American Oncology Network, Inc. (AON) reported significant financial developments in its latest 10-Q filing for the third quarter of 2024, reflecting both growth in revenue and ongoing challenges in profitability. As of September 30, 2024, AON's total revenue reached $470.3 million, a 39.8% increase from $336.3 million in the same quarter of 2023. Year-to-date revenue also saw a substantial rise, totaling $1.27 billion, up 32.8% from $955 million in the prior year. This growth was primarily driven by a 25.2% increase in patient encounters and an 11.9% rise in revenue per encounter.

Despite the revenue growth, AON reported a net loss of $1.3 million for Q3 2024, a significant improvement compared to a net loss of $29.2 million in Q3 2023. Year-to-date, the net loss narrowed to $29.4 million from $40.8 million in the previous year. The company attributed the improved performance to increased patient service revenue, which rose to $465.5 million in Q3 2024, up from $332.2 million in Q3 2023.

Operating expenses also increased, rising by 29.9% in Q3 2024 to $468.7 million, primarily due to higher costs of revenue associated with increased drug and medical supply costs. The cost of revenue surged by $122.9 million, reflecting the impact of higher patient volumes and costs per encounter. General and administrative expenses rose by $9.5 million, consistent with revenue growth.

AON's balance sheet showed total assets of $394.8 million as of September 30, 2024, an increase from $374.5 million at the end of 2023. However, total liabilities also rose to $340.7 million, up from $303.7 million, with current liabilities increasing significantly. Cash and cash equivalents decreased to $19.4 million from $28.5 million at the end of 2023.

Strategically, AON has been active in expanding its operations, completing acquisitions in Hawaii and Georgia during the nine months ended September 30, 2024. The company also entered into a significant agreement to purchase clinical assets for approximately $30.5 million, expected to close in early 2025. Additionally, AON raised $51 million through the sale of 8.5 million shares of Class A common stock at $6.00 per share, aimed at funding acquisitions and general corporate purposes.

The company continues to face challenges, including rising operational costs due to labor shortages and increased prices for medical supplies. AON's management is focused on improving internal controls and addressing material weaknesses identified in financial reporting.