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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2003

OR

Commission file number 0-26190

US ONCOLOGY, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (832) 601-8766

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

None

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

Common Stock ($.01 par value)

(Title of class)

Series A Preferred Stock Purchase Rights

(Title of class)

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 þ No ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12-b of the Act). Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant as of June 30, 2003 was $510.8 million (based upon the closing sales price of the Common Stock on The Nasdaq Stock Market on June 30, 2003 of $7.39 per share). For purposes of this calculation, shares held by non-affiliates exclude only those shares beneficially owned by executive officers, directors and stockholders beneficially owning 10% or more of the outstanding Common Stock.

There were 85,286,454 shares of the Registrant’s Common Stock outstanding on February 29, 2004. In addition, as of February 29, 2004, the Registrant had agreed to deliver approximately 946,531 shares of its Common Stock on certain future dates for no additional consideration.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement issued in connection with the Registrant’s 2004 Annual Meeting of Stockholders are incorporated by reference into Part III hereof.

Part I

As used in this report, unless the context otherwise requires, the terms, “US Oncology,” the “Company,” “we,” “our” and “us” refer to US Oncology, Inc. and its consolidated subsidiaries.

Introduction

This report comprises over 75 pages of information. The length and detail required by applicable disclosure and reporting rules can leave a reader somewhat overwhelmed. Therefore, this introduction is designed to provide you with some context for information contained in this report.

Our core business is providing services to physicians who treat cancer patients. Our services are grouped under three main business lines – medical oncology services, cancer center services and cancer research services. We provide these services principally through our Physician Practice Management (“PPM”) business model, bundled together as a comprehensive set of oncology practice management services where we become the exclusive provider of all business management services to the practice. We also offer pharmaceutical and research services under separate non-comprehensive agreements under what we call our “service line model” to practices that do not wish to contract for our comprehensive package of services.

Our fees under the physician practice management model are generally based on the overall financial performance of the practice. Under the service line model, our fees are fees for service not tied to overall practice performance. 91.1% of our 2003 revenues were derived from PPM service agreements.

This report is designed to give investors an understanding of our business and performance, as well as to comply with relevant securities laws. The following is a brief guide to some of the key sections of this report.

The financial statements presented in this report were prepared in accordance with generally accepted accounting principles in the United States. In Management’s Discussion and Analysis of Results of Operations and Financial Condition, we describe many events and trends, both recurring and nonrecurring, including significant impairment, restructuring and other charges that we have incurred over the past three years as a result of market developments and activities related to the repositioning of our business. We have also discussed, under the heading Forward-Looking Statements and Risk Factors, possible events or trends that typically occur in an unpredictable fashion and uncertainties relating to our business. In addition to those trends and events discussed in this report, it is important for investors to understand that our financial statements rely on estimates, which are also subject to uncertainties, including those discussed below under the heading

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“Management’s Discussion and Analysis of Results of Operations and Financial Condition — Critical Accounting Policies and Estimates.”

US Oncology is America’s premier cancer care services company. We support the cancer care community by providing medical oncology services, cancer center services and cancer research services. Our network of over 875 affiliated physicians provides care to patients in over 470 locations, including 78 outpatient cancer centers and 23 Positron Emission Tomography (PET) sytems, across 32 states. We estimate that in 2003 those physicians provided care to approximately 500,000 patients, including approximately 190,000 new patients.

Our network’s community-based focus allows our affiliated physicians to provide to patients locally the latest advances in therapies, research and technology, often within a single outpatient setting. As a result, patients access high-quality treatment with the least amount of disruption to their daily lives. Our nationwide presence enables us to rapidly implement best practices and share new discoveries, and our network’s size affords competitive advantages in areas such as purchasing, information systems, access to clinical research and leading edge technology.

US Oncology was incorporated in October 1992 under the laws of the State of Delaware. Our principal executive offices are located at 16825 Northchase Drive, Suite 1300, Houston, Texas, and our telephone number is (832) 601-8766. Our common stock is traded on the Nasdaq Stock Market under the symbol “USON.” Our website address is http://www.usoncology.com, and copies of our filings with the Securities and Exchange Commission are available on our website under the heading “Investor Relations.” We file our reports electronically with The United States Securities and Exchange Commission (SEC) using the SEC’s Electronic Data Gathering and Retrieval or “EDGAR” system. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers, including US Oncology, at http://www.sec.gov.

Cancer in the United States

The provision of cancer care is a significant and growing market. Cancer is the second-leading cause of death in the United States. More than 1,500 Americans a day die from this disease — one out of every four deaths in this country. Since 1990, more than 18 million new cancer cases have been diagnosed, and the American Cancer Society (ACS) estimates that approximately 1.4 million new cancer cases will be diagnosed in America during 2004. Approximately one in two men, and one in three women in the United States will develop cancer at some point during their lifetime.

Cancer’s financial toll is staggering, too. The National Institutes of Health estimate that overall costs for cancer in the year 2003 were $189.5 billion, including $64.2 billion in direct medical costs. As America’s population ages, incidences of cancer are likely to increase, since cancer is much more common in the elderly than in the young.

As diagnostic technology improves and more treatment options become available, survival rates are improving. The National Cancer Institute estimated that approximately 9.6 million Americans with a history of cancer were alive in January 2000. However, survival is not without its costs. As new oncology pharmaceuticals and supportive care drugs are introduced into the marketplace, the costs of treating cancer patients continue to rise. Improved survival rates also mean that many patients receive treatment for longer periods of time, increasing costs and the challenges of managing ever-increasing patient loads. Current industry estimates predict that pharmaceutical use will continue to increase. New diagnostic and radiation treatment technology also require significant investments by cancer care providers.

We believe that these demographic and industry trends, coupled with the increasing complexity of managing an oncology practice, have increased the need for our services. We believe that this need is even more acute in light of recent reductions in Medicare reimbursement for cancer care. We believe that we offer oncology practices the tools they need to survive and thrive in providing their patients high quality, cost-effective and convenient cancer care.

Our Strategy

Our mission is to increase access to and advance the delivery of high-quality cancer care in America. We do this by offering physicians a complete set of services to enable them to provide cancer patients with a full continuum of care, including professional medical services, chemotherapy infusion, radiation oncology, diagnostic services, access to clinical trials, patient education and other services, all in an outpatient setting.

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We believe that in today’s marketplace, particularly in light of recent reductions in Medicare reimbursement and continued pressures on overall reimbursement, the most successful oncology practices will be those that have a preeminent position in their local market, that are diversified beyond medical oncology and that have implemented efficient management. We believe that our services best position practices to attain these characteristics.

We intend to intensify our development efforts and to continue to offer practices and physicians the opportunity to take advantage of our services through a comprehensive strategic alliance, encompassing all of the management services we offer. We believe that our comprehensive solution is the best one for most oncology practices. We previously offered our PPM affiliated practices the option to move to a less comprehensive, lower cost “service line” option, and most practices have remained on the PPM model.

For medical oncologists who do not wish to obtain comprehensive management services, such as billing and collection and cancer center diversification opportunities, we offer pharmaceutical management services as a stand-alone option under our “service line” structure. Under our pharmaceutical service line offering, we manage all aspects of the pharmaceutical operations of the practice, but do not provide other business office services and do not provide services outside of medical oncology. We also offer our Cancer Research Services to our pharmaceutical customers under the service line structure.

During the last several years, we have worked to enhance the platform upon which we expect to build. Our model conversions and disaffiliations have stabilized our network to align ours and our practices’ incentives and better ensure that our economic arrangements are sustainable, as well as eliminating the distraction of underperforming practices and assets.

Our Business

Our operations are organized around three distinct business lines: Medical Oncology Services, Cancer Center Services and Cancer Research Services.

Medical Oncology Services. We provide comprehensive management services to medical oncologists. These services can be divided into two categories – oncology pharmaceutical services and practice management services. Because medical oncologists are typically the “gate keeper”, or primary care, physicians for oncology patients, we focus our development efforts on affiliating with the preeminent medical oncology group in a market. We then help that group grow by recruiting new physicians and affiliating with other oncologists in the market. We believe that larger oncology groups can more effectively expand into radiation oncology and diagnostic radiology and more effectively use capital assets, thereby providing the full continuum of high quality care to cancer patients in local communities. Once an oncology group has obtained sufficient size, we encourage that group to take advantage of our cancer center services described below. In addition, we continue to promote cancer research services for all of our practices.

Pharmaceuticals are the central component of medical oncology practices and by far their largest expense. For this reason, we have developed core competencies in purchasing and managing oncology pharmaceuticals for medical oncologists. Central to the pharmaceutical services we provide to medical oncologists is our better-than-market drug pricing. By aggregating our network-wide purchasing power in negotiations with pharmaceutical companies, we attempt to obtain the best possible pricing.

In addition, we provide comprehensive pharmaceutical services to our affiliated practices in an effort to further enhance cost-effectiveness, including:

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The second component of our medical oncology offering includes comprehensive practice management services for medical oncologists. These services are designed to encompass all of the non-clinical aspects of running a medical oncology practice and include:

Medical oncologists under our PPM model receive all of our medical oncology services, while physicians under our service line model contract only for the oncology pharmaceutical services aspect of this business line.

Under the PPM model, our revenues are fees paid by the practices and include reimbursement for all expenses, as well as an additional fee based upon overall practice performance. Under our service line model our revenues are fees paid by the practices and include reimbursement for the cost of pharmaceuticals plus an additional fee based upon the services required by the practice.

Cancer Center Services. We provide capital and development and operations expertise for outpatient cancer centers. We encourage medical oncology practices with sufficient market presence to diversify into diagnostic radiology and radiation therapy. Diversification enables practices to offer a full range of technologies to their patients, such as radiation therapy and diagnostic radiology, as well as enhancing medical oncologists’ financial position by mitigating some of their financial exposure to changes in pharmaceutical economics. We manage all aspects of the process, from helping practices decide whether and where to build a cancer center, through regulatory and permitting issues, through construction, development and operations. We believe a fully integrated, diversified practice is best able to offer patients high-quality, cost effective care in their local communities.

Services we offer include:

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In some markets, because of particular competitive conditions or as a result of certificate of need or similar regulations, we may determine that a joint venture with another local provider is the best way for us to develop cancer center services. In such cases we facilitate negotiations and structure transactions between ourselves, our affiliated practice and another local healthcare provider, such as a hospital.

We offer cancer center services only as part of our PPM offering. Our revenues come from our overall management fees, which are typically based upon some measure of overall practice performance.

Cancer Research Services. We provide cancer research services to practices that are affiliated with us under either our PPM or service line model. We provide a full range of services from study concept and design to regulatory approval.

During 2003, we supervised 50 different clinical trials. Our affiliated practice researchers enrolled more than 3,300 new patients in these studies during 2003. More than 470 of our affiliated physicians participate in clinical research through US Oncology.

Under our cancer research service line, our revenues come from pharmaceutical and biotechnology firms that pay us to manage and facilitate their clinical trials and to provide other research-related services. Under this service line, we pay our affiliated physicians for their participation in clinical trials according to financial arrangements that are separately determined for each trial.

We manage our overall business according to the business lines described above. Accordingly, we include segment financial information in this report for each of these business segments.

Economic Models

Most of our revenues (91.1% during 2003) are derived under the physician practice management (PPM) model. Under the PPM model, we provide all of our services to a physician practice under a single management agreement under which we are appointed exclusive business manager, responsible for all of the non-clinical aspects of the physicians’ practice.

Our PPM agreements are long-term agreements (generally with initial terms of 25 to 40 years) and cannot be terminated unilaterally without cause. Physicians joining the PPM practices are required to enter into employment or non-competition agreements with the practice. Prior to 2002, we generally paid consideration to physicians in physician groups in exchange for the group’s selling us operating assets and entering into such long-term contracts or joining an already affiliated group. Historically, we also have helped affiliated groups expand by recruiting individual physicians without buying assets or paying consideration for service agreements. During 2002 and 2003, our PPM business expanded solely through such recruitment (rather than new affiliations involving the purchase of assets and payment of consideration.)

We intend to continue to expand our business, both by recruiting new physicians and by affiliating with new groups. We will pay consideration for operating assets of groups and may, under some circumstances, pay other consideration.

Under most of our PPM agreements, we are compensated under the “earnings model.” Under that model, we are reimbursed for all expenses we incur in connection with managing a practice, and are paid an additional fee based upon a percentage of the practice’s earnings before income taxes, subject to certain adjustments. 66.7% of our revenue during 2003 was derived from affiliated practices managed under agreements on the earnings model as of December 31, 2003. The remainder of our PPM agreements are under the net revenue model described below or, in some states, provide for a fixed management fee.

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Of our 2003 revenue, 6.8% was derived under the service line model. Under our service line agreements, fees include payment for pharmaceuticals and supplies used by the group, reimbursement for certain pharmacy-related expenses and payment for the other services we provide. Rates for our services typically are based on the level of services required by the practice.

Realignment of Net Revenue Model Practices

Of our 2003 revenue, 24.4% was derived from affiliated practices managed under PPM agreements on our “net revenue model” as of December 31, 2003. Under the net revenue model, our fee consists of a fixed amount, plus a percentage of net revenues, plus, if certain performance criteria are met, a performance fee. Under these agreements, once we have been reimbursed for expenses, the practice is entitled to retain a fixed portion of revenues before any additional service fee is paid to us. The effect of this priority of payments is that we bear a disproportionate share of increasing practice costs, since if there are insufficient funds to pay both our fee and the fixed amount to be retained by the practice, the entire amount of the shortfall reduces our management fee. Rapidly increasing pharmaceutical costs have increased practice revenues and thus the amounts retained by physicians. At the same time rising costs have eroded margins, leaving less available to pay our management fees.

The net revenue model does not appropriately align our and our practices’ economic incentives, in that the parties do not have similar motivation to control costs or efficiently utilize capital. For this reason, we have been seeking to convert net revenue model practices to the earnings model since the beginning of 2001. In some cases, net revenue model practices have converted instead to the service line model or disaffiliated entirely. Of our 2000 revenue, 56.3% was derived from net revenue model practices, while only 24.4% of our 2003 revenue was derived from practices under the net revenue model as of December 31, 2003. We no longer enter into new affiliations under the net revenue model.

Since December 31, 2003, and through March 1, 2004, we have converted three practices previously under the net revenue model, representing 6.2% of our 2003 revenue, to the earnings model. We will continue to attempt to convert the remaining net revenue model practices.

Conversions and disaffiliations have helped to stabilize our operating platform. The percentage of Field EBITDA that we retained as management fees (not including reimbursement for practice expenses) declined from 42% in 1999 to 38% in 2000 and 35% in 2001. With the implementation of our realignment strategy, the percentage of Field EBITDA has been steady, at 34% in both 2002 and 2003.

Since announcing our initiative to convert practices away from the net revenue model in November 2000, we have recorded charges of $251.3 million relating to impairment of net revenue model practices resulting either from termination of those agreements or the determination that their carrying values were not recoverable. As of December 31, 2003, only one net revenue model service agreement, with a carrying value of $22.5 million, was reflected on our balance sheet.

Competition

We operate in highly competitive industries. Some of our competitors have greater financial, technical, marketing and managerial resources than we have. To the extent that competitors are owned by pharmaceutical manufacturers, retail pharmacies, insurance companies, HMOs or hospitals, they may have pricing advantages that are unavailable to us and other independent companies.

Pharmaceutical Management. The specialty pharmaceutical industry is highly competitive and is undergoing consolidation. The industry is fragmented, with many public and private companies focusing on different product or customer niches. We are unique in our exclusive focus on oncology pharmaceuticals. Some of our current and potential competitors include:

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Outpatient Healthcare Centers. Outpatient care is a growing trend, but the sector is highly fragmented. We know of at least one other company that is focused on outpatient radiation oncology centers. Many hospitals and regional medical centers also operate outpatient care centers, offering primary care, urgent care, diagnostic imaging like MRIs and heart scans, minor surgery (known as ambulatory surgery centers or ASCs), and a range of other specialties including oncology. Although fragmented and predominantly locally-focused, our strongest competitors are hospitals or joint ventures between hospitals and oncology practices who finance, build and operate comprehensive cancer centers adjacent to a large hospital or as a satellite location within the hospital system. Companies such as SurgiCare, Inc. (for ASCs) and Outpatient Imaging Affiliates (for diagnostic radiology imaging) also build and operate outpatient care centers, often in partnership with hospitals or HMOs. Some of these companies could attempt to enter or expand their presence in the oncology market.

With respect to research activities, the contract research organization industry is fragmented, with several hundred small limited-service providers and several large full-service contract research organizations with global operations. We compete against large contract research organizations and site management organizations that may have access to more financial resources than we do.

Affiliated Practices. Our profitability depends in large part on the continued success of our affiliated practices. The business of providing healthcare services is highly competitive. The affiliated practices face competition from several sources, including sole practitioners, single- and multi-specialty practices, hospitals and managed care organizations.

Regulation

General. The healthcare industry is highly regulated, and there can be no assurance that the regulatory environment in which we and our affiliated practices operate will not change significantly and adversely in the future. In general, regulation and scrutiny of healthcare providers and related companies are increasing.

There are currently several federal and state initiatives relating to the provision of healthcare services, the legal structure under which those services are provided, access to healthcare, disclosure of healthcare information, costs of healthcare and the manner in which healthcare providers are reimbursed for their services. The Office of the Inspector General is focusing on, among other issues, clinical research, physician coding, pharmaceutical relationships, credit balances and group purchasing organization activities, which may result in government actions that could negatively impact our operations. It is not possible to predict whether any such initiatives will result in new or different rules or regulations or other actions or what their form, effective dates or impact on us will be.

Our affiliated practices are intensely regulated at the federal, state and local levels. Although these regulations often do not directly apply to us, if a practice is found to have violated any of these regulations and, as a result, suffers a decrease in its revenues or an increase in costs, our results of operations might be materially and adversely affected.

Licensing and Certificate of Need Requirements. Every state imposes licensing requirements on clinical staff, individual physicians and on facilities operated or utilized by healthcare providers. Many states require regulatory approval, including certificates of need, before (1) establishing certain types of healthcare facilities, (2) offering certain services or (3) expending amounts in excess of statutory thresholds for healthcare equipment, facilities or programs.

Privacy Regulations. The Department of Health and Human Services published new privacy regulations on December 28, 2000 under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which impact our affiliated practices’ operations with respect to the transfer of data, including between us and our affiliated practices. Also a part of

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HIPAA are security and electronic signature standards that regulate how to maintain personally identifiable health information in our databases. We believe we have taken appropriate measures to comply with these requirements.

Fee-Splitting; Corporate Practice of Medicine and Pharmacy. The laws of many states prohibit physicians from splitting professional fees with non-physicians and prohibit non-physician entities, such as US Oncology, from practicing medicine and from employing physicians to practice medicine. The laws in most states regarding the corporate practice of medicine have been subjected to limited judicial and regulatory interpretation. We believe our current and planned activities do not constitute fee-splitting or the practice of medicine as contemplated by these laws. However, there can be no assurance that future interpretations of such laws will not require structural and organizational modification of our existing relationships with the practices. In addition, statutes in some states in which we do not currently operate could require us to modify our affiliation structure. Comparable state laws prohibit the practice of pharmacy by entities not licensed as pharmacies.

Medicare/Medicaid Fraud and Abuse Provisions. Federal law prohibits the offer, payment, solicitation or receipt of any form of remuneration in return for the referral of Medicare or other federal or state health program patients or patient care opportunities, or in return for the purchase, lease or order of any item or service that is covered by Medicare or other federal or state health program. Pursuant to this law, the federal government has pursued a policy of increased scrutiny of transactions among healthcare providers in an effort to reduce potential fraud and abuse relating to government healthcare costs.

The Medicare and Medicaid anti-kickback laws (the “Anti-Kickback Laws”) provide criminal penalties for individuals or entities participating in the Medicare or Medicaid programs who knowingly and willfully offer, pay, solicit or receive remuneration in order to induce referrals for items or services reimbursed under such programs. In addition to federal criminal penalties, the Social Security Act provides for civil monetary penalties and exclusion of violators from participation in the Medicare or Medicaid programs.

A violation of the Anti-Kickback Laws requires the existence of all of these elements: (i) the offer, payment, solicitation or receipt of remuneration; (ii) the intent to induce referrals; (iii) the ability of the parties to make or influence referrals of patients; (iv) the provision of services that are reimbursable under any governmental health programs; and (v) patient coverage under any governmental program. Fulfilling all of the requirements of the applicable regulatory safe harbors ensures that a party has not violated the Anti-Kickback Laws. We believe that all compensation we receive is for our services. We also believe that we are not in a position to make or influence referrals of patients or services reimbursed under any governmental health programs to our affiliated practices. Consequently, we do not believe that the service fees payable to us should be viewed as remuneration for referring or influencing referrals of patients or services covered by such programs as prohibited by the Anti-Kickback Laws. To our knowledge, there have been no case law decisions regarding service agreements similar to ours that would indicate that such agreements violate the Anti-Kickback Laws. Further, we believe that since we are not a provider of medical services under our PPM model, and are not in a position to refer patients to any particular medical practice, the remuneration we receive for providing services does not violate the Anti-Kickback Laws. However, because of the breadth of the Anti-Kickback Laws and the government’s active enforcement thereof, there can be no assurance that future interpretations of such laws will not require modification of our existing relationships with practices.

In situations where we operate a licensed pharmacy, we would be a provider. Although we believe our offerings under that service line comply with law, there is a risk that our status as provider could bring greater scrutiny to those arrangements.

Prohibitions of Certain Referrals. The Omnibus Budget Reconciliation Act of 1993 includes a provision that significantly expands the scope of the Ethics in Patient Referral Act, also known as the “Stark Law.” The Stark Law originally prohibited a physician from referring a Medicare or Medicaid patient to any entity for the provision of clinical laboratory services if the physician or a family member of the physician had an ownership interest in or compensation relationship with the entity. The revisions to the Stark Law prohibit a referral to an entity in which the physician or a family member has an ownership interest or compensation relationship if the referral is for any of a list of “designated health services.” The Stark Law and its current and future regulations apply directly to providers, not to us under the PPM model. There can be no assurance, however, that interpretations of such laws will not indirectly affect our existing relationships with affiliated practices.

Pharmacy Regulation. Our pharmaceutical service line, and our pharmacies in particular, are subject to the operating and security standards of the Food and Drug Administration (the “FDA”), the United States Drug Enforcement Administration, various state boards of pharmacy and comparable agencies. Such standards affect the prescribing of pharmaceuticals (including certain controlled substances), operating of pharmacies (including nuclear pharmacies) and packaging of pharmaceuticals. Complying with the standards, especially as they change from time to time, could be costly

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for us and could limit the manner in which we implement this segment. While we believe that our arrangements with our affiliated practices comply with the Anti-Kickback Laws and any relevant safe harbors as well as the Stark Law and its exceptions, there can be no assurance that our pharmacy function will not subject us to additional governmental review or an adverse determination.

Antitrust. We and our affiliated practices are subject to a range of antitrust laws that prohibit anti-competitive conduct, including price fixing, concerted refusals to deal and division of markets. We believe we are in compliance with these laws, but there can be no assurance that a review of US Oncology or our affiliated practices would not result in a determination that could adversely affect our operations and the operations of our affiliated practices. Furthermore, because of the size and scope of our network, there is a risk that we could be subjected to greater scrutiny by government regulators with regard to antitrust issues.

Reimbursement Requirements. In order to participate in the Medicare and Medicaid programs, our affiliated practices must comply with stringent reimbursement regulations, including those that require certain healthcare services to be conducted “incident to” or otherwise under a physician’s supervision. Different states also impose differing standards for their Medicaid programs, including utilizing an actual-cost-based system for reimbursement of pharmaceuticals instead of average wholesale price based methodologies. Satisfaction of all reimbursement requirements is required under our compliance program. The practices’ failure to comply with these requirements could negatively affect our results of operations.

Enforcement Environment. In recent years, federal and state governments have launched several initiatives aimed at uncovering behavior that violates the federal civil and criminal laws regarding false claims and fraudulent billing and coding practices. Such laws require physicians to adhere to complex reimbursement requirements regarding proper billing and coding in order to be compensated for medical services by governmental payors. Our compliance program requires adherence to applicable law and promotes reimbursement education and training; however, because we perform services for our practices, it is likely that governmental investigations or lawsuits regarding practices’ compliance with reimbursement requirements would also encompass our activities. A determination that billing and coding practices of the affiliated practices are false or fraudulent could have a material adverse effect on us.

The Federal False Claims Act is a frequently employed vehicle for identifying and enforcing billing, reimbursement and other regulatory violations. In addition to the government bringing claims under the Federal False Claims Act, qui tam, or “whistleblower,” actions may be brought by private individuals on behalf of the government. A violation under the False Claims Act occurs each time a claim is submitted to the government or each time a false record is used to get a claim approved, when the claim is false or fraudulent and the defendant acted knowingly. Under the False Claims Act, defendants face exclusion from the Medicare/Medicaid programs and monetary damages of $5,500 to $11,000 for each false claim, as well as treble damages.

Compliance. We have a comprehensive compliance program designed to assist us, our employees and our affiliated practices in complying with applicable law. We regularly monitor developments in healthcare law and modify our agreements and operations as changes in the business and regulatory environment require. While we believe we will be able to structure our agreements and operations in accordance with applicable law, there can be no assurance that our arrangements will not be successfully challenged.

Employees

As of December 31, 2003, we directly employed 3,711 people. As of December 31, 2003, our PPM affiliated practices employed 4,385 people (excluding the network physicians). Under the terms of the service agreements with the affiliated practices, we are responsible for the compensation and benefits of the practices’ non-physician medical personnel. No employee of US Oncology or of any affiliated practice is a member of a labor union or subject to a collective bargaining agreement. We consider our relations with our employees to be good.

Service Marks

We have registered the service mark “US Oncology” with the United States Patent and Trademark Office.

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We lease our corporate headquarters in Houston, Texas. We or the affiliated practices own, lease or sublease the facilities where the clinical staffs provide medical services. In connection with the development of integrated cancer centers, we have acquired or leased land valued at approximately $37.4 million. We anticipate that, as our affiliated practices grow, expanded facilities will be required.

In addition to conventional medical office space, we have developed comprehensive cancer centers that are generally free-standing facilities in which a full range of outpatient cancer treatment services is offered in one facility. At December 31, 2003, we operated 78 integrated cancer centers and had five cancer centers under development. Of the 78 cancer centers in operation, 30 were leased and 48 owned, ranging in size from 4,700 square feet to 112,400 square feet. Seventeen of the centers are leased under a leasing facility under which the assets are included as assets on our balance sheet. Since December 31, 2003, we have sold one of the 17 cancer centers in the leasing facility.

The provision of medical services by our affiliated practices entails an inherent risk of professional liability claims. We do not control the practice of medicine by the clinical staff or their compliance with regulatory and other requirements directly applicable to practices. In addition, because the practices purchase and prescribe pharmaceutical products, they face the risk of product liability claims. We and our practices maintain insurance coverage as to certain risks. However, successful malpractice, regulatory or product liability claims asserted against us or one of the practices could have a material adverse effect on us.

We have become aware that we and certain of our subsidiaries and affiliated practices are the subject of qui tam lawsuits (commonly referred to as “whistle-blower” suits) that remain under seal, meaning they were filed on a confidential basis with a U.S. federal court and are not publicly available or disclosable. The United States has determined not to intervene in any of the qui tam suits we are aware of and all but one of such suits has been dismissed, but the individuals who filed the remaining claim of which we are aware may still pursue the litigation, although none of those individuals has indicated an intent to do so. Because qui tam actions are filed under seal, there is a possibility that we could be the subject of other qui tam actions of which we are unaware. We intend to continue to investigate and vigorously defend ourselves against any and all such claims, and we continue to believe that we conduct our operations in compliance with law.

Qui tam suits are brought by private individuals, and there is no minimum evidentiary or legal threshold for bringing such a suit. The Department of Justice is legally required to investigate the allegations in these suits. The subject matter of many such claims may relate both to our alleged actions and alleged actions of an affiliated practice. Because the affiliated practices are separate legal entities not controlled by us, such claims necessarily involve a more complicated, higher cost defense, and may adversely impact the relationship between us and the practices. If the individuals who file complaints and/or the United States were to prevail in these claims against us, and the magnitude of the alleged wrongdoing were determined to be significant, the resulting judgment could have a material adverse financial and operational effect on us including potential limitations in future participation in governmental reimbursement programs. In addition, addressing complaints and government investigations requires us to devote significant financial and other resources to the process, regardless of the ultimate outcome of the claims.

We have previously disclosed that the House of Representatives’ Energy and Commerce Committee had requested that we furnish certain information regarding pharmaceutical purchasing and usage by our network. The request was made in connection that Committee’s investigation of Medicaid reimbursement for pharmaceuticals. We furnished the information requested by the Committee during the third and fourth quarters of 2003 and have not received any additional requests or other communication from the Committee. Medicaid accounted for approximately 3% of affiliated practices’ net patient revenue in 2003.

From time to time, we become involved in disputes with our affiliated practices. These disputes typically relate to disagreements regarding our performance under our contract with the physician group in question or to issues of contract interpretation. Generally, we are able to resolve such disputes without resorting to litigation. However, there is a risk that such disputes could result in litigation and in a deterioration or dissolution of our relationship with the physician group in question.

We and our network physicians are defendants in a number of lawsuits involving employment and other disputes and breach of contract claims. In addition, we are involved from time to time in disputes with, and claims by, our affiliated practices against us. Although we believe the allegations are customary for the size and scope of our operations, adverse judgments, individually or in the aggregate, could have a material adverse effect on us.

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Forward-Looking Statements and Risk Factors

The following are or may contain forward-looking statements within the meaning of the U.S. federal securities laws: (i) certain statements, including possible or assumed future results of operations, contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” (ii) any statements contained herein regarding our prospects; (iii) any statements preceded by, followed by or that include the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” “projects” or similar expressions; and (iv) all statements concerning expected financial results, business development activities and all other statements other than statements of historical fact.

Our business and results of operations are subject to risks and uncertainties, many of which are beyond our ability to control or predict. Because of these risks and uncertainties, actual results may differ materially from those expressed or implied by forward-looking statements, and investors are cautioned not to place undue reliance on such statements, which speak only as of the date thereof.

The cautionary statements contained or referred to herein should be considered in connection with any written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We do not undertake any obligation to release any revisions to or to update publicly any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

In general, because our revenues depend upon the revenues of our affiliated practices, any of the risks below that harm the economic performance of the practices will, in turn, harm us.

Most of our revenues come from pharmaceuticals, and adverse impact on the way in which pharmaceuticals are reimbursed or purchased by us would have an adverse impact on our business.

During 2003, approximately $1.6 billion in net operating revenue, out of a total of $2.5 billion, was attributable to amounts paid by all payors to US Oncology’s affiliated physicians for pharmaceuticals. Because revenues attributable to pharmaceuticals are such a significant part of our business, factors that adversely affect those revenues or the cost structure underlying those revenues are likely to adversely affect our business. The risk factors below discuss several of those factors.

Recently enacted reductions in reimbursement for pharmaceuticals under Medicare will adversely affect our results of operations.

In December 2003, President Bush signed into law the Medicare Modernization Act, providing for a prescription drug benefit under the Medicare program. Outpatient oncology drugs were already covered by Medicare, but this new prescription drug benefit bill significantly reduces levels of reimbursement for oncology drugs administered in the physician office setting. Prior to passage of the bill, physicians received 95 percent of average wholesale price (AWP) for pharmaceuticals administered to Medicare patients in the physician office setting.

Under the new law, Medicare reimbursement for most drugs used in the treatment of cancer has been reduced in 2004 to 85 percent of AWP (determined as of April 1, 2003), with certain drugs reimbursed at levels as low as 80 percent of AWP. Starting in 2005, reimbursement will be based upon average sales price (ASP), and set at 106 percent of ASP. Drug makers would report the ASP to the government, but the Secretary of Health and Human Services would have authority to adjust payments for any drugs if the ASP does not reflect widely available market prices.

To partially offset the reductions in reimbursement for drugs, the new law also increases the practice expense component paid to oncologists for drug administration services beginning in 2004. The exact nature of the increase is not detailed in the law, other than to say that it will be determined by utilizing data previously submitted by the American Society of Clinical Oncology. Based on the Congressional Budget Office’s analysis published on November 20, 2003, the new law will cause Medicare spending for drug administration by medical oncologists and hematologists to increase from 2003 amounts by approximately $500 million in 2004, $300 million in 2005 and $300 million in 2006.

Significant discretion is given to the Secretary of Health and Human Services in implementing this increase and other aspects of the law, including setting ASP or an alternative basis for reimbursement and implementing a third-party vendor option for pharmaceutical sales. Nevertheless, it is clear that the new reimbursement methodology will adversely impact financial results of oncologists, including those in the US Oncology network, with respect to Medicare patients, which will, in turn, under our service agreements with affiliated practices adversely impact our financial results. Medicare is our

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affiliated PPM practices’ largest payor, representing approximately 41% of their net patient revenue. During 2004, we believe that the reductions in reimbursement for drugs will be largely offset by the increase in reimbursement for other practice expenses, with the main impact of the legislation on oncology reimbursement occurring in 2005 and beyond.

Application of the expected Medicare 2005 reimbursement rates to our historical results of operations for 2003 would reduce, on a pro forma basis, our net revenue and EBITDA for 2003 by approximately $40 million to $45 million. To arrive at those results, we mathematically applied those 2005 rates to our net revenue for 2003 and made no other adjustment to our historical results. The pro forma financial information is for illustrative purposes only, and we do not believe the information is indicative of future results. Other matters that could impact our future results include the risk factors described herein, as well as: (a) any growth in our business, including from new cancer centers, PET system installations or otherwise expanding operations of affiliated physician groups, (b) the extent to which non-governmental payors change their reimbursement rates, (c) changes in practice performance or behavior, including the extent to which physicians continue to administer drugs to Medicare patients, or changes in our contracts with physicians, (d) reduced expenses or changes in our cost structure, including any change in the prices we pay for drugs, and (e) any other changes in reimbursement or practice activity that are unrelated to the prescription drug legislation.

The recent reductions in Medicare reimbursement may also cause some oncologists to cease providing care in the physician office setting either by retiring from the practice of medicine or by moving to a hospital setting. Any such reductions in our affiliated practices would adversely affect our results of operations. In addition, any reduction in the overall size of the outpatient oncology market could adversely affect our prospects for growth and business development.

Continued efforts by commercial payors to reduce reimbursement levels or change the manner in which pharmaceuticals are reimbursed could adversely affect us.

Commercial payors continue to seek to negotiate lower levels of reimbursement for cancer care services, with a particular focus on reimbursement for pharmaceuticals. There is a risk that commercial payors will seek reductions in pharmaceutical reimbursement similar to those included in the recent federal legislation discussed above. Although our affiliated practices’ payor contracts typically are terminable on short notice, and therefore subject to renegotiation, many of them are also linked to Medicare. Successful reductions in reimbursement could harm us. In addition, several payors are trying to implement “brown bagging” or similar programs under which cancer patients or their oncologists would be required to obtain pharmaceuticals from a third party. That third party, rather than the oncologist, would then be reimbursed. We have been and continue to be successful in resisting such programs. As in the case of AWP reform, we continue to promote the idea that any reduction in pharmaceutical reimbursement must be accompanied by an adjustment in reimbursement for other practice costs. However, in the event that we are not successful in resisting these initiatives, our practices’ and our results of operations could be adversely affected. In addition, any such program to remove control of pharmaceuticals from oncologists could pose additional risks to our affiliated physicians and their patients.

Continued review of pharmaceutical companies and their pricing and marketing practices could result in lowered reimbursement for pharmaceuticals.

Continued review of pharmaceutical companies by government payors could result in lowered reimbursement for pharmaceuticals, which could harm us. Recent federal legislation discussed above should reduce governmental scrutiny of AWP, which has been a focus of several investigations by government agencies, since Medicare will no longer reimburse based on AWP after this year. However, many state Medicaid programs continue to reimburse for drugs on a AWP based model. Moreover, existing and prior lawsuits and investigations have resulted and could continue to result in significant settlements that include corporate integrity agreements affecting pharmaceutical manufacturer behavior. Additionally, many of the concerns of government agencies will continue to apply under any model. Furthermore, possibly in response to such scrutiny as well as significant adverse coverage in the press, some pharmaceutical manufacturers could alter pricing or marketing strategies to the detriment of oncologists, which in turn could adversely affect us. Finally, as a group purchasing organization that is a significant purchasing agent of pharmaceuticals paid for by government programs, we could become involved in these investigations or lawsuits, or we or our affiliated practices may become a target of such pharmaceutical-related scrutiny. Any of these events could have a material adverse effect on us.

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The new reimbursement methodology under Medicare could make it more difficult for us to obtain favorable pricing from pharmaceutical companies.

Historically, one of our key business strengths has been our ability to obtain pricing for pharmaceuticals that we believe is better than prices widely available in the marketplace. After 2005, Medicare will reimburse for oncology pharmaceuticals based on the average price at which pharmaceutical companies sell those drugs to oncologists and other users, so that any discount to any purchaser would have the effect of reducing reimbursement for all purchasers. This may make pharmaceutical companies more reluctant to offer market-differentiated pricing to us or may cause them to reduce the degree of such differentiation. In addition, the new reimbursement regime may have other, unanticipated effects on pricing of pharmaceuticals. Any decrease in our ability to obtain pricing for pharmaceuticals that is more favorable than the market as a whole could adversely affect our ability to attract and retain new customers and could adversely affect our business and results of operations.

We derive a substantial portion of our revenue and profitability from the utilization of pharmaceuticals manufactured and sold by a limited number of vendors.

We derive a substantial portion of our revenue and profitability from the utilization of pharmaceuticals manufactured and sold by a limited number of manufacturers. During 2003, approximately 67% of net operating revenue was derived from pharmaceuticals sold exclusively by five vendors. Our agreements with these vendors are typically for one to two years and cancelable by either party without cause on 30 days’ prior notice. Further, several of the agreements provide favorable pricing that is adjusted quarterly for required volume levels. In some cases, compliance with the contract is measured on an annualized basis and pharmaceutical pricing concessions are given in the form of rebates payable at the end of the measurement period. Failure to attain performance levels could result in our not earning rebates, including some that may already have been reflected in our financial statements. Any termination or adverse adjustment to these relationships could have a material adverse effect on our business, financial condition and results of operations.

If our affiliated practices terminate their agreements with us, we could be seriously harmed.

Our practices may attempt to terminate their agreements with us. If any of our larger practices were to succeed in such a termination, other than in connection with a transition to the service line structure, we could be seriously harmed. From time to time, we have disputes with physicians and practices that could result in harmful changes to our relationship with them or a termination of a service agreement if adversely determined. We are also aware that some practices affiliated with other companies have attempted to end or restructure their affiliations, although they do not have a contractual right to do so, by arguing that their affiliations violate some aspect of healthcare law. In addition to loss of revenue from a particular practice, a departure of a large number of physicians from our network could adversely affect our ability to obtain favorable pricing for goods and services and other economies of scale that are based upon the size of our network. If some of our network physicians or affiliated practices were able to successfully make such arguments and terminate their affiliation with us, there could be a materially adverse effect on us.

If a significant number of physicians leave our affiliated practices, we could be seriously harmed.

Our affiliated practices usually enter into employment or non-competition agreements with their physicians that provide some assurance to both the practice and to us with respect to continuing revenues. We and our affiliated practices try to maintain such contracts. In addition to loss of revenue from departing physicians, a departure of a large number of physicians from our network could adversely affect our ability to obtain favorable pricing for goods and services and other economies of scale that are based upon the size of our network. If a significant number of physicians terminated relationships with our affiliated practices, we could be seriously harmed.

Our affiliated practices may be unable to enforce non-competition provisions with departed physicians.

Most of the employment agreements between the practices and their physicians include a clause that prevents the physician from competing with the practice for a period after termination of employment. We cannot predict whether a court will enforce the non-competition covenants in the agreements. If practices are unable to enforce the non-competition provisions of their employment agreements, we could be seriously harmed.

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We may encounter difficulties in managing our network of affiliated practices.

We do not control the practice of medicine by the physicians or their compliance with regulatory and other requirements directly applicable to practices. At the same time, an affiliated practice may have difficulty in effectively influencing the practices of its individual physicians. In addition, we have only limited control over the business decisions of the practices even under the PPM model. As a result, it is difficult to implement standardized practices across the network, and this could have an adverse effect on cost controls, regulatory compliance, our profitability and the strength of our network.

We rely heavily on a single distributor for our pharmaceutical products, and our business would be harmed by disruptions in that distributor’s business or in our relationship with that distributor.

Almost all of the pharmaceutical products provided to our affiliated practices through us come from a single distributor, National Specialty Services (NSS), a subsidiary of Cardinal Health. Although we believe that we obtain benefits from this exclusive relationship and that other distributors would be available to us if necessitated by a deterioration in the performance of NSS or in our relationship with NSS, such a deterioration in their business or our relationship with them could result in disruption in our business.

Our service fee arrangements for our net revenue model practices subject us to disproportionate economic risk.

Under a net revenue model service agreement, the practice retains a fixed portion of net revenue before any service fee (other than practice operating costs) is paid to us. Under net revenue agreements, therefore, we disproportionately bear the economic impact of increasing or declining margins. This risk has become particularly acute in light of the recent Medicare legislation. Our costs of operations have increased, primarily due to an increase in expensive, single-source drugs and compensation and benefits, which has resulted in a disproportionate decline in our operating margin, even as practice profitability continues to grow. We are seeking to convert practices to the earnings model or the service line structure, which eliminates this disproportionate economic risk. We continue to seek to convert remaining net revenue model practices. 83% of our revenues for the fourth quarter of 2003 were derived from practices not on the net revenue model as of March 1, 2004, an increase from 41% at the end of 2000. If we are not successful in converting remaining practices, then continuing to provide services under the net revenue model agreements could have a material adverse effect on us.

Governmental regulation and changes in such regulation could adversely affect our operating results or financial condition.

The healthcare industry is highly regulated and there can be no assurance that the regulatory environment in which we operate will not change significantly and adversely in the future. State and federal governments have increasingly undertaken efforts to control growing healthcare costs through legislation, regulation and voluntary agreements with medical care providers and pharmaceutical companies. If future government cost containment efforts limit the profits that can be derived from new drugs, then profit margins on pharmaceutical products could decrease and clinical research spending on new pharmaceutical products may also decrease, which could limit the business opportunities available to us and affect our results of operations and financial condition.

Our pharmaceutical segment is subject to the operating and security standards of the Food and Drug Administration (the “FDA”), the United States Drug Enforcement Administration, various state boards of pharmacy and comparable agencies. Such standards affect the prescribing of pharmaceuticals (including certain controlled substances), operating of pharmacies (including nuclear pharmacies), and packaging of pharmaceuticals. Complying with those standards, especially as they change from time to time, could be costly for us and could limit the manner in which we implement this segment.

The laws of many states prohibit unlicensed, non-physician-owned entities or corporations (such as US Oncology) from performing medical services, or in certain instances, prohibit physicians from splitting fees with non-physicians, including US Oncology. We do not believe that we engage in the unlicensed practice of medicine or the delivery of medical services in any state, and are not licensed to practice medicine in states that permit such licensure. In addition, many states have similar laws with respect to the practice of pharmacy. We do not believe we practice pharmacy, except where appropriately licensed. In many jurisdictions, however, the laws restricting the corporate practice of medicine or pharmacy and fee-splitting have been subject to limited judicial and regulatory interpretation and, therefore, there is no assurance that upon review some of our activities would not be found to be in violation of such laws. If such a claim were successfully asserted against us, we could be subject to civil and criminal penalties, the imposition of which could have a material adverse effect on our operations, cash flows and financial condition.

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In general, regulation and scrutiny of healthcare providers and related companies are increasing. Federal and state investigations and enforcement actions continue to focus on the healthcare industry, scrutinizing a wide range of items such as joint venture arrangements, referral and billing practices, product discount arrangements, dissemination of confidential patient information, relationships with pharmaceutical manufacturers, clinical drug research trials and gifts for patients. In addition, we may be adversely affected by aspects of some other healthcare proposals, including cutbacks in Medicare and Medicaid programs, containment of healthcare costs on an interim basis by means that could include a freeze on rates paid to healthcare providers, greater flexibility to the states in the administration of Medicaid and developments in federal and state health information requirements, including the standardization of electronic transmission of some administrative and financial information.

Because of the complexity and uncertainty of the regulations that govern companies and individuals in the healthcare sector, we expend significant resources in our comprehensive compliance program. The government is empowered to investigate all business activities of healthcare companies, including lawful ones, and exerts considerable leverage in such investigations as a result of the significant penalties that may apply in the event of any violation of healthcare law. Furthermore, government programs often are administered and enforced by multiple agencies and entities that may themselves have differing interpretations of healthcare regulations, and enforcement authorities have taken the position that complying with specific instructions of such entities may not, by itself, be determinative of the lawfulness of any actions. Because of these factors and the high cost of defending or addressing any investigation or allegation regarding healthcare law violations, we must from time to time forego business opportunities that we believe to be lawful, if there is a possibility that such activities could be perceived or later interpreted as inappropriate or unlawful or could invite government investigation.

Loss of revenues or a decrease in income of our affiliated practices could adversely affect our results of operations.

Our revenue currently depends on revenue generated by affiliated practices. Loss of revenue by the practices could seriously harm us. It is possible that our affiliated practices will not be able to maintain successful medical practices. In addition, our fees under PPM service agreements depend upon the profitability of the practices. Any failure by the practices to contain costs effectively will adversely impact our results of operations in those areas. Because we do not control the manner in which our practices conduct their medical practice (including drug utilization), our ability to control costs related to the provision of medical care is limited. Furthermore, the affiliated practices face competition from several sources, including solo practitioners, single- and multi-specialty practices, hospitals and managed care organizations. We have limited ability to discontinue or alter our service arrangements with practices, even where continuing to manage such practices under existing arrangements is economically detrimental to us.

Our business could be adversely affected if relations with any of our significant pharmaceutical suppliers are terminated or modified.

Our ability to purchase pharmaceuticals, or to expand the scope of pharmaceuticals purchased, from a particular supplier at prices below those generally offered to oncologists is largely dependent upon such supplier’s assessment of the value of our network. Many pharmaceuticals used by our affiliated physicians are available from only one manufacturer. To the extent that our service line structure or other factors cause pharmaceutical suppliers to perceive our network as less valuable, our relationships and pricing with such suppliers could be harmed. Our inability to purchase pharmaceuticals from any of our significant suppliers at prices below those generally available to oncologists could have a material adverse effect on our business, results of operations and financial condition.

Our development of new cancer centers could be delayed or result in serious liabilities, and the centers may not be profitable.

The development of integrated cancer centers is subject to a number of risks, including obtaining regulatory approval, delays that often accompany construction of facilities and environmental liabilities that arise from operating cancer centers. Any failure or delay in successfully building and operating integrated cancer centers, as well as liabilities from operations, could seriously harm us. New cancer centers may incur significant operating losses during their initial operations, which could materially and adversely affect our operating results, cash flows and financial condition. In addition, in some cases our cancer centers may not be profitable enough for us to recover the cost of our investment in the cancer center. In certain situations, we may be required to recognize losses in connection with closing or selling cancer centers, either because of underperformance or other market developments.

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We rely on the ability of our affiliated practices to grow and expand.

We rely on the ability of our affiliated practices to grow and expand. Our affiliated practices may encounter difficulties attracting additional physicians and expanding their operations. The failure of practices to expand their patient base and increase revenues could harm us.

We operate in a highly competitive industry.

We may have existing competitors, as well as a number of potential new competitors, that have greater name recognition and significantly greater financial, technical and marketing resources than we do. This may permit our competitors to devote greater resources than we can to the development and promotion of their services. These competitors may also undertake more far-reaching marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to existing and potential employees.

We also expect our competitors to develop strategic relationships with providers, pharmaceutical companies and payors, which could result in increased competition. The introduction of new and enhanced services, acquisitions, industry consolidation and the development of strategic relationships by our competitors could cause price competition, a decline in sales or a loss of market acceptance of our services, or make our services less attractive. In addition, in developing cancer centers, we compete with a number of tax-exempt non-profit organizations that can finance acquisitions and capital expenditures on a tax-exempt basis or receive charitable contributions unavailable to us.