Starling Oncology (STLN) Wells Fargo 21st Annual Healthcare Conference summary

Business performance and growth

• Achieved first fully profitable year and executed a major balance sheet restructuring, including refinancing with OrbiMed and adding a $25 million revolver.

• Operating a hybrid care model across five states, serving over 2 million patients with both employed and independent providers.

• Projecting over 20% top-line growth annually, with a 2027 target to double capitated revenue from $150 million to $300 million, driven by new contracts in Florida, California, Nevada, and Oregon.

• Pharmacy business now exceeds 60% of revenue, with gross margins up 300 basis points year-over-year and pharmacy gross margins above 20%.

• Majority of future growth is already contracted, with a robust pipeline and strong demand for services.

Strategic differentiation and operational model

• Delivers industry-leading MLRs in the mid-80s through scale in drug procurement, proprietary utilization management, and network control.

• Hybrid care model and delegated capitation contracts enable competitive pricing and high-quality, accessible care.

• Pharmacy revenue is currently attributed to owned clinics, with potential upside from network providers via the new Starling Nexus product.

• Expansion outside California leverages a delegated capitation model, allowing entry into new states and access to higher capitation rates.

• Risk contracts include annual escalators and risk corridors to mitigate drug cost trends and benefit design shifts.

Industry context and regulatory environment

• Medicare Advantage rate changes do not directly impact revenue but increase demand from partners seeking to manage MLR and spend.

• Pharmacy regulation and drug pricing pressures are managed through scale, procurement strategies, and active negotiations with manufacturers.

• Business diversity, with both Part B risk and Part D pharmacy revenue, provides P&L stability and resilience to drug price fluctuations.

• Provider education and technology are used to maximize pharmacy attachment rates and reduce leakage.