Business Overview: Starling Oncology, Inc. (Nasdaq: STLN)

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Executive Summary

Starling Oncology, Inc. — known for most of its public life as The Oncology Institute, Inc. before an August 2026 corporate rebrand — is a national value-based oncology care company. Founded in 2007 as a cluster of community oncology practices in Southern California, the company has grown into a multi-state platform that takes on financial and clinical risk for cancer patients, rather than simply billing payors for each service rendered.

Headquartered in operations across California, Arizona, Nevada, Florida, and Oregon, Starling Oncology runs both medical oncology (infusion) and radiation oncology clinics, layered with a specialty pharmacy and a clinical-trials business. Its defining feature — and the reason it matters in the oncology-care landscape — is its attempt to be the largest hybrid value-based oncology platform in the country, combining owned physician practices with a broader managed-network model, at a time when most competing oncology groups are still paid largely fee-for-service.

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1. Core Business Model & How They Work

Starling Oncology's economic engine is fundamentally different from a traditional oncology practice: instead of being paid per visit or per infusion, a meaningful share of its revenue comes from taking on the risk (and reward) of managing a population of cancer patients for a fixed fee.

[ Payor Contract (capitation / gain-share / FFS) ] ▶️ [ TOI PC Physician Practices + Network Providers ] ▶️ [ Care Coordination & Treatment ] ▶️ [ Cost of Care vs. Fixed Payment ] ▶️ [ Margin Retained or Shared ]

Key Operational Drivers

1. Value-Based Contracts: Under capitation and gain/loss-sharing agreements, the company receives a fixed monthly payment per covered member and keeps the difference between that payment and the actual cost of care delivered — the inverse of fee-for-service incentives.
2. Physician Practice Structure: Because of California's corporate-practice-of-medicine restrictions, the underlying "TOI PC" physician practices are physician-owned but consolidated as variable interest entities under 20-year management services agreements, with Starling Oncology earning a management fee (cost reimbursement plus a percentage of practice gross revenue).
3. Specialty Pharmacy Attach: In-house specialty and retail pharmacies fill oral, IV, and injectable oncology medications, billed to pharmacy benefit managers at WAC-minus rates — an incremental, higher-margin revenue stream layered on top of clinical care.
4. Hybrid Network Model: Beyond its own 65 owned clinics, the company contracts with 198 independent providers (including 187 locations in the Florida Oncology Network) through a managed-services-organization structure, extending its value-based reach without the capital cost of owning every clinic.

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2. Business Segments

Starling Oncology does not report formal segments; it organizes its disclosure around four "business lines" that function like segments:

                    Starling Oncology, Inc.
                            │
        ┌───────────────────┼───────────────────┬───────────────────┐
        │                   │                   │                    │
  Fee-for-Service     Value-Based Care    Specialty Pharmacy   Clinical Trials & Other
  (physician visits,   (capitation,        (oral/IV/injectable   (TOI Clinical Research,
   infusion, radiation, gain/loss share;    oncology drugs via    palliative care, sponsor/
   outpatient blood     >46% of revenue     PBM contracts)        CRO-paid trials)
   transfusions)        per company)

Fee-for-Service

Traditional billing for physician services, in-house infusion, radiation oncology (linear accelerator therapy), and outpatient blood transfusions, billed retrospectively to commercial and government payors with a small patient co-pay.

Value-Based Care

The company's strategic centerpiece: population-level contracts covering roughly 2.0 million patients, paid via capitation or gain/loss sharing. Capitation fees alone were about 16% of 2025 revenue per risk-factor disclosure, with value-based arrangements overall described as "more than half" of revenue in places and 46%+ in others.

Specialty Pharmacy

Specialty and retail pharmacy operations across all five states of operation, filling medications and billing pharmacy benefit managers — escrow-like margin capture on drugs the company's own physicians are already prescribing.

Clinical Trials and Other

Run through TOI Clinical Research, LLC, including a 2025 profit-sharing arrangement with Helios Clinical Research; pharmaceutical sponsors and CROs pay per procedure performed for trial-related care.

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3. Key Offerings

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4. Competitive Landscape

Starling Oncology operates in a market split between traditional fee-for-service oncology groups and a newer wave of value-based specialty care companies.

• Traditional Oncology Practice Networks: American Oncology Network, U.S. Oncology Network, and OneOncology are large physician-practice platforms that remain predominantly paid fee-for-service; they compete for the same physician talent and local market share but are not built around taking downside financial risk.
• Specialty Value-Based Benefit Managers: Evolent Health, Thyme Care, and OncoHealth compete more directly on the value-based/utilization-management side, typically as overlay benefit managers rather than owners of physician practices.
• Hospital Health Systems: Large hospital oncology departments compete for patients in every market the company operates in, generally on a fee-for-service basis with greater brand recognition locally.

                High Downside Risk-Bearing (true capitation)
                            │
                            │      Starling Oncology
                            │      (hybrid owned-practice +
                            │       network value-based model)
   Evolent / Thyme Care /   │
   OncoHealth (benefit-     │
   manager overlay, less    │
   direct care delivery)    │
   ─────────────────────────┼───────────────────────────── Owns Care Delivery (clinics/physicians)
                            │
   Hospital Health Systems  │      AON / US Oncology Network /
   (FFS, high local brand)  │      OneOncology (FFS-dominant
                            │       physician practice platforms)

Starling Oncology's claimed differentiation is being the only value-based oncology company of meaningful scale that combines owned clinics with a delegated network — a position its competitors occupy only partially.

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5. Strategic Strengths & Risks

Strengths

• First-Mover Scale in Value-Based Oncology: Operating across 17 markets in five states with roughly 2.0 million patients under value-based agreements gives the company a scale of risk-contracting experience that smaller, single-market oncology groups cannot easily replicate.
• Hybrid Owned + Network Model: Combining 65 owned TOI PC clinics with 198 independent network providers (including the 187-location Florida Oncology Network) lets the company extend value-based contracts into new geographies without the full capital cost of clinic ownership.
• Vertically Integrated Pharmacy and Trials: Specialty pharmacy and clinical-trials businesses capture incremental margin from the same patient population already under the company's clinical care.

Risks

• Persistent Losses: The company reported a 2025 net loss of $60.6 million and an operating loss of $36.1 million — the value-based model has not yet demonstrated durable profitability at scale.
• Capitation/Risk-Contract Execution Risk: Taking on downside financial risk for cancer care means a bad actuarial estimate, an unexpectedly costly patient cohort, or a new high-cost therapy class can turn a capitated contract loss-making; this is the central structural risk of the entire business model.
• Customer Concentration: The largest single customer represented about 14% of patient services revenue, concentrating counterparty and renegotiation risk.
• Corporate Practice of Medicine Structure: Reliance on variable-interest-entity consolidation of physician-owned practices under long-term management agreements is legally and operationally complex, and the structure itself is a target of ongoing regulatory scrutiny in several states.
• Rebrand Transition Risk: The August 2026 name change from The Oncology Institute to Starling Oncology (with the ticker moving from TOI to STLN) introduces near-term brand-recognition and investor-familiarity friction even though the underlying operating business is unchanged.

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6. Financial Overview

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7. Summary Conclusion

Starling Oncology (formerly The Oncology Institute) is a scale bet on value-based cancer care: a hybrid model of owned physician practices and a delegated independent-provider network that lets it take financial and clinical responsibility for roughly two million patients across seventeen markets. Its moat, to the extent one exists, is built on scale and contracting experience in an area most oncology competitors have been slow to enter — but that moat is not yet protecting the bottom line, with the company still posting sizable net and operating losses in 2025. The single biggest forward risk is whether its capitation and gain/loss-sharing contracts can be priced and managed well enough to turn the model's scale into sustainable profit before cash resources or payor patience run out.