A man lost his toe when he dropped a knife on it.
Doctor: "I have good news and bad news."
Guy: "What's the bad news?"
Doc: "They replaced your toe with a piece of candy."
Guy: "Good news?"
Doc: "You now have tic tac toe."
The joke plays on the phrase 'tic tac toe', which sounds like 'tic tac toe'. The doctor is saying that the man's new 'toe' is actually a tic tac candy, leading to the humorous wordplay.