Summary of Starling Oncology's Q2 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: $161.3 million, up 34.6% year-over-year from $119.8 million.

Adjusted EBITDA: Positive $0.2 million, a significant improvement from a loss of $4.1 million in Q2 2025.

Gross Profit: $27.2 million, compared to $17.5 million in the prior year, with a gross margin of 16.8% (up from 14.6%).

Specialty Pharmacy Revenue: $98.6 million, representing 61.1% of total revenue and a 57.6% year-over-year increase.

Operating Cash Flow: Positive $9.7 million for the first half of 2026, compared to a loss of $15.2 million in the same period last year.

Free Cash Flow: Approximately $12.5 million for Q2, bringing year-to-date free cash flow to $9.5 million.

2Strategic Updates and Business Highlights

Rebranding: The company announced its rebranding to Starling Oncology to better reflect its focus on value-based oncology care.

New Provider Portal: Launching Starling Nexus in mid-August, aimed at improving care coordination and operational efficiencies.

Capitated Contracts: Anticipating three new delegated capitated contracts in Q4, adding approximately 80,000 lives and $50 million in annualized revenue.

California Exclusivity: Achieved exclusivity with a major partner, adding 230,000 capitated lives and an estimated $6 million in annualized revenue.

Strategic Refinancing: Completed a refinancing with OrbiMed, replacing an $86 million convertible note with a $75 million term loan, extending debt maturities to 2031.

3Forward Guidance and Outlook

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

Gross Profit Guidance: Updated to $105 million to $110 million.

Adjusted EBITDA Guidance: Narrowed to $2 million to $7 million.

Capitated Revenue Growth: Expected to double in 2027 to approximately $300 million, driven by new contracts and expansions.

4Bad News, Challenges, or Points of Concern

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

Operating Expenses: Patient Services gross profit declined by 57% year-over-year due to increased clinical labor and conservative fee-for-service approaches.

Delayed Contract Launch: A statewide payer relationship in Florida has been pushed from Q3 to Q4, impacting anticipated revenue for Q3.

5Notable Q&A Insights

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

MLR Performance: The company is confident in maintaining MLRs between 75% to 85% for delegated products, which is favorable compared to industry standards.

Provider Portal Launch: E-prescribing capabilities will lag the initial rollout by about a month, and no immediate revenue lift from the portal is assumed in guidance.

Competitive Landscape: The company is focusing on service quality and pricing to win contracts from competitors, rather than a trend of consolidation in the market. Overall, Starling Oncology reported a strong quarter with significant growth in revenue and profitability, alongside strategic expansions and operational improvements. However, challenges remain in managing medical costs and navigating delayed contract launches.