UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2022~~2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39427

___________________________________

Oak Street Health, Inc.

(Exact Name of Registrant as Specified in its Charter)

___________________________________

Delaware			84-3446686
(State or other jurisdiction ofincorporation or organization)			(I.R.S. EmployerIdentification No.)
30 W. Monroe Street Suite 1200Chicago, Illinois 60603			60603
30 W. Monroe Street Suite 1200Chicago, Illinois			60603
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (844) 871-5650

___________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Common Stock, $0.001 par value

OSH

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ☒

As of ~~November~~April 227, ~~2022~~2023, the registrant had ~~242~~245,~~915~~008,~~915~~081 shares of ~~common~~Common ~~stock~~Stock, $0.001 par value per share, outstanding.

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PART I.	FINANCIAL INFORMATION	64
Item 1.	Financial Statements	64
	Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021	6
	Condensed Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022	4
	Consolidated Statements of Operations for the Three and Nine-Months Ended September 30, 2022 and 2021 (unaudited)	7
	Condensed Consolidated Statements of Operations for the Three-Months Ended March 31, 2023 and 2022 (unaudited)	5
	Consolidated Statements of Comprehensive Loss for the Three and Nine-Months Ended September 30, 2022 and 2021 (unaudited)	8
	Condensed Consolidated Statements of Comprehensive Loss for the Three-Months Ended March 31, 2023 and 2022 (unaudited)	6
	Consolidated Statements of Changes in Stockholders’ Equity/(Deficit) for the Three and Nine-Months Ended September 30, 2022 and 2021 (unaudited)	9
	Condensed Consolidated Statements of Changes in Stockholders’ Equity/(Deficit) for the Three-Months Ended March 31, 2023 and 2022 (unaudited)	7
	Consolidated Statements of Cash Flows for the Nine-Months Ended September 30, 2022 and 2021 (unaudited)	13
	Condensed Consolidated Statements of Cash Flows for the Three-Months Ended March 31, 2023 and 2022 (unaudited)	9
	Notes to Consolidated Financial Statements	14
	Notes to Condensed Consolidated Financial Statements (unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2825
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4236
Item 4.	Controls and Procedures	4236
PART II.	OTHER INFORMATION	4338
Item 1.	Legal Proceedings	4338
Item 1A.	Risk Factors	4338
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	4338
Item 3.	Defaults upon Senior Securities	4338
Item 4.	Mine Safety Disclosures	4338
Item 5.	Other Information	4338
Item 6.	Exhibits	4338

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EXPLANATORY NOTE

On May 2, 2023, Oak Street Health, Inc. (“Oak Street Health,” “OSH,” “we,” “us,” “our” or the “Company”) consummated the transactions contemplated by the Agreement and Plan of Merger, dated as of February 7, 2023 (the “Merger Agreement”), by and among Oak Street Health, CVS Pharmacy, Inc. (“CVS Pharmacy”), Halo Merger Sub Corp., an indirect wholly owned subsidiary of CVS Pharmacy (“Merger Sub”), and, solely for the limited purposes set forth therein, CVS Health Corporation ("CVS Health"). Pursuant to the terms and conditions set forth in the Merger Agreement, on May 2, 2023, Merger Sub merged with and into Oak Street Health, with Oak Street Health continuing as the surviving corporation (the “Merger”). Following consummation of the Merger, the New York Stock Exchange (the “NYSE”) filed a notification of removal from listing on Form 25 with the Securities and Exchange Commission (the “SEC”) with respect to the delisting and deregistration of the Common Stock, par value $0.001 per share, of Oak Street Health (the “Common Stock”). The shares of Common Stock ceased trading prior to the opening of the market on May 2, 2023, and are no longer listed on the NYSE. Accordingly, the Company is no longer a publicly traded company and is an indirect wholly-owned subsidiary of CVS Pharmacy. In addition, the Company intends to file with the SEC a Form 15 to suspend the reporting obligations of the Company under Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) on May 12, 2023, which, upon filling, will immediately suspend Oak Street Health's reporting obligations under the Exchange Act. Unless otherwise specified, the financial information included in Part 1 of this Quarterly Report on Form 10-Q, as well as the accompanying Management’s Discussion and Analysis of Financial Condition and Results of Operations, reflect the corporate status of the Company as it existed on March 31, 2023.

This Quarterly Report on Form 10-Q does not reflect any changes in the Company's operations, strategy or business plan that may occur as a result of the Merger and the Company becoming part of CVS Health.

FORWARD-LOOKING STATEMENTS

Throughout this Quarterly Report on Form 10-Q, we make “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as “may,” “will,” “estimate,” “intend,” “plan,” “continue,” “believe,” “expect,” “anticipate,” “target,” “should,” “could,” “potential,” “opportunity,” “goal” or similar terminology. The forward-looking statements contained in this Quarterly Report on Form 10-Q are generally set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” but may be found in other sections as well. These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of timing, future results or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks and uncertainties and other factors~~, including, among other things:~~ .

•We derive many of our ~~history~~forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of ~~net~~known ~~losses~~factors, and it is impossible for us to anticipate all factors that could affect our ~~ability~~actual results. Important factors that could cause actual results to ~~achieve~~differ materially from our expectations, or ~~maintain~~cautionary ~~profitability~~statements, are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in anour ~~environment~~Form 10-K for the year-ended December 31, 2022 ("2022 Form 10-K") and this Quarterly Report on Form 10-Q. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other filings with the SEC and public communications. You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q in the context of ~~increasing~~these ~~expenses;~~risks and uncertainties.

•We caution you that the ~~impact~~important factors referenced above may not contain all of the ~~Coronavirus~~factors ~~disease~~that ~~2019~~are ~~(“COVID-19”)~~important ~~pandemic~~to you. In addition, we cannot assure you that we will realize the results or ~~any~~developments ~~other~~we ~~pandemic,~~expect ~~epidemic~~or anticipate or, ~~outbreak~~even ofif ansubstantially ~~infectious~~realized, ~~disease~~that they will result in the ~~United~~consequences ~~States~~or affect us or ~~worldwide~~our operations in the way we expect. The forward-looking statements included in this Quarterly Report on ~~our~~Form ~~business,~~10-Q ~~financial~~are ~~condition~~made ~~and~~only ~~results~~as of ~~operations;~~the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

•the effect of our relatively limited operating history on investors’ ability to evaluate our current business and future prospects;

•the viability of our growth strategy and our ability to realize expected results;

•our ability to manage our growth effectively, execute our business plan, maintain high levels of service and patient satisfaction and adequately address competitive challenges;

•our ability to attract new patients;

•the dependence of our revenues and operations on a limited number of key payors;

•the potential adverse impact of legal proceedings and litigation;

•the risk of termination or non-renewal of the Medicare Advantage contracts held by the health plans with which we contract, or the termination or non-renewal of our contracts with those plans;

•the impact on our business from changes in the payor mix of our patients and potential decreases in our reimbursement rates;

•our ability to compete in the healthcare industry;

•our ability to timely enroll new physicians and other providers in governmental healthcare programs before we can receive reimbursement for their services;

•the impact on our business of reductions in Medicare reimbursement rates or changes in the rules governing the Medicare program;

•our dependence on reimbursements by third-party payors and payments by individuals;

•our assumption under most of our agreements with health plans of some or all of the risk that the cost of providing services will exceed our compensation;

•the impact on our business of renegotiation, non-renewal or termination of capitation agreements with health plans;

•risks associated with estimating the amount of revenues and refund liabilities that we recognize under our risk agreements with health plans;

•the impact on our business of security breaches, loss of data or other disruptions causing the compromise of sensitive information or preventing us from accessing critical information;

•the impact on our business of disruptions in our disaster recovery systems or management continuity planning;

•the impact of reductions in the quality ratings of the health plans we serve;

•the risk of our agreements with the physician equity holder of our practices being deemed invalid;

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•our ability to maintain and enhance our reputation and brand recognition;

•our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems;

•our ability to obtain, maintain and enforce intellectual property protection for our technology;

•the potential adverse impact of claims by third parties that we are infringing on or otherwise violating their intellectual property rights;

•risks associated with existing securities class action litigation;

•our ability to protect the confidentiality of our trade secrets, know-how and other internally developed information;

•the impact of any restrictions on our use of or ability to license data or our failure to license data and integrate third-party technologies;

•risks associated with our use of “open-source” software;

•our dependence on our senior management team and other key employees;

•the concentration of our primary care centers in Illinois, Michigan, Pennsylvania, Ohio and Texas;

•the impact on our business of an economic downturn;

•our ability to attract and retain highly qualified personnel;

•our management team’s limited experience managing a public company;

•the impact on our business of the termination of our leases, increases in rent or inability to renew or extend leases;

•the impact of failures by our suppliers, material price increases on supplies, lack of reimbursement for drugs we purchase or limitations on our ability to access new technology or products;

•our ability to maintain our corporate culture;

•the impact of competition for physicians and nurses, shortages of qualified personnel and related increases in our labor costs;

•our ability to attract and retain the services of key primary care physicians;

•the risk that our submissions to health plans may contain inaccurate or unsupportable information regarding risk adjustment scores of members;

•our ability to accurately estimate incurred but not reported medical expense;

•the impact of negative publicity regarding the managed healthcare industry;

•the impact of state and federal efforts to reduce Medicaid spending;

•the impact on our centers of adverse weather conditions and other factors beyond our control;

•factors related to our indebtedness; and

•our ability to develop and maintain proper and effective internal control over financial reporting.

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under the sections entitled “Risk Factors” in our Form 10-K for the year-ended December 31, 2021 ("2021 Form 10-K") and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Form 10-K and this Quarterly Report on Form 10-Q. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other filings with the Securities and Exchange Commission ("SEC") and public communications. You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q in the context of these risks and uncertainties.

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We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

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PART I FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

OAK STREET HEALTH, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the quarterly period ended ~~September~~March 3031, ~~2022~~2023

OAK STREET HEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions, except shares and per share data)


	March 31, 2023 (unaudited)		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	136.8	$	137.9
Restricted cash	19.4		20.6
Other receivables, net	3.0		2.5
Capitated accounts receivable	1,215.4		894.0
Marketable debt securities	226.0		287.7
Prepaid expenses and other current assets	20.8		15.9
Total current assets	1,621.4		1,358.6
Property, plant and equipment, net	213.0		204.1
Operating right-of-use assets	313.5		317.6
Goodwill	158.0		158.0
Intangible assets, net	8.7		9.1
Other long-term assets	6.8		7.3
Total assets	$	2,321.4	$	2,054.7
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	31.1	$	17.1
Accrued compensation and benefits	65.7		52.7
Liability for unpaid claims	1,062.2		850.3
Other liabilities	44.1		43.0
Total current liabilities	1,203.1		963.1
Long-term debt	1,005.2		978.6
Long-term operating lease liabilities	350.0		349.3
Other long-term liabilities	29.8		31.0
Total liabilities	2,588.1		2,322.0
Commitments and contingencies (See Note 10)
Stockholders' deficit:
Preferred stock, par value $0.001; 50,000,000 shares authorized as of March 31, 2023 and December 31, 2022; no shares issued and outstanding as of March 31, 2023 and December 31, 2022	—		—
Common stock, par value $0.001; 500,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 244,306,322 and 242,873,706 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	0.2		0.2
Additional paid-in capital	1,250.3		1,205.4
Accumulated other comprehensive loss	(0.8)		(2.2)
Accumulated deficit	(1,520.0)		(1,474.5)
Total stockholders' deficit allocated to Oak Street Health, Inc.	(270.3)		(271.1)
Non-controlling interests	3.6		3.8
Total stockholders' deficit	(266.7)		(267.3)
Total liabilities and stockholders' deficit	$	2,321.4	$	2,054.7

	September 30, 2022 (unaudited)		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	204.3	$	104.7
Restricted cash	18.7		15.7
Other receivables, net (Humana comprised $0.2 as of December 31, 2021)	2.1		3.1
Capitated accounts receivable (Humana comprised $105.0 as of December 31, 2021)	833.9		559.4
Marketable debt securities	339.0		671.1
Prepaid expenses and other current assets	18.1		14.0
Total current assets	1,416.1		1,368.0
Property, plant and equipment, net	196.1		144.8
Goodwill	158.0		152.9
Intangible assets, net	9.6		10.8
Operating right-of-use assets (Humana comprised $70.9 as of December 31, 2021)	313.1		157.7
Other long-term assets	7.6		6.9
Total assets	$	2,100.5	$	1,841.1
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable	$	25.9	$	22.1
Accrued compensation and benefits	47.1		41.7
Liability for unpaid claims (Humana comprised $99.1 as of December 31, 2021)	787.1		556.3
Other liabilities (Humana comprised $19.3 as of December 31, 2021)	46.4		44.0
Total current liabilities	906.5		664.1
Long-term debt	977.0		901.4
Long-term operating lease liabilities (Humana comprised $66.0 as of December 31, 2021)	341.8		164.2
Other long-term liabilities (Humana comprised $43.1 as of December 31, 2021)	30.8		55.4
Total liabilities	2,256.1		1,785.1
Commitments and contingencies (See Note 10)
STOCKHOLDERS' EQUITY/(DEFICIT)
Preferred stock, par value $0.001; 50,000,000 shares authorized as of September 30, 2022 and December 31, 2021; no shares issued and outstanding as of September 30, 2022 and December 31, 2021	—		—
Common stock, par value $0.001; 500,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 242,950,926 and 240,937,465 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	0.2		0.2
Additional paid-in capital (Humana comprised $50.0 as of December 31, 2021)	1,185.0		1,017.9
Accumulated other comprehensive loss	(4.1)		(1.4)
Accumulated deficit	(1,341.5)		(965.3)
Total stockholders' equity/(deficit) allocated to Oak Street Health, Inc.	(160.4)		51.4
Non-controlling interests	4.8		4.6
Total stockholders' equity/(deficit)	(155.6)		56.0
Total liabilities and stockholders' equity/(deficit)	$	2,100.5	$	1,841.1

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~The accompanying notes are an integral part of these consolidated financial statements.~~ 4

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OAK STREET HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

($ in millions, except shares and per share data)

	Three-Months Ended September 30,				Nine-Months Ended September 30,
	Three-Months Ended March 31,
	2022		2021		2022		2021
	2023		2022
Revenues:
Capitated revenue (Humana comprised $130.7 for the three-months ended September 30, 2021 and $379.2 for the nine-months ended September 30, 2021)	$	537.9	$	376.7	$	1,560.1	$	1,014.6
Capitated revenue	$	743.2	$	506.1
Other revenue (Humana comprised $2.8 for the three-months ended September 30, 2021 and $4.5 for the nine-months ended September 30, 2021)	7.8		12.0		23.1		23.9
Other revenue	8.8		7.7
Total revenues	~~545~~752.70		~~388~~513.78		~~1,583.2~~		~~1,038.5~~
Operating expenses:
Medical claims expense (Humana comprised $99.1 for the three-months ended September 30, 2021 and $277.7 for the nine-months ended September 30, 2021)	427.4		309.8		1,198.4		790.9
Medical claims expense	523.5		379.4
Cost of care, excluding depreciation and amortization (Humana comprised $2.8 for the three-months ended September 30, 2021 and $7.1 for the nine-months ended September 30, 2021)	113.6		76.3		307.6		203.6
Cost of care, excluding depreciation and amortization	129.2		95.2
Sales and marketing	4442.13		3033.58		~~120.5~~		~~80.5~~
Corporate, general and administrative	8189.79		7788.07		~~265.3~~		~~224.3~~
Depreciation and amortization	910.15		47.58		~~25.3~~		~~11.7~~
Total operating expenses	~~675~~795.94		~~498~~604.19		~~1,917.1~~		~~1,311.0~~
Loss from operations	(~~130~~43.24)		(~~109~~91.41)		~~(333.9)~~		~~(272.5)~~
Other (expense):
Other expense:
Interest expense, net	—(0.6)		(0.6)		~~(1.1)~~		~~(1.8)~~
Other	(0.2)		—(5.0)		~~(40.3)~~		—
Total other (expense)	(0.2)		(0.6)		(41.4)		(1.8)
Total other expense	(0.8)		(5.6)
Net loss	(~~130~~44.42)		(~~110~~96.07)		~~(375.3)~~		~~(274.3)~~
Net income/(loss) attributable to non-controlling interests	01.3		(0.62)		~~0.9~~		~~(3.5)~~
Net loss attributable to Oak Street Health, Inc.	$	(~~130~~45.75)	$	(~~109~~96.45)	$	~~(376.2)~~	$	~~(270.8)~~
Weighted average common shares outstanding - basic and diluted	~~231~~238,~~919~~093,~~421~~465		~~223~~225,~~435~~645,~~698~~420		~~228,042,160~~		~~221,932,624~~
Net loss per share – basic and diluted	$	(0.5619)	$	(0.4943)	$	~~(1.65)~~	$	~~(1.22)~~

7The accompanying notes are an integral part of these condensed consolidated financial statements.

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OAK STREET HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

($ in millions, except shares and per share data)

	Three-Months Ended September 30,				Nine-Months Ended September 30,
	Three-Months Ended March 31,
	2022		2021		2022		2021
	2023		2022
Net loss	$	(~~130~~44.42)	$	(~~110~~96.07)	$	~~(375.3)~~	$	~~(274.3)~~
Other comprehensive loss:
Net unrealized gain/(loss) on marketable debt securities, net of tax	01.74		0(3.10)		~~(2.7)~~		~~(0.2)~~
Comprehensive loss	(~~129~~42.78)		(~~109~~99.97)		~~(378.0)~~		~~(274.5)~~
Less: Comprehensive income/(loss) attributable to non-controlling interests	01.3		(0.62)		~~0.9~~		~~(3.5)~~
Comprehensive loss attributable to Oak Street Health, Inc.	$	(~~130~~44.01)	$	(~~109~~99.35)	$	~~(378.9)~~	$	~~(271.0)~~

The accompanying notes are an integral part of these condensed consolidated financial statements.

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OAK STREET HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY/(DEFICIT)

(Unaudited)

($ in millions, except shares and per share data)

	Three-Months Ended
	Common Stock			AdditionalPaid-In Capital	AccumulatedDeficit		Accumulated OtherComprehensive Loss	Non-controllingInterest		TotalEquity/(Deficit)
	SharesIssued	Amount
Balances June 30, 2021	240,785,554	$	0.2	935.0	$	(717.2)	(0.3)	$	3.1	$	220.8
Balances December 31, 2021	240,937,465	$	0.2	1,017.9	$	(965.3)	(1.4)	$	4.6	$	56.0
Issuance of common stock upon vesting of restricted stock units	33,542	—		—	—		—	—		$	—
Issuance of Common Stock under the employee purchase plan	63,284	—		1.8	—		—	—		1.8
Issuance of common stock upon exercise of options	47,389	—		0.9	—		—	—		$	0.9
Issuance of Common Stock upon vesting of restricted stock units	49,395	—		—	—		—	—		—
Shares withheld related to net settlement of stock based awards	(782)	—		—	—		—	—		$	—
Issuance of Common Stock upon exercise of options	116,539	—		2.2	—		—	—		2.2
Issuance of common stock under the employee purchase plan	62,575	—		3.0	—		—	—		$	3.0
Forfeitures	(88,446)	—		(1.2)	—		—	—		(1.2)
Forfeitures	(8,322)	—		(0.1)	—		—	—		$	(0.1)
Shares withheld related to net settlement of stock based awards	(6,421)	—		—	—		—	—		—
Stock-based compensation expense		—		38.8	—		—	—		$	38.8
Stock-based compensation	—	—		40.6	—		—	—		40.6
Payments to non-controlling interests		—		—	—		—	(0.4)		$	(0.4)
Dissolution of joint venture	—	—		(2.7)	—		—	0.6		(2.1)
Net unrealized gain on marketable debt securities		—		—	—		0.1	—		$	0.1
Net unrealized loss on short-term marketable securities	—	—		—	—		(3.0)	—		(3.0)
Net loss	—	—		—	(~~109~~96.45)		—	(0.62)		$(96.7)	~~(110.0)~~
Balances September 30, 2021	240,919,956	0.2		977.6	(826.6)		(0.2)	2.1		$	153.1
Balances March 31, 2022	241,071,816	0.2		1,058.6	(1,061.8)		(4.4)	5.0		$	(2.4)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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OAK STREET HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY/(DEFICIT)

(Unaudited)

($ in millions, except shares and per share data)

	Three-Months Ended
	Common Stock			Additional Paid-In Capital		AccumulatedDeficit		Accumulated OtherComprehensive Loss		Non-controllingInterests		~~TotalEquity/(~~Total Deficit)
	SharesIssued	Amount
Balances June 30, 2022	241,084,244	$	0.2	$	1,108.5	$	(1,210.8)	$	(4.8)	$	5.0	$	(101.9)
Balances December 31, 2022	242,873,706	$	0.2	$	1,205.4	$	(1,474.5)	$	(2.2)	$	3.8	$	(267.3)
Issuance of common stock upon vesting of restricted stock units	70,849	—		—		—		—		—		—
Issuance of Common Stock upon exercise of options	952,273	—		19.4		—		—		—		19.4
Issuance of common stock upon exercise of options	543,082	—		11.1		—		—		—		11.1
Shares withheld related to net share settlement of stock based awards	(37,473)	—		(0.8)		—		—		—		(0.8)
Shares withheld related to net settlement of stock based awards	(9,478)	—		(0.2)		—		—		—		(0.2)
Issuance of Common Stock under the employee purchase plan	95,207	—		1.5		—		—		—		1.5
Issuance of common stock under the employee purchase plan	161,189	—		2.3		—		—		—		2.3
Issuance of Common Stock upon vesting of restricted stock units	480,620	—		—		—		—		—		—
Issuance of common stock pursuant to RubiconMD Holdings, Inc. earn-out	1,225,122	—		32.5		—		—		—		32.5
Forfeitures	(58,011)	—		(1.2)		—		—		—		(1.2)
Forfeitures	(124,082)	—		(2.9)		—		—		—		(2.9)
Stock compensation expense	—	—		26.0		—		—		—		26.0
Stock-based compensation expense	—	—		33.7		—		—		—		33.7
Payments to non-controlling interest	—	—		—		—		—		(1.5)		(1.5)
Payments to non-controlling interests	—	—		—		—		—		(0.5)		(0.5)
Net unrealized gain on short-term marketable securities	—	—		—		—		1.4		—		1.4
Net unrealized gain on marketable debt securities	—	—		—		—		0.7		—		0.7
Net (Loss) Income	—	—		—		(45.5)		—		1.3		(44.2)
Net loss	—	—		—		(130.7)		—		0.3		(130.4)
Balances March 31, 2023	244,306,322	$	0.2	$	1,250.3	$	(1,520.0)	$	(0.8)	$	3.6	$	(266.7)
Balances September 30, 2022	242,950,926	$	0.2	$	1,185.0	$	(1,341.5)	$	(4.1)	$	4.8	$	(155.6)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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OAK STREET HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CHANGES~~CASH ~~IN STOCKHOLDERS’ EQUITY/(DEFICIT)~~FLOWS

(Unaudited)

($ in millions, except shares and per share data)

	Nine-Months Ended
	Common Stock			Additional Paid-In Capital	AccumulatedDeficit		Accumulated OtherComprehensive Income (Loss)	Non-controllingInterest		TotalEquity/(Deficit)
	SharesIssued	Amount
Balances December 31, 2020	240,756,714	$	0.2	971.8	$	(555.8)	—	$	7.0	$	423.2
Purchase of capped calls	—	—		(123.6)	—		—	—		$	(123.6)
Issuance of common stock upon vesting of restricted stock units	55,781	—		—	—		—	—		$	—
Issuance of common stock upon exercise of options	222,203	—		4.5	—		—	—		$	4.5
Shares withheld related to net settlement of stock based awards	(1,412)	—		—	—		—	—		$	—
Issuance of common stock under the employee purchase plan	62,575	—		3.0	—		—	—		$	3.0
Forfeitures	(175,905)	—		(0.9)	—		—	—		$	(0.9)
Stock-based compensation expense	—	—		122.8	—		—	—		$	122.8
Payments from non-controlling interests	—	—		—	—		—	0.1		$	0.1
Payments to non-controlling interests	—	—		—	—		—	(1.5)		$	(1.5)
Net unrealized loss on marketable debt securities	—	—		—	—		(0.2)	—		$	(0.2)
Net loss	—	—		—	(270.8)		—	(3.5)		$	(274.3)
Balances September 30, 2021	240,919,956	0.2		977.6	(826.6)		(0.2)	2.1		153.1

The accompanying notes are an integral part of these consolidated financial statements.

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OAK STREET HEALTH, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY/(DEFICIT)

(Unaudited)

($ in millions, except shares and per share data)

	Nine-Months Ended
	Common Stock			Additional Paid-In Capital		AccumulatedDeficit		Accumulated OtherComprehensive Income (Loss)		Non-controllingInterest		TotalEquity/(Deficit)
	SharesIssued	Amount
Balances December 31, 2021	240,937,465	$	0.2	$	1,017.9	$	(965.3)	$	(1.4)	$	4.6	$	56.0
Issuance of common stock upon vesting of restricted stock units	149,850	—		—		—		—		—		—
Issuance of common stock upon exercise of options	662,034	—		13.4		—		—		—		13.4
Shares withheld related to net settlement of stock based awards	(15,995)	—		(0.2)		—		—		—		(0.2)
Issuance of common stock under the employee purchase plan	224,473	—		4.1		—		—		—		4.1
Issuance of common stock pursuant to RubiconMD Holdings, Inc. earn-out	1,225,122	—		32.5		—		—		—		32.5
Forfeitures	(232,023)	—		(4.3)		—		—		—		(4.3)
Stock-based compensation expense	—	—		124.3		—		—		—		124.3
Payments to non-controlling interest	—	—		—		—		—		(1.3)		(1.3)
Purchase of joint venture minority interest	—	—		(2.7)		—		—		0.6		(2.1)
Net unrealized loss on marketable debt securities	—	—		—		—		(2.7)		—		(2.7)
Net loss	—	—		—		(376.2)		—		0.9		(375.3)
Balances September 30, 2022	242,950,926	$	0.2	$	1,185.0	$	(1,341.5)	$	(4.1)	$	4.8	$	(155.6)

The accompanying notes are an integral part of these consolidated financial statements.

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OAK STREET HEALTH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

(Unaudited)

	Nine-Months Ended September 30,
	Three-Months Ended March 31,
	2022		2021
	2023		2022
Cash flows from operating activities:
Net loss	$	(~~375~~44.32)	$	(~~274~~96.37)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on debt and related issuance costs	31.37		21.41
Accretion of discounts and amortization of premiums on short-term marketable securities, net	4(0.98)		2.43
Fair value adjustment to contingent consideration	~~38.3~~—		—5.0
Depreciation and amortization	2510.35		~~11.~~7.8
Non-cash operating lease costs	3110.65		115.20
Stock-based compensation, net of forfeitures	~~120~~24.08		~~121~~39.94
Change in operating assets and liabilities, net of impact of acquisitions:
Changes in assets and liabilities:
Accounts receivables	(~~273~~321.49)		(~~208~~136.09)
Other assets	(54.34)		(101.56)
Accounts payable and accrued compensation and benefits	726.42		234.13
Liability for unpaid claims	~~230~~211.9		~~180~~79.26
Operating lease liabilities	(155.67)		(94.95)
Other liabilities	(51.43)		234.90
Net cash used in operating activities	$(92.7)	~~(213.3)~~	(~~125~~91.92)
Cash flows from investing activities:
Proceeds from sales and maturities of marketable debt securities	$146.0	~~716.6~~	43288.72
Purchases of marketable debt securities	(~~392~~82.21)		(~~817~~174.62)
Purchase of business, net of cash acquired	(5.6)		(1.4)
Purchases of property and equipment	(17.0)		(19.8)
Purchases of property and equipment	(67.6)		(40.6)
Net cash provided by investing activities	46.9		94.2
Net cash provided by (used by) investing activities	$	251.2	(815.9)
Cash flows from financing activities:
Proceeds from borrowings on term loan, net	$24.9	~~72.3~~	$—	—
Proceeds from borrowings on Convertible Senior Notes, net	—		897.9
Capital distributions to non-controlling interests	(1.5)		—
Purchase of capped calls	—		(123.6)
Purchase of joint venture minority interest	—		(2.1)
Capital contributions from non-controlling interests	—		0.1
Proceeds from exercise of options, net	18.6		2.2
Settlement of contingent earnout liability	(21.7)		—
Proceeds from issuance of Common Stock under the employee purchase plan	1.5		1.8
Capital distributions to non-controlling interests	(1.3)		(1.5)
Net cash provided by financing activities	43.5		1.9
Purchase of joint venture minority interest	(2.1)		—
Net change in cash, cash equivalents and restricted cash	(2.3)		4.9
Proceeds from exercise of options	13.4		4.5
Cash, cash equivalents and restricted cash, beginning of period	158.5		120.4
Proceeds from issuance of common stock under the employee purchase plan	4.1		3.0
Cash, cash equivalents and restricted cash, end of period	$	156.2	$	125.3
Net cash provided by financing activities	$	64.7	780.4
Supplemental non-cash disclosure
Net change in cash, cash equivalents and restricted cash	102.6		(161.4)
Additions to construction in process funded through accounts payable	6.3		9.2
Cash, cash equivalents and restricted cash, beginning of period	120.4		419.7
Cash, cash equivalents and restricted cash, end of period	$	223.0	$	258.3
Supplemental disclosures
Additions to construction in process funded through accounts payable	7.0		4.7

The accompanying notes are an integral part of these condensed consolidated financial statements.

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OAK STREET HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION AND NATURE OF BUSINESS

Description of Business

Oak Street Health, Inc. ~~(collectively with its consolidated subsidiaries is referred to as “Oak Street Health,” “OSH,” “we,” “us,” “our” or the “Company”)~~ was formed as a Delaware corporation on October 22, 2019 for the purpose of completing a public offering and related reorganization transactions (collectively referred to as the “IPO”) in order to carry on the business of Oak Street Health, LLC (“OSH LLC”) and its affiliates. On August 10, 2020, the Company completed its IPO. As the managing member of OSH LLC, Oak Street Health, Inc. operates and controls all of the business affairs of OSH LLC and its affiliates.

The Company operates primary care centers serving Medicare beneficiaries. The Company, through its centers and management services organization, combines an innovative care model with superior patient experience. The Company invests resources into primary care to prevent unnecessary acute events and manage chronic illnesses. The Company engages Medicare eligible patients through the use of an innovative community outreach approach. Once patients are engaged, the Company integrates population health analytics, social support services and primary care into the care model to drive improved outcomes. The Company contracts with health plans to generate medical costs savings and realize a return on its investment in primary care. As of ~~September~~March 3031, ~~2022~~2023, the Company operated ~~161~~172 centers.

Merger with CVS Health

As more fully described in Note 13, the Company consummated the transactions contemplated by the Merger Agreement, and pursuant to the terms and conditions set forth in the Merger Agreement, on May 2, 2023, Merger Sub merged with and into the Company, with the Company continuing as the surviving corporation and existing as an indirect wholly owned subsidiary of CVS Pharmacy.

On May 2, 2023, at the effective time of the Merger (the “Effective Time”), each share of our Common Stock, issued and outstanding immediately prior to the Effective Time was automatically cancelled, extinguished and converted into the right to receive $39.00 in cash, without interest and less any applicable withholding taxes (the “Merger Consideration”). In connection with the Merger, the NYSE filed a Form 25 with the SEC regarding the removal of shares of our Common Stock from listing and the withdrawal of the registration of our Common Stock under Section 12(b) of the Exchange Act. Shares of the Company’s Common Stock were suspended from trading on the NYSE prior to the opening of trading on May 2, 2023. The Company intends to file with the SEC a Form 15 to suspend its reporting obligations under Sections 13 and 15(d) of the Exchange Act. Accordingly, as of the Effective Time, the Company no longer existed as a standalone public company.

Other than transaction expenses and related costs associated with the Merger of $6.5 million for the three-months ended March 31, 2023, the terms of the Merger Agreement did not impact our condensed consolidated financial statements.

Basis of Presentation and Consolidation

The accompanying unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such regulations that would substantially duplicate the disclosures contained in the Company's annual audited consolidated financial statements. These financial statements have been prepared on a basis consistent with the accounting principles applied for the fiscal year ended December 31, ~~2021~~2022 in the Company’s ~~2021~~2022 Form 10-K filed with the SEC. In the opinion of management, all adjustments (consisting of all normal and recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three ~~and nine~~-months ended ~~September~~March 3031, ~~2022,~~2023 ~~including the impact of COVID-19,~~ are not necessarily indicative of the results that may be expected any other interim period for or for the year ending December 31, ~~2022~~2023.

The condensed consolidated financial statements of the Company include the financial statements of all wholly owned subsidiaries and majority-owned or controlled companies, which include the variable interest entities (“VIE”) in which OSH has an interest and is the primary beneficiary. See Note 11, “Variable Interest Entities.” For those consolidated subsidiaries where our ownership is less than 100%, the portion of the net income or loss allocable to the non-controlling interests is reported as “Net loss (gain) attributable to non-controlling interests” in the consolidated statements of operations. Intercompany balances and transactions have been eliminated in consolidation.

In addition, Oak Street Health is the majority interest owner in two joint ventures: OSH-PCJ Joliet, LLC ("PCJ JV") and OSH-RI, LLC ("RI JV"), which are consolidated in the Company’s financial statements. In January 2022, the Company paid a former joint venture partner, Evangelical Services Corporation, $2.1 million to acquire its 49.9% ownership interest in OSH-ESC Joint Venture, LLC. As such, OSH owned 100% of this entity as of March 31, 2022, and the joint venture was effectively dissolved. During the quarters ended June and September 30, 2022, distributions were made from OSH-PCJ Joliet, LLC to Oak Street Health MSO, LLC, a subsidiary of the Company that holds 50.1% ownership interest in PCJ JV, and Primary Care Physicians of Joliet, an unaffiliated third party that holds 49.9% ownership interest in PCJ JV. Distributions made during the quarter ended June 30, 2022 totaled $0.8 million to each owner and in the quarter ended September 30, 2022 distributions totaled $0.5 million to each owner.10

Use of Estimates

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~~where~~interests ~~significant~~is ~~estimates~~reported ~~are~~as ~~used~~“Net inincome ~~the~~(loss) ~~accompanying~~attributable ~~financial~~to ~~statements~~non-controlling ~~include~~interests” ~~revenue~~in ~~recognition,~~ the ~~liability~~condensed ~~for~~consolidated ~~unpaid~~statements ~~claims, stock-based compensation, valuation and related impairment recognition~~ of ~~long-lived~~operations. ~~assets,~~Intercompany ~~including~~balances ~~intangibles~~ and ~~goodwill~~transactions ~~and~~have ~~the~~been ~~valuation~~eliminated ofin ~~stock options~~consolidation. ~~Actual results could differ from those estimates.~~

In addition, Oak Street Health is the majority interest owner in two joint ventures: OSH-PCJ Joliet, LLC ("PCJ JV") and OSH-RI, LLC ("RI JV"), which are consolidated in the Company’s financial statements. In January 2022, the Company paid a former joint venture partner, Evangelical Services Corporation, $2.1 million to acquire its 49.9% ownership interest in OSH-ESC Joint Venture, LLC. As such, OSH owned 100% of this entity as of March 31, 2022, and the joint venture was effectively dissolved. During the three-months ended March 31, 2023, distributions were made from OSH-PCJ Joliet, LLC to Oak Street Health MSO, LLC, a subsidiary of the Company that holds 50.1% ownership interest in PCJ JV, and Primary Care Physicians of Joliet, an unaffiliated third party that holds 49.9% ownership interest in PCJ JV. Distributions made during the three-months ended March 31, 2023 and 2022 totaled $1.5 million and $0, respectively, to each owner.

There were no material related party transactions during the three-months ended March 31, 2023 and 2022 under ASC 850.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates on the information available at the time, its experiences and various other assumptions believed to be reasonable under the circumstances including estimates of the impact of COVID-19. The areas where significant estimates are used in the accompanying financial statements include revenue recognition, the liability for unpaid claims, stock-based compensation, valuation and related impairment recognition of long-lived assets, including intangibles and goodwill and the valuation of stock options. Actual results could differ from those estimates.

COVID-19

Even as the COVID-19 pandemic subsides, disruptions caused by the pandemic, including labor shortages and inflationary pressures, may continue and could, in turn, have a negative impact on the Company. Further, recurring COVID-19 outbreaks, including outbreaks caused by different virus variants, could have the potential to impact the Company and its future results of operations, cash flows and financial position.

On March 27, 2020, the United States President signed into law the Coronavirus Aid, Relief and Economic Securities Act (“CARES Act”) which provides economic assistance to a wide array of industries, including healthcare. This legislation did not have a material impact on our financial statements as of and for the nine-months ended September 30, 2022. Refer to our 2021 Form 10-K for details on the prior year impact of the legislation.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company described its significant accounting policies in Note 2 of the notes to consolidated financial statements for the year ended December 31, ~~2021~~2022 included in its ~~2021~~2022 Form 10-K. During the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023, there were no significant changes to those accounting policies~~, other than those noted below and those policies impacted by the new accounting pronouncements adopted during the period and further described below~~.

Stock-based compensation expense

The Company accounts for stock-based compensation as an expense in the statements of operations based on the awards' fair values at their respective grant dates. The Company estimates the fair value of options with service conditions granted using the Black-Scholes option pricing model. Stock options that include service and performance conditions are valued at their grant date using the Black-Scholes model and estimates regarding the probability of achieving the performance metrics. The Black-Scholes option pricing model requires inputs based on certain assumptions, including (a) the fair value per share of the Company's common stock, (b) the expected stock price volatility, (c) the expected term of the award, (d) the risk-free interest rate and (e) expected dividends.

The fair value of stock-based awards is recognized as compensation expense, net of actual forfeitures, over the requisite service period, which is generally the vesting period, with the exception of the fair value of stock-based payments for awards that include service and performance conditions which is recognized as compensation expense over the requisite service period as achievement of the performance objective becomes probable.

The Company issued certain performance stock options (“PSOs”) during the first quarter of 2022, that vest based on the satisfaction of certain service and performance-based conditions. The Company estimates compensation expense based on the grant date fair value of the awards and recognizes the expense on a graded vesting basis over the vesting period of the awards. Compensation expense for these awards is recognized only if the Company has determined that it is probable that the performance condition will be met. The Company reassesses the probability of vesting at each reporting period and adjusts compensation expense based on the probability assessment.

The Company issued certain performance stock units ("PSUs") during the second quarter of 2022. The awards will vest based on the satisfaction of certain service conditions and performance-based conditions. The Company estimates compensation expense based on the grant date fair value of the awards and recognizes the expense on a straight-line basis over the vesting period of the award. Compensation expense for these awards is recognized only if the Company has determined that it is probable that the performance condition will be met. The Company reassesses the probability of vesting at each reporting period and adjusts compensation expense based on the probability assessment.

Correction of immaterial error in previously issued financial statements

The Company has arrangements with Humana, that include a license fee payable by the Company to Humana for the Company’s provision of health care services in certain centers owned or leased by Humana. The license fee is a reimbursement to Humana for its costs of owning or leasing and maintaining the centers, including rental payments, center maintenance or repair expenses, equipment expenses, special assessments, cost of upgrades, taxes, leasehold improvements and other expenses identified by Humana. During the second quarter of 2022, the Company reassessed the nature of its license fee arrangements and determined that the reimbursement for leasehold improvements included in the license fee payments should be included as a lease component and accounted for under ASC 842, Leases ("ASC 842"). As previously

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disclosed in the Company's 2021 Form 10-K, the Company adopted ASC 842 effective January 1, 2021 under the modified retrospective transition method.

The Company considered the guidance Accounting Standards Codification 250, Accounting Changes and Error Corrections as well as the guidance in SEC Staff Bulletin 99, Materiality and concluded that the error was immaterial to the Company's previously issued interim and annual consolidated financial statements. The Company has corrected the cumulative impact of the error within the Quarterly Report on Form 10-Q for the period ended June 30, 2022 and disclosed the impact in Note 2 therein.

We recorded a decrease to cost of care, excluding depreciation and amortization, within the consolidated statements of operations of $3.6 million and impact of $0.02 to our net loss per share- basic and diluted for the nine-months ended September 30, 2022. There was no impact to the consolidated statement of cash flows or the consolidated statements of equity/(deficit).

Recently Adopted Accounting Pronouncements

In October 2021, the FASB issued Accounting Standard Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The new guidance requires contract assets and liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities are recognized by the acquirer at fair value on the acquisition date. The new standard is effective for fiscal years beginning after December 15, 2022. Early adoption is permitted. The standard will not impact acquired contract assets or liabilities from business combinations occurring prior to the effective date of adoption. We elected to adopt this guidance early effective as of the quarter ended September 30, 2022 in connection with the Company’s acquisition of substantially all of the assets of CHW Cares Inc. ("CHW"), which was completed during the quarter. The guidance was not applicable to the CHW acquisition as contract assets and liabilities were not acquired, and as such, the adoption did not have a material effect on our consolidated financial statements or notes to the consolidated financial statements. For more information about the CHW acquisition, see Note 5, "Business Combinations, Goodwill and Intangible Assets."

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This standard is effective for fiscal years beginning after December 15, 2021 and should be applied prospectively or retrospectively. We have adopted ASU 2021-10 as of January 1, 2022 using the prospective method. This adoption did not have a material impact on our consolidated financial statements or notes to the consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820) of Equity Securities Subject to Contractual Sale Restrictions. The new guidance clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The guidance is required to be adopted by January 1, 2024, and we do not anticipate ~~this~~the ~~standard~~adoption ~~update~~of this will have a material impact on our consolidated financial statements or notes to the consolidated financial statements.

NOTE 3. REVENUE RECOGNITION

The Company earns revenue from our capitated arrangements with health plan payers and other revenue arrangements. Other revenue is comprised of ancillary fees earned under contracts with certain managed care organizations for the provision of certain care coordination and care management services; license subscription and fees; and fee-for- service revenue. Both our capitated and fee-for-service revenue generally relate to contracts with patients in which our performance obligation is to provide and/or manage healthcare services to the patients. Revenues are recorded during the period our obligations to provide healthcare services are satisfied as noted below within each service type.

Our care coordination services include a single performance obligation to stand ready to provide care coordination services to patients, which constitutes a series of distinct service increments. Payments received are recognized in other revenue ratably over the length of contract terms and are refundable on a pro rata basis to Humana if the Company ceases to provide services at the centers within the length of the term specified in the contracts. Under our care management services, we have a single performance to stand ready to provide care management services, which constitutes a series of distinct service increments.

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~~The Company acquired RubiconMD Holdings, Inc. (“RMD”) on October 20, 2021. RMD is a healthcare technology company specializing in an online eConsult platform which enables primary care providers~~ to ~~easily access same-day insights from top specialists in order to~~ provide ~~better care for their patients. RMD generates revenue by providing subscription licenses to its customers to access its eConsult platform, as well as providing integration, training and other ad-hoc~~ services. Weat ~~have identified~~ the ~~performance~~centers ~~obligation~~within ~~to be standing ready to provide access to~~ the ~~eConsult~~length ~~platform.~~of ~~Subscription license revenue is recognized when~~ the ~~performance~~term ~~obligation~~specified isin ~~met over time by either~~ the ~~straight-line method or when services are performed over the terms of the applicable contract~~contracts. ~~RMD~~Under ~~also~~our ~~provides~~care ~~services~~management ~~to assist customers with initial usage and training of the platform. These~~ services, ~~are~~we ~~typically provided for a fixed fee and do not~~ have a ~~variable~~single ~~component. We identified the~~ performance ~~obligation~~to isstand ready to provide ~~the~~care ~~other~~management ~~professional~~ services, which isconstitutes ~~typically~~a ~~achieved~~series ~~over~~of ~~time~~distinct service increments.

The Company additionally generates revenue by providing subscription licenses to its customers to access its eConsult platform, as well as providing integration, training and other ad-hoc services. We have identified the performance obligation to be standing ready to provide access to the eConsult platform. Subscription license revenue is recognized when the performance obligation is met over time by either the straight-line method or when services are performed over the terms of the applicable contract.

Capitated Revenue and Accounts Receivable

The Company has agreements in place with the payors listed below, and payor sources of capitated revenue for each period presented were as follows:

	Three-Months Ended September 30,				Nine-Months Ended September 30,
	Three-Months Ended March 31,
	2022		2021		2022		2021
	2023		2022
Humana	3132	%	3532	%	32	%	37	%
Wellcare/Meridian	1613	%	1516	%	17	%	16	%
UnitedHealth Care	10	%	8	%	9	%	7	%
Other	55	%	52	%
CMS	8	%	10	%	8	%	7	%
Other	35	%	32	%	34	%	33	%

Medicare Part D comprised 2% of capitated revenues for the three ~~and nine~~-months ended ~~September~~March 3031, ~~2022~~2023 and ~~September~~March 3031, ~~2021~~2022. Medicare Part D comprised 3% of medical claims expense for the three-months ended ~~September~~March 3031, ~~2022~~2023 and 2% for the ~~nine~~three-months ended ~~September~~March 3031, 2022. ~~Medicare Part D comprised 2% of medical claims expense for the three-months ended September 30, 2021 and 3% for the nine-months ended September 30, 2021.~~

For the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022, respectively, we estimate that we will receive an additional $4469.41 million and $4049.12 million for acuity-related adjustments to be received in subsequent periods. Under our capitated revenue arrangements, we receive a fixed fee per patient, per month ("PPPM") for services. In certain contracts, PPPM fees also include adjustments for items such as performance incentives or penalties based on the achievement of certain clinical quality metrics as contracted with payors. There were no material PPPM adjustments related to performance incentives/penalties for quality-related metrics for the three ~~and nine~~-months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~March 31, 2022.

Other Revenue

The composition of other revenue for each period was as follows ($ in millions):

	Three-Months Ended September 30,				Nine-Months Ended September 30,
	Three-Months Ended March 31,
	2022		2021		2022	2021
	2023		2022
Care coordination and care management services	$	12.85	$	91.87	~~5.2~~	$	~~18.4~~
License subscription and other fees	32.36		—3.1		~~9.5~~	—
Fee for service	23.7		2.29		~~8.4~~	~~5.5~~
Total other revenue	$	78.8	$	127.07	~~23.1~~	$	~~23.9~~

As of ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, the Company’s contract liabilities related to the Humana care coordination payments totaled $3736.3 million and $3337.96 million, respectively. The short-term portion is recorded in other liabilities and the long-term portion is included in other long-term liabilities in the accompanying condensed consolidated balance sheets. As of ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, we recorded $6.7.0 million and $67.20 million of short-term contract liabilities, respectively, and $3029.63 million and $2730.76 million of long-term contract liabilities, respectively.

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NOTE 4. FAIR VALUE MEASUREMENTS AND INVESTMENTS

Fair Value Measurements

In determining the fair value of financial assets and liabilities, the Company utilizes market data or other assumptions that it believes market participants would use in pricing the asset or liability in the principal or most advantageous market and adjusts for non-performance and/or other risks associated with the Company as well as counterparties, as appropriate. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

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counterparties, as appropriate. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level 1 – Valuations based on unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible at the measurement date.

Level 2 – Valuations with inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Valuations with unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis ($ in millions):

	Fair Value Measurements as of September 30, 2022 using:						Fair Value Measurements as of December 31, 2021 using:
	Fair Value Measurements as of March 31, 2023 using:						Fair Value Measurements as of December 31, 2022 using:
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Marketable debt securities:
Commercial paper	$	6175.54	$	—	$	—	$	~~120~~88.84	$	—	$	—
U.S. Treasury obligations	—		1218.85		—		—		264.09		—
Corporate bonds	—		~~201~~99.27		—		—		~~412~~158.31		—
Asset-backed securities	—		333.85		—		—		9914.23		—
Other	—		2928.79		—		—		1222.80		—
Total financial assets	$	6175.54	$	~~277~~150.56	$	—	$	~~120~~88.84	$	~~550~~199.3	$	—
Liabilities:
Convertible senior notes	$	—	$	710.5	$	—	$	—	$	752.7	$	—
Contingent consideration1	—		—		0.2		—		—		21.8
Total liabilities	$	—	$	710.5	$	0.2	$	—	$	752.7	$	21.8
1 During the quarter-ended June 30, 2022, RMD achieved both earn-out hurdles. As such, the Company no longer measured the fair value of the contingent consideration and instead recorded the maximum earn-out as an amount payable to RMD as of June 30, 2022. See Footnote 5 for further detail.

The Company measures the fair value of its corporate bonds, U.S. treasury obligations and asset-backed securities by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. ~~During the three and nine-months ended September 30, 2022, there were no transfers between Levels 1, 2 and 3.~~

The fair value of the Company's Convertible Senior Notes ~~are~~was $906.9 million and $702.0 million as of March 31, 2023 and December 31, 2022, respectively, and classified within Level 2 of the fair value hierarchy as the valuation inputs are based on quoted prices in an inactive market on the last day in the reporting period. The carrying value of the Convertible Senior Notes was $907.0 million and $905.8 million as of March 31, 2023 and December 31, 2022, respectively, which is net of unamortized debt issuance and offering costs.

InThe ~~September~~carrying ~~2022,~~value of the Company's ~~and~~Term ~~certain~~Loan ofwas ~~its subsidiaries entered into a~~ $~~300~~98.02 million ~~loan~~ and ~~security~~$72.8 ~~agreement~~million ~~(the~~as ~~"Loan~~of ~~Agreement") with Hercules Capital Inc.~~March 31, as2023 ~~administrative~~ and ~~collateral agent and lender (the “Agent”)~~December 31, ~~and Silicon Valley Bank and other lenders from time to time parties thereto (collectively with the Agent in its capacity as a lender~~2022, ~~the “Lenders”) with such amount to be funded in five committed tranches (collectively~~respectively, ~~the~~which ~~"Term~~is ~~Loan").~~net As of ~~September 30,~~debt ~~2022~~issuance costs, ~~the~~and ~~carrying~~approximates fair value ofas the ~~loan~~variable isinterest ~~$72.3~~rate ~~million,~~re-prices ~~net of debt issuance costs~~frequently. The fair value of the Term Loan ~~approximates~~is ~~its~~classified ~~carrying~~within ~~value~~Level ~~since~~2 of the ~~interest~~fair ~~rate~~value ~~is at market~~hierarchy. For more information about the Convertible Senior Notes and Term Loan, see Note 8, “Long-Term Debt.”

18During the three-months ended March 31, 2023 and 2022, there were no transfers between Levels 1, 2 and 3.

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Investments

AtAs ~~September~~of March 3031, ~~2022~~2023 and December 31, 2022, the Company’s marketable debt securities classified as available-for-sale were as follows ($ in millions):

	September 30, 2022						December 31, 2021
	March 31, 2023						December 31, 2022
	Amortized cost		~~Net~~Gross unrealized gains (losses)		Fair value		Amortized cost		~~Net~~Gross unrealized gains (losses)		Fair value
Marketable debt securities:
Commercial paper	$	6175.74	$	~~(0.2)~~—	$	6175.54	$	~~120~~88.95	$	(0.1)	$	~~120~~88.84
U.S. Treasury obligations	1218.95		~~(0.1)~~—		1218.85		264.09		—0.0		264.09
Corporate bonds	~~204~~100.65		(30.48)		~~201~~99.27		~~413~~160.40		(1.19)		~~412~~158.31
Asset-backed securities	343.05		~~(0.2)~~—		333.85		9914.4		(0.21)		9914.23
Other	2928.9		~~(0.2)~~—		2928.79		1222.81		—(0.1)		1222.80
Total marketable debt securities	$	~~343~~226.18	$	(40.18)	$	~~339~~226.0	$	~~672~~289.59	$	(12.42)	$	~~671~~287.17

These investments in marketable debt securities carry maturity dates of less than five years from the date of purchase. The net realized gains and losses were immaterial during the three ~~and nine~~-months ended ~~September~~March 3031, 2023 and 2022. We do not intend to sell these investments, and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost basis. We did not record an allowance for credit losses as of ~~September~~March 3031, ~~2022~~2023 or December 31, ~~2021~~2022 as no losses were determined to be caused by credit losses.

NOTE 5. BUSINESS COMBINATIONS, GOODWILL AND INTANGIBLE ASSETS

Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $158.0 million and $~~152~~158.90 million at ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, respectively. All goodwill recorded in the condensed consolidated balance sheets is assigned to the Oak Street Health, Inc. reporting unit, which had a negative carrying value as of March 31, 2023 and December 31, 2022.

Intangible assets with a finite useful life continue to be amortized over their useful lives. ~~Net~~Gross intangible assets amounted to $912.65 million and $1012.85 million at ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, respectively. Accumulated amortization related to intangible assets amount to $23.98 million and $13.74 million at ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, respectively. The Company recorded amortization expense of $0.4 million and $0.14 million for the three-months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021, respectively. The Company recorded amortization expense of $1.2 million and $0.3 million for the nine-months ended September 30,~~ 2022 ~~and 2021~~, respectively.

The remaining weighted average amortization period of finite-lived intangible assets is 5.83 years. The remaining estimated future amortization expense by year, as of ~~September~~March 3031, ~~2022~~2023, is presented in the following table:

	~~(in millions)~~		(in millions)
2022	$	0.5
2023			$	1.7
2023	1.7
2024			1.7
2024	1.7
2025			1.7
2025	1.7
2026			1.7
2026	1.7
2027			1.7
Thereafter	~~2.3~~		0.2
Estimated aggregate future intangible asset amortization	$	~~9.6~~	$	8.7

During the nine-months ended September 30, 2022, we made a $0.2 million adjustment to our preliminary allocation of the purchase consideration for the RMD acquisition related to finalized net working capital adjustments. As of September 30, 2022, the purchase price allocation is considered final. During the nine-months ended September 30, 2022, RMD achieved certain internal volumes required to earn the maximum earn-out consideration of $60.0 million. The Company paid out $27.5 million in cash and issued $32.5 million of Oak Street Health common stock during the three-months ended September 30, 2022. Of the total cash paid, $21.7 million had been recorded as a liability at the date of acquisition and presented as cash used in financing activities in the consolidated statement of cash flows with remaining amount reflected as cash used in operating activities- other liabilities. Additionally, the change in fair value of the

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contingent consideration liability was recorded in other income (expense) on the consolidated statement of operations. For the three and nine-months ended September 30, 2022, the Company recorded $0 million and $38.3 million, respectively, within our other expenses as a result of RMD achieving the maximum earn-out consideration.

On September 23, 2022 OSH acquired substantially all of the assets of CHW for a total purchase price of $6.2 million, including contingent consideration with an estimated fair value of $0.2 million. The estimated fair value of the contingent consideration is recorded within other long-term liabilities. The maximum potential earn-out is $5.5 million dependent on internal metrics. As part of the CHW acquisition, the Company recorded $5.3 million of goodwill. As of September 30, 2022, the purchase price allocation is considered preliminary, and the Company may record certain adjustments during the one-year measurement period following the CHW acquisition.

NOTE 6. LEASES

The components of lease expense for the Company’s operating leases were as follows for the three ~~and nine~~-months ended ~~September~~March 3031, ~~2022~~2023 and ~~September~~March 3031, ~~2021~~2022 ($ in millions):

	Three-Months Ended September 30,				Nine-Months Ended September 30,
	2022		2021		2022		2021
Operating lease cost2	$	13.3	$	5.6	$	34.6	$	15.0
Variable lease cost 2	2.1		5.3		7.3		14.0
Total lease cost	$	15.4	$	10.9	$	41.9	$	29.0
2See Note 2 for discussion of the correction of an immaterial prior period error. The correction of the classification of leasehold improvements resulted in a prior period benefit recorded to operating lease costs during the nine-months ended September 30, 2022. Additionally, as a result of the correction, certain variable lease expenses were re-classified as operating lease expenses during the nine-months ended September 30, 2022. These corrections impacted the comparability of variable lease costs year over year.

The Company entered into operating leases that resulted in $22.6 million and $89.2 million of right-of-use assets in exchange for operating lease obligations for the three and nine-months ended September 30, 2022, respectively. The Company entered into operating leases that resulted in $22.7 million and $49.5 million of right-of-use assets in exchange for operating lease obligations for the three and nine-months ended September 30, 2021, respectively.

The weighted-average remaining lease term and discount rate for operating lease liabilities included in the consolidated balance sheets are as follows:

	September 30, 2022		December 31, 2021
Weighted-average remaining lease term (in years)	8.8		9.9
Weighted-average discount rate	4.37	%	4.17	%

The table below presents the future minimum lease payments under the non-cancelable operating leases as of September 30, 2022 ($ in millions):

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2022	$	10.5
	Three-Months Ended March 31,
~~2023~~	~~48.5~~2023		2022
2024	54.7
Operating lease cost	$	13.8	$	7.0
2025	52.5
Variable lease cost	3.7		6.0
2026	52.1
Total lease cost	$	17.5	$	13.0
2027	52.3
Thereafter	196.9
Total lease payments	$	467.5
Less: imputed interest	(101.8)
Total operating lease liabilities	$	365.7
Reported as:
Operating lease liabilities, current (1)	23.9
Operating lease liabilities, noncurrent	341.8
Total operating lease liabilities	$	365.7
(1) Included in other liabilities on the consolidated balance sheet

The Company entered into operating leases that resulted in $6.7 million of right-of-use assets in exchange for operating lease obligations for the three-months ended March 31, 2023. The Company entered into operating leases that resulted in $22.7 million of right-of-use assets in exchange for operating lease obligations for the three-months ended March 31, 2022.

The weighted-average remaining lease term and discount rate for operating lease liabilities included in the condensed consolidated balance sheets are as follows:


	March 31, 2023		December 31, 2022
Weighted-average remaining lease term (in years)	8.6		8.7
Weighted-average discount rate	4.73	%	4.59	%

The table below presents the future minimum lease payments under the non-cancelable operating leases as of March 31, 2023 ($ in millions):


2023	$	37.8
2024	55.3
2025	55.8
2026	56.8
2027	56.7
2028	55.8
Thereafter	176.2
Total lease payments	494.4
Less: imputed interest	(119.7)
Total operating lease liabilities	$	374.7
Reported as:
Operating lease liabilities, current (1)	24.7
Operating lease liabilities, noncurrent	350.0
Total operating lease liabilities	$	374.7

(1) Included in other liabilities on the condensed consolidated balance sheet

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NOTE 7. LIABILITY FOR UNPAID CLAIMS

Activity within liabilities for unpaid claims was as follows for the ~~nine~~three-months ended ($ in millions):

	September 30,
	March 31,
	2022		2021
	2023		2022
Balance, beginning of period	$	~~556~~850.3	$	~~262~~556.13
Incurred health care costs:
Current year	~~1,195~~530.35		~~785~~377.27
Prior years	—(8.3)		50.28
Total claims incurred	$522.2	~~1,195.3~~	$378.5	~~790.4~~
Claims paid:
Current year	(~~482~~57.94)		(~~366~~32.52)
Prior years	(~~485~~254.40)		(~~246~~268.40)
Total claims paid	$(311.4)	~~(968.3)~~	$(300.2)	~~(612.9)~~
Adjustments to other claims-related liabilities	31.81		21.73
Balance, end of period	$	~~787.~~1,062.2	$	~~442~~635.39

We assess the profitability of our managed care capitation arrangements to identify contracts where current operating results or forecasts indicate probable future losses. If anticipated future variable costs exceed anticipated future revenues, a premium deficiency reserve is recognized. No material premium deficiency reserves were recorded as of ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022.

NOTE 8. LONG-TERM DEBT

~~Term~~The ~~Loan~~following table is a summary of the Company's indebtedness as of March 31, 2023 and December 31, 2022 ($ in millions):

On September 30, 2022, the Company and certain of its subsidiaries entered into the Loan Agreement with Hercules Capital, Inc., as administrative and collateral agent and lender, and Silicon Valley Bank and other lenders from time to time parties thereto. The Loan Agreement provides the Company with a Term Loan Facility of up to $300.0 million to be funded in five committed tranches available to be drawn at the Company’s option during the specified time period. Under Tranche A (available from September 30, 2022 ("Closing") until March 31, 2023), the Company was required to draw down $75.0 million upon Closing and may draw up to an additional $25.0 million. Under Tranche B (available from Closing until December 15, 2023), the Company may borrow up to $50.0 million in $25.0 million increments. Under


	March 31, 2023		December 31, 2022
Liability component:
Convertible Senior Notes Principal	$	920.0	$	920.0
Term Loan Principal	100.0		75.0
Total Principal	1,020.0		995.0
Less: Convertible Senior Notes debt issuance costs, net of amortization	(13.0)		(14.2)
Less: Term Loan debt issuance costs, net of amortization	(1.8)		(2.2)
Total debt issuance costs, net of amortization	(14.8)		(16.4)
Net carrying amount	$	1,005.2	$	978.6
Equity component recorded at issuance:
Capped call transactions	$	123.6	$	123.6

21See Note 13 for further discussion of impact of the Merger that was consummated on May 2,2023 on the Company's debt balances as of March 31, 2023.

Term Loan Facility

On September 30, 2022, the Company and certain of its subsidiaries entered into a Loan Agreement with Hercules Capital, Inc., as administrative and collateral agent and lender, and Silicon Valley Bank ("SVB") and the other lenders from time to time parties thereto. The Loan Agreement provides the Company with a secured term loan facility of up to $300.0 million (the "Term Loan Facility") to be funded in five committed tranches, which each tranche of term loans (collectively, the "Term Loans") available to be drawn at the Company’s option during the specified time period. As required under the Loan Agreement, at the closing of the Loan Agreement on September 30, 2022 ("the Closing"), the Company borrowed $75.0 million under Tranche A and borrowed an additional $25.0 million under Tranche A as of March 31, 2023. Under Tranche B (which became available on the Closing until December 15, 2023), the Company may borrow up to $50.0

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million in $25.0 million increments. Under Tranche C (which will become available ~~from~~on January 1, 2024 and remain available until June 30, 2024), the Company may borrow up to $50.0 million in $25.0 million increments. Under Tranche D (which will become available ~~from~~on the earlier of (a) the date on which Tranche C is fully drawn and (b) July 1, 2024, and remain available until December 15, 2024), the Company may borrow up to $75.0 million in $25.0 million increments. Under Tranche E (which became available ~~from~~on the Closing and will remain available until June 1, 2025), the Company may borrow up to $25.0 million subject to the approval of the individual lender. If the Company does not elect to draw the entire principal amount available under the Tranche B, C or D during the applicable drawdown period, then any such undrawn portion will be added to the aggregate principal amount available under Tranche E. The Company's obligations under the Term Loan Facility are secured by a perfected security interest in substantially all of the assets of the Company, subject to certain limitations and exceptions. The Term Loan Facility is scheduled to mature on October 1, 2027, subject to a springing maturity date of September 1, 2025 if, prior to June 1, 2025, the Company’s Convertible Senior Notes have not been (i) converted into equity interests of the Company, (ii) amended such that the scheduled maturity date of the Convertible Senior Notes is at least 180 days after the initial maturity date of the tranches of the Term Loans then in effect, or (iii) fully redeemed and extinguished.

The Term ~~Loan~~Loans ~~interest~~bear ~~rate will float and change on the day the prime rate changes from time to time. The Term Loan~~ interest ~~rate~~at isa rate equal to the greater of either 7.95% or the prime rate (as defined in the Loan Agreement) plus 2.45% per annum. In addition, the principal balance of the Term Loans ~~will~~ bear “payment-in-kind” interest at the rate of 1.00% per annum (“PIK Interest”), which PIK Interest ~~will~~is be added to the outstanding principal balance of the Term Loans and ~~increase~~increases the outstanding principal balance of the Term Loans on each payment date. In addition, an end-of-term charge equal to 4.95% of the aggregate original principal amount of the Term Loans, due on the earlier of the maturity date of the Term Loans or the repayment of the Term Loans, is payable by the Company. Interest payments on the ~~loan~~Term Loans are due on the first day of each month.

Borrowings under the Term Loan Facility may be voluntarily prepaid in minimum increments of $25.0 million, subject to a prepayment fee equal to (i) 2.00% of the amount prepaid, if the prepayment occurs during the first year following the ~~closing~~Closing, (ii) 1.00% of the amount prepaid, if the prepayment occurs during the second year following the ~~closing~~Closing, and (iii) 0.50% of the amount prepaid, if the prepayment occurs during the third year following the ~~closing~~Closing. There is no prepayment fee, penalty or premium applicable to voluntary prepayments made by the Company on or after the fourth year following the closing.

At ~~September~~March 3031, ~~2022~~2023, the outstanding aggregate balance of the Term Loan ~~was $72.3 million~~, net of debt issuance costs was $98.2 million.

The Loan Agreement contains customary affirmative and negative covenants, including a requirement that the Company maintain all of its operating and deposit accounts with Silicon Valley Bank ("SVB"). In addition, beginning on the earlier of (i) the reporting deadline of the Company’s fourth quarter 2023 financial statements under the Loan Agreement and (ii) the date at which more than $100.0 million in aggregate principal (excluding any paid-in-kind interest) is outstanding under the Term Loan Facility, the Company is required to maintain a specified trailing twelve-month platform contribution (as defined in the Loan Agreement), with the applicable platform contribution increasing over time and as the Company’s borrowings under the Term Loan Facility increase. At ~~September~~March 3031, ~~2022~~2023, the financial covenant was not yet in effect.

On March 10, 2023, the California Department of Financial Protection and Innovation took possession of and closed SVB, appointing the Federal Deposit Insurance Corporation (“FDIC”) as receiver. As receiver, the FDIC transferred all deposits and substantially all assets of the former SVB to a newly created "bridge bank" (Silicon Valley Bridge Bank, N.A.). On March 16, 2023, in light of the uncertainty surrounding SVB and its ability to continue operations, the Company transferred certain cash deposits from SVB bridge bank to other financial institutions. On April 4, 2023, the Company entered into a Default Waiver and First Amendment (the “Amendment”) to the Loan Agreement. Among other matters, the Amendment provides a waiver of any potential default under the Loan Agreement. The Company was in compliance with all of the applicable covenants under the Loan Agreement as of March 31, 2023. Refer to Note 13 for more detailed information.

Convertible Senior Notes

On March 16, 2021, the Company issued, at par value, $920.0 million aggregate principal amount of 0% Convertible Senior Notes, including $120.0 million in aggregate principal amount pursuant to the option we granted to the initial purchasers to purchase additional convertible senior notes, which was exercised in full in March 2021. Total proceeds received by the Company from the sale of the Convertible Senior Notes, net of debt issuance and offering costs of $22.1 million, were $897.9 million. The Company used $123.6 million of the net proceeds to pay for the cost of the capped call transactions (see discussion on capped call transactions further below).

The Convertible Senior Notes are governed by an indenture (“Indenture”), dated as of March 16, 2021, between the Company and U.S. Bank National Association, as trustee. Under the Indenture, the Convertible Senior Notes are general senior, unsecured obligations of the Company and will mature on March 15, 2026, unless earlier redeemed, repurchased or converted. The Convertible Senior Notes are equal in right of payment with the Company’s future senior, unsecured indebtedness and structurally subordinated to all indebtedness and liabilities of the Company’s subsidiaries.17

Pursuant to the terms of the Indenture, the Convertible Senior Notes are convertible at the option of the holders, or may be called by the Company for redemption, upon the occurrence of certain circumstances. For additional information on the conversion provisions included in the Indenture, please see Long-Term Debt, of the notes to consolidated financial statements included in our 2021 Form 10-Q for the period ended June 30, 2022. Based upon the reported sales price of our common stock during the last 30 consecutive trading days of the third quarter of 2022, the Convertible Senior Notes were not convertible by the holders on September 30, 2022 and will not be convertible until December 15, 2025.

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Pursuant to the terms of the Indenture, the Convertible Senior Notes are convertible at the option of the holders, or may be called by the Company for redemption, upon the occurrence of certain circumstances. For additional information on the conversion provisions included in the Indenture, please see Note 8: Long-Term Debt, of the notes to the consolidated financial statements included in our 2022 Form 10-K. Based upon the reported sales price of our Common Stock during the last 30 consecutive trading days of the first quarter of 2023, the Convertible Senior Notes were not convertible by the holders on March 31, 2023 and will not be convertible until December 15, 2025.

The Company recognized $1.1 million and $1.1 million related to the amortization of debt issuance and offering costs in interest expense, net on the condensed consolidated statements of operations related to the Convertible Senior Notes for the three-months ended March 31, 2023 and 2022, respectively. The effective interest rate for both periods was 0.49%.

Capped Call Transactions

Concurrently with the pricing of the Convertible Senior Notes, the Company entered into convertible note hedge transactions (the “capped call transactions”) with six initial purchasers or their respective affiliates and other financial institutions (the “option counterparties”) to mitigate the impact of potential economic dilution to our ~~common~~Common ~~stock~~Stock upon conversion of the Convertible Senior Notes. The capped calls were purchased for $123.6 million from the net proceeds from the issuance of the Convertible Senior Notes and have an initial strike price of approximately $79.16 per share, which corresponds to the initial conversion price of the Convertible Senior Notes. The capped call transactions cover, subject to customary adjustments, the number of shares of ~~common~~Common ~~stock~~Stock initially underlying the Convertible Senior Notes. The capped call transactions are expected to offset the potential dilution to the Company’s ~~common~~Common ~~stock~~Stock upon any conversion of Convertible Senior Notes, with such reduction and/or offset subject to a cap initially equal to $138.8750 per share.

The capped call transactions will expire on March 12, 2026. The capped call transactions are separate transactions and are not part of the terms of the Convertible Senior Notes.

The capped call transactions cover, subject to anti-dilution adjustments, approximately 11,622,176 shares of the Company’s ~~common~~Common ~~stock~~Stock. The capped call transactions are subject to either adjustment or termination upon the occurrence of specified extraordinary and disruption events affecting the Company.

The Convertible Senior Notes and capped call transactions consisted of the following balances reported in the consolidated balance sheet as of September 30, 2022 and December 31, 2021 ($ in millions):

	September 30, 2022	December 31, 2021
Liability component:
Principal	920.0	920.0
Less: debt issuance costs, net of amortization	(15.3)	(18.6)
Net carrying amount	904.7	901.4
Equity component recorded at issuance:
Capped call transactions	123.6	123.6

The Company recognized $1.1 million and $3.3 million related to the amortization of debt issuance and offering costs in interest expense, net on the consolidated statements of operations related to the Convertible Senior Notes for the three and nine-months ended September 30, 2022, respectively. The Company recognized $1.1 million and $2.4 million related to the amortization of debt issuance and offering costs in interest expense, net on the consolidated statements of operations related to the Convertible Senior Notes for the three and nine-months ended September 30, 2021, respectively. The effective interest rate for all periods was 0.49%.

NOTE 9. STOCK-BASED COMPENSATION

2020 Omnibus Incentive Plan

On August 5, 2020, the Company’s Board of Directors adopted the 2020 Omnibus Incentive Plan (the “2020 Plan,”). Under the 2020 Plan, employees, consultants and directors of the Company and our affiliates that perform services for us are eligible to receive awards. The 2020 Plan provides for the grant of incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), stock appreciation rights, restricted stock awards (“RSAs”), performance awards, other share-based awards (including restricted stock units (“RSUs”)) and other cash-based awards. The maximum number of shares available for issuance under the 2020 Plan may not exceed ~~the sum of (i) 33~~62,~~473~~590,~~410~~091 shares ~~and~~ (~~ii) 21,888,258 shares issued pursuant to restricted shares and the aggregate number of shares that may be issued pursuant to the rights granted under the ESPP may not exceed 2,386,875 shares,~~ subject to ~~adjustment in the event of a stock split, stock dividend or other change in our capitalization (subject to~~ annual increases as approved by the Board of Directors).

Stock Options Activity, excluding PSOs

Stock options granted by the Company generally vest over four years with 25% of the option shares vesting each year. Options generally expire ten years from the date of the grant.

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The following is a summary of stock option activity, excluding PSOs, as of and for the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023 ($ in millions):

	Number of Options	Weighted-Average Exercise Price		Weighted-Average RemainingContractual Term (Years)	Aggregate Intrinsic Value
Outstanding, December 31, 2021	14,945,566	$	21.89	8.61	$	177.2
Outstanding, December 31, 2022	15,532,081	$	21.28	7.73	$	15.2
Granted	~~1,829,910~~—	~~16.92~~—
Exercised	(~~560~~952,~~905~~273)	2120.0092
Cancelled	(~~442~~117,~~025~~167)	2324.7776
Outstanding, September 30, 2022	15,772,546	$	21.31	8.03	$	62.1
Outstanding, March 31, 2023	14,462,641	$	21.27	7.55	$	249.4
Options exercisable as of September 30, 2022	8,630,780	$	21.37	7.85	30.1
Options exercisable as of March 31, 2023	9,240,178	$	21.36	7.41	$	154.8

The aggregate intrinsic value of options exercised in each of the three-months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022 was $121.60 million, and $2(1.06) million ~~and $8.2 million in the nine-months ended September 30~~, ~~2022 and 2021,~~ respectively. Aggregate intrinsic value represents the difference between the exercise price of the option and the closing price of the Company’s ~~common~~Common ~~stock~~Stock on the date of exercise. The fair value of options granted for the three-months ended ~~September~~March 3031, 2022 ~~and 2021~~ was $012.95 million ~~and $0~~.4 ~~million,~~No ~~respectively,~~options ~~and~~were ~~$15.7~~granted ~~million~~during ~~and $9.6 million for~~ the ~~nine~~three-months ended ~~September~~March 3031, ~~2022 and 2021, respectively~~2023.

Performance Stock Options Activity

In February 2022, the Company granted PSOs to certain of its executives, with 50% of the option shares vesting at the end of year two and the remaining 50% of the option shares vesting at the end of year three, subject in each case to the satisfaction of certain performance-based conditions. The PSOs generally expire ten years from the date of the grant. The fair value of performance stock options granted for the ~~nine~~three-months ~~ended September~~March 3031, 2022 was $25.8 million. No performance stock options were granted during the three-months ended March 31, 2023.

The following is a summary of PSO activity as of and for the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023 ($ in millions):

	Number of Options	Weighted-Average Exercise Price		Weighted-Average RemainingContractual Term (Years)	Aggregate Intrinsic Value
Outstanding, December 31, 2021	—	$	—	—	$	—
Outstanding, December 31, 2022	4,356,234	$	17.45	8.95	$	19.0
Granted	~~3,300,505~~—	~~15.75~~—
Exercised	—	—
Cancelled	—	—
Adjustments	7,000	—
Outstanding, September 30, 2022	3,300,505	$	15.75	9.4	$	28.9
Cancelled	(18,000)	21.96
Options exercisable as of September 30, 2022	—	$	—	—	—
Outstanding, March 31, 2023	4,345,234	$	17.43	9.1	$	92.3
Options exercisable as of March 31, 2023	—	$	—	—	—

RSU Activity

RSUs granted generally vest ratably over four years. The following is a summary of RSU transactions as of and for the ~~nine~~ three-months ended ~~September~~March 3031, ~~2022~~2023:

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	Unvested Shares	Grant Date Fair Value
Unvested, December 31, 2021	476,628	$	47.30
Unvested, December 31, 2022	2,528,388	$	21.53
Granted	2,~~572~~747,~~673~~183	1733.6919
Vested	(~~149~~452,~~850~~824)	4019.3965
Canceled and forfeited	(~~281~~99,~~823~~991)	2120.9746
Unvested, September 30, 2022	2,617,628	$	21.59
Unvested, March 31, 2023	4,722,756	$	28.48

PSU Activity

The Company granted PSUs to certain of its employees during the second quarter of 2022 ~~with~~that ~~the~~vested ~~units vesting~~ in April 2023~~, subject in each case to the satisfaction of certain performance-based conditions~~. The following is a summary of PSU activity as of and for the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023:

	Unvested Shares	Grant Date Fair Value
Unvested, December 31, 2021	111,184	$	33.73
Unvested, December 31, 2022	538,213	$	28.03
Granted	~~455~~11,~~426~~663	~~23.66~~—
Vested	—(27,796)	—44.97
Canceled and forfeited	(519,~~705~~719)	2422.1713
Unvested, September 30, 2022	560,905	$	27.88
Unvested, March 31, 2023	502,361	$	44.97

RSA Activity

The RSAs were granted as part of the pre-IPO conversion. The following is a summary of RSA transactions as of and for the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023:

	Unvested Shares	Grant Date Fair Value
Unvested, December 31, 2021	16,090,990	$	14.71
Unvested, December 31, 2022	5,943,100	$	13.54
Granted	—	—
Vested	(9801,~~040,014~~201)	152.7334
Canceled and forfeited	(~~280~~58,~~956~~011)	1519.5797
Unvested, September 30, 2022	6,770,020	$	13.31
Unvested, March 31, 2023	5,083,888	$	15.31

Employee Stock Purchase Plan

On August 5, 2020, the Board of Directors adopted, and the OSH LLC’s and OSH MH LLC’s majority unitholders approved, the ~~2021~~2022 Employee Stock Purchase Plan (the “ESPP”). The ESPP is more fully described in Note 13 to the consolidated financial statements included in our ~~2021~~2022 Form 10-K.

During the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022, ~~224~~95,~~473~~207 shares and 6263,~~575~~284 shares, respectively, were purchased under the ESPP.

Stock-Based Compensation Expense

The following table is a summary of stock-based compensation expense by function ($ in millions):

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	Three-Months Ended September 30,				Nine-Months Ended September 30,
	Three-Months Ended March 31,
	2022		2021		2022		2021
	2023		2022
Cost of care, excluding depreciation and amortization	$	12.3	$	0.56	$	~~2.7~~	$	~~1.2~~
Sales and marketing	1.40		0.86		~~3.8~~		~~2.5~~
Corporate, general and administrative	2821.15		3738.42		~~113.5~~		~~118.2~~
Total	~~30.8~~$	24.8	~~38.7~~$	39.4	~~120.0~~		~~121.9~~

As of ~~September~~March 3031, ~~2022~~2023, the Company had approximately $98152.90 million in unrecognized compensation expense related to all non-vested awards (RSAs, ISOs, PSO, PSUs and RSUs) that will be recognized over the weighted-average period of 13.4407 years.

NOTE 10. COMMITMENTS AND CONTINGENCIES

Contingencies

The Company is presently, and from time to time, subject to various claims, investigations, suits and ~~lawsuits~~other legal proceedings arising in the ~~normal~~ordinary course of business. InThe Company currently believes that the ~~opinion~~outcomes of ~~management~~such proceedings, ~~the~~individually ~~ultimate~~and ~~resolution~~in ofthe ~~these~~aggregate, ~~matters~~ will not have a material adverse ~~effect~~impact on ~~the~~its ~~Company’s~~business, cash flows, financial position or results of operations. Any legal proceedings are subject to inherent uncertainties, and the Company’s view of these matters and its potential effects may change in the future. In accordance with applicable accounting standards, the Company establishes an accrued liability for loss contingencies related to legal and regulatory matters when the loss is both probable and reasonably estimable,

Uncertainties

The healthcare industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirements, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Recently, government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse ~~statutes~~statues and regulations by healthcare providers. Violations of these laws and regulations could result in expulsion from government healthcare programs together with imposition of significant fines and penalties, as well as significant repayments for patient services billed.

On November 1, 2021, the Company received a civil investigative demand (“CID”) from the United States Department of Justice. According to the CID, the Department of Justice is investigating whether the Company may have violated the False Claims Act, 31 U.S.C. §§ 3729-3722. The CID requests certain documents and information related to the Company’s relationships with third-party marketing agents and related to the Company’s provision of free transportation to federal health care beneficiaries and requests information and documents related to such matters. We are continuing to cooperate with the Department of Justice in response to the CID and believe we have complied with all of the current information requests. We are currently unable to predict the outcome of this investigation. Additionally, the Company cannot reasonably estimate the possible loss or ~~whether~~range ~~litigation~~of isloss ~~probable.~~that may result from this action. Regardless of the outcome, this inquiry has the potential to have an adverse impact on us due to any related defense and settlement costs, diversion of management resources and other factors.

On January 10, 2022, Reginald T. Allison, individually and on behalf of all others similarly situated, filed a putative class action lawsuit against the Company, Michael Pykosz, our Chief Executive Officer and also a member of our Board of Directors, and Timothy Cook, our Chief Financial Officer, in the United States District Court for the Northern District of Illinois (Case No. 1:22-cv-00149). On March 25, 2022, Central Pennsylvania Teamsters Pension Fund – Defined Benefit Plan, Central Pennsylvania Teamsters Pension Fund – Retirement Income Plan 1987, and Boston Retirement System (collectively, the “Northeast Pension Funds”) were appointed as the lead plaintiffs in the case. On May 25, 2022, the Northeast Pension Funds along with an additional named plaintiff, the City of Dearborn Police & Fire Revised Retirement System, filed their consolidated amended and restated complaint (the “Amended Complaint”), adding two of the Company's largest stockholders and members of the Company's Board of Directors as defendants.

OnPlaintiffs ~~March~~allege ~~25,~~that ~~2022,~~the ~~Central~~Company ~~Pennsylvania~~and ~~Teamsters~~certain ~~Pension~~of ~~Fund~~its –executive ~~Defined~~officers ~~Benefit~~made ~~Plan,~~false ~~Central~~and/or ~~Pennsylvania~~misleading ~~Teamsters~~statements ~~Pension~~about ~~Fund~~patient –acquisition ~~Retirement~~tactics ~~Income~~that ~~Plan~~purportedly ~~1987,~~violated ~~and~~the ~~Boston~~False ~~Retirement~~Claims ~~System’s~~Act ~~(collectively,~~and ~~the~~U.S. ~~“Northeast~~federal ~~Pension~~Anti-Kickback ~~Funds”)~~Statute, ~~were~~and ~~appointed~~are aspurportedly the ~~lead~~subject ~~plaintiffs~~of in the ~~case.~~CID Ondiscussed ~~May~~above. ~~25,~~The ~~2022,~~Amended ~~the~~Complaint ~~Northeast~~includes ~~Pension~~two ~~Funds~~categories ~~along~~of ~~with~~claims: an(1) ~~additional~~claims ~~named~~under ~~plaintiff,~~ the ~~City~~Securities Exchange Act of ~~Dearborn~~1934 ~~Police~~based &on ~~Fire~~allegedly ~~Revised~~misleading ~~Retirement~~public ~~System,~~statements ~~filed~~throughout ~~their~~the ~~consolidated~~class ~~amended~~period ~~and~~of ~~restated~~August ~~complaint~~6, 2020 through November 8, 2021 (the “~~Amended~~Exchange ~~Complaint~~Act Claims”)., and (2) claims under the Securities Act

Plaintiffs allege that the Company and certain of its executive officers made false and/or misleading statements about patient acquisition tactics that purportedly violated the False Claims Act and federal Anti-Kickback Statute, and are purportedly the subject of the CID discussed above. The Amended Complaint includes two categories of claims: (1) claims under the Securities Exchange Act of 1934 based on allegedly misleading public statements throughout the class period of August 6, 2020 through November 8, 2021 (the “Exchange Act Claims”), and (2) claims under the Securities Act of 1933 based on allegedly misleading statements in the registration statements and prospectuses accompanying Oak Street Health, Inc.’s initial public offering and secondary public offerings (the “Securities Act Claims”). The Exchange Act claims are asserted against Oak Street Health, Inc., Michael Pykosz, our CEO and Timothy Cook, our CFO, and also against certain stockholders of as “control persons.” The Securities Act Claims are asserted against the same defendants as well as the underwriters of the Company’s public offerings, and the Oak Street Health, Inc. directors who signed the registration statements. The Amended Complaint seeks damages, interest, costs, attorneys’ fees and other unspecified equitable relief.21

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Onof ~~July~~1933 ~~25,~~based ~~2022,~~on allegedly misleading statements in the ~~defendants~~registration ~~filed~~statements aand ~~consolidated~~prospectuses ~~motion~~accompanying tothe ~~dismiss~~IPO and secondary public offerings (the ~~Amended~~“Securities ~~Complaint~~Act Claims”). OnThe ~~September~~Exchange ~~26,~~Act ~~2022~~claims are asserted against the Company, Michael Pykosz and Timothy Cook and also against certain stockholders of as “control persons.” The Securities Act Claims are asserted against the ~~plaintiffs'~~same ~~opposition~~defendants toas ~~that~~well ~~motion~~as tothe ~~dismiss~~underwriters ~~was~~of ~~filed~~the Company’s public offerings, and the ~~defendants~~members ~~reply~~of toour ~~that~~Board ~~opposition~~of ~~was~~Directors ~~filed~~who onsigned ~~October~~the ~~26,~~registration ~~2022~~statements related to such public offerings. The ~~court~~Amended ~~will~~Complaint ~~now~~seeks ~~consider~~damages, ~~the~~interest, ~~motion~~costs, inattorneys’ ~~due~~fees ~~course.~~and other unspecified equitable relief.

On InJuly 25, 2022, the ~~event~~defendants ~~that~~filed a consolidated motion to dismiss the ~~defendants~~Amended Complaint. On September 26, 2022, the plaintiffs's opposition to that motion to dismiss iswas ~~not~~filed, ~~granted~~and the defendants reply to that opposition was filed on October 26, 2022. On February 10, 2023, the Court ruled on the motion to dismiss, granting the Company's' ~~intends~~motions to ~~continue~~dismiss with respect to ~~vigorously~~the ~~defend~~plaintiffs' ~~this~~section ~~matter.~~12(a)(2) ~~Given~~claim and section 11 claim based on misrepresentations from the ~~uncertainty~~May 2021 secondary public offering, and denying the remainder of ~~litigation~~the motion. Additionally, three stockholders, Joseph Miller, the ~~preliminary~~Hialeah ~~stage~~Employees' Retirement System and the Employees Retirement System of the ~~case~~City of St. Louis each filed, on November 7, 2022, January 5, 2023 and February 2, 2023, respectively, derivative actions in the ~~legal~~Delaware ~~standards~~Court ~~that~~of ~~must~~Chancery beagainst ~~met~~certain ~~for~~of ~~success~~our onofficers and each of the ~~merits~~members of our Board of Directors (collectively, “Defendants”) principally alleging breach of fiduciary duties and unjust enrichment. Generally, the ~~Company~~complaint ~~cannot~~in ~~estimate~~each derivative action concerns those Defendants’ duties relating to certain outreach practices the ~~reasonably~~Company allegedly ~~possible~~engaged ~~loss~~in orand ~~range~~its ofpatient ~~loss~~transportation program, which are also matters that ~~may~~are ~~result~~the ~~from~~subject ~~this~~of ~~action~~the CID. These cases have all been consolidated and stayed.

~~Management~~The ~~believes~~Company ~~that~~intends ~~the~~to ~~Company~~continue isto indefend ~~compliance~~these ~~with~~claims ~~fraud~~vigorously. ~~and~~Given ~~abuse~~the ~~laws~~uncertainty of litigation, asthe ~~well~~preliminary asstage ~~other~~of ~~applicable~~the ~~laws~~case, and ~~regulations.~~the ~~While~~legal nostandards ~~regulatory~~that ~~inquiries~~must ~~have~~be ~~been~~met ~~made,~~for ~~compliance~~success ~~with~~on ~~such~~the ~~laws~~merits, ~~and~~the ~~regulations~~Company iscannot ~~subject~~reasonably toestimate ~~government~~the ~~review~~possible ~~and~~loss ~~interpretation,~~or asrange ~~well~~of asloss ~~regulatory~~that ~~actions~~may ~~unknown~~result atfrom this ~~time~~action.

NOTE 11. VARIABLE INTEREST ENTITIES

The Physician Groups, or affiliated physician practice organizations, were established to employ healthcare providers, contract with managed care payors and to deliver healthcare services to patients in the markets that the Company serves.

The Company evaluated whether it has a variable interest in the Physician Groups, whether the Physician Groups are VIEs and whether the Company has a controlling financial interest in the Physician Groups. The Company concluded that it has variable interests in the Physician Groups on the basis of its Administrative Service Agreement (“ASA”) which provides for reimbursement of costs and a management fee payable to the Company from the Physician Groups in exchange for providing management and administrative services which creates risks and a potential return to the Company. The Physician Group’s equity at risk, as defined by U.S. GAAP, is insufficient to finance its activities without additional support, and, therefore, the Physician Groups are considered VIEs.

The tables below ~~illustrates~~illustrate the VIE assets and liabilities and performance for the Physician Groups as of and for the periods ended ($ in millions):

	September 30, 2022		December 31, 2021
	March 31, 2023		December 31, 2022
Total assets	$	~~945~~1,316.72	$	~~596~~1,002.20
Total liabilities	~~868~~1,140.26		~~564~~930.48

	Three-Months Ended September 30,				Nine-Months Ended September 30,
	Three-Months Ended March 31,
	2022		2021		2022		2021
	2023		2022
Total revenues	$	~~543~~749.36	$	~~350~~511.54	$	~~1,575.9~~	$	~~644.9~~
Medical claims expense	~~426~~522.31		~~283~~378.05		~~1,195.4~~		~~481.9~~
Cost of care	5568.50		3447.56		~~153.3~~		~~67.4~~
Total operating expenses	$	~~481~~590.81	$	~~317~~426.51	$	~~1,348.7~~	$	~~549.3~~

There are no restrictions on the Physician Groups’ assets or on the settlement of its liabilities. The assets of the Physician Groups can be used to settle obligations of the Company. The Physician Groups are included in the Company’s obligated group; thus, creditors of the Company have recourse to the assets owned by the Physician Groups. There are no liabilities for which creditors of the Physician Groups do not have recourse to the general credit of the Company. There are no restrictions placed on the retained earnings or net income of the Physician Groups with respect to potential dividend payments.

~~NOTE 12. RELATED PARTIES~~ 22

Humana

Humana held over 5% of our common stock during the year ended December 31, 2021. Additionally, a Humana representative served on the Board of Directors from 2020 until his retirement, effective September 7, 2021. Humana no longer has a representative on the Board of Directors as of September 7, 2021. Humana is no longer a related party for the year ending December 31, 2022, and as such, the Company has included prior year transaction amounts only on the consolidated balance sheet and consolidated statement of operations.

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~~During~~NOTE ~~the year ended December 31, 2021, our related party transactions with Humana included capitated managed care contracts, which resulted in capitated revenue and related receivables~~12. ~~Within~~NET ~~the~~LOSS ~~Company’s~~PER other revenue, revenues from Humana were included in both fee-for-service revenue and care coordination and care management revenue. The receivable associated with the fee-for-service revenue was recorded in other receivables. The unearned portion of the care coordination payments was recorded as a contract liability in both the current and long-term other liabilities accounts. The Company also incurred medical claims expense related to the Humana payor contracts which are included in medical claims expense. Related unpaid claims were included in the liability for unpaid claims financial statement caption. The Humana Alliance Provision contains an arrangement for a license fee that is payable by the Company to Humana for the Company’s provision of health care services in certain centers owned or leased by Humana. The license fee is a reimbursement to Humana for its costs of owning or leasing and maintaining the centers, including rental payments, center maintenance or repair expenses, equipment expenses, special assessments, cost of upgrades, taxes, leasehold improvements and other expenses identified by Humana. We will continue to have these transaction types with Humana during the year ended December 31, 2022, however, they are no longer considered related party transactions.SHARE

~~NOTE~~The ~~13.~~following ~~NET~~table ~~LOSS~~sets ~~PER~~forth ~~SHARE~~the computation of basic and diluted net loss per common share for the three-months ended March 31, 2023 and 2022 ($ in millions).

The following table sets forth the computation of basic and diluted net loss per common share for the three and nine-months ended September 30, 2022 and 2021 ($ in millions).


	Three-Months Ended March 31,
	2023		2022
Numerator:
Net loss	$	(44.2)	$	(96.7)
Less: Net income/(loss) attributable to non-controlling interests	1.3		(0.2)
Net loss attributable to Oak Street Health, Inc.	(45.5)		(96.5)
Denominator:
Weighted average common shares outstanding - basic and diluted	238,093,465		225,645,420
Net loss per share – basic and diluted	$	(0.19)	$	(0.43)

	Three-Months Ended September 30,				Nine-Months Ended September 30,
	2022		2021		2022		2021
Numerator:
Net loss	$	(130.4)	$	(110.0)	$	(375.3)	$	(274.3)
Less: Net income/(loss) attributable to non-controlling interests	0.3		(0.6)		0.9		(3.5)
Net loss attributable to Oak Street Health, Inc.	(130.7)		(109.4)		(376.2)		(270.8)
Denominator:
Weighted average common shares outstanding - basic and diluted	231,919,421		223,435,698		228,042,160		221,932,624
Net loss per share – basic and diluted	$	(0.56)	$	(0.49)	$	(1.65)	$	(1.22)

The Company’s potentially dilutive securities, which included stock options (including PSOs), unvested RSUs (including PSUs), unvested RSAs, and shares issuable upon conversion of our Convertible Senior Notes, have been excluded from the computation of diluted net loss per share as the effect would reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share was the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated:

	Nine-Months Ended September 30,
	Three-Months Ended March 31,
	2022	2021
	2023	2022
Stock options	1918,~~073~~807,~~051~~875	1419,~~999~~650,~~384~~785
RSUs	3,178,533	341,215
RSUs (including PSUs)	5,225,117	2,345,372
RSAs	65,~~770~~083,~~020~~888	1614,~~792~~966,~~134~~634
Convertible Senior Notes	11,622,176	11,622,176
	40,643,780	43,754,909
	40,739,056	48,584,967

~~ITEM~~NOTE 213. ~~MANAGEMENT’S~~ ~~DISCUSSION~~SUBSEQUENT ~~AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~EVENTS

~~The~~Loan following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. This discussion should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and the accompanying notes as well as the sections entitled “Risk Factors” and Amendment

28On April 4, 2023, the Company entered into an Amendment to the Loan Agreement dated September 30, 2022 with Hercules Capital, Inc. as administrative and collateral agent and lender (the “Agent”), and SVB and the other lenders from time to time parties thereto (collectively with Agent in its capacity as a lender, the “Lenders”).

Among other matters, the Amendment provided a waiver of any potential default under the Loan Agreement related to the Company’s movement of certain cash deposits between financial institutions in March 2023, which were made intentionally by the Company during the recent period of uncertainty surrounding SVB and its ability to continue operations. The Amendment provides that the Company may maintain cash in certain accounts outside of SVB and its affiliates in an aggregate amount not to exceed $65.0 million. We were in compliance with terms of the Amendment as of March 31, 2023.

Delisting and Deregistration

On May 2, 2023, the Merger, as described in Note 1, was consummated. Also, on May 2, 2023, the NYSE filed a notification of removal from listing on Form 25 with the SEC with respect to the delisting and deregistration of the Company’s Common Stock. Our shares of common stock ceased trading prior to the opening of the market on May 2, 2023, and are no longer listed on the NYSE. Accordingly, the Company is no longer a publicly traded company. In addition, on May 12, 2023, the Company intends to file with the SEC a Form 15, which, upon filing, will immediately suspend the reporting obligations of the Company under Sections 13(a) and 15(d) of the Exchange Act.

Treatment of Outstanding Debt in Connection with the Merger

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~~“Management’s~~At ~~Discussion~~the Effective Time, CVS Pharmacy repaid and ~~Analysis~~discharged ofin ~~Financial~~full ~~Condition~~the amount outstanding under the Term Loan Facility. All commitments and ~~Results~~obligations ofpursuant ~~Operations”~~to ~~included~~such indebtedness have been terminated in ~~our~~full ~~2021~~(other ~~Form~~than ~~10-K~~indemnities and other contingent obligations expressly meant to survive termination).

~~The~~On ~~discussion~~May ~~contains~~2, ~~forward-looking~~2023, ~~statements~~the ~~about~~Company entered into the ~~business~~first supplemental indenture to the Indenture (the “Supplemental Indenture”) pursuant to which the right to convert each $1,000 ~~operations~~principal ~~and~~amount ~~financial~~of ~~performance~~Convertible Senior Notes into shares of ~~the~~Common ~~Company~~Stock ~~based~~was onchanged ~~our~~to ~~current~~a ~~expectations~~right to convert such principal amount of Convertible Senior Notes into the Merger Consideration that ~~involves~~a ~~risks~~holder of a number of shares of Common Stock equal to the Conversion Rate (as defined in the Indenture) immediately prior to the Merger would have owned or been entitled to receive (the “Reference Property”), ~~uncertainties~~which ~~and~~Reference ~~assumptions~~Property will be cash in an amount equal to $492.6792 ~~Actual~~per ~~results~~$1,000 ~~could~~principal ~~differ~~amount ~~materially~~of ~~from~~Convertible ~~those~~Senior ~~discussed~~Notes, in oraccordance ~~implied~~with bythe ~~forward-looking~~Indenture, ~~statements~~at asany time from, and including, the date that the Merger became effective. In addition, the Merger constitutes a ~~result~~Fundamental Change (as defined in the Indenture) under the Indenture, giving the holders of ~~various~~the ~~factors~~Convertible Senior Notes the right to require the Company to repurchase their Convertible Senior Notes, ~~including~~subject ~~those~~to ~~discussed~~the ~~above~~terms and conditions of the therein. Pursuant to the Indenture, the repurchase price for the Convertible Senior Notes will be an amount in ~~“Forward-Looking~~cash ~~Statements~~equal to one hundred percent (100%) of the principal amount of the Convertible Senior Notes (or portions thereof) to be so repurchased,” plus accrued and unpaid Special Interest (as ~~well~~defined in the Indenture) thereon to, but excluding, the Fundamental Change Repurchase Date (as ~~those~~defined ~~discussed~~in ~~under~~the Indenture). At the ~~“Risk~~Effective ~~Factors”~~Time, ~~section~~the capped call transactions were terminated pursuant to the agreements between the Company and each of the bank counterparties to the capped call transactions, with each bank counterparty paying to the Company, on or about May 2, 2023, an amount in ~~our~~cash ~~2021~~as ~~Form~~agreed ~~10-K~~between the Company and such bank counterparty.

Treatment of Outstanding Equity-Based Awards in Connection with the Merger

Each outstanding and unexercised option to purchase shares of Common Stock (for the purposes of this Note 13, an “Option”) with an exercise price per share less than $39.00 that was vested prior to the Effective Time or that, as a result of the Merger, became vested, as of the Effective Time (with any performance conditions applicable to such Option determined in accordance with the applicable award agreement as of immediately prior to the Effective Time), was, at the Effective Time, automatically cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable tax withholdings) equal to the product of (i) the number of shares of Common Stock subject to such Option as of immediately prior to the Effective Time and (ii) the excess of $39.00 over the per share exercise price of such Option. At the Effective Time, each outstanding and unexercised Option with an exercise price per share equal to or greater than the $39.00, whether vested or unvested, was automatically cancelled for no consideration.

Each Option that was unvested at the Effective Time and not cancelled pursuant to the provisions described in the preceding paragraph was, at the Effective Time, automatically cancelled and converted into the contractual right to receive a payment in cash (without interest and subject to applicable tax withholdings) equal to the product of (i) the number of shares of Common Stock subject to such Option as of immediately prior to the Effective Time and (ii) the excess of $39.00 over the exercise price per share of such Option (each, a “Converted Option Cash Award”), and each Converted Option Cash Award was subject to the same terms and conditions (including applicable vesting provisions, but excluding exercise provisions) as applied to the corresponding Option immediately prior to the Effective Time and became payable in accordance with the original vesting schedule applicable to the corresponding Option, except that each Converted Option Cash Award provides that the unvested portion, if any, of such Converted Option Cash Award will immediately vest and become payable upon a termination of the holder’s employment or services without “cause” or a resignation by the holder for “good reason” that occurs within the 12-month period following the Effective Time.

Each Oak Street Health restricted stock award ("RSA") that was outstanding as of immediately prior to the Effective Time was, at the Effective Time, automatically assumed by CVS Pharmacy and converted into a corresponding CVS Health restricted stock award (each, an “Assumed RSA”) on the same terms and conditions (including applicable vesting and expiration provisions) as applied to each such RSA immediately prior to the Effective Time, except that each Assumed RSA covers a number of whole shares of CVS Health Common Stock equal to the product of (i) the number of shares of Common Stock underlying such Assumed RSA as of immediately prior to the Effective Time and (ii) the Equity Award Exchange Ratio (as defined below), and such Assumed RSA provides that the unvested portion, if any, of such Assumed RSA will immediately vest and settle upon a termination of the holder’s employment or services without “cause” or a resignation by the holder for “good reason” that occurs within the 12-month period following the Effective Time.

Each Oak Street Health restricted stock unit ("RSU") that was outstanding as of immediately prior to the Effective Time that was vested or, as a result of the Merger, became vested as of the Effective Time (in each case, with any performance conditions applicable to such RSU determined in accordance with the applicable award agreement as of immediately prior to the Effective Time), was, at the Effective Time, automatically cancelled and converted into the right to receive, an amount in cash (without interest and subject to applicable tax withholdings) equal to the product of (i) $39.00 and (ii) the number of shares of Common Stock subject to such RSU as of immediately prior to the Effective Time (a “Cash-Out RSU”).

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Each RSU granted on or after February 7, 2023 that was outstanding and unvested as of the Effective Time was, at the Effective Time, automatically assumed by CVS Pharmacy and converted into a corresponding CVS Health restricted stock unit award (each, an “Assumed RSU Award”) on the same terms and conditions (including applicable vesting and expiration provisions) as applied to each such RSU immediately prior to the Effective Time, except that each Assumed RSU Award covers a number of whole shares of CVS Health Common Stock equal to the product of (i) the number of shares of Oak Street Health Common Stock underlying such RSU as of immediately prior to the Effective Time and (ii) the Equity Award Exchange Ratio.

Each RSU (other than Cash-Out RSUs and RSUs granted on or after February 7, 2023) that was outstanding and unvested as of the Effective Time was, at the Effective Time, automatically cancelled and converted into the contractual right to receive a payment in an amount of cash (without interest and subject to applicable tax withholdings) equal to the product of (i) $39.00 and (ii) the total number of shares of Common Stock subject to such RSU as of immediately prior to the Effective Time (each, a “Converted RSU Cash Award”), and each Converted RSU Cash Award is subject to the same terms and conditions (including time-based vesting) as applied to such RSU immediately prior to the Effective Time and will become payable in accordance with the original vesting schedule applicable to the corresponding RSU, except that each Converted RSU Cash Award provides that the unvested portion, if any, of such Converted RSU Cash Award will immediately vest and become payable upon a termination of the holder’s employment or services without “cause” or a resignation by the holder for “good reason” that occurs within the 12-month period following the Effective Time.

The “Equity Award Exchange Ratio” means the quotient obtained by dividing (i) $39.00 by (ii) the volume weighted average closing sale price (rounded to the nearest cent) of one share of CVS Health Common Stock as reported on the NYSE as reported on Bloomberg L.P. under the function “VWAP” (or, if not reported therein, in another authoritative source mutually selected by the parties) for the 10 consecutive trading days ending on (and including) the date that is two trading days immediately preceding the Effective Time (as adjusted as appropriate to reflect any stock splits, stock dividends, combinations, reorganizations, reclassifications or similar events), rounded to the nearest 0.0001.

Pursuant to the Merger Agreement, Oak Street Health took all actions necessary pursuant to the terms of the ESPP to, among other things, ensure each purchase right issued pursuant to the ESPP was fully exercised on the earlier of (x) the scheduled purchase date for such offering period and (y) the date that is no later than five business days prior to the Effective Time (with any participant payroll deductions not applied to the purchase of shares of Oak Street Health Common Stock returned to the participant). The ESPP was terminated effective immediately prior to the Effective Time.

Assumed RSAs and Assumed RSUs

Pursuant to the Merger Agreement, on May 2, 2023 CVS Health filed a registration statement on Form S-8 with respect to the issuance of the shares of CVS Health Common Stock subject to the Assumed RSAs and Assumed RSU Awards that are eligible to be registered on Form S-8.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes as well as the section entitled “Risk Factors" included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and the accompanying notes as well as the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2022 Form 10-K.

The discussion contains forward-looking statements about the business, operations and financial performance of the Company based on our current expectations that involves risks, uncertainties and assumptions. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed above in “Forward-Looking Statements,” as well as those discussed under the “Risk Factors” section in this Quarterly Report on Form 10-Q and our 2022 Form 10-K.

This discussion and analysis does not reflect any changes that may become relevant as a result of the Merger and the Company becoming a wholly-owned subsidiary of CVS Health.

Business Overview

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Oak Street Health, Inc. (collectively referred to as “Oak Street Health,” “OSH,” “we,” “us,” “our” or the “Company”) was formed as a Delaware corporation on October 22, 2019 for the purpose of completing a public offering and related restructuring transactions (collectively referred to as the “IPO”) in order to carry on the business of Oak Street Health, LLC (“OSH LLC”) and its affiliates. As the managing member of OSH LLC, Oak Street Health, Inc. operates and controls all of the business affairs of OSH LLC and its affiliates. Prior to May 2, 2023, our Common Stock traded on the NYSE under the ticker symbol “OSH.” On May 2, 2023, the NYSE filed a notification of removal from listing on Form 25 with the SEC with respect to the delisting and deregistration of the Company’s Common Stock. Our shares of Common Stock ceased trading prior to the opening of the market on May 2, 2023 and is no longer listed on the NYSE.

Oak Street Health was designed to provide and manage Medicare-eligible patients’ total healthcare through capitated, value-based arrangements. We created a new care platform because the then-existing primary care infrastructure was not built with the capacity to drive the significant improvements in cost and quality the current health system needs. We decided to focus on the Medicare market due to its size, growth tailwinds and largely clinically cohesive population. We designed our platform to take risk in managing patients’ health below an agreed-upon baseline cost because we believed there was a meaningful opportunity to produce system-wide cost savings by changing where and how patients’ healthcare is delivered. Our platform’s design has included investments in technology and patient-centered, community-based care delivery to create a different and, we believe, better approach to addressing the needs of high-risk Medicare-eligible patients.

As of ~~September~~March 3031, ~~2022~~2023, the Company operated ~~161~~172 centers across 2021 states, which provided care for approximately ~~209~~231,~~500~~000 patients. We, together with our affiliated physician practice organizations, employ approximately 56,~~900~~200 team members, including approximately 600 primary care providers. Our operations are organized and reported under one segment.

Merger with CVS Health

On February 7, 2023, the Company entered into the Merger Agreement with an indirect wholly owned subsidiary of CVS Pharmacy, pursuant to which (and subject to the terms and conditions in the Merger Agreement) such subsidiary of CVS Pharmacy will acquire all of the outstanding shares of the Company’s Common Stock in an all-cash transaction, representing an enterprise value of approximately $10.6 billion, structured as a merger of an indirect wholly-owned subsidiary of CVS Pharmacy with and into the Company, with the Company continuing as the surviving corporation.

At the Effective Time, by virtue of the Merger, each share of our shares of Common Stock issued and outstanding immediately prior to the Effective Time was automatically cancelled, extinguished and converted into the right to receive the Merger Consideration, without interest and less any applicable withholding taxes. In connection with the Merger, the NYSE filed a Form 25 with the SEC regarding the removal of shares of our Common Stock from listing and the withdrawal of the registration of our Common Stock under Section 12(b) of the Exchange Act. Shares of the Company’s Common Stock were suspended from trading on the NYSE prior to the opening of trading on May 2, 2023. The Company intends to file, on May 12, 2023, with the SEC a Form 15, which will immediately suspend the Company's reporting obligations under Sections 13 and 15(d) of the Exchange Act. Accordingly, as a result of the Merger, the Company became an indirect wholly-owned subsidiary of CVS Pharmacy, and as of the Effective Time, the Company no longer existed as a standalone public company.

COVID-19 Update on our Business

On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. The rapid spread of COVID-19 around the world and throughout the United States ~~has~~ altered the behavior of businesses and people~~, with significant negative effects on federal, state and local economies, the duration of which is unknown at this time~~. Various policies were implemented by federal, state and local governments in response to the COVID-19 pandemic that caused many people to remain at home and forced the closure of or limitations on certain businesses, as well as suspended elective procedures by health care facilities. The on-going COVID-19 global pandemic disproportionately impacts older adults, especially those with chronic illnesses, which describes many of our patients.

The COVID-19 pandemic has impacted both our per-patient capitated revenue and medical claims expense. Throughout the pandemic, our risk scores for existing Oak Street Health patients have been consistent with our historical experience. New patients in 2021 had lower risk scores than what we would expect based on historical experience, due to a lack of availability of care in 2020 as the healthcare system was inaccessible to non-Oak Street Health patients for several months in 2020 because of local COVID-19 restrictions. As we are able to more completely and accurately document both current and new patients’ health conditions, we expect that risk scores will increase to reflect the true severity of these patients’ conditions, which we would further expect to result in increased revenue for our 2022 fiscal year. It is unknown to us at present how significantly, if at all, this new patient risk score dynamic might impact our business during the full 2022 fiscal year.

As we are financially responsible for essentially all of the healthcare costs associated with our at-risk patients whether we provide that care or a third party provides that care, we suspect that the healthcare costs of patients infected with COVID-19 will be greater than had COVID-19 not occurred. It is impossible, however, to know what other healthcare issues these patients may have encountered in their pre-COVID-19 lives and whether the COVID-19 costs are, or will be, greater or lesser than the costs these patients would otherwise incur. Because of the COVID-19 related volatility in medical cost data in 2020 and 2021 and the surge in COVID-19 cases at the end of 2021 and beginning of 2022, we do not believe 26

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~~that~~current ~~these~~and ~~periods~~new ~~can~~patients’ ~~serve~~health asconditions, awe ~~reliable~~expect ~~basis~~that ~~for~~risk ~~estimating~~scores ~~our~~will ~~future~~increase ~~performance~~to ~~and~~reflect ~~do not know what~~ the ~~impact~~true ~~from~~severity ~~COVID-19~~of ~~will~~these bepatients’ ~~on medical costs in the future~~conditions. ~~Given~~It ~~these~~is ~~factors,~~unknown ~~per-patient~~to ~~medical~~us ~~costs~~at ~~may~~present behow ~~greater~~significantly, ~~for~~if ~~the~~at ~~full 2022 fiscal year than the levels we experienced in our recent historical results. We do believe~~all, ~~however,~~this ~~that~~new ~~the impact of on per-~~patient ~~revenue~~risk ~~and~~score ~~medical~~dynamic ~~claims~~might ~~related~~impact ~~to COVID-19 that we expect to experience will not have a materially detrimental effect on~~ our ~~long-term~~business ~~financial performance~~ in ~~future periods~~2023.

~~The~~As ~~COVID-19~~we ~~pandemic~~are ~~had~~financially anresponsible ~~impact~~for onessentially ~~our~~all ~~results~~of ~~from~~the ~~operations,~~healthcare ~~cash~~costs ~~flows~~associated ~~and~~with ~~financial~~our ~~position~~at-risk ~~for~~patients ~~the~~whether ~~nine-months~~we ~~ended~~provide ~~September 30,~~that ~~2022,~~care ~~primarily~~or as a ~~result~~third ofparty anprovides ~~increase~~that incare, ~~cases~~we insuspect ~~early~~that ~~2022~~the ~~due~~healthcare tocosts ~~the~~of ~~Omicron~~patients ~~variant.~~infected ~~Based~~with ~~upon~~COVID-19 ~~claims~~will ~~paid~~be togreater than had COVID-19 ~~date,~~not ~~our~~occurred ~~direct~~as costs directly related to COVID-19 ~~claims~~persist. ~~were~~It ~~approximately~~is ~~$89.3~~impossible, ~~million~~however, ~~for~~to ~~the~~know ~~period~~what ~~from~~other ~~March~~healthcare 1,issues ~~2020~~these ~~through~~patients ~~September 30,~~may ~~2022.~~have Weencountered ~~estimated~~in ~~that~~their ~~total~~ pre-COVID-19 ~~claims~~lives ~~incurred~~and ~~during~~whether the ~~nine~~COVID-~~months~~19 ~~ended~~costs ~~September 30~~are, ~~2022~~or ~~were~~will ~~approximately~~be, ~~$21.2~~greater ~~million,~~or ~~which~~lesser ~~was~~than ~~comparable~~the tocosts ~~our~~these ~~direct~~patients would otherwise incur. Because of the COVID-19 ~~claims~~related ofvolatility ~~$18.9~~in ~~million~~medical ~~for~~cost data in 2020 and 2021 and the ~~nine~~surge in COVID-~~months~~19 ~~September 30,~~cases at the end of 2021 and the first half of 2022., Wewe ~~expect~~do tonot ~~incur~~believe ~~additional~~that these periods can serve as a reliable basis for estimating our future performance and do not know what the impact from COVID-19 ~~related~~will be on medical costs ~~given~~in the ~~volume~~future. ofGiven ~~positive~~these ~~cases~~factors, per-patient medical costs may be greater in 2023 than the levels we experienced in our ~~markets~~recent historical results. ~~Due~~We todo believe, however, that the ~~uncertainty~~impact of ~~COVID~~on per-19patient ~~infection~~revenue and ~~hospitalization~~medical ~~rates,~~claims related to COVID-19 that we ~~cannot~~expect ~~estimate~~to ~~any~~experience ~~incremental~~will ~~COVID-19~~not ~~related~~have ~~costs~~a wematerially ~~may~~detrimental ~~incur~~effect on our long-term financial performance in future periods.

The COVID-19 pandemic did not have a material impact on our results from operations, cash flows and financial position for the three-months ended March 31, 2023. The COVID-19 pandemic had an impact on our results from operations, cash flows and financial position for the three-months ended March 31, 2022, primarily as a result of an increase in cases in early 2022 due to the Omicron variant. Based upon claims paid to- date, our direct costs related to COVID-19 claims were approximately $102.5 million for the period from March 1, 2020 through March 31, 2023. We estimated that total COVID-19 claims incurred during the three-months ended March 31, 2023 were approximately $2.1 million, which represents a decrease from our direct COVID-19 claims of $10.0 million for the three-months March 31, 2022. Due to the uncertainty of COVID-19 infection and hospitalization rates, we cannot estimate any incremental COVID-19 related costs we may incur in future periods.

We will continue to closely monitor the COVID-19 pandemic and its continued impact on our patients and prospective patients and our business. The ongoing effects of the pandemic, as well as the extent and significance of any future variants, remain unresolved and could continue for an extended period of time. Even as the COVID-19 pandemic subsides, disruptions caused by the pandemic, including labor shortages, supply chain disruptions, and inflationary pressures, may continue and could, in turn, have a negative impact on the Company. Further, recurring COVID-19 outbreaks, including outbreaks caused by different virus variants, could have the potential to impact the Company and its future results of operations, cash flows and financial position.

The full extent to which the COVID-19 pandemic has and will continue to directly or indirectly impact our business, future results of operations and financial condition will depend on factors that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 including the impact of new variants of the virus, the actions taken to contain it or treat its impact and the economic impact on our markets. Such factors include, but are not limited to, the scope and duration of stay-at-home practices and business closures and restrictions, rate and effectiveness of vaccinations in the U.S., government-imposed or recommended suspensions of elective procedures, and expenses required for supplies and personal protective equipment. Because of these and other uncertainties, we cannot estimate the length or severity of the impact of the pandemic on our business. Furthermore, because of our business model, the full impact of the COVID-19 pandemic may not be fully reflected in our results of operations and overall financial condition until future periods. We will continue to closely evaluate and monitor the nature and extent of these potential impacts to our business, results of operations and liquidity.

~~For~~The ~~additional~~US ~~information~~Department of Health and Human Services has announced that the coronavirus public health emergency will conclude on May 11, 2023. As part of the ~~various~~continuous ~~risks~~coverage ~~posed~~requirement, byas part of the ~~COVID-19~~public ~~pandemic~~health emergency, ~~please~~Medicaid ~~see~~recipients were neither disenrolled, nor required to complete the ~~“Risk~~annual ~~Factors”~~redetermination ~~section~~process ~~included~~that inis ~~our~~typically ~~2021~~necessary ~~Form~~to ~~10-K~~verify ongoing eligibility. The Medicaid redetermination process restarted on April 1, 2023.

For additional information on the various risks posed by the COVID-19 pandemic, please see the “Risk Factors” section included in our 2022 Form 10-K.

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Key Factors Affecting Our Performance

~~•Adding~~The ~~New~~following ~~Patients~~are inthe ~~Existing~~key ~~Centers:~~factors ~~Our~~that ~~ability~~have tohistorically ~~add~~affected ~~new patients is a key indicator of~~ the ~~market~~Company’s ~~recognition~~performance. ofFollowing the ~~attractiveness~~Merger, ofthese ~~the~~factors ~~Oak~~will ~~Street~~continue ~~Platform, both~~ to ~~our~~be ~~patients~~important ~~and Medicare Advantage ("MA") plan partners~~considerations, ~~and~~but athe key ~~growth~~factors ~~driver~~impacting ~~for~~ the ~~business.~~Company Aswill wechange ~~add~~and patients to our existing centers, we expect these patients to contribute significant incremental economics to Oak Street Health as we leverage our fixed cost base at each center. We grow our patient base through our own internal outreach efforts, which drive most of our new ~~patient~~factors ~~growth,~~will asbecome ~~well~~relevant as ~~assignments~~the ~~from~~Company ~~our~~becomes MAintegrated ~~plan~~within ~~partners.~~the WeCVS ~~grew~~Health ~~our patient base from approximately 131,500 patients as of September 30, 2021 to approximately 209,500 as of September 30, 2022~~organization.

•~~Expand~~Adding ~~our~~New ~~Center~~Patients ~~Base~~in ~~within~~ Existing ~~and New Markets~~Centers: WeOur ~~believe~~ability ~~our~~to ~~core~~add ~~market~~new ~~consists~~patients ofis ~~approximately~~a 27key ~~million~~indicator ~~patients,~~of ~~and~~the wemarket’s ~~served~~recognition ~~approximately~~of ~~209,500~~the ~~patients~~attractiveness as of ~~September 30,~~the ~~2022.~~Oak AsStreet ~~a result~~Platform, weboth ~~believe there is significant opportunity~~ to ~~expand~~our inpatients ~~our~~and ~~existing~~Medicare ~~markets~~Advantage ~~through~~("MA") ~~the~~plan ~~acquisition~~partners. ofAs ~~new~~we add patients to our existing centers, ~~and~~we ~~addition~~expect ~~of new centers. For the long term,~~ these ~~strategically~~patients ~~developed~~to ~~new~~contribute ~~sites~~incremental ~~allow~~economics us to ~~access~~Oak ~~additional~~Street ~~neighborhoods~~Health ~~while~~as ~~leveraging~~we leverage our ~~established~~fixed ~~brand~~cost ~~and~~base ~~infrastructure~~at ineach ~~a market~~center. ~~Our~~We ~~existing~~grow ~~markets~~our ~~today~~patient ~~represent~~base athrough ~~small~~our ~~fraction~~own ofinternal ~~the~~sales ~~overall~~and ~~market~~marketing ~~opportunity.~~efforts ~~Based~~as ~~upon~~well as assignments from our ~~experience~~MA toplan ~~date,~~partners. weWe ~~believe~~grew our ~~care~~patient ~~model~~base ~~can~~from ~~scale~~approximately ~~nationally~~175,000 ~~and~~patients weas ~~therefore~~of ~~expect~~March 31, 2022 to ~~selectively~~approximately ~~and~~231,000 ~~strategically~~as ~~expand~~of ~~into~~March 31, ~~new geographies~~2023.

30•Expand our Center Base within Existing and New Markets: We served approximately 231,000 patients as of March 31, 2023. We believe there is opportunity to expand in our existing markets through the acquisition of new patients to existing centers and addition of new centers.

•Contract with Payors: Our economic model relies on our capitated arrangements with payors and CMS, which manage and market MA plans across the United States. These existing contracts and relationships and our payors’ understanding of the value of our model reduces the risk of entering into new markets as we typically have payor contracts before entering a new market. Maintaining, supporting, and growing these relationships, particularly as we enter new geographies, is critical to our long-term success.

•Center-Level Contribution Margin: Due to the significant fixed costs associated with operating and managing our centers and the increases we experience in patient contribution on a per-patient basis the longer a patient is part of the Oak Street Platform, we generate significantly better center-level contribution margins (defined as (i) total revenues generated within our centers, excluding Medicare Part D revenue minus (ii) the sum of (a) medical claims expense, excluding Medicare Part D related expenses, and (b) cost of care, excluding depreciation and amortization) as the patient base within our centers increases and matures and our costs decrease as a percent of revenue. As a result, the value of a center to our business increases over time. As we add patients and document their health conditions, we are able to more accurately assess risk scores. We expect close monitoring will result in higher risk scores, which will yield higher revenue from increased capitated payments.

•Seasonality to our Business: Our operational and financial results, including at-risk patient growth, per-patient revenue, and medical costs, will experience some variability depending upon the time of year in which they are measured. We typically experience the largest portion of our at-risk patient growth during the first quarter, when plan enrollment selections made during the prior Annual Enrollment Period (“AEP”) from October 15th through December 7th of the prior year take effect. Our per-patient revenue will generally decline over the course of the year. As the year progresses, our per-patient revenue declines as new patients join us typically with less complete or accurate documentation (and therefore lower risk-adjustment scores) and our attrition skews towards our higher-risk (and therefore greater revenue) patients. Finally, medical costs will vary seasonally depending on a number of factors, including the weather which can be a driver of certain illnesses, such as the influenza virus. We would

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~~Additionally,~~therefore weexpect ~~began participating in the Global and Direct Contracting Model as of April 1, 2021, which we are hopeful will allow us~~ to ~~manage~~see ~~existing~~higher ~~fee-for-service~~levels (“FFS”) patients on an at-risk basis. The Direct Contracting Model and the Accountable Care Organization Realizing Equity, Access and Community Health ("ACO REACH") model, as its successor, create new opportunities for the Centers for Medicare & Medicaid Services ("CMS") to test an array of ~~financial risk~~per-~~sharing~~patient ~~arrangements~~medical costs in the ~~traditional~~fourth ~~Medicare~~quarter. ~~fee-for-service~~Medical ~~population,~~costs ~~and~~also itdepend ~~will~~upon ~~enable us to assume financial risk for~~ the ~~cost~~number of ~~care~~business ~~for~~days ~~some patients covered by traditional Medicare. Through the Direct Contracting model, CMS aims to transform risk-sharing arrangements~~ in ~~Medicare~~a ~~FFS,~~period ~~empower~~as ~~and~~periods engage beneficiaries (or patients or members) in their own care delivery, broaden participation in CMS Innovation Center models, reduce provider burden and shift providers from FFS to value-based payments in primary care. The stated goals of the ACO REACH model are to advance health equity to bring benefits of accountable care to underserved communities, promote provider leadership and governance, and protect beneficiaries and the model with ~~more~~fewer ~~participant~~business ~~vetting,~~days ~~monitoring and greater transparency. There can be no assurances, however, that these or any other payment models that align with our strategy and investments~~ will behave ~~continued~~lower ormedical ~~changed~~costs inall ~~ways~~else ~~that could be disadvantageous to our business~~equal.

•Contract with Payors: Our economic model relies on our capitated arrangements with payors and CMS, which manage and market MA plans across the United States. In our short history, we have been able to establish strategic value-based relationships with over 30 different payors, including each of the top 5 national payors by number of MA patients. These existing contracts and relationships and our payors’ understanding of the value of our model reduces the risk of entering into new markets as we typically have payor contracts before entering a new market. Maintaining, supporting, and growing these relationships, particularly as we enter new geographies, is critical to our long-term success.

•Effectively Manage the Cost of Care for Our Patients: The capitated nature of our contracts with payors requires us to prudently manage the medical expense of our patients. Our care model focuses on leveraging the primary care setting as a means of avoiding costly downstream healthcare costs, such as acute hospital admissions. Our patients, however, retain the freedom to seek care at emergency rooms or hospitals; we do not restrict their access to care beyond the limits of their MA plan, although we have developed many capabilities to manage and control the associated costs of this care. Therefore, we are liable for potentially large medical claims should we not effectively manage our patients’ health. On October 20, 2021, we acquired RubiconMD Holdings, Inc. ("RMD"), a leading technology platform in New York providing access to specialist expertise. The acquisition enables Oak Street Health to integrate virtual specialty care into its existing care model, which is expected to significantly streamline the referral process and better manage costs, enhance patient experience and provide comprehensive care far beyond traditional primary care.

•Center-Level Contribution Margin: We endeavor to expand our number of centers and number of patients at each center over time. Due to the significant fixed costs associated with operating and managing our centers and the increases we experience in patient contribution on a per-patient basis the longer a patient is part of the Oak Street Platform, we generate significantly better center-level contribution margins (defined as (i) patient revenue, excluding Medicare Part D revenue minus (ii) the sum of (a) medical claims expense, excluding Medicare Part D related expenses, and (b) cost of care, excluding depreciation and amortization) as the patient base within our centers increases and matures and our costs decrease as a percent of revenue. As a result, the value of a center to our business increases over time.

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the first quarter, when plan enrollment selections made during the prior Annual Enrollment Period (“AEP”) from October 15th through December 7th of the prior year take effect. Our per-patient revenue will generally decline over the course of the year. As the year progresses, our per-patient revenue declines as new patients join us typically with less complete or accurate documentation (and therefore lower risk-adjustment scores) and our attrition skews towards our higher-risk (and therefore greater revenue) patients. Finally, medical costs will vary seasonally depending on a number of factors, including the weather which can be a driver of certain illnesses, such as the influenza virus. We would therefore expect to see higher levels of per-patient medical costs in the first and fourth quarters. Medical costs also depend upon the number of business days in a period as periods with fewer business days will have lower medical costs all else equal.

•Investments in Growth: We expect to continue to focus on long-term growth through investments in our centers, care model and sales and marketing. In addition, we expect our corporate, general and administrative expenses to increase in absolute dollars for the foreseeable future to support our growth and because of the additional costs of being a public company.

Executive Summary

The following table presents key financial statistics for the three ~~and nine~~-months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022:

	Three-Months Ended September 30,				Nine-Months Ended September 30,
	Three-Months Ended March 31,
(dollars in millions)	~~2022~~2023		~~2021~~2022		~~2022~~		~~2021~~
Centers	~~161~~172		~~110~~140		~~161~~		~~110~~
Total patients	~~209~~231,~~500~~000		~~131~~175,~~500~~000		~~209,500~~		~~131,500~~
At-risk	~~145~~177,000		~~100~~124,~~500~~000		~~145,000~~		~~100,500~~
Fee-for-service	6454,~~500~~000		3151,000		~~64,500~~		~~31,000~~
Total revenues	$	~~545~~752.70	$	~~388~~513.78	$	~~1,583.2~~	$	~~1,038.5~~
Loss from operations1	$	(~~130~~43.24)	$	(~~109~~91.41)	$	~~(333.9)~~	$	~~(272.5)~~
Net loss1	$	(~~130~~44.42)	$	(~~110~~96.07)	$	~~(375.3)~~	$	~~(274.3)~~
Platform contribution (Non-GAAP)2	$	6.0	$	3.1	$	79.9	$	45.2
Patient contribution (Non-GAAP)2	$	219.7	$	126.7
Patient contribution (Non-GAAP)2	$	110.5	$	66.9	$	361.7	$	223.7
Platform contribution (Non-GAAP)2	$	101.6	$	39.8
Adjusted EBITDA (Non-GAAP)2	$	~~(88~~0.3)5	$	(6442.4)	$	~~(183.7)~~	$	~~(135.3)~~

_______________________________________

1Includes stock-based compensation expense as shown in the table in the Results of Operations section below.

2See “Non-GAAP Reconciliations” below for reconciliations to the most directly comparable financial measures calculated in accordance with GAAP and related disclosures.

Centers

We define our centers as those primary care centers open for business and attending to patients at the end of a particular period. Our centers are leased or licensed by Oak Street Health MSO, LLC or an affiliated entity and, pursuant to the terms of certain contractual relationships between Oak Street Health MSO, LLC and our affiliated medical practices, made available for use by the medical practices in the provision of primary care services.

Total Patients

Total patients includes both at-risk MA and ~~Direct~~ACO ~~Contracting~~Reach patients (those patients for whom we are financially responsible for their total healthcare costs) as well as fee-for-service Medicare patients (those patients for whom our affiliated medical groups submit claims to the federal government for direct reimbursement under the Medicare program or to MA plans with which we do not have value-based arrangements). We define our total at-risk patients as at-risk patients who have selected one of our affiliated medical groups as their provider of primary care medical services asor ofhave ~~the~~been ~~end~~aligned ofunder athe ~~particular~~ACO ~~period~~Reach orprogram ~~have~~as ~~been~~of ~~aligned~~the ~~under~~end ~~the~~of ~~Direct~~a ~~Contracting~~particular ~~program~~period. We define our total fee-for-service Medicare patients as fee-for-service Medicare patients who come to one of our centers for medical care at least once per year. A fee-for-service patient continues to be included in our patient count until the earlier to occur of (a) more than one year since the patient’s last visit, (b) the patient communicates a desire to stop receiving care from us or (c) the patient passes away.

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for-service patient continues to be included in our patient count until the earlier to occur of (a) more than one year since the patient’s last visit, (b) the patient communicates a desire to stop receiving care from us or (c) the patient passes away.

Non-GAAP Financial Measures

We utilize certain financial measures that are not calculated based on GAAP. Certain of these financial measures are considered “non-GAAP” financial measures within the meaning of Item 10 of Regulation S-K promulgated by the SEC. We believe that non-GAAP financial measures provide an additional way of viewing aspects of our operations that, when viewed with the GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business. These non-GAAP financial measures are also used by our management to evaluate financial results and to plan and forecast future periods. However, non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Non-GAAP financial measures used by us may differ from the non-GAAP financial measures used by other companies, including our competitors.

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To supplement our consolidated financial statements presented on a GAAP basis, we disclose the following non-GAAP financial measures: patient contribution, platform contribution and adjusted EBITDA as these are performance measures that our management uses to assess our operating performance. Because patient contribution, platform contribution and adjusted EBITDA facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes and in evaluating acquisition opportunities.

Patient and platform contributions are reconciled to gross profit as the most directly comparable GAAP measure as set forth in the below tables under “Non-GAAP Reconciliations.” Gross profit is defined as total revenues less medical claims expense. Adjusted EBITDA is reconciled to net loss as the most directly comparable GAAP measure as set forth in the below table under “Non-GAAP Reconciliations.”

Our definitions of patient contribution, platform contribution and adjusted EBITDA may differ from the definition used by other companies and therefore comparability may be limited. In addition, other companies may not publish this or similar metrics. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP, such as ~~net~~gross ~~loss~~profit and ~~loss~~net ~~from operations~~loss.

We provide investors and other users of our financial information with reconciliations of patient contribution, platform contribution and adjusted EBITDA to loss from operations and net loss, respectively. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view patient contribution, platform contribution and adjusted EBITDA in conjunction with ~~loss~~gross ~~from~~profit ~~operations~~ and net loss, respectively.

Patient Contribution

We define patient contribution as capitated revenue less medical claims expense. Patient contribution is intended to isolate the profitability of the Company's capitation arrangements with our health plan payors and/or CMS for which the Company provides and/or manages healthcare services for its at-risk patients. We expect that patient contribution will grow year-over-year in absolute dollars as our at-risk patient base continues to grow. We would also expect that our patient contribution per-patient-per-month economics on our at-risk patients will continue to improve the longer our patients are part of the Oak Street Platform as we better understand their health conditions and the patients better engage with our care model. We would expect, however, that our aggregate patient contribution per-patient-per-month economics on our at-risk patients may decrease at an aggregate level to the extent our patient growth skews our mix of patients towards patients newer to the Oak Street Platform. We would also expect to experience seasonality in patient contribution per-patient-per-month with the first quarter generally generating the greatest patient contribution per-patient-per-month, decreasing for the rest of the year. This seasonality is primarily driven by our adding new patients to the Oak Street Platform throughout the year, who generally have lower per-patient capitated revenue compared to our existing patient base.

We would also expect to experience seasonality in patient contribution per-patient-per-month with the first quarter generally generating the greatest patient contribution per-patient-per-month, decreasing for the rest of the year. This seasonality is primarily driven by our adding new patients to the Oak Street Platform throughout the year, who generally have lower per-patient capitated revenue compared to our existing patient base.

Platform Contribution

We define platform contribution as total revenues less the sum of medical claims expense and cost of care, excluding depreciation and amortization and stock-based compensation. We believe this metric best reflects the economics or overall profit margin of our care model and related centers as it includes all medical claims expense associated with our patients’ care as well as the costs we incur to care for our patients via the Oak Street Platform. As a center matures, we expect the platform contribution from that center to increase both in terms of absolute dollars as well as a percent of capitated revenue. This increase will be driven by improving patient contribution economics over time as well as our ability to generate operating leverage on the costs of our centers. Our aggregate platform contribution may not increase despite improving economics at our existing centers should we open new centers at a pace that skews our mix of centers towards newer centers. We would expect to experience seasonality in platform contribution due to seasonality in our patient contribution.

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expect the platform contribution from that center to increase both in terms of absolute dollars as well as a percent of capitated revenue. This increase will be driven by improving patient contribution economics over time as well as our ability to generate operating leverage on the costs of our centers. Our aggregate platform contribution may not increase despite improving economics at our existing centers should we open new centers at a pace that skews our mix of centers towards newer centers. We would expect to experience seasonality in platform contribution due to seasonality in our patient contribution.

Adjusted EBITDA

We define adjusted EBITDA as net loss excluding interest expense, ~~and~~net; other income (expense),; income taxes,; fair value adjustments related to assets and liabilities recorded in purchase accounting such as earn-out liabilities and intangibles and related to impairment of ~~equity~~such investments,; depreciation and amortization,; transaction/offering costs,; one-time in nature litigation costs and stock-based compensation. We include adjusted EBITDA in this Quarterly Report on Form 10-Q because it is an important measure upon which our management assesses and believes investors should assess our operating performance. We also consider adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis.

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Results of Operations

The following tables set forth our results of operations for the periods presented and as a percentage of our total revenues for those periods.

	Three-Months Ended September 30,						Nine-Months Ended September 30,
	Three-Months Ended March 31,
(dollars in millions)	~~2022~~2023		~~2021~~2022		% Change		~~2022~~		~~2021~~		~~% Change~~
Revenues:
Capitated revenue	$	~~537~~743.92	$	~~376~~506.71	4347	%	$	~~1,560.1~~	$	~~1,014.6~~	54	%
Other revenue	$	78.8	$	127.07	~~(35)~~14	%	$	~~23.1~~	$	~~23.9~~	~~(3)~~	%
Total revenues	$	~~545~~752.70	$	~~388~~513.78	4046	%	$	~~1,583.2~~	$	~~1,038.5~~	52	%
Operating expenses:
Medical claims expense	$	~~427~~523.45	$	~~309~~379.84	38	%	$	~~1,198.4~~	$	~~790.9~~	52	%
Cost of care, excluding depreciation and amortization (1)	$	~~113~~129.62	$	7695.32	4936	%	$	~~307.6~~	$	~~203.6~~	51	%
Sales and marketing (2)	$	4442.13	$	3033.58	4526	%	$	~~120.5~~	$	~~80.5~~	50	%
Corporate, general and administrative (3)	$	8189.79	$	7788.07	61	%	$	~~265.3~~	$	~~224.3~~	18	%
Depreciation and amortization	$	910.15	$	47.58	~~102~~35	%	$	~~25.3~~	$	~~11.7~~	~~116~~	%
Total operating expenses	$	~~675~~795.94	$	~~498~~604.19	3631	%	$	~~1,917.1~~	$	~~1,311.0~~	46	%
Loss from operations	$	(~~130~~43.24)	$	(~~109~~91.41)	19(52)	%	$	~~(333.9)~~	$	~~(272.5)~~	23	%
Other income/(expense):
Other expense:
Interest expense, net	—(0.6)		(0.6)		~~100~~—	%	~~(1.1)~~		~~(1.8)~~		~~(38)~~	%
Other	(0.2)		—(5.0)		100	%	~~(40.3)~~		—		~~100~~	%
Total other expense	(0.28)		(05.6)		(6789)	%	~~(41.4)~~		~~(1.8)~~		~~2200~~	%
Net loss	(~~130~~44.42)		(~~110~~96.07)		19(54)	%	~~(375.3)~~		~~(274.3)~~		37	%
Net income/(loss) attributable to non-controlling interests	01.3		(0.62)		(~~150~~744)	%	~~0.9~~		~~(3.5)~~		~~(127)~~	%
Net loss attributable to the Company	(~~130~~45.75)		(~~109~~96.45)		19(54)	%	~~(376.2)~~		~~(270.8)~~		39	%
(1) Includes stock-based compensation, as follows:	12.3		0.56		~~160~~281	%	~~2.7~~		~~1.2~~		~~125~~	%
(2) Includes stock-based compensation, as follows:	1.40		0.86		7563	%	~~3.8~~		~~2.5~~		52	%
(3) Includes stock-based compensation, as follows:	2821.15		3738.42		(2544)	%	~~113.5~~		~~118.2~~		~~(4)~~	%

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	Three-Months Ended September 30,				Nine-Months Ended September 30,
	Three-Months Ended March 31,
	2022		2021		2022		2021
	2023		2022
Revenues:
Capitated revenue	99	%	9799	%	99	%	98	%
Other revenue	1	%	31	%	1	%	2	%
Total revenues	100	%	100	%	~~100~~	%	~~100~~	%
Operating expenses:
Medical claims expense	7870	%	8074	%	76	%	76	%
Cost of care, excluding depreciation and amortization	2117	%	2019	%	19	%	20	%
Sales and marketing	86	%	87	%	8	%	8	%
Corporate, general and administrative	1512	%	2017	%	17	%	22	%
Depreciation and amortization	21	%	12	%	2	%	1	%
Total operating expenses	~~124~~106	%	~~128~~118	%	~~121~~	%	~~126~~	%
Loss from operations	(246)	%	(2818)	%	~~(21)~~	%	~~(26)~~	%
Other income/(expense):
Interest expense, net	—	%	—	%	—	%	—	%
Other	—	%	—(1)	%	~~(3)~~	%	—	%
Total other expense	—	%	—(1)	%	~~(3)~~	%	—	%
Net loss	(246)	%	(2819)	%	~~(24)~~	%	24	%
Net income/(loss) attributable to non-controlling interests	0	%	—	%	—	%	—	%
Net loss attributable to the Company	(246)	%	(2819)	%	~~(24)~~	%	~~(26)~~	%

Total Revenues

	Three-Months Ended September 30,				Change				Nine-Months Ended September 30,				Change
	Three-Months Ended March 31,				Change
(dollars in millions)	~~2022~~2023		~~2021~~2022		$		%		~~2022~~		~~2021~~		$		%
Revenues:
Capitated revenue	$	~~537~~743.92	$	~~376~~506.71	$	~~161~~237.21	4347	%	$	~~1,560.1~~	$	~~1,014.6~~	$	~~545.5~~	54	%
Other revenue	$8.8	~~7.8~~	$7.7	~~12.0~~	(41.2)1		~~(35)~~14	%	$	~~23.1~~	$	~~23.9~~	~~(0.8)~~		~~(3)~~	%
Total revenues	$	~~545~~752.70	$	~~388~~513.78	$	~~157~~238.02	4046	%	$	~~1,583.2~~	$	~~1,038.5~~	$	~~544.7~~	52	%

Capitated revenue was $~~537~~743.92 million for the three-months ended ~~September~~March 3031, ~~2022~~2023, an increase of $~~161~~237.21 million, or 4347%, compared to $~~376~~506.71 million for the three-months ended ~~September~~March 3031, ~~2021~~2022. This increase was driven primarily by a 4443% increase in total patients under capitated arrangements, ~~slightly~~and ~~offset~~an byincrease ~~a decrease of approximately 1%~~ in ~~the~~ capitated revenue ~~rate.~~rates ~~For~~of ~~the~~3%. ~~three-months~~We ~~ended September 30, 2022, we~~ recorded a reduction in capitated revenue of $52.9 7 million related to prior periods ~~primarily~~for ~~due to~~ the ~~retrospective~~three-months ~~trend~~ended ~~adjustments~~March ~~made~~31, by2023 ~~CMS~~compared ~~under~~to ~~the~~a ~~Direct~~$3.4 million ~~Contracting~~of ~~program~~incremental ~~and~~capitated ~~Direct~~revenue ~~contracting~~as ~~patient~~of ~~retroactivity. During~~ the three-months ended ~~September~~March 3031, ~~2021~~2022, weas ~~recorded~~a ~~$15.4~~result ~~million~~ of ~~incremental capitated revenue related to prior periods due to~~ patient retroactivity and ~~increases~~changes in ~~our~~ acuity adjustments in both periods. When excluding the prior period revenue for the three-months ended ~~September 30~~March 31, ~~2022~~2023 and ~~2021~~2022, the year over year capitated revenue rate per patient increased by approximately 4%.

Capitated revenue was $1,560.1 million for the nine-months ended September 30, 2022, an increase of $545.5 million, or 54%, compared to $1,014.6 million for the nine-months ended September 30, 2021. This increase was driven primarily by a 44% increase in total patients under capitated arrangements (including Direct Contracting, which started as of April 2021) and an increase of approximately 7% in capitated revenue rate. Immaterial prior period capitated revenue was included in balance for the nine-months ended September 30, 2022. For the nine-months ended September 30, 2021, incremental capitated revenue of $20.2 million was recorded related to prior periods related to patient retroactivity and increases in our acuity adjustments. When excluding the prior period revenue for the nine-months ended September 30, 2021, the year over year capitated revenue rate per patient increased by approximately 9%. 32

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Other revenue was $7.8 million for the three-months ended September 30, 2022, a decrease of $4.2 million, or 35%, compared to $12.0 million for the three-months ended September 30, 2021. Other revenue was $23.1 million for the nine-months ended September 30, 2022, a decrease of $0.8 million, or 3%, compared to $23.9 million for the nine-months ended September 30, 2021. The decreases are primarily related to incremental revenues recorded during the three-months ended September 30, 2021 related to prior periods due to the ACO shared savings program.

Operating Expenses

	Three-Months Ended September 30,				Change				Nine-Months Ended September 30,				Change
	Three-Months Ended March 31,				Change
(dollars in millions)	~~2022~~2023		~~2021~~2022		$		%		~~2022~~		~~2021~~		$		%
Medical claims expense	$	~~427~~523.45	$	~~309~~379.84	$	~~117~~144.61	38	%	$	~~1,198.4~~	$	~~790.9~~	$	~~407.5~~	52	%
Cost of care, excluding depreciation and amortization	$129.2	~~113.6~~	$95.2	~~76.3~~	3734.30		4936	%	$	~~307.6~~	$	~~203.6~~	~~104.0~~		51	%
Sales and marketing	$42.3	~~44.1~~	$33.8	~~30.5~~	138.65		4526	%	$	~~120.5~~	$	~~80.5~~	~~40.0~~		50	%
Corporate, general and administrative	$89.9	~~81.7~~	$88.7	~~77.0~~	41.72		61	%	$	~~265.3~~	$	~~224.3~~	~~41.0~~		18	%
Depreciation and amortization	$10.5	~~9.1~~	$7.8	~~4.5~~	42.67		~~102~~35	%	$	~~25.3~~	$	~~11.7~~	~~13.6~~		~~116~~	%
Total operating expenses	$	~~675~~795.94	$	~~498~~604.19	$	~~177~~190.85	3631	%	$	~~1,917.1~~	$	~~1,311.0~~	$	~~606.0~~	46	%

Medical claims expense was $~~427~~523.45 million or 7870% of total revenues for the three-months ended ~~September~~March 3031, ~~2022~~2023, an increase of $~~117~~144.61 million, or 38%, compared to $~~309~~379.84 million or 8074% of total revenues for the three-months ended ~~September~~March 3031, ~~2021~~2022. This increase was driven primarily by a 4443% increase in total patients under capitated arrangements, slightly offset by ana 43% decrease in cost per patient. For the three-months ended ~~September~~March 3031, ~~2022~~2023, we recorded a reduction to medical claims expense of $~~12.~~8 .3 million related to prior periods ~~due~~in comparison to ~~2022 costs developing more favorably versus our estimates and Direct contracting patient retroactivity. During the three-months ended September 30, 2021, we recorded~~ incremental medical claims expenses of $90.4 8 million asfor athe ~~result~~three-months ofended anMarch ~~increase~~31, ~~in prior period incurred claims~~2022. When excluding these prior period costs for the three-months ended ~~September 30~~March 31, ~~2022~~2023 and ~~2021~~2022, ~~respectively,~~ the year over year medical claims expense per patient ~~increased~~decreased by 2%.

~~Medical~~Cost ~~claims~~of ~~expense~~care, excluding depreciation and amortization was $~~1,198~~129.42 million or 7617% of total revenues for the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023, an increase of $~~407~~34.50 million, or 5236%, compared to $~~790~~95.92 million or 7619% of total revenues for the ~~nine~~three-months ended ~~September~~March 3031, ~~2021~~2022. ~~This~~The increase was ~~driven~~ primarily driven by aincreases ~~44%~~in ~~increase~~salaries inand ~~total~~benefits ~~patients~~of ~~under~~$23.4 ~~capitated~~million; ~~arrangements~~occupancy ~~(including~~costs ~~those~~of ~~under~~$5.3 ~~Direct~~million; ~~Contracting~~and ~~which~~medical ~~started~~supplies asand patient transportation costs of ~~April~~$3.5 ~~2021)~~million, due to growth in both the number of centers we operate and athe 5%number ~~increase~~of inteam ~~cost~~members ~~per~~supporting our larger patient. base.

~~Cost~~Sales ~~of care, excluding depreciation~~ and ~~amortization~~marketing expense was $~~113~~42.63 million or 216% of total revenues for the three-months ended ~~September~~March 3031, ~~2022~~2023, an increase of $378.35 million or 4926%, compared to $7633.38 million or 207% of total revenues for the three-months ended ~~September~~March 3031, ~~2021~~2022. The increase was ~~primarily~~ driven by ~~increases~~greater inadvertising ~~salaries~~spend ~~and benefits~~ of $245.73 million; ~~occupancy~~to ~~costs~~drive ofnew ~~$5.4~~patients ~~million;~~to ~~and~~our ~~medical~~clinics ~~supplies~~ and ~~patient~~net ~~transportation~~headcount ~~costs~~growth of $52.79 million~~, due to growth in both the number of centers we operate and the number of team members supporting our larger patient base~~.

~~Cost of care~~Corporate, ~~excluding~~general ~~depreciation~~ and ~~amortization~~administrative expense was $~~307~~89.69 million or 1912% of total revenues for the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023, an increase of $~~104~~1.02 million, or 511%, compared to $~~203~~88.67 million or 2017% of total revenues for the ~~nine~~three-months ended ~~September~~March 3031, ~~2021~~2022. The increase was primarily driven by increases in salaries and benefits, excluding the impact of stock compensation expense, of $676.07 million; ~~occupancy~~and an increase in technology costs of $162.3 million;. These increased costs can be primarily attributed to increased headcount to support our growth. Additionally, legal and ~~patient~~professional ~~transportation~~fees ~~costs~~increased ofby $167.21 million mainly in connection with the negotiation and execution of the Merger Agreement, ~~due~~as well as actions required to ~~growth~~be intaken ~~both~~to satisfy certain closing conditions related to the ~~number~~Merger. ofWe ~~centers~~note wethat ~~operate~~the increase to total salaries and benefits was offset by a year over year decrease to stock compensation expense of $16.7 million. This reduction is due to the ~~number~~large amount of ~~team~~pre-IPO ~~members~~equity ~~supporting~~awards ~~our~~that ~~larger~~fully ~~patient~~vested ~~base~~during the third quarter of 2022. This significantly reduced the stock compensation expense for the three-months ended March 31, 2023 relative to 2022.

~~Sales~~Depreciation and ~~marketing~~amortization expense was $4410.15 million or 81% of total revenues for the three-months ended ~~September~~March 3031, ~~2022~~2023, an increase of $132.67 million, or 4535%, compared to $307.58 million or 82% of total revenues for the three-months ended ~~September~~March 3031, ~~2021~~2022. The increase was ~~driven~~primarily bydue ~~net~~to ~~headcount~~higher ~~growth~~capital ofexpenditures ~~$10.0~~purchased ~~million~~to ~~and~~support ~~greater~~the ~~advertising~~continued ~~spend~~growth of ~~$3.3~~our ~~million~~business toas ~~drive~~more ~~new~~centers ~~patients~~are ~~to our clinics~~opened.

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Sales and marketing expense was $120.5 million or 8% of total revenues for the nine-months ended September 30, 2022, an increase of $40.0 million, or 50%, compared to $80.5 million or 8% of total revenues for the nine-months ended September 30, 2021. The increase was driven by net headcount growth of $31.2 million and greater advertising spend of $7.0 million to drive new patients to our clinics.

Corporate, general and administrative expense was $81.7 million or 15% of total revenues for the three-months ended September 30, 2022, an increase of $4.7 million, or 6%, compared to $77.0 million or 20% of total revenues for the three-months ended September 30, 2021. The increase was primarily driven by greater salaries and benefits, including stock-based compensation expense, of $2.2 million, an increase in travel and entertainment expenses of $1.0 million and an increase in technology costs of $1.1 million. These increased costs can be primarily attributed to increased headcount to support our growth.

Corporate, general and administrative expense was $265.3 million or 17% of total revenues for the nine-months ended September 30, 2022, an increase of $41.0 million, or 18%, compared to $224.3 million or 22% of total revenues for the nine-months ended September 30, 2021. The increase was primarily driven by greater salaries and benefits, including stock-based compensation expense, of $30.1 million, an increase in legal and professional fees of $2.1 million, an increase in travel and entertainment expenses of $2.3 million and an increase in technology costs of $4.4 million. These increased costs can be primarily attributed to increased headcount to support our growth.

Depreciation and amortization expense was $9.1 million or 2% of total revenues for the three-months ended September 30, 2022, an increase of $4.6 million, or 102%, compared to $4.5 million or 1% of total revenues for the three-months ended September 30, 2021. Depreciation and amortization expense was $25.3 million or 2% of total revenues for the nine-months ended September 30, 2022, an increase of $13.6 million, or 116%, compared to $11.7 million or 1% of total revenues for the nine-months ended September 30, 2021. The increases were primarily due to capital expenditures purchased to support the continued growth of our business.

Other (Expense) Income

	Three-Months Ended September 30,				Change				Nine-Months Ended September 30,				Change
	Three-Months Ended March 31,				Change
(dollars in millions)	~~2022~~2023		~~2021~~2022		$		%		~~2022~~		~~2021~~		$		%
Other income (expense):
Interest expense, net	$	—(0.6)	$	(0.6)	$	~~0.6~~—	~~(100)~~—	%	$	~~(1.1)~~	$	~~(1.8)~~	$	~~0.7~~	39	%
Other	$(0.2)	~~(0.2)~~	$(5.0)	—	(04.2)8		~~100~~(98)	%	$	~~(40.3)~~	$	—	~~(40.3)~~		~~100~~	%
Total other expense	$	(0.28)	$	(05.6)	$	0.4.8	(6789)	%	$	~~(41.4)~~	$	~~(1.8)~~	~~(39.6)~~		~~2200~~	%

Other expense was $40.3 million for the nine-months ended September 30, 2022, an increase of $40.3 million, or 100%, compared to $0.0 million for the nine-months ended September 30, 2021. The increase was primarily due to a fair value adjustment to the contingent consideration or earn-out related to the acquisition of RMD in October 2021. During the nine-months ended September 30, 2022, RMD achieved internal metrics that resulted in the maximum earn-out amount, and we increased the balance of the earn-out liability to reflect the actual payout amount of $60.0 million. The earn-out was paid out via cash and common stock during the quarter ended September 30, 2022.33

Non-GAAP Reconciliations

The following table provides a reconciliation of gross profit, the most closely comparable GAAP financial measure, to platform contribution. Gross profit is defined as total revenues less medical claims expense.

	Three-Months Ended September 30,				Nine-Months Ended September 30,
(dollars in millions)	2022		2021		2022		2021
Gross profit	$	118.3	$	78.9	$	384.8	$	247.6
Cost of care, excluding depreciation and amortization	(113.6)		(76.3)		(307.6)		(203.6)
Stock-based compensation	1.3		0.5		2.7		1.2
Platform contribution	$	6.0	$	3.1	$	79.9	$	45.2

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Other expense was $0.2 million for the three-months ended March 31, 2023, a decrease of $4.8 million, or 98%, compared to $5.0 million for the three-months ended March 31, 2022. The decrease was primarily due to a fair value adjustment of $4.5 million to the contingent consideration related to the acquisition of the Rubicon business in October 2021 recorded during the three-months ended March 31, 2022.

Non-GAAP Reconciliations

The following table provides a reconciliation of gross profit, the most closely comparable GAAP financial measure, to patient contribution. Gross profit is defined as total revenues less medical claims expense.

Three-Months Ended September 30,

Nine-Months Ended September 30,

Three-Months Ended March 31,

(dollars in millions)

~~2022~~2023

~~2021~~2022

~~2022~~

~~2021~~

Gross profit

~~118~~228.35

78134.94

~~384.8~~

~~247.6~~

Other revenue

(78.8)

(127.07)

~~(23.1)~~

~~(23.9)~~

Patient contribution

~~110~~219.57

66126.97

~~361.7~~

~~223.7~~

The following table is a reconciliation of gross profit, the most closely comparable GAAP financial measure, to platform contribution. Gross profit is defined as total revenues less medical claims expense.


	Three-Months Ended March 31,
(dollars in millions)	2023		2022
Gross profit	$	228.5	$	134.4
Cost of care, excluding depreciation and amortization	(129.2)		(95.2)
Stock-based compensation	2.3		0.6
Platform contribution	$	101.6	$	39.8

The following table provides a reconciliation of net loss, the most closely comparable GAAP financial measure, to adjusted EBITDA:

	Three-Months Ended September 30,				Nine-Months Ended September 30,
	Three-Months Ended March 31,
(dollars in millions)	~~2022~~2023		~~2021~~2022		~~2022~~		~~2021~~
Net loss	$	(~~130~~44.42)	$	(~~110~~96.07)	$	~~(375.3)~~	$	~~(274.3)~~
Interest expense, net	—0.6		0.6		~~1.1~~		~~1.8~~
Fair value adjustments	—		—5.0		~~40.1~~		—
Depreciation and amortization	910.15		47.58		~~25.3~~		~~11.7~~
Stock-based compensation	3024.8		3839.74		~~120.0~~		~~121.9~~
Litigation costs1	01.74		—1.0		~~3.0~~		—
Transaction/offering related costs	10.37		10.85		~~1.9~~		~~3.6~~
Other income/expense	0.2		$	—	$	0.2	$	—
CVS transaction related costs	6.5		—
Adjusted EBITDA	$	(88.3)	$	(64.4)	$	(183.7)	$	(135.3)
Other income/expense	0.2		—
Adjusted EBITDA	$	0.5	$	(42.4)

Liquidity and Capital Resources

Overview

~~The~~1 ~~Company’s~~Litigation ~~long-term~~costs ~~capital~~included ~~policy~~in isthe ~~to:~~calculation ~~maintain~~of aAdjusted ~~strong~~EBITDA ~~balance~~include ~~sheet~~only ~~and~~those ~~financial~~costs ~~flexibility;~~which ~~reinvest~~are inconsidered ~~its~~one-time ~~care~~in ~~model;~~nature and ~~invest~~outside inof ~~strategic~~the ~~opportunities~~ordinary ~~that~~course ~~reinforce~~of ~~its~~business ~~care~~based ~~model~~on ~~and~~the ~~meet~~following ~~return~~considerations ~~requirements.~~which ~~To date,~~ we ~~have~~assess ~~financed~~regularly: ~~our~~(i) ~~operations through private placements of our equity securities, payments received from various payors,~~ the ~~issuance~~frequency of ~~Convertible~~similar ~~Senior~~cases ~~Notes, our IPO and additional borrowings under our Term Loan Facility. We believe~~ that ~~our~~have ~~access~~been brought to ~~capital~~date, ~~markets~~or ~~will~~are ~~provide~~expected ~~adequate resources~~ to ~~fund~~be ~~our~~brought ~~short-term~~within ~~and~~two ~~long-term~~years, ~~operating~~(ii) ~~and~~the ~~financing~~complexity ~~needs. As~~ of ~~September~~the 30case, ~~2022,~~(iii) wethe ~~had~~nature ~~cash, restricted cash and cash equivalents~~ of ~~$223.0~~the ~~million.~~remedy(ies) ~~Our~~sought, ~~cash~~including ~~and~~the ~~cash~~size ~~equivalents primarily consist~~ of ~~highly~~any ~~liquid~~monetary ~~investments~~damages insought, ~~money~~(iv) ~~market~~the ~~funds~~counterparty involved, and ~~cash.~~(v) ~~Since~~ our ~~inception~~overall ~~and~~litigation ~~through September 30~~strategy, ~~2022,~~such ~~we have generated significant operating losses from our operations~~ as ~~reflected~~litigation incosts ~~our~~related ~~accumulated~~to ~~deficit~~the ~~and negative cash flows from operations.~~civil

Weinvestigative ~~expect~~demand ~~to continue to incur operating losses~~ and ~~generate~~putative ~~negative~~class-action ~~cash~~lawsuit ~~flows~~(see ~~from~~Note ~~operations~~10.“Commitments ~~for the foreseeable future due to the investments we intend to continue to make in expanding our operations~~ and ~~sales and marketing and due to additional general and administrative costs we expect to incur in connection with operating as a public company. As a result~~Contingencies,” ~~we may require additional capital resources~~ to ~~execute strategic initiatives to grow~~ our ~~business.~~ condensed

Weconsolidated ~~believe~~financial ~~that~~statements ~~the~~included ~~proceeds from the Term Loan Facility~~ in ~~September~~this ~~2022~~Quarterly ~~and~~Report ~~convertible~~on ~~debt~~Form offering in 2021 are sufficient to satisfy our anticipated cash requirements, which consist of capital expenditures, working capital, and potential acquisition and strategic transactions, for the next twelve months even with the uncertainty arising from the COVID10-19 pandemic. Under the Loan Agreement, we have drawn down $72.3 million, net of debt issuance costs, and have the ability to draw down up to $300 million over the life of the loan pursuant to separate tranches that are available at specified time periods. See Note 8, "Long-Term Debt." Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties. Q)

1 Litigation costs included in the calculation of Adjusted EBITDA include only those costs which are considered one-time in nature and outside of the ordinary course of business based on the following considerations which we assess regularly: (i) the frequency of similar cases that have been brought to date, or are expected to be brought within two years, (ii) the complexity of the case, (iii) the nature of the remedy(ies) sought, including the size of any monetary damages sought, (iv) the counterparty involved, and (v) our overall litigation strategy, such as litigation costs related to the DOJ matter and class-action lawsuit (refer to Note 10 in the Form 10-Q herein).34

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~~Our~~Historically, ~~actual~~the ~~results~~Company’s long- term capital policy was to maintain a strong balance sheet and ~~our~~financial ~~future~~flexibility; ~~capital~~reinvest in its care model; and invest in strategic opportunities that reinforce its care model and meet return requirements ~~could~~and ~~vary~~has ~~because~~historically financed its operations through private placements of, ~~many~~its ~~factors~~equity securities, ~~including~~payments ~~our~~received ~~growth~~from ~~rate~~various payors, proceeds from issuances of convertible notes and term loans and its IPO. Following the ~~timing~~Merger, as an indirect wholly-owned subsidiary of CVS Pharmacy and ~~extent~~no longer a standalone public company, the Company’s long-term capital policy will become part of ~~spending~~the tooverall ~~open~~capital ~~new~~policy ~~centers~~of ~~and~~CVS ~~expand~~Health, ~~into~~with ~~new~~the ~~markets~~ongoing cash requirements of the Company, including capital expenditures and other investments to grow the ~~expansion~~Company’s business, being managed as part of ~~outreach~~ CVS Health’s overall operating, financing and investing activities.

WeAs ~~may~~of inMarch ~~the~~31, ~~future enter into arrangements to acquire or invest in complementary businesses~~2023, ~~services~~we ~~and~~had ~~technologies~~cash, ~~including~~restricted ~~intellectual~~cash ~~property rights. We have based this estimate on assumptions that may prove to be wrong,~~ and wecash ~~could~~equivalents ~~use~~of ~~our available capital resources sooner than we currently expect~~$156.2 ~~We may be required to seek additional equity or debt financing~~million. InOur ~~the~~cash ~~event~~and ~~that~~cash ~~additional~~equivalents ~~financing~~primarily isconsist ~~required~~of ~~from~~highly ~~outside~~liquid ~~sources,~~investments wein ~~may~~money ~~not~~market befunds ~~able~~and ~~to raise it on terms acceptable to us or at all~~cash. IfSince weour ~~are~~inception ~~unable~~and tothrough ~~raise~~March ~~additional~~31, ~~capital when desired~~2023, ~~or if~~ we ~~cannot~~have ~~expand~~generated ~~our~~significant ~~operations~~operating orlosses ~~otherwise~~from ~~capitalize on~~ our ~~business~~operations ~~opportunities~~as ~~because~~reflected wein ~~lack sufficient capital,~~ our ~~business,~~accumulated ~~results~~deficit ~~of operations~~ and ~~financial~~negative ~~condition~~cash ~~would~~flows befrom ~~adversely affected~~operations.

~~Term Loan~~Indebtedness

OnFor ~~September~~more ~~30,~~information ~~2022,~~on the Company’s ~~and~~Term ~~certain of its subsidiaries entered into the~~ Loan ~~Agreement with Hercules Capital~~Facility, Convertible ~~Inc.,~~Senior ~~as administrative and collateral agent and lender~~Notes, ~~and~~Capped ~~Silicon~~Call ~~Valley~~Transactions ~~Bank~~ and ~~other~~marketable ~~lenders~~debt ~~from~~securities ~~time~~please torefer ~~time parties thereto. The Loan Agreement provides the Company with a Term Loan Facility of up~~ to ~~$300.0~~Note ~~million to be funded in five committed tranches available to be drawn during the specified time period at the Company's option. Under Tranche A (available from September 30~~8, ~~2022 (~~"~~Closing")~~Long-Term ~~until March 31~~Debt," ~~2023),~~of the ~~Company~~notes ~~was required~~ to ~~draw down $75.0 million upon closing and may draw up to an additional $25.0 million. Under Tranche B (available from Closing until December 15, 2023),~~ the ~~Company~~condensed ~~may~~consolidated ~~borrow~~financial upstatements toincluded ~~$50.0 million~~ in ~~$25.0~~this ~~million~~Quarterly ~~increments.~~Report Under Tranche C (available from January 1, 2024 until June 30, 2024), the Company may borrow up to $50.0 million in $25.0 million increments. Under Tranche D (available from the earlier of (a) the date on ~~which~~Form ~~Tranche~~10-Q ~~C is fully drawn down~~ and ~~(b)~~see ~~July~~Note 113, ~~2024~~Subsequent ~~until~~Events ~~December~~for ~~15,~~a ~~2024),~~discussion ~~the~~of ~~Company may borrow up to $75.0 million in $25.0 million increments. Under Tranche E (available from Closing until June 1, 2025),~~ the ~~Company~~impact ~~may borrow up to $25.0 million subject to the approval~~ of the ~~individual~~Merger ~~lender.~~that Ifwas ~~the~~consummated ~~Company~~on ~~does~~May ~~not elect to draw the entire principal amount available under the Tranche B~~2, C2023 ~~or D during the applicable drawdown period, then any such undrawn portion will be added to the aggregate principal amount available under Tranche E. The Term Loan Facility is scheduled to mature~~ on ~~October 1, 2027, subject to a springing maturity date of September 1, 2025 if, prior to June 1, 2025,~~ the Company’s ~~Convertible~~debt Senior Notes have not been (i) converted into equity interests of the Company, (ii) amended such that the scheduled maturity date of the Convertible Senior Notes is at least 180 days after the initial maturity date of the tranches of the Term Loans then in effect, or (iii) fully redeemed and extinguishedbalances.

As required under the Loan Agreement, at the Closing, the Company borrowed $75.0 million under Tranche A of the Term Loan Facility. The Company intends to use the proceeds from the initial borrowing of the Term Loan for related fees and expenses in connection with the Loan Agreement and for working capital and general corporate purposes. The Loan Agreement contains customary affirmative and negative covenants. In addition, beginning on the earlier of (i) the reporting deadline of the Company’s fourth quarter 2023 financial statements under the Loan Agreement and (ii) the date at which more than $100.0 million in aggregate principal (excluding any paid-in-kind interest) is outstanding under the Term Loan Facility, the Company is required to maintain a specified trailing twelve-month platform contribution, with the applicable platform contribution increasing over time and as the Company’s borrowings under the Term Loan Facility increase. At September 30, 2022, the financial covenant is not yet in effect. Refer to Note 8, "Long-Term Debt," of the notes to consolidated financial statements included in this Quarterly Report on Form 10-Q.

Convertible Senior Notes, Capped Call Transactions and Marketable Debt Securities

In March 2021, we issued $920.0 million aggregate principal amount of Convertible Senior Notes. Concurrently with the pricing of the Convertible Senior Notes, we entered into capped call transactions to mitigate the impact of potential economic dilution to our common stock upon conversion of the Convertible Senior Notes. The Convertible Senior Notes are governed by an Indenture, are general senior, unsecured obligations of the Company and will mature on March 15, 2026, unless earlier redeemed, repurchased or converted. Refer to Note 8, "Long-Term Debt," of the notes to consolidated financial statements included in this Quarterly Report on Form 10-Q.

Total proceeds realized from the sale of the Convertible Senior Notes, net of debt issuance and offering costs of $22.1 million, were $897.9 million. We used approximately $123.6 million of the net proceeds to pay the cost of the capped call transactions. We intend to use the remainder of the net proceeds for general corporate purposes, which may include working capital, capital expenditures, and potential acquisitions and strategic transactions.

The Indenture contains customary covenants related to timely filings and reporting, and customary events of default. As of September 30, 2022, we were in compliance with all covenants under the Indenture.

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Changes in Cash Flows

The following table presents a summary of our condensed consolidated cash flows from operating, investing and financing activities for the periods indicated.

	Nine-Months Ended September 30,
	Three-Months Ended March 31,
(dollars in millions)	~~2022~~2023		~~2021~~2022		$ Change		% Change
Net cash used in operating activities	$	(~~213~~92.37)	$	(~~125~~91.92)	$	(871.45)	692	%
Net cash provided by (used in) investing activities	251.2		(815.9)		1,067.1		(131)	%
Net cash provided by investing activities	46.9		94.2		(47.3)		(50)	%
Net cash provided by financing activities	6443.75		~~780~~1.49		~~(715~~41.7)6		~~(92)~~2189	%
Net change in cash	$	~~102~~(2.63)	$	~~(161.~~4).9	$	~~264~~(7.02)	(~~164~~147)	%

Operating Activities

For the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023, net cash used in operating activities was $~~(213~~92.3)7 million, an increase of $~~(87~~1.4)5 million in cash outflows compared to net cash used in operating activities of $~~(125~~91.9)2 million for the ~~nine~~three-months ended ~~September~~March 3031, ~~2021~~2022. The principal contributors to the year-over-year change in the operating cash flows were as follows:

•A net change of $~~(27~~38.2)6 million in net loss and non-cash charges and credits, primarily due to ana ~~increase~~decrease in net loss for the business, as noted above under “Results of Operations” offset by ~~the~~a ~~fair~~decreased ~~value adjustment to RMD contingent consideration (see Note 5 to our consolidated financial statements included in this Quarterly Form on Form 10~~stock-Q)based ~~and~~compensation ~~other non-cash charges~~charge.

•An increase of $~~(60~~40.2)1 million in cash outflows related to operating assets and liabilities primarily resulting from: delayed cash receipts and payments driven by the Company transitioning to another financial institution from SVB in light of the uncertainty surrounding SVB and its ability to continue operations.

◦Changes in accounts receivable due to the timing of collections and the growth in the number of at-risk patients;

◦Changes in liability for unpaid claims due to the growth in the number of at-risk patients; and,

◦Changes in accounts payable, accrued compensation and benefits and other liabilities mainly due to the timing of payments to our vendors.

Investing Activities

For the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023, net cash provided by investing activities was $~~251~~46.29 million, ana ~~increase~~decrease of $~~1,067~~47.13 million in cash inflows compared to net cash used in investing activities of $~~(815~~94.9)2 million for the ~~nine~~three-months ended ~~September~~March 3031, ~~2021~~2022 primarily due to the net cash inflows of $~~1,098~~63.39 million from sales, maturities and purchases of marketable debt securities, ~~offset~~during bythe ~~continued~~three-months ~~increased~~ended ~~investments~~March 31, in2023, ~~our~~compared ~~centers~~to ~~and~~$114.0 ~~purchases~~million ofduring ~~property~~the ~~and~~three-months ~~equipment~~ended ofMarch 31, ~~approximately $(27~~2022.~~0) million.~~

Financing Activities

Cash provided by financing activities for the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023 was $6443.75 million, primarily related to the proceeds received of $7224.39 million from the Company's borrowings under its Term Loan Facility ~~executed~~and ~~September 30, 2022. Cash provided by financing activities for the nine-months ended September 30, 2021 of $780.4 million was primarily due to $897.9 million in~~ proceeds from ~~the~~exercise ~~issuance~~ of ~~the~~options ~~Convertible~~received ~~Senior Notes, partially offset by cash outflows~~ of $~~123~~18.6 million, ~~related~~during to the ~~capped~~three-months ~~call~~ended ~~transactions completed in~~ March 31, ~~2021~~2023.

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Contractual Obligations and Commitments

As of ~~September~~March 3031, ~~2022~~2023, our contractual obligations are summarized in the table below.

(dollars in millions)	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Convertible senior notes	$	920.0	$	—	$	—	$	920.0	$	—
Convertible senior notes (1)	$	920.0	$	—	$	920.0	$	—	$	—
Term loan	75.0		—		—		—		75.0
Term loan (1)	100.0		—		—		100.0		—
Operating lease obligations	467.5		45.9		107.3		104.5		209.8
Operating lease obligations (2)	494.4		51.1		111.8		113.4		218.1
Contingent consideration	0.2		—		0.2		—		—
Total	$	1,514.4	$	51.1	$	1,031.8	$	213.4	$	218.1
Total	$	1,462.7	$	45.9	$	107.5	$	1,024.5	$	284.8

~~Convertible~~(1) ~~Senior~~For ~~Notes-~~more ~~The~~information ~~Company~~on ~~holds~~the ~~borrowings under our~~ Convertible Senior Notes, ~~which~~and ~~have~~the aTerm 0%Loan ~~interest~~please ~~rate.~~refer ~~The~~to ~~Convertible~~Note ~~Senior~~8, ~~Notes~~"Long-Term ~~are governed by an indenture (“Indenture”)~~Debt," ~~dated~~of asthe ofnotes ~~March~~to ~~16,~~the ~~2021,~~condensed ~~between~~consolidated ~~the~~financial ~~Company~~statements ~~and~~included ~~U.S.~~in ~~Bank~~this ~~National~~Quarterly ~~Association,~~Report ason ~~the~~Form ~~trustee.~~10-Q ~~Under~~and ~~the~~see ~~Indenture~~Note 13, ~~the~~Subsequent ~~Convertible~~Events ~~Senior~~for ~~Notes~~a ~~are~~discussion ~~general~~of ~~senior,~~the ~~unsecured~~impact ~~obligations~~ of the ~~Company~~Merger ~~and~~that ~~will~~was ~~mature~~consummated on ~~March~~May 152, ~~2026,~~2023 ~~unless~~on ~~earlier~~the ~~redeemed,~~Convertible ~~repurchased~~Senior orNotes ~~converted~~and the Term Loan.

~~Term~~(2) ~~loan-~~The OnCompany ~~September~~leases 30offices, ~~2022~~operating facilities, ~~the~~vehicles ~~Company~~and ~~entered~~information ~~into~~technology a("IT") ~~the Loan Agreement~~equipment, which ~~provides~~are ~~the~~accounted ~~Company~~for ~~with~~as ~~the~~operating ~~Term Loan Facility~~leases. ~~Under~~These ~~the~~leases ~~Term~~have ~~Loan~~remaining ~~Facility,~~lease ~~the~~terms ~~Company~~of ~~may borrow~~ up to ~~$300.0 million in five committed tranches. At September~~ 30, ~~2022 the outstanding balance under the Term Loan was $72.3 million~~years, ~~which~~inclusive ~~includes~~of ~~debt~~renewal ~~issuance~~or ~~costs.~~termination ~~The~~options ~~Term~~that ~~Loan~~the ~~Facility~~Company is ~~scheduled~~reasonably certain to ~~mature on October 1, 2027~~exercise.

Operating lease obligations- The Company leases offices, operating facilities, vehicles and information technology ("IT") equipment, which are accounted for as operating leases. These leases have remaining lease terms of up to 30 years, inclusive of renewal or termination options that the Company is reasonably certain to exercise. Also included in the operating lease obligations are license fees paid as a reimbursement to Humana for its costs of owning or leasing and maintaining the centers, including reimbursements for rental payments and leasehold improvements.

Contingent consideration- As part of the CHW acquisition, the Company is obligated to pay contingent consideration of up to a maximum earn-out of $5.5 million during the fiscal year 2024 should the acquired business achieve certain internal metrics in the year following the acquisition. We have recorded the fair value of this contingent consideration at $0.2 million.

Off-Balance Sheet Obligations

As of ~~September~~March 3031, ~~2022~~2023, we did not have any significant off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. The future effects of the COVID-19 pandemic on our results of operations, cash flows and financial position are unclear, however, we believe we have made reasonable estimates and assumptions in preparing the financial statements. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.

For a description of our critical accounting policies, see “Critical Accounting Policies” in our ~~2021~~2022 Form 10-K. There have been no significant changes in our critical accounting estimate policies or methodologies to our condensed consolidated financial statements.

Recently Adopted Accounting Pronouncements

For a description of recently issued accounting pronouncements, see Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information regarding our exposure to certain market risks, see “Quantitative and Qualitative Disclosures about Market Risk,” in Part II, Item 7A of our ~~2021~~2022 Form 10-K. There have been no material changes in our market risk exposures for the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023, as compared to those discussed in our ~~2021~~2022 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of September 30, 2022.

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the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of March 31, 2023.

Changes to our Internal Controls over Financial Reporting

There were no material changes in our internal control over financial reporting during the ~~nine~~three-months ended ~~September~~March 3031, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 10, "Commitments and Contingencies," to ~~the~~our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed under Part I, Item 1A “Risk Factors” in our ~~2021~~2022 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Unregistered Sales of Equity Securities

None.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit No.			Description
3.1			Amended and Restated Certificate of Incorporation of Oak Street Health, Inc. dated August 10, 2020 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on August 11, 2020).
2.1			Agreement and Plan of Merger, dated as of February 7, 2023, by and among CVS Pharmacy, Inc., Halo Merger Sub Corp., Oak Street Health, Inc. and, for the limited purposes set forth therein, CVS Health Corporation (incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed on February 8, 2023).
3.2			Amended and Restated Bylaws of Oak Street Health, Inc. dated August 10, 2020 (incorporated by reference to Exhibit 3.2 to the Company's Form 8-K filed on August 11, 2020).
3.1			Second Amended and Restated Certificate of Incorporation of Oak Street Health, effective May 2, 2023 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on May 2, 2023).
10.1			Security and Loan Agreement, dated as of September 30, 2022, by and among the Company and certain of its subsidiaries named thereto, as borrowers, Hercules Capital, Inc. as agent and lender, Silicon Valley Bank and the several banks and other financial institutions or entities from time to time parties thereto as lenders (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 3, 2022).
3.2			Second Amended and Restated Bylaws of Oak Street Health, effective May 2, 2023 (incorporated by reference to Exhibit 3.2 to the Company's Form 8-K filed on May 2, 2023).
31.1			Certification of the Chief Executive Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2			Certification of the Chief Financial Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1*			Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, filed herewith.
32.2*			Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, filed herewith.
101.INS			Inline XBRL Instance Document
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted in Inline XBRL)

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*The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

** Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.39

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Oak Street Health, Inc. (Registrant)
Date: November 7, 2022	By:	/s/Timothy Cook
Date: May 9, 2023	By:	/s/Timothy Cook
		Timothy Cook
		Chief Financial Officer(Principal Financial Officer)

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