nexus, is set to launch in mid-August, aimed at enhancing care coordination and data collection.

Capitated Contracts: Anticipating three new delegated capitated contracts in Q4, adding approximately 80,000 lives and $50 million in annualized revenue. Additionally, exclusivity in California adds around 230,000 lives and $6 million in annualized revenue.

Operational Efficiencies: Continued focus on operational efficiencies led to $1 million in annualized savings from vendor negotiations.

3Forward Guidance and Outlook

2026 Revenue Guidance: Raised to $650 million to $670 million, including approximately $150 million from capitated revenue.

Adjusted EBITDA Guidance: Narrowed to a range of $2 million to $7 million.

Capitated Revenue Growth: Expected to double in 2027 to approximately $300 million.

Q3 Expectations: Anticipated adjusted EBITDA to be positive but muted, in the range of $500,000 to $1.5 million, due to onboarding new members.

4Bad News, Challenges, or Points of Concern

Medical Loss Ratio (MLR): Increased to 85.5% from 71% year-over-year, with expectations of fluctuating between 80% to 90% in the next 12 months as new lives are onboarded.

Delayed Contract Launch: A statewide payer relationship in Florida has been pushed from Q3 to Q4, which will impact Q3 revenue.

Patient Services Revenue Decline: Patient services gross profit decreased by 57% year-over-year, attributed to increased clinical labor, a conservative fee-for-service approach, and onboarding costs.

5Notable Q&A Insights

Expansion in Nevada and Oregon: Contracts in these states are expected to significantly contribute to membership and revenue.

MLR Discussion: The company aims for MLRs between 75% to 85% for delegated products once fully ramped, indicating a focus on maintaining cost efficiency.

California Exclusivity: The win was attributed to superior service and care coordination, suggesting a competitive edge in the market.

Provider Portal Features: E-prescribing will lag the initial rollout by about a month, with no immediate revenue impact from the portal expected in guidance. Overall, Starling Oncology reported a strong quarter with significant revenue growth and positive adjusted EBITDA, while also navigating challenges related to MLR and contract delays. The company is optimistic about future growth driven by new contracts and operational efficiencies.